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Source: www.nyfraudclaims.com

A new decision of the New York Appellate Division First Department swiftly affirms the dismissal of fraud claims seeking to rescind a matrimonial settlement agreement, based upon waiver/disclaimer, a defense based upon documentary evidence and statute of limitations – Kany v Kany, 2017 NY Slip Op 02158 (1st Dep’t Mar. 23, 2017).

In Kary, plaintiff-wife attempted to avoid a prior settlement of her matrimonial claims by asserting that her former husband had not adequately revealed his entitlement to retirement benefits, thereby fraudulently inducing her to agree to waive any claim to any retirement benefits.  The lower court granted defendant’s motion to dismiss and/or for summary judgment.

Waiver and Disclaimer

In rejecting the fraud claim and affirming the lower court ruling, the First Department found an explicit waiver provision in the settlement agreement itself to be particularly damning:  “Pursuant to the agreement, plaintiff waived any and all right and claim to ‘any participation or interest that [defendant] may now or in the future have in any retirement plan.’”  Obviously, in the face of this specific waiver, covering the precise alleged fraud upon which the complaint was based, the First Department had little trouble discarding of this claim, declaring:  “Thus, [plaintiff] assumed the risk that at the time the agreement was executed defendant had an interest in a retirement plan of which she was not aware.”

In addition to the specific waiver, the First Department noted that, as many contracts provide to guard against later fraud claims, the plaintiff acknowledged she had performed her own investigation and was not counting on defendant to make full disclosures: “[P]laintiff ‘specifically acknowledged that she had made her own independent investigation of defendant’s business affairs and was waiving further disclosure.’”

Emails and Correspondence Are “Documentary Evidence” Refuting Fraud

The First Department further relied upon emails and written correspondence that refuted plaintiff’s claim of fraudulent concealment: “The allegation that the supplemental retirement benefits were fraudulently concealed from plaintiff is also flatly refuted by the emails and written correspondence submitted on defendant’s motion, many by plaintiff herself.”

Recognizing that such emails and correspondence are not always considered the type of “documentary evidence” upon which a complaint may be dismissed under CPLR 3211(a)(1), the First Department relied upon a line of cases in which such evidence is accepted where it is irrefutable: “The emails and written correspondence may be considered documentary evidence, because they were submitted to show that defendant’s supplemental retirement assets were disclosed, and they are ‘essentially undeniable.’”  The Court cited a decision it had previously rendered on this subject, which had thoroughly analyzed the subject of when emails and correspondence can be relied upon as “documentary evidence” under  CPLR 3211(a)(1)Amsterdam Hospitality Group, LLC v Marshall-Alan Assoc., Inc., 120 AD3d 431, 433 (1st Dep’t 2014).

Statute of Limitations

Finally, the First Department found that other written disclosures about potential retirement benefits served to start the statute limitations for fraud to run.  Under CPLR 213(8), “the time within which the action [for fraud] must be commenced shall be the greater of six years from the date the cause of action accrued or two years from the time the plaintiff or the person under whom the plaintiff claims discovered the fraud, or could with reasonable diligence have discovered it.”  Thus, the First Department ruled that the two-year time period had expired because plaintiff was sufficiently on notice of the alleged fraud: “Since, at the very least, the disclosures in defendant’s net worth statement and in the benefits booklet issued by his employer put plaintiff on inquiry notice that defendant was entitled to supplemental retirement benefits, the complaint is time-barred (see DeLuca v DeLuca, 48 AD3d 341 [1st Dept 2008]; CPLR 213[8]).”

Lessons

Once again, specific written disclaimers and waivers in the contract itself are very important to guard against future claims of fraud.  The more specific, the better.  Documents outside the four-corners of the contract that show what the plaintiff knew or was told can also be important to refute subsequent fraud claims.  Finally, any party who does want to assert a subsequent fraud claim needs to act timely once any inkling of potential fraud is discovered.