Fraud Lawsuits in Maryland
Maryland, like most states, allows for a party to sue another party for fraud. Both individuals and entities (such as corporations or partnerships) can sue for fraud. In Maryland, Fraud is established legally when (i) a party makes a false representation to another party, (ii) the representation’s falsity was either known to the party making the representation or that the representation was made with reckless indifference as to its truth, (iii) the misrepresentation was made for the purpose of defrauding the defrauded party, (iv) the defrauded party relied on the misrepresentation and had the right to rely on it, and (v) the defrauded party suffered compensable injury resulting from the misrepresentation. This fraud standard in Maryland was clarified by the Maryland Court of Appeals in Nails v. S & R, Inc.
However, there are clear limits to suing a party for fraud in Maryland. First, because a lot of parties often claim that frauds has occurred, a fraud lawsuit in Maryland has special requirements. A party seeking to initiate a fraud lawsuit in Maryland is required to specifically state all of the fraud actions in detail at the outset of the lawsuit; in other words, a suing party cannot simply make blanket allegations about being defrauded. In Maryland, as described by the Court of Appeals in Goldstein v. Miles, all allegations of fraud must be plead with specificity and any statements that are ‘”vague and indefinite in its nature and terms” cannot support a cause of action for frauds. Accordingly, a party asserting a fraud or concealment claim in Maryland must plead affirmatively and with specificity the supporting facts in their Complaint and those facts must go beyond mere conclusory statements. The Maryland Court of Appeals in Dual v. Lockheed Martin Corporation specifically noted that in order to demonstrate a prima facia case of fraud or concealment, a party must plead specifically the “who, when, and what” of the circumstances surrounding the alleged fraud. Bald allegations are insufficient. Thus, as importantly stated by the Court of Appeals, if the particular acts supporting a fraud claim are not specified in the complaint, the lawsuit is subject to being dismissed altogether.
Further, pursuant to long standing Maryland law, promissory representations regarding future events (as opposed to present and existing facts) cannot serve as a basis for a frauds or misrepresentation claim. As clarified by: “[F]raud cannot predicated upon the failure to fulfill an agreement to do something at a future time. . . [O]therwise, any breach of contract would constitute fraud.”
Additionally, as clarified by the Maryland Court of Special Appeals in Finch v. Hughes Aircraft Co., in order to recover damages in an action alleging fraudulent concealment, a plaintiff must prove (i) that the defendant owed a duty to the plaintiff to disclose a material fact; (ii) that the defendant failed to disclose that fact; (iii) that the defendant intended to defraud or deceive the plaintiff; (iv) that the plaintiff took action in justifiable reliance on the concealment; and (v) the plaintiff suffered damages as a result of the defendant’s concealment.
Consequently, while Maryland does provide a cause of action for fraud, there are significant limits to a party seeking to sue another party for fraud. Simply because a misreprentation has occurred — whether in a business transaction or personal relationship — does not mean that a legal frauds has occurred. However, if a fraudulent action has met the standard for fraud in Maryland, then a fraud lawsuit can go forward in the court system.
Our firm’s Civil Litigation Group handles all types of civil litigation including matters related to fraud and misrepresentation in Maryland. Whether representing a party in a fraud dispute, contract dispute, construction matter or any type of civil matter, our litigation attorneys have familiarity with the legal process and the specific topics therein. Longman & Van Grack regularly handles cases in the Maryland District Court, Maryland Circuit Court, US District Court for the District of Maryland, and all appellate courts. If you are in a legal dispute with an individual or business — whether related to a fraud allegation or not — Adam Van Grack and our other litigation attorneys will take time to thoroughly review your case and the dispute at issue to evaluate if liability exists. Through our years of experience, our firm’s civil litigation legal team will guide you on the best course of action for an efficient and smooth resolution. Contact Adam or our other attorneys at (301) 291-5027 for a contract dispute attorney consultation today at our Bethesda, Maryland Office or Rockville, Maryland Office.
