How To Prove A Texas Fraud by Nondisclosure Claim
In Texas, a claim of Fraud by Nondisclosure is defined as:
Fraudulent Inducement is a term used for contract fraud and occurs when one party involved in the contract used deceit or trickery to get the other party or signer to act to their advantage.
It simply means:
When one party purposely deceives the other with the intention of persuading them to sign a contract.
There are 6 elements of the claim:
- Element 1. The defendant deliberately failed to disclose material facts. The defendant knowingly hid important information that they were required to share, which misled the other party and contributed to the fraudulent situation.
Facts that might support this element look like:
* The defendant was aware of significant defects in the property but chose not to inform the buyer during the sale process.
* The defendant received multiple reports from professionals indicating serious issues but failed to disclose this information to the plaintiff.
* The defendant actively concealed documents that detailed the property’s problems, preventing the plaintiff from making an informed decision.
* The defendant had a history of similar nondisclosure incidents, demonstrating a pattern of deceitful behavior.
* The defendant made affirmative statements about the property’s condition while omitting critical information that contradicted those claims. - Element 2. The defendant had a duty to disclose such facts to the plaintiff. The defendant was required to share important information with the plaintiff that they knew about, which could have influenced the plaintiff’s decisions, and failing to do so is a key part of proving fraud by not disclosing the truth.
Facts that might support this element look like:
* The defendant had a longstanding business relationship with the plaintiff, which created a duty to disclose material information.
* The defendant possessed exclusive knowledge about a significant defect in the product that the plaintiff was unaware of.
* The defendant was aware that the plaintiff was relying on their expertise to make an informed purchasing decision.
* The defendant had previously disclosed similar information to other clients, establishing a pattern of transparency.
* The defendant’s silence on critical facts was intended to induce the plaintiff to proceed with the transaction. - Element 3. The plaintiff was ignorant of the facts and did not have an equal opportunity to discover them. The plaintiff didn’t know important information that the defendant had and couldn’t easily find it out, which means they were at a disadvantage when it came to understanding the truth behind the situation.
Facts that might support this element look like:
* The plaintiff was not provided with access to critical financial documents that would have revealed the true nature of the transaction.
* The defendant had specialized knowledge about the product that the plaintiff, as a layperson, could not reasonably have been expected to know.
* The plaintiff relied on the defendant’s representations and did not have the means to independently verify the information provided.
* The defendant actively concealed information, making it impossible for the plaintiff to discover the truth without significant effort.
* The plaintiff was unaware of industry standards that would have alerted them to the potential misrepresentation by the defendant. - Element 4. The defendant intended the plaintiff to act or refrain from acting based on the nondisclosure. The defendant knew that the plaintiff would make decisions based on missing information and purposely kept that information hidden, expecting the plaintiff to either take action or avoid it because of that lack of disclosure.
Facts that might support this element look like:
* The defendant knowingly withheld critical information about the property’s structural issues, believing the plaintiff would proceed with the purchase without this knowledge.
* The defendant made misleading statements about the financial stability of the business, intending for the plaintiff to invest based on those false assurances.
* The defendant was aware that the plaintiff relied on their expertise and intentionally failed to disclose potential risks associated with the investment.
* The defendant had a history of similar nondisclosures, indicating a pattern of behavior aimed at influencing the plaintiff’s decisions.
* The defendant explicitly stated that all relevant information had been disclosed, leading the plaintiff to believe there were no hidden issues. - Element 5. The plaintiff relied on the non-disclosure. The plaintiff depended on the other party not revealing important information, believing that their silence meant everything was fine, which is a key part of proving they were misled in a fraud case based on not disclosing crucial facts.
Facts that might support this element look like:
* The plaintiff conducted due diligence based on the assumption that all material facts were disclosed by the defendant.
* The plaintiff made a significant financial investment, believing the information provided was complete and accurate.
* The plaintiff explicitly asked the defendant about potential risks, relying on the defendant’s silence as an assurance of safety.
* The plaintiff would not have proceeded with the transaction had they known the undisclosed information.
* The plaintiff’s decision-making process was directly influenced by the defendant’s failure to disclose critical information. - Element 6. The plaintiff’s reliance on the non-disclosure resulted in plaintiff’s injury. The plaintiff suffered harm because they trusted the information that was kept secret, believing it to be true, which led them to make decisions that ultimately caused their injury.
Facts that might support this element look like:
* The plaintiff invested a significant amount of money based on the defendant’s assurances, unaware of the undisclosed risks involved.
* The plaintiff suffered financial losses directly linked to the defendant’s failure to disclose critical information about the investment.
* The plaintiff would not have proceeded with the transaction had they been aware of the undisclosed facts.
* The plaintiff relied on the defendant’s expertise and reputation, which were undermined by the non-disclosure of essential information.
* The plaintiff incurred additional expenses due to the consequences of the undisclosed information, further demonstrating reliance on the defendant’s representations.
(See West African Ventures Ltd. v. Fleming, Dist. Court, SD Texas 2022. Jacked Up, LLC v. Sara Lee Corp., 854 F. 3d 797 – Court of Appeals, 5th Circuit 2017. Bombardier Aerospace Corp. v. SPEP Aircraft Holdings, LLC, 572 S.W.3d 213, 219-20 (Tex. 2019).)
If you’re in court without a lawyer and plan to assert a Claim of Fraud by Nondisclosure, having a Personal Practice of Law at Courtroom5 is essential. You’ll need to make informed decisions about what to file at each phase of your case and prepare legal documents supported by thorough legal research and a strong analysis of the facts. Equip yourself with the tools and knowledge to effectively navigate your legal journey.
Prove Your TX Fraud by Nondisclosure Claim
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