What is fraudulent inducement?

Fraud in the inducement occurs where a party’s assent to a contract is obtained through “conscious misrepresentation, or concealment, or non-disclosure of a material fact which induces the innocent party to enter the contract.” (Odorizzi v. Bloomfield School Dist. (1966) 246 Cal.App.2d 123, 128; see also Civ. Code, § 1572.)

“Fraud in the inducement is a subset of the tort of fraud.” (Hinesley v. Oakshade Town Center (2005) 135 Cal.App.4th 289, 294.) It occurs when “the promisor knows what he is signing but his consent is induced by fraud, mutual assent is present and a contract is formed, which, by reason of the fraud, is voidable.” (Hinesley v. Oakshade Town Center (2005) 135 Cal.App.4th 289, 294–295.)

To establish a claim of fraudulent inducement, one must show that the defendant did not intend to honor its contractual promises when they were made. (Agosta v. Astor (2004) 120 Cal.App.4th 596, 603.)

“A promise of future conduct is actionable as fraud only if made without a present intent to perform.... something more than nonperformance is required to prove the defendant's intent not to perform his promise.... '[I]f plaintiff adduces no further evidence of fraudulent intent than proof of nonperformance of an oral promise, he will never reach a jury.'” (Magpali v. Farmers Group, Inc. (1996) 48 Cal.App.4th 471, 481.)

To advance a cognizable fraud claim, “every element of the cause of action... must be alleged in full, factually and specifically, and the policy of liberal construction of pleading will not usually be invoked to sustain a fraud claim deficient in any material respect.” (Wilhelm v. Pray, Price, Williams & Russell (1986) 186 Cal.App.3d 1324, 1331.) Fraud must be plead with particularity and specificity rather than with general or conclusory allegations. (Small v. Fritz Companies, Inc. (2003) 30 Cal.4th 167, 184.) This particularity requirement necessitates pleading facts which show how, when, where, to whom, and by what means the representations were made. (Morgan v. AT & T Wireless Services, Inc. (2009) 177 Cal.App.4th 1235, 1261–1262.) To state the claim against an entity, the plaintiff must also include allegations regarding the speaker’s authority to bind the entity. (Lazar v. Superior Court (1996) 12 Cal.4th 631, 645.)

A three-year statute of limitation applies to fraud claims. (Code Civ. Proc., § 338, subd. (d).)

Useful Rulings on Fraudulent Inducement

Recent Rulings on Fraudulent Inducement

BLUE TOWN, LLC VS SOUTHWEST SERVICES GROUP, LLC, ET AL.

On March 13, 2020, Plaintiff filed a first amended complaint (FAC) against Southwest Services Group, LLC (Southwest), RT Development, LLC (RT), and Brett Miles, alleging: (1) breach of promissory note; (2) fraudulent inducement; (3) negligent misrepresentation; (4) account stated; and (5) money had and received. Now, Plaintiff moves to strike the answers of both Southwest and RT.

  • Hearing

  • Type

    Personal Injury/ Tort

  • Sub Type

    Fraud

NIETO V. GENERAL MOTORS, LLC

Third Cause of Action (Fraudulent Inducement-Concealment) Defendant objects to the Third Cause of Action pursuant to Civil Code section 430.10, subdivision (e). The Court in Robinson Helicopter Co., Inc. v. Dana Corp. (2004) 34 Cal.4th 979, 988 (Robinson) explains that “the economic loss rule provides: [W]here a purchaser’s expectations in a sale are frustrated because the product he bought is not working properly, his remedy is said to be in contract alone, for he has suffered only economic losses.

  • Hearing

CHARLENE TANG VS 829 FLOWER, LLC , ET AL.

The Johnson court continued its analysis by drawing a distinction between fraudulent inducement to enter into the arbitration clause and fraudulent inducement to enter into the underlying contract that contained the arbitration clause as follows: It is true that arbitration may be refused where grounds exist for revocation of the agreement to arbitrate. [Citations omitted.] Fraud in the inducement of the underlying contract, however, is not sufficient to defeat an arbitration clause.

  • Hearing

  • Type

    Real Property

  • Sub Type

    other

  • Judge Elaine Lu
  • County

    Los Angeles County, CA

BARBARA A. COHEN VS OREN ABUTBUL, ET AL.

Bitton, and American Contractors Indemnity Company asserting causes of action for (1) Breach of Contract; (2) Breach of the Covenant of Good Faith and Fair Dealing; (3) Negligence; (4) Negligence Per Se; (5) Fraudulent Inducement; (6) Fraud/Promise Without Intent to Perform; (7) Breach of Express and Implied Warranties; (8) Recovery on Contractors’ License Bonds; (9) Disgorgement; (10) Elder Financial Abuse; and (11) Conversion.

  • Hearing

  • Type

    Personal Injury/ Tort

  • Sub Type

    Fraud

ANDRES ASCENCIO, ET AL. VS FCA US LLC, ET AL.

On July 1, 2020, Plaintiffs filed a first amended complaint (“FAC”) against Defendants for (1) violation of subdivision (d) of Civil Code section 1793.2; (2) violation of subdivision (b) of Civil Code section 1793.2; (3) violation of subdivision (a)(3) of Civil Code section 1739.2; (4) breach of express written warranty; (5) breach of the implied warranty of merchantability; and (6) fraudulent inducement/concealment. On July 1, 2020, Plaintiffs filed a notice of settlement of entire case.

  • Hearing

  • Type

    Contract

  • Sub Type

    Breach

DAVID SCHWARTZ, ET AL. VS MC2 CONSTRUCTION LA, INC., A CALIFORNIA CORPORATION

Cross-Complaint On October 27, 2020, Cimmarrusti filed a Cross-Complaint against Schwartz and Diane Schwartz (“Diane”), alleging causes of action for: (1) fraudulent inducement; (2) breach of contract; (3) breach of fiduciary duty; (4) disgorgement; and (5) conversion. The Cross-Complaint alleges in pertinent part as follows. Schwartz first met Cimmarrusti in or around the middle of 2013.

  • Hearing

  • Type

    Business

  • Sub Type

    Intellectual Property

JENNY RIVERA VS NISSAN NORTH AMERICA, INC., A CALIFORNIA CORPORATION

Plaintiff’s operative Complaint alleges the following causes of action against all defendants: (1) breach of implied warranty of merchantability under Song-Beverly Warranty Act, (2) breach of express warranty under Song-Beverly Warranty Act, (3) fraudulent inducement – concealment. Defendant now demurs to the third cause of action on the grounds that it fails to plead facts sufficient to state a cause of action. Defendant additionally moves to strike portions of the Complaint.

  • Hearing

MERIDIAN VS. WORXSITEHR

That is a species of fraudulent inducement based upon affirmative misrepresentations. With respect to such fraud allegations, the contract the parties entered into is collateral to the alleged affirmative acts of fraud. Thus, the economic loss rule does not preclude the statement of causes of action for intentional and negligent fraud based on the facts alleged in the Complaint notwithstanding the existence of a contractual relationship between the parties.

  • Hearing

  • Type

    Personal Injury/ Tort

  • Sub Type

    Fraud

MARQUEZ VS NISSAN NORTH AMERIC

Plaintiff's third cause of action for fraudulent inducement is based on 's alleged non-disclosure of known defects in the type of transmission used in the vehicle when the vehicle was sold to plaintiff.

  • Hearing

TOLARA GROSS VS EDUCATION MANAGEMENT SYSTEMS

On May 20, 2019, Plaintiff filed the operative first amended complaint (“FAC”) against defendant Education Management Systems (“Defendant”) alleging causes of action for (1) Fraudulent Inducement; (2) Negligent Misrepresentation; (3) Disability Discrimination; (4) Libel Per Se; (4) Wrongful Termination in Violation of Public Policy; (6) Intentional Infliction of Emotional Distress; and (7) Unpaid Wage Claim. On August 6, 2020, Defendant filed the instant motion to compel arbitration.

  • Hearing

  • Type

    Employment

  • Sub Type

    Wrongful Term

  • Judge Elaine Lu
  • County

    Los Angeles County, CA

STAMATIS STAMATOPOULOS VS ALEX YAMINI, ET AL.

This contention fails for the same reasons as Plaintiff’s fraudulent inducement argument. There is a triable issue of material fact as to Defendants’ intentions at the time the purported misrepresentation was made. 6. Violation of LAMC § 151.31(D)(1)(a) Plaintiff contends that the Agreement does not comply with LAMC section 151.31(D)(1)(a).

  • Hearing

ESMAREI HABIBI VS. FCA US LLC

The Court intends to rule as follows; To sustain the demurrer by Defendant FCA US LLC to cause of action 6 fraudulent inducement – concealment without leave to amend. Plaintiff failed set forth facts that reflected that safety had been compromised, and that Defendant had exclusive knowledge that Plaintiff's vehicle was defective at the time of purchase. Any recalls (or consumer complaints) are available on the NHTSA website for public viewing. There were no such allegations under C/A 6 itself.

  • Hearing

DANIEL MARTIN RENOVATO, ET AL. VS FCA US LLC, ET AL.

Plaintiffs assert against FCA claims for breach of the repurchase obligation under the Song-Beverly Act, failure to timely repair the vehicle, failure to provide sufficient service literature and replacement parts to effect repairs, breach of express written warranty, and fraudulent inducement, in addition to breach of the implied warranty. The causes of action against FCA involve additional facts and law, in particular issues of willfulness, intent, and fraud.

  • Hearing

  • Type

    Contract

  • Sub Type

    Breach

LETICIA MUNOZ OLMOS, ET AL. VS JRDTSP LLC, A CALIFORNIA LIMITED LIABILITY COMPANY DBA SCOTT ROBINSON CHRYSLER DODGE JEEP RAM, ET AL.

Fourth Cause of Action: Fraudulent Inducement - Concealment Defendant demurrers to fourth cause of action for Fraudulent Inducement – Concealment, contending that (1) Plaintiffs do not sufficiently allege a duty to disclose, (2) Plaintiffs do not allege this claim of fraud with the required specificity, and (3) the economic loss rule bars this cause of action.

  • Hearing

  • Type

    Contract

  • Sub Type

    Breach

  • Judge Elaine Lu
  • County

    Los Angeles County, CA

MARIA DEL CARMEN VALDOVINOS ROSALES, ET AL. VS KIA MOTORS AMERICA, INC. A CALIFORNIA CORPORATION

However, where a party is fraudulently induced to contract, allegations that as a result of the fraudulent inducement the induced party was exposed to potential liability may be sufficient to avoid being barred by the economic loss rule. (See Robinson, supra, 34 Cal.4th at 993.) Here, Plaintiffs’ fraud claims are based on fraudulent inducement, which is sufficient to establish an independent duty.

  • Hearing

  • Type

    Contract

  • Sub Type

    Breach

  • Judge Elaine Lu
  • County

    Los Angeles County, CA

VLADIMIR LEVIN VS GLENN TODD ROSEN, ET AL.,

.: SC128271 MOTION: Defendants Glenn Todd Rosen and Rosen Law Firm, APC’s Motion to Vacate Default/Default Judgment HEARING DATE: 11/10/2020 BACKGROUND On April 24, 2018, Plaintiff Vladimir Levin (“Plaintiff”) filed a second amended complaint against Defendants Glenn Todd Rosen, Hilary Blaire Rosen, The Rosen Law Firm, and Does 1 -10 for breach of contract, waste, negligent misrepresentation, and fraudulent inducement.

  • Hearing

  • Type

    Real Property

  • Sub Type

    Landlord Tenant

DERMOT GIVENS VS COLIN FULFORD

Plaintiff’s fraud cause of action alleges misrepresentations and fraudulent inducement allegations. (See Fr-2(a), FR-4(a).) Defendant demurs to this cause of action arguing that Plaintiff’s cannot establish fraudulent intent merely from a breach of contract. Defendant also argues that Plaintiff has failed to meet the heightened pleading requirement for fraud actions. In opposition, Plaintiff argues that the fraud action is properly pled, and references facts not present in the complaint.

  • Hearing

  • Type

    Personal Injury/ Tort

  • Sub Type

    Fraud

LAURA FRANCO-MARIA VS GENERAL MOTORS, LLC

These facts are sufficient to constitute cause of action for (1) breach of implied warranty of merchantability under the Song-Beverly Warranty Act, (2) breach of express warranty under the Song-Beverly Act and (3) fraudulent inducement. The demurrer on this ground is OVERRULED. Economic Loss Rule Defendant further demurrers to the 3rd cause of action based on the economic loss rule. The fraud claim is independent of any breach of contract claim. As such, fraud is an exception to the economic loss rule.

  • Hearing

GARCIA VS. GENERAL MOTORS

Plaintiff concedes that her claim for punitive damages is based solely on her third cause of action for fraudulent inducement - concealment. (Opp. to MTS p. 2, ll. 6-9.) For the reasons set forth below (see Line 16), the Court has sustained defendant's demurrer to the third cause of action, with leave to amend. Based on the deficiencies found in the third cause of action as set forth in the tentative ruling on the demurrer, the Court grants the motion to strike the prayer for punitive damages (Compl.

  • Hearing

GARCIA VS. GENERAL MOTORS

Third Cause of Action – Fraudulent Inducement - Concealment Plaintiff's third cause of action for fraudulent inducement is based on GM's alleged non- disclosure of known defects in the type of transmission used in the vehicle when the vehicle was sold to plaintiff. (Compl. ¶¶ 41-44, 77, 78.)

  • Hearing

EXPO DESIGN & DEVELOPMENT, A CALIFORNIA DISSOLVED CORPORATION VS JAMES GREELEY, ET AL.

(“Plaintiff”) initiated this action against Defendants James Greeley (“James”) and Rosa Greeley (“Rosa”) (collectively, “Defendants”) alleging causes of action for (1) breach of written contract, (2) breach of oral contract, (3) open book account, (4) account stated, (5) quantum meruit, and (6) fraudulent inducement.

  • Hearing

PATRICIA COLEMAN VS CALIBER HOME LOANS, INC.., A TEXAS CORPORATION, ET AL.

As noted by Caliber, “[i]f the defrauded plaintiff would have suffered the alleged damage even in the absence of the fraudulent inducement, causation cannot be alleged and a fraud cause of action cannot be sustained.” (Beckwith v. Dahl (2012) 205 Cal.App.4th 1039, 1064 [emphasis in original].) Here again, Coleman alleges that but for the misrepresentations regarding the status of foreclosure proceedings, she would have sought alternative financing such as a reverse mortgage.

  • Hearing

  • Type

    Real Property

  • Sub Type

    Foreclosure

PEREZ VS GENERAL MOTORS HEARING RE: DEMURRER TO COMPLAINT OF MARGARITA PEREZ BY GENERAL MOTORS LLC

This Complaint for (1) breach of implied warranties under the Song-Beverly Act, (2) breach of express warranties under the Song-Beverly Act, and (3) Fraudulent Inducement arises out of Plaintiff’s May 11, 2016 purchase of a new 2015 Cadillac Escalade.

  • Hearing

ARTHUR POLANCO VS GENERAL MOTORS, LLC

Third Cause of Action: Fraudulent Inducement-Concealment (Economic Loss Rule) “Economic loss consists of damages for inadequate value, costs of repair and replacement of the defective product or consequent loss of profits-without any claim of personal injury or damages to other property.

  • Hearing

GOMEZ V. VOLVO CARS OF NORTH AMERICA, LLC

Demurrer to the Complaint’s Fourth Cause of Action The Demurrer to the Fourth Cause of Action for Fraudulent Inducement – Concealment,” brought by defendants Volvo Car USA, LLC (erroneously sued as “Volvo USA, LLC”) and GSM Auto Group dba Volvo Mission Viejo (collectively, “Defendants”) is SUSTAINED, without leave to amend, as follows. (C.C.P. § 430.10(e).)

  • Hearing

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