Eurycleia Partners, LP v. Seward & Kissel, LLP

Summary

The Court of Appeals affirmed dismissal of hedge-fund limited partners' claims against the fund's outside counsel, Seward & Kissel (S&K), sounding in fraud, aiding and abetting fraud, and breach of fiduciary duty. It held the complaint failed CPLR 3016 (b) because neither the allegations nor the surrounding circumstances permitted a reasonable inference that S&K knew the offering memoranda's representations about the 10% diversification cap and the auditor's identity were false. The court further held that an attorney's representation of a limited partnership does not, without more, create a fiduciary duty running to the limited partners, and that absent such a duty there was no legal obligation of affirmative disclosure supporting the silence-based fraud claims.