Fraud and The East Hampton Dream Home

• Posted on: Jun 25 2025

By: Jeffrey M. Haber

In Lopez v. O’Sullivan, 2025 N.Y. Slip Op. 32178(U) (Sup. Ct., Suffolk County) (here), the court declined to dismiss fraud claims, among others, finding that plaintiff sufficiently stated a claim for such relief against the defendants. The court determined that plaintiff provided detailed allegations of misrepresentations made by defendants, which induced him to enter into transactions that ultimately deprived him of ownership of his property. In doing so, the court emphasized that plaintiff’s allegations gave fair and reasonable notice of the facts and circumstances surrounding the alleged fraud. The court also noted that the fraud claims were distinct from any breach of contract claims asserted by plaintiff, as they involved misrepresentations of material facts that spanned multiple transactions over several years.

​Factual Background

In January 2014, plaintiff purchased property in East Hampton, New York (the “property”) from Hampton Dream Properties LLC (“Hampton”) for $250,000.00. Plaintiff gave a down payment of $60,000.00 and entered into a mortgage loan agreement with Hampton for the balance of the purchase price. The mortgage secured plaintiff’s indebtedness to Hampton and was payable for eight years in monthly installments. Notably, at the closing, plaintiff signed a document in which plaintiff agreed that he was “purchasing the property … subject to all liens, mortgages and judgments.”

In 2016, Bank of New York Mellon commenced a foreclosure action against the property in connection with an outstanding loan taken by the former owners of the property when they purchased the property (the “foreclosure action”).  Plaintiff asked defendants about the foreclosure action and was allegedly advised that it was not a concern.

According to plaintiff, beginning in or about August 2022, certain defendants advised plaintiff that he needed to provide them with hundreds of thousands of dollars to resolve the foreclosure action – money that plaintiff contends he paid to those defendants. Thereafter, certain defendants allegedly coerced plaintiff into signing a deed transferring the subject property back to one of the defendants for no consideration. Plaintiff was allegedly advised that to negotiate with the bank and resolve the foreclosure action, Hampton had to become the owner of the property again. According to plaintiff, defendants resolved the foreclosure action resulting in Hampton becoming the new owner of the property. Plaintiff maintained that one of the defendants demanded that plaintiff pay an additional $500,000.00 to repurchase the property. 

On June 27, 2023 defendant South Fork Realty Management Corp. notified plaintiff that it was the new owner of the property and that it was seeking to evict plaintiff from the premises.

Defendants moved to dismiss, inter alia, the fraud claims asserted against them.

Plaintiff claimed that defendants gave him false assurances that the existing liens were a mere technicality, the house was his and would be free and clear of all liens in a short period of time. Plaintiff also claimed that defendants made other misrepresentations to him in 2022 to induce him to pay over money and sign over his deed to Hampton.

The moving defendants sought dismissal of, inter alia, the fraud claim, claiming that there were no misrepresentations, that plaintiff entered into the transaction to purchase the property with full knowledge of the outstanding liens, and that Hampton and its principal were obligated to clear these liens. The moving defendants also contended that plaintiff failed to meet the pleading requirements of CPLR 3016(b), which requires the plaintiff to plead fraud with particularity. Defendants further claimed that plaintiff failed to satisfy the reliance element of his fraud claims. Finally, defendants claimed that to the extent plaintiff was alleging fraudulent concealment, that claim should be dismissed because there was no duty to disclose the information claimed to be concealed.[1]

The Motion Court’s Ruling

The court denied the motions to dismiss the fraud claims.

The court found that plaintiff gave defendants “fair and reasonable notice … of the facts and circumstances upon which a fraud was allegedly perpetrated against the plaintiff by the defendants individually and in concert with one and other.”[2]

[Eds. Note: Under CPLR 3016 (b), the circumstances constituting fraud must be stated with sufficient detail “to permit a reasonable inference of the alleged conduct.”[3]  To satisfy the particularity requirement, the plaintiff must allege such facts as the time, place, and content of the defendant’s false representations, as well as the details of the defendant’s fraudulent acts, including when the acts occurred, who engaged in them, and what was obtained as a result. Put another way, the complaint must identify the “who, what, where, when and how” of the alleged fraud.

Notwithstanding, in Pludeman v.Northern Leasing Systems, Inc., the Court of Appeals held that CPLR 3016(b) “should not be so strictly interpreted as to prevent an otherwise valid cause of action in situations where it may be impossible to state in detail the circumstances constituting a fraud.”[4] Therefore, at the pleading stage, a complaint need only “allege the basic facts to establish the elements of the cause of action.”[5] Thus, as noted, a plaintiff will satisfy CPLR 3016(b) when the facts permit a “reasonable inference” of the alleged misconduct.[6]]

The court also held that plaintiff had “a claim for fraud which exist[ed] separate and apart from any breach of contract claim.”[7]

[Eds. Note: “A cause of action to recover damages for fraud will not lie where the only fraud claimed arises from the breach of a contract.”[8] “Mere unfulfilled promissory statements as to what will be done in the future are not actionable as fraud and the injured party’s remedy is to sue for breach of contract.”[9] However, if the plaintiff alleges a misrepresentation of “present facts that [are] collateral to the contract and served as an inducement to enter into the contract, [then] a cause of action alleging fraudulent inducement is not duplicative of a breach of contract cause of action.”[10]] 

In addition to defendants’ motions, plaintiff moved to dismiss, inter alia, an affirmative defense asserted by one set of defendants. In that defense, defendants claimed that the fraud claim asserted against them should be dismissed because it duplicated plaintiff’s breach of contract claims.

In addressing plaintiff’s motion to dismiss, the court acknowledged its earlier finding that the fraud claim did not duplicate plaintiff’s contract claims. As noted, the court found that plaintiff adequately alleged misrepresentations of present facts that were collateral to the contract claims which served as an inducement to enter into the purchase contract. In so doing, the court accepted plaintiff’s allegations that his fraud claim went “beyond the reach of the breach of contract cause of action.”[11] Nevertheless, given the number of transactions at issue and the years during which they occurred, the court found it difficult to determine the applicability of defendants’ affirmative defense without discovery. Consequently, the court denied plaintiff’s motion to dismiss the affirmative defense.

[Eds. Note: To find articles related to the foregoing issues, visit the “Blog” tile on our website and enter “fraud”, “CPLR 3016(b)”, “pleading fraud with particularity”, or “duplication”, or any other related search term in the “search” box.]

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Jeffrey M. Haber is a partner and co-founder of Freiberger Haber LLP. This article is for informational purposes and is not intended to be and should not be taken as legal advice.

[1] A duty to disclose arises when (1) the defendant speaks on the subject, in which case he/she must speak truthfully and completely about the matter (see Bank of Am., N.A. v. Bear Stearns Asset Mgmt., 969 F. Supp. 2d 339, 351 (S.D.N.Y. 2013)); (2) there is a fiduciary relationship between the plaintiff and defendant (see Balanced Return Fund Ltd. v. Royal Bank of Canada, 138 A.D.3d 542, 542 (1st Dept. 2016)); or (3) the defendant possesses “special facts” about the matter not known by the plaintiff (Pramer S.C.A. v. Abaplus Int’l Corp., 76 A.D.3d 89, 99 (1st Dept. 2010)).

[2] Slip Op. at *7.

[3] Pludeman v. Northern Leasing Sys., Inc., 10 N.Y.3d 486, 491 (2008) (citation omitted).

[4] Id. at 491 (internal quotation marks and citation omitted).

[5] Id. at 492.

[6] Id.

[7] Id.

[8] Gorman v. Fowkes, 97 A.D.3d 726, 727 (2d Dept. 2012); see also Selinger Enters., Inc. v. Cassuto, 50 A.D.3d 766, 768 (2d Dept. 2008); Tiffany at Westbury Condominium v. Marelli Dev. Corp., 40 A.D.3d 1073, 1076 (2d Dept. 2007).

[9] Brown v. Lockwood, 76 A.D.2d 721, 731 (2d Dept. 1980) (citation omitted).

[10] Did-it.com, LLC v. Halo Group, Inc., 174 A.D.3d 682, 683 (2d Dept. 2019).

[11] Id. at *11.