The law has a specific definition what constitutes actionable legal fraud. "Although the word ‘fraud’ maybe used in common parlance to connote any practice involving shady or underhanded dealing, in law it is a term of art with a precise definition." Banco Popular N. Am. v. Gandi, 184 N.J. 161, 175 (2005). In order to assert a legal fraud claim the moving party must establish the following five elements by clear and convincing evidence: “(1) [a] material misrepresentation of a presently existing or past fact; (2) knowledge or belief by defendant of its falsity; (3) an intention that the other person rely on it; (4) reasonable reliance thereon by the other person; and (5) resulting harm.” Jewish Ctr. of Sussex Cty v. Whale, 86 N.J. 619, 624-625 (1991); see also Simpson v. Widger, 311 N.J. Super. 379, 392 (App. Div. 1998) (holding that “fraud must be proven by clear and convincing evidence”).
I. Opinions or Forecasts Are Not Actionable.
As stated above, in order to assert a fraud claim the moving party must assert a “presently existing” misrepresentation of “fact.” See Simpson, 311 N.J. Super. at 392 (holding that“[p]ossibilities are not ‘presently existing’ facts”); see also Daibo v. Kirsch, 316 N.J. Super. 580, 589-590 (App. Div. 1998). Hence a misstatement or misrepresentation of opinion is not fraudulent. Gennari v. Weichert Co. Realtors, 288 N.J. Super. 504, 535 (App. Div. 1996) . Whether a statement is one of fact or one of opinion under New Jersey law is decided as follows:
The distinction between fact and opinion is broadly indicated by the generalization that what was susceptible of exact knowledge when the statement is made is usually considered to be a matter of fact. Representation in regard to matters not susceptible of personal knowledge are generally to be regarded as mere expressions of opinion, and that is held to be so even though they are made positively and as thought they are based upon the maker’s own knowledge. Usually, also, to say that a thing is only matter of opinion imports that it is unsusceptible of proof.
Joseph J. Murphy Realty, Inc. v. Shervan, 159 N.J. Super. 546, 551 (App. Div. 1978). Using that definition, Courts have held that possibilities or future forecasts are not presently existing material misrepresentations of fact, but instead are in-actionable opinions. See Simpson, 311 N.J. Super. at 392; Daibo, 316 N.J. Super. at 589-90.
II. Exact Knowledge At the Time the Statement was Made Is Required To Prove Fraud.
Additionally, “a statement’s content must be susceptible of ‘exact knowledge’ at the time it is made” to be a statement of fact. Alexander v. CIGNA, 991 F. Supp. 427, 435 (D. N.J. 1998). Because future business is merely an “opinion” of the “possibilities” and not “presently existing facts," any predictions or projections of future payments which would flow to the Respondents cannot be fraudulent as a matter of law. Simpson, 311 N.J. Super. at 392; Daibo, 316 N.J. Super. at 589-590; Alexander, 991 F. Supp. at 435. Discussions as to the future projections cannot constitute “presently existing” material misrepresentations as a matter of law.
III. A Party Must Show Scienter to Prove Legal Fraud.
A party asserting a fraud claim must also prove by clear and convincing evidence that the party who made the presently existing material misrepresentation did so with knowledge that the fact was false and wanted the other party to rely on it. As such, if a defendant makes a misstatement in error without any bad intent they cannot be held liable for legal fraud.
III. Detrimental Reliance Is Also Required.
Moreover, in order to prove actionable legal fraud the party asserting the claim must prove by clear and convincing evidence that they were tricked or fooled by the defendant’s misrepresentation. If the Plaintiff did not believe or consider the presently existing misstatement of fact when they entered into the agreement then they could not maintain their legal fraud claim.
The last element a party asserting a fraud claim must prove is that they suffered damages. Those damages must be linked to the presently existing or past misrepresentation of fact. Thus, if a party cannot show that it suffered any form of injury or damages caused by that misrepresentation their case must be dismissed as a matter of law.