Claims of fraud, silent fraud, and misrepresentation arising from business sales, financial statements, and commercial dealings.
Fraud claims arise in business when one party relies on another’s statements, or on its silence, and loses money as a result. In Michigan these cases usually involve the sale of a business, financial statements prepared for a lender or buyer, investment solicitations, or dealings between business partners.
Common-law fraud requires a material false representation, made knowingly or recklessly, with the intent that the other party rely on it, followed by actual reliance and resulting damage. Silent fraud reaches the suppression of facts a party had a duty to disclose. Innocent misrepresentation can apply between parties to a transaction without proof of intent. Fraud must be pleaded with particularity under MCR 2.112(B), so the facts have to be developed before the complaint is filed.
The firm handles claims of fraud in the inducement, silent fraud, innocent misrepresentation, and related tort theories in the business context, including cases involving distressed acquisitions, misrepresented financial statements, and concealed liabilities. Representation often includes coordinated discovery across multiple parties and jurisdictions.
Depending on the facts, remedies can include damages, rescission of the transaction, and equitable relief. Fraud claims are often joined with claims for breach of contract, breach of fiduciary duty, and conversion, and, where assets were moved beyond the reach of creditors, claims under the Michigan Uniform Voidable Transactions Act. When the party accused of fraud files for bankruptcy, the claim may continue as a nondischargeability action in the bankruptcy court.
The firm also represents parties accused of fraud. The questions there are often whether the statement was one of fact rather than opinion or a promise about the future, and whether the plaintiff’s reliance was reasonable in light of the contract and the information available.
In general, the plaintiff must show that the defendant made a material false representation, knew it was false or made it recklessly, intended that the plaintiff rely on it, and that the plaintiff did rely on it and was harmed. Michigan also recognizes silent fraud (concealing facts when there is a duty to disclose) and innocent misrepresentation in some settings. Fraud must be pleaded with particularity under MCR 2.112(B).
Yes. A person who personally participates in a fraud can be held individually liable even if the person was acting on behalf of a corporation or LLC. The corporate form protects owners from the company’s contract debts, not from their own wrongful conduct.
No. Michigan courts generally require a fraud claim to rest on something beyond the failure to perform a contract, such as a false statement that induced a party to enter the contract in the first place. When the only complaint is that the other side did not perform, the claim is usually for breach of contract.
Fraud claims are generally subject to a six-year limitations period under MCL 600.5813. If the wrongdoer fraudulently concealed the claim, MCL 600.5855 may extend the time to sue. Because the starting date can be disputed, it is safer to act promptly once the fraud is discovered.
Sometimes. Michigan’s statutory conversion remedy, MCL 600.2919a, allows recovery of three times actual damages, plus costs and reasonable attorney fees, when property is converted to another person’s own use. Otherwise, Michigan generally limits recovery to compensatory damages and does not allow punitive damages unless a statute authorizes them.
These answers are general information about Michigan and federal law, not legal advice about your situation. Contacting the firm does not create an attorney-client relationship.
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