Opinion ID: 564114
Heading Depth: 2
Heading Rank: 3

Heading: The Claim for Fraudulent Inducement

Text: 39 Plaintiffs' final claim is that the district court erred in concluding that their fraudulent inducement claim was not a viable legal theory. The district court stated: 40 Under Count IV of the amended complaint, plaintiffs allege that defendants fraudulently induced Mr. Schaff to resign his position as CEO of Spectrum by making false representations and by entering into the two written agreements with intent not to abide by them. Whether or not Mr. Schaff was fraudulently induced to enter into the agreements is immaterial--neither plaintiff's injuries nor defendants' refusal to perform were predicated on fraud. Plaintiff's injuries resulted from defendants' refusal to perform after Spectrum was placed into receivership, a refusal that justly finds support in paragraph 12 of the letter agreement. 41 (App. at 111). We agree. 42 Under Kentucky law, the requirements for a claim for fraudulent inducement are a representation made as a statement of fact which is untrue, with the intent to deceive and which is acted upon to the detriment of the defrauded party. See Wahba v. Don Carlett Motors, Inc., 573 S.W.2d 357, 359 (Ky.App.1978). The burden is on the party asserting fraud to establish it by clear and convincing evidence. Sanford Constr. Co. v. S & M Contractors, Inc., 443 S.W.2d 227 (Ky.1969). An essential element for such a claim is establishing causal connection between any misrepresentation and the resulting injury. See Godley v. Piedmont Land Sales, Inc., 505 F.Supp. 397, 402 (E.D.Ky.1978), aff'd, 640 F.2d 831 (6th Cir.1981). 43 In the present case, defendant's non-performance--as well as any resulting injuries to plaintiffs--were not due to any fraudulent action or inducement but, rather, to defendants' justifiable reliance on paragraph 12 of the letter agreement that explicitly released them from any obligation of performance if a receivership occurred. As discussed above, plaintiffs' argument that additional promises were made, but not incorporated in the agreement, are barred by the integration clause of the contract. 4 44 AFFIRMED. 45