Apparent Authority as a Dual Gateway: Fraud Pleading and CPLR 302 Jurisdiction; Six‑Year Cutoff for Serial Misrepresentations; Strict Propensity Notice for Negligent Supervision

Introduction

In Canfield Funding, LLC v. Focalpointe Group, LLC (2025 NY Slip Op 04374), the Appellate Division, Fourth Department, addresses three recurring issues in business-fraud litigation involving large corporations and invoice factoring arrangements:

• When allegations of “apparent authority” are sufficient to sustain a fraudulent misrepresentation claim against a corporate principal at the pleading stage;
• Whether those same allegations can support New York’s long-arm personal jurisdiction under CPLR 302 against non-domiciliary corporate defendants, by attributing in-state tortious conduct to their agents;
• How the statute of limitations for fraud (CPLR 213[8]) operates to partially time-bar serial misrepresentation schemes, and the strict notice requirement for negligent supervision under Moore Charitable Foundation v PJT Partners, Inc.

The plaintiff, Canfield Funding, is a New York factoring company that allegedly purchased and collected accounts receivable from Focalpointe Group for purported IT services rendered to UnitedHealth Group Incorporated, Optum, Inc., and OptumInsight, Inc. (collectively, the UHG/Optum defendants). It later emerged that no legitimate UHG/Optum–Focalpointe relationship existed; Focalpointe’s invoices were a sham within a multi-year fraud orchestrated by Focalpointe’s principal, Michael Mann. Canfield claims it repeatedly verified invoices with UHG/Optum employees over six years and relied on confirmations from individuals holding Director and Vice President titles.

The UHG/Optum defendants moved to dismiss for failure to state a claim, lack of personal jurisdiction, and on statute of limitations grounds, and succeeded in dismissing aiding and abetting fraud (unopposed) and negligent supervision. The trial court otherwise sustained the core fraud claim. On appeal and cross-appeal, the Fourth Department largely affirms, but trims the fraud claim to exclude acts occurring more than six years before suit, applying CPLR 213(8).

Summary of the Judgment

• Fraud claim survives in part: Accepting the complaint’s allegations as true (CPLR 3211[a][7]), Canfield adequately pleaded fraudulent misrepresentation against UHG/Optum, based on apparent authority of four employees who verified invoices and account balances over several years.
• Apparent authority supports both liability and jurisdiction: The complaint adequately alleges that the UHG/Optum defendants, through job titles, corporate communications channels, and a Vice President’s confirmation, created an appearance of authority—sufficient not only to plead fraud but also to establish a factual basis for long-arm personal jurisdiction (CPLR 302), because the employees’ in-state tortious conduct may be imputed to their principal “through an agent.”
• Partial statute-of-limitations dismissal: Fraud claims are time-barred to the extent based on acts before August 15, 2016 (six years before commencement on August 15, 2022). The two-year discovery provision is inapplicable because discovery occurred by early September 2019 and suit was filed more than two years later.
• Negligent supervision dismissed: Applying Moore Charitable Foundation v PJT Partners, Inc., the court holds Canfield failed to plead the employer’s actual or constructive knowledge of the employees’ propensity to commit the kind of fraud at issue. Knowledge of Mann’s conduct is irrelevant because he was not UHG/Optum’s employee.

Analysis

Precedents Cited and Their Influence

• Leon v Martinez, 84 NY2d 83 (1994); AG Capital Funding Partners, L.P. v State St. Bank & Trust Co., 5 NY3d 582 (2005); EBC I, Inc. v Goldman, Sachs & Co., 5 NY3d 11 (2005); Cortlandt St. Recovery Corp. v Bonderman, 31 NY3d 30 (2018)
  These foundational pleading cases underpin the CPLR 3211(a)(7) standard: accept factual allegations as true, draw favorable inferences for the plaintiff, and ask only whether the facts fit any cognizable legal theory. The Fourth Department uses this standard to keep the fraud claim alive at the pleading stage, making clear that whether Canfield can ultimately prove its allegations is not part of the dismissal calculus.
• Mandarin Trading Ltd. v Wildenstein, 16 NY3d 173 (2011)
  Provides the familiar elements of fraudulent misrepresentation. The court relies on Mandarin to structure the inquiry, focusing on falsity, intent to induce reliance, justifiable reliance, and injury.
• Parlato v Equitable Life Assur. Socy. of U.S., 299 AD2d 108 (1st Dept 2002), lv denied 99 NY2d 508 (2003); American Socy. of Mech. Engrs., Inc. v Hydrolevel Corp., 456 US 556 (1982)
  These cases articulate the principle that a principal may be liable for an agent’s misuse of apparent authority to defraud third parties—even when the agent acts solely for personal benefit and to the detriment of the principal. The Fourth Department leans on this logic to underscore why UHG/Optum cannot avoid liability merely because the scheme allegedly favored the employees or Mann, rather than the corporate principal.
• Hallock v State of New York, 64 NY2d 224 (1984); Standard Funding Corp. v Lewitt, 89 NY2d 546 (1997)
  These leading New York cases set the guardrails for apparent authority: it must be created by the principal’s words or conduct communicated to the third party; agents cannot unilaterally create their own apparent authority. The court uses Hallock and Standard Funding to insist that the complaint point to principal-level conduct—and it finds such conduct in the job titles, email/phone use over six years, and, critically, the Vice President’s confirmation.
• Regency Oaks Corp. v Norman-Spencer McKernan, Inc., 129 AD3d 1454 (4th Dept 2015); Federal Ins. Co. v Diamond Kamvakis & Co., 144 AD2d 42 (1st Dept 1989)
  Both support that corporate arrangements, titles, and long-term course of dealing can create the factual predicate for apparent authority at the pleading stage. The court draws on these to find that Canfield’s reliance was plausibly reasonable.
• People v Frisco Mktg. of NY LLC, 93 AD3d 1352 (4th Dept 2012); Tucker v Sanders, 75 AD3d 1096 (4th Dept 2010); Altman v DiPreta, 204 AD3d 965 (2d Dept 2022)
  These cases inform the personal jurisdiction analysis. They emphasize that to defeat a CPLR 3211(a)(8) motion, the plaintiff need only show that “facts may exist” to support jurisdiction. The court relies on this lenient standard and the “through an agent” language of CPLR 302 to impute in-state tortious conduct to UHG/Optum at this stage.
• CPLR 213(8); Boardman v Kennedy, 105 AD3d 1375 (4th Dept 2013); Lane’s Floor Coverings & Interiors, Inc. v DiLalla, 226 AD3d 593 (1st Dept 2024); Krog Corp. v Vanner Group, Inc., 158 AD3d 914 (3d Dept 2018)
  These authorities govern the fraud limitations period: the longer of six years from accrual or two years from discovery. The Fourth Department applies them to partially dismiss pre–August 15, 2016 misrepresentations, demonstrating the permissibility of partial time-bar rulings within a single fraud cause of action.
• Moore Charitable Foundation v PJT Partners, Inc., 40 NY3d 150 (2023); 106 N. Broadway, LLC v Lawrence, 189 AD3d 733 (2d Dept 2020)
  Moore refines negligent supervision in New York, adding a specific “premises or resources” element and clarifying the strict notice requirement: the employer must know or have reason to know of the employee’s propensity for the injury-producing conduct. The Fourth Department applies Moore to hold that Canfield failed to allege employer notice of these particular employees’ propensity to commit fraud.

Legal Reasoning

1) Apparent Authority Sustains the Fraud Claim at the Pleading Stage

The court holds that Canfield’s allegations, taken as true, plausibly show that UHG/Optum’s employees acted with apparent authority. Key pleaded facts include:

• Use of UHG/Optum email accounts and phones during work hours over a six-year period to communicate invoice verifications;
• Employees’ job titles and responsibilities (Director-level roles in staffing/financial analysis and a Vice President with vendor management/IT delivery), aligning with the subject matter being verified;
• A Vice President’s confirmation to Canfield both of a substantial account balance and that the Director was the appropriate point of contact for financial matters—an explicit principal-originated signal that Canfield could rely on that employee.

These facts, if proven, satisfy Hallock/Standard Funding by identifying principal conduct (not merely agent say-so) that created the appearance of authority. Combined with Parlato and Hydrolevel, the court recognizes that even if the employees acted for personal or third-party benefit, the corporate principal may be liable where its structure and communications enabled the fraud and induced reasonable reliance.

2) Apparent Authority Also Supports Long-Arm Jurisdiction (CPLR 302)

New York’s long-arm statute extends jurisdiction over non-domiciliaries who, “in person or through an agent,” either transact business in the state or commit a tortious act within the state (CPLR 302[a][1], [2]). By sufficiently alleging that the employees were acting with apparent authority, Canfield establishes—at the jurisdictional pleading stage—that UHG/Optum may be responsible “through an agent” for in-state tortious communications to a New York plaintiff. Under Frisco and Tucker, Canfield need only show that “facts may exist” to support jurisdiction; full resolution is left for discovery. The finding is especially notable because it uses the same apparent authority theory to defeat both a merits-based dismissal and a jurisdictional challenge.

3) Fraud’s Statute of Limitations: A Six-Year Lookback and Partial Time-Bar

CPLR 213(8) provides the longer of six years from accrual or two years from discovery. The complaint alleges discovery by early September 2019; suit was filed on August 15, 2022—outside two years—so the discovery prong does not help. The court therefore applies a six-year lookback measured from commencement and dismisses the fraud claim insofar as it rests on misrepresentations before August 15, 2016.

The practical import is twofold:

• Serial misrepresentation schemes tied to multiple invoices over years may be partially time-barred on a rolling basis; and
• Partial dismissal within a single fraud cause of action is proper, trimming only the time-barred segment.

4) Negligent Supervision: Strict Notice of Employees’ Propensity Required

Assuming New York law applies, the Moore framework requires pleading:

1. Actual or constructive knowledge of the employee’s propensity for the injury-causing conduct;
2. Knowledge of the ability to control and the necessity to do so; and
3. The tort occurred on the employer’s premises or using property/resources available only through employment.

Canfield alleged use of corporate emails/phones (element 3) and, inferentially, the employer’s ability to control (element 2). But it did not allege that UHG/Optum had notice of these specific employees’ propensity to commit fraudulent verification. Knowledge of Mann’s misconduct is irrelevant because he was not an employee. Under Moore, this pleading gap is fatal, so the negligent supervision claim was correctly dismissed.

Impact and Forward-Looking Consequences

• For corporate principals: The case underscores that job titles, long-standing patterns of confirmation communications, and high-level endorsements can together create apparent authority exposing the company to fraud liability—even when the company did not benefit and the employee acted adversely to corporate interests. Companies should centralize and standardize third-party verifications, limit who may confirm receivables or assignments, and ensure communications carry clear authority parameters (recognizing that disclaimers alone will not cure principal-created appearances under Hallock/Standard Funding).
• For factoring companies and trade finance: The decision validates the practice of seeking invoice verifications from counterparties and relying on apparent authority indicators—at least to defeat a pleading-stage dismissal. However, the six-year limitations “guillotine” requires prompt filing or careful recordkeeping to preserve damages for older misrepresentations.
• On jurisdiction: The opinion is significant in treating apparent authority as a jurisdictional conduit under CPLR 302’s “through an agent” language. Where corporate employees allegedly direct tortious communications into New York while clothed with apparent authority, their out-of-state principal may be amenable to New York jurisdiction at the outset.
• On negligent supervision claims post-Moore: Plaintiffs must plead concrete facts showing the employer’s notice of the specific employee’s propensity to commit the kind of tort alleged. Generalized suspicions, or knowledge of a non-employee’s misconduct, will not suffice.

Complex Concepts Simplified

• Apparent authority: When a principal, by its own actions (titles, communications, patterns of dealing), leads a third party to reasonably believe an agent has authority, the principal can be bound—even if the agent acts for personal gain. The agent cannot create apparent authority by self-assertion; it must flow from the principal’s conduct.
• Fraudulent misrepresentation (pleading elements): A false statement (or material omission) known to be false, made to induce reliance; the plaintiff justifiably relies; and suffers injury as a result.
• Long-arm jurisdiction (CPLR 302): New York courts can exercise jurisdiction over non-domiciliaries who, in person or through agents, transact business in NY or commit torts in NY. At the pleading stage, the plaintiff need only show that facts may exist to support jurisdiction; detailed proof can await discovery.
• Fraud statute of limitations (CPLR 213[8]): The longer of six years from when the misrepresentation occurred or two years from when the plaintiff discovered (or reasonably should have discovered) the fraud. Filing after two years from discovery forecloses that prong, leaving only the six-year lookback from the filing date.
• Negligent supervision (Moore standard): To state a claim, a plaintiff must allege the employer knew or should have known of the employee’s propensity for the specific tort, had the ability and need to control the employee, and that the tort occurred on the employer’s premises or using employer-only resources (like corporate email systems). Mere allegations that a third party was fraudulent or that the employer could have supervised better are not enough.

Conclusion

Canfield Funding establishes three important guideposts in New York business-fraud litigation:

1. Apparent authority does double duty. Well-pleaded allegations that a corporate principal created the appearance of authority—through titles, channels, and a senior confirmation—can sustain a fraud claim and supply a jurisdictional hook under CPLR 302 as “through an agent.”
2. Fraud’s six-year clock can partially prune serial schemes. Courts may pare back a single fraud cause of action to exclude misrepresentations outside the six-year window, even while allowing later misrepresentations to proceed.
3. Negligent supervision remains tightly circumscribed after Moore. Plaintiffs must plead employer notice of the individual employees’ propensity for the specific misconduct; knowledge about non-employees or generalized risks does not suffice.

In an era of remote communications and complex vendor ecosystems, this decision highlights the legal significance of corporate signaling—who speaks for the company, how they communicate, and for how long. Those signals can create apparent authority with real consequences for liability and jurisdiction, while limitations law and Moore’s notice requirement set firm boundaries on recoverable claims and supervisory theories.