Fraudulent Concealment

Fraudulent concealment is one type of fraud in New York. Others include fraudulent inducement and claims governed by the Deceptive Practices Act. Fraudulent concealment involves one party's failure to disclose information to another party. However, one party having a little more information than another party does not necessarily mean that it has a legal duty to disclose that information. Silence on its own is not necessarily actionable. However, there are situations in which there is a duty to disclose vital information. At The Linden Law Group, P.C., our New York City fraud lawyers can evaluate your situation and determine whether a theory of fraudulent concealment may apply to it.

A basic fraud claim must establish that the defendant intentionally and materially misrepresented a fact, the purpose of the misrepresentation was to defraud or mislead the plaintiff, the plaintiff reasonably relied on the misrepresentation, and the plaintiff incurred actual damages due to the reliance. With a fraudulent concealment claim, you must prove those elements, and you must also prove that the defendant owed you a duty to disclose material information but failed to disclose it. As with other fraud complaints, a fraudulent concealment complaint needs to include details about what the defendant allegedly did wrong and what was concealed or not disclosed that should have been.

The duty to disclose material information must be based on a special relationship between the plaintiff and the defendant. Occasionally, this type of duty has arisen just from a defendant having superior knowledge to a plaintiff, but usually the context for these cases has been a direct negotiation in a business transaction. For example, if the parties are entering into a business contract, there may be a duty to disclose information. Similarly, business partners typically have a fiduciary relationship to each other. Generally, however, if there is no contractual relationship, nor a confidential nor a fiduciary relationship, a court will not allow recovery for fraudulent concealment.

Fraudulent concealment can arise in different situations, but one common situation in which it arises is when a person or entity with a duty to disclose intentionally hides information that is crucial to the other person's decision about whether or not to invest.

When there is no special relationship, there is also no duty to disclose information. This lack of duty means that even when an initial assessment has been provided voluntarily or partially, there may not be a duty to update it with new impressions, even if not doing so could mislead the plaintiff. When the facts at issue are not peculiarly within one party’s knowledge, and the other party has the ability to know through ordinary intelligence the truth or real quality of the representation's subject, that party is supposed to use those means to get at the truth. For example, if you could have found out negative facts about an investment on your own, but you simply took an easier route by believing another person or choosing not to look into the facts, your attorney may not be able to claim fraudulent concealment.

Of relevance to this issue might be whether a plaintiff is considered a "sophisticated businessman." Plaintiffs who are considered sophisticated may not be able to establish that they got into an arms-length transaction by justifiably relying on misrepresentations if they did not make any effort to verify the information. It is different, however, if the concealed information was within the other party's unique or peculiar knowledge. There is an exception when the facts that were misrepresented were within the defendant's exclusive knowledge, and the truth could only be discovered through tremendous difficulty.

Another difficulty can arise in fraudulent concealment lawsuits when the plaintiff and the defendant have executed a detailed contract that includes an express disclaimer. For example, it might state that a buyer is not relying on any seller representations in choosing to enter into the contract. Generally, if a party expressly disclaims reliance, they cannot later claim reliance.

Usually in fraud cases, you can recover what you lost as a result of the fraud but not what you could have gained. In some successful fraudulent concealment cases, however, it may be possible to recover punitive damages. The jury will need to determine that awarding these damages advances the purpose of deterring wrongful conduct.

If you suffer harm due to fraudulent concealment, you should hold the responsible business or individual accountable. It is important to retain an experienced attorney to bring this challenging type of claim. Our New York City lawyers are familiar with many types of fraud, including investment fraud, mortgage fraud, internet scams, and fraud by friends and family. The Linden Law Group, P.C. represents victims of fraud in Queens, Manhattan, Brooklyn, the Bronx, and Staten Island, as well as in Nassau and Suffolk Counties. Contact us at (212) 537-6612 or via our online form. Sue to recover damages — our firm fights fraud head-on.