Court Opinion

ID: 5843779
Source: CourtListenerOpinion
Date Created: 2022-01-12 23:39:17.467609+00
Date Added: 2024-06-11T08:43:51.562637
License: Public Domain

Murphy, P. J. (dissenting in part).
I agree with the majority that the second amended complaint states a cause of action for common-law fraud. However, for the reason stated by Justice Silverman, the portions of that complaint based upon subdivision (a) of section 17 of the Securities Act of 1933 (US Code, tit 15, § 77q, subd [a]) and section 352-c of the General Business Law should be dismissed for legal insufficiency. A plaintiff may recover damages in common-law fraud because particular defendants induced him to purchase stock on the basis of untrue statements (Downey v Finucane, 205 NY 251, 255). Thus, the narrow question presented on appeal is whether the allegations in the second amended complaint are sufficient to plead a common-law action based upon fraud. Viewing the subject complaint most favorably to the pleader, it alleges that the plaintiff relied upon the false and misleading statements of the defendants. It further alleges that the defendants made these false statements when they knew the truth. CPLR 3016 (subd [b]) does not require that a plaintiff plead every basic act of the sense that underlies his cause of action for fraud. Insofar as the plaintiff states that she relied upon the false statements of the defendants, it must reasonably be inferred that she read those statements before relying upon them. The plaintiff’s failure to allege that she read those statements is not fatal to. the pleading within either the letter or the spirit of CPLR 3016 (subd [b]). A pleading is not deficient merely because some of the factual allegations are stated in the alternative. (CPLR 3014; Foley v D’Agostino, 21 AD2d 60, 69; Lonsdale v Speyer, 249 App Div 133, 141, 142.) Therefore, insofar as the second amended complaint alleges knowledge of falsity upon the part of the defendants, it sufficiently states one of the requisite elements of common-law fraud (cf. M. B. L. Distrs. v Kahn, 58 AD2d 806). The plaintiff’s other remarks, viz., that the defendants could have known the truth with reasonable effort or made no reasonable effort to ascertain the truth, may merely be treated as surplusage for purposes of this motion to determine the sufficiency of the cause grounded upon common-law fraud. Accordingly, the order of the Supreme Court, New York County, entered April 5, 1978, insofar as appealed from, should be modified, on the law, by dismissing so much of the second amended complaint as is grounded upon subdivision (a) of section 17 of the Securities Act of 1933 and section 352-c of-the General Business Law, and, as modified, it should be affirmed, with costs.