In Overdrive, Inc. v. Baker & Taylor, Inc.,116 Chancellor Chandler extended the holding of ABRY to facts that were a breach of covenant, not a misrepresentation. The fraud claim in that case was based upon actions that were allegedly prohibited by the exclusivity language in the contract that made plaintiff the “exclusive provider”117 of digital media distribution services-- except with respect to six pre-existing contracts between the defendant and third parties that were listed on a schedule to the agreement. After signing the agreement with the plaintiff, the defendant amended one of the listed contracts thereby permitting a third party to distribute defendant’s media content digitally in alleged violation of the exclusivity covenant. There,…show more content… GTE Corp.,119 the federal district court applied New York law and addressed the question of whether, under a contract that included an exclusive remedy provision and a limitation on liability, a fraud claim based upon representations in the contract could be maintained.120 After first reciting the exclusive remedy and limitations of liability language from the acquisition agreement, the court then outlined the requirements under New York law for a contract based fraud claim. The court stated that a claim of fraud for breaching representations and warranties in a contract is not sufficient unless the complaining party can (i) demonstrate a legal duty separate from the duty to perform under the contract; or (ii) demonstrate a fraudulent misrepresentation or breach collateral or extraneous to the contract; or (iii) seek special damages that are caused by the misrepresentations and breaches and are unrecoverable as contract damages.121 The court then proceeded to conclude that none of these criteria were satisfied and dismissed the fraud claim. Because the required elements for the fraud claim were not satisfied, the court never directly addressed whether the exclusive remedy clause would limit the fraud…show more content… v. Stryker Corporation,123 the court analyzed a fraud claim based upon an allegation that the seller knew that the compliance with laws representation was not true. After reciting the exclusive remedy clause in the contract, the court held that “New York does not enforce agreements that purport to exonerate or limit a party’s liability for willful or grossly negligent acts. The limitation of remedies section does not exonerate Pfizer for fraud.”124 New York law therefore permits buyers to make claims not only for “willful” misrepresentations, but also for gross negligence even if the contract otherwise purports to limit such liability. This is a nuanced approach similar to Delaware, but with the line drawn in a slightly different place because it would appear to permit grossly negligent contractual misrepresentation claims. As a result, the court proceeded to analyze whether under the facts of the case the necessary knowledge element could exist to support a fraud claim and ultimately dismissed the fraud claim. Interestingly, even though the facts and the claim would seem to warrant the contractual fraud claim pre-conditions outlined in Dyncorp, the court did not require that one of the three pre-conditions for a contract-based fraud claim exist, potentially leaving open whether that test continues to be required to make a contract-based fraud claim in New
