Buyer Beware: Queens Real Estate Case Highlights Limits of Fraud Claims Post-Closing
This week we wanted to bring to your attention an interesting decision out of the 2nd Department wherein the Court applied the doctrines of Caveat Emptor and Merger in denying a Plaintiffs’ causes of action sounding in fraud and deceit, misrepresentation and breach of contract arising out of a dispute involving the sale of real property in Queens county. The relevant facts of, as well as a link to, the case are set forth below:
In 2006, the Plaintiffs purchased three commercial properties from the Defendants. In 2012, the Plaintiffs commenced an action seeking damages for fraud and deceit, misrepresentation and breach of contract, asserting that the Defendants had withheld that the master tenant of one of the properties had informed the Defendants that the master tenant was experiencing financial difficulties and, absent rent concessions, the master tenant would breach its lease and vacate the property, that the only asset of the master tenant was its lease, and that a bankruptcy court had relieved all prior assignees of the lease from liability notwithstanding that the terms of the lease provided they had liability. The Appellate Division, Second Department, affirmed the Supreme Court, Queens County’s grant of the Defendants’ motion for summary judgment dismissing the complaint. According to the Appellate Division,
“…the facts alleged to have been misrepresented and/or improperly concealed were not matters peculiarly within the defendants’ knowledge which could not have been discovered by the plaintiffs by the exercise of ordinary intelligence and/or which thwarted the plaintiffs in their efforts to fulfill their responsibilities imposed by the doctrine of caveat emptor [citations omitted]…[Further]…the contract demonstrated that the parties did not intend that any provision of the contract would survive delivery of the deed, [and, therefore,] the doctrine of merger extinguished any claim the plaintiffs may have had regarding the contract of sale [citations omitted].”
R. Vig Properties, LLC v. Rahimzada, 2023 NY Slip Op 00887, decided February 15, 2023, is posted at https://www.nycourts.gov/reporter/3dseries/2023/2023_00887.htm
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