What is Fraud?

When someone tricks you into doing something that harms you by providing you with false information, you may be able to recover by making a fraud claim. When a claim is brought correctly, you, as the plaintiff, may be entitled to recover for the damages you’ve suffered as well as substantial punitive damages.

What are the Elements of a Fraud Claim?

There are several elements to a fraud claim. In an attempt to itemize each component, we’ve broken them down as follows:

1) The Defendant must make a material representation;
2) The representation must be false;
3) The Defendant must have known that the representation was false, or have made it with recklessly without knowledge of the truth;
4) The Defendant must have intended to induce the Plaintiff into acting based on the representation; and
5) The Plaintiff must have justifiably relied on the Defendant’s representation; and
6) The Plaintiff’s reliance on the Defendant’s representation must have cause the Plaintiff’s injury.

See Ernst & Young, L.L.P. v. Pac. Mut. Life Ins. Co., 51 S.W.3d 573, 2001.

A plaintiff should be careful to review these elements and what they mean. Keep in mind that meeting all elements is required — close doesn’t count.

Element 1: The Defendant must make a material representation.

The starting point of a fraud is the representation of something material. The key thing to think about here is materiality. The thing represented must actually matter. An irrelevant detail should not be the basis of a fraud claim.

Element 2: The representation must be false.

In order for the plaintiff to prove its claim for fraud, it will need to show that the representation was not true. A plaintiff would have a hard time proving they were tricked by someone who was providing them with the truth.

Element 3: The Defendant must have known that the representation was false, or have made it with recklessly without knowledge of the truth.

Fraud is an intentional act. Telling someone incorrect information isn’t sufficient. The fraudster must mean to convey incorrect information. In some instances fraud can be established by showing that the Defendant represented material things as true despite not knowing whether they were true or false.

Element 4: The Defendant must have intended to induce the Plaintiff into acting based on the representation.

The reason a fraudster provides false information is because they want their victim to act upon that information. Fraud is a misdirection leading someone to do something that they likely would not have done absent the false information provided. A Defendant must have actually meant for their victim to use the false information.

Element 5: The Plaintiff must have justifiably relied on the Defendant’s representation.

This element has two components.

First, the victim has to actually rely on the false information provided by the fraudster. If someone tells you false information and you don’t believe it or don’t do anything about it, then you are unlikely to have been harmed.

Second, the victim’s reliance must be justified. If believing the fraudster was unreasonable, then the victim may not be able to prevail on their claim due to their own unreasonableness.

Element 6: The Plaintiff’s reliance on the Defendant’s representation must have caused the Plaintiff’s injury.

This element essentially says “no harm, no foul.” If the Defendant’s false representation is not what harmed the victim, then suing the Defendant for that false representation doesn’t make too much sense. A fraud victim must be harmed to be entitled to damages.

How long do I have to bring a fraud claim?

Unless the plaintiff asserts a legitimate ground for tolling the statute of limitations, a typical claim for fraud must be brought within four years. See Tex. Civ. Prac. & Rem. Code § 16.004.

What are Punitive/Exemplary Damages?

The word “punitive” has the same root as “punish”. The word “exemplary” has the same root as “example”. Punitive Damages or Exemplary Damages are designed to punish or make an example of the person against whom they are assessed.

The Texas Civil Practice and Remedies Code allows for significant awards of punitive damages in a fraud case if the judge or entire jury determines that they are appropriate. These damages are capped at the greater of a) $200,000 or b) the sum of two times the plaintiff’s economic damages and non-economic damages of up to $750,000. See Tex. Civ. Prac. & Rem. Code § 41.008.

Does Bower PLLC represent clients with fraud claims?

Yes. Bower PLLC’s attorneys regularly represent fraud victims. The focus of our Plaintiff-side litigation practice is helping those who have been harmed by others. Our fraud-victim clients include individuals as well as businesses. We’ve brought claims on behalf of these clients, securing numerous judgments with six-figure awards of punitive damages.

Click here for information on other claims that Bower PLLC brings on behalf of its clients.

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This page was originally posted on 3/1/2020 and was last updated on 8/25/2022.