Opinion ID: 1658929
Heading Depth: 1
Heading Rank: 3

Heading: whether the trial court erred in granting the appellee, mac tools, inc.'s motion for summary judgment on the issue of waiver and estoppel as to the fraud alleged by mark allen, to have induced his entry into the contract for a mac tools distributorship and whether there existed a genuine issue or genuine issues of material fact which precluded the entry of summary judgment in this cause.

Text: Allen argues that representations of the number of customers induced him into the Mac Tools Distributorship Contract, which were false and known to be false by the Mac Tools' DSMs. That they gave him a territory which had never had 250 customers or stops and the sales figures quoted him were not based on accurate or true information. He was orally reassured and continuously told by Christmas and Tremonte, that the customers were to be added to make up the deficit which existed in the numbers represented to him to induce him to enter the contract. Allen complains that the trial court missed the aspect of the continuing representations made to him when the court granted the summary judgment in favor of Mac Tools. Mac Tools counters and states that even if there were such fraudulent representations, Allen waived any right to assert a claim or defense of fraudulent inducement based on such representations. The trial court below granted summary judgment on this Court's decision of Turner v. Wakefield, 481 So.2d 846 (Miss. 1985). In this decision Turner sued Wakefield for the balance due on a promissory note executed by Wakefield for the purchase of Turner's chiropractic practice. Turner asserted that Wakefield wrongfully misrepresented the value of the equipment and expected business income in the first year. Id. at 847. However, Wakefield discovered the misrepresentations four months after the contract was entered but continued to operate the business and to make note payments for an additional eleven months. Id. at 848. This Court held that if fraud did exist, Wakefield waived his right to allege it by ratifying the contract after discovery of the fraud. Id. This Court stated Where [sic] one is induced through false and fraudulent representations to enter into an agreement upon discovery thereof, he has an election to either rescind, in which event he must tender back that which he has received, or he may affirm the agreement, and maintain his action in damages for deceit, but his election must be promptly made, and, [sic] when once made, is final. If one elects to affirm the agreement, after full knowledge with the truth respecting the false and fraudulent representation[s], and thereafter continues to carry it out and receive its benefits, he may not thereafter maintain an action in damages for deceit, because this would constitute a ratification if the agreement and condemnation [sic] of the fraud; otherwise one might, with knowledge of fraud, speculate upon the advantages or disadvantages of an agreement, receive its benefits, and thereafter repudiate all its obligations. Turner, 481 So.2d at 848 (quoting Stoner v. Marshall, 145 Colo. 352, 358 P.2d 1021, 1022-23 (1961)). A contract obligation obtained by fraudulent representation is not void, but voidable. Upon discovery thereof, the one defrauded must act promptly and finally to repudiate the agreement; however, a continuance to ratify the contract terms constitutes a waiver. Turner, 481 So.2d at 848-49. The facts clearly show that Allen did not promptly repudiate but instead remained a distributor for Mac Tools for approximately three years and eight months. Allen states that he became immediately aware of the fact that there were not sufficient customers in said area, as had been represented to him, wherein he could make 200 to 250 sales per week. Also, Allen testified in his deposition that he learned Tremonte's statement regarding sales potential was false in June 1986. Allen also made forty-two monthly installments for his initial inventory and he ordered and purchased additional inventory from Mac Tools. Allen continued to work, and did not take prompt action as required by this Court in Turner to terminate his distributorship with Mac Tools or to declare the contract between himself and Mac Tools void and unenforceable by this Court's holding in Turner. Allen argues that his case is factually dissimilar to Turner, thus its holding and promulgated rule should not be applicable toward him. According to Allen the difference lies in the fact that the DSMs gave him additional representations or promises and thus his case does not fall within the purview of Turner. It appears that Allen was arguing fraudulent inducement or in the alternative fraud. The lower court merely treated this matter as a fraudulent inducement case and properly found under this Court's ruling in Turner that due to Allen's actions after his discovery of the alleged fraudulent acts that Allen waived any right to assert a claim for damages based upon fraudulent inducement. However, the lower court did not address the merits on the ongoing fraud. Allen asserts that after signing the agreement he discovered that the Defendants had made false representations which induced him into entering the Distributor Agreement with Mac Tools. Specifically, Allen testified that after signing the Distributor Agreement, he discovered that representations made by Tremonte about the number of available sales were false, and that these false representations, which Tremonte and the subsequent DSMs knew to be false, were continually made to him. Thus the evidence for review for the lower court concerned not only fraudulent inducement but also fraud. A review of the original complaint filed by Allen reveals, while not artfully plead, the complaint alleges fraud sufficient to meet the standards predicated under Miss.R.Civ.Pro. 9(b). [T]he circumstances constituting the fraud shall be stated with particularity. Fraud will not be inferred or presumed and may not be charged in general terms. The circumstances of the alleged fraud such as the time, place and contents of any false representations or conduct must be stated. Brabham v. Brabham, 483 So.2d 341, 342 (Miss. 1986) (citing Miss.R.Civ.P. 9(b); McMahon v. McMahon, 247 Miss. 822, 157 So.2d 494, 495 (1963); V. Griffith, Mississippi Chancery Practice § 589 (2d ed. 1950)). The elements of fraud are: (1) a representation; (2) its falsity; (3) its materiality; (4) the speaker's knowledge of its falsity or ignorance of its truth; (5) the speaker's intent that the representation should be acted upon by the hearer and in the manner reasonably contemplated; (6) the hearer's ignorance of its falsity; (7) the hearer's reliance on the representation's truth; (8) the hearer's right to rely thereon; and (9) the hearer's consequent and proximate injury. Franklin v. Lovitt Equip. Co., Inc., 420 So.2d 1370, 1373 (Miss. 1982). Conditions of mind, such as intent and malice, are required to be averred only generally. Benson v. Hall, 339 So.2d 570 (Miss. 1976); Edmonds v. Delta Democrat Pub. Co., 230 Miss. 583, 93 So.2d 171 (1957). In addressing Allen's complaint, he stated all the nine elements necessary for a fraud claim. He argued (1) that Tremonte made a representation to him concerning the amount of customers, approximately 200 to 250; (2) that this number was indeed false; (3) that the number of customers was much less then represented and there were other Mac Tools' distributors in his territory, which caused a substantial decrease in available sales; (4) that Tremonte, Christmas, and Jenkins all were completely aware of the lack of customers; (5) that the DSMs intended, by making the false representations, to keep him as a distributor; (6) that he believed that the DSMs would work on increasing his territory to rise to the level of 200 to 250 customers; (7) that he relied on the representations of the DSMs when he purchased his initial inventory and later invest in more inventory; (8) that he believed that he had the right to rely on the DSMs' representations and attempted dutifully and faithfully to attempt to perform the provisions of the contract; (9) and that he suffered injury and loss of earning capacity for a total amount of three hundred seventy-six thousand two hundred dollars. Therefore, in Allen's complaint he not only alleges fraudulent inducement but fraud. It is not clear in the record why the trial judge did not consider the complaint as one in fraud, but the judge's order only addressed the issue of fraudulent inducement. This Court has stated before that [s]ummary judgment may be inappropriate in most complex cases  for example, in cases dealing with fraud. Cunningham v. Lanier, 555 So.2d 685, 687 n. 2 (Miss. 1989) (citation omitted). In the context of summary judgment when the party has alleged fraud this Court has alluded to the notion that the cases which involve allegations of fraud or misrepresentation generally are inappropriate for disposition at a summary-judgment stage. Great S. Nat'l Bank v. McCullough Envtl. Servs., Inc., 595 So.2d 1282, 1289 (Miss. 1992); Pursue Energy Corp. v. Perkins, 558 So.2d 349, 354 (Miss. 1990). Thus, concluded by our jurisprudence is the understanding that triable issues of fact do exist when the facts or evidence support the allegation that fraud and misrepresentation were involved. Great S. Nat'l Bank, 595 So.2d at 1289. It is well established that fraud is never assumed but is essentially a question of facts which clear and convincing evidence must prove. Parker v. Howarth, 340 So.2d 434, 437 (Miss. 1976). Fraud is essentially a question of fact best left for the jury. In an allegation of fraud ... the precise facts which would establish the fraud will often be known only by the party or parties alleged to have committed the fraud. Because the factor of intent which is necessary to establish fraud requires knowledge of the perpetrator's state of mind, it may not be possible for an opponent to reveal detailed precise facts in support of his claim. Crystal Springs Ins. Agency, Inc. v. Commercial Union Ins. Co., 554 So.2d 884 (Miss. 1989) (citing 10A Charles A. Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice and Procedure: Civil 2d § 2727 (1983)). [T]he clear and convincing standard required of the evidence to sustain a claim of fraud is certainly met in a summary judgment posture when one witness specifically claims a representation was in fact made. Simmons v. Thompson Machinery of Mississippi, Inc., 631 So.2d 798, 802 (Miss. 1994) (quoting McMullan v. Geosouthern Energy Corp., 556 So.2d 1033, 1037 (Miss. 1990)). Finally, in a motion for summary judgment, a genuine issue of material fact is obviously present where one party testifies to one account of the matter in interest and the other party swears otherwise. Simmons, 631 So.2d at 802 (citing Newell v. Hinton, 556 So.2d 1037, 1041 (Miss. 1990)). As the record reveals, clearly there exists disputed material facts. Motions for summary judgment may not be used to determine or decide issues of fact, only to decide whether there are any material fact issues to be tried. Simmons, 631 So.2d at 801 (citing American Legion Ladnier Post Number 42 v. City of Ocean Springs, 562 So.2d 103, 106 (Miss. 1990)). Application of the law to the evidence and viewing the facts in the light most favorable to Allen leads to the conclusion that material issues of fact exist. Allen claims that Mac Tools made several representations, know to be false representations, as to the acquirement of more customers, certainly disposition of this issue requires a determination by a finder of fact. The best way and perhaps the only way for Allen to prove fraudulent representations amounting to fraud would be at a trial in which he could test the credibility of the DSMs whom he claims made the fraudulent representations to him. This opinion should not be construed as resolving the issue of fraud in favor of Allen; rather, from the evidence in the record, Allen should be entitled to an opportunity to prove the merits of his case at a trial by jury. As the benefit of the doubt should go to the party opposing the granting of summary judgment, there were issues that were proper questions for consideration on the merits. In view of the foregoing, the grant of summary judgment in favor of Mac Tools was error, and this case should be reversed and remanded.