BH 336 Partners LLC v. Sentinel Real Estate Corp.

Summary

The Appellate Division, First Department modified an order denying defendants' motion to dismiss, holding that claims by most plaintiffs were time-barred under CPLR 213(8), while claims by EZ Wadsworth Partners LLC and BH 336 Partners LLC survived. The court also held that the assignee plaintiffs' standing presented a factual issue because broad assignment language and the surrounding circumstances could establish an intent to transfer fraud claims.

Holdings

1. The fraud claims of plaintiffs other than EZ Wadsworth Partners LLC and BH 336 Partners LLC were time-barred because the relevant contracts were executed more than six years before the action was commenced, including applicable COVID-related tolling.
2. The time-barred plaintiffs could not rely on the two-year discovery period because they were placed on inquiry notice of the possibility of the fraudulent deregulation scheme no later than June 20, 2019 and failed to investigate.
3. Defendants did not establish on the motion to dismiss that EZ Wadsworth Partners LLC and BH 336 Partners LLC lacked standing merely because their affiliates, rather than the plaintiffs themselves, entered the original purchase contracts.
4. The general disclaimer in the contracts did not bar the fraud claims because it did not specifically disclaim reliance on the particular type of facts allegedly misrepresented or undisclosed, which were peculiarly within the sellers' knowledge.

Questions Presented

1. Whether the fraud claims of plaintiffs other than EZ Wadsworth Partners LLC and BH 336 Partners LLC were barred by the applicable statute of limitations.
2. Whether plaintiffs could invoke the two-year fraud-discovery period despite receiving information placing them on inquiry notice of the alleged deregulation scheme.
3. Whether the assignee plaintiffs lacked standing because they did not contract directly with defendants and their assignments did not expressly assign fraud claims.
4. Whether the contracts' general disclaimer barred the plaintiffs' fraud claims.

Disposition

other