| Mountain Cr. Acquisition LLC v Intrawest U.S. Holdings, Inc. |
| 2012 NY Slip Op 05104 [96 AD3d 633] |
| June 26, 2012 |
| Appellate Division, First Department |
| Mountain Creek Acquisition LLC, Respondent, v IntrawestU.S. Holdings, Inc., Appellant. |
—[*1] Wollmuth Maher & Deutsch LLP, New York (William F. Dahill of counsel), forrespondent.
Order, Supreme Court, New York County (Eileen Bransten, J.), entered December 14, 2011,which, inter alia, granted defendant's motion to dismiss the complaint solely to the extent ofdismissing the third cause of action, unanimously modified, on the law, to dismiss the fifth causeof action for fraudulent inducement, and to strike the request for punitive damages, and otherwiseaffirmed, without costs.
The parties entered into a Stock Purchase Agreement (Agreement) for the purchase ofMountain Creek, Inc. (MCI), a New Jersey vacation resort, for the price of $15 million to beadjusted by, inter alia, the value of MCI's interim net revenue, to be calculated according to theAgreement. A dispute arose regarding the calculation of the interim net revenue, and plaintiffalleged that defendant refused to resolve the dispute pursuant to the Agreement. Under thecircumstances, plaintiff sufficiently pleaded a breach of the Agreement, which provided aspecific method for resolving disputes concerning calculations of the interim net revenue (seeFuria v Furia, 116 AD2d 694 [1986]).
Defendant represented in the Agreement that its financial statements had accuratelypresented MCI's results of operations for fiscal year 2009, and plaintiff allegedly later learnedthat this amount was materially different, especially as concerned MCI's obligations, due to theunderstatement of the company's liability for warranty reserves, and its insurance expenses.Defendant further represented in the Agreement that it had made no changes to its tax practices,when, according to the complaint, it had, thereby preventing plaintiff from prosecuting a taxappeal. Thus, plaintiff sufficiently pleaded a breach of these sections of the Agreement.
Plaintiff's claim alleging fraudulent inducement is barred by the specific disclaimer in theAgreement (see Danann Realty Corp. v Harris, 5 NY2d 317, 320 [1959]), and by itsfailure to establish reasonable reliance on the alleged oral representations by the namedemployees (see HSH Nordbank AG vUBS AG, 95 AD3d 185 [2012]). Plaintiff, while suspecting that the reported insuranceexpense figure was "too low," failed to make use of the means of verification that were availableto it, such as examining any further documentation, reviewing the books of MCI, or traveling toMCI's offices to inspect its financials (see UST Private Equity Invs. Fund v Salomon SmithBarney, 288 AD2d 87, 88 [2001]; Rodas v [*2]Manitaras, 159 AD2d 341, 343 [1990]).
Plaintiff's request for punitive damages is stricken, since this was a private transaction, andplaintiff has not alleged any harm to the public nor has there been a showing of a high degree ofmoral turpitude (see Steinhardt Group v Citicorp, 272 AD2d 255, 257 [2000]).Concur—Gonzalez, P.J., Tom, Andrias, Acosta and Freedman, JJ.