Fraud cases come in many varieties. Intentional misrepresentation is the most familiar.
The ingredients necessary for valid Fraud claims, called “elements,” are the following:
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.
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.)
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.