To state a claim based on fraudulent omission or concealment, a plaintiff must allege the following elements:

1. the defendant concealed or suppressed a material fact,
2. the defendant was under a duty to disclose the fact to the plaintiff,
3. the defendant intentionally concealed or suppressed the fact with the intent to defraud the plaintiff,
4. the plaintiff was unaware of the fact and would not have acted as he did if he had known of the concealed or suppressed fact, and
5. as a result of the concealment or suppression of the fact, the plaintiff sustained damage.

Jones v. ConocoPhillips (2011) 198 Cal.App.4th 1187, 1198; see also Hambrick v. Healthcare Partners Medical Group, Inc. (2015) 238 Cal.App.4th 124, 162; Blickman Turkus, LP v. MF Downtown Sunnyvale, LLC (2008) 162 Cal.App.4th 858, 868.

A party alleging fraud or deceit in connection with a contract may recover in tort if he or she can “establish tortious conduct independent of a breach of the contract itself, that is violation of some duty arising from tort law.” Food Safety Net Services v. Eco Safe Systems USA, Inc. (2012) 209 Cal.App.4th 1118, 1130.

“Every fact constituting the fraud must be alleged, and the policy of liberal construction will not ordinarily be invoked to sustain a defective pleading.” Furia v. Helm, 111 Cal.App.4th 945, 956 (2003).

Note that “‘[p]romissory fraud’ is a subspecies of the action for fraud and deceit. A promise to do something necessarily implies the intention to perform; hence, where a promise is made without such intention, there is an implied misrepresentation of fact that may be actionable fraud.” Lazar v. Super. Ct., 12 Cal.4th 631, 638 (1996). Otherwise the elements of fraud are the same as for intentional misrepresentations of present material facts. “[A]n action based on a false promise is simply a type of intentional misrepresentation, i.e., actual fraud.” Tarmann v. State Farm Mut. Auto. Ins. Co., 2 Cal.App.4th 153, 159 (1991).

A duty to disclose material facts may arise:

1. when the defendant is in a fiduciary relationship with the plaintiff
2. when the defendant had exclusive knowledge of material facts not known to the plaintiff;
3. when the defendant actively conceals a material fact from the plaintiff; and
4. when the defendant makes partial representations but also suppresses some material facts.

Jones v. ConocoPhillips (2011) 198 Cal.App.4th 1187, 1198; see also Hambrick v. Healthcare Partners Medical Group, Inc. (2015) 238 Cal.App.4th 124, 162; Blickman Turkus, LP v. MF Downtown Sunnyvale, LLC (2008) 162 Cal.App.4th 858, 868.

A party alleging fraud or deceit in connection with a contract may recover in tort if he or she can “establish tortious conduct independent of a breach of the contract itself, that is violation of some duty arising from tort law.” Food Safety Net Services v. Eco Safe Systems USA, Inc. (2012) 209 Cal.App.4th 1118, 1130.

“Every fact constituting the fraud must be alleged, and the policy of liberal construction will not ordinarily be invoked to sustain a defective pleading.” Furia v. Helm, 111 Cal.App.4th 945, 956 (2003).

Falk v. General Motors Corp. (2007) 496 F.Supp.2d 1088, 1094-96 (citing LiMandri v. Judikins (1997) 52 Cal. App. 4th 326, 336).

A party must plead fraud specifically; general and conclusory allegations do not suffice. Lazar v. Super. Ct., (1996) 12 Cal.4th 631, 645. “This particularity requirement necessitates pleading facts which show how, when, where, to whom, and by what means the representations were tendered.” Id. “The requirement of specificity in a fraud action against a corporation requires the plaintiff to allege the names of the persons who made the allegedly fraudulent representations, their authority to speak, to whom they spoke, what they said or wrote, and when it was said or written.” Tarmann v. State Farm Mut. Auto. Ins. Co., 2 Cal.App.4th 153, 157 (1991).

While fraud must be pled specifically, (Glaski v. Bank of Am., Nat'l Ass’n (2013) 218 Cal.App.4th 1079, 1090), “[l]ess specificity is required when ‘it appears from the nature of the allegations that the defendant must necessarily possess full information concerning the facts of the controversy....’” Committee on Children’s Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 216. Similarly, less specificity is required for fraud claims based on omission or concealment.

“‘[T]he courts should not... seek to absolve the defendant from liability on highly technical requirements of form in pleading. Pleading facts in ordinary and concise language is as permissible in fraud cases as in any others, and liberal construction of the pleading is as much a duty of the court in these as in other cases.’” Appollo Capital Fund, LLC v. Roth Capital Partners, LLC (2007) 158 Cal.App.4th 226, 242.

But note, “[a] plaintiff’s burden in asserting a fraud claim against a corporate employer is even greater. In such a case, the plaintiff must ‘allege the names of the persons who made the allegedly fraudulent representations, their authority to speak, to whom they spoke, what they said or wrote, and when it was said or written.’” Lazar v. Super. Ct. (1996) 12 Cal.4th 631, 645. (citations omitted)

Furthermore, the rule of specificity of pleading is intended to apply only to affirmative representations and not to fraud by concealment. Alfaro v. Community Housing Improvement System & Planning Assn., Inc. (2009) 171 Cal.App.4th 1356, 1384; Jones v. ConocoPhillips (2011) 198 Cal.App.4th 1187, 1200 (concealment is sufficiently pled when the complaint as a whole provides sufficient notice of the claims against defendants). A duty to disclose material facts may arise:

Economic Loss Rule

The economic loss rule only permits a plaintiff to recover in tort when a defective product causes either personal injury or damages to property other than the defective product. Jimenez v. Super. Ct. (2002) 29 Cal.4th 473, 483. The law of contractual warranty governs damage to the product itself. Id. at 482-83.

But “[t]ort damages have been permitted in contract cases where a breach of duty directly causes physical injury; for breach of the covenant of good faith and fair dealing in insurance contracts; for wrongful discharge in violation of fundamental public policy; or where the contract was fraudulently induced.” Robinson Helicopter Co., Inc. v. Dana Corp. (2004) 34 Cal.4th 979, 989-990 (citation omitted). “[I]n each of these cases, the duty that gives rise to tort liability is either completely independent of the contract or arises from conduct which is both intentional and intended to harm.” Id.

Statute of Limitations

The statute of limitations for fraud is three years. Code of Civ. Proc. § 338(d). A fraud claim does not begin to accrue “until the discovery, by the aggrieved party, of facts constituting the fraud or mistake.” Id. “Under the discovery rule, the statute of limitations begins to run when the plaintiff suspects or should suspect that her injury was caused by wrongdoing, that someone has done something wrong to her... [T]he limitations period begins once the plaintiff has notice or information of circumstances to put a reasonable person on inquiry.” Jolly v. Eli Lilly & Co. (1988) 44 Cal.3d 1103, 1110–1111 (internal quotation marks, footnote and citations omitted).

The Court of Appeal in Cansino v. Bank of America (2014) 224 Cal.App.4th 1462 recently explained the pleading standard for the delayed discovery rule:

Because the discovery rule operates as an exception to the statute of limitations, if an action is brought more than three years after commission of the fraud, plaintiff has the burden of pleading and proving that he did not make the discovery until within three years prior to the filing of his complaint. To excuse failure to discover the fraud within three years after its commission, a plaintiff also must plead facts showing that he was not negligent in failing to make the discovery sooner and that he had no actual or presumptive knowledge of facts sufficient to put him on inquiry. To that end, a plaintiff must allege facts showing the time and surrounding circumstances of the discovery and what the discovery was. Conclusory allegations will not withstand a demurrer. The discovery related facts should be pleaded in detail to allow the court to determine whether the fraud should have been discovered sooner.

Cansino v. Bank of America (2014) 224 Cal.App.4th 1462, 1472 (internal quotation marks and citations omitted).

“When a plaintiff reasonably should have discovered facts for purposes of the accrual of a case of action or application of the delayed discovery rule is generally a question of fact, properly decided as a matter of law only if the evidence (or, in this case, the allegations in the complaint and fact properly subject to judicial notice) can support only one reasonable conclusion.” Broberg v. The Guardian Life Ins. Co. of Am. (2009) 171 Cal.App.4th 912, 921.

Application

Fraud has been found in many situations. Some examples:

Safety

A safety concern is a material fact that a manufacturer has a duty to disclose. Jones v. ConocoPhillips (2011) 198 Cal.App.4th 1187, 1198-99 (“‘a duty to disclose may arise when a defendant possesses or exerts control over material facts not readily available to the plaintiff,’ at least when those material facts concern allegedly concealed safety risks known only to the manufacturer.”); see also Reniger v. Hyundai Motor America (2015) 122 F.Supp.3d 888, 896 (holding plaintiffs sufficiently alleged a duty to disclose where complaint alleged manufacturer had superior and exclusive knowledge of, but concealed, safety defects concerning stalling of its vehicles that caused loss of brakes and power steering); Daugherty v. Amer. Honda Motor Co., Inc. (2006) 144 Cal.App.4th 824, 836 (holding fraudulent omission claim failed on demurrer since defendant made no representations and had not duty to disclose an alleged fact, making particular note of the fact that “the complaint [was] devoid of factual allegations showing any instance of physical injury or any safety concerns posed by the defect,” so the alleged defect posed no “unreasonable risk”).

False Certificates

The court in Robinson Helicopter found that the defendant’s alleged misrepresentations in supplying false certificates of conformance, upon which the plaintiff justifiably relied by accepting delivery and using the nonconforming products, constituted conduct separate from the breach of contract claim based on the provision of the nonconforming products. Thus, the court found that the fraud was a tort independent of the contract breach and the economic loss rule did not bar the fraud claims. Robinson Helicopter Co., Inc. v. Dana Corp. (2004) 34 Cal.4th 979, 990-991.