Typical Common Law Claims: Fraud

Michael Goldman
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An accomplished litigator representing his clients in complex environmental disputes throughout the country.

Depending on the interactions between the parties, a claim for fraud might also arise in an environmental lawsuit.  For instance, in Mitchell v. Encana Oil & Gas (USA), Inc., the plaintiffs claimed that the defendants failed to warn the plaintiffs of the dangers of potential discharges into groundwater from their exploration activities.[1] Plaintiffs claimed that this failure amounted to fraud as facts were concealed knowingly and with reckless disregard to plaintiff’s health and well-being.  In Harris v. Devon Energy Prod. Co, the plaintiff made similar allegations concerning the defendant’s failure to disclose the chemicals its used in its operations near the plaintiff’s home.[2] Finally, in Celanese Corp. v. Coastal Water Authority, the plaintiff claimed that defendants hit and damaged a pipeline in 2002, but hid the damage by backfilling over the damaged portion without informing the plaintiff.[3] The plaintiff sued the defendants for fraud, among other things, claiming that the failure to disclose the information constituted fraud where the particular circumstances imposed a duty to disclose the information.[4] 

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The elements of fraud are: (1) the defendant made a material representation that was false; (2) the defendant knew the representation was false or made it recklessly without regard to its truth; (3) the defendant intended to induce the plaintiff to act upon the representation; (4) the plaintiff actually and justifiably relied upon the false representation; and (5) the plaintiff suffered injury.[5] A plaintiff must plead fraud with particularity and must include the time, place and contents of the false representations, as well as the identity of the person making the misrepresentation and what that person obtained thereby.[6] Several defendants have been successful in dismissing fraud claims on this basis alone. For instance in both Tucker, et al v. Southwestern Energy Co. and Boggs, et al. v. Landmark 4 LLC, the courts granted the defendants’ motions to dismiss fraud claims because they were not pled with particularity.[7] 

In addition, the plaintiffs must prove that they relied on the fraudulent statements.  In Mitchell Energy Corp. v. Bartlett, the court granted summary judgment on the plaintiff’s fraud claims because the plaintiff failed to provide evidence that they believed or relied on such statements by the defendants.[8]

Key Points

  • Depending on the interactions between the parties, a claim for fraud might also arise in an environmental lawsuit.
  • The elements of fraud are: (1) the defendant made a material representation that was false; (2) the defendant knew the representation was false or made it recklessly without regard to its truth; (3) the defendant intended to induce the plaintiff to act upon the representation; (4) the plaintiff actually and justifiably relied upon the false representation; and (5) the plaintiff suffered injury. 
  • A plaintiff must plead fraud with particularity and must include the time, place and contents of the false representations, as well as the identity of the person making the misrepresentation and what that person obtained thereby.
  • In addition, the plaintiffs must prove that they relied on the fraudulent statements.  
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[1] Mitchell v. Encana Oil & Gas (USA), Inc., No., 3:10-CV-02555-N (N.D. Tex., filed Dec. 15, 2010) (Doc. 1, page 7).

[2] Harris v. Devon Energy Production Company, L.P., No. 4:10-cv-00708 (E.D. Tex., Dec. 15, 2010) (Doc. 1, page 6-7).

[3] Id.

[4] Id.

[5] Celanese Corp. v. Coastal Water Authority, 2008 WSL 2697321, at *8-9 (S.D. Tex. 2008).

[6] United States ex rel. Russell v. Epic Healthcare Mgmt. Grp., 193 F.3d 304, 308 (5th Cir. 1999), abrogated on other grounds by United States ex rel. Eisenstein v. City of New York, 556 U.S. 928 (2009); see United States ex rel. Thompson v. Columbia/HCA Healthcare Corp., 125 F.3d 899, 903 (5th Cir. 1997).

[7] Tucker, et al v. Southwestern Energy Co., et al No 1:11-cv-0044-DPM (E.D. Ark., May 17, 2011) (Doc. 82, page 3); Boggs, et al. v. Landmark 4 LLC, No. 1:12-cv-00614 (N.D. Ohio, Mar. 12, 2012) (Doc. 20, page 11); see also, Harris v. Devon Energy Production Company, L.P., No. 4:10-cv-00708 (E.D. Tex., Dec. 15, 2010) (Doc. 7, page 3); Mitchell v. Encana Oil & Gas (USA), No. 3:10-cv-02555 (N.D. Tex., Dec. 15, 2010) (Doc. 7, page 6).

[8] Mitchell Energy Corp. v. Bartlett, 958 S.W.2d 430, 444 (Tex. App.—Fort Worth 1997, pet. denied).

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