A Primer on Pleading Fraud Claims in Utah, 0817 UTBJ, Vol. 30, No. 4. 28

AuthorSpencer Macdonald

Article A Primer on Pleading Fraud Claims in Utah

Vol. 30 No. 4 Pg. 28

Utah Bar Journal

August, 2017

July, 2017

Spencer Macdonald

Introduction

Civil litigators sometime take the “kitchen sink” approach to preparing a complaint by including various tort claims that may have only marginal application to the underlying factual elements of the case. Of these causes of action, a claim for “fraud” is often the most susceptible to summary disposition via a motion to dismiss under Rule 12 of the Utah Rules of Civil Procedure or else a motion for summary judgment under Rule 56. Such dismissals can sometimes be attributable to the practitioner’s insufficient attention to properly pleading the prima facie elements of this cause of action, which include the following: (1) [t]hat a representation was made; (2) concerning a presently existing material fact; (3) which was false; (4) which the representor either (a) knew to be false, or (b) made recklessly, knowing that he had insufficient knowledge upon which to base such representation; (5) for the purpose of inducing the other party to act upon it; (6) that the other party, acting reasonably and in ignorance of its falsity; (7) did in fact rely upon it; (8) and was thereby induced to act; (9) to his injury and damage.

Prince v. Bear River Mut. Ins. Co., 2002 UT 68, ¶ 41, 56 P.3d 524 (citation and internal quotation marks omitted).

Unfortunately, even summarily dismissed fraud claims can consume significant resources of both the court and the opposing party, which is perhaps why the Utah Court of Appeals has cautioned litigants and attorneys that “a plaintiff alleging fraud must know what his claim is when he files it.” Shah v. Intermountain Healthcare, Inc., 2013 UT App 261, ¶ 12, 314 P.3d 1079 (citation and internal quotation marks omitted). To that end, this article presents eight basic questions that practitioners can use to vet potential fraud claims.

Question 1: What was the Purported “Misrepresentation,” and Does It Have the Necessary Characteristics?

To be liable for fraud, a defendant’s misrepresentation must be of “presently existing material fact.” Jones & Trevor Mktg., Inc. v. Lowry, 2010 UT App 113, ¶ 12, 233 P.3d 538 (citation omitted).

This gives rise to three specific characteristics • First, the representation must pertain to an objective and quantifiable “fact,” as opposed to non-testable statements such as “mere expressions of opinion,” Kinnear v. Prows, 16 P.2d 1094, 1096 (Utah 1932). Distinguishing “fact” from “opinion” is determined “by the subject matter,…the form of the statement, the attendant circumstances, and the knowledge of the parties.” Condas v. Adams, 388 P.2d 803, 805 (Utah 1964). Misrepresentations of law or of the legal effects of contracts are also not categorized as fraudulent, Gadd v. Olson, 685 P.2d 1041, 1044 (Utah 1984), nor are statements pertaining to marketing or advertising, commonly referred to as “puffery.” See McBride v. Jones, 615 P.2d 431, 434 (Utah 1980).

• Second, the representation must pertain to a fact that was “presently existing” at the time the representation was made. Speculative statements about the future are, like opinions, untestable and therefore do not generally give rise to a fraud claim. However, when a fraud claim is based on a promise of some sort of future performance, the promise may be treated as concerning a “presently existing” fact if the claimant shows that the promisor, when making...

To continue reading

Request your trial