Business deals always carry some risk, even when you know the parties involved and have dealt with them before. Fraudulent misrepresentation can happen at any time in any business. Essentially, one party makes certain representations or promises, and you find out later that those representations were not true. These fraudulent deals inevitably leave you with losses, which are often significant, that you did not anticipate.
We have a long history of handling commercial litigation cases and representing small business owners in various industries. An Arizona commercial lawyer at Provident Law® can advise you of your legal rights if you have fallen victim to fraudulent misrepresentation. Together, we can explore the legal options available to you, determine the best strategy for addressing the fraud that has occurred, and work to minimize the potential losses to you and your business.
Filing Fraudulent Misrepresentation Claims in Arizona Courts
Arizona Rule of Civil Procedure 9(b) states that when you file a lawsuit based on fraud, you must “state with particularity the circumstances constituting fraud.” This rule establishes a different pleading standard for fraud cases than most other claims, which only require “notice pleading” or a general statement of the claim sufficient to put the defendants on notice of your claim. Therefore, you must be specific in alleging the circumstances of any fraud claim from the time you first file your lawsuit with the court.
Elements of a Fraudulent Misrepresentation Suit
A plaintiff filing suit for fraudulent misrepresentation must prove the existence of various elements, as follows:
- A representation, which may be oral or in writing;
- The falsity of that representation;
- The materiality of the false representation;
- The defendant’s knowledge of the representation’s falsity or ignorance of its truth;
- The defendant’s intention that the plaintiff should act upon the representation in a reasonably contemplated manner;
- The plaintiff’s ignorance of the falsity of the representation;
- The plaintiff’s reliance on the truth of the representation;
- The plaintiff’s justifiable and reasonable right to rely on the representation; and
- The plaintiff’s consequent and proximate injuries resulting from their reliance on the misrepresentation.
Damages in a Fraudulent Misrepresentation Lawsuit
A successful plaintiff in a fraudulent misrepresentation suit can seek damages suffered for relying on the fraudulent misrepresentation. For instance, the plaintiff could seek rescission of the contract and request to be placed back in the same position as before entering the contract or before the defendant made the fraudulent misrepresentation. Alternatively, the plaintiff could seek to enforce the contract and request damages from the defendant flowing from the misrepresentation.
Potential Defenses to Fraud
If a plaintiff cannot prove even one required element of fraud as listed above, they cannot maintain a fraud claim. One of the most difficult elements of fraud to prove includes establishing the defendant’s intention that the plaintiff should act upon the misrepresentation in a specific manner, as it requires evidence of the defendant’s state of mind. Likewise, proving the defendant’s knowledge of the falsity of the representation and the plaintiff’s ignorance of its falsity can also be challenging, based on the circumstances.
Another defense to fraud may be the statute of limitations. Generally, a plaintiff must file a suit based on fraud no more than three years from the date that the fraudulent misrepresentation occurred. Failure to meet this deadline can result in the claim being dismissed as violative of the statute of limitations.
Contact Us for Assistance with Your Commercial Law Issue Today
Proving fraudulent misrepresentation in court can be a complex endeavor. The commercial law attorneys at Provident Law® have decades of combined legal experience representing clients in commercial litigation, and we are experienced in efficiently and economically resolving commercial disputes. We aim to build a long-term relationship with you as we work together to proactively address and solve your most complex legal problems in commercial litigation, business law, and more. Contact a commercial lawyer today by calling (480) 388-3343 or reach out to us online to set up a time to see what we can do for you.