The following excerpt is from In re Palmieri, 50 N.Y.S.3d 27 (Table) (N.Y. Surr. Ct. 2016):
Constructive fraud is defined as a "breach of duty, which irrespective of moral guilt and intent, the law declares fraudulent because of its tendency to deceive, to violate a confidence or injure public or private interests which the law deems worthy of special protection" (see Brown v. Lockwood, 76 A.D.2d 721, 432 N.Y.S.2d 186 [2d Dept 1980] ; Matter of Klenk, 151 Misc.2d 863, 574 N.Y.S.2d 438 [Sur Ct Suffolk Co 1991] ). "Unlike actual fraud, which requires knowledge on the part of the perpetrator of his false representation, constructive fraud emanates form the existence of a fiduciary or confidential relationship whereby the trusting party reposes a confidence in the guilty party and therefore the trusting party does not exercise the care and vigilance that ordinarily would be exercised in a given situation" (Matter of Klenk).
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