§ 7.1.2

• Jurisdiction: Arizona

§ 7.1.2 Fraudulent Concealment

The line between misrepresentation and nondisclosure is often blurred.²⁰⁰⁷ Failure to reveal a fact is commonly the reason a statement is misleading. Thus, it is not surprising that tort liability for fraud encompasses concealment.²⁰⁰⁸

Unlike negligent nondisclosure, intentionally misleading nondisclosure does not require a traditional finding of duty.²⁰⁰⁹ All persons are required to refrain from intentionally harming others.²⁰¹⁰ Liability for an intentionally deceptive omission may be imposed despite the absence of a fiduciary, statutory, or other legal duty to disclose.²⁰¹¹ "The duty, if it must be so named, is obviously to refrain from intentional harm to others."²⁰¹²

Fraudulent nondisclosures include not only omissions that induce action but those that cause the plaintiff to refrain from acting.²⁰¹³ For instance, a deceptive omission that induces an investor not to sell a failing investment might create liability.²⁰¹⁴ People are unusually vulnerable to this type of deception. Behavioral research has shown that people find it difficult to cut their losses.²⁰¹⁵ Thus, nondisclosures that tend to bolster this propensity to hold losing investments are especially deceptive—they reinforce...