Second Department Slices and Dices Justifiable Reliance With Opposite Results in Two Decisions on Same Day

Justifiable reliance is obviously a key element of the cause of action for fraud and misrepresentation. See, e.g., New York High Court Reinforces Justifiable Reliance and Loss Causation in Fraud. Courts are not, however, particularly consistent in assessing whether the reliance in any given case is justifiable enough to sustain a fraud claim—at the pleadings stage, on summary judgment, or at trial. See generally, the topic heading in this blog for Justifiable/Reasonable Reliance, and more specifically, e.g., Decisions Not Entirely Consistent in Addressing Justifiable Reliance for Fraud Claims.

Two recent decisions rendered on the same day by the New York Appellate Division, Second Department, show how vexing the element of justifiable reliance can be. In Feldman v Byrne, 2022 NY Slip Op 06113 (2d Dep’t Decided Nov. 2, 2022), the Second Department reversed the Commercial Division’s dismissal of a fraud claim, ruling that the question of justifiable reliance in that case was a factual issue that could not be decided at the pleadings stage. While in John v. Elefante, 2022 NY Slip Op 06120 (2d Dep’t Decided Nov. 2, 2022), the Second Department sustained the granting of summary judgment dismissing a fraud claim because the plaintiff had not shown he exercised reasonable diligence in relying upon alleged fraudulent false statements.

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