law-fraud | fraudulent inducement | fraudulent concealment | fraudulent misrepresentation |
FRAUD VS. BREACH OF CONTRACT
“A promise of future performance constitutes an actionable misrepresentation if the promise was made with no
intention of performing at the time it was made.” Formosa Plastics, 960 S.W.2d at 48. “Proving that a party had no
intention of performing at the time a contract was made is not easy, as intent to defraud is not usually susceptible
to direct proof.” Tony Gullo Motors I, L.P. v. Chapa, 212 S.W.3d 299, 305 (Tex. 2006) (citing Spoljaric v. Percival
Tours, Inc., 708 S.W.2d 432, 435 (Tex. 1986)). While breach of the contract alone is not evidence that a party did
not intend to perform, “breach combined with ‘slight circumstantial evidence’ of fraud” is some evidence of
fraudulent intent, enough to support a verdict. Id. “[A] party’s intent is determined at the time the party made the
representation, [but] it may be inferred from the party’s subsequent acts after the representation is made.”
Spoljaric, 708 S.W.2d at 434 (citing Chicago, T. & M.C. Ry. Co. v. Titterington, 19 S.W. 472, 474 (1892)).
Aquaplex, Inc v. Rancho Law Valencia, Inc., No. 08-0280 (Tex. Oct 30, 2009)(per curiam) (fraud damages,
proving amount of damages, remittiture by court of appeals or new trial)
ELEMENTS OF FRAUD
A plaintiff seeking to prevail on a fraud claim must prove that (1) the defendant made a material
misrepresentation; (2) the defendant knew the representation was false or made the representation
recklessly without any knowledge of its truth; (3) the defendant made the representation with the intent
that the other party would act on that representation or intended to induce the party’s reliance on the
representation; and (4) the plaintiff suffered an injury by actively and justifiably relying on that
representation. See De Santis v. Wackenhut Corp., 793 S.W.2d 670, 688 (Tex. 1990); Trenholm v.
Ratcliff, 646 S.W.2d 927, 930 (Tex. 1983).
Exxon Corp. v. Miesch, No. 05-1076 (Tex. Mar. 27, 2009)(Wainwright)(plugging of oil well to prejudice future
production subsequent to dispute over royalties, false statement to Railroad Commission, fraud, statute of
limitations, oil and gas law,)
STATUTE OF LIMITATIONS FOR FRAUD
Unlike most of Emerald and the royalty owners’ other claims, which have a two-year statute of limitations, the
statute of limitations for fraud is four years. Tex. Civ. Prac. & Rem. Code § 16.004(a)(4). The statute of limitations
for fraud begins to run from the time the party knew of the misrepresentation. Little v. Smith, 943 S.W.2d 414, 420
(Tex. 1997).
MEASURE OF DAMAGES
we note that the “measure of damages in a fraud case is the actual amount of the plaintiff’s loss that directly and
proximately results from the defendant’s fraudulent conduct.” Tilton v. Marshall, 925 S.W.2d 672, 680 (Tex. 1996).
INDUCEMENT, DETRIMENTAL RELIANCE
One who makes a fraudulent misrepresentation is subject to liability to the persons or class of persons whom he
intends or has reason to expect to act or to refrain from action in reliance upon the misrepresentation for
pecuniary loss suffered by them through their justifiable reliance in the type of transaction in which he intends or
has reason to expect their conduct to be influenced.
Restatement (Second) of Torts § 531 (1977). Like the defendants in Ernst & Young, Exxon argues that this
approach reduces the intent-to-induce element to a foreseeability standard. We rejected that argument in Ernst &
Young, holding that section 531’s “reason-to-expect standard requires more than mere foreseeability; the
claimant’s reliance must be ‘especially likely’ and justifiable, and the transaction sued upon must be the type the
defendant contemplated.” Ernst & Young, 51 S.W.3d at 580. Evidence that reliance on false public information as
part of a general industry practice is insufficient, as a matter of law, to prove an intent to induce reliance. Id. at
581–82. Even an obvious risk that a misrepresentation might be repeated to a third party is not sufficient to
satisfy the reason-to-expect standard. A plaintiff must show that “[t]he maker of the misrepresentation [has]
information that would lead a reasonable man to conclude that there is an especial likelihood that it will reach
those persons and will influence their conduct.” Id. at 581 (citing Restatement (Second) of Torts § 531 (1977)).
The standard is not met if a plaintiff merely foresees that some party may rely on statements made in a public
filing. In order to prove intent-to-induce reliance under this standard, the party must show an especial likelihood
that the party who made the misstatement knew the claimant would rely on the information in the type of
transaction the defendant contemplated. See Ernst & Young, 51 S.W.3d at 580.
Exxon Corp. v. Miesch, No. 05-1076 (Tex. Mar. 27, 2009)(Wainwright)(plugging of oil well to prejudice future
production subsequent to dispute over royalties, false statement to Railroad Commission, fraud, statute of
limitations, oil and gas law,)
08‑1081 ANN CASSTEVENS v. DANIEL SMITH AND SHANNON SMITH; from Smith County; 6th district
(06‑07‑00116‑CV, 269 SW3d 222, 10‑23‑08, pet denied June 2009)
Fraud--Common-Law and Statutory
Casstevens also alleges that she was defrauded by the Smiths both on a common-law basis and for statutory
fraud (Tex. Bus. & Com. Code Ann. § 27.01 (Vernon 2002) (fraud in a real estate transaction)).
Common-law fraud occurs if (1) a material representation was made; (2) the representation was false; (3) when
the representation was made, the speaker knew it was false or made it recklessly without any knowledge of the
truth and as a positive assertion; (4) the speaker made the representation with the intent that the other party
should act upon it; (5) the party acted in reliance on the representation; and (6) the party thereby suffered injury.
In re FirstMerit Bank, N.A., 52 S.W.3d 749, 758 (Tex. 2001).
Statutory fraud under the Texas Business and Commerce Code in a real estate transaction occurs when a party
makes a false representation of fact or a false promise to induce the plaintiff to enter into an agreement, the
plaintiff relies on the false promise by entering into the agreement, and the reliance causes injury to the plaintiff.
Tex. Bus. & Com. Code Ann. § 27.01.