Opinion ID: 2518343
Heading Depth: 2
Heading Rank: 3

Heading: Constructive and Actual Fraud

Text: ¶ 29 Constructive fraud is the concealment of a material fact by one who has a duty to disclose. Varn v. Maloney, 1973 OK 133, ¶ 17, 516 P.2d 1328, 1332. Constructive fraud may be based on either an equitable duty or legal duty. Faulkenberry v. Kansas City Southern Ry. Co., 1979 OK 142, ¶ 4, 602 P.2d 203, 206. In Faulkenberry, this Court recognized a constructive fraud claim based on a legal duty under the Federal Employers' Liability Act. Id. at ¶ 5, 602 P.2d at 206. ¶ 30 In the present case, the Production Revenue Standards Act, 52 O.S.2001, 570.1 -.15 (PRSA), provides a legal duty on which the plaintiffs can base a claim for constructive fraud. Section 570.10 provides: All proceeds from the sale of production shall be regarded as separate and distinct from all other funds of any person receiving or holding the same until such time as such proceeds are paid to the owners legally entitled thereto. Section 570.12, previously section 540, requires information to be included for each property and month of sale with the payment from the sale of oil or gas. The required information includes: (1) the lease's or well's identification; (2) [m]onth and year of sales included in the payment; (3) total barrels or MCF attributed to the payment; (4) price per barrel or price per MCF; (5) the amount of severance and other production taxes, but not windfall profit taxes, attributed to the payment; (6) [n]et value of total sales attributed to such payment after taxes are deducted; (7) owner's interest in decimal form in production from the property; (8) [o]wner's share of the value of sales attributed to the payment prior to any deductions; (9) [o]wner's share of sales value attributed to such payment less owner's share of production and severance taxes; and (10) [a] specific listing of the amount and purpose of any other deductions from the proceeds attributed to such payment due to the owner upon the owner's request. ¶ 31 The PRSA provisions give the royalty owners a right to be accurately informed of the facts and place a legal duty on the respondents to accurately inform the plaintiffs of the facts on which the royalty payments are based. The respondents failed to include any statements or evidentiary materials in their motions for partial summary judgment showing that they complied with the PRSA. ¶ 32 In addition to the constructive fraud claim, the plaintiffs are seeking damages for actual fraud. Actual fraud is a material false representation, made with knowledge of its falsity or recklessly without knowledge as to its truth or falsity, as a positive assertion, with the intention that it be acted upon by another. Varn, 1973 OK 133 at ¶ 17, 516 P.2d at 1332. To be actionable, both actual fraud and constructive fraud require detrimental reliance by the person complaining. Id. ¶ 33 The respondents, in the statement of facts in their motion for partial summary judgment state: [H]owever, no Plaintiff relied to his or her detriment on any information contained in those check stubs. The respondents then reference the depositions of some, but not all, of the plaintiffs. Thus, the respondents have failed to support their statement of material facts as to which they contend that there is no genuine dispute by sufficient evidentiary materials as required by the rule on summary judgment. By failing to adequately support their statement of this fact, the respondents were not entitled to partial summary judgment on the issues of actual fraud and constructive fraud. See 12 O.S.2001, ch. 2, app. 1, rule 13.