7 FSM Intrm. 223-227

In order to make a prima facie case of intentional misrepresentation a plaintiff must produce some evidence of: 1) a misrepresentation by the defendant, 2) scienter or the defendant's knowledge that the statements were untrue, 3) intent to cause the plaintiff to rely on the misrepresentations, 4) causation or actual reliance by the plaintiff, 5) justifiable reliance by the plaintiff and 6) damages. The misrepresentation must be a false and material representation of a past or present fact. Eram v. Masaichy, 7 FSM Intrm. 223, 225 (Chk. S. Ct. Tr. 1995).

A plaintiff is justified in relying on a defendant's representations of a vehicle's "good shape and operation" where the defendant is a mechanic with superior knowledge of vehicles and this particular vehicle's condition. Eram v. Masaichy, 7 FSM Intrm. 223, 225 (Chk. S. Ct. Tr. 1995).

Normally, the measure of damages in case of the purchase of personal property induced by misrepresentation is the difference between the fair market value of the property if the true condition were known and what the plaintiff paid for the property. Eram v. Masaichy, 7 FSM Intrm. 223, 226 (Chk. S. Ct. Tr. 1995).

The plaintiff filed his complaint and the defendant answered in writing denying the plaintiff's essential allegations and asserting a counterclaim. The plaintiff subsequently replied to the defendant's counterclaim. Since the defendant failed to appear, his counterclaims are dismissed. The plaintiff still has the burden of proof as the defendant has answered and denied all of plaintiff's allegations. The following discussion shall constitute the court's findings of facts and conclusions of law.

This action arose from the sale of a used vehicle by the defendant to the plaintiff. The plaintiff paid $3000.00 for the vehicle. The plaintiff took the vehicle for a test drive before he gave the defendant the money. At trial the plaintiff's wife testified that during the test drive it became apparent that the vehicle had some type of problem. There was some testimony that the defendant stated the problem was that the clutch cylinder needed oil. The plaintiff bought the vehicle after the test drive. The plaintiff had the title transferred to him. Some time within the next few days the vehicle became inoperable because of the clutch. The plaintiff returned the vehicle to the defendant's place of business and demanded his money back. The plaintiff still retains the title to the vehicle and the defendant has refused to return the money. No attempt has been made by either party to confirm the cause of the problem or fix the vehicle. Based upon these facts, the plaintiff has alleged three causes of action. The first cause of action is based on the tort of intentional misrepresentation.

The misrepresentations alleged by the plaintiff are: that the vehicle was recently purchased by the defendant from a third party for $4200.00, that the vehicle was in "good shape and operation" and that the vehicle "was tuned up." These allegations are sufficiently specific enough to satisfy the Rule 9(a) requirement that fraud or misrepresentation be pleaded with particularity. The plaintiff claims that all of these representations were untrue and the defendant knew them to be untrue. Although the plaintiff did not allege that these misrepresentations were made with the intent that the plaintiff rely on them in making his decision to purchase the vehicle, the court can infer from the circumstance surrounding the sale that this is the case.

The plaintiff must present some evidence of the following elements in order to make a prima facie case of intentional misrepresentation. The plaintiff must produce some evidence of: 1) A misrepresentation by the Defendant, 2) Scienter or the defendant's knowledge that the statements were untrue, 3) Intent to cause the Plaintiff to rely on the misrepresentations, 4) Causation or actual reliance by the Plaintiff, 5) Justifiable Reliance by the Plaintiff and 6) Damages. Plaintiff must provide the court with some evidence of each and every one of these elements if he is to recover.

The misrepresentation must be a false and material representation of a past or present fact. In this case the plaintiff has failed to show that the defendant's representation as to the price he recently paid for the vehicle was false. Neither has the plaintiff shown the court that the vehicle was not tuned up. The only fact in the plaintiff's allegations that appears to be false is that the vehicle was in "good shape and operation."

Since the defendant was not present and did not contest the testimony presented by the plaintiff, the court may infer that the defendant knew that the misrepresentations were false and that he intended the plaintiff to rely on them. This is because there was evidence presented that the defendant worked as a mechanic and therefore has special knowledge of the vehicle's condition. It would have been advantageous to the plaintiff if he had issued a subpoena to the defendant and called him as a witness.

The plaintiff testified that he relied on the representations in his decision to purchase the vehicle. But the question remains, whether or not the plaintiff's reliance was justified. The plaintiff had no duty to investigate the claims of "good shape and operation" made by the defendant. Since the defendant apparently worked as a mechanic, the plaintiff had the right to rely on the defendant's superior knowledge of vehicles and the representations of this vehicle's condition. But when a plaintiff undertakes an investigation of the representations made by a defendant then plaintiff's reliance may not be justified. Whether or not the plaintiff's reliance on a defendant's representations is justified after he undertakes an investigation depends on what the plaintiff learns. If the investigation shows that the representations are not true then the plaintiff's reliance is no longer justified. The testimony in this case demonstrated that on the test drive it became apparent to the plaintiff that the vehicle was in fact not in "good shape and operation" as represented by the defendant. There were problems with the operation of the vehicle. At this point the plaintiff could not rely on the representations of "good shape and operation" made by the defendant.

The plaintiff testified that the defendant told him the problem was that the clutch cylinder needed oil. The defendant did in fact put oil in the clutch cylinder and apparently this repair fixed the problem at least temporarily. The plaintiff in this situation was entitled to rely on the defendant's representation again because the defendant as a mechanic was in a position of superior knowledge. The court may also infer that the defendant's representation concerning the clutch was intended to prevent further investigation into the condition of the vehicle by the plaintiff. What remains is evidence of damage.

Normally, the measure of damages in case of the purchase of a vehicle or other personal property induced by misrepresentation is the difference between the fair market value of the vehicle if the true condition were known and what the plaintiff paid for the vehicle. Plaintiff's contention is that the he should receive the full $3000.00 he paid. For the court to award this amount in damages, the plaintiff must present evidence that the fair market value of the vehicle was nil ($0.00).1 The plaintiff has produced no evidence of this kind. All that is before the court is the plaintiff's testimony that the vehicle is "inoperable" most likely due to the clutch. The plaintiff made no attempt to see if the vehicle could be fixed or how bad the condition was. This leaves the court in a position that it must speculate as to the damages suffered. It may be that the vehicle could be easily fixed by replacing the clutch or the clutch cylinder. It may be that the vehicle can not be put in good working order. Since the plaintiff is not a mechanic and did not produce any testimony from such a person, the court has no way of knowing.

It is clear to the court that plaintiff has established a prima facie case of liability and is entitled to some damages. But at this point the amount of damages are only speculation. Since the defendant has not appeared and thus there can be no objection, the court will allow the plaintiff to re-open his case and establish the amount of damages. The plaintiff may establish the amount of damages by having a mechanic inspect the vehicle and determine the cost of putting the vehicle in good working order. The plaintiff may present this evidence to the court and the court will render an award of damages accordingly.

The plaintiff's second cause of action seeks damages for the tort of conversion. The plaintiff alleges that the defendant converted the money that was paid for the vehicle. The conversion is alleged to have occurred when the plaintiff made a demand of the defendant to return the money.

Conversion requires that the plaintiff have possession of the thing converted or have the right to immediate possession. The plaintiff exchanged the money for the vehicle therefore he was not in possession of the thing converted. While the plaintiff has proven that the defendant gained the money by fraud or misrepresentation, he has not established that he is entitled to the full $3000.00. This reasoning follows from the fact that plaintiff has thus far failed to prove the extent of damages. The defendant can only be said to have converted the amount that the plaintiff can prove as damages. In any case, if the plaintiff recovers on his first cause of action he may not recover again on conversion. Therefore this cause of action under the circumstances of this case fails to state a claim upon which relief may be granted.

All torts based on negligence require that the plaintiff establish the defendant owed the plaintiff a duty. The duty owed by defendants in the area of emotional distress is that the defendant must exercise due care not to cause others emotional distress that leads in turn to a foreseeable physical

result. In other words the plaintiff must show that there is a physical manifestation of the emotional distress that was foreseeable.2 Plaintiff has made no allegations or presented any testimony of any physical manifestation as a result of the alleged emotional distress caused by the fraudulent acts of the defendant. Thus as with plaintiff's second cause of action his third cause of action fails to state a claim upon which relief may be granted.

Plaintiff in his request for relief asked for an award of punitive damages. There were no allegations in the complaint or evidence offered at the trial that the defendant's conduct was of the nature that would justify an award of punitive damages. Therefore any award of punitive damages is denied.


	THE SUPREME COURT OF THE FEDERATED STATES OF MICRONESIA Cite as Eram v. Masaichy , 7 FSM Intrm. 223 (Chuuk S. Ct. Tr. 1995) [7 FSM Intrm. 223] ERIANO ERAM, Plaintiff, vs. WILBERT MASAICHY, Defendant. CA No. 210-93 OPINION AND JUDGMENT Soukichi Fritz Chief Justice Trial: August 21, 1995 Decided: August 29, 1995 APPEARANCES: For the Plaintiff: Eriano Eram (pro se) P.O. Box 189 Weno, Chuuk FM 96942 * * * * HEADNOTES Torts ) Fraud In order to make a prima facie case of intentional misrepresentation a plaintiff must produce some evidence of: 1) a misrepresentation by the defendant, 2) scienter or the defendant's knowledge that the statements were untrue, 3) intent to cause the plaintiff to rely on the misrepresentations, 4) causation or actual reliance by the plaintiff, 5) justifiable reliance by the plaintiff and 6) damages. The misrepresentation must be a false and material representation of a past or present fact. Eram v. Masaichy, 7 FSM Intrm. 223, 225 (Chk. S. Ct. Tr. 1995). [7 FSM Intrm. 224] Torts ) Fraud A plaintiff is justified in relying on a defendant's representations of a vehicle's "good shape and operation" where the defendant is a mechanic with superior knowledge of vehicles and this particular vehicle's condition. Eram v. Masaichy, 7 FSM Intrm. 223, 225 (Chk. S. Ct. Tr. 1995). Torts ) Damages Normally, the measure of damages in case of the purchase of personal property induced by misrepresentation is the difference between the fair market value of the property if the true condition were known and what the plaintiff paid for the property. Eram v. Masaichy, 7 FSM Intrm. 223, 226 (Chk. S. Ct. Tr. 1995). Torts ) Duty of Care; Torts ) Infliction of Emotional Distress A defendant must exercise due care not to cause others emotional distress that leads in turn to a foreseeable physical result. Eram v. Masaichy, 7 FSM Intrm. 223, 226-27 (Chk. S. Ct. Tr. 1995). Torts ) Duty of Care; Torts ) Infliction of Emotional Distress Where there was no physical manifestation of the emotional distress that was foreseeable there can be no claim for negligent infliction of emotional distress. Eram v. Masaichy, 7 FSM Intrm. 223, 227 (Chk. S. Ct. Tr. 1995). * * * * COURT'S OPINION SOUKICHI FRITZ, Chief Justice: The dispute in this matter came before the court for trial on July 17, 1995. The plaintiff personally appeared and represented himself. The defendant did not appear personally or through counsel. The plaintiff filed his complaint and the defendant answered in writing denying the plaintiff's essential allegations and asserting a counterclaim. The plaintiff subsequently replied to the defendant's counterclaim. Since the defendant failed to appear, his counterclaims are dismissed. The plaintiff still has the burden of proof as the defendant has answered and denied all of plaintiff's allegations. The following discussion shall constitute the court's findings of facts and conclusions of law. Facts This action arose from the sale of a used vehicle by the defendant to the plaintiff. The plaintiff paid $3000.00 for the vehicle. The plaintiff took the vehicle for a test drive before he gave the defendant the money. At trial the plaintiff's wife testified that during the test drive it became apparent that the vehicle had some type of problem. There was some testimony that the defendant stated the problem was that the clutch cylinder needed oil. The plaintiff bought the vehicle after the test drive. The plaintiff had the title transferred to him. Some time within the next few days the vehicle became inoperable because of the clutch. The plaintiff returned the vehicle to the defendant's place of business and demanded his money back. The plaintiff still retains the title to the vehicle and the defendant has refused to return the money. No attempt has been made by either party to confirm the cause of the problem or fix the vehicle. Based upon these facts, the plaintiff has alleged three causes of action. The first cause of action is based on the tort of intentional misrepresentation. [7 FSM Intrm. 225] Intentional Misrepresentation The misrepresentations alleged by the plaintiff are: that the vehicle was recently purchased by the defendant from a third party for $4200.00, that the vehicle was in "good shape and operation" and that the vehicle "was tuned up." These allegations are sufficiently specific enough to satisfy the Rule 9(a) requirement that fraud or misrepresentation be pleaded with particularity. The plaintiff claims that all of these representations were untrue and the defendant knew them to be untrue. Although the plaintiff did not allege that these misrepresentations were made with the intent that the plaintiff rely on them in making his decision to purchase the vehicle, the court can infer from the circumstance surrounding the sale that this is the case. The plaintiff must present some evidence of the following elements in order to make a prima facie case of intentional misrepresentation. The plaintiff must produce some evidence of: 1) A misrepresentation by the Defendant, 2) Scienter or the defendant's knowledge that the statements were untrue, 3) Intent to cause the Plaintiff to rely on the misrepresentations, 4) Causation or actual reliance by the Plaintiff, 5) Justifiable Reliance by the Plaintiff and 6) Damages. Plaintiff must provide the court with some evidence of each and every one of these elements if he is to recover. The misrepresentation must be a false and material representation of a past or present fact. In this case the plaintiff has failed to show that the defendant's representation as to the price he recently paid for the vehicle was false. Neither has the plaintiff shown the court that the vehicle was not tuned up. The only fact in the plaintiff's allegations that appears to be false is that the vehicle was in "good shape and operation." Since the defendant was not present and did not contest the testimony presented by the plaintiff, the court may infer that the defendant knew that the misrepresentations were false and that he intended the plaintiff to rely on them. This is because there was evidence presented that the defendant worked as a mechanic and therefore has special knowledge of the vehicle's condition. It would have been advantageous to the plaintiff if he had issued a subpoena to the defendant and called him as a witness. The plaintiff testified that he relied on the representations in his decision to purchase the vehicle. But the question remains, whether or not the plaintiff's reliance was justified. The plaintiff had no duty to investigate the claims of "good shape and operation" made by the defendant. Since the defendant apparently worked as a mechanic, the plaintiff had the right to rely on the defendant's superior knowledge of vehicles and the representations of this vehicle's condition. But when a plaintiff undertakes an investigation of the representations made by a defendant then plaintiff's reliance may not be justified. Whether or not the plaintiff's reliance on a defendant's representations is justified after he undertakes an investigation depends on what the plaintiff learns. If the investigation shows that the representations are not true then the plaintiff's reliance is no longer justified. The testimony in this case demonstrated that on the test drive it became apparent to the plaintiff that the vehicle was in fact not in "good shape and operation" as represented by the defendant. There were problems with the operation of the vehicle. At this point the plaintiff could not rely on the representations of "good shape and operation" made by the defendant. The plaintiff testified that the defendant told him the problem was that the clutch cylinder needed oil. The defendant did in fact put oil in the clutch cylinder and apparently this repair fixed the problem at least temporarily. The plaintiff in this situation was entitled to rely on the defendant's representation again because the defendant as a mechanic was in a position of superior knowledge. The court may also infer that the defendant's representation concerning the clutch was intended to prevent further investigation into the condition of the vehicle by the plaintiff. What remains is evidence of damage. [7 FSM Intrm. 226] Normally, the measure of damages in case of the purchase of a vehicle or other personal property induced by misrepresentation is the difference between the fair market value of the vehicle if the true condition were known and what the plaintiff paid for the vehicle. Plaintiff's contention is that the he should receive the full $3000.00 he paid. For the court to award this amount in damages, the plaintiff must present evidence that the fair market value of the vehicle was nil ($0.00).1 The plaintiff has produced no evidence of this kind. All that is before the court is the plaintiff's testimony that the vehicle is "inoperable" most likely due to the clutch. The plaintiff made no attempt to see if the vehicle could be fixed or how bad the condition was. This leaves the court in a position that it must speculate as to the damages suffered. It may be that the vehicle could be easily fixed by replacing the clutch or the clutch cylinder. It may be that the vehicle can not be put in good working order. Since the plaintiff is not a mechanic and did not produce any testimony from such a person, the court has no way of knowing. It is clear to the court that plaintiff has established a prima facie case of liability and is entitled to some damages. But at this point the amount of damages are only speculation. Since the defendant has not appeared and thus there can be no objection, the court will allow the plaintiff to re-open his case and establish the amount of damages. The plaintiff may establish the amount of damages by having a mechanic inspect the vehicle and determine the cost of putting the vehicle in good working order. The plaintiff may present this evidence to the court and the court will render an award of damages accordingly. Conversion The plaintiff's second cause of action seeks damages for the tort of conversion. The plaintiff alleges that the defendant converted the money that was paid for the vehicle. The conversion is alleged to have occurred when the plaintiff made a demand of the defendant to return the money. Conversion requires that the plaintiff have possession of the thing converted or have the right to immediate possession. The plaintiff exchanged the money for the vehicle therefore he was not in possession of the thing converted. While the plaintiff has proven that the defendant gained the money by fraud or misrepresentation, he has not established that he is entitled to the full $3000.00. This reasoning follows from the fact that plaintiff has thus far failed to prove the extent of damages. The defendant can only be said to have converted the amount that the plaintiff can prove as damages. In any case, if the plaintiff recovers on his first cause of action he may not recover again on conversion. Therefore this cause of action under the circumstances of this case fails to state a claim upon which relief may be granted. Infliction of Emotional Distress The plaintiff's third cause of action is one for infliction of emotional distress. Apparently, this cause of action is based upon negligence. There are no allegations that any emotional distress that may have been suffered was intentional. All torts based on negligence require that the plaintiff establish the defendant owed the plaintiff a duty. The duty owed by defendants in the area of emotional distress is that the defendant must exercise due care not to cause others emotional distress that leads in turn to a foreseeable physical [7 FSM Intrm. 227] result. In other words the plaintiff must show that there is a physical manifestation of the emotional distress that was foreseeable.2 Plaintiff has made no allegations or presented any testimony of any physical manifestation as a result of the alleged emotional distress caused by the fraudulent acts of the defendant. Thus as with plaintiff's second cause of action his third cause of action fails to state a claim upon which relief may be granted. Punitive Damages Plaintiff in his request for relief asked for an award of punitive damages. There were no allegations in the complaint or evidence offered at the trial that the defendant's conduct was of the nature that would justify an award of punitive damages. Therefore any award of punitive damages is denied. PARTIAL JUDGMENT Based on the foregoing findings of fact and conclusions of law, the court enters its partial judgment. Accordingly, it is Ordered, Adjudged and Decreed that the defendant is liable to the plaintiff under plaintiff's first cause of action, misrepresentation, in an amount to be determined by later submission to the court in accordance with the opinion, and it is further Ordered that the plaintiff's second cause of action, conversion, and his third cause of action, infliction of emotional distress, are both dismissed for failure to state a claim upon which relief may granted, and it is further Ordered that the plaintiff's claims for punitive damages are dismissed for failure to plead and prove such claims, and it is further Ordered that the defendant's counterclaims are dismissed for his failure to appear at trial and prosecute these claims, and it is further Ordered that costs, if any, will be assessed in the final order awarding damages. * * * * Footnotes: 1. The remedy sought, asking that defendant return the full purchase price, in reality seeks a recision of the contract of sale. But the plaintiff failed to plead any contract action. Therefore the remedy of recision is unavailable to plaintiff. 2. There are exceptions to the physical harm requirements, but none are applicable to this fact pattern.