Claims for Fraudulent Concealment or Failure to Disclose in Tennessee — Tennessee Enterprise Litigation Legal professionals Weblog — June 10, 2020

Underneath Tennessee regulation, when a defendant has affirmatively made an unfaithful assertion of fabric reality, a plaintiff could properly have the ability to get better for intentional misrepresentation (additionally referred to as “fraud”) or for negligent misrepresentation.  What if, as a substitute of creating an unfaithful assertion of reality, the defendant didn’t disclose an essential reality or info? In Tennessee, in correct instances, a plaintiff can get better for the defendant’s failure to reveal a cloth reality (generally referred to as “fraudulent concealment”).

When contemplating a reason behind motion as a result of a celebration has didn’t disclose essential info, a very good place to start out your evaluation is to acknowledge that, underneath Tennessee regulation, in most all transactions, a celebration doesn’t have an obligation to reveal materials info to the opposite social gathering.  For that cause, amongst others, this reason behind motion is in no way straightforward to show. Nevertheless, in some instances, it may be profitable.

There are 4 classes of exceptions to the rule {that a} social gathering to a transaction usually doesn’t have an obligation to reveal info to the opposite social gathering to the transaction. The primary exception exists the place a “earlier particular” fiduciary relationship existed between the events.  Examples of definitive fiduciary relationships are attorneys and purchasers, and trustees and beneficiaries.

The second exception exists “the place it seems one or every of the events to the contract expressly reposes belief and confidence within the different.” I’ve not been capable of finding an instance, in Tennessee case regulation, the place this exception has been discovered to use.  This exception would essentially be very tough to show and would require one thing greater than is current in nearly all transactions, for my part. It would apply to a state of affairs the place, by the categorical language of the contract, one social gathering acknowledged that it was in a superior place of data and acknowledged that the opposite social gathering was relying upon it and trusting it to totally disclose all related info.

The third exception exists the place the contract or transaction is “intrinsically fiduciary and requires excellent good religion.”  Insurance coverage contracts and contracts between legal professionals and purchasers would match into this exception.

The fourth exception applies to actual property transactions. Underneath Tennessee regulation, a vendor should disclose a reality of “controlling significance in figuring out the desirability and worth” of the true property if that reality “wouldn’t be obvious to the client by the train of bizarre care.”  Maybe the main Tennessee case during which this exception utilized concerned a vendor who offered a home which, unbeknownst to the patrons, didn’t have water service for a considerable interval daily.  In that case, there was no sensible approach for the patrons to have found that reality earlier than the transaction.

To succeed on a failure to reveal reason behind motion, simply as to succeed on an motion for intentional or negligent misrepresentation, the plaintiff should show that the very fact which was hid was materials.  Concealment of non-material info won’t carry the day in fraudulent concealment instances. Whether or not a reality is materials or non-material will rely on the distinctive circumstances of every case.

To succeed on a fraudulent concealment declare, a plaintiff should additionally show justifiable reliance on the fabric reality or info which weren’t disclosed.  If a reality is materials, in my expertise, proving {that a} plaintiff justifiably relied on it’s usually fairly straightforward except the omitted reality may have been found by the train of affordable care. Some Tennessee instances tackle justifiable reliance from the standpoint that there isn’t any obligation to reveal a indisputable fact that the opposite social gathering may discover out about by the train of bizarre diligence. That strategy doesn’t even go so far as evaluating the plaintiff’s reliance: It cuts the plaintiff off if she or he may have found the very fact by the train of bizarre care.

The tort of fraudulent concealment or failure to reveal, based mostly on my casual statement, is raised principally in instances involving actual property transactions, but it surely has actually been raised, and might be raised, in different contexts and varieties of instances. For industrial legal professionals who deal with litigation issues, being conscious {that a} reason behind motion for fraudulent concealment is acknowledged in Tennessee is, clearly, essential although it isn’t as typically relevant as its associated torts of intentional and negligent misrepresentation.

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