Samuel Johnson said that "[t]here is no crime more infamous than the violation of truth. ... When speech is employed only as the vehicle of falsehood, every man must disunite himself from others, inhabit his own cave, and seek prey only for himself." I agree with the sentiment--a good society needs trust. On the other hand, people lie, and our society goes on. People lie more often than you realize. I see it often in my practice. I have, on a few occasions, caught opposing parties in blatant lies that were very damaging to their cases. (I am not going to tell you that I didn't enjoy it either! I did.)
I also regularly see something more subtle: people see things differently and remember things differently--and these different perspectives are often a product of each person's interests. The old saw about "two sides to every story" is true. People's ability to be accurate is hindered by things like confirmation bias, hindsight bias, and attribution bias. To summarize these cognitive phenomena in horribly reductive fashion: we may see clearly, but we often only remember distorted fragments that fit our preconceived views of ourselves and the world. Even without meaning to, people lie to themselves and believe they are telling the truth when they share their limited perspectives with others.
The common law of fraud concerns a particularly pernicious kind of lying--knowing falsehood to obtain some advantage or benefit. I was interested to learn recently while conducting some legal research that Utah and Idaho law differ significantly when it comes to certain common law fraud claims.
Basic Fraud
"To successfully establish a fraud claim [in Utah], the party asserting fraud must show by clear and convincing evidence (1) [t]hat a representation was made; (2) concerning a presently existing material fact; (3) which was false; (4) which the representor either (a) knew to be false, or (b) made recklessly, knowing that he had insufficient knowledge upon which to base such representation; (5) for the purpose of inducing the other party to act upon it; (6) that the other party, acting reasonably and in ignorance of its falsity; (7) did in fact rely upon it; (8) and was thereby induced to act; (9) to his injury and damage." Prince v. Bear River Mut. Ins. Co., 2002 UT 68, ¶ 41, 56 P.3d 524.
Similarly, in Idaho, a plaintiff alleging fraud bears the burden of proving nine elements: "(1) a statement or a representation of fact; (2) its falsity; (3) its materiality; (4) the speaker's knowledge of its falsity; (5) the speaker's intent that there be reliance; (6) the hearer's ignorance of the falsity of the statement; (7) reliance by the hearer; (8) justifiable reliance; and (9) resultant injury." See, e.g., Glaze v. Deffenbaugh, 172 P.3d 1104, 1108 (Idaho 2007)
Negligent Misrepresentation
"[A] claim for negligent misrepresentation [in Utah] requires a party to demonstrate that (1) a party carelessly or negligently makes a false representation 'expecting the other party to rely and act thereon,' (2) the plaintiff actually relies on the statement, and (3) suffers a loss as a result of that reliance. ... [I]n addition to affirmative misstatements, an omission may be actionable as a negligent misrepresentation where the defendant has a duty to disclose.” Smith v. Frandsen, 2004 UT 55, ¶¶9-11, 94 P.3d 919.
In contrast, the Idaho Supreme Court has "strictly and narrowly" limited the cause of action of negligent misrepresentation to "professional relationships involving an accountant." See Duffin v. Idaho Crop Imp. Ass'n, 895 P.2d 1195, 1203 (Idaho 1995).
Constructive Fraud
"To establish constructive fraud [in Utah], two elements must be shown: (1) a confidential relationship between the parties; and (2) a failure to disclose material facts.” d'Elia v. Rice Dev., Inc., 2006 UT App 416, ¶ 51, 147 P.3d 515. "A confidential relationship" generally means that the party accused of withholding information was in a position of trust or power over the other--a fiduciary.
Construtive fraud is also harder to prove in Idaho. First, a plaintiff must prove "a breach of duty arising from a relationship of trust and confidence." In other words, a breach of fiduciary duties. Once that significant burden has been met, the plaintiff still must prove seven of the nine elements of ordinary fraud (see above)--all except "the speaker's knowledge of [the statement's] falsity," and "the speaker's intent that there be reliance." See Gray v. Tri-Way Const. Services, Inc., 210 P.3d 63, 71-72 (Idaho 2009).
As far as these three causes of action are concerned, I favor the Utah approach. It empowers courts and juries with more flexibility to punish harmful lies that may not fit in the narrow categories identified by Idaho law. Either way, common law fraud claims can be tough to prove. People who make their way in the world by lying are often very skilled at it. That means that fraud claims often take the back seat to more concrete, readily provable claims (negligence, breach of contract) regardless of whether your case must be filed in Utah or Idaho.
