Misrepresentation by concealment unavailable when party had an opportunity to independently verify the information

RURAL DEVELOPMENTS, LLC v. JOHN H. TUCKER, CLARA TUCKER, GENE CARMAN REAL ESTATE AND AUCTIONS FAMILY PARTNERSHIP, LP d/b/a GENE CARMAN REAL ESTATE AND AUCTION, GENE CARMAN AND BARRY WITCHER
(Tenn. Ct. App. January 15, 2009). 

This case involves allegations of intentional misrepresentation and associated causes of action all related to the sale of a spring for commercial development. Appellant contends that the output of the spring was misrepresented. The trial court granted summary judgment as to a number of causes of action, and the appellant then non-suited his remaining claims and appealed. For the reasons stated herein we affirm the trial court.

Opinion may be found at the TBA website:

http://www.tba2.org/tba_files/TCA/2009/ruraldevelopment_011509.pdf 

"In order to prove a claim based on fraudulent or intentional misrepresentation, a plaintiff must show that: 

1) the defendant made a representation of an existing or past fact;  2) the representation was false when made;  3) the representation was in regard to a material fact; 4) the false representation was made either knowingly or without belief in its truth or recklessly; 5) plaintiff reasonably relied on the misrepresented material fact; 6) plaintiff suffered damage as a result of the misrepresentation.  

The above is sometimes augmented by principles of misrepresentation by concealment which is stated as: 

1. The defendant concealed or suppressed a material fact;

2. The defendant was under a duty to disclose the fact to the plaintiff; 

3. The defendant intentionally concealed or suppressed the fact with the intent to deceive the plaintiff; 

4.  The plaintiff was not aware of the fact and would have acted differently if the plaintiff knew of the concealed or suppressed fact; and 

5. As a result of the concealment or suppression of the fact, the plaintiff sustained damage. " Id.

"In order to determine whether plaintiff’s reliance upon Davis’ statements was reasonable, several factors must be considered, including “the plaintiff’s business expertise and sophistication,” the “availability of the relevant information” and “the opportunity to discover the fraud.” Id.

"Here Mr. Cook actually went to the spring but only observed.  He was again invited to inspect the spring but did not.  Mr. Cook was knowledgeable in the commercial development of springs. The spring was at the very core of this sale, yet Mr. Cook failed to closely inspect it or measure its output. Where the means of information are at hand and equally accessible to both parties so that, with ordinary prudence or diligence, they might rely on their own judgment, generally they must be presumed to have done so, or, if they have not informed themselves, they must abide the consequences of their own inattention and carelessness." Id.

"The doctrine of frustration of purpose only applies in cases of the most extreme hardship where there has been an unanticipated circumstance that, under the equities at play, justify placing the risk of avoidance of the contract on the party not claiming frustration of purposes. The question in cases involving frustration is whether the equities of the case, considered in light of sound public policy, require placing the risk of a disruption or complete destruction of the contract equilibrium on defendant or plaintiff under the circumstances of a given case (citations omitted) and the answer depends on whether an unanticipated circumstance, the risk of which should not be fairly thrown on the promisor, has made performance vitally different from what was reasonably to be expected. . ." Id.