A cause of action alleging fraud requires the plaintiff to plead: (1) a material misrepresentation of a fact, (2) knowledge of its falsity, (3) an intent to induce reliance, (4) justifiable reliance, and (5) damages (see Eurycleia Partners, LP v Seward & Kissel, LLP, 12 NY3d 553, 559; Stein v Doukas, 98 AD3d 1024, 1025).The Court then found it was unreasonable as a matter of law for the contractor to rely on the Certificate of Insurance specifically issued by the broker to believe that there was such insurance, citing the disclaimer in the certificate:
[T]he certificate of insurance that was purportedly issued by the third-party defendants provided that it was “issued as a matter of information only and confer[red] no rights upon the certificate holder.” Accordingly, as the Supreme Court found, it was "unreasonable to rely on [that certificate] for coverage in the face of th[at] disclaimer language" (Greater N.Y. Mut. Ins. Co. v White Knight Restoration, 7 AD3d 292, 293; see Benjamin Shapiro Realty Co. v Kemper Natl. Ins. Cos., 303 AD2d 245, 246). Therefore, the third-party defendants were entitled to summary judgment dismissing the third-party fraud cause of action (see Greene v Rachlin, 154 AD3d 814, 817; see also Greater N.Y. Mut. Ins. Co. v White Knight Restoration, 7 AD3d at 293).Commentary The Da Silver case obviously reiterates a familiar theme that I have often detailed in this blog: While the law provides powerful remedies for the victims of fraud and deceit, it also expects everyone to act prudently and reasonably to protect themselves from fraudulent conduct. I like to remind my own staff always to “ACT” – Assume Nothing. Check Everything. Trust No One. The lessons from Da Silver go beyond the context of fraud. The very document that the contractor claimed to have relied upon to believe there was insurance expressly stated that it was “issued as a matter of information only and confer[red] no rights upon the certificate holder.” Now, one might ask what “information” the “Certificate of Insurance” could have been providing if not for the insurance identified in it. That is a fair question. But, as the Second Department noted, this language – which the court considered a “disclaimer” – did put the reader on notice to verify the information from independent source(s). So, in the fraud context, courts will expect the plaintiff to do its homework and take reasonable steps to verify information upon which it would rely. In the insurance context specifically, “Certificates of Insurance” that contain such “disclaimers” are not really worth the paper they are written on: Check and verify the insurance is the lesson.