Brief of Braddock v

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Jan 9, 2024

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Title of the Case: Braddock v. Braddock, Supreme Court of New York (2007) Facts: John Braddock sued his cousin, David Braddock, for fraud. David wanted to form a company, Broad Oak Energy (BOE), and asked John to find an investor to provide to BOE and also asked John to work for BOE. David assured John that he would be BOE’s chief financial officer (CFO) and land manager. David also told John that he, John, would receive half as much stock that he, David, would receive. John then quit his job, found an investor for David, and moved to Texas. Two weeks later, David told John that he would not be a CFO or a land manager, but a land man. John “‘engagement agreements’ to accept the lesser position as an ‘employee at will,’ subject to discharge for any reason at any time” (Braddock v. Braddock). As a result of stress John’s health declined, and he was granted a medical leave of absence. A month later, John was fired. John filed a suit in New York state court against David claiming that these circumstances constituted fraud. The court dismissed his claims and John appealed. Issue(s): Is it fraudulent to offer a relative a job (that requires their relocation) only to reduce the job offer to that of a lesser position? (Referenced Braddock v. Braddock) Decision: Yes. The Court found that John’s actions satisfied the requirements of fraud. There was a misrepresentation of material fact and there was justifiable reliance on these facts and resulting injury. (Referenced Braddock v. Braddock) Opinions and Reasoning: The majority concluded that John had reason to believe that David would treat him with good faith and integrity as their relationship is one of family. This situation can be distinguished from

cases where the misrepresentations were “revealed by the time the deal was executed” (Braddock v. Braddock). In this situation, though John signed documents that “altered the originally promised terms of his position with the company (Braddock v. Braddock), the deal between the two parties was underway even before anything was signed. John had already quit his former job and moved to Texas. John was “no longer in a position to reject the offered terms or even to negotiate effectively” (Braddock v. Braddock). John’s reliance on the claims made by David is reasonable because they are family. Had they been strangers to each other, there would have been strict reliance on the signed written documents. However, in this case, they were not strangers and as a result, there was “expectation of the good faith of a family member” that would result in “reliance on assurances that are not incorporated into written documents drafted and executed later” (Braddock v. Braddock). The dissenting opinion disagreed with the majority on the point that there was reason for John to believe in David’s claims. At the time, BOE “was but an unfunded shell requiring for its viability an enormous infusion of capital (Braddock v. Braddock). John, an experienced banker and financial consultant, should have been well aware of the risks that came with his decision. In these circumstances, “no promise of high executive-level employment in the company could have been viewed to be an ‘assurance’ or a ‘guarantee’” (Braddock v. Braddock). What he perceived to be ‘assurances’ and ‘guarantees’ can reasonably be understood as “expressions of expectation or intent” (Braddock v. Braddock). While John may have had moral claim to rely on his cousin even when objective circumstances counseled otherwise, there is no legal right to recovery in fraud that may be vindicated upon such a predicate (Braddock v. Braddock). The dissenting opinion called for the dismissal of John’s fraud cause of action.

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