Opinion
10849 Index 155070/17
01-23-2020
Maria A. CESTONE, Plaintiff–Appellant, v. Sarah JOHNSON, et al., Defendants–Respondents, Christopher Woodrow, Defendant.
Schenck, Price, Smith & King LLP, New York (Ryder T. Ulon, Florham Park, of counsel), for appellant. Judd Burstein, P.C., New York (G. William Bartholomew of counsel), for respondents.
Schenck, Price, Smith & King LLP, New York (Ryder T. Ulon, Florham Park, of counsel), for appellant.
Judd Burstein, P.C., New York (G. William Bartholomew of counsel), for respondents.
Renwick, J.P., Manzanet–Daniels, Kern, Oing, Gonzlez, JJ.
Order, Supreme Court, New York County (Gerald Lebovits, J.), entered on or about March 6, 2018, to the extent it granted defendants Sarah Johnson and Holly Bartlett Johnson's CPLR 3211(a)(7) motion to dismiss the causes of action for fraud in the inducement, fraud, conspiracy to commit fraud, and aiding and abetting fraud, unanimously affirmed, without costs.
This action arises from a loan made by defendant Holly Bartlett Johnson (Holly) to nonparty Worldview Entertainment Holdings Inc. (Worldview). Plaintiff Maria Cestone claims that Holly and her sister, Sarah Johnson (Sarah), fraudulently induced her into purchasing the note that memorialized a loan, by failing to disclose that Sarah, a guarantor on the loan, had already repaid Holly the loan prior to the purchase.
The court properly dismissed the fraud-based claims based on paragraph 6(b) of the note purchase agreement, which specifically disclaimed reliance on the alleged misrepresentation or omission that plaintiff now claims had defrauded her (see Danann Realty Corp. v. Harris , 5 N.Y.2d 317, 320–321, 184 N.Y.S.2d 599, 157 N.E.2d 597 [1959] ). Under that provision, plaintiff represented that she had "adequate information concerning the business and financial condition of Borrower [Worldview] and ... guarantor under the Note" and "independently and without reliance upon Seller ... made her own analysis and decision to enter into this Agreement." She also disclaimed reliance on "any documents or other information regarding the credit, affairs, financial condition or business of or any other matter concerning the Borrower or any obligor."
Further, the alleged misrepresentation or omission regarding Sarah's repayment of the loan was not "peculiarly within" defendants' knowledge (see Loreley Fin. [Jersey] No. 3 Ltd. v. Citigroup Global Mkts. Inc. , 119 A.D.3d 136, 143, 987 N.Y.S.2d 299 [1st Dept. 2014] ; Basis Yield Alpha Fund [Master] v. Goldman Sachs Group, Inc. , 115 A.D.3d 128, 137, 980 N.Y.S.2d 21 [1st Dept. 2014] ). Plaintiff, who was admittedly the sole director of Worldview, as well as the chair of Worldview's sole shareholder, Worldview Entertainment Holdings LLC, occupied a position that afforded her reasonable access to information about Worldview's finances, including whether the loan had been repaid by Sarah as the guarantor, before plaintiff purchased the note. Plaintiff cannot argue justifiable reliance on defendants' misrepresentation or omission where she had the means available to ascertain the status of the loan (see ACA Fin. Guar. Corp. v. Goldman, Sachs & Co. , 25 N.Y.3d 1043, 1044, 32 N.E.3d 921 [2015] ; HSH Nordbank AG v. UBS AG , 95 A.D.3d 185, 194–195, 941 N.Y.S.2d 59 [1st Dept. 2012] ). In any event, the disclaimer aside, dismissal of the fraud claims is warranted on the alternative ground that plaintiff's contention that the note had been satisfied in advance of her purchase of it is "wholly speculative" ( Katz 737 Corp. v. Cohen , 104 A.D.3d 144, 151, 957 N.Y.S.2d 295 [1st Dept. 2012], lv denied 21 N.Y.3d 864, 2013 WL 4711225 [2013] ). Plaintiff has not attempted to collect payment from any of the remaining guarantors, or from the borrower, Worldview, itself.
In view of the foregoing, we need not reach the parties' remaining contentions.