Khan v. Khan

Khan v Khan 2026 NY Slip Op 05639 October 2, 2026 Appellate Division, Fourth Department Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This decision is uncorrected and subject to revision before publication in the Official Reports. RIMA MIAN KHAN, PLAINTIFF-APPELLANT, v MEHDI ALI KHAN, DEFENDANT-RESPONDENT. Supreme Court of the State of New York, Appellate Division, Fourth Judicial Department Decided on October 2, 2026 611 CA 25-01009 Present: Bannister, J.P., Montour, Greenwood, Nowak, And Hannah, JJ. WOODS OVIATT GILMAN LLP, BUFFALO (WILLIAM F. SAVINO OF COUNSEL), FOR PLAINTIFF-APPELLANT. J. ADAMS & ASSOCIATES, PLLC, WILLIAMSVILLE (JOAN CASILIO ADAMS OF COUNSEL), FOR DEFENDANT-RESPONDENT. Appeal from an order of the Supreme Court, Erie County (Amy C. Martoche, J.), entered May 21, 2025, in an action to rescind a property settlement agreement. The order, insofar as appealed from, granted that part of the motion of defendant seeking to dismiss the complaint. [*1] It is hereby ORDERED that the order so appealed from is unanimously affirmed without costs. Memorandum: Plaintiff commenced this action seeking to rescind one paragraph of the parties' Property Settlement Agreement (PSA) that equitably distributed defendant's medical practice and rescind the subsequent judgment of divorce regarding that equitable distribution, based on fraud/fraudulent inducement and newly discovered evidence. Defendant moved, inter alia, to dismiss the complaint pursuant to CPLR 3211 (a) (1) and (7). Plaintiff appeals from an order insofar as it granted that part of the motion seeking to dismiss the complaint. We affirm. On a motion to dismiss the complaint pursuant to CPLR 3211, "the pleading is to be afforded a liberal construction" (Leon v Martinez, 84 NY2d 83, 87 [1994], citing CPLR 3026). The court must give "every possible favorable inference" to a plaintiff and accept the allegations contained in the complaint as true (id.). In evaluating whether a complaint should be dismissed pursuant to CPLR 3211 (a) (7) in a case where the court has considered evidentiary material in support of or in opposition to the motion, "the criterion is whether the proponent of the pleading has a cause of action, not whether [the proponent] has stated one" (Leon, 84 NY2d at 88 [internal quotation marks omitted]). "[B]are legal conclusions and factual claims [that] are flatly contradicted by the evidence [proffered by the moving party] are not presumed to be true on a motion to dismiss for failure to state a cause of action" (Matter of Niagara County v Power Auth. of State of N.Y., 82 AD3d 1597, 1599 [4th Dept 2011], lv dismissed in part & denied in part 17 NY3d 838 [2011] [internal quotation marks omitted]; see also Naegele v Fox, 206 AD3d 1558, 1559 [4th Dept 2022]; see generally Rovello v Orofino Realty Co., 40 NY2d 633, 636 [1976]). "Dismissal of the complaint is warranted if the plaintiff fails to assert facts in support of an element of the claim, or if the factual allegations and inferences to be drawn from them do not allow for an enforceable right of recovery" (Connaughton v Chipotle Mexican Grill, Inc., 29 NY3d 137, 142 [2017]). Defendant owned a 25% interest in his medical practice. Paragraph 24 of the PSA stated that both parties had retained the services of an expert accountant for purposes of evaluating defendant's practice and agreed to a "compromised figure" for plaintiff's interest in the practice. The paragraph further provided that the parties had agreed to settle the case and waived "formal further disclosure, non-party disclosure, further valuations and litigation." The PSA was incorporated but not merged into a judgment of divorce. The day after that judgment was filed, a third party announced the purchase of defendant's practice and two other similar medical [*2]practices for an undisclosed amount. In her complaint, plaintiff alleged that, given the timing of the announcement of the purchase of defendant's practice, defendant "made material false statements concerning the value of his practice and/or omitted material facts regarding the value of" the practice with the intention of inducing plaintiff's reliance on an earlier and lower valuation. Plaintiff asserted that, had she known that a sale of defendant's practice was imminent, she would not have executed the PSA without knowing what the sale price of defendant's share was. Plaintiff asserted that she justifiably relied upon the earlier valuation and there was nothing that would have led her to believe that the practice would be sold at that time. Plaintiff alleged upon information and belief that her equitable share of the practice would be a much higher amount than she received under the PSA. We conclude that Supreme Court properly dismissed the complaint pursuant to CPLR 3211 (a) (7) for failure to state a claim. "Agreements between spouses, unlike ordinary business contracts, involve a fiduciary relationship requiring the utmost of good faith" (Christian v Christian, 42 NY2d 63, 72 [1977]). It is equally well settled, however, that "[m]arital settlement agreements are judicially favored and are not to be easily set aside" (Simkin v Blank, 19 NY3d 46, 52 [2012]; see Christian, 42 NY2d at 71-72). "[A separation agreement or] stipulation of settlement which is fair on its face will be enforced according to its terms unless there is proof of fraud, duress, overreaching, or unconscionability" (Van Ostrand v Latham, 222 AD3d 1382, 1383 [4th Dept 2023] [internal quotation marks omitted]; see Amoia v Amoia, 222 AD3d 1386, 1388 [4th Dept 2023]). The elements of a fraud claim are "a misrepresentation or a material omission of fact which was false and known to be false by [the] defendant, made for the purpose of inducing the other party to rely upon it, justifiable reliance of the other party on the misrepresentation or material omission, and injury" (Pasternack v Laboratory Corp. of Am. Holdings, 27 NY3d 817, 827 [2016], rearg denied 28 NY3d 956 [2016] [internal quotation marks omitted]; see Connaughton, 29 NY3d at 142). The court properly dismissed the complaint because defendant's evidentiary submissions conclusively establish that plaintiff has no cause of action for fraud inasmuch as there was no fraudulent misrepresentation or omission and, assuming, arguendo, that there was, plaintiff could not have justifiably relied on any alleged fraudulent representation or omission (see generally Van Ostrand, 222 AD3d at 1384; Kojovic v Goldman, 35 AD3d 65, 68-72 [1st Dept 2006], lv denied 8 NY3d 804 [2007]). In support of the motion, defendant submitted evidence that his attorney notified plaintiff's attorney during settlement negotiations that there was "a potential transaction regarding [the husband's] medical practice." Rather than make an inquiry regarding the potential transaction, plaintiff elected to waive any further discovery and go forward with the settlement (see DiSalvo v Graff, 227 AD2d 298, 298 [1st Dept 1996]). Entered: October 2, 2026 Ann Dillon Flynn Clerk of the Court