Opinion ID: 2008738
Heading Depth: 2
Heading Rank: 1

Heading: The Fraud and Negligent Misrepresentation Claims.

Text: The claims of fraudulent and negligent misrepresentation [20] are subject to a different analysis, for different interests are implicated. At issue is the right of citizens and businesses of the District of Columbia to be protected against fraud and misrepresentation allegedly carried out in the District. We conclude that the District has a stronger interest than does Virginia in the fraud and misrepresentation claims. In Blake, supra, the court held that under Virginia law a contractor may not maintain an action against an architect or engineer for economic injury absent privity of contract between the parties. The decision was predicated on the perceived need to protect the economic expectations of the participants in the project. This consideration, which was so important to our conclusion that Virginia's interest in the negligence and implied warranty claims outweighs the District's, does not apply to the fraud and misrepresentation claims. Where a party's conduct has been induced by fraud or misrepresentation, the party engaged in the deceitful conduct has no legitimate expectation that it is entitled to profit from its misrepresentation. We think that the District has a compelling interest in protecting a District of Columbia entrepreneur from fraudulent and negligent misrepresentations, most of them allegedly made in the District, by another business entity based in the capital. Section 148(b) of the Restatement provides a useful framework for selecting the law which applies to multi-state misrepresentation claims. It suggests the following six factors as helpful to the analysis: (a) the place where the plaintiff relied on the defendant's misrepresentations; (b) the place where the plaintiff received the misrepresentations; (c) the place where the defendant made the misrepresentations; (d) the domicile and place of incorporation and place of business of the parties; (e) the place where the tangible thing which is the subject of the transaction between the parties was situated at the time; and (f) the place where the plaintiff is to render performance under the contract which he has allegedly been induced to enter by fraud. The essence of Hercules' claim of fraud is that it was induced into signing the Agreement by Rippeteau's fraudulent misrepresentations. Hercules asserts that it signed the Agreement with Shama, which was executed in the District, in reliance on what it was falsely told by Rippeteau. The initial assurances relating to the Church Street Project were allegedly made and received in the District. Hercules and Rippeteau are also both domiciled here. Accordingly, the considerations enumerated in items (a) through (d) in Section 148(d) of the Restatement weigh substantially in favor of applying District law. The location of the tangible thing that is the subject of the transaction, item (e), and the place of performance under the contract, item (f), point in the opposite direction. On balance, however, we think the District's interest in preventing fraudulent conduct in Washington, D.C. is paramount even if the project is located in Virginia. While Virginia has an obvious interest in regulating the relations between builders and architects within its borders, that concern does not extend to the setting of rules relating to fraudulent misrepresentations allegedly made outside Virginia by one District business to another. [21]