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Fraud and Misrepresentation Interrogatories

Fraud and Misrepresentation Interrogatories

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Fraud and Misrepresentation Interrogatories
 Intentional misrepresentation of fact, negligent misrepresentation, fraudulent concealment andnondisclosure, constructive fraudBy Kevin R. CulhaneExcerpted from
Model Interrogatories
 This chapter presents interrogatories for use in litigation where plaintiff claims to have sufferedpecuniary loss as a result of defendants fraudulent misrepresentation. These claims, often referred togenerically as fraud claims, are predicated upon a variety of distinct legal theories that must becarefully distinguished in practice. Given the nature and breadth of commercial transactions within oureconomy, claims for fraud or misrepresentation have become increasingly prevalent in modernsociety.§1801 Intentional MisrepresentationA claim for intentional misrepresentation is usually predicated on the assertion that the defendantinduced the plaintiff to enter into some transaction or relationship by misrepresenting material factspertaining to the relationship or transaction. In this context, the elements of intentionalmisrepresentation include: 1) the misrepresentation of a material fact; 2) knowledge of falsity (scienter);3) intent to induce reliance; 4) actual and justifiable reliance on the misrepresentation; and 5) resultingdamage. When the elements of intentional misrepresentation are present, the complaint will frequentlyalso seek punitive damages. This is because the existence of fraud is one of the bases upon whichexemplary damages may be predicated.
See
Cal. Civ. Code §3294.§1802 Fraudulent Concealment or Non-DisclosureA special species of fraudulent misrepresentation exists when a defendant, under an affirmative duty todisclose all material facts, conceals facts in order that the plaintiff may be induced to enter into atransaction or relationship. These claims differ from claims predicated on intentional misrepresentationin that notwithstanding the absence of any affirmative misrepresentation, the law provides for recoverywhen plaintiff is damaged as a result of concealment. A primary issue to be determined in these cases iswhether the defendant stood in such a relation to the plaintiff as to give rise to an affirmative duty of disclosure under the circumstances. Once that duty is established, the remaining elements of actionablefraud, including intent to induce reliance, justifiable reliance, and resulting damage, are established as incases involving affirmative misrepresentations.§1803 Negligent Misrepresentation
 
Negligent misrepresentation involves many of the elements of intentional misrepresentation, althoughthis cause of action is characterized by a less culpable mental state. Thus, the plaintiff in a negligentmisrepresentation case must prove: 1) a misrepresentation of material fact; 2) intent to induce reliance;3) justifiable reliance on the misrepresentation; and 4) resulting damage. The scienter element differs,however; negligent misrepresentation occurs when a defendants false statement is made without areasonable ground for a belief in the truth of the misrepresented fact. The liability in these cases isessentially negligence liability, although the application of negligence defenses is subject to somecontroversy
.
 
See §1861.3.§1804 Constructive FraudWhen there is a fiduciary or confidential relationship between the plaintiff and the defendant, the lawrecognizes a fourth species of fraud, i.e., constructive fraud. In general,
constructive
fraud consists of any breach of duty by a person who, without an actual fraudulent intent, gains an advantage bymisleading another to his prejudice or to the prejudice of anyone claiming under him
.
See
Cal.Civ.Code§1573. In this respect, constructive fraud resembles fraudulent concealment (or non-disclosure), but it isnot identical. As with fraudulent concealment, constructive fraud requires some relation between theparties giving rise to an affirmative duty to disclose. However, unlike fraudulent concealment, a findingof constructive fraud is not subject to the requirement that the failure to disclose material facts beintentional.
Byrum v 
.
Brand 
, 219 Cal. App. 3d 926 (1990). Despite the absence of an intentrequirement, many of the interrogatories set forth in this section on fraudulent concealment may beadapted for use in constructive fraud cases.§1805 A Note on Election of RemediesFraud claims pose difficult questions relating to the requirement that a plaintiff elect betweenpotentially inconsistent remedies. When a plaintiff has been induced by a defendants fraud to enterinto a contractual relationship, the plaintiff must elect between affirming the contract (and seekingdamages), or rescinding the contract (and seeking restitution). The distinctions between restitution anddamage remedies, together with an in depth analysis of the requirement that plaintiff elect hisremedies, is set forth in 3 Witkin,
Cal 
.
Procedure
(4th ed. 1997) §175
et seq
.
 §1810 DefinitionsThe 
INCIDENT
 refers to the statement, representation, or concealment which is the subject of theplaintiffs complaint .For other definitions that are utilized throughout this book, see §102.§1820 Identification of DefendantAs in other tort cases, it is important that you specifically identify the opposing party, whether a party isa natural person, corporation, partnership, or sole proprietorship. When the opposing party operatesunder any of these business forms, these questions will elicit additional information that may
 
necessitate further inquiry relating to venue and joinder issues. Moreover, specific informationregarding the identity of the opposing party will avoid the delay that occurs when it is subsequentlynecessary for you to amend your pleadings. Interrogatories designed to elicit information regarding theopposing party, including specific identifying information such as date of birth, address, etc., as well asadditional information relating to defendants business status, are set forth in §211.§1830 AgencyAs in other tort cases, it is important to determine whether there are other individuals or entities thatmay be vicariously responsible for the damages caused by the fraudulent misrepresentation orconcealment. The questions set forth in §213 explore specific agency relationships, and include severalgeneral questions regarding imputed negligence. The responses to these interrogatories may provideuseful information to ensure that all legally responsible parties are included within the litigation.§1840 Basic Transaction InformationAs suggested in the discussion setting forth the elements of plaintiffs cause of action, fraud claimsusually involve a contention that the plaintiff was caused to enter into some transaction or relationshipwith the defendant as a result of the defendants fraudulent misrepresentation or concealment. Theinterrogatories set forth in this section seek to obtain basic information about the nature of the partiesrelationship and/or the transaction which gives rise to the claim. The answers to these interrogatorieswill disclose the existence of any fundamental disagreement between parties regarding the nature andextent of the transaction that gives rise to the claim.1.
 
Please state whether, on or about [here insert date]
YOU
entered into a contract with plaintiff whereby plaintiff agreed to [here insert details of transaction, i.e. purchase a certain parcel of real property].2.
 
If your answer to interrogatory number 1 was yes, please
IDENTIF
Y
 
each party to that contract.3.
 
If your answer to interrogatory number 1 was yes, please set forth the date that
YOU
enteredinto [here insert details of transaction].4.
 
If your answer to interrogatory number 1 was yes, please
IDENTIF
Y
 
each
WRITING
relating to[the transaction].5.
 
Please
IDENTIF
Y
 
the present custodian of any
WRITING
identified in your answer tointerrogatory number 4.§1850 Intentional Misrepresentation of Fact§1851 Plaintiff to DefendantAs set forth at the beginning of this chapter, many fraud claims are based upon the claim that thedefendant induced the plaintiff to take action or enter into a relationship by affirmatively

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