Opinion
July 17, 1997
Appeal from Supreme Court, New York County (Kristin Booth Glen, J.).
Defendants' renewed motions for summary judgment on plaintiffs' fraud cause of action were prompted by disclosure that had resulted in concessions by plaintiffs City and Housing Authority that they never directly relied on any misrepresentations of product safety made by defendants. The IAS Court, in Part II of its decision, set forth in scholarly and well-reasoned fashion the reasons why these concessions do not warrant summary judgment, ruling that a showing of direct reliance is not necessary where it is claimed that the defendant marketed a product it actually knew to be unsafe without warning of the dangers it knew to be inherent in the product. That such is this Court's view as well was presaged in a prior appeal in this matter, where, affirming the denial of defendants' motion to dismiss this fraud cause of action as barred by the Statute of Limitations, this Court noted that "[m]isrepresentations of safety to the public at large, for the purpose of influencing the marketing of a product known to be defective, gives rise to a separate cause of action for fraud" ( 190 A.D.2d 173, 177, citing, inter alia, Young v. Robertshaw Controls Co., 104 A.D.2d 84, 86, appeal dismissed 64 N.Y.2d 885, citing Kuelling v. Lean Mfg. Co., 183 N.Y. 78). That this Court would reject defendants' argument that to eliminate the necessity that plaintiffs show direct reliance is to reduce plaintiffs' cause of action for fraud to one for strict products liability was also presaged in our prior decision, which noted "that defendants are alleged not simply to have marketed a product that failed, but rather to have led the public to believe in the safety of a product that defendants knew to be a health hazard, and to have engaged in a scheme that concealed this knowledge from the public" ( supra, at 177).
There is no merit to such of defendants' defenses and counterclaims asserting a duty on the part of the City to have warned the Housing Authority of the dangers of lead paint. Defendants have set forth no evidence indicating the existence of a principal-agent relationship that would give rise to such a duty ( see, Brennan v. New York City Hous. Auth., 72 A.D.2d 410, 414-415 [Birns, J. concurring]; Ciulla v. State of New York, 191 Misc. 528). Moreover, no "special" relationship giving rise to liability on the part of the City can be gleaned from the evidence set forth by defendants, such as the fact that the City enacted ordinances that first required lead paint warning labels and then banned the use of certain lead paints in dwellings ( see, Worth Distribs. v. Latham, 59 N.Y.2d 231, 237), or the fact that the City's Health Department rented space in some Housing Authority buildings ( cf., Garrett v. Holiday Inns, 58 N.Y.2d 253). We have considered defendants' remaining contentions and find them to be without merit.
Concur — Milonas, J. P., Ellerin, Nardelli and Williams, JJ.