Opinion ID: 2639411
Heading Depth: 3
Heading Rank: 1

Heading: Pleading Fraud with Particularity

Text: ¶ 16 Rule 9(b) of the Utah Rules of Civil Procedure specifies that [i]n all averments of fraud or mistake, the circumstances constituting fraud or mistake shall be stated with particularity. The elements that a party must allege to bring a claim sounding in fraud are (1) that a representation was made (2) concerning a presently existing material fact (3) which was false and (4) which the representor either (a) knew to be false or (b) made recklessly, knowing that there was insufficient knowledge upon which to base such a representation, (5) for the purpose of inducing the other party to act upon it and (6) that the other party, acting reasonably and in ignorance of its falsity, (7) did in fact rely upon it (8) and was thereby induced to act (9) to that party's injury and damage. Gold Standard, Inc. v. Getty Oil Co., 915 P.2d 1060, 1066-67 (Utah 1996) (citations omitted); Educators Mut. Ins. Ass'n. v. Allied Prop. & Cas. Ins. Co., 890 P.2d 1029, 1032 (Utah 1995); accord Crookston v. Fire Ins. Exch., 817 P.2d 789, 800 (Utah 1991). However, the mere recitation by a plaintiff of the elements of fraud in a complaint does not satisfy the particularity requirement. In other fraud cases, `[w]e have stressed, and continue to hold, that mere conclusory allegations in a pleading, unsupported by a recitation of relevant surrounding facts, are insufficient to preclude ... summary judgment.' Franco v. Church of Jesus Christ of Latter-day Saints, 2001 UT 25, ¶ 36, 21 P.3d 198 (quoting Chapman v. Primary Children's Hosp., 784 P.2d 1181, 1186 (Utah 1989)). The relevant surrounding facts `must be set forth with sufficient particularity to show what facts are claimed to constitute such charges.' Williams v. State Farm Ins. Co., 656 P.2d 966, 971 (Utah 1982) (quoting Heathman v. Hatch, 13 Utah 2d 266, 268, 372 P.2d 990, 991 (1962)). ¶ 17 AFIE failed, however, to allege in its complaint relevant facts supporting its claim that Harrison personally committed or participated in any fraudulent acts. In its complaint, AFIE's first claim for relief was fraud. This section of its complaint contains only two paragraphs, which allege as follows: 33. Defendants made false representations concerning present existing material facts, which representations they either knew to be false or were made recklessly, and defendants omitted material facts despite their duty fully to disclose, all for the purpose of inducing action on the part of plaintiff. 34. Plaintiff actually and justifiably relied upon the false representations and material omissions to its injury and detriment, in an amount to be determined at trial. These paragraphs merely recite the elements of fraud, however, and, as we have already noted, such conclusory allegations alone fail to allege fraud with sufficient particularity. See Franco, 2001 UT 25 at ¶ 36, 21 P.3d 198. ¶ 18 Even if we examine the complaint as a whole, it fails to recite any relevant facts connecting Harrison personally to the alleged fraud. The complaint mentions several examples of RSI's representations, but it contains nothing regarding Harrison personally making or directing others to make these representations. The only time Harrison is mentioned in the complaint at all is in one of the complaint's opening paragraphs, where she is identified as one of the parties. There she is listed as the President and owner of RSI ... [who] is responsible for the entire business operation of RSI, oversees and is responsible for its billing practices and is personally responsible to see that the project referenced herein is and was handled professionally, honestly and with the utmost care. This allegation may be a relevant fact, but it is insufficient to support fraud liability absent other facts linking Harrison directly to the fraud.