1. Fraud Claim
Elements of Claim
To state a claim for fraud or fraudulent misrepresentation under New York law, a plaintiff must show: “(1) the defendant made a material false representation, (2) the defendant intended to defraud the plaintiff[s] thereby, (3) the plaintiff[s] reasonably relied upon the representation, and (4) the plaintiff[s] suffered damage as a result of their reliance.” Swersky v. Dreyer & Traub, 643 N.Y.S.2d 33, 36 (1st Dept. 1996). A claim for fraudulent concealment or omission requires the same showing as that for fraud or fraudulent misrepresentation, with the additional requirement that the plaintiff must demonstrate that the defendant had a duty to disclose material information. See Banque Arabe et Internationale D'Investissement v. Md. Nat. Bank, 57 F.3d 146, 153 (2nd Cir. 1995); Manhattan Motorcars, Inc. v. Automobili Lamborghini, S.p.A., 244 F.R.D. 204, 213 (S.D.N.Y. 2007). For both forms of fraud, the element of damages includes a requirement that the plaintiff establish proximate causation. In re Fosamax Prod. Liab. Litig., 924 F.Supp.2d 477, 489 (S.D.N.Y. 2013); Hunt v. Enzo Biochem, Inc., 471 F.Supp.2d 390, 399-400 (S.D.N.Y. 2006) (holding, inter alia, that a claim of common law fraud under New York law “requires a showing of proximate causation”).
Pleading Requirements
The rules of pleading in Federal court usually require only 'a short and plain statement' of the plaintiff's claim for relief; however, averments of fraud must be alleged with particularity. See, e.g., In re PXRE Group, Ltd., Sec. Litig., 600 F. Supp.2d 510, 524 (S.D.N.Y. 2009) quoting Fed. R. Civ. P. 8, 9(b)); see also, ATSI Communications , Inc. v. Shaar Fund, Ltd., 493 F.3d 87, 98-99 (2d Cir. 2007). The language of Rule 9(b) "is cast in terms of the conduct alleged, and is not limited to allegations styled or denominated as frauds or expressed in terms of the constituent elements of a fraud cause of action." Rombach v. Chang, 355 F.3d 164, 171 (2d Cir. 2004). "This pleading constraint serves to provide a defendant with fair notice of a plaintiff's claim, safeguard his reputation from improvident charges of wrongdoing, and protect him against strike suits." Id.
Rule 9(b) – Federal Rules of Civil Procedure
Rule 9(b) of the Federal Rule of Civil Procedure requires that any fraud claim, including any claim for conspiracy to commit fraud, need be pleaded with particularity. See Fed. R. Civ. P. 9(b); see also, Rombach, 355 F.3d at 170; Warren v. John Wiley & Sons, Inc., 952 F.Supp.2d 610, 621 (S.D.N.Y. 2013) (“[L]ike a claim for fraud, a claim for fraudulent concealment must be [pleaded] with particularity, in accordance with the heightened standards of Fed. R. Civ. P. 9(b).”) This “pleading constraint” is predicated upon the need to provide defendant “with fair notice of a plaintiff's claim, safeguard his reputation from improvident charges of wrongdoing, and protect him against strike suits.” Asti Communications,493 F.3d at 98-99.
In order to comply with Rule 9(b), a plaintiff must “(1) specify the statements that the plaintiff contends were fraudulent, (2) identify the speaker, (3) state where and when the statements were made, and (4) explain why the statements were fraudulent.” See Lerner v. Fleet Bank, N.A., 459 F.3d 273, 290 (2nd Cir. 2006) (quoting Mills v. Pollar Molecular Corp., 12 F.3d 1170, 1175 (2nd Cir. 1993)); Asti, supra; Sullivan v. Aventis, Inc., No. 4-cv-2939, 2015 WL 4879112, at *9 (S.D.N.Y. August 13, 2015) (holding, inter alia, that when alleging fraud, “the who, what, when, where, and how” of the alleged fraud need be specified). “Allegations that are conclusory or unsupported by factual assertions are insufficient.” Id. Moreover, “[w]here multiple defendants are asked to respond to allegations of fraud, the complaint should inform each defendant of the nature of his [or her] participation in the alleged fraud.” DiVittorio v. Equidyne Extractive Indus., Inc., 822 F. 2d 1242, 1247 (2nd Cir. 1987); see also, Mills, 12 F.3d at 1175 (holding, inter alia, that Rule 9(b) is not satisfied where the complaint vaguely attributes alleged fraudulent statements to unspecified defendants).
2. Civil Conspiracy to Defraud
Elements of Claim
New York does recognize a cause of action for conspiracy to commit fraud. The elements of such a claim include: (1) an agreement between two or more parties; (2) an overt act in furtherance of the agreement; (3) the parties' intentional participation in the furtherance of a plan or purpose; and, (4) resulting damage or injury.
Pleading Requirements
To adequately plead a claim for conspiracy to commit fraud under New York law, and in addition to pleading the underlying fraud, a plaintiff must demonstrate: "(1) an agreement among two or more parties; (2) a common objective; (3) acts in furtherance of the objective; and, (4) knowledge." See, e.g., JP Morgan Chase, 406 F. Supp. 2d 247, 259 (S.D.N.Y. 2005), (quoting Filler v. Hanvitt, Nos. 01 Civ. 9510, 02 Civ. 8251, 2003 U.S. Dist. LEXIS 15950, 2003 WL 22110773, at *2 (S.D.N.Y. Sept. 12, 2003)). A claim for conspiracy to commit fraud must be pleaded with the specificity necessary to satisfy Rule 9(b) (as set forth more fully above). Where a plaintiff fails to allege a viable fraud claim, no claim for conspiracy to commit fraud possibly can exist. See JP Morgan Chase Bank v. Winnick, 406 F.Supp.2d 247, 259 (S.D.N.Y. 2005); see also, Demalco Ltd. v. Feltner, 588 F.Supp. 1277, 1278 (S.D.N.Y. 1985) (“It is well settled in New York that ‘civil conspiracy to commit fraud, standing alone, is not actionable.' Instead, the gravamen of a claim of conspiracy is the underlying independent tort, and if the independent tort has not been adequately pleaded, the conspiracy claim will also fail.”)
3. Statute of Limitations
Pursuant to Section 213(8) of the CPLR, the statute of limitations governing fraud claims asserted under New York law is "the greater of six years from the date the cause of action accrued or two years from the time the plaintiff ... discovered the fraud, or could with reasonable diligence have discovered it." See N.Y.C.P.L.R. 213(8). Once a plaintiff has notice of the fraud "he is charged with whatever knowledge an inquiry would have revealed." Koch v. Christie's Intl. PLC, 785 F.Supp.2d 105, 118 (S.D.N.Y. 2011); Kottler v. Deutsche Bank AG, 607 F. Supp. 2d 447, 461 (S.D.N.Y. 2009).
Whether or not a claim alleging fraud or a conspiracy to commit fraud has been timely asserted hinges on the underlying facts and circumstances of each particular case, the relevant inquiries being not only what was, but what reasonably should have been, known by the aggrieved party at all times material.