Have you been a victim of fraud?

Fraud is the successful employment of cunning, deception, or artifice to circumvent, cheat, or defraud another to his or her injury. Instances of fraud occur when individuals or businesses deceive others in order to gain an advantage or monetary benefit. This type of deception can occur in any business transaction or contract, placing all parties involved at risk of being deceived. It is important to note that fraud can be perpetrated by both internal employees of an organization as well as individuals external to it.

Generally, fraud is the successful employment of cunning, deception, or artifice to circumvent, cheat, or defraud another to his or her injury. Fraud has several forms. For example, a misrepresentation made knowingly or recklessly, concerning a material fact, that is made with the intention of inducing a party to rely on it, and that is relied on by that party to his or her detriment or injury, is fraudulent. Fraud also arises from artifice and concealment, such as indirect but misleading language, which induces another person to rely on false information to the person’s detriment or injury. Any act, omission, or concealment involving a breach of legal duty, trust, or confidence that is injurious to another, or by which an undue and unconscientious advantage is taken of another, may become the foundation for an action for constructive fraud. Fraud in a transaction involving real estate or stock in a corporation or joint stock company has been defined by statute and is known as statutory fraud.

“Simple fraud” is also known as fraud by misrepresentation and the elements are set forth above. “Fraudulent inducement” is very closely related to simple fraud. The distinguishing element between the two causes of action is that fraudulent inducement arises only when a valid contract exists between the parties which was induced by the defendant’s false representation. “Fraud by non-disclosure” (also sometimes referred to as “fraud by omission” or “fraud by concealment”) is a special type of simple fraud that is created when the defendant has a duty to disclose material facts to the plaintiff in a transaction or in a relationship. When there is a duty to disclose information and a party fails to disclose the information, the non-disclosure is equivalent to an affirmative misrepresentation of facts. Finally, Texas Business & Commerce Code section 27.01 provides for an independent cause of action for the tort of fraud in real estate and stock transactions and is commonly referred to as “statutory fraud”. The elements of statutory fraud are the same as those of simple fraud with the one significant difference being that statutory fraud does not require the defendant’s knowledge or recklessness in making the representation.

The elements of a fraud claim are:

• the defendant made a material representation;

• the representation was false;

• when the representation was made, the speaker knew it was false or made it recklessly without any knowledge of the truth and as a positive assertion;

• the representation was made with the intention that it be acted upon by the other party;

• the party acted in reliance upon the representation; and,

• the party suffered injury.

Yes. A breach of contract occurs when one party fails to fulfill a promise made in a contract. Fraud involves intentionally deceiving someone. While a contract can be breached through fraudulent means, the intent is irrelevant in a breach of contract claim.

To prove a fraud claim under Texas law, you must demonstrate that someone falsely made a material statement, knowing it was untrue (or should have known that it was untrue), to make you act (or not act) in a certain way, resulting in harm to you. After establishing the legal elements of a fraud claim, you'll need to provide evidence to back up your case. Defendants can be guilty of fraud by deliberately failing to disclose a material fact, which creates a false impression and results in damages for the plaintiff. Innocent and negligent misrepresentations are handled differently, and both lack a deliberate intent to deceive.

Fraud claims must be brought within four years after the day the fraud cause of action accrues. A fraud claim accrues at the moment of the defendant’s representation. However, under the “discovery rule”, the limitations period does not begin to run until the plaintiff either discovers the fraud or in the exercise of reasonable diligence could have discovered the fraud. When the statute of limitations begins to run on a fraud claim may not be immediately obvious due to the very nature of a fraudulent representation. Accordingly, it is important to consult with an experienced business litigation attorney as soon as you have an inkling that you may have been the victim of fraud so your legal rights may be protected as soon as possible.

A party who is injured by fraud can recover reliance damages, including out-of-pocket expenses, in an action for common law or statutory fraud. Out-of-pocket damages are reliance damages that reimburse the injured party for expenditures made toward fulfilling the transaction. The out-of-pocket measure allows the injured party to recover the actual injury suffered measured by the difference between the value of that which was parted with and the value of that which was actually received.

The injured fraud victim can also recover benefit of the bargain damages measured by the difference between the value as represented and the value received. The injured party may also seek to recover lost profits, but only if the profits would have been received had the agreement been performed as promised. The plaintiff is limited to out-of-pocket expenses when the subject of the fraud is an unenforceable contract.

In an action for common law or statutory fraud, a plaintiff can recover pre and post-judgment interest and court costs. Attorneys’ fees are available in a common law fraud claim if the fraud claim is related to another claim that permits recovery of attorney’s fees, and the same legal services were used for the fraud claim and for the prosecution of the other claim. A plaintiff asserting a statutory fraud claim can recover attorney’s fees but must have evidence that the fees were reasonable and necessary.

Recovery of punitive damages is also a possibility in a common-law fraud case filed on or after September 1, 2003, in which the injured party can prove by clear and convincing evidence that the harm with respect to which the injured party seeks recovery of punitive damages results from the defendant’s fraud, malice or gross negligence.

GIW PLLC can evaluate the specifics of your situation to determine whether there is a legitimate case to be made that you have been the victim of fraud and, if appropriate and feasible, bring a lawsuit against the allegedly fraudulent party in order to obtain appropriate compensation legally available to you under Texas law.