To state a claim for fraudulent misrepresentation in New York, the plaintiff typically must allege that the defendant made a false statement to the plaintiff. But what if the defendant made the disputed statement to a third party, and the plaintiff claims to have been indirectly injured by that representation? In Harel Alternative Real Est. L.P. v. All Brooklyn Mgmt. LLC, 175 N.Y.S.3d 199 (Sup. Ct. Kings Cnty. Sept. 29, 2022), Kings County Commercial Division Justice Reginald A. Boddie considered whether, and under what circumstances, such a claim is permissible.

In Harel, the plaintiff, Harel Alternative Real Estate L.P. (“Harel”), and the defendant, All Brooklyn Management LLC (“All Brooklyn”), entered into a Cooperation Agreement in connection with a series of joint real estate investments.[1] The agreement provided that Harel would initially own a 90% stake in each of the LLCs formed to make these investments; but “[u]pon certain occurrences, namely the payment of a certain amount of funds to [Harel], the parties agreed that [Harel] would transfer its 90% interest . . . to All Brooklyn.”[2] Harel alleged that, after the parties signed the agreement, All Brooklyn submitted loan applications with several banks to refinance the mortgages on six properties purchased pursuant to the Cooperation Agreement.[3] According to Harel, All Brooklyn “fraudulently misrepresented to [these banks] that All Brooklyn was the sole member of certain borrower LLCs despite [its] knowledge...

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