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Vermeer Owners, Inc. v. Guterman

Court of Appeals of the State of New York
Nov 26, 1991
78 N.Y.2d 1114 (N.Y. 1991)

Summary

holding that a fraud action requires proof of "a representation of material fact, falsity, scienter, reliance and injury"

Summary of this case from Axginc Corp. v. Plaza Automall, Ltd.

Opinion

Argued October 17, 1991

Decided November 26, 1991

Appeal from the Appellate Division of the Supreme Court in the First Judicial Department, Martin Evans, J.

Jerome R. Halperin and Guy S. Halperin for appellants.

Eugene L. Girden, Russell G. Bogin, Jeffrey A. Jennes and Stanley L. Kantor for Gerald Guterman and another, respondents.

David Rozenholc, Jacob Aschkenasy and Donald Eng for Fleur Garage Corp., respondent.


MEMORANDUM.

The order of the Appellate Division should be affirmed, with costs.

We agree with the courts below that plaintiffs may not maintain a private cause of action under the Martin Act (CPC Intl. v McKesson Corp., 70 N.Y.2d 268, 276-277). Plaintiffs contend that CPC is not controlling because that case involved the violation of General Business Law § 352-c, which addresses a variety of fraudulent acts and practices in the sale and exchange of securities and other properties, whereas the present claim is based upon a violation of section 352-e, which specifically addresses real estate syndication offerings. The difference, however, is not legally significant because our decision in CPC rested on a determination that "an implied private [cause of] action is not consistent with the legislative scheme underlying the Martin Act" (id., at 276-277). That conclusion also forecloses a private cause of action under section 352-e.

We also agree with the holding of the courts below that these plaintiffs have no basis for invalidating the lease on the ground of unconscionability or breach of fiduciary duty (see generally, Sablosky v Gordon Co., 73 N.Y.2d 133, 138; Gillman v Chase Manhattan Bank, 73 N.Y.2d 1, 10-11).

With respect to plaintiffs' fraud claim, we recognize that sponsors of apartment house conversions have a duty to meet high standards of fair dealing and good faith toward tenants (People v Lexington Sixty-First Assocs., 38 N.Y.2d 588, 595; see, Gilligan v Tishman Realty Constr. Co., 283 App. Div. 157, 162, affd 306 N.Y. 974; Lizby Assocs. v Baron, 130 Misc.2d 834, 835) and that in many instances purchasing tenants and sponsors do not deal as equals either in terms of access to information or business acumen and thus, tenants often lack equal bargaining power (see, e.g., Horn v 440 E. 57th Co., 151 A.D.2d 112, 119).

Plaintiffs argue that defendants City Partners and Guterman misrepresented the lease transaction in the offering plan. Although it is clear that the offering plan contained statements that were demonstrably false, plaintiffs have not met their burden. They were required to prove by clear and convincing evidence a representation of material fact, falsity, scienter, reliance and injury. Nothing in this record establishes that plaintiffs in fact relied on any misrepresentation by defendants to their detriment. Thus, they have failed to establish common-law fraud and the complaint was properly dismissed.

Chief Judge WACHTLER and Judges SIMONS, KAYE, ALEXANDER, TITONE, HANCOCK, JR., and BELLACOSA concur.

Order affirmed, with costs, in a memorandum.


Summaries of

Vermeer Owners, Inc. v. Guterman

Court of Appeals of the State of New York
Nov 26, 1991
78 N.Y.2d 1114 (N.Y. 1991)

holding that a fraud action requires proof of "a representation of material fact, falsity, scienter, reliance and injury"

Summary of this case from Axginc Corp. v. Plaza Automall, Ltd.

holding that a fraud action requires proof of "a representation of material fact, falsity, scienter, reliance and injury"

Summary of this case from Wall v. CSX Transportation, Inc.

holding that a fraud action requires proof of "a representation of material fact, falsity, scienter, reliance and injury"

Summary of this case from W. P. Carey, Inc. v. Bigler

affirming dismissal of fraud claim, noting that "[n]othing in this record establishes that plaintiffs in fact relied on any misrepresentation by defendants to their detriment."

Summary of this case from Morrison v. Hoffmann-La Roche, Inc.

affirming dismissal of fraud claim, noting that “[n]othing in this record establishes that plaintiffs in fact relied on any misrepresentation by defendants to their detriment.”

Summary of this case from Bertini v. Smith & Nephew, Inc.

affirming dismissal of fraud claim, noting that “[n]othing in this record establishes that plaintiffs in fact relied on any misrepresentation by defendants to their detriment.”

Summary of this case from Bertini v. Smith & Nephew, Inc.

extending rule of McKesson from "the sale and exchange of securities and other properties" to "real estate syndication offerings"

Summary of this case from Anwar v. Fairfield Greenwich Limited

listing the elements of a common-law fraud claim in New York as "representation of material fact, falsity, scienter, reliance and injury"

Summary of this case from Lichtenstein v. Reassure America Life Insurance Co.

setting out elements of fraud as "a representation of material fact, falsity, scienter, reliance and injury"

Summary of this case from Brassco, Inc. v. Klipo

In Vermeer Owners, Inc. v. Guterman, 78 N.Y.2d 1114, 585 N.E.2d 377, 578 N.Y.S.2d 128 (1991), the Court of Appeals extended its holding in CPC Int'l to § 352-e, another provision of the Martin Act (which pertains to real estate syndication offerings).

Summary of this case from Rhodes v. Consumers' Buyline, Inc.

In Vermeer Owners, the court explained that "[o]ur decision in CPC rested on a determination that `an implied private [cause of] action is not consistent with the legislative scheme underlying the Martin Act.'"

Summary of this case from Rhodes v. Consumers' Buyline, Inc.

In Vermeer Owners, we affirmed the Appellate Division's dismissal of a lawsuit arising out of a real estate syndicate offering.

Summary of this case from Kerusa Co. v. W10Z/515 Real Estate Ltd.

In Vermeer Owners v Guterman (78 NY2d 1114), the Court confirmed that no private right of action was authorized under the provision of the Martin Act (General Business Law § 352-e) which governs real estate offerings.

Summary of this case from Kramer v. Real Estate

dismissing fraud claim where "[n]othing in th[e] record establishes that plaintiffs in fact relied on any misrepresentation by defendants to their detriment"

Summary of this case from RGH Liquidating Trust ex rel. Reliance Grp. Holdings, Inc. v. Deloitte & Touche LLP

dismissing a fiduciary cause of action on grounds that a sponsor of a condominium conversion owes no fiduciary duty to prospective purchaser

Summary of this case from Gardner v. Yanko

In Vermeer Owners v. Guterman (78 NY2d 1114), the common-law fraud claim that was not barred under the Martin Act was based on demonstrably false statements in the cooperative offering plan, not omissions.

Summary of this case from Kramer v. Zeckendorf

In Vermeer Owners v. Guterman (78 NY2d 1114), the common-law fraud claim that was not barred under the Martin Act was based on demonstrably false statements in the cooperative offering plan, not omissions.

Summary of this case from Kerusa Co. v. W10Z/515 Real Estate

In Vermeer, a unanimous Court held and stated: "We agree with the courts below that plaintiffs may not maintain a private cause of action under the Martin Act [citation omitted].

Summary of this case from Pacurib v. Villacruz
Case details for

Vermeer Owners, Inc. v. Guterman

Case Details

Full title:VERMEER OWNERS, INC., et al., Appellants, v. GERALD GUTERMAN et al.…

Court:Court of Appeals of the State of New York

Date published: Nov 26, 1991

Citations

78 N.Y.2d 1114 (N.Y. 1991)
578 N.Y.S.2d 128
585 N.E.2d 377

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