Opinion ID: 807798
Heading Depth: 3
Heading Rank: 3

Heading: Fraudulent Concealment Claim Against Best Buy

Text: and HSBC Davis next alleges that Defendants fraudulently concealed the existence of an annual fee in its advertising and marketing. “The elements of a cause of action for fraud in California are: (a) misrepresentation (false representation, concealment, or nondisclosure); (b) knowledge of falsity (or ‘scienter’ ); (c) intent to defraud, i.e., to induce reliance; (d) justifiable reliance; and (e) resulting damage.” Kearns v. Ford Motor Com10380 DAVIS v. HSBC BANK NEVADA pany, 567 F.3d 1120, 1126 (9th Cir. 2009) (emphasis in original) (internal citation and quotation marks omitted). In particular, a claim for fraudulent concealment requires that: “(1) the defendant must have concealed or suppressed a material fact, (2) the defendant must have been under a duty to disclose the fact to the plaintiff, (3) the defendant must have intentionally concealed or suppressed the fact with the intent to defraud the plaintiff, (4) the plaintiff must have been 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 must have sustained damage.” Marketing West, Inc. v. Sanyo Fisher (USA) Corp., 7 Cal. Rptr. 2d 859, 864 (Ct. App. 1992). Without reaching the other factors, the district court determined that Davis’s claim fails because he cannot demonstrate justifiable reliance on the purported failure to disclose the annual fee. We agree. [7] In an action for fraud under California law, recovery shall be denied “[i]f the conduct of the plaintiff [in relying upon a misrepresentation] in the light of his own intelligence and information was manifestly unreasonable.” Broberg v. Guardian Life Ins. Co. of Am., 90 Cal. Rptr. 3d 225, 232 (Ct. App. 2009) (alterations in original) (internal citation and quotation marks omitted). To establish manifest unreasonableness, “[i]t must appear that [plaintiff] put faith in representations that were preposterous or shown by facts within his observation to be so patently and obviously false that he must have closed his eyes to avoid discovery of the truth.” Id. (internal quotation marks omitted). We bear in mind, however, that “[w]hether reliance [on a misrepresentation] was reasonable is a question of fact for the jury, and may be decided as a matter of law only if the facts permit reasonable minds to come to just one conclusion.” Id. (alterations in original) (internal citation and quotation marks omitted). [8] Fatal to Davis’s claim is the undisputed fact that he failed to read the Important Terms & Disclosure Statement DAVIS v. HSBC BANK NEVADA 10381 before checking the box accepting these terms and conditions. California courts have held that where, as here, the parties to an agreement deal at arm’s length, it is not reasonable to fail to read a contract before signing it. See, e.g., Desert Outdoor Advertising v. Super. Ct., 127 Cal. Rptr. 3d 158, 163 (Ct. App. 2011); Brown v. Wells Fargo Bank, NA, 85 Cal. Rptr. 3d 817, 833-34 (Ct. App. 2008) (explaining that there can be no reasonable reliance where the plaintiff, dealing at arm’s length, “had a reasonable opportunity to discover the true terms of the contract” but simply failed to read the contract before signing it). Moreover, the existence of the annual fee was “within [Davis’s] observation” because he concedes that he was able to discover the annual fee when he revisited Best Buy’s website and scrolled through the Important Terms & Disclosure Statement. However, by refusing to read this document before completing the application, and instead assuming the absence of an annual fee, Davis “put faith” in a purported representation that was “shown by facts within his observation to be so patently and obviously false that he must have closed his eyes to avoid discovery of the truth.” Broberg, 90 Cal. Rptr. 3d at 232 (internal quotation marks omitted). The only conclusion that reasonable minds may draw is that Davis’s reliance on the purported misrepresentation was manifestly unreasonable. [9] Davis’s reliance on Barrer v. Chase Bank USA, N.A., 566 F.3d 883 (9th Cir. 2009), is misplaced. He argues that Barrer leaves open the possibility that, where a disclaimer concerning a particular term is buried in the fine print of an agreement, a reasonable consumer may still be deceived by advertising or marketing materials concerning that term. This is not what Barrer says. Rather, we held in Barrer that because a provision empowering the defendant to change the cardholder’s annual percentage rate for any reason was “buried too deeply in the fine print,” the defendant could not show, as a matter of law, that the credit card agreement made “clear and conspicuous” disclosure of that provision, as 10382 DAVIS v. HSBC BANK NEVADA required by Regulation Z and the Truth in Lending Act (“TILA”). Barrer, 566 F.3d at 892. However, whether a disclosure satisfies the “clear and conspicuous” standard under the federal regulatory framework, see Rubio v. Capital One Bank, 613 F.3d 1195, 1199 (9th Cir. 2010) (noting that TILA and its implementing regulations require “absolute compliance” by creditors), is inapposite to whether, in the common law context, it was reasonable for Davis to rely on a purported representation when he did not read the terms and conditions to which he assented. Thus, we conclude that Davis cannot demonstrate reasonable reliance and that the district court did not err in dismissing his fraud claim.