Yellin v. Revival Property Group, LLC: Pleading Fraud and Breach of Fiduciary Duty Against Undisclosed Dual Real Estate Agents

I. Introduction

The Appellate Division, Second Department’s decision in Yellin v. Revival Property Group, LLC, 2025 NY Slip Op 07332 (Dec. 24, 2025), squarely addresses the liability exposure of real estate brokers who allegedly act as undisclosed dual agents in residential transactions, particularly in the context of a purported “house-flipping” scheme involving unpermitted and structurally defective renovations.

The case centers on plaintiffs who purchased a Nassau County residential property that had been remodeled. They allege that the brokers—Brode Ellison Group at Douglas Elliman Real Estate and its agent, Mark Brode (collectively, “the broker defendants”)—simultaneously represented them and the sellers, failed to properly disclose that dual role, and made (or participated in) material misrepresentations regarding the condition and permitting of the property. After the trial court (Supreme Court, Nassau County) dismissed several tort and fiduciary duty claims at the pleading stage, the Appellate Division reversed, reinstating those causes of action and granting leave to amend the complaint.

The opinion clarifies several important points of New York law:

What is required to state claims for fraudulent misrepresentation, negligent misrepresentation, gross negligence, and breach of fiduciary duty against real estate brokers in an alleged “flip” scenario.
The limits of Real Property Law § 443 agency disclosure forms as “documentary evidence” sufficient to defeat such claims under CPLR 3211(a)(1).
The fiduciary obligations of real estate brokers, particularly when acting (or alleged to be acting) as dual agents, and the consequences of non-disclosure.
The standards governing motions to dismiss under CPLR 3211(a)(1) and (7), the improper conversion of such motions to summary judgment under CPLR 3211(c), and the Appellate Division’s remedial approach.
The liberal standard for granting leave to amend under CPLR 3025(b), especially where amendments are unopposed and facially non-frivolous.

The decision thus reinforces robust pleading-stage protection for purchasers in real estate transactions while clarifying the evidentiary threshold that broker-defendants must meet to secure early dismissal.

II. Summary of the Opinion

The plaintiffs purchased a remodeled home in Nassau County between November 2018 and January 2019. They alleged that the broker defendants acted as dual agents, representing both them and the sellers, without adequate disclosure, and that they participated in a fraudulent house-flipping scheme involving unpermitted work that caused serious structural defects.

The plaintiffs asserted multiple causes of action, including:

Second cause of action: breach of fiduciary duty (against the broker defendants).
Fourth cause of action: negligent misrepresentation.
Fifth cause of action: gross negligence.
Seventh cause of action: fraudulent misrepresentation.

The broker defendants moved under CPLR 3211(a) to dismiss these claims. The Supreme Court granted those branches of the motion, and entered judgment dismissing the second, fourth, fifth, and seventh causes of action as against the broker defendants. Later, on a motion by plaintiffs seeking renewal, reargument, and leave to amend, the court:

Adhered to its prior determination dismissing the four causes of action.
Denied leave to amend the complaint.

On appeal, the Second Department:

Dismissed the appeal from the April 14, 2021 order as superseded by the judgment, under Matter of Aho, but considered the issues via the appeal from the judgment (CPLR 5501[a][1]).
Reversed the judgment insofar as it dismissed the second, fourth, fifth, and seventh causes of action against the broker defendants, holding that:
- The complaint adequately stated causes of action for fraudulent misrepresentation, negligent misrepresentation, gross negligence, and breach of fiduciary duty.
- The broker defendants’ “documentary evidence” did not “utterly refute” the plaintiffs’ allegations as required for dismissal under CPLR 3211(a)(1).
Vacated so much of the December 21, 2021 order as adhered to the April 14, 2021 dismissal.
Dismissed as academic the appeal from the December 21, 2021 order in light of the reversal of the judgment.
Reversed the December 21, 2021 order insofar as it denied leave to amend, and granted leave to amend the complaint.
Awarded costs to the plaintiffs.

In doing so, the Court highlighted the fiduciary obligations of real estate brokers, especially in multiple-representation situations, and confirmed that even signed Real Property Law § 443 disclosure forms do not automatically defeat allegations of undisclosed dual agency at the pleading stage.

III. Procedural and Doctrinal Framework

A. Appeals from Intermediate Orders and the “Aho Rule”

The Court begins by applying the well-known principle from Matter of Aho, 39 NY2d 241, 248, that a party’s right to take a direct appeal from an interlocutory order terminates upon entry of a final judgment. At that point, the issues decided by the order are reviewable only on appeal from the final judgment, under CPLR 5501(a)(1). Thus:

The appeal from the April 14, 2021 order was dismissed.
The issues raised by that appeal were nevertheless “brought up for review” by the appeal from the May 4, 2021 judgment.

This is standard appellate mechanics but important for practitioners: once a final judgment is entered, parties should focus their appellate practice on that judgment rather than pursuing separate appeals from pre-judgment orders.

B. Misapplication of CPLR 3211 by the Trial Court and the Appellate Response

The Second Department notes that “although the plaintiffs’ motion was made pursuant to CPLR 3211(a), the Supreme Court treated it as one for summary judgment without providing the parties with any notice that it intended to do so (see id. § 3211[c]).” Under CPLR 3211(c), a trial court can convert a motion to dismiss into a summary judgment motion, but only with appropriate notice so that parties can marshal evidentiary submissions.

However, instead of remanding for reconsideration under the correct standard, the Appellate Division opted, “in the interest of judicial economy,” to decide the merits itself under the proper CPLR 3211 standards (citing Christ the Rock World Restoration Church Intl., Inc. v Evangelical Christian Credit Union, 153 AD3d 1226, 1229; Fedele v Qualified Personal Residence Trust of Doris Rosen Margett, 137 AD3d 965, 966–967; Sta-Brite Servs., Inc. v Sutton, 17 AD3d 570, 570–571). This line of cases stands for the proposition that where the record is fully developed, and the parties have briefed the CPLR 3211 issues, the appellate court can correct the standard and resolve the motion rather than remand.

IV. Detailed Analysis of the Court’s Reasoning

A. Standards for Dismissal Under CPLR 3211(a)(1) and (7)

1. CPLR 3211(a)(1): Documentary Evidence Must “Utterly Refute” the Allegations

Citing Georgica Bldrs., Ltd. v 136 Bishops Lane, LLC, 175 AD3d 610, 611, and Leon v Martinez, 84 NY2d 83, 87–88, the Court reiterates that:

“To succeed on a motion to dismiss based upon documentary evidence pursuant to CPLR 3211(a)(1), the documentary evidence must utterly refute the plaintiff’s factual allegations, conclusively establishing a defense as a matter of law.”

Key aspects of this standard:

The evidence must be documentary in the technical sense (e.g., contracts, deeds, official records), not affidavits or general evidentiary submissions.
“Utterly refute” is a very high bar: the documents must leave no room for factual dispute.
If the documents are ambiguous or incomplete, they will not justify dismissal under (a)(1).

In Yellin, the broker defendants relied, among other things, on a Real Property Law § 443 disclosure form. The Court held that the “last page” of that form, bearing the signature of only one plaintiff, did not “utterly refute” the plaintiffs’ allegations of undisclosed dual agency and breach of fiduciary duty. Thus, it was insufficient to warrant dismissal under CPLR 3211(a)(1).

2. CPLR 3211(a)(7): Pleading a Cognizable Legal Theory

The Court also reaffirms the familiar standard under CPLR 3211(a)(7), quoting Georgica Bldrs. and Leon:

“On a motion pursuant to CPLR 3211(a)(7) to dismiss for failure to state a cause of action, the court must accept the facts alleged in the complaint as true, accord the plaintiff the benefit of every possible favorable inference, and determine only whether the facts as alleged fit within any cognizable legal theory.”

This “cognizable legal theory” standard is generous: the question is not whether the plaintiff will ultimately prove the case, but whether, assuming the allegations are true and read favorably, they amount to a recognized cause of action. The Second Department applied this standard and held the complaint sufficient as to four key tort/fiduciary causes of action.

B. Fraudulent Misrepresentation and Related Tort Claims

1. Fraudulent Misrepresentation

The Court quotes Berkovits v Berkovits, 190 AD3d 911, 915 (citing Fox Paine & Co., LLC v Houston Cas. Co., 153 AD3d 673, 677), for the elements of fraud:

“The elements of a cause of action to recover damages for fraud are (1) a misrepresentation or a material omission of fact which was false, (2) knowledge of its falsity, (3) an intent to induce reliance, (4) justifiable reliance by the plaintiff, and (5) damages.”

Applying those elements, the Second Department concluded that the complaint “sufficiently stated” a fraud cause of action:

The complaint alleged misrepresentations of fact (not mere opinions or puffery) concerning, among other things, the condition and permitting of the property.
Those misrepresentations were alleged to be false, with the broker defendants having knowledge of their falsity.
The complaint alleged an intent to induce reliance, specifically as part of a “fraudulent house-flipping scheme involving the defendants and others.”
Plaintiffs alleged reliance on those representations in deciding to purchase the property.
Plaintiffs alleged resulting damages upon discovering unpermitted structural defects after the purchase.

The opinion’s emphasis that the misrepresentations were “part of a fraudulent house-flipping scheme” is notable. It suggests that allegations of coordinated schemes involving brokers and others can support an inference of scienter (knowledge and intent) at the pleading stage, particularly where the broker’s role plausibly indicates a financial or strategic interest in the transaction beyond a neutral facilitation.

2. Negligent Misrepresentation

For negligent misrepresentation, the Court cites Leon v Martinez and RBS Citizens, N.A. v Thorsen, 71 AD3d 1108, 1108–1109. Although the opinion does not restate the elements in full, under New York law they generally include:

Existence of a special or privity-like relationship imposing a duty to impart correct information.
Provision of false information that the defendant should have known was incorrect.
Reasonable reliance by the plaintiff.
Resulting pecuniary loss.

In Yellin, the “special relationship” is grounded in the broker’s fiduciary duty as an agent for the buyers. Given the Court’s later discussion of brokers as fiduciaries, it is clear that where a broker undertakes to advise and guide a purchaser in a transaction—and especially where the broker is (or is alleged to be) a dual agent—this can supply the necessary relationship to support negligent misrepresentation.

3. Gross Negligence

With respect to gross negligence, the Court cites Leon v Martinez and Dolphin Holdings, Ltd. v Gander & White Shipping, Inc., 122 AD3d 901, 902–903, as authority that the complaint adequately alleged this claim as well.

Under New York law, gross negligence is conduct that evinces a reckless disregard for the rights of others or “smacks of intentional wrongdoing.” In the real estate context, a broker who knowingly or recklessly ignores serious defects, violations, or undisclosed risks while advising a buyer may face exposure to such a claim, particularly where the broker’s conflict of interest or dual loyalties are alleged to be concealed.

While the opinion does not detail the exact factual allegations supporting gross negligence, the Court’s conclusion that the complaint satisfies this standard signals that allegations of a coordinated scheme, concealment of unpermitted work, and reckless disregard of the buyer’s interests suffice, at least at the pleading stage.

C. Breach of Fiduciary Duty and Undisclosed Dual Agency

1. Brokers as Fiduciaries

The decision’s most significant doctrinal contribution concerns the fiduciary obligations of real estate brokers. The Court quotes Edwards v Walsh, 169 AD3d 865, 867 (itself quoting Dubbs v Stribling & Assoc., 96 NY2d 337, 340), for the basic principle:

“A real estate broker is a fiduciary with a duty of loyalty and an obligation to act in the best interests of the principal.”

This is reinforced with a citation to Ader v Guzman, 135 AD3d 668, 670, confirming that New York continues to treat brokers as fiduciaries, not merely as arms-length service providers.

2. Disclosure of Divided Loyalties and Multiple Representation

The Court continues quoting Dubbs (via Edwards):

“[W]here a broker’s interests or loyalties are divided due to a personal stake in the transaction or representation of multiple parties, the broker must disclose to the principal the nature and extent of the broker’s interest in the transaction or the material facts illuminating the broker’s divided loyalties.”

And further:

“A breach of this duty of loyalty by a real estate broker may constitute a fraud for which the broker is answerable in damages.”

This underscores two key doctrinal points:

Disclosure obligation: A broker must not merely disclose in conclusory terms that they are a “dual agent” or have a conflict; they must disclose the “nature and extent” of that interest or “material facts” about their divided loyalties, so that the principal can make an informed decision.
Overlap with fraud: A breach of fiduciary duty in this context can rise to the level of fraud, exposing the broker not only to equitable relief or fee forfeiture but to tort damages, potentially including punitive damages where the conduct is egregious.

3. Application to the Yellin Facts

The Second Department holds that the complaint “sufficiently alleged” that the broker defendants:

“represented multiple parties to the transaction” (i.e., acted as dual agents or otherwise had divided loyalties), and
did so “without disclosing that fact to the plaintiffs,” thereby breaching their fiduciary duty of loyalty.

Critically, the Court finds that the broker defendants’ documentary submission—the Real Property Law § 443 disclosure form—did not conclusively disprove those allegations:

“In particular, the last page of a Real Property Law § 443 disclosure form bearing the signature of only one of the plaintiffs did not warrant dismissal of the second cause of action pursuant to CPLR 3211(a)(1).”

This is an important holding for future dual-agency litigation:

A partially executed or incomplete § 443 form, especially where only one purchaser signed and only the last page is supplied, will not be deemed to “utterly refute” a claim that the broker failed to adequately disclose dual representation.
Even a fully signed § 443 form may not suffice at the pleading stage if the complaint alleges that the broker failed to disclose the “nature and extent” of the dual agency or other material conflicts, or that the form itself was misleading or not reflective of reality.

In short, Yellin underscores that Real Property Law § 443 forms are not a silver bullet at the CPLR 3211(a)(1) stage where the plaintiffs plausibly allege undisclosed or inadequately disclosed dual agency.

D. Leave to Amend Under CPLR 3025(b)

The Second Department next addresses the denial of leave to amend, quoting the standard from Bridgehampton Natl. Bank v D & G Partners, L.P., 186 AD3d 1310, 1311:

“Motions for leave to amend pleadings should be freely granted, absent prejudice or surprise directly resulting from the delay in seeking leave, unless the proposed amendment is palpably insufficient or patently devoid of merit.”

This is consistent with CPLR 3025(b) and well-settled New York practice. The Court then notes that:

The plaintiffs had “established their entitlement to the proposed amendments,” and
Crucially, “the defendants did not oppose” those amendments, citing Deutsche Bank Natl. Trust Co. v Nissan, 230 AD3d 1105, 1108, and Thomsen v Suffolk County Police Dept., 50 AD3d 1015, 1017–1019.

Under these circumstances, denying leave to amend was an abuse of discretion. The appellate court therefore reversed that aspect of the order and granted leave.

Practically, Yellin reinforces that:

Leave to amend is the norm, not the exception, especially in the early procedural stages.
Where a defendant does not oppose the amendment and there is no clear prejudice or futility, trial courts should not deny such motions.
In complex fraud and fiduciary duty cases, plaintiffs often need to refine or expand their factual allegations as discovery progresses; the courts should facilitate that process consistent with CPLR 3025(b).

E. Appellate Disposition and Mootness

Finally, because the Court reversed the judgment and reinstated the claims, it dismissed as academic the appeal from so much of the December 21, 2021 order as had adhered to the April 14, 2021 dismissal. Once the underlying judgment was reversed and the claims restored, the continued validity of the intermediate order became moot, and no further practical relief was needed.

V. Complex Concepts and Terminology Simplified

A. CPLR 3211(a)(1) – “Documentary Evidence” Dismissal

Under CPLR 3211(a)(1), a defendant can seek dismissal based on “documentary evidence.” In practice, this means:

Written instruments such as contracts, deeds, mortgages, official records, or prior judicial determinations.
Documents that are unambiguous and whose authenticity is unquestioned.
Evidence that, on its face, proves a defense so conclusively that the lawsuit cannot stand.

In Yellin, the broker defendants’ reliance on a single signed page of a Real Property Law § 443 agency disclosure form was not enough. A partial or incomplete form does not “utterly refute” claims of undisclosed dual agency and breach of fiduciary duty.

B. CPLR 3211(a)(7) – Failure to State a Cause of Action

A motion under CPLR 3211(a)(7) tests the legal sufficiency of the complaint, not the ultimate merits. At this stage:

The court assumes all well-pleaded facts are true.
The plaintiff gets the “benefit of every possible favorable inference.”
The question is simply: do the alleged facts, if true, add up to any recognized legal claim?

In Yellin, the Court found that the allegations—undisclosed dual agency, participation in a fraudulent house-flipping scheme, misdescriptions of the property’s condition and permitting, and reliance by the buyers—fit comfortably within recognized theories of fraud, negligent misrepresentation, gross negligence, and breach of fiduciary duty.

C. Fraud vs. Negligent Misrepresentation vs. Gross Negligence

Fraudulent misrepresentation requires intentional deception: the defendant knows a statement is false (or is recklessly indifferent to its truth), intends the plaintiff to rely, and the plaintiff justifiably relies and is damaged.
Negligent misrepresentation involves carelessness rather than intent: the defendant has a duty to give correct information (typically due to a special or fiduciary relationship), provides incorrect information without exercising reasonable care, and the plaintiff reasonably relies and suffers financial harm.
Gross negligence is more than ordinary negligence; it is a form of extreme carelessness or reckless disregard, often close to intentional wrongdoing in its seriousness.

Yellin recognizes that all three theories can co-exist in a real estate transaction where a broker is alleged to have misled the buyer about a property’s condition and where undisclosed self-interest or divided loyalties are involved.

D. Fiduciary Duty of Real Estate Brokers and Dual Agency

A fiduciary is someone who must act loyally and in the best interests of another—here, the client. A real estate broker is such a fiduciary. When a broker represents both the buyer and the seller (a dual agent), or has any personal stake in the transaction (e.g., involvement in a flip), the broker’s loyalties are divided.

New York law requires that the broker:

Fully disclose the fact of dual representation or self-interest.
Explain the “nature and extent” of the conflict so the client can give informed consent.
Refrain from self-dealing or favoring one party over the other without such informed consent.

If the broker fails to do this, the breach can amount to:

A claim for breach of fiduciary duty, and
Potentially, a claim for fraud, with attendant damages.

Yellin confirms these principles and applies them to undisclosed dual agency in a residential transaction involving alleged structural defects.

E. Real Property Law § 443 Agency Disclosure Form

Real Property Law § 443 requires that real estate licensees give written disclosures to the parties in residential real estate transactions regarding whom the broker represents (seller, buyer, landlord, tenant, or both in dual agency). Typically:

The form describes the nature of each type of agency relationship.
The parties acknowledge and sign to indicate their understanding and consent.

In Yellin, the broker defendants pointed to the last page of such a form, signed by only one plaintiff, as proof that they had made appropriate disclosures. The Court held that this partial form did not conclusively disprove the claim that the broker failed to disclose its multiple representation and divided loyalties.

Thus, a § 443 form is relevant, but not necessarily dispositive—especially at the pleading stage—when the plaintiff alleges that the broker’s conduct and actual relationships went beyond or diverged from what the form states.

F. Leave to Amend Under CPLR 3025(b)

CPLR 3025(b) provides that leave to amend “shall be freely given upon such terms as may be just,” unless:

The amendment would cause prejudice or surprise to the non-moving party, or
The proposed amendment is palpably insufficient or patently devoid of merit (i.e., clearly futile on its face).

In Yellin, the appellate court emphasized that the defendants did not oppose the proposed amendments and that plaintiffs had demonstrated entitlement to amend. Denial of leave thus ran contrary to the liberal standard mandated by the CPLR and appellate precedent.

VI. Impact and Implications

A. For Real Estate Brokers and Brokerage Firms

Yellin should prompt heightened diligence by brokers and firms, especially in residential transactions involving:

Dual agency or multiple representation: Brokers must ensure:
- Clear, contemporaneous written disclosure of dual agency, including the nature and extent of their role on both sides.
- Actual, informed consent from all principals, ideally documented beyond a bare § 443 acknowledgment.
- Consistency between the § 443 form and the broker’s real-world conduct and financial interests.
House-flipping and renovation scenarios: If a broker has any ties to the seller, developer, or investor entity (ownership interest, partnership, repeated collaboration, etc.), such relationships need to be carefully disclosed and managed.
Property condition and permitting issues: Brokers must be cautious not to make representations about structural integrity, code compliance, or permitting status beyond their knowledge or in conflict with public records or known facts.

The opinion underscores that failure to disclose conflicts and divided loyalties can support:

Claims for breach of fiduciary duty.
Fraud claims, with potentially substantial damages exposure.
Ancillary claims such as negligent misrepresentation and gross negligence.

And it confirms that standard-form § 443 disclosures will not automatically insulate brokers from such claims at the pleading stage.

B. For Purchasers and Sellers in Real Estate Litigation

For buyers (and potentially for sellers in certain contexts), Yellin offers an appellate blueprint for pleading robust claims against brokers:

Frame the broker relationship as fiduciary: Allegations should clearly state that the broker undertook to represent and advise the purchaser, establishing a special relationship.
Detail the dual agency or conflicts: Plead facts showing that the broker simultaneously represented the seller, had a stake in a house-flipping scheme, or otherwise had divided loyalties.
Connect misrepresentations to the scheme: Describe specific misrepresentations (or omissions) as part of a coordinated effort to induce purchase of a defective or improperly permitted property.
Allege reliance and damages with specificity: Explain how the plaintiffs relied on the broker’s statements and how they were financially harmed by discovering defects after closing.

The case also communicates that:

Even where a § 443 disclosure has been signed, plaintiffs may still proceed if they allege insufficient or misleading disclosure, or if only partial documentation exists.
Courts at the 3211 stage will not resolve factual disputes over the sufficiency of disclosures; they ask only whether plaintiffs have stated a cognizable claim.

C. For Trial Courts and Motion Practice

Procedurally, Yellin sends several messages to trial courts:

Do not convert 3211 motions to summary judgment without CPLR 3211(c) notice: Doing so risks reversal or appellate re-analysis under the proper standard.
Apply 3211(a)(1) rigorously: Only unambiguous, comprehensive documentary evidence that completely refutes the allegations should result in dismissal at this stage.
Apply 3211(a)(7) liberally: If a complaint plausibly fits a recognized theory—especially fraud and breach of fiduciary duty—it should generally survive, leaving factual disputes to discovery and summary judgment or trial.
Exercise discretion on amendments consistently with CPLR 3025(b): Denials of leave to amend must be supported by clear prejudice or futility; otherwise, they are vulnerable to reversal.

D. Broader Doctrinal Significance

At a broader level, Yellin is part of a continuing line of New York cases that:

Emphasize the fiduciary nature of real estate brokerage and the high expectations placed on brokers’ loyalty and candor.
Protect consumers in complex real estate transactions from undisclosed conflicts of interest and deceptive practices.
Limit the use of preprinted forms and generalized disclosures as conclusive shields against fiduciary and fraud claims, especially where the actual facts of the transaction suggest a deeper conflict or scheme.
Reaffirm the high threshold for CPLR 3211(a)(1) dismissal and the liberal pleading standard for plaintiffs alleging fraud and misrepresentation.

The decision also underscores the judiciary’s sensitivity to alleged “house-flipping schemes,” indicating that where brokers are alleged co-participants in such schemes, courts will be reluctant to foreclose claims at the earliest procedural stage.

VII. Conclusion

Yellin v. Revival Property Group, LLC is an important reaffirmation and refinement of New York law regarding:

The fiduciary duty of real estate brokers, especially in dual agency or conflict-laden situations.
The standards for pleading fraud, negligent misrepresentation, and gross negligence against brokers involved in allegedly deceptive renovation and sales schemes.
The limited evidentiary force of Real Property Law § 443 agency disclosure forms at the CPLR 3211 stage, particularly where they are incomplete or only partially executed.
The liberal standards governing both motions to dismiss (which favor plaintiffs at the pleading stage) and motions to amend (which favor allowing plaintiffs to refine their claims).

By reinstating the plaintiffs’ core tort and fiduciary duty claims and granting leave to amend, the Second Department has signaled that disputes over broker conduct in complex residential transactions—especially alleged undisclosed dual agency in house-flipping contexts—are generally fact-intensive and not amenable to early termination based solely on partial disclosure forms or contested interpretations of broker conduct.

For brokers, the case is a cautionary reminder that dual agency and undisclosed conflicts carry serious litigation risk and must be handled with scrupulous disclosure and loyalty. For consumers and litigants, it provides a robust appellate precedent supporting the viability of fraud and fiduciary duty claims against brokers where dual agency, conflicted interests, and misrepresentations about property condition and permitting are credibly alleged.