Student Legal Reasoning

Fact Relevancy

Elements Analysis for Common Law Fraud Claim in Miller v. Williams Chevrolet, 326 Ill. App. 3d 642, 762 N.E.2d (2001)


Excerpts from decision:


The elements of common law fraud are (1) false statement of material fact; (2) defendant's knowledge that the statement was false; (3) defendant's intent that the statement induce the plaintiff to act; (4) plaintiff's reliance on the statement; and (5) plaintiff's damages resulting from reliance on the statement.


1. False statement of Material Fact

 This element encompasses three requirements: the defendant must (1) make a misrepresentation, (2) it must involve a fact and (3) the misrepresentation must be material.


            [a. Misrepresentation]

 

Miller contends that William Chevrolet told him that the Altima was "executive driven" and that this characterization was false and affirmatively misrepresented the car's true history as a rental vehicle


            [b. Fact]

 

Defendant argues that the designation "executive driven" has no clear meaning and at most is "puffing." Puffing is defined as a "bare and naked statement as to value" of a product and is considered a nonactionable assertion of opinion. Statements of existing facts or comments that ascribe specific virtues to a product are not generally considered puffing and may be the subject of a fraud claim.


Unlike phrases such as "expert workmanship," or "magnificent" which courts have found to be mere statements of value ( Breckenridge v. Cambridge Homes, Inc., 246 Ill. App. 3d 810, 823, 616 N.E.2d 615, 623, 186 Ill. Dec. 425 (1993)), "executive driven" is sufficiently susceptible of interpretation as a factual description of a car's history to defy our characterizing it as "puffing" as a matter of law.

 

[c. Material]


A misrepresentation is "material" if the plaintiff would have acted differently had he been aware of it, or if it concerned the type of information upon which he would be expected to rely when making his decision to act.

 

Plaintiff's deposition indicated that he did not want to purchase a car previously used for rentals and that he would not have purchased the Altima in question had he known of its history.

 

Plaintiff's opinion witness also indicated that purchasers who request or knowingly accept cars previously used as rentals expect a reduction in price as a result.

 

Furthermore, the fact that other states demand that rental history be divulged in writing to prospective car buyers reveals that this is precisely the type of information that people use as the basis for purchasing decisions. See e.g., Mass. Regs. Code tit. 940, § 5.04(2)(c) (1993); KAN. STAT. ANN. § 50-659(2).


2. Knowledge of Falsehood

 

In the instant case, defendant does not dispute that its salespeople knew that the car had been titled to Enterprise Rental prior to the sale to Miller.


3. Intent to Induce Reliance

 

Miller alleges that he was told the car was "executive driven" in conjunction with being told that it was a "great car" and defendant offers no suggestion why the salesperson used the phrase "executive driven" other than to explain the car's history in an effort to get Miller to buy it. The particular phrase "executive driven" logically appears to have been employed to encourage the purchase.

 

In this case, however, both Miller's opinion witness and common sense tell us that used car dealerships have reason to know that the history of a car is of concern to purchasers. This is all the more true when the history involves previous service as a taxi or rental vehicle. One can hardly disclaim the lack of intent to persuade while one is simultaneously employing a specific description of the car's history in a sales pitch.


4. Reliance

 

William Chevrolet argues that Miller's reliance on the assertion that the car was executive driven is unreasonable as a matter of law. Because Miller ultimately signed the back of the car's title, the front side of which listed Enterprise as the previous owner, William Chevrolet claims that Miller cannot assert that he reasonably relied on its oral statements about the Altima's history.

 

From the record, it appears that the certificate of title was the sole document that revealed the Altima's prior owner The record reflects that Miller's opportunity to find out the car's history did not occur until after he was obligated on the sales contract.

 

Regardless of this timing analysis, a triable question remains whether Miller's reliance on the statements of the salesperson was reasonable. For example, "where the person making the statement has inhibited plaintiff's inquires ...by creating a false sense of security" the failure to inquire into facts that could be made available to the plaintiff is not fatal. Whether a plaintiff's reliance was reasonable under these circumstances is generally considered a question of fact. In this case, a reasonable trier of fact could conclude that the phrase "executive driven" was designed to and did create exactly this sort of false sense of security.


5. Damages

 

The trial court found that, as a matter of law, plaintiff could not prove damages resulting from William Chevrolet's alleged misrepresentations about the history of the Altima. In the absence of any complaints by plaintiff about the car's condition during his use of it, the trial court found that plaintiff's alleged loss of confidence in the car and his assertion that he overpaid and had lost resale value because he was misled about the car's history were not legally cognizable harms.

 

Illinois courts have generally allowed damages claims based on diminished value of a product regardless of whether it has yet malfunctioned, provided the product contains a manifested defect or current condition affecting value.

 

In the instant case, William Chevrolet does not dispute that the car in question was owned previously by a rental company. And Miller's opinion witness presented evidence of diminished value of rental cars generally. Unlike the theoretical, future possibility of lost value facing the plaintiff in Kelly, Miller has raised a question of material fact regarding the presently diminished value of the Altima.