Psenicska v. Twentieth Century Fox Film Corp.
409 F. App'x 368 (2009)
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Rule of Law:
Under New York law, a specific contractual disclaimer of reliance on oral representations about the subject matter of a contract bars a fraudulent inducement claim, especially when the 'peculiar knowledge' exception does not apply because the aggrieved party could have easily verified the representations or walked away from the agreement without collateral harm.
Facts:
- Plaintiffs appeared in the movie BORAT — Cultural Learnings of America for Make Benefit Glorious Nation of Kazakhstan.
- Plaintiffs signed a 'Standard Consent Agreement' that included a provision disclaiming reliance on 'any promises or statements made by anyone about the nature of the Film or the identity of any other Participants or persons involved in the Film.'
- Defendants orally represented the film as a documentary about a foreign reporter or dignitary and his experiences in the United States, to be broadcast on Belarus television.
- One plaintiff, Psenicska, claims he was told the film would be a 'documentary about the integration of foreign people into the American way of life.'
- The released film, Borat, featured a fictional character but was created in the style of a traditional, fact-based documentary, comprising interviews with real people and depictions of real events.
Procedural Posture:
- Plaintiffs (individuals who appeared in the movie BORAT) sued defendants (including Twentieth Century Fox Film Corp.) in the United States District Court for the Southern District of New York, alleging fraud, unjust enrichment, and infliction of emotional distress.
- The district court granted the defendants' motion to dismiss the complaints under Federal Rule of Civil Procedure 12(b)(6), concluding that the plaintiffs' suits were barred by their signed Standard Consent Agreements.
- Plaintiffs appealed the district court's judgment of dismissal to the United States Court of Appeals for the Second Circuit.
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Issue:
Does a contractual provision disclaiming reliance on oral representations about the nature of a film bar a fraudulent inducement claim when the plaintiff alleges that defendants orally misrepresented the film's nature and the true facts were 'peculiarly within' the defendants' knowledge?
Opinions:
Majority - Per Curiam
No, a contractual provision disclaiming reliance on oral representations about the nature of a film bars a fraudulent inducement claim even if the defendants orally misrepresented the film's nature, because the 'peculiar knowledge' exception does not apply under these circumstances. The court found no ambiguity in the term 'documentary-style film,' concluding that Borat unequivocally falls within this genre due to its use of interviews with real people and depictions of real events to tell a fictional character's story in a fact-based documentary style. Under New York law, a specific contractual disclaimer of reliance on representations regarding the very matter as to which fraud is claimed typically defeats allegations of reliance. The 'peculiar knowledge' exception, which permits a claim of reliance despite a disclaimer when facts are uniquely known to the misrepresenting party, was deemed inapplicable here. This exception is intended for situations where determining the truth would be costly or where a party could not insist on written terms for a deal-breaking issue. Plaintiffs took no simple steps to confirm the oral representations (e.g., asking to meet the 'reporter' or learn his name) and could have walked away from the film offer without sustaining collateral harm if written terms were denied. Therefore, plaintiffs failed to demonstrate reasonable reliance, which is an essential element for claims of fraudulent inducement or duty to disclose.
Analysis:
This case significantly reinforces the enforceability of specific contractual disclaimers of reliance under New York law, particularly against claims of fraudulent inducement. It clarifies the narrow scope of the 'peculiar knowledge' exception, limiting its application to situations where plaintiffs genuinely face high costs in verifying information or cannot practically insist on written contractual terms. The ruling emphasizes a contracting party's responsibility to exercise due diligence, either by seeking clarification, incorporating crucial terms into a written agreement, or opting out of a deal if conditions are not met without incurring substantial detriment. This precedent underscores judicial deference to clear contractual language, even in the face of alleged misrepresentation, when the aggrieved party had reasonable avenues for self-protection.
