Opinion ID: 2630777
Heading Depth: 2
Heading Rank: 1

Heading: Do the District Court's Findings of Fact Support a Claim for Fraud?

Text: The fraud claim was based upon Ellis's breach of his promise to repurchase the lot if the Gillespies decided not to build on it. As a general rule, fraud cannot be based upon statements promissory in nature that relate to future actions or upon the mere failure to perform a promise or an agreement to do something in the future. Pacific States Auto. Fin. Corp. v. Addison, 45 Idaho 270, 261 P. 683 (1927). The allegedly false representation must concern past or existing material facts. Maroun v. Wyreless Systems, Inc., 141 Idaho 604, 114 P.3d 974 (2005). We have recognized two exceptions to the general rule that fraud cannot be based upon the mere failure to perform a promise. One exception is if the speaker made the promise without any intent to keep it, but to induce action on the part of the promisee. Pocatello Sec. Trust Co. v. Henry, 35 Idaho 321, 206 P. 175 (1922). The second exception is if the promise was accompanied by statements of existing fact which show the promisor's ability to perform the promise and those statements were false. Id. In this case, the district court did not rely upon the first exception. It did not find that Ellis had no intent of repurchasing the lot at the time he promised to do so. It based its finding of fraud on the second exception, as follows: The Court [in Pocatello Security Trust Co. v. Henry, 35 Idaho 321, 206 P. 175 (1922)] stated: Some of the defensive matters pleaded in avoidance of this agreement relate to promises that were to be performed in the future. Standing alone, they might not afford equitable ground for a rescission of this contract. But some of them were as to existing facts, and the representations as to others were so coupled with existing facts as to bring such representation within the rule announced in the foregoing cases, to the effect if the promise is accompanied by a statement of existing facts which show the ability of the promisor to perform his promise, and without which the promise would not have been accepted or acted upon, such statements are representations, and if falsely made, are grounds for avoiding the contract, though the thing promised to be done lies wholly in the future. See Pocatello Security T. Co. v. Henry, 35 Idaho at 331, 206 P. 175 Darris Ellis made an oral representation that he or the development company would buy back the lot at any time if Plaintiffs decided not to build. He also represented that several other persons were interested in the lots and that they were hot lots. This Court must conclude that those representations were so coupled with existing facts that they show an ability of Ellis to perform on his promise and therefore, the representations were representations of fact for considering the elements of fraud. This is the only additional factual finding made by the district court. Its addition to the district court's prior findings of fact does not support a finding of fraud. The district court only identified one representation of existing fact made by Ellis. As the court found, He also represented that several other persons were interested in the lots and that they were `hot lots.' It is not enough that Ellis made a representation of existing fact in connection with the promise to do something in the future. The representation of existing fact must also have been false. As stated in the district court's quotation from Pocatello Security Trust Co. v. Henry, 35 Idaho 321, 331, 206 P. 175, 178 (1922) (emphasis added), [I]f the promise is accompanied by a statement of existing facts which show the ability of the promisor to perform his promise, and without which the promise would not have been accepted or acted upon, such statements are representations, and if falsely made, are grounds for avoiding the contract. The district court did not find that Ellis's statement was false, and the Gillespies admitted during oral argument that they did not even try to prove that it was. Therefore, the district court's finding of fraud is not supported by its findings of fact and must be reversed.