Wednesday, May 25, 2011

Distinguishing different types of fraud claims in Texas


Common Law Fraud Claim To bring a claim for common law fraud, a plaintiff must show the following: (1) a material misrepresentation 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) (orig. proceeding).

Fraud in the Inducement Cause of Action To bring a claim for fraud in the inducement, a plaintiff must show the elements of fraud, see Balogh v. Ramos, 978 S.W.2d 696, 701 (Tex. App.—Corpus Christi 1998, pet. denied), and must show that she has been fraudulently induced to enter into a binding agreement. Haase v. Glazner, 62 S.W.3d 795, 798 (Tex. 2001) (“Without a binding agreement, there is no detrimental reliance, and thus no fraudulent inducement claim. That is, when a party has not incurred a contractual obligation, it has not been induced to do anything.”).

Statutory Fraud [real estate transaction] To bring a claim for statutory fraud, [ Plaintiff ] must show the following: (1) the transaction involved real estate; (2) [ Defendant ]. made a false representation of a material fact or made a false promise to do an act to [ Defrauded Party ], or benefited by not disclosing that a third party’s representation or promise was false; (3) the false representation was made for the purpose of inducing [ Defrauded Party ] [ Name ] to enter into a contract; (4) [ Defrauded Party ] relied on the false representation or promise in entering into the contract; and (5) the reliance caused [ Defrauded Party ] injury. See Tex. Bus. & Com. Code Ann. § 27.01 (West 2009) (titled “Fraud in Real Estate and Stock Transactions”); Fletcher v. Edwards, 26 S.W.3d 66, 77 (Tex. App.—Waco 2000, pet. denied) (“A plaintiff establishes a statutory fraudulent inducement claim under section 27.01 of the Business and Commerce Code by showing: a false representation of a material fact; made to induce a person to enter a contract; and relied on by that person in entering the contract.”). The statutory cause of action differs from the common law only in that to recover actual damages, it does not require proof that the defendant made a material false representation knowing it to be false or made it recklessly as a positive assertion without any knowledge of its truth. Fletcher, 26 S.W.3d at 77.

 SOURCE: San Antonio Court of Appeals - 04-10-00616-CV - 5/11/11

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