Indiana Consumer Fraud

I would like to take a second to highlight a case recently decided by the Indiana Court of Appeals. It is important not because it made new law but simply because it is a good reminder of what the law is.

The case is captioned Brad Lawson v. Rodney Hale d/b/a R.H. Equipment. It was decided on February 26, 2009. Brad Lawson bought a used tractor from R.H. Equipment. At the time of purchase, Mr. Lawson inquired whether there were any problems with the tractor. Hale did not disclose any problems, despite the fact that he knew the engine had a cracked block that had been ineffectively repaired.

The case was tried to the Court without a jury and the judge found for the defendant. The Court of Appeals reversed and directed the trial court to enter judgment for the Plaintiff on the fraud claim, citing it as a “textbook case” of fraud. The lesson we are reminded of is summarized in two important sentences from the opinion: “[F]raud is not limited only to affirmative representations; the failure to disclose all material facts can also constitute actionable fraud. When a buyer makes inquiries about the condition, qualities or characteristics of property ‘it becomes incumbent upon the seller to fully declare any and all problems associated with the subject of the inquiry.

This is great, very broad language for Indiana consumers. It will be very rare indeed that a consumer will purchase a vehicle without making at least some inquiry as to the condition, qualities or characteristics of the car. Once this inquiry is made, the dealership has an affirmative obligation to disclose all material facts about the car.