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FILED: NEW YORK COUNTY CLERK 11/24/2014 10:53 PM INDEX NO. 650487/2014
NYSCEF DOC. NO. 13 RECEIVED NYSCEF: 11/24/2014
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK
Commercial Division
BRYAN KELLY,
Index No. 650487/2014
Plaintiff, Hon. Jeffrey K. Oing
-against- PLAINTIFF'S MEMORANDUM
OF LAW IN OPPOSITION TO
LETTIRE CONSTRUCTION CORP., DEFENDANT’S MOTION TO
DISMISS
Defendant.
Plaintiff Bryan Kelly (“Plaintiff”), by and through his attorneys The
Stolper Group, LLP, respectfully submits this Memorandum in Opposition to the
Defendant’s Motion to Dismiss Plaintiff’s third cause of action for fraud.
PRELIMINARY STATEMENT
Plaintiff is a senior developer with expertise in affordable housing and
Defendant is a construction contractor. The Complaint alleges that in recruiting and
inducing Plaintiff to join Defendant to create an affordable housing platform, Defendant
failed to disclose that Defendant and its principal, Nick Lettire (“Nick”), were the subject
of a US Department of Labor investigation that sought debarment for violations of
federal wage and hour laws (the “DOL investigation”) in connection with certain New
York City construction projects. Plaintiff did not find out about the DOL investigation
until after he joined Defendant. Once the investigation and potential debarment became
public shortly after Plaintiff joined, government agencies, most notably New York City
agencies required for affordable housing projects, informed Plaintiff that they were
unable to proceed with Defendant (and by extension, Plaintiff) until the debarment issue
1
was favorably resolved. Plaintiff faced professional embarrassment and a potential
tarnish to his reputation. He had no idea as to the timing or substance of the outcome of
the debarment investigation (i.e., whether it would be favorable or not). Unable to
develop affordable housing projects – the very purpose of his joining Defendant –
Plaintiff had no choice but to terminate his agreement with Defendant. The fraud claim
seeks to remedy the harm caused to Plaintiff by Defendant’s material omission.
Defendant’s motion challenges Plaintiff’s fraud claim in the following
respects: Defendant claims that it had no duty to disclose the DOL investigation to
Plaintiff before the parties entered into a written agreement; the DOL investigation was
not material to Plaintiff; and Plaintiff did not allege intent or injury as a result. All of
these points are contradicted by the plain language of the Complaint.
Defendant’s motion is driven not by merit but in an effort to forestall
discovery into the DOL investigation. That is why the motion to dismiss arose now, after
a discovery conference, and not immediately in response to the Complaint. The only
development since Defendant filed an answer is its refusal to provide discovery
concerning the investigation.
RELEVANT ALLEGED FACTS1
Over a several month period, Defendant, a real estate development
company, solicited and recruited Plaintiff away from his senior position with a leading
affordable housing developer. (Compl. ¶ 8; Kelly Aff. ¶ 2.) During the extended
recruitment process, Defendant disclosed confidential, non-public information about its
1
The factual allegations contain herein are taken from Plaintiff's Complaint, filed February 13, 2014, and
the Affidavit of Bryan Kelly attached hereto as Exhibit A. “On a CPLR 3211 motion to dismiss, a court
may consider affidavits.” Sargiss v. Magarelli, 12 N.Y.3d 527, 531, 881 N.Y.S.2d 651, 909 N.E.2d 573
(2009).
2
business to Plaintiff but did not mention the DOL investigation, even after Plaintiff joined
Defendant as its Director of Development in September 2010. (Compl. ¶¶ 9, 20, 42;
Kelly Aff. ¶ 6.) On the contrary, Defendant touted its strong relationships with key city
agencies involved in affordable housing, which was critical to Plaintiff. (Kelly Aff. ¶4.)
As a result of the DOL investigation, Plaintiff was unable to proceed with
new affordable housing projects. (Compl. ¶¶ 20, 21, 22, 43; Kelly Aff. ¶ 8.) Plaintiff’s
relationships at these city agencies notified him that pending the outcome of the
debarment proceeding, the city could not proceed with Defendant (and by extension,
Plaintiff). (Compl. ¶20; Kelly Aff. ¶8.) This effectively put an end to Plaintiff’s
affordable housing efforts on Defendant’s behalf, as Plaintiff could not do the job for
which he was hired. (Compl. ¶¶ 20, 21, 22, 43; Kelly Aff. ¶ 8.) Plaintiff never would
have left his prior employment and joined Defendant if he had known about the DOL
investigation. (Compl. ¶¶ 20, 42; Kelly Aff. ¶¶ 8, 9.) Plaintiff’s career was essentially
put on hold for the time that he was employed by Defendant and his career development
was thwarted and undermined as a result of Defendant’s tortious conduct. (Compl. ¶¶ 20,
21, 22, 43; Kelly Aff. ¶¶ 8, 9, 10.) Plaintiff resigned from Defendant in June 2011.
(Compl. ¶ 23; Kelly Aff. ¶ 8.)
Defendant alleged that the Complaint fails to establish any of the
necessary elements of fraudulent concealment. (Defendant’s Motion ¶ 10.) On the
contrary, the Complaint states that Defendant committed fraud by failing to disclose the
DOL investigation to Plaintiff prior to his employment, and inducing Plaintiff to leave his
employer and take a position with Defendant. (Compl. ¶¶ 20, 21, 22, 42, 43.) The
Complaint asserts that Plaintiff would not have accepted employment with Defendant if
3
he had known about the DOL investigation, and that Plaintiff suffered damage to his
career as a result. (Compl. ¶¶ 20, 21, 22, 42, 43; Kelly Aff. ¶10.)
ARGUMENT
On a motion to dismiss, a court “must give the complaint a liberal
construction, accept the allegations as true and provide plaintiffs with the benefit of every
favorable inference.” Roni LLC v. Arfa, 18 N.Y.3d 846, 848, 939 N.Y.S.2d 746, 747
(2011). See also Siegmund Strauss, Inc. v. East 149th Realty Corp., 20 N.Y.3d 37, 43,
956 N.Y.S.2d 435 (2012) (“When deciding a 3211(a)(7) motion, the facts as alleged in
the complaint and the opposition papers must be accepted as true; the court must accord
the plaintiff the benefit of every possible favorable inference and determine only whether
the facts as alleged fit within any cognizable legal theory.”); Guido v. Orange Regional
Medical Center, 102 A.D.3d 828, 831-32, 958 N.Y.S.2d 195, 199 (2d Dept. 2013);
Samuelsen v. New York City Transit Authority, 101 A.D.3d 537, 540, 957 N.Y.S.2d 27,
30 (1st Dept. 2012) (reversing decision to grant motion to dismiss, noting that “the
pleading is to be afforded a liberal construction, the facts alleged in the complaint are to
be accepted as true, and plaintiff is to be accorded the benefit of every possible favorable
inference”). The purpose of a motion to dismiss is to determine whether the pleading
states a cause of action cognizable at law. See Eastern Consolidated Properties, Inc. v.
Lucas, 285 A.D.2d 421, 421-22, 729 N.Y.S.2d 11, 12-13 (1st Dept. 2001) (reversing
decision to grant motion to dismiss).
The Complaint alleges facts sufficient to support Plaintiff’s fraud claim,
and thus, Defendant’s Motion must be denied.
4
I. The Fraud Claim is Pled with Sufficient Particularity
Under CPLR section 3016(b), the circumstances constituting fraud “shall
be stated in detail.” New York courts have held that section 3016(b) is met “when the
facts are sufficient to permit a reasonable inference of the alleged conduct.” Pludeman v.
Northern Leasing Systems, Inc., 10 N.Y.3d 486, 492, 860 N.Y.S.2d 422, 890 N.E.2d 184
(2008). See also Sargiss v. Magarelli, 12 N.Y.3d 527, 531-32, 881 N.Y.S.2d 651, 909
N.E.2d 573 (2009) (same). Section 3016 mandates only that the complaint allege the
misconduct complained of in enough detail that defendants are informed of the substance
of the claim. See Bernstein v. Kelso & Co., Inc., 231 A.D.2d 314, 320, 659 N.Y.S.2d
276 (1st Dept. 2010) (discussing CPLR § 3016(b) and denying motion to dismiss because
complaint sufficiently complied with statute).
Certainly here Plaintiff has alleged sufficient facts to inform Defendant of
the substance of the claim. Plaintiff has alleged that, as a result of Defendant’s failure to
disclose material information regarding the DOL investigation into its wage and hour
practices, Plaintiff accepted a position with Defendant that he would not otherwise have
accepted. (Compl. ¶¶ 20, 22, 42, 43.) By accepting a position with Defendant, and
having no opportunity to continue to develop his professional skills and relationships
there as a result of the DOL investigation, Plaintiff’s career objectives were thwarted and
grossly undermined. (Compl. ¶¶ 22, 43; Kelly Aff. ¶¶ 8-10.) These allegations are
sufficient to establish a cause of action for fraud. See Stewart v. Jackson & Nash, 976
F.2d 86 (2d Cir. 1992) (denying motion to dismiss fraud claim because lawyer
sufficiently alleged that she was induced to join defendant’s firm as a result of
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defendant’s misrepresentations and suffered damage to her career development as a
result); Navaretta v. Group Health Inc., 191 A.D.2d 953, 954, 595 N.Y.S.2d 839 (3d
Dept. 1993) (denying summary judgment motion and noting that plaintiff’s allegations
that defendant’s misrepresentations induced her into entering employment with
defendant, and that “she would not have taken the job in the first place if the true facts
had been revealed to her,” sufficiently alleged fraud); Hyman v. International Business
Machines Corp., 2000 WL 1538161 (S.D.N.Y.) (finding that allegations that plaintiffs
were induced to leave secure employment by false representations and this inducement
led to injuries are sufficient to plead a cause of action for fraud).
II. Plaintiff has Pled the Elements of Fraudulent Concealment
A cause of action to recover damages for fraudulent concealment requires
allegations of scienter, reliance, damages and an allegation that the defendant had a duty
to disclose material information and that it failed to do so. McDonnell v.Bradley, 109
A.D.3d 592, 593, 970 N.Y.S.2d 612 (2d Dept. 2013). In its motion to dismiss the fraud
claim, Defendant argued that Plaintiff failed to establish fraud. Defendant is mistaken
because the Complaint sufficiently alleges that: Defendant had a duty to disclose the
DOL investigation to Plaintiff before the parties entered into an agreement; Defendant
had an intent to deceive; the existence of the DOL investigation was material
information; and Plaintiff was damaged by Defendant’s tortious conduct.
A. Defendant had a duty to disclose the DOL investigation
A duty to disclose arises where one party’s superior knowledge of
essential facts renders a transaction without disclosure inherently unfair. See Madison
Apparel Group Ltd. v. Hachette Filipacchi Presse, S.A., 52 A.D.3d 385, 861 N.Y.S.2d
6
296 (1st Dept. 2008) (denying motion to dismiss fraudulent concealment claim because
plaintiff sufficiently alleged defendant had a duty to disclose information that, without
disclosure, made transaction between parties unfair); Swersky v. Dreyer and Traub, 219
A.D.2d 321, 327-28, 643 N.Y.S.2d 33 (1st Dept. 1996) (denying motion to dismiss
fraudulent concealment claim because there were outstanding issues as to whether
defendant had a duty to disclose certain facts). “When a material fact is concealed by a
party to a contract who should in good faith disclose that fact, the party’s silence may rise
to the level of actionable fraud.” George Cohen Agency, Inc. v. Donald S. Perlman
Agency, Inc., 114 A.D.2d 930, 932, 495 N.Y.S.2d 408 (2d Dept. 1985). See also Tahini
Investments, Ltd. v. Bobrowsky, 99 A.D.2d 489, 490, 470 N.Y.S.2d 431 (2d Dept. 1984)
(“Where a party to a contract conceals a material fact which he is in good faith bound to
disclose, such silence may constitute an actionable representation.”)
Defendant knew about the risk of debarment from the DOL investigation
and concealed this from Plaintiff in order to induce him to accept a position with
Defendant. See George Cohen Agency, Inc., 114 A.D.2d at 932-33 (finding issue of fact
existed as to whether defendant concealed its knowledge of policy defects, which it had a
duty to disclose, to induce plaintiff to purchase a portfolio). The DOL investigation
posed a threat to Defendant’s ability -- and thus Plaintiff’s ability -- to continue to
develop affordable housing. See Young v. Keith, 112 A.D.2d 625, 492 N.Y.S.2d 489 (3d
Dept. 1985) (denying motion to dismiss fraud claim because a duty to disclose could
have been found where the undisclosed information involved a threat to the plaintiff’s
ability to operate).
7
In effect, the DOL investigation hindered Plaintiff’s ability to do his job
and, thus, thwarted his ability to further develop his career. Plaintiff would not have
accepted employment with Defendant if he had known of the DOL investigation.
(Compl. ¶42.) Therefore, Defendant had a duty to disclose the DOL investigation to
Plaintiff before the parties entered into an agreement. See Young, 112 A.D.2d at 627
(noting that a duty to disclose may be found where the information is such that if plaintiff
had known of the information it would not have continued with the transaction).
Defendant’s contention that it had no duty to disclose the information
prior to Plaintiff joining Defendant rings hollow in light of the fact that Defendant had
disclosed other non-public information to Plaintiff during the recruitment process. (Kelly
Aff. ¶12.)
B. Defendant had the Intent to Deceive
In its motion, Defendant claimed that Plaintiff failed to establish scienter.
However, the element of scienter can be reasonably inferred from the facts alleged in the
Complaint. See Houbigant, Inc. v. Deloitte & Touche LLP, 303 A.D.2d 92, 98, 753
N.Y.S.2d 493 (1st Dept. 2003) (noting it is sufficient if the complaint contains some
rational basis for inferring scienter); China Development Industrial Bank v. Morgan
Stanley & Co., Inc., 86 A.D.3d 435, 436, 927 N.Y.S.2d 52 (1st Dept. 2011) (affirming
denial of motion to dismiss fraud claims in part because the element of scienter could be
“reasonably inferred from the facts alleged”); Sterling National Bank v. J.H. Cohn LLP,
40 Misc. 3d 1230(A), 975 N.Y.S.2d 712 (Sup. Ct. N.Y. County 2013) (“Under New York
law, to raise a sufficient specter of the intent to deceive, a plaintiff need only allege facts
8
from which it may be inferred that the defendant was aware its misrepresentations would
be reasonably relied upon by the plaintiff.”).
An intent to deceive can be inferred from the failure to disclose material
facts that one is obligated to disclose. See Anderson v. Meador, 56 A.D.3d 1030, 869
N.Y.S.2d 233 (3d Dept. 2008) (finding cause of action for fraud was stated because an
intent to deceive could be inferred from the failure to disclose material facts); Striker v.
Graham Pest Control Co. Inc., 179 A.D.2d 984, 985, 578 N.Y.S.2d 719 (3d Dept. 1992)
(finding an intent to deceive could be inferred from the failure to disclose material
information that defendant was obligated to disclose). Allegations of inducement are
sufficient to support an inference of an intent to deceive. See Bernstein v. Kelso & Co.,
Inc., 231 A.D.2d 314, 321-22, 659 N.Y.S.2d 276 (1st Dept. 2010) (finding that
allegations that defendants acted to induce plaintiff to take certain action supported an
inference of intent to deceive plaintiff).
Whether Defendant concealed knowledge about the DOL investigation in
order to induce Plaintiff to accept employment is an issue of fact not ripe for a dispositive
motion. See George Cohen Agency, Inc. v. Donald S. Perlman Agency, Inc., 114 A.D.2d
930, 932-33, 495 N.Y.S.2d 408 (2d Dept. 1985) (finding that whether a party concealed
knowledge to induce another party to act was a fact issue requiring a trial).
C. The Existence of the DOL Investigation was Material Information
Defense counsel’s affirmation claimed, without citation or support, that
the existence of the DOL investigation was not material information. Counsel’s
unsupported contention carries no weight here. The Complaint expressly stated that
Plaintiff would not have accepted employment with Defendant if he had known about the
9
DOL investigation. (Compl. ¶¶ 20, 42.) This allegation is sufficient to establish
materiality. See Navaretta v. Group Health Inc., 191 A.D.2d 953, 954, 595 N.Y.S.2d 839
(3d Dept. 1993); Hyman v. International Business Machines Corp., 2000 WL 1538161 at
*3 (S.D.N.Y. 2000).
At the very least, materiality is a question of fact, and so whether
Defendant’s concealment of the DOL investigation was material in inducing Plaintiff to
leave his former employer and accept employment with Defendant is not appropriately
resolved on a motion to dismiss. See Swersky v. Dreyer and Traub, 219 A.D.2d 321,
328, 643 N.Y.S.2d 33 (1st Dept. 1996) (determining that whether defendant’s
concealment of information was material to plaintiff’s decision to act was a question for
the trier of fact); Hyman, 2000 WL 1538161 at *3 (finding that materiality of
representations was triable issue of fact).
D. Plaintiff was Damaged by Defendant’s Tortious Conduct
Plaintiff has sufficiently alleged that, as a result of Defendant’s failure to
disclose the DOL investigation to him, he accepted a position with Defendant and then
was effectively unable to continue to advance his career while connected to Defendant.
(Compl. ¶¶ 22, 43; Kelly Aff. ¶¶ 8-10.) Plaintiff’s career objectives were thwarted and
undermined during his employment with Defendant and he incurred loss of professional
opportunities, injury to his professional reputation and damage to his career growth and
potential. (Compl. ¶22; Kelly Aff. ¶ 10.) Therefore, Plaintiff has established damages
resulting from Defendant’s fraud. See Stewart v. Jackson & Nash, 976 F.2d 86 (2d Cir.
1992).
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In any event, there are issues of material fact regarding damages and thus
Defendant’s motion to dismiss must be denied. It is up to the jury to decide whether
Plaintiff suffered any damage to his reputation, or could have been at a more advanced
stage of his career or received superior employment opportunities if not for Defendant’s
tortious conduct. See Hyman, 2000 WL 1538161 at *3 (finding that determinations
regarding losses suffered by an employee fraudulently induced to accept employment are
appropriately made by the finder of fact); Cole v. Kobs & Draft Advertising, Inc., 921 F.
Supp. 220 (S.D.N.Y. 1996) (finding substantial issues of fact regarding damages suffered
by employee fraudulently induced to remain at employer).
CONCLUSION
For the foregoing reasons, Defendant’s motion to dismiss Plaintiff’s fraud claim
should be denied.
Dated: November 24, 2014 Respectfully submitted,
THE STOLPER GROUP, LLP
241 Centre Street
Suite 601
New York, NY 10013
Telephone: (212) 337-3502
By: /s/ Michael Stolper
Michael Stolper
Attorneys for Plaintiff Bryan Kelly
11
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FILED: NEW YORK COUNTY CLERK 11/24/2014 10:53 PM INDEX NO. 650487/2014 NYSCEF DOC. NO. 13 RECEIVED NYSCEF: 11/24/2014 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK Commercial Division BRYAN KELLY, Index No. 650487/2014 Plaintiff, Hon. Jeffrey K. Oing -against- PLAINTIFF'S MEMORANDUM OF LAW IN OPPOSITION TO LETTIRE CONSTRUCTION CORP., DEFENDANT’S MOTION TO DISMISS Defendant. Plaintiff Bryan Kelly (“Plaintiff”), by and through his attorneys The Stolper Group, LLP, respectfully submits this Memorandum in Opposition to the Defendant’s Motion to Dismiss Plaintiff’s third cause of action for fraud. PRELIMINARY STATEMENT Plaintiff is a senior developer with expertise in affordable housing and Defendant is a construction contractor. The Complaint alleges that in recruiting and inducing Plaintiff to join Defendant to create an affordable housing platform, Defendant failed to disclose that Defendant and its principal, Nick Lettire (“Nick”), were the subject of a US Department of Labor investigation that sought debarment for violations of federal wage and hour laws (the “DOL investigation”) in connection with certain New York City construction projects. Plaintiff did not find out about the DOL investigation until after he joined Defendant. Once the investigation and potential debarment became public shortly after Plaintiff joined, government agencies, most notably New York City agencies required for affordable housing projects, informed Plaintiff that they were unable to proceed with Defendant (and by extension, Plaintiff) until the debarment issue 1 was favorably resolved. Plaintiff faced professional embarrassment and a potential tarnish to his reputation. He had no idea as to the timing or substance of the outcome of the debarment investigation (i.e., whether it would be favorable or not). Unable to develop affordable housing projects – the very purpose of his joining Defendant – Plaintiff had no choice but to terminate his agreement with Defendant. The fraud claim seeks to remedy the harm caused to Plaintiff by Defendant’s material omission. Defendant’s motion challenges Plaintiff’s fraud claim in the following respects: Defendant claims that it had no duty to disclose the DOL investigation to Plaintiff before the parties entered into a written agreement; the DOL investigation was not material to Plaintiff; and Plaintiff did not allege intent or injury as a result. All of these points are contradicted by the plain language of the Complaint. Defendant’s motion is driven not by merit but in an effort to forestall discovery into the DOL investigation. That is why the motion to dismiss arose now, after a discovery conference, and not immediately in response to the Complaint. The only development since Defendant filed an answer is its refusal to provide discovery concerning the investigation. RELEVANT ALLEGED FACTS1 Over a several month period, Defendant, a real estate development company, solicited and recruited Plaintiff away from his senior position with a leading affordable housing developer. (Compl. ¶ 8; Kelly Aff. ¶ 2.) During the extended recruitment process, Defendant disclosed confidential, non-public information about its 1 The factual allegations contain herein are taken from Plaintiff's Complaint, filed February 13, 2014, and the Affidavit of Bryan Kelly attached hereto as Exhibit A. “On a CPLR 3211 motion to dismiss, a court may consider affidavits.” Sargiss v. Magarelli, 12 N.Y.3d 527, 531, 881 N.Y.S.2d 651, 909 N.E.2d 573 (2009). 2 business to Plaintiff but did not mention the DOL investigation, even after Plaintiff joined Defendant as its Director of Development in September 2010. (Compl. ¶¶ 9, 20, 42; Kelly Aff. ¶ 6.) On the contrary, Defendant touted its strong relationships with key city agencies involved in affordable housing, which was critical to Plaintiff. (Kelly Aff. ¶4.) As a result of the DOL investigation, Plaintiff was unable to proceed with new affordable housing projects. (Compl. ¶¶ 20, 21, 22, 43; Kelly Aff. ¶ 8.) Plaintiff’s relationships at these city agencies notified him that pending the outcome of the debarment proceeding, the city could not proceed with Defendant (and by extension, Plaintiff). (Compl. ¶20; Kelly Aff. ¶8.) This effectively put an end to Plaintiff’s affordable housing efforts on Defendant’s behalf, as Plaintiff could not do the job for which he was hired. (Compl. ¶¶ 20, 21, 22, 43; Kelly Aff. ¶ 8.) Plaintiff never would have left his prior employment and joined Defendant if he had known about the DOL investigation. (Compl. ¶¶ 20, 42; Kelly Aff. ¶¶ 8, 9.) Plaintiff’s career was essentially put on hold for the time that he was employed by Defendant and his career development was thwarted and undermined as a result of Defendant’s tortious conduct. (Compl. ¶¶ 20, 21, 22, 43; Kelly Aff. ¶¶ 8, 9, 10.) Plaintiff resigned from Defendant in June 2011. (Compl. ¶ 23; Kelly Aff. ¶ 8.) Defendant alleged that the Complaint fails to establish any of the necessary elements of fraudulent concealment. (Defendant’s Motion ¶ 10.) On the contrary, the Complaint states that Defendant committed fraud by failing to disclose the DOL investigation to Plaintiff prior to his employment, and inducing Plaintiff to leave his employer and take a position with Defendant. (Compl. ¶¶ 20, 21, 22, 42, 43.) The Complaint asserts that Plaintiff would not have accepted employment with Defendant if 3 he had known about the DOL investigation, and that Plaintiff suffered damage to his career as a result. (Compl. ¶¶ 20, 21, 22, 42, 43; Kelly Aff. ¶10.) ARGUMENT On a motion to dismiss, a court “must give the complaint a liberal construction, accept the allegations as true and provide plaintiffs with the benefit of every favorable inference.” Roni LLC v. Arfa, 18 N.Y.3d 846, 848, 939 N.Y.S.2d 746, 747 (2011). See also Siegmund Strauss, Inc. v. East 149th Realty Corp., 20 N.Y.3d 37, 43, 956 N.Y.S.2d 435 (2012) (“When deciding a 3211(a)(7) motion, the facts as alleged in the complaint and the opposition papers must be accepted as true; the court must accord the plaintiff the benefit of every possible favorable inference and determine only whether the facts as alleged fit within any cognizable legal theory.”); Guido v. Orange Regional Medical Center, 102 A.D.3d 828, 831-32, 958 N.Y.S.2d 195, 199 (2d Dept. 2013); Samuelsen v. New York City Transit Authority, 101 A.D.3d 537, 540, 957 N.Y.S.2d 27, 30 (1st Dept. 2012) (reversing decision to grant motion to dismiss, noting that “the pleading is to be afforded a liberal construction, the facts alleged in the complaint are to be accepted as true, and plaintiff is to be accorded the benefit of every possible favorable inference”). The purpose of a motion to dismiss is to determine whether the pleading states a cause of action cognizable at law. See Eastern Consolidated Properties, Inc. v. Lucas, 285 A.D.2d 421, 421-22, 729 N.Y.S.2d 11, 12-13 (1st Dept. 2001) (reversing decision to grant motion to dismiss). The Complaint alleges facts sufficient to support Plaintiff’s fraud claim, and thus, Defendant’s Motion must be denied. 4 I. The Fraud Claim is Pled with Sufficient Particularity Under CPLR section 3016(b), the circumstances constituting fraud “shall be stated in detail.” New York courts have held that section 3016(b) is met “when the facts are sufficient to permit a reasonable inference of the alleged conduct.” Pludeman v. Northern Leasing Systems, Inc., 10 N.Y.3d 486, 492, 860 N.Y.S.2d 422, 890 N.E.2d 184 (2008). See also Sargiss v. Magarelli, 12 N.Y.3d 527, 531-32, 881 N.Y.S.2d 651, 909 N.E.2d 573 (2009) (same). Section 3016 mandates only that the complaint allege the misconduct complained of in enough detail that defendants are informed of the substance of the claim. See Bernstein v. Kelso & Co., Inc., 231 A.D.2d 314, 320, 659 N.Y.S.2d 276 (1st Dept. 2010) (discussing CPLR § 3016(b) and denying motion to dismiss because complaint sufficiently complied with statute). Certainly here Plaintiff has alleged sufficient facts to inform Defendant of the substance of the claim. Plaintiff has alleged that, as a result of Defendant’s failure to disclose material information regarding the DOL investigation into its wage and hour practices, Plaintiff accepted a position with Defendant that he would not otherwise have accepted. (Compl. ¶¶ 20, 22, 42, 43.) By accepting a position with Defendant, and having no opportunity to continue to develop his professional skills and relationships there as a result of the DOL investigation, Plaintiff’s career objectives were thwarted and grossly undermined. (Compl. ¶¶ 22, 43; Kelly Aff. ¶¶ 8-10.) These allegations are sufficient to establish a cause of action for fraud. See Stewart v. Jackson & Nash, 976 F.2d 86 (2d Cir. 1992) (denying motion to dismiss fraud claim because lawyer sufficiently alleged that she was induced to join defendant’s firm as a result of 5 defendant’s misrepresentations and suffered damage to her career development as a result); Navaretta v. Group Health Inc., 191 A.D.2d 953, 954, 595 N.Y.S.2d 839 (3d Dept. 1993) (denying summary judgment motion and noting that plaintiff’s allegations that defendant’s misrepresentations induced her into entering employment with defendant, and that “she would not have taken the job in the first place if the true facts had been revealed to her,” sufficiently alleged fraud); Hyman v. International Business Machines Corp., 2000 WL 1538161 (S.D.N.Y.) (finding that allegations that plaintiffs were induced to leave secure employment by false representations and this inducement led to injuries are sufficient to plead a cause of action for fraud). II. Plaintiff has Pled the Elements of Fraudulent Concealment A cause of action to recover damages for fraudulent concealment requires allegations of scienter, reliance, damages and an allegation that the defendant had a duty to disclose material information and that it failed to do so. McDonnell v.Bradley, 109 A.D.3d 592, 593, 970 N.Y.S.2d 612 (2d Dept. 2013). In its motion to dismiss the fraud claim, Defendant argued that Plaintiff failed to establish fraud. Defendant is mistaken because the Complaint sufficiently alleges that: Defendant had a duty to disclose the DOL investigation to Plaintiff before the parties entered into an agreement; Defendant had an intent to deceive; the existence of the DOL investigation was material information; and Plaintiff was damaged by Defendant’s tortious conduct. A. Defendant had a duty to disclose the DOL investigation A duty to disclose arises where one party’s superior knowledge of essential facts renders a transaction without disclosure inherently unfair. See Madison Apparel Group Ltd. v. Hachette Filipacchi Presse, S.A., 52 A.D.3d 385, 861 N.Y.S.2d 6 296 (1st Dept. 2008) (denying motion to dismiss fraudulent concealment claim because plaintiff sufficiently alleged defendant had a duty to disclose information that, without disclosure, made transaction between parties unfair); Swersky v. Dreyer and Traub, 219 A.D.2d 321, 327-28, 643 N.Y.S.2d 33 (1st Dept. 1996) (denying motion to dismiss fraudulent concealment claim because there were outstanding issues as to whether defendant had a duty to disclose certain facts). “When a material fact is concealed by a party to a contract who should in good faith disclose that fact, the party’s silence may rise to the level of actionable fraud.” George Cohen Agency, Inc. v. Donald S. Perlman Agency, Inc., 114 A.D.2d 930, 932, 495 N.Y.S.2d 408 (2d Dept. 1985). See also Tahini Investments, Ltd. v. Bobrowsky, 99 A.D.2d 489, 490, 470 N.Y.S.2d 431 (2d Dept. 1984) (“Where a party to a contract conceals a material fact which he is in good faith bound to disclose, such silence may constitute an actionable representation.”) Defendant knew about the risk of debarment from the DOL investigation and concealed this from Plaintiff in order to induce him to accept a position with Defendant. See George Cohen Agency, Inc., 114 A.D.2d at 932-33 (finding issue of fact existed as to whether defendant concealed its knowledge of policy defects, which it had a duty to disclose, to induce plaintiff to purchase a portfolio). The DOL investigation posed a threat to Defendant’s ability -- and thus Plaintiff’s ability -- to continue to develop affordable housing. See Young v. Keith, 112 A.D.2d 625, 492 N.Y.S.2d 489 (3d Dept. 1985) (denying motion to dismiss fraud claim because a duty to disclose could have been found where the undisclosed information involved a threat to the plaintiff’s ability to operate). 7 In effect, the DOL investigation hindered Plaintiff’s ability to do his job and, thus, thwarted his ability to further develop his career. Plaintiff would not have accepted employment with Defendant if he had known of the DOL investigation. (Compl. ¶42.) Therefore, Defendant had a duty to disclose the DOL investigation to Plaintiff before the parties entered into an agreement. See Young, 112 A.D.2d at 627 (noting that a duty to disclose may be found where the information is such that if plaintiff had known of the information it would not have continued with the transaction). Defendant’s contention that it had no duty to disclose the information prior to Plaintiff joining Defendant rings hollow in light of the fact that Defendant had disclosed other non-public information to Plaintiff during the recruitment process. (Kelly Aff. ¶12.) B. Defendant had the Intent to Deceive In its motion, Defendant claimed that Plaintiff failed to establish scienter. However, the element of scienter can be reasonably inferred from the facts alleged in the Complaint. See Houbigant, Inc. v. Deloitte & Touche LLP, 303 A.D.2d 92, 98, 753 N.Y.S.2d 493 (1st Dept. 2003) (noting it is sufficient if the complaint contains some rational basis for inferring scienter); China Development Industrial Bank v. Morgan Stanley & Co., Inc., 86 A.D.3d 435, 436, 927 N.Y.S.2d 52 (1st Dept. 2011) (affirming denial of motion to dismiss fraud claims in part because the element of scienter could be “reasonably inferred from the facts alleged”); Sterling National Bank v. J.H. Cohn LLP, 40 Misc. 3d 1230(A), 975 N.Y.S.2d 712 (Sup. Ct. N.Y. County 2013) (“Under New York law, to raise a sufficient specter of the intent to deceive, a plaintiff need only allege facts 8 from which it may be inferred that the defendant was aware its misrepresentations would be reasonably relied upon by the plaintiff.”). An intent to deceive can be inferred from the failure to disclose material facts that one is obligated to disclose. See Anderson v. Meador, 56 A.D.3d 1030, 869 N.Y.S.2d 233 (3d Dept. 2008) (finding cause of action for fraud was stated because an intent to deceive could be inferred from the failure to disclose material facts); Striker v. Graham Pest Control Co. Inc., 179 A.D.2d 984, 985, 578 N.Y.S.2d 719 (3d Dept. 1992) (finding an intent to deceive could be inferred from the failure to disclose material information that defendant was obligated to disclose). Allegations of inducement are sufficient to support an inference of an intent to deceive. See Bernstein v. Kelso & Co., Inc., 231 A.D.2d 314, 321-22, 659 N.Y.S.2d 276 (1st Dept. 2010) (finding that allegations that defendants acted to induce plaintiff to take certain action supported an inference of intent to deceive plaintiff). Whether Defendant concealed knowledge about the DOL investigation in order to induce Plaintiff to accept employment is an issue of fact not ripe for a dispositive motion. See George Cohen Agency, Inc. v. Donald S. Perlman Agency, Inc., 114 A.D.2d 930, 932-33, 495 N.Y.S.2d 408 (2d Dept. 1985) (finding that whether a party concealed knowledge to induce another party to act was a fact issue requiring a trial). C. The Existence of the DOL Investigation was Material Information Defense counsel’s affirmation claimed, without citation or support, that the existence of the DOL investigation was not material information. Counsel’s unsupported contention carries no weight here. The Complaint expressly stated that Plaintiff would not have accepted employment with Defendant if he had known about the 9 DOL investigation. (Compl. ¶¶ 20, 42.) This allegation is sufficient to establish materiality. See Navaretta v. Group Health Inc., 191 A.D.2d 953, 954, 595 N.Y.S.2d 839 (3d Dept. 1993); Hyman v. International Business Machines Corp., 2000 WL 1538161 at *3 (S.D.N.Y. 2000). At the very least, materiality is a question of fact, and so whether Defendant’s concealment of the DOL investigation was material in inducing Plaintiff to leave his former employer and accept employment with Defendant is not appropriately resolved on a motion to dismiss. See Swersky v. Dreyer and Traub, 219 A.D.2d 321, 328, 643 N.Y.S.2d 33 (1st Dept. 1996) (determining that whether defendant’s concealment of information was material to plaintiff’s decision to act was a question for the trier of fact); Hyman, 2000 WL 1538161 at *3 (finding that materiality of representations was triable issue of fact). D. Plaintiff was Damaged by Defendant’s Tortious Conduct Plaintiff has sufficiently alleged that, as a result of Defendant’s failure to disclose the DOL investigation to him, he accepted a position with Defendant and then was effectively unable to continue to advance his career while connected to Defendant. (Compl. ¶¶ 22, 43; Kelly Aff. ¶¶ 8-10.) Plaintiff’s career objectives were thwarted and undermined during his employment with Defendant and he incurred loss of professional opportunities, injury to his professional reputation and damage to his career growth and potential. (Compl. ¶22; Kelly Aff. ¶ 10.) Therefore, Plaintiff has established damages resulting from Defendant’s fraud. See Stewart v. Jackson & Nash, 976 F.2d 86 (2d Cir. 1992). 10 In any event, there are issues of material fact regarding damages and thus Defendant’s motion to dismiss must be denied. It is up to the jury to decide whether Plaintiff suffered any damage to his reputation, or could have been at a more advanced stage of his career or received superior employment opportunities if not for Defendant’s tortious conduct. See Hyman, 2000 WL 1538161 at *3 (finding that determinations regarding losses suffered by an employee fraudulently induced to accept employment are appropriately made by the finder of fact); Cole v. Kobs & Draft Advertising, Inc., 921 F. Supp. 220 (S.D.N.Y. 1996) (finding substantial issues of fact regarding damages suffered by employee fraudulently induced to remain at employer). CONCLUSION For the foregoing reasons, Defendant’s motion to dismiss Plaintiff’s fraud claim should be denied. Dated: November 24, 2014 Respectfully submitted, THE STOLPER GROUP, LLP 241 Centre Street Suite 601 New York, NY 10013 Telephone: (212) 337-3502 By: /s/ Michael Stolper Michael Stolper Attorneys for Plaintiff Bryan Kelly 11