Fraud/Special Investigation

Key Points:

• The Second and First Departments of the New York Appellate Division have recently issued divergent decisions affecting a defendant’s entitlement to leave to amend its answer to assert counterclaims sounding in fraud where it appears that the accident at issue was staged/intentionally caused by the plaintiff depending on where the matter is venued.
• Based on these recent decisions, a defendant in a matter venued in a court in the Second Department is entitled to leave to amend its answer to assert counterclaims sounding in fraud based on mere allegations that the accident at issue was staged/intentionally caused by the plaintiff, the plaintiff knowingly made false representations to assert claims against the defendant, and that the defendant suffered damages consisting of its costs and fees incurred in investigating and litigating plaintiff’s claims. 
• However, a defendant in a matter venued in a court in the First Department is only entitled leave to amend its answer to assert counterclaims sounding in fraud where it submits prima facie evidence that the plaintiff staged/intentionally caused the accident and made false representations, and where the defendant alleges damages beyond those associated with its costs and fees incurred in investigating and litigating plaintiff’s claims.

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The Second and First Department of the New York Appellate Division both recently issued decisions addressing a defendant’s entitlement for leave to amend its answer to assert counterclaims sounding in fraud arising from an accident that is apparently staged and/or intentionally caused by a plaintiff. Specifically, despite the underlying similarities between Gimenez v. Pepsi-Cola Bottling Company of New York, Inc., 225 N.Y.S.3d 691 (NY 2d Dept. 2025) and Anguisaca-Morales v. St. Paul and St. Andrew United Methodist Church, 234 N.Y.S.3d 42 (NY 1st Dept. 2025), the respective decisions of the Second Department and First Department substantially diverged. As a result of these contrasting decisions, the venue of a matter will affect a defendant’s ability to successfully obtain leave to amend its answer to assert counterclaims sounding in fraud against a plaintiff.  

Both Gimenez and Anguisaca-Morales involved plaintiffs whose alleged injuries resulted from accidents where liability would normally and presumably be decided against the defendants. In Gimenez, the plaintiffs allegedly were injured due to their vehicle being rear-ended by the defendants’ vehicle. In Anguisaca-Morales, the plaintiff allegedly fell from an unsecured ladder while working at a construction site. Both actions involved appeals from lower court decisions on the plaintiffs’ motions for summary judgment on liability and the defendants’ corresponding motions for leave to amend their answers to assert counterclaims for fraud against the plaintiffs based on allegations that the accident was staged/intentionally caused by the plaintiffs.

With respect to the motions for summary judgment on liability, the Second and First Department both found issues of fact resulting in the plaintiffs not being entitled to summary judgment on liability. In Gimenez, the Second Department found that the defendants raised issues of fact as to the existence of a non-negligent explanation for the alleged accident and whether the plaintiffs staged the accident. In Anguisaca-Morales, the First Department found there were issues of fact as to whether the plaintiff intentionally fell and was the sole proximate cause of his alleged accident.

Turning to the respective motions for leave to amend their answers filed by the defendants in Gimenez and Anguisaca-Morales, the defendants in both actions submitted proposed amended answers that asserted similar allegations of fraud in support of their respective counterclaims, including that: 1) the respective plaintiffs staged/intentionally caused the accidents; 2) that the respective plaintiffs knowingly made false representations against the respective defendants; and 3) that the respective defendants suffered damages as a result, consisting of incurring investigation and legal costs and fees. In both cases, the Second and First Department also reviewed evidence that they respectively determined had been sufficient to raise a question of fact as to whether the respective plaintiffs intentionally caused their accidents.

However, despite the above similarities, the reasonings in these decisions regarding the respective defendants’ entitlement to leave to amend their answers diverged. In Gimenez, the Second Department held that the defendants were entitled to leave to amend their answer because the allegations asserted in their proposed amended answer were sufficient on their face to plead a counterclaim for fraud. However, in Anguisaca-Morales, the First Department held that the defendants were not entitled to leave to amend their answer because their proposed amended answer failed to sufficiently plead a counterclaim for fraud. In doing so, the First Department held that the counterclaim asserted in defendants’ proposed amended answer was premised on unproven allegations and the defendants failed to plead justifiable reliance or resulting damages.

Thus, based on the Second Department’s decision in Gimenez, a defendant in an action venued in any of the lower courts in the ten counties that comprise the Second Department (Kings, Queens, Richmond, Nassau, Suffolk, Westchester, Dutchess, Orange, Rockland, and Putnam) is entitled to leave to amend its answer to assert a counterclaim for fraud against a plaintiff in an action based on mere allegations that the plaintiff staged and/or intentionally caused the accident at issue.

Conversely, pursuant to the First Department’s decision in Anguisaca-Morales, a defendant in an action venued in any of the lower courts in the two counties that comprise the First Department (New York and Bronx) is not entitled to leave to amend its answer to assert a counterclaim for fraud against a plaintiff based on similar allegations. Even when the defendants submits evidence that that the plaintiff intentionally caused the accident that is sufficient to defeat a motion for summary judgment on liability. Instead, in order to be entitled to leave to amend its answer to assert a counterclaim for fraud against the plaintiff in a matter venued in the First Department, a defendant is effectively required to make a prima facie demonstration that the plaintiff staged/intentionally caused the accident and that the defendant sustained damages. In doing so, the damages must be in addition to what the defendant incurred in relation to investigating and litigating the plaintiff’s claims.

The decisions in Gimenez and Anguisaca-Morales have not yet been cited in any subsequent decisions involving cases where the plaintiff allegedly staged/intentionally caused the accident. Instead, these decisions have only been discussed in multiple decisions by one judge in the New York Supreme Court, Kings County, in cases that do not involve allegations of staged accidents. This judge has inserted identical language in five decisions that appear to be a concerted attempt to limit the application of Gimenez to cases where there is “concrete evidence” that the accident was staged.

Ian works in our Melville, NY office. He can be reached at (631) 227-6389 or ILGlick@mdwcg.com.