January 22, 2018

SSRGA Wins An Important Real Estate Fraud Case

Camille Cox, as Executor of the Estate of Marjorie Cox, Deceased v. Alan Gerson et al

Supreme Court of the State of New York, County of Kings, October 31, 2017

In this case, the plaintiff alleged that the defendants misled her about the value of real property she sold to them. While Plaintiff sold her real property to one or more of the defendants at fair market value, when the defendants resold the property at a higher price, the plaintiff sued for fraud and unjust enrichment, alleging essentially that the defendants fraudulently induced plaintiff to sell the property at a depressed price so that they could capture for themselves the full, undiscounted value of the property.

Our clients, defendants Eli Harel and Harel Group NY Properties LLC (collectively, the “Harel Defendants”) — who purchased the subject property from plaintiff — moved to dismiss.

The Court granted the Harel Defendants’ motion to dismiss, holding that plaintiff’s fraud claim was not actionable because statements concerning the value of real property cannot constitute fraud, since they are mere expressions of opinion and  there can be no justifiable reliance where parties to a transaction are adverse to one another. Even if the Harel Defendants had made a below-market offer on the property, the Court reasoned, that could not constitute fraud because plaintiff could and should have conducted her own due diligence as to the property’s fair market value.  Also, because the Harel Defendants and plaintiff were adverse to one another in the transaction, there could be no fraud as to the Harel Defendants.

The Court also struck down the plaintiff’s unjust enrichment claim because the Harel Defendants received no direct benefit from the plaintiff other than an arms’-length real estate contract, and because there was a contractual relationship between the parties, which precludes recovery under a quasi-contract theory.


If you have any questions about this case, or any real-estate related legal matter, please contact us below.