In Crawford v. Integrated Asset Mgt. Servs., LLC, 2025 N.Y. Slip Op. 01352 (2d Dept. Mar. 12, 2025) (here), the Appellate Division, Second Department reversed the denial of the defendants’ motion to dismiss the plaintiffs’ fraud-based claims, among others, involving a home improvement project in Brooklyn, N.Y., on the grounds of duplication with the plaintiff’s breach of contract claims. Crawford is notable because the Court held that the fraud damages were not distinct from those sought by the breach of contract claim. As noted in previous articles (e.g., here), this focus on overlapping damages is common in the First Department.
Crawford was an action for, inter alia, breach of contract, fraud, fraudulent inducement, rescission of contract based upon fraudulent inducement, and negligent misrepresentation arising from a home improvement project in Brooklyn, New York.
In August 2018, plaintiffs entered into a contract with defendant, Integrated Asset Management Services, LLC (hereinafter “Integrated”), for a home improvement project (hereinafter, the “project”). As alleged, notwithstanding that plaintiffs paid Integrated and the individual defendant Christopher Lyons, the principal of Integrated, a total of $171,150, defendants allegedly abandoned the project in January 2020, leaving the work mostly unfinished.
Regarding the alleged fraud, plaintiffs alleged that their claims were based upon defendants’ misrepresentations about their qualification and expertise in the work and their receipt of monies for work that was never started.
Defendants moved to dismiss, claiming that, among other things, the fraud-based claims duplicated plaintiffs’ breach of contract claims. Defendants maintained that both claims concerned the failure of defendants to possess the necessary qualifications for the project and the failure to complete the project in accordance with the contract.
The motion court denied the motion with regard to the fraud-based claims. Defendants appealed.
On appeal, the Second Department reversed the motion court’s order.
The Court held that plaintiffs’ fraud allegations were duplicative of their breach of contract allegations: “None of these [fraud] causes of action were sufficiently distinct from the claims that the defendants breached the home improvement contract so as to constitute separate causes of action.”[1] Notably, the Court held that the damages sought by both claims were the same: “the alleged misrepresentations did not result in any loss independent of the damages allegedly incurred for breach of contract.”[2]
Takeaway
As we have often explained in the articles in which we have examined the duplication doctrine, fraud claims that are nothing more than contract claims dressed up in fraud clothing, are subject to dismissal. E.g., here, here, here, and here. Thus, courts will apply the doctrine when a plaintiff alleges a breach of contract claim and a fraud claim that arise from the same facts and circumstances. When that happens, the fraud claim will be deemed duplicative of the contract claim not only because the fraud claim arises from the same facts as the contract claim, but also because the fraud claim seeks the same damages and does not allege a breach of any duty collateral to or independent of the parties’ agreements.[3]
Crawford is notable because the Court specifically addressed whether the damages sought by the fraud claim were the same as those sought by the breach of contract claim. In the First Department, the Court has dismissed fraud claims in which the damages sought by the fraud claim are the same as those sought by the breach of contract claim. This is so even where the plaintiff successfully demonstrates that the alleged misrepresentation is collateral to the contract at issue.[4] This Blog wrote about this scenario here, here, and here.
In Crawford, although the Court found that the alleged misrepresentations were not collateral to or independent of the contract at issue, it specifically addressed the fact that the claimed fraud damages were not independent of the contract damages. As noted in prior articles, the Second Department has not often examined the duplication of claims through the lens of the damages sought. Perhaps that is why the Court cited a First Department case to make the point.[5] This Blog will continue to examine the duplication of claims doctrine in the two Departments to see if the Second Department starts issuing decisions with more frequency that find duplication because of the overlap of damages, as the First Department has often done.
[1] Slip Op. at *1.
[2] Id. at 1 (citing Doukas v. Ballard, 135 A.D.3d 896, 897 (2d Dept. 2016); Church of S. India Malayalam Congregation of Greater N.Y. v. Bryant Installations, Inc., 85 A.D.3d 706, 707 (2d Dept. 2011); Havell Capital Enhanced Mun. Income Fund, L.P. v. Citibank, N.A., 84 A.D.3d 588 (2d Dept. 2011); see also Sound Communications, Inc. v. Rack & Roll, Inc., 88 A.D.3d 523, 524 (1st Dept. 2011)).
[3] Havell Capital Enhanced Mun. Income Fund, L.P. v. Citibank, N.A., 84 A.D.3d 588, 589 (1st Dept. 2011).
[4] E.g., Salamone v. EIP Global Fund LLC, 2021 N.Y. Slip Op. 2372 (1st Dept. 2021).
[5] Slip Op. at *1 (citing Sound Communications, supra).
