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James RHEE, et al. v. HIGHLAND DEVELOPMENT CORPORATION, et al.
No. 1765, Sept. Term, 2007.
-- October 07, 2008
“(1) the defendant owed a duty to the plaintiff to disclose a material fact; (2) the defendant failed to disclose that fact; (3) the defendant intended to defraud or deceive the plaintiff; (4) the plaintiff took action in justifiable reliance on the concealment; and (5) the plaintiff suffered damages as a result of the defendant's concealment.”
Lloyd v. Gen. Motors Corp., 397 Md. 108, 138, 916 A.2d 257 (2007) (quoting Green v. H & R Block, 355 Md. 488, 525, 735 A.2d 1039 (1999)). Each element must be proven by clear and convincing evidence. Md. Envtl. Trust v. Gaynor, 370 Md. 89, 97, 803 A.2d 512 (2002).
In the context of the sale of real property, non-disclosure of a material fact ordinarily is not actionable, but fraudulent concealment of a material fact is:
Non-disclosure is a failure to reveal facts. It may exist where there is neither representation nor concealment. Except in a few special types of transactions, such as insurance contracts and transactions between a fiduciary and his beneficiary, there is no general duty upon a party to a transaction to disclose facts to the other party. To create a cause of action, concealment must have been intentional and effective-the hiding of a material fact with the attained object of creating or continuing a false impression as to that fact. The affirmative suppression of the truth must have been with intent to deceive.
Fegeas v. Sherrill, 218 Md. 472, 476-77, 147 A.2d 223 (1958) (internal citations and quotations omitted) (emphasis added).
In discussing the fraudulent concealment of a cause of action, the Court of Appeals has observed:
“Absent a fiduciary relationship ․ a plaintiff seeking to establish fraudulent concealment must prove that the defendant took affirmative action to conceal the cause of action and that the plaintiff could not have discovered the cause of action despite the exercise of reasonable diligence and that ․ the affirmative act on the part of the defendant must ․ be some act intended to exclude suspicion and prevent injury, or there must be a duty on the part of the defendant to disclose such facts, if known.”
Id. (quoting Frederick Road v. Brown & Sturm, 360 Md. 76, 100 n. 14, 756 A.2d 963 (2000)) (citations omitted) (emphasis added).
In other words, “fraudulent concealment-without any misrepresentation or duty to disclose-can constitute common-law fraud․ Although silence as to a material fact (nondisclosure), without an independent disclosure duty, usually does not give rise to an action for fraud, suppression of the truth with the intent to deceive (concealment) does.” United States v. Colton, 231 F.3d 890, 899 (4th Cir.2000). This is so because, as the Supreme Court has explained, a fraudulent concealment is “equivalent to a false representation.” Stewart v. Wyoming Cattle Ranche Co., 128 U.S. 383, 388, 9 S.Ct. 101, 32 L.Ed. 439 (1888).
See also Hoffman v. Stamper, 385 Md. 1, 28 n. 12, 867 A.2d 276 (2005) (fraud may consist of suppression of the truth as well the assertion of a falsehood); Schnader v. Brooks, 150 Md. 52, 57-58, 132 A. 381 (1926) (concealment may amount to fraud “where it is effected by misleading and deceptive talk, acts, or conduct, or is accompanied by misrepresentations, or where, in addition to a party's silence, there is any statement, word, or act on his part, which tends affirmatively to the suppression of the truth, or to a covering up or disguising of the truth, or to a withdrawal or distraction of a party's attention from the real facts”); Colton, supra, 231 F.3d at 898-99 (fraudulent concealment may be common-law fraud when the concealment consists of “deceptive acts or contrivances intended to hide information, mislead, avoid suspicion, or prevent further inquiry into a material matter”); Restatement (Second) of Torts § 550 (1977) (“One party to a transaction who by concealment or other action intentionally prevents the other from acquiring material information is subject to the same liability to the other, for pecuniary loss as though he had stated the nonexistence of the matter that the other was thus prevented from discovering.”); W. Page Keeton et al., Prosser and Keeton on Torts § 106 (5th ed. 1984) (“Any words or acts which create a false impression covering up the truth, or which remove an opportunity that might otherwise have led to the discovery of a material fact ․ are classed as misrepresentation, no less than a verbal assurance that the fact is not true.”). Cf. Sass v. Andrew, 152 Md.App. 406, 430, 832 A.2d 247 (2003) stating in dicta that, even in the absence of a duty to disclose, the suppression of facts “which materially qualify representations made to another” may support a claim for fraud (quoting Finch v. Hughes Aircraft Co., 57 Md.App. 190, 239, 469 A.2d 867 (1984)).
Thus, in Maryland, a cause of action for fraudulent concealment will lie in favor of a purchaser of real property against the seller when, in the absence of any independent duty to disclose, the seller actively and with the intent to deceive conceals a material fact about the property; the purchaser justifiably relies upon the concealment in buying the property; and, as a proximate result, the purchaser suffers damages. Here, apart from the disputed issues of extension of duty, materiality of defect, and damages, the factual allegations in the first amended complaint-that the appellees desecrated the cemetery and then affirmatively acted to hide its presence on Lot 20, intending to conceal, and in fact concealing, its presence-sufficiently state a cause of action for fraudulent concealment.
See Elsey v. Lamkin, 156 Ky. 836, 838, 162 S.W. 106 (1914) (affirming judgment in favor of purchaser of real property against seller for fraud based upon the seller's concealing the existence of a cemetery on the property by disclosing the presence of one cemetery on the property and not the other, thereby “creating upon the mind of the vendee a false impression that full disclosure has been made and the whole truth told”).
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