Opinion ID: 2067498
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Heading: The Law of Fraud.

Text: Fraud requires clear-and-convincing evidence of (1) materiality, (2) falsity, (3) representation, (4) scienter, (5) intent to deceive, (6) justifiable reliance, and (7) resulting injury and damage. McGough v. Gabus, 526 N.W.2d 328, 331 (Iowa 1995); Sinnard v. Roach, 414 N.W.2d 100, 105 (Iowa 1987); Cornell v. Wunschel, 408 N.W.2d 369, 374 (Iowa 1987). McDaniel alleges error in the district court ruling on three of these elements. First, he argues that the statements he made to the Pierces did not falsely represent the condition of the car. Second, he argues that the Clarks did not justifiably rely on his statements because he only made the statements to the Pierces. Third, he argues that, even if the court concludes that he fraudulently misrepresented the car to the Clarks, the Clarks failed to prove damages. The first three elements of a fraud claim are often treated as a single element and are referred to as fraudulent misrepresentation. Sinnard, 414 N.W.2d at 105. A representation need not be an affirmative misstatement; the concealment of or failure to disclose a material fact can constitute fraud. Id.; Cornell, 408 N.W.2d at 374. However, for concealment to be actionable, the representation must relate to a material matter known to the party ... which it is his legal duty to communicate to the other contracting party whether the duty arises from a relation of trust, from confidence, from inequality of condition and knowledge, or other attendant circumstances. Sinnard, 414 N.W.2d at 105 (quoting Wilden Clinic, Inc. v. City of Des Moines, 229 N.W.2d 286, 293 (Iowa 1975)). There is no specific test for determining when a duty to reveal arises in fraud cases. Sinnard, 414 N.W.2d at 106. However, we have stated that [a] misrepresentation may occur when one with superior knowledge, dealing with inexperienced persons who rely on him or her, purposely suppresses the truth respecting a material fact involved in the transaction. Kunkle Water & Elec., Inc. v. City of Prescott, 347 N.W.2d 648, 653 (Iowa 1984); see also Sinnard, 414 N.W.2d at 106 (applying the Kunkle analysis). The district court found that McDaniel misrepresented the condition of the car, and in this law action our decision is whether that finding is supported by substantial evidence. The Pierces testified that McDaniel did not tell them that the car was clipped. They testified that McDaniel led them to believe that the car had low mileage because it was seldom driven and that two doors had been replaced only because they had been dented. McDaniel testified that he told the Pierces about the clip. A review of his testimony, however, suggests that he did not clearly reveal to the Pierces the extent of his repairs. Q. Did you tell the Pierces that the car had been clipped together? A. I said clipped, yes. Q. You used the word clipped now? A. I said the car had probablyThe way I would have probably had said it, the car was damaged or wrecked and the car was clipped. Q. You probably would have said it. Do you have a recollection that you used the word clipped? A. I wouldn't say I absolutely said clipped, but I showed `em where the spots was. Now, average person, if you're showing them, ought to listen a bit and try to understand what you're trying to tell `em. .... Q. You were telling about some minor cosmetic kinds of problems with the car? A. Yes. Q. You never told 'em you put an '86 rear onto the front of an '89 Taurus wagon, did you?.... A. I didn't say I put a 1986 rear clip on this car and the car's an '89, no. I did tell them it was wrecked. It was damaged. We did clip it, and I started proceeding to show 'em what needed to be touched up and stuff like that. Q. Why did you tell 'em it had been wrecked? A. Because you should tell anybody. Further, the purchase agreement with McDaniel disclosed certain repairs, but failed to mention the significant fact that roughly one-half of the automobile being purchased was not a 1989 model. We conclude that substantial evidence supports the trial court's finding that McDaniel misrepresented the condition of the car.