Basso v. New York University

Background

Anna Basso, Amy Hartman, and Jaime Villa Ruiz brought the action for themselves and other similarly situated students who attended NYU’s Tisch Asia graduate program in Singapore. They alleged that NYU represented that Tisch Asia would provide an educational experience equal to Tisch School of the Arts in New York, including comparable education, faculty, equipment, facilities, and professional opportunities. Tisch Asia opened in 2007 and closed in 2015.

The First Amended Complaint asserted seven claims: breach of contract; breach of the implied covenant of good faith and fair dealing; violations of New York General Business Law Sections 349 and 350; negligent misrepresentation; fraud; and unjust enrichment. In an earlier order, the court dismissed the implied-covenant and General Business Law claims. The remaining claims were breach of contract, negligent misrepresentation, fraud, and unjust enrichment. NYU moved for summary judgment, which asks whether the evidence shows that no genuine factual dispute requires a trial and that the moving party is entitled to judgment under the law.

Statute of Limitations

The court allowed NYU to raise its statute-of-limitations defense even though NYU had not included it in its answer. The court found that the plaintiffs had an opportunity to respond and had not shown prejudice from the late pleading of the defense.

The court explained that New York’s borrowing statute required comparing New York’s limitations period with the limitations period of the place where each claim accrued. The record did not establish the plaintiffs’ residences when their claims accrued, so the court could not determine whether another state’s shorter limitations period applied. The court nevertheless stated that New York’s six-year period placed an outer limit on the claims. Under that analysis, fraud and negligent-misrepresentation claims based on statements inducing enrollment could be timely only for students who initially enrolled in the 2011–2012 or 2012–2013 school years. Contract and unjust-enrichment claims could be timely for some students who enrolled earlier because those claims might have accrued during the school year rather than at enrollment.

Negligent Misrepresentation and Fraud

The court held that the economic-loss doctrine barred the negligent-misrepresentation and fraud claims. That doctrine generally prevents recovery in tort for economic losses that are remediable through a contract. The court found that the student-university relationship was contractual and that the alleged representations appeared in materials that could supply the terms of that relationship, including the Tisch Asia website’s frequently asked questions, the “About Tisch Asia” webpage, and a message from the school’s chair. The plaintiffs identified only economic losses allegedly caused by receiving an education of lower value than expected and did not show an independent duty or injury outside the alleged contract.

The court separately held that the negligent-misrepresentation claim failed because the plaintiffs had not shown the special relationship required for that claim. The court stated that universities generally do not have such a relationship with their students or with prospective students viewing website materials. Relocating to Singapore did not change that conclusion, and the court noted that NYU had not undertaken special responsibility for finding students housing.

Regarding the plaintiffs’ argument that NYU concealed information about Tisch Asia’s financial condition, the court treated that theory as fraudulent concealment rather than ordinary fraud. It declined to consider the theory because the First Amended Complaint did not allege fraudulent concealment. The court added that, even if it considered the theory, it would fail because a university generally has no legal obligation to disclose business records and financial data about its internal operations to students.

Breach of Contract

The court recognized that the relationship between a university and its students is contractual and that school bulletins, circulars, and regulations may supply the contract’s terms. A student must identify specific, concrete promises that the university broke; general complaints about educational quality and broad statements are not enough.

The court did not decide whether NYU’s representations were contractual promises or whether NYU fulfilled them. Instead, it held that the plaintiffs had not shown concrete harm caused by any alleged breach. They presented no admissible evidence of consequential damages, such as specific educational or job opportunities lost or particular future income lost. Their theory that Tisch Asia provided lower-quality education and less value than Tisch New York was too general and amounted to a rejected educational-malpractice theory. The court therefore dismissed the breach-of-contract claim.

Unjust Enrichment

The court held that the unjust-enrichment claim failed because the plaintiffs had not identified harm that would make restitution equitable. It also held that unjust enrichment was unavailable because the parties agreed that a contract governed the plaintiffs’ education at Tisch Asia and that the contract covered the subject of the dispute. The plaintiffs could plead unjust enrichment alternatively only if there were a genuine dispute about whether a contract existed or covered the disputed issue, and the court found no such dispute.

Disposition

The court ordered that NYU’s motion for summary judgment on Counts One, Five, Six, and Seven be granted. It directed the clerk to dismiss all pending motions and close the case. Counts Two, Three, and Four had already been dismissed in the earlier order.