Opinion ID: 1212725
Heading Depth: 3
Heading Rank: 1

Heading: Pandora and Alorica

Text: Noble claims that the consent and waiver agreement that Pandora and Alorica prepared for ACI to sign was fraudulent because it falsely represented that Noble did not have a security interest in some of ACI's assets. Assuming, arguendo, that the consent and waiver was a statement made by Pandora and Alorica to Noble and not by ACI to Pandora and Alorica, neither Pandora nor Alorica had a duty to not make false representations to Noble, who was not a party to the agreement. See Flynn, 627 N.W.2d at 350. Additionally, there is no proffered or apparent reason why Pandora or Alorica would intend or expect that Noble would in any way rely on the statement in the consent and waiver that Noble had no security interest in ACI's assets. Moreover, these claims require that the plaintiff actually rely on the misrepresentation to its detriment. Hoyt, 736 N.W.2d at 318. None of Noble's acts or omissions can be construed as having been made in reliance on the statement that Noble did not have a security interest in any of ACI's property. Nor can any fact alleged explain how such reliance, if it existed, could have caused the loss described in the complaint. Noble also claims that Pandora and Alorica fraudulently failed to timely inform Noble that Pandora was foreclosing on its security interest and that Alorica would be purchasing ACI's assets. Nondisclosure is fraudulent only if the defendant had a legal or equitable obligation to disclose to a plaintiff who was entitled to receive the information. The default rule is that one party to a transaction has no duty to disclose facts to another party. L & H Airco, 446 N.W.2d at 380. Minnesota law does not appear to recognize any duty to disclose information to third parties with whom no relationship exists. Flynn, 627 N.W.2d at 350. Noble argues that Minnesota has upheld fraudulent concealment claims as to third parties, but the cases it cites do not support this contention. See Vikse v. Flaby, 316 N.W.2d 276, 278-79, 284 (Minn.1982) (a corporation defrauded its investors when its agents lied to and withheld information from an investment advisor with intention that the advisor would induce investors to invest in the corporation based on the agents' lies and omissions); Richfield Bank & Trust Co. v. Sjogren, 309 Minn. 362, 244 N.W.2d 648, 652 (Minn.1976) (bank liable for nondisclosure to persons borrowing money from the bank). The facts that support Noble's assertion that there was a relationship between Noble and Pandora before the foreclosure boil down to Pandora's knowledge of Noble's unperfected security interest, which was not sufficient to create a duty to disclose. See L & H Airco, 446 N.W.2d at 380. Even if such a duty existed, Noble does not allege that it took or failed to take any action that could be construed as relying on Pandora's failure to communicate that foreclosure proceedings were pending. Further, there is no causative link between Noble's ignorance of the foreclosure and its junior security interest, which is the most direct cause of its loss. Noble has not sufficiently pleaded its fraud claims, and the district court correctly dismissed them.