Park 100 Investors v.

Kartes
Misrepresentation & nondisclosure
Case Name/Parties Parks 100 (plaintiff) v. Kartes (defendant)
Court & Date Indiana court of appeals, 1995
Relevant Facts James and Nancy Kartes were part-owners of the Kartes Video
Communication, Inc., and in 1984 they were looking to relocate
to a larger operating facility. They were approached by Robert
Scanell, a Park 100 representative, and it was decided that KVC
would rent building 107 in the complex. Kaplan (KVC), was in
charge of negotiations, and he received and reviewed a lease
from Park 100. It did not have a personal guarantee agreement,
and the agreement was never mentioned in the negotiations.
The lease was approved by KVC’s attorney, and it was signed
and delivered to Park 100.
The day before KVC was going to move into the building,
Scannell caught the Karteses before they left for their
daughter’s wedding, and told them they need to sign the ‘lease
papers’ and that it couldn’t wait. James called up Kaplan and
asked him if the attorney approved, and then he unknowingly
signed a lease guarantee agreement. Scannell overheard the
conversation and stayed silent.
The KArteses eventually sold their share of KVC to Saffron
Associates, who then failed to make rent payments. Park 100
sued the Karteses for the unpaid rent.
Procedural History Trial court ruled in favor of the defendants (karteses) and Park
100 appealed the decision
Rule(s) Elements of actual fraud in Indiana:
- a material misrepresentation of past or existing fact by a
party that was
- False
- Made under knowledge or in reckless ignorance of the falsity
- Was relied upon by the complaining party
- Proximately caused the complaining party injury
Issue(s) Did Park 100 used fraudulent means to procure the signatures
on the personal guarantee of lease form?
Holding(s) Court found that the signatures were obtained fraudulently,
and affirm the trial court decision
Reasoning - 1) Scannell claiming that the papers were “lease papers” and
they couldn’t move in until they were signed were
misrepresentations
- 2) He knew the document was for a lease guarantee
- 3) Karteses used ordinary care and diligence, and relied on
Scanell’s statements to their detriment

Lease guarantee was never discussed during negotiations, and

the lease agreement made no references to the guarantee

P argues that Karteses failed to prove reliance. Said they had a

duty to read the document that they signed.

Doerr v. Hibben Hollweg & Co: “contract of guarantee cannot

be enforced where the guarantor has been induced to enter
into the contract by fraudulent misrepresentations or
concealment”

While Kartes had duty to read, that will not carry to the extent
that it will ignore fraud.
Notes Different from hill and Syester because they supposedly read
and understood the agreements, whereas Karteses didn’t

RS §163: if a misrepresentation as to the character or essential

terms of a proposed contract induces conduct that appears to
be a manifestation of assent by someone who doesn’t know
the character or essential terms of the contract, his conduct is
not effective as a manifestation of assent