Suing for misrepresentation, fraud, failure to perform a promise made

DIFFERENTIATING NEGLIGENT MISREPRESENTATION, FRAUD, INTENT NOT TO PERFORM PROMISE

To prevail on a negligent misrepresentation claim, a plaintiff must show (1) the representation in question was made by the defendant in the course of his business or in a transaction in which he had a pecuniary interest, (2) the defendant supplied false information for the guidance of others in their business, (3) the defendant did not exercise reasonable care or competence in obtaining or communicating the information, and (4) the plaintiff suffered pecuniary loss by justifiably relying on the representation. Fed. Land Bank Ass'n of Tyler v. Shane, 825 S.W.2d 439, 442 (Tex. 1991); see also Roof Sys., Inc. v. Johns Manville Corp., 130 S.W.3d 430, 439 (Tex. App.-Houston [14th Dist.] 2004, no pet.) (“The 'false information' contemplated in a negligent misrepresentation case is a misstatement of existing fact, not a promise of future conduct.”).

Elements of Fraud under Texas Law

To prevail in a cause of action for fraud, one must provide sufficient evidence of the elements of fraud, which are (1) a material misrepresentation was made; (2) it was false; (3) when the representation was made, the speaker knew it was false or the statement was recklessly asserted without any knowledge of its truth; (4) the speaker made the false representation with the intent that it be acted on by the other party; (5) the other party acted in reliance on the misrepresentation; and (6) the party suffered injury as a result. Taylor Elec. Servs., Inc. v. Armstrong Elec. Supply Co., 167 S.W.3d 522, 526 (Tex. App.-Fort Worth 2005, no pet.) (citing DeSantis v. Wackenhut Corp., 793 S.W.2d 670, 688 (Tex. 1990)); see Grant Thornton LLP v. Prospect High Income Fund, 314 S.W.3d 913, 921 (Tex. 2010).

Failure to perform contractual promise vs. fraud

A promise to do an act in the future is actionable fraud when made with the intention, design and purpose of deceiving, and with no intention of performing the act. Spoljaric v. Percival Tours, Inc., 708 S.W.2d 432, 434 (Tex. 1986). While a party's intent is determined at the time the party made the representation, it may be inferred from the party's subsequent acts after the representation is made. Id. Failure to perform, standing alone, is no evidence of the promissor's intent not to perform when the promise was made. Id. at 435. However, that fact is a circumstance to be considered with other facts to establish intent. Id. Since intent to defraud is not susceptible to direct proof, it invariably must be proven by circumstantial evidence. Id. “'Slight circumstantial evidence of fraud,' when considered with the breach of promise to perform, is sufficient to support a finding of fraudulent intent.” Id. (quoting Maulding v. Niemeyer, 241 S.W.2d 733, 738 (Tex. Civ. App.-El Paso 1951, orig. proceeding)).

SOURCE: Dallas Court of Appeals 05-09-01397-CV 4/22/11

LEGAL CONCEPTS AND TERMS: fraud, fraudulent intent, fraudulent mis-representation, non-performance of promise, fraud vs. breach of contract claim