In today's Freedom Friday blog and email newsletter, I want to talk about a topic that I often get asked, especially by business owners who are “cheated” out of either an investment they made, or a business deal, and that's a fraud claim.  Unlike a standard breach of contract claim, not every breach, however unfair, can be considered fraud under Oklahoma.  So, in today's Freedom Friday blog and email newsletter, I'm answering the question, “What is fraud under Oklahoma law?”

First of all, fraud has a special pleading requirement in Oklahoma.  Oklahoma is a “notice pleading” state.  This means that you must plead sufficient facts to put the defendant on notice of your allegations as a plaintiff.  However, if you're pleading fraud, you have to go beyond a “notice pleading” and plead fraud with particularity.  So, what is meant by particularity?  Title 12 O.S. Section 2009(B) says “in all averments of fraud or mistake, the circumstances constituting fraud or mistake must be stated with particularity,” and this has been explained by the Oklahoma Supreme Court that “allegations of fraud must be stated with sufficient particularity to enable to opposing party to prepare his/her responsive pleadings and defenses.  Particularity does not mean the plaintiff has to plead evidentiary matters.”  See A-Plus Janitorial & Carpet Cleaning v. Employers' Workers' Comp. Ass'n, 1997 OK 37, ⁋ 35, 936 P.2d 916.  The Oklahoma Supreme Court has further explained that Section 2009(B) “requires specification of the time, place, and content of an alleged false representation, but not the circumstances or evidence from which fraudulent intent could be inferred.”  See Gianfillippo v. Northland Cas. Co., 1993 OK 125, ⁋ 11, 861 P.2d 308.

Next, we need to understand what the elements of fraud are.  These are the different aspects of a fraud claim you must plead with particularity in a lawsuit for fraud.  There are four elements of fraud under Oklahoma law:

1.  False Material Misrepresentation

The first element of fraud under Oklahoma law is a false material misrepresentation.  This means that the party that allegedly committed fraud made a representation to the plaintiff that was either false (not truthful) or was somehow deception or in a material way it was a misrepresentation.  A classic example of a false material misrepresentation is if you look to buy a used car, and a car salesman tells you the car has nothing wrong with it, when in reality the car is a “lemon”.

2.  Positive Assertion Either Known to be False or Recklessly Without Knowledge of the Truth

The second element of fraud under Oklahoma law is that the false misrepresentation was made as a positive assertion either known (by the person who made the statement) as known to be false, or such statement was made recklessly without knowledge of the truth.  This means that when that false statement was made, the person who made it knew that the statement was false, or did not perform due diligence, was reckless, and made a false statement without having a knowledge of the truth.

3.  Intention False Statement Acted Upon

The third element of fraud under Oklahoma law is that there is intent that the false misrepresentation be acted upon.  Not only must the statement be false and/or a material misrepresentation, that it be made as a positive assertion either known to be false or recklessly without knowledge of the truth, but the declarant must intend the false statement be acted on.

4.  Detrimental Reliance

The fourth element of fraud under Oklahoma law is detrimental reliance.  Detrimental reliance means that the plaintiff has relied upon the false material misrepresentation to the plaintiff's detriment.  This means that the plaintiff relied on the false statement and suffered damages as a result.

Thinking about starting a small business?  Or maybe your small business is having issues with contracts, leases, business partners, collection issues, or experiencing other barriers to growth?  Please contact me at [email protected] to schedule a FREE strategy session.

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