Opinion ID: 1214373
Heading Depth: 1
Heading Rank: 12

Heading: TSI Cross-Appeal Issues

Text: The district court entered a directed verdict against TSI on its claims of fraudulent misrepresentation and fraud by silence against Jenkins and Hood. We affirm. TSI bases its misrepresentation claims on the fact that during the 1992 negotiations, Hood represented that he had the financial capacity to make the required payments for the purchase$1 million at closing and $1.5 million one year later. However, as of January 11, 1993, Hood was turned down for financing by three banks, and the fourth bank, Boatmen's Bank, would provide financing for the $1 million initial payment only if Hood obtained a guarantor. Neither Hood nor Jenkins disclosed this to TSI. Paul claims that he and TSI would not have signed the Agreement had he known that Hood needed a guarantor to obtain financing. Section 3.3(e) of the Agreement gave the sellers the right to request Hood's financial information; however, no request was made. Paul never attempted to examine Hood's financial condition. Section 7.2(c) of the Agreement made satisfactory review of the financial capabilities of the buyers a condition precedent to TSI's obligations. TSI's chief financial officer testified that although Jenkins gave him a copy of Hood's financial statement, the TSI officer never looked at it. The burden of proving fraud is by a preponderance of the evidence, which must be clear, convincing, and satisfactory. Modern Air Conditioning, Inc. v. Cinderella Homes, Inc., 226 Kan. 70, Syl. ¶ 7, 596 P.2d 816 (1979). (See PIK Civ.2d 14.40 and PIK Civ.2d 14.42 [1995 Supp.], cited by the parties, for the elements of the fraudulent misrepresentation and fraud by silence claims.) TSI bases its fraud by silence claims on buyers' failure to inform TSI and Paul that Hood did not have the financial strength to complete the transaction without a guarantor. Buyers respond that neither TSI nor Paul asked Hood whether Hood had the financial capability to make the investment on his own. Hood obtained a commitment from Boatmen's Bank to lend the $1 million needed for the closing. Hood was ready, willing, and able to perform as of the closing date. The evidence did not establish sufficient proof of any of the elements of either a fraudulent misrepresentation or a fraud by silence claim. Most telling is TSI's failure to request any financial information from Hood. The district court properly directed a verdict for Jenkins and Hood on TSI's fraud claims.