CIVIL ACTIONS FOR FRAUD
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Basic Elements Of A Fraud
Deceit and fraud are defined separately in statutes. Deceit
is defined in Civ. Code §§1709 and 1710, while fraud
is defined in Civ. Code §§1572 (actual fraud) and
1573(constructive fraud). Liability for actual fraud under Civ.
Code §1572is limited to acts committed by or with the connivance
of a party to a contract with the intent to deceive another
party to the contract and induce that party to enter into the
Deceit: One who willfully deceives another
with intent to induce the other to alter his or her position
to his or her injury or risk is liable for any damage suffered
as a result of the deceit. [Civ. Code §1709] There are
four categories of deceit [Civ. Code §1710]:
the suggestion, as a fact, of that which is not true,
by one who does not believe it to be true, commonly referred
to as intentional misrepresentation;
the assertion, as a fact, of that which is not true, by
one who has no reasonable ground for believing it to be
true, commonly referred to as negligent misrepresentation;
the suppression of a fact, by one who is bound to disclose
it or who gives information of other facts which are likely
to mislead for want of communication of that fact, commonly
referred to as concealment; and
a promise, made without any intention of performing it,
commonly referred to as false promise.
Actual Fraud: Actual fraud consists of any
of the following acts, committed by or with the connivance of
a party to a contract with intent to deceive another party to
the contract, or to induce the other party to enter into the
contract [Civ. Code §1572]:
the suggestion, as a fact, of that which is not true,
by one who does not believe it to be true;
the positive assertion, in any manner not warranted by
the information of the person making it, of that which is
not true, though the person making the assertion believes
it to be true;
the suppression of that which is true, by one having knowledge
or belief of the fact;
a promise made without any intention of performing it;
any other act fitted to deceive.
Constructive Fraud: Constructive fraud consists
of any breach of duty which, without actual fraudulent intent,
gains an advantage to the person in fault, or any one claiming
under the person in fault, by misleading another to the prejudice
of the person misled, or to the prejudice of anyone claiming
under the person misled. [Civ. Code §1573(1)] In addition,
constructive fraud consists of any act or omission that the
law specially declares to be fraudulent, without respect to
actual fraud. [Civ. Code §1573(2)]
Election Of Remedies: A plaintiff who has
entered into a contract in reliance on the fraud of a defendant
may elect either the contract remedy, consisting of restitution
based on rescission of the contract, or the tort remedy, by
affirming the contract and seeking damages. A plaintiff can
file a complaint stating causes of action in both contract and
tort, but may be required to elect one remedy or the other at
some time before judgment.
General Procedural Outline:
No two cases are alike and procedures vary
with the nature and complexity of the legal and evidentiary issues
involved. The following is a very general outline of the stages
of a civil action.
Every case begins with the filing and service of a Summons and
Complaint. The Complaint will contain one or more "causes
of action" such as "Breach of Contract" or "Fraud".
Service Of Complaint
After the Summons and Complaint have been filed with the court,
they must be properly served on the defendant(s). If the defendant(s)
will accept service, he/she may sign an Acknowledgment of Service."
Otherwise the documents will have to be formally served.
Response To Complaint
The Defendant(s) have 30 days from the date of service of the
Summons and Complaint to serve on the Plaintiff(s) either an
Answer to the Complaint or a pleading challenging the sufficiency
of the the Complaint. Responses challenging the sufficiency
of the Complaint include a motion called a "Demurrer"
and a "Motion To Strike"
Hearing Of Challenges To Sufficiency
Of Complaint (If Applicable)
If the defendant(s) decide to file a demurrer or motion to strike,
these motions must be heard and ruled upon before the matter
may proceed. This can take up to 2 months. If such motion is
sustained and the court grants leave to amend the Complaint,
a new complaint must be drafted and served and the process starts
over. Sometimes a second demurrer or motion will be filed causing
Once the Complaint and Answer have been filed both parties commence
"discovery" procedures by which the evidence necessary
to prosecute both sides of the case. Depending on the nature
and complexity of the case, one or more of the following discovery
devices may be used by the parties:
Interrogatories: Written questions which must be answered under oath.
Request For Production Of
Documents: Demands for production of documents
by the parties involved.
Requests For Admission: Requiring the parties to say which allegations they affirm
and which they deny.
parties may be required to appear in the opposing attorney's
office to answer questions under oath in front of a court
reporter. Depositions can also be taken from 3rd parties.
Subpoena Documents From
Third Party: Documents may be subpoenad from 3rd
parties such as banks and employers.
Discovery Motions (If
If a party fails or refuses to comply with discovery requests,
it may be necessary for the party propounding the discovery
to make a motion in court to compel responses. If the court
grants the motion, further responses will be made. If those
responses are still inadequate, another motion may be made and
the court can sanction (fine) the resisting party. In extreme
cases the court can even terminate the action in favor of the
Throughout the case the court will set a series of Case Management
Conferences to be attended by attorneys for all parties. These
hearings are designed to determine whether the case is ready
for trial. When the court feels that a case is ready for trial,
it will set the date for trial and make orders concerning completion
of discovery and final preparation for trial.
Settlement negotiations may proceed throughout the trial. Often
the court will require the parties to try a mediation of the
issues or will set a "Mandatory Settlement Conference"
(MSC) before the trial date. Settlement negotiations general
become more intense as the trial date approaches.
The vast majority of cases settle before trial. However if the
parties cannot settle the case, the only way to resolve the
issues is by way of trial.
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