Court Opinion

ID: 4711096
Source: CourtListenerOpinion
Date Created: 2021-08-12 00:36:35.130355+00
Date Added: 2024-06-11T14:23:12.159517
License: Public Domain

I agree with the majority except for its discussion of fraud. The majority leaves the incorrect impression fraud can be proved only by an affirmative statement misrepresenting existing fact. Yet when a person is under a duty to speak, the failure to disclose material facts within that person's knowledge also constitutes a fraudulent misrepresentation.
The Court of Appeals held there was no evidence from which a jury could find by clear, cogent and convincing proof Edward Block made a misrepresentation to Joseph Stiley. The Court of Appeals appropriately cited Sigman v. Stevens-Norton, Inc.,70 Wn.2d 915, 425 P.2d 891 (1967), for the nine elements of fraud, and Sprague v. Sumitomo Forestry Co., 104 Wn.2d 751,709 P.2d 1200 (1985), for the burden of proof in an action for fraudulent misrepresentation. However, the Court of Appeals' discussion of the issue of fraudulent misrepresentation suggests fraud requires an affirmative statement misrepresenting an existing fact. Stileyv. Block, No. 13555-1-III, slip op. at 8-9 (Wash.Ct.App. July 18, 1995). The majority continues this mistaken belief in its discussion of the fraud issue. Majority op. at 504-506. The majority asserts there was a misrepresentation by Block in his May 25, 1984 letter to Patrick Stiley, but the misrepresentation was not of a material existing fact. Majority op. at 506.
Numerous Washington cases, however, indicate when a person is under a duty to speak and a person fails to disclose material facts within that person's knowledge, such failure to disclose also constitutes fraudulent misrepresentation. Oates v. Taylor,31 Wn.2d 898, 199 P.2d 924 (1948); Boonstra v. Stevens-Norton,Inc., 64 Wn.2d 621, 393 P.2d 287 (1964). As we said in Oates
at 902-03 (quoting 37 C.J.S. Fraud § 16a, at 244-45 (1943)):
 It is well settled that the suppression of a material fact which a party is bound in good faith to disclose is equivalent to a false representation. Where the law imposes a duty on one party to disclose all material facts known to him and not known to the other, silence or concealment in violation of *Page 516 
this duty with intent to deceive will amount to fraud as being a deliberate suppression of the truth and equivalent to the assertion of a falsehood. The concealment of the fact which one is bound to disclose is an indirect representation that such fact does not exist, and constitutes fraud.
As the escrow agent for the Westwood Hills transaction, Block had responsibility for drafting, executing, and recording the deed of trust on the lots at issue in this case. Under Hurlbertv. Gordon, 64 Wn. App. 386, 824 P.2d 1238, review denied,119 Wn.2d 1015 (1992), Block plainly had a duty to inform Joseph Stiley about any material change in the terms of the deed of trust. Both Stiley brothers testified Block never informed them he had changed the legal description of the property subject to the deed of trust. Moreover, they testified he did not inform them he had, in effect, substantially diminished the security for Joseph Stiley's investment in Westwood Hills. In addition to this direct evidence, there were written escrow instructions governing Block's conduct as the escrow agent for this transaction. He varied the terms of the original written escrow agreement. Thus, there should have been some writing by Block to Stiley confirming the change in the written escrow instructions. In the absence of such a confirming letter or other writing, the Stiley brothers' description of the facts gains greater credence.
Although Block disputes the Stiley brothers' testimony, an issue of fact remained for the jury. The trial court was correct in denying the motion for directed verdict and the Court of Appeals erred in reversing the trial court's decision. The majority's opinion compounds the Court of Appeals' error by failing to recognize fraud can be proved both by affirmative statements misrepresenting existing fact as well as by the deliberate failure to disclose material facts within a person's knowledge. For the foregoing reasons, I concur in all portions of the majority's opinion with the exception of its discussion of fraud. *Page 517 
DURHAM, C.J., and GUY and JOHNSON, JJ., concur with TALMADGE, J.
Reconsideration denied February 6, 1997.