Opinion ID: 2378811
Heading Depth: 1
Heading Rank: 5

Heading: Failure to Plead Fraudulent Inducement with Particularity

Text: Early on in the case, in its answer to Newcastle's amended petition, the Thyes asserted the defense that Newcastle had failed to adequately state a claim for fraud with particularity against them. Later, at the hearing on the motion for summary judgment, the Thyes again asserted that Newcastle never met the specificity in pleading requirements for fraud. This same argument is made by the Thyes in their appellate brief. Generally, the Kansas Rules of Civil Procedure permit notice pleading. In other words, a pleading is sufficient if it contains [a] short and plain statement of the claim showing that the pleader is entitled to relief and a demand for judgment. K.S.A. 60-208(a). Notwithstanding the general liberality of notice pleading, a plaintiff alleging fraud as a cause of action must state the circumstances constituting fraud with particularity. K.S.A. 60-209(b). Kansas case law demonstrates that the statutory requirement to plead fraud with particularity is strictly enforced. See Palmer v. Brown, 242 Kan. 893, 901, 752 P.2d 685 (1988) (upholding dismissal of fraud claim for failure to plead fraudulent inducements with particularity); McGill v. Kuhn, 186 Kan. 99, 104, 348 P.2d 811 (1960) (holding that fraud claim was insufficiently pled because it did not allege knowledge by plaintiffs of alleged intent to defraud defendant); Vondracek v. Mid-State Co-Op, Inc., 32 Kan. App.2d 98, 103, 79 P.3d 197 (2003) (where petition stated pled only two elements of fraud with particularity, trial court did not err in granting summary judgment for failing to plead fraud with particularity). According to the Pattern Instructions for Kansas, PIK Civ. 4th 127.40, the essential elements required to sustain an action for fraud are: 1. That false (or untrue) representations were made as a statement of existing and material fact. 2. That the representations were known to be false (or untrue) by the party making them, or were recklessly made without knowledge concerning them. 3. That the representations were intentionally made for the purpose of inducing another party to act upon them. 4. That the other party reasonably relied and acted upon the representations made. 5. That the other party sustained damage by relying upon them. A representation is material when it relates to some matter that is so substantial as to influence the party to whom it was made. In alleging its action for fraud against the Thyes, Newcastle made conclusory statements that merely set forth the elements of fraud and did not state with particularity the circumstances constituting fraud. Specifically, Newcastle outlined its fraud claim as follows: 31) Newcastle adopts by reference, all allegations contained in paragraphs 1 through 30, above, as though fully set forth herein. 32) That false or untrue representations were made by the Thyes as a statement of  existing and material fact to Newcastle concerning the Thyes Agreement. 33) That the representations made by the Thyes concerning the Newcastle were known by them to be false or untrue ... when they made them. 34) That the representations were intentionally made by the Thyes for the purpose of inducing Newcastle to act upon them. 35) That Newcastle reasonably relied and acted upon the representations made [by] the Thyes concerning the Thyes Agreement. 36) That Newcastle sustained damage by relying upon the representations made by the Thyes concerning their agreement with Newcastle. Although Newcastle specifically adopted by reference the allegations contained in paragraphs 1 through 30, none of those allegations even mention the February 2006 cancellation and release agreements, which are what Newcastle now seeks to avoid with its fraudulent concealment claim. There are no allegations within Newcastle's fraud claim or the previous paragraphs as to what false or untrue representations were made by the Thyes. In addition, there are no particular facts or circumstances alleged regarding what representations induced Newcastle to enter into the February 2006 cancellation and release agreements. Finally, Newcastle has not set forth particular facts or circumstances as to how it justifiably relied on the Thyes' representations or as to its damages in this case. As a result, Newcastle failed to meet the specificity in pleading requirements for its fraudulent concealment claim.