Opinion ID: 1133601
Heading Depth: 1
Heading Rank: 7

Heading: Fraud By Silence and Negligence

Text: Under the rules of civil procedure, fraud is a special matter. The applicable statutory requirement reads: (b) Fraud, mistake, conditions of the mind. In all averments of fraud or mistake, the circumstances constituting fraud or mistake shall be stated with particularity. Malice, intent, knowledge and other conditions of mind of a person may be averred generally. K.S.A. 60-209(b). See Weil & Associates v. Urban Renewal Agency, 206 Kan. 405, Syl. ¶ 7, 479 P.2d 875 (1971). The district judge held that the concealment alleged by Miller did not rise to the actionable level of fraud by silence under current Kansas law. Additionally, the court stated that Miller failed to plead fraud with sufficient particularity as required by K.S.A. 60-209(b). On appeal Miller contends that he alleged facts in his pleadings with sufficient particularity and provided sufficient evidence of fraud by silence to withstand a motion for summary judgment on the fraud claim. In all averments of fraud, the circumstances constituting fraud shall be stated with particularity. K.S.A. 60-209(b). To establish fraud by silence, the plaintiff must show by clear and convincing evidence the following elements: (1) that defendant had knowledge of material facts which plaintiff did not have and which plaintiff could not have discovered by the exercise of reasonable diligence; (2) that defendant was under an obligation to communicate the material facts to the plaintiff; (3) that defendant intentionally failed to communicate to plaintiff the material facts; (4) that plaintiff justifiably relied on defendant to communicate the material facts to plaintiff; and (5) that plaintiff sustained damages as a result of defendant's failure to communicate the material facts to plaintiff. OMI Holdings, Inc. v. Howell, 260 Kan. 305, Syl. ¶ 6, 918 P.2d 1274 (1996). In Miller's first amended petition, he specifically pled fraud as a count against the attorney defendants. Miller alleged that the attorney defendants had knowledge of material facts which he did not have and could not have discovered by the exercise of reasonable diligence. The material facts alleged in Miller's petition were that the attorneys were authorized to act as his legal counsel, yet they negotiated a settlement, scheduled a settlement hearing, and participated in the hearing for the purpose of acquiring court approval for payments to be made on his behalf for which he received no benefit. Miller also alleged that others with this knowledge were prohibited from communicating with him because he was represented by the attorneys. Miller further alleged that the attorneys were under an obligation to communicate the material facts to him, they intentionally failed to do so, and he justifiably relied on an assumption that any attorney retained to represent him would communicate material facts to him. Miller stated that he sustained substantial damages as a direct and proximate result of the attorneys' failure to communicate with him. The delineated damages were: increased medical malpractice insurance premiums; increased charges imposed by the Fund; decreased patient referrals; lost income; the impugning of his professional confidence; embarrassment, humiliation, anxiety, and depression; and time and monies expended to obtain replacement medical malpractice insurance. Clearly, Miller averred fraud with particularity in compliance with K.S.A. 60-209(b). However, this does not dispose of the issue because the pleadings and depositions of Miller do not show that Miller sustained damages as a result of the attorneys' omissions or silence. The damages delineated by Miller in his petition were not damages sustained as a result of the defendant attorneys' failure to inform Miller of developments in the malpractice claim. The damages identified in Miller's petition were sustained by Miller as the result of having a significant malpractice claim against him. Those damages do not support any claim that the actions or omissions of the defendants in defending Miller on the malpractice claim caused Miller damages. Based on a lack of identifiable damages, we affirm the trial court's dismissal of Miller's claims of outrageous conduct, fraud, and negligence.