Barrier Systems, Inc. v. A.F.C. Enterprises, Inc

In Barrier Systems, Inc. v. A.F.C. Enterprises, Inc., 264 A.D.2d 432 (2nd Dept. 1999) the plaintiff commenced an action against defendant A.F.C. for its failure to make certain payments remaining on a modified lease. In opposition to plaintiff's motion for partial summary judgment, defendant A.F.C. alleged that the plaintiff had intentionally misrepresented the features and performance characteristics of certain equipment by employing "bait and switch" tactics to fraudulently induce it into using the equipment. The appellate Court, in reversing the trial court's denial of plaintiff's motion for partial summary judgment, stated, in pertinent part, the following [264 A.D.2d 432, 433, 694 N.Y.S.2d 440 (2nd Dept., 1999)]: "A.F.C. cannot avoid partial summary judgment by asserting fraud in the inducement and other arguments related to the inadequacy of the equipment, inasmuch as it entered into the lease modification agreement, made substantial payments thereunder, and continued to use the leased equipment after learning of the alleged fraud and bait and switch tactics in which the plaintiff allegedly engaged. Hence, A.F.C. confirmed and acknowledged its obligations under the lease at a time when it was aware of the purported fraud and of the alleged shortcomings of the TTV (see, European Am. Bank v. Syosset Autorama, 204 A.D.2d 266, 611 N.Y.S.2d 585; Gannett Co. v. Tesler, 177 A.D.2d 353, 577 N.Y.S.2d 248; Klapper v. Integrated Agric. Mgt. Co., 149 A.D.2d 765, 539 N.Y.S.2d 812; Lumber Ind. v. Woodlawn Furniture Corp., 26 A.D.2d 924, 274 N.Y.S.2d 813). "Whether under a waiver or ratification analysis, a party may not avoid an agreement on grounds of fraud if, after acquiring knowledge of the fraud, he affirms the contract by accepting a benefit under it" (Agristor Leasing-II v. Pangburn, 162 A.D.2d 960, 961, 557 N.Y.S.2d 183; see, Sugar Cr. Stores v. Pitts, 198 A.D.2d 833, 604 N.Y.S.2d 407; see generally, Bowmer v. H.C. Louis, Inc., 243 Cal.App.2d 501, 52 Cal.Rptr. 436). Accordingly, the plaintiff is entitled to partial summary judgment on its claim for unpaid rent."