Panel Permits $20 Million Fraud Claim to Go Forward

Panel Permits $20 Million Fraud Claim to Go Forward - 1/7/2009

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HEADLINES \| SETTLEMENTS AND DISMISSALS \| COURT FILINGS LINKS TO OTHER NEWS \| NEWS ARCHIVE	HEADLINES ARCHIVED SETTLEMENTS AND DISMISSALS ARCHIVED

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Panel Permits $20 Million Fraud Claim to Go Forward
Noeleen G. Walder

Law.com. January 7, 2009
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EXCERPT: An investment banker who claims he was duped into leaving his Wall Street job and moving to Texas to receive a stake in a family business can proceed with a $20 million suit against his cousin and the company, a New York state appeals court has ruled. John C. Braddock alleged that David B. Braddock promised him equity in Broad Oak Energy Inc., in exchange for locating a major investor to fund the oil and gas company. John Braddock accepted the offer but claimed he was ultimately mistreated and forced out of the company by his cousin, who left the ex-banker, a cancer survivor, with no job, stock or health insurance. In a 3-2 opinion focusing on the issue of whether John could have reasonably relied on his cousin's alleged promises, the Appellate Division, First Department, reinstated the ex-banker's claims for fraud, breach of fiduciary duty and promissory estoppel. "In assessing whether John's actions may be found to be reasonable, the question is not whether he ultimately understood that his cousin had lied to him, but whether he could have reasonably understood that his cousin was lying to him at the time when he first took actions in response to David's assurances," Justice David B. Saxe (See Profile) wrote for the majority in Braddock v. Braddock, 600430/07. According to the complaint, David proposed in 2005 that he and John, an investment banking specialist with "extensive personal and professional connections to the oil and gas industry," join in forming a company that would exploit reserves in Texas and Louisiana. […] The ex-banker claims he agreed to the deal because his cousin assured him that after he raised capital for the startup, he would be appointed Broad Oak's chief financial officer and land manager, and receive "founder's shares" in the company.

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