Two recent decisions from the Appellate Division, Second and Third Departments, underscore the fundamental requirement of reasonable or justifiable reliance for the cause of action of fraud, and in particular if “the facts represented are not matters peculiarly within the defendant’s knowledge, and the plaintiff has the means available to it of knowing, by the exercise of ordinary intelligence, the truth or the real quality of the subject of the representation, the plaintiff must make use of those means, or it will not be heard to complain that it was induced to enter into the transaction by misrepresentations.”
Chase v. Leidner—Third Department
The context of the Third Department’s decision in Chase v Leidner, 2025 NY Slip Op 06104 (3d Dep’t Decided Nov. 6, 2025) was the sale of a recreational vehicle (a camper) that was advertised by the sellers to be in “immaculate condition.” It turned out that it was not.
Plaintiff purchased the camper and weeks later noticed holes in the roof of the camper (causing leaking) and that it was infested with ants. After plaintiff got unsatisfactory relief from the defendant-sellers, he sued them alleging breach of contract and fraud. Defendants moved for and were granted summary judgment, the court below finding that they established they had fulfilled their obligation to relinquish ownership of the camper to plaintiff and did not otherwise misrepresent or conceal the condition of the camper prior to its sale. On appeal, the Third Department affirmed.
In affirming dismissal of the fraud claim, the Third Department focused primarily on the plaintiff’s conduct, rather than any alleged fraudulent misrepresentations of the defendants. The bottom line for the Court was that the plaintiff could have discovered any alleged misrepresentation about the condition of the camper before he made the purchase, and therefore, did not establish the element of reasonable reliance to establish fraud.
First, the Court set out the long-standing relevant principles on a cause of action for fraud, requiring a plaintiff to “demonstrate that defendant[s] knowingly misrepresented a material fact with the intent to deceive plaintiff and, after having justifiably relied upon such misrepresentation, plaintiff experienced pecuniary loss. However, if the facts represented are not matters peculiarly within the part[ies’] knowledge, and the other party has the means available to him or her of knowing, by the exercise of ordinary intelligence, the truth of the representation, he or she must make use of those means, or he or she will not be heard to complain that he or she was induced to enter into the transaction by misrepresentations” (Quotations and citations omitted.)
The Third Department then explained why plaintiff had not fulfilled his own duty to investigate the relevant circumstances himself:
Defendants averred that they did not misrepresent or conceal any known problem with the camper, indicating that they were not aware of any holes in the roof of the camper, did not experience any problems with leaks, and were not aware of an insect problem within the camper. Critically important to the legal analysis, defendants’ proof established that, even if they had known of these issues and misrepresented them to plaintiff, he had been afforded the opportunity to discover any defects prior to the sale. Thus, plaintiff could not establish that he had been induced to enter into the transaction by any material misrepresentations from defendants. Plaintiff testified that he was not prevented from inspecting the camper prior to purchasing it, and that although he did inspect it, he had not checked the roof or the inside of any cabinets, despite having full access to do so. As an owner of multiple used campers in the past, plaintiff also acknowledged that he was aware that campers were known to have leaks and, thus, he should have known to check the roof.
The Court then concluded that plaintiff had not rebutted defendants’ proof, and affirmed the dismissal.
4 Colonial Dr., LLC v Suburban Consultants, Ltd.—Second Department
The context of the Second Department’s decision in 4 Colonial Dr., LLC v Suburban Consultants, Ltd., 2025 NY Slip Op 05930 (2d Dep’t Decided Oct. 29, 2025) was plaintiffs’ purchase of real property for which, after the close of title, they discovered extensive structural damage. Plaintiffs sued the sellers and brokers, alleging among other claims, fraud.
The court below dismissed all claims at the pleadings stage of the case, granting defendants’ motion under CPLR 3211(a). The Second Department affirmed.
After citing the basic elements of a claim for fraud, the Second Department again focused on the plaintiff’s conduct concerning the alleged misrepresentation of the real property, acknowledging the governing law:
“‘A plaintiff’s reliance must be reasonable. If the facts represented are not matters peculiarly within the defendant’s knowledge, and the plaintiff has the means available to it of knowing, by the exercise of ordinary intelligence, the truth or the real quality of the subject of the representation, the plaintiff must make use of those means, or it will not be heard to complain that it was induced to enter into the transaction by misrepresentations’” (R. Vig Props., LLC v Rahimzada, 213 AD3d 871, 872 [citations omitted]; see Gordon v Connie Profaci Realty, LLC, 231 AD3d 712, 713-714).
The Court then bolstered that with the principles particularly applicable to the sale of real property and the doctrine of caveat emptor, explaining the requirement of the sellers’ active concealment of material information about the real property and thwarting the buyer’s ability to do its own due diligence.
The Court then concluded that plaintiffs had not fulfilled their own duties to ascertain the true nature of the real property, especially given specific contractual disclaimers and the “as is” provision.
Commentary
A theme running through the law of fraud is that those claiming they are victims of fraudulent conduct have the duty to act prudently to protect themselves from the subject wrongful conduct of the other party. That is the fundamental element of reasonable reliance in fraud. As the courts acknowledge: If the facts represented are not matters peculiarly within the defendant’s knowledge, and the plaintiff has the means available to it of knowing, by the exercise of ordinary intelligence, the truth or the real quality of the subject of the representation, the plaintiff must make use of those means, or it will not be heard to complain that it was induced to enter into the transaction by misrepresentations.