California Law Ode

A Fraud Lawsuit Under California Law

Fraud Lawsuits in California

The various ways a victim can be defrauded are as limitless as the bounds of human ingenuity. But under California law, wrongful actions are generally characterized as civil "fraud" only under one of the following legal theories:

1. Intentional Misrepresentation. Probably the most common type of fraud is a false statement. But not every false statement is fraudulent. The elements of a claim for intentional misrepresentation are:

a. An intentionally or recklessly false statement of fact. Not every false statement is a false statement of "fact." Statements of opinion generally are not actionable. Sales talk, or "puffing" ("This is the best location in the county!"), is generally not actionable. However, if the defendant claims to be an expert or there are other reasons to expect that the victim would rely upon the defendant’s opinion as a statement of "fact," an opinion may be treated by the court as a statement of fact. Also, a statement need not be made directly to the victim. For instance, if the defendant made the false statement to a third person with the expectation that the statement would be repeated to the victim, the victim may have a valid claim for fraudulent misrepresentation.
b. Intention to defraud. If a representation of fact was intentionally false and a material part of the transaction (e.g., "this house does not have flooding problems"), it is likely the false promise was made with the intention to defraud the victim.
c. Reasonable reliance upon the false statement. The victim must have actually relied upon the statement to change his or her position (e.g., the victim would not have purchased the house if he or she knew the truth). The false statement need not be the only reason the victim changed his or her position, but it must be at least part of the reason. Also, the victim’s reliance on the false statement must be reasonable. If the victim knew or should have known the statement was false, the victim did not reasonably rely. The sophistication of the victim will play a role in determining whether his or her reliance on the statement was reasonable; e.g., a sophisticated real estate investor’s reliance on a representation about the qualities of a house may not be reasonable while an unsophisticated buyer’s reliance may be. Even an unsophisticated victim, however, "may not put faith in representations which are preposterous, or which are shown by facts within his observation to be so patently and obviously false that he must have closed his eyes to avoid discovery of the truth." Seeger v. Odell (1941) 18 Cal. 2d 409.
d. Resulting in damages. There must be measurable damages that were caused by the fraud. It is not enough that the victim was told a lie (e.g., "A famous movie star once slept in this house"); the victim must also be able to prove some type of damage resulted from the lie.

2. Negligent Misrepresentation. A claim for negligent misrepresentation is generally the same as a claim for intentional misrepresentation, except the victim must only prove the defendant did not have "a reasonable basis" to believe its statement of fact was true (as opposed to proving the defendant knew its statement was false). If the defendant’s false statement was both honestly made and based upon reasonable grounds, however, there is no claim. Punitive damages are not available for negligent misrepresentations.

3. Concealment. A claim for fraud may also arise if the defendant concealed or failed to disclose a material fact during a transaction, causing damage to the victim. The elements of a claim for fraudulent concealment are:

a. The defendant failed to disclose or concealed a material fact with an intent to defraud the victim.
b. The defendant had a duty to disclose. There is not always a duty to disclose facts during a transaction. If there is a duty, it generally arises in one of four different circumstances: (i) The defendant is in a "fiduciary relationship" (such as being a partner) with the victim; or (ii) The defendant took steps to hide important information from the victim (as opposed to simply failing to tell the victim); or (iii) The defendant disclosed some information to the victim, but the disclosed information is misleading unless more information is given; or (iv) The defendant is aware of key information and knows the victim is unlikely to discover that information. In addition, California laws may create a duty to disclose in certain transactions. For example, sellers of residential property in California generally are required to make written disclosures about the condition of the house.
c. The victim must have been unaware of the fact and would not have acted as he or she did if he or she knew of the fact.
d. The victim sustained damages as a result of the concealment.

4. False Promise. A claim of fraud may arise if a defendant entered into a contract and made promises that it never intended to perform. The elements of a false promise claim are:

a. The defendant made a promise.
b. The promise was important to the transaction.
c. At the time he or she made the promise, the defendant did not intend to perform it.
d. The defendant intended the victim to rely upon the promise.
e. The victim reasonably relied upon the promise.
f. The defendant did not perform the promise.
g. The victim was harmed as a result of defendant not carrying out his or her promise.
h. The victim’s reliance on the defendant’s promise was a substantial factor in causing the victim’s harm.

It is important to understand that a broken promise, alone, is not a sufficient basis for a fraud claim. More than a mere broken promise is required. The victim must also prove that the defendant did not intend to perform the promise at the time the promise was made. In practice, it is usually difficult to tell the difference between a broken promise and a promise made without an intention to perform. Courts generally look for circumstantial evidence to support a false promise claim (as opposed to a broken promise claim), such as the defendant broke its promise immediately after making it.

Characterization of a claim as fraud has many advantages to a victim; primarily, the victim may be able to recover punitive damages in addition to actual damages. Also, the measure of damages is generally more liberal under fraud and other "tort" theories, allowing victims a more complete recovery. But even if a wrongful action does not fall under the definition of "fraud," it still may lead to a valid legal claim. For instance, a broken promise - while not necessarily fraudulently - may still constitute a valid breach of contract claim. While punitive damages and emotional distress damages are generally not available for breach of contract in California, the victim still should be able to recover his or her monetary damages.

This article constitutes general information only and should not be relied upon as legal advice.

Michael Abney is a business and real estate litigation attorney in Orange County, California and a partner in Drosman Abney & Percival, LLP. An honors graduate of Harvard Law School, Michael has been a California lawyer for 19 years. You can contact Michael at http://www.daplawyers.com.


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GoogleBomb Fears Poem

Dispelling Fears About The GoogleBomb Algorithm Update

Google algorithm updates always bring the fears of webmasters to a boiling point. In the aftermath of an algorithm update, some people come out swinging, making claims that Google is trying to put them out of business. Others look at their Google rankings and pat themselves on the back for having survived another "algo" update.

It has been known in search engine optimization (SEO) circles for quite some time that one could successfully implement what is referred to as a GoogleBomb. The best example was a search on the phrase "miserable failure". A search on those words within Google would show George W. Bush's biography at the White House website, in the top three or four results of the search results. This would occur, despite the fact that neither word in the search criteria resides on the White House website. At one time, Bush's biography had been in the #1 spot, but counter-bombing campaigns moved Bush's listing down the page a bit.

Many people have written about this phenomenon in time's past. I have even written about it myself. When I wrote about it, my point was to show the importance of anchor text in a link to build the value of a web page in the Google search engine result pages (SERPS).

The "miserable failure" GoogleBomb came to exist within a loophole within the Google algorithms. Google puts a lot of value on the anchor text that point to a particular web page. It is part of their "one link – one vote" philosophy as to the value of a web page.

Bloggers joined forces to create thousands of links pointing to the White House website with the words "miserable failure" in the anchor text. The shenanigans of the George W. Bush bashers were eventually countered by their fellow bloggers on the other side of the political aisle. Eventually, the search phrase "miserable failure" would also bring up the Michael Moore and Jimmy Carter websites in the top few results for that search phrase.

The average person who did not understand the nature of the SEO game would occasionally stumble across these esoteric search phrases and get him or herself into a huff, because they thought that Google was stating their own political views. Of course, Google really does not have an opinion, at least not one that would ever appear in their search results.

The GB Update...

In this case, the GB Update is not so-named because "George Bush" disappeared from the "miserable failure" search results. Instead, it is so-named because it is the "GoogleBomb" update, which Google implemented in January of 2007.

Once the update was implemented, the "miserable failure" search began to only return pages that talked about GoogleBombs from a technical standpoint.

With the GB update officially rolled out (http://googlewebmastercentral.blogspot.com/2007/01/quick-word- about-googlebombs.html), people began the standard Google-update panic process.

Hundreds of posts began appearing on forums concerning the GB updates and the fear that link-building efforts undertaken by search engine marketing (SEM) companies and webmasters would be hurt as well.

So, I did a bit of research. I have run several linking campaigns on my own behalf, and on the behalf of clients. Those campaigns were put together with a mix of keyword phrases nestled in the anchor text of links to our websites. I checked the status of all of the websites I represent, and without fail, our linking campaigns had not been hurt by the GB update.

Interesting Changes From The GoogleBomb Update

According to Matt Cutts of Google, the changes in the GB update were all completed within the Google algorithm. Cutts has always said that Google does not like to manually rearrange the search engine results, so an algorithmic solution to the GoogleBomb was in order. A few of the Google engineers worked together to find a solution to the GoogleBomb issue.

In an attempt to understand what had changed, I looked at a few of the more notorious GoogleBombs of past and discovered some interesting facts.

Broken Google Bombs:

* "Miserable failure" no longer returns George W. Bush, Michael Moore, or Jimmy Carter websites.
* "Worst president ever" now only returns pages that make the claim the GW Bush has earned that title.
* "Waffles" no longer returns results that point to the John Kerry website.
* Tony Blair's homepage no longer comes up under the search term "liar".

Unchanged Google Bombs:

* A search for "Scientology" still has the "Operation Clambake" listing in the #2 spot (2007-01-31). Operation Clambake is a website that is critical of Scientology.
* "Click here" still points to the Adobe website (although this was not actually a GoogleBomb).
* "French military victories" still goes to the same page on Albino Black Sheep when you hit "I feel lucky" on Google's search page. (I still get a kick out of this one.)
* The "great president" GoogleBomb survived. It still points to Bush's bio on the White House website.

The Question On Everyone's Mind

Everyone seems to be asking the same question. How does Google defuse Google Bombs?

Well, Google isn't saying, so we are left to figure it out on our own. Based on what I was able to uncover in my study of Google Bombs, I came up with a theory.

What I have been able to take from the results shown above is that Google may have targeted only "negative links". If you want to review what is shown above, all of the Google Bombs that are now gone had negative connotations to them. All of the Google Bombs that survived can be construed as having positive, or at least non-negative, connotations to them.

If my assertion is correct, then average, ordinary webmasters will have nothing to fear from the Google Bomb update. My sites and my client's websites also reflect that the Google Bomb update did not have any affect on us.

Maybe I am just grasping at straws, but I don't think so. You be the judge... "Worst president" is gone, and "great president" survived. To me, that says a lot.

The Google Bombing Legacy Continues...

Following my logic, Google Bombing is still a possibility for those who Google Bomb with a positive set of anchor text keywords. So, some Google Bombs will continue to live well into the future.

In 2004, Search Engine Watch suggested that Google Bombs are better defined as Link Bombs, since they can affect all of the major search engines, including Yahoo and MSN.

Google has finally addressed link bombing in a positive way, but Yahoo and MSN are still prone to link bombing attacks. For example, as of this writing, MSN still has George in the top spot for "miserable failure" in the MSN Live results.

Bill Platt has been involved in article marketing and link building since 1999. If you are in the market to have someone build keyword anchor text links to your site, using unique and interesting content as the foundation, then Bill's team can help you: http://www.linksandtraffic.com.


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