Court Opinion

ID: 9620045
Source: CourtListenerOpinion
Date Created: 2023-08-22 05:37:31.812018+00
Date Added: 2024-06-11T12:56:00.775913
License: Public Domain

Dissenting Opinion by
Justice SCOTT.
I must respectfully dissent from the majority's holding concerning Flegles fraud claim. In determining that Truserv is entitled to judgment as a matter of law, the majority has usurped the fact-finding function of the jury. I simply cannot agree with the majority's holding that misrepresentations about investment prospects and expected sales performance cannot, as a matter of law, support a fraud claim. In my view, the jury had ample support in the record to conclude that TruServ falsely misrepresented the potential for sales and income from the expanded store. It would seem axiomatic to me that withholding multiple unfavorable market projections from a client to whom one owes a fiduciary duty, while instead presenting contrary and misleading market information, goes to the very heart of a fraud claim. Indeed, it is well-settled that to establish fraud in Kentucky, one must only show
(1) that defendant made a material representation; (2) that it was false; (8) that when he made it he knew it was false, or made it recklessly, without any knowledge of its truth and as a positive assertion; (4) that he made it with intention of inducing plaintiff to act, or that it should be acted upon by the plaintiff; (5) that plaintiff acted in reliance upon it, and (6) that plaintiff thereby suffered injury.
Sanford Const. Co. v. S & H Contractors, Inc., 443 S.W.2d 227, 231 (Ky.1969) (quoting Cresent Grocery Co. v. Vick, 194 Ky. 727, 240 S.W. 388 (1922)).
In Kentucky Electric Development Co.'s Receiver v. Head, we noted, "a misrepresentation, to be [actionable], must concern an existing or a past fact, and not a future promise, prophecy, or opinion of a future event, unless declarant falsely represents his opimion of a future happening." 252 Ky. 656, 68 S.W.2d 1, 3 (1934) (emphasis added). This is exactly what Flegles proved TruServ did in this case-falsely misrepresented its opinion as to the potential for sales and income at the expanded store-how else can you characterize concealed conflicting projections?
The majority attempts to distinguish Head by citing it for the proposition that Flegles had a "common sense" duty to protect itself. While this general observation may be true, it must not be overlooked that Head acknowledges a duty *555upon a market participant of the obligation to use "ordinary vigilance" in ascertaining the type of information that would be readily available to that participant, i.e., in that instance, ascertaining the value of stock. See Head, 68 S.W.2d at 3 (emphasis added). In contrast, here, regardless of Flegles' experience in the industry, or vigilance expended, the type of information that it required in making the business decision was uniquely in the province and control of TruServ. No amount of vigilance could have negated TruServ's active misrepresentation of that information.
Flegles pointed to overstated numbers for the Just Ask Rental program and undisclosed adverse projections as evidence that TruServ's opinion was not as it was represented. Thus, a viable case for fraud was presented to the jury as to a misrepresentation of opinion.
In addition to the misrepresentation of opinion, TruServ concealed from Flegles $131 million in business losses. The Court of Appeals, however, determined that Fle-gles did not establish that it would have refrained from going forward with the expansion had it known about TruServ's loss. The Court of Appeals appears to have imposed on Flegles the burden to establish proximate cause in demonstrating their store loss arose from TruServ's loss. This is improper. Flegles was entitled to show a pattern of concealment to buttress the weight of its evidence of TruServ's intent behind its actions.
In my view, Flegles was not required to show that every grievance that it had against TruServ was a direct cause of the business losses it incurred at the new store, just that it related to an ongoing pattern of concealment. To that end, Fle-gles presented a comprehensive case revealing numerous facts and statements made by TruServ that were false. Flegles contends that if it had known the totality of the actual facts they would not have gone forward with the expansion. Tru-Serv's losses were merely one of the misrepresentations that Flegles complained about. Certainly, if that were the entire case for Flegles, it would not be sufficient to show causation, however, it was only a facet of the whole case. Thus, Flegles presented a question of fact for the jury to determine: whether TruServ's misrepresentations caused injury.
Although I agree that some of the statements amounted to "mere puffing" or "sales talk," since the jury had an adequate and actionable basis for determining that there was fraud, their verdict should not have been invalidated due to the fact that some of the statements could be properly (and maybe wrongfully) characterized as "mere puffing."
For the foregoing reasons, I must dissent.
SCHRODER, J., and VENTERS, J., join this dissenting opinion.