Opinion ID: 614396
Heading Depth: 3
Heading Rank: 2

Heading: Equisearch’s Alleged Fraud

Text: Moriarty contends that Equisearch committed fraud (a) when it misrepresented the value of the stock as merely exceeding $50,000, and (b) when it failed to disclose the nature of the asset. The district court disagreed and granted Equisearch summary judgment. For a fraud claim to survive summary judgment, a plaintiff must prove the following elements: (1) a material misrepresentation or concealment of fact, (2) defendant’s knowledge of the falsity of the statement or his reckless disregard for its truth, (3) defendant’s intent to mislead -9- No. 10-3447 Moriarty v. Equisearch Servs., Inc. plaintiff, (4) plaintiff’s justifiable reliance on the misrepresentation or concealment, and (5) injury. See State ex rel. Illuminating Co. v. Cuyahoga Cnty. Ct. of Common Pleas, 776 N.E.2d 92, 97–98 (Ohio 2002) (per curiam). We find no error in the district court’s conclusion that Moriarty failed to establish all elements of his claim.
Moriarty contends here, as he did below, that Equisearch committed fraud when—knowing that the value of the asset surpassed $573,000—it told him only that the asset’s value “exceeded $50,000.” The district court, finding multiple insufficiencies in Moriarty’s evidence, held that he failed to establish three elements of this fraud-by-misrepresentation theory: the false or misleading nature of the statement, Equisearch’s knowledge of its falsity, and his reliance on the statement to his detriment. We agree that Moriarty failed to establish that the statement was false or misleading. Equisearch’s representation was true: the value of the stock—approximately $573,000—in fact exceeded $50,000. Moriarty nonetheless argues that the gross understatement of the value constitutes “a prima facie case of fraud.” But he offers no Ohio authority—the law of the relevant jurisdiction—for this argument. And the only case that he cites, Carton v. Choice Point, Inc., 482 F. Supp. 2d 533 (D.N.J. 2007), fails to persuade us that Ohio courts would recognize his theory: Carton involved nonbinding New Jersey precedent; the court ruled on a motion to dismiss, rather than a motion for - 10 - No. 10-3447 Moriarty v. Equisearch Servs., Inc. summary judgment; and the decision does not explain how the defendants’ representations about an asset’s value misled the plaintiffs. See id. at 535–36.
Last, Moriarty asserts that Equisearch committed fraud when it concealed from him the nature of the asset; more precisely, when it failed to disclose the fact that the “asset” that it had located was actually PFG stock. The district court again disagreed, holding that Moriarty failed to establish Equisearch’s duty to disclose the precise nature of the asset. A concealment of fact constitutes fraud only if, among other things, the defendant has a duty to disclose that fact. State ex rel. Illuminating Co., 776 N.E.2d at 97–98. But establishing a duty to disclose is no easy task: disclosure obligations arise primarily in situations that involve a fiduciary relationship. Federated Mgmt. Co. v. Coopers & Lybrand, 738 N.E.2d 842, 855 (Ohio Ct. App. 2000). As the district court held, Moriarty failed to show that Equisearch acted as a fiduciary and, consequently, that it owed him disclosure obligations. Moriarty advances a single theory to support Equisearch’s alleged duty to disclose the nature of the asset: that Equisearch, as PFG’s agent or subagent, must carry out PFG’s contractual and statutory obligations to register and deliver the stock. Under this theory, Equisearch’s fiduciary duties hinge on PFG’s fiduciary duties. Yet Moriarty fails to explain how PFG’s contractual and statutory obligations entail fiduciary obligations, and he - 11 - No. 10-3447 Moriarty v. Equisearch Servs., Inc. wholly ignores the well-settled principle of Ohio law that a fiduciary relationship exists only where one party reposes “special confidence and trust . . . in the integrity and fidelity of another” who, through that special trust, acquires a “position of superiority or influence.” Ed Schory & Sons, Inc. v. Soc’y Nat’l Bank, 662 N.E.2d 1074, 1081 (Ohio 1996) (internal quotation marks and citation omitted).