July 31, 2013 Articles

Justifiable Reliance Standards Differ Across States

Similarities in "black letter" law conceal important differences in how states address common issues related to claims.

By Patrick Keating and Tyler Beas

Although the elements of fraud and negligent misrepresentation claims are similar across many states, those similarities in the “black letter” law conceal important differences in how states address common issues related to the claims.

Typically, a plaintiff in a fraud or negligent misrepresentation case must establish that the defendant made a material misrepresentation of fact to the plaintiff and that the plaintiff’s detrimental reliance on the misrepresentation was justifiable or reasonable. In a fraud case, the plaintiff must prove that the defendant made the misrepresentation intentionally or recklessly. See Eurycleia Partners, LP v. Seward & Kissel, LLP, 883 N.Y.S.2d 147, 150 (N.Y. 2009) (New York law; specifying elements of fraud—including an intentional misrepresentation); Engalla v. Permanente Med. Grp., Inc., 15 Cal. 4th 951, 974 (Cal. 1997) (California law; fraud established by reckless misrepresentation); Fed. Land Bank Ass’n of Tyler v. Sloane, 825 S.W.2d 439, 442 (Tex. 1991) (Texas law; negligent misrepresentation elements); Gilchrist Timber Co. v. ITT Rayonier, Inc., 696 So. 2d 334, 337–39 (Fla. 1997) (Florida law; negligent misrepresentation elements).

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