Fraud and Punitive Damages
A fraud or misrepresentation matter is typically much more serious than
a breach of contract case because fraud carries with it the possibility
of punitive damages. Fraud is typically more offensive to a judge or jury
(hence the punitive damages) because it is an act that was done intentionally
to deceive and misrepresent some important fact which the other party
relied upon. Punitive damages are meant to not only reimburse the plaintiff
for his loss, but also punish those committing the fraud which can lead
to a substantial judgment amount.
The astronomical jury awards we hear about in the news are almost always
the result of punitive damages. If you have a matter that involves fraud,
whether someone has intentionally deceived you or you are being accused
of misleading others, it is critical you speak to a fraud and misrepresentation
attorney immediately. The experienced fraud attorneys at McFarlin LLP
have prosecuted and defended many such actions and will protect your rights.
Negligent Misrepresentation Distinguished
Another common cause of action is negligent misrepresentation, which is
different than fraud, in that the party making the representations did
not have the prior intent to deceive. They were just negligent in not
knowing their representations were false. Negligent misrepresentation
is easier to prove than fraud because it does not require proof of the
offending party’s subjective intent or mindset at the time of the
representation, it requires merely a showing that what they said was false,
and they should have known it (to paraphrase the code).
Oftentimes, a plaintiff will sue for fraud and negligent misrepresentation
together. The idea being if fraud comes off the table (unable to prove
intent), negligent misrepresentation will be the fall back position. Even
if proven, negligent misrepresentation does not give rise to the possibility
of punitive damages in California, however, damages can still be substantial.
Definition of Fraud
Fraud can take many forms in different situations and is therefore somewhat
hard to define. Generally, civil fraud involves a contract that was entered
into based on false representations. More specifically (to paraphrase
the code):
- A false representation was made;
- The party making the false representation knew it to be false;
- The false representation was material and relied upon by the other party; and
- Harm or monetary loss resulted.
The difficult aspect to proving fraud relates to proving the intent to
mislead the other party. It is always difficult to prove someone’s
subjective intent. A fraud attorney will seek to use circumstantial evidence
of intent to prove the “misrepresentor” knew definitively
their representation was false at the time it was made. Alternatively,
a good fraud defense attorney will seek to disprove intent to deceive,
by way of the circumstances surrounding the contract negotiations. In
either event, with such a critical issue at hand, it is important to have
the best possible representation in any fraud or misrepresentation matter.
Civil Fraud vs. Criminal Fraud
One common question relating to fraud and misrepresentation claims is whether
a fraud rises to the level of criminal fraud, or remains merely a civil
fraud. Ultimately, whether fraud is criminal is up to the discretion of
the District Attorney or California State Attorney (Department of Justice).
A private citizen cannot prosecute a criminal matter, only “the
People of the State of California” or another public entity.
Some matters which may rise to the level of criminal fraud prosecution
include: Theft, embezzlement, forgery, insurance fraud, securities fraud,
social security fraud or bank fraud, to name a few. Generally, if the
fraudulent activity is on a large enough scale, just about any fraud offense
can be prosecuted as criminal fraud by the District Attorney or Department
of Justice.
