Opinion ID: 760532
Heading Depth: 3
Heading Rank: 1

Heading: False Representations

Text: 16 Defendants assert that no rational trier of fact could find that Defendants made false representations. The district court agreed. However, viewing the evidence in the light most favorable to Plaintiffs, a reasonable trier of fact could find that Defendants' agents made false representations. 17 In order to show that Defendants made misrepresentations, Plaintiffs need not establish a duty to disclose, but instead must prove the truth of their claim that Defendants had already reached a decision on the closure of El-Jay. Plaintiffs have adduced sufficient evidence to be allowed to prove this before a trier of fact. If the trier of fact finds that Defendants' decision was sufficiently certain, they could then conclude that Defendants' representations of future growth, ramping up, etc. were false at the time they were made. 18 There are two bases on which Defendants could be found to have made false representations. First, the mere nondisclosure of material facts can be a form of misrepresentation where the defendant has concealed a known fact that is material to the transaction, see Millikin v. Green, 283 Or. 283, 583 P.2d 548, 550 (1978), or has made representations that would be misleading without full disclosure, see Felonenko v. Siomka, 55 Or.App. 331, 637 P.2d 1338, 1340 (1981). Defendants argue that nondisclosure is actionable only where a defendant has made representations that would be misleading without full disclosure and there is a duty to disclose. The district court apparently agreed and held that since there was no duty to disclose, there was no actionable fraud. However, this is not entirely correct. [O]ne who makes a representation that is misleading because it is in the nature of a 'half-truth' assumes the obligation to make a full and fair disclosure of the whole truth. Gregory, 855 P.2d at 1144. 19 Under Oregon law, there is a duty to disclose likely material contingencies. In Elizaga v. Kaiser Found. Hosp., 259 Or. 542, 487 P.2d 870 (1971), an employer made representations that could imply that the job offered to the plaintiff would continue past a certain date. The employer knew, however, that the position would probably be terminated before that date. Since nondisclosure of material facts can be a form of misrepresentation where the defendant has made representations which would be misleading without full disclosure, the Oregon Supreme Court held that [i]n order to avoid misleading plaintiff, defendant was under a duty to disclose that the Board of Examiners might well terminate the program. Id. at 873; see also Caldwell, 634 P.2d at 477 (holding that failure to disclose possible sale of mobilehome park was actionable because the likelihood that the mobile home would remain in the park was crucial to plaintiff's decision to purchase). 20 Second, Plaintiffs contend that no duty to disclose is required when fraud is based upon active concealment, as opposed to nondisclosure. Plaintiffs allege Defendants actively concealed the closure by intentionally withholding material information from El-Jay management. The fact that El-Jay management did not know of the closure is irrelevant because [a] principal who deliberately withholds material facts from his agent in order that the agent may innocently misrepresent the facts is guilty of fraud if the agent does in fact make such a misrepresentation and it is relied on by the third party. Bodenhamer v. Patterson, 278 Or. 367, 563 P.2d 1212, 1215-16 (Or.1977); Restatement (Second) Agency 555 § 256. 21 The district court erred in holding, as a matter of law, that no reasonable trier of fact could conclude that Defendants made false representations. Plaintiffs have put forth sufficient evidence to allow a jury reasonably to decide either way. 22 Defendants argue that they should not be forced to disclose sensitive business information. Defendants would not have been placed in this position, however, but for the false impression created by statements suggesting future growth and the ramping up of production. But for Defendants' affirmative misrepresentations, there would be no duty to disclose.