Caldwell v. The Roman Catholic Archdiocese of New York

Background

Emmett Caldwell, Daniel Rice, Michael Leonard, and James Bruno sued The Archdiocese of New York and The Roman Catholic Diocese of Brooklyn on behalf of themselves and others similarly situated. The plaintiffs were former participants in the defendants’ Independent Reconciliation and Compensation Programs, through which they released childhood sexual-abuse claims during the period from October 2016 through February 2019.

The amended complaint asserted two claims under New York law: fraudulent misrepresentation and negligent misrepresentation. The plaintiffs alleged that the defendants obtained releases by misrepresenting that the programs would produce fair and reasonable settlement offers, that the program administrators were independent, that the offers were not controlled by undisclosed limits, and that the administrators would consider perpetrators’ histories of abuse allegations. The plaintiffs also alleged that the defendants failed to disclose information about the prospects and possible effect of the New York Child Victims Act, including the defendants’ lobbying against the legislation.

The defendants moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), which tests whether a complaint states a legally sufficient claim, and argued that the fraud-related allegations also failed Rule 9(b)’s requirement that fraud be pleaded with particularity. The plaintiffs separately requested a status conference.

Fraudulent Misrepresentation

The court explained that a fraudulent-misrepresentation claim requires a material false statement, an intent to defraud, reasonable reliance, and resulting damages. Rule 9(b) additionally requires the complaint to identify the allegedly fraudulent statements, the speaker, where and when the statements were made, and why they were fraudulent.

The court held that the plaintiffs did not identify specific statements by the defendants that the process or settlement offers were fair or reasonable. The plaintiffs also did not sufficiently identify the speakers, places, or times of statements about the programs’ independence. Although the court stated that statements about a program’s independence could, in context, be treated as factual statements rather than mere opinion, it did not decide that issue.

Instead, the court held that the plaintiffs had not supplied enough factual support for their claim that the independence representations were false. Their allegations that the defendants imposed a $500,000 settlement cap, hired and paid the administrators, and controlled the administrators’ decisions were stated primarily on information and belief without supporting facts. Count I was therefore dismissed for failure to state a claim.

Negligent Misrepresentation

The court stated that a negligent-misrepresentation claim requires a special or similar relationship creating a duty to provide correct information, incorrect information, and reasonable reliance. Where such a claim relies on the same facts as an intentional fraud claim, Rule 9(b)’s particularity requirement also applies.

The court held that four negligent-misrepresentation allegations substantially repeated the fraud allegations and therefore failed for the same lack of specificity. As to the allegations concerning the Child Victims Act, the court found that the plaintiffs had not pleaded facts showing a special relationship that existed before they entered the transactions. The plaintiffs’ childhood abuse by clergy, standing alone, did not establish such a relationship.

The court also held that the plaintiffs had not adequately shown reasonable reliance. The legislative prospects for the Child Victims Act were publicly reported, the plaintiffs signed releases stating that they understood the releases were final resolutions of their claims, and the program materials directed them to consult an attorney or receive limited legal counseling about the release. The court concluded that the plaintiffs had not alleged that the defendants prevented them from investigating the legislation or that the defendants possessed and withheld sufficiently specific information that the plaintiffs could not have learned through ordinary diligence. Count II was dismissed.

Disposition

The court granted the defendants’ motion to dismiss the amended complaint. It granted the plaintiffs leave to amend and directed them to file any amendments within 30 days of the opinion and order. The court denied the plaintiffs’ request to schedule a status conference. It also ruled that the defendants’ original motion to dismiss was moot because the plaintiffs had filed an amended complaint.