Opinion ID: 2521038
Heading Depth: 3
Heading Rank: 2

Heading: Failure to Disclose as Evidence of Fraud

Text: [¶ 25] The sellers contend failure to disclose a fact does not constitute fraud. However, they ignore the reality that they acknowledged making a number of false statements. It is in light of these false statements that the nondisclosures became part and parcel of the fraudulent acts: Conduct or words which tend to produce an erroneous impression may satisfy the plaintiff's burden. In addition, even if someone is not under a duty to speak, if he does speak, he is under a duty to speak truthfully and to make a full and fair disclosure. Reliance is reasonable when false representations have occurred prior to the execution of the contract which is sought to be avoided or for which damages are sought to be recovered. Sundown, Inc., 8 P.3d at 330-31 (emphasis added and citations omitted). By way of example, Mrs. Alexander acknowledged the sellers' duty to complete the property condition statement honestly and fully. Both sellers acknowledged they knew of the salt deposits, and yet they failed to disclose this information on the property condition statement, thereby making an affirmative false statement. Likewise, they admitted they advised the buyers of two specific excess water incidents but failed to advise them of any other defects. They also acknowledged saying the garden was in good condition but not advising the buyers the soil had been sterilized and nothing had been grown in over ten years. The trial court determined the sellers' disclosures, both verbally at the initial showing of the property and in the written property condition statement, reinforced the buyers' confidence the property was in good condition as the sellers reported. [¶ 26] The foregoing list of the sellers' misleading statements and actions is by no means all-inclusive; rather, it is merely illustrative of the definitive point that, regardless of whether there was a duty, once the sellers started making disclosures, they had a duty to do so completely and truthfully. The disclosures and concomitant duty preceded the buyers' determination to make the initial offer to contract and all parties' entering into the ultimate contract to purchase. On the basis of our holding in Sundown, Inc. and the facts of this case, the sellers' contention that their failure to disclose cannot constitute fraud is without merit. [¶ 27] The sellers maintain no evidence was presented to prove positive acts of fraudulent concealment. This argument is really something of a nonsequitar. No cause of action for fraudulent concealment was pleaded. Rather, the cause of action was fraudulent misrepresentation, and conduct or words which tend to produce an erroneous impression satisfy the plaintiff's burden. Sundown, Inc., 8 P.3d at 330. The evidence established the foundation defects and damage were physically concealed and cosmetically repaired. To the extent this conduct tended to produce an erroneous impression, it supported the cause of action as pleaded.