Lawsuit Fraud Cases

Civil litigation includes lawsuits over fraud

Civil Lawsuits Over Fraud

Fraud cases come in many varieties.  Intentional misrepresentation is the most familiar.

The ingredients necessary for valid Fraud claims, called “elements,” are the following:

  • The first element of a valid claim for intentional misrepresentation is that one person makes a statement, called a “representation,” to someone else.

  • The second element is that the statement is a statement of fact.
  • The third element is that the statement is false, a “misrepresentation.”
  • The fourth element is that the person who makes the statement knows it is false when he makes it.
  • The fifth element is that the person who makes the statement intends the other person to rely on it.
  • The sixth element is that the other person relies on the statement.
  • The seventh element is that the other person’s reliance on the statement is reasonable.
  • The eighth and last element is resulting damage to the other person.
Take away any of the eight elements and you no longer have a valid claim for intentional misrepresentation.  Instead you may have no valid claim at all.  For example, you have no valid claim if you take away a statement of fact, and replace it with a statement of opinion.  If you take away knowledge the statement is false, and replace it with a reasonable belief the statement is true, instead of intentional misrepresentation you have innocent misrepresentation and again no valid claim.  Without damages, you may still have intentional misrepresentation, but it won’t be a valid claim - the equivalent of ‘no harm, no foul.’

However, removing one of elements doesn’t always mean you don’t have a valid claim for something else.  For example, if you take away knowledge that the statement is false, and replace it with no reasonable belief whether it is true or false, you have a valid claim for a variety of fraud called negligent misrepresentation.

Concealment and Non-Disclosure

Another variety of a fraud case is called concealment.  When concealment happens in the course of selling a house, it usually goes by the name non-disclosure.  A statement of fact is absent.  In its place, as the first element of non-disclosure, is the seller’s knowledge of a “material fact” concerning the subject of the transaction not known to the buyer.  “Material” means that the fact is so important that a buyer would not go forward if he knew of it.  The buyer’s inability to discover the fact in the course of reasonable inspection and investigation is the second element.  If both elements are present the law imposes a duty on the part of the seller to disclose the fact.  The seller’s failure to disclose the fact is a fraud upon the buyer and constitutes a valid claim if the buyer suffers damage by proceeding with the transaction.

The statute of limitations for fraud cases is three years from the date you discover the fraud.  That means that once you discover the fraud, you have only three years to file a fraud lawsuit against the person who defrauded you.  If you let more than three years go by, your claim will be “barred.”  (In contract fraud cases, the statute of limitations runs from the time the contract is broken, whether you know it or not, and the period is two years for oral contracts and four years for written contracts.)

Fraud lawsuits cases and the Burden of Proof

A fraud lawsuit is a battle between the parties to prove or disprove the presence of all the required elements of the variety of fraud in question.  In a fraud case of intentional misrepresentation the defendant will deny making the statement the plaintiff contends he made.  If there are no witnesses, conflicting testimony will be a “he said, she said” contest with the possibility that the plaintiff fails to meet his burden of proof and the defendant prevails.  In a non-disclosure fraud case the defendant will deny he knew of the defect which the plaintiff claims he concealed.  Proving the defendant recently patched and painted over the crack in the pool is not that hard.  Proving the plaintiff was aware of the crack in the slab beneath the old wall to wall carpeting is a challenge.

The best defense against fraud is well-developed skepticism and thorough investigation.  If it sounds or looks too good to be true, it isn’t.

Stanley D. Prowse is a Civil Litigation Attorney specializing in fraud cases in the greater San Diego area.

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