MADISON APPAREL GROUP LTD v. HACHETTE FILIPACCHI PRESSE

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Supreme Court, Appellate Division, First Department, New York.

MADISON APPAREL GROUP LTD., Plaintiff-Appellant, v. HACHETTE FILIPACCHI PRESSE, S.A., et al., Defendants-Respondents.

Decided: June 19, 2008

MAZZARELLI, J.P., ANDRIAS, WILLIAMS, RENWICK, JJ. Dorsey & Whitney LLP, New York (Bruce R. Ewing of counsel), for appellant. Kilpatrick Stockton LLP, New York (Georges Nahitchevansky of counsel), for respondents.

Order, Supreme Court, New York County (Helen E. Freedman, J.), entered January 2, 2008, which, to the extent appealed from, granted defendants' motion to dismiss the complaint to the extent of concluding that the complaint did not state a claim for fraudulent concealment, deeming the cause of action for fraudulent concealment a cause of action for fraudulent misrepresentation and dismissing the cause of action for breach of the implied covenant of good faith and fair dealing, unanimously modified, on the law, to reinstate the cause of action for fraudulent concealment, and otherwise affirmed, without costs.

The complaint alleges that defendants had peculiar and superior knowledge of their ongoing negotiations with a third-party licensee, that plaintiff was unable to discern such negotiations through the use of reasonable intelligence or due diligence, and that defendants were aware that plaintiff sought to terminate the parties' agreement at least in part due to its lack of knowledge about the negotiations. These allegations, which for purposes of this motion to dismiss pursuant to CPLR 3211(a)(7) we accept as true and view in a light most favorable to plaintiff, invoke the “special facts” doctrine, pursuant to which defendants had a duty to disclose the negotiations (see Black v. Chittenden, 69 N.Y.2d 665, 668-669, 511 N.Y.S.2d 833, 503 N.E.2d 1370 [1986];  Swersky v. Dreyer & Traub, 219 A.D.2d 321, 327-328, 643 N.Y.S.2d 33 [1996];  Travelers Indem. Co. of Illinois v. CDL Hotels USA, Inc., 322 F.Supp.2d 482, 499 [S.D.N.Y.2004] ).   The complaint sufficiently alleges the remaining four elements of a claim for fraudulent concealment (see P.T. Bank Cent. Asia, N.Y. Branch v. ABN AMRO Bank N.V., 301 A.D.2d 373, 376, 754 N.Y.S.2d 245 [2003] ).

Applying the implied covenant of good faith and fair dealing in the manner urged by plaintiff would effectively create an independent contractual right that was not bargained for by the parties (see National Union Fire Ins. Co. of Pittsburgh, Pa. v. Xerox Corp., 25 A.D.3d 309, 310, 807 N.Y.S.2d 344 [2006], lv. dismissed 7 N.Y.3d 886, 826 N.Y.S.2d 178, 859 N.E.2d 917 [2006] ).