Opinion ID: 675766
Heading Depth: 2
Heading Rank: 2

Heading: Indiana common law claims

Text: 29 The district court also held that the McNeelys could not recover for fraud under Indiana common law because they had not actually relied on Hardee's representations. 7 It is well settled that a plaintiff seeking recovery for fraud must prove that the defendant made a material misrepresentation of past or existing facts; that the representation was false and made with knowledge or reckless ignorance of falsity; and that the misrepresentation caused the plaintiff to rely on the misrepresentation to her detriment. Whiteco Properties, 467 N.E.2d at 436; see also Vaughn, 797 F.2d at 1410, 1415. The McNeelys contend that the district court applied an incorrect standard of reliance, but most of their arguments address the district court's factual findings, not its legal analysis. The McNeelys' particular twist is the claim that the district court ignored the effect of the omissions of Hardee's representatives regarding the sale of company-owned stores: that approval was needed from Lentz before stores could be sold; that such approval had never been given; and that no Arkansas stores were for sale at that time. 30 But it appears that the district court did consider these very circumstances. The district court found that the plaintiffs knew that additional approval was needed before they could buy a company-owned store. The entire thrust of the district court's conclusion was that the plaintiffs did not enter into the Maumelle franchise based on how much, or how little, they knew about the build one-buy one policy. The McNeelys argue in part that a plaintiff need not prove reliance if she is alleging fraud based on omissions rather than on affirmative misrepresentations. But reliance is an essential element of any fraud case, in effect supplying the causal link between the alleged tortious act and the plaintiff's harm. See Indosuez Carr Futures, Inc. v. Commodity Futures Trading Comm'n, 27 F.3d 1260, 1265 (7th Cir.1994). Even when a defendant has omitted material information, a court cannot find liability unless the omission actually caused the plaintiff's harm--and reliance is one way to supply this causal connection. Rowe, 850 F.2d at 1233, quoting Basic, Inc. v. Levinson, 485 U.S. 224, 241, 108 S.Ct. 978, 989, 99 L.Ed.2d 194 (1988). Thus a plaintiff must convince the trier of fact that he acted to his detriment based upon his ignorance of the omitted information. The district court engaged in the proper analysis by determining whether the plaintiffs in fact entered the Maumelle franchise based upon a belief that the sales of the Maumelle store would be at least $800,000 or that they would be allowed to purchase company-owned stores. The district court concluded, based on all of the evidence, that the plaintiffs did not proceed based on these beliefs. 31 Moreover, even if the district court had concluded differently, the McNeelys would still be barred from recovery based on the district court's finding that reliance on Hardee's statements would have been unreasonable. For the same reasons, reliance on the omission of information would have been unreasonable.