New York County Supreme Court Dismisses Fraud, Gross Negligence and Breach of Contract Suit against Investigative Firm

By Lewis Tesser, Partner, and Timothy Nolen, Associate

A recent opinion out of the New York County Supreme Court shows how important pleading requirements are when alleging intent to commit fraud. The case involved issues of business law, contract law, corporate law, civil practice and torts.

The case, Platinum Partners Value Arbitrage Fund LP v. Kroll Associates, Inc., 2011 N.Y. Misc. LEXIS 4737 (Sup. Ct. N.Y. County, October 5, 2011), involved an investigative firm which was contracted to perform a due diligence investigation regarding a $20 million loan. When the loan turned out to be associated with a Ponzi scheme, the plaintiff sued the investigative firm, arguing that it failed to inform the plaintiff of various criminal and civil charges from the 1980s associated with the loan recipient. The Court dismissed the suit, noting that the plaintiff’s allegations would not prove intent to commit fraud and that news articles which the plaintiff alleged that the investigative firm failed to uncover were published earlier than the time period that the defendant agreed to search through. Accordingly, the Court dismissed the suit.

Platinum Partners demonstrates the complexity and importance of formulating proper pleadings in business litigation suits. At Tesser, Ryan & Rochman, LLP, their attorneys have devoted years to commercial and business litigation. Their attorneys can advise clients how to prepare for such complex civil litigation.