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Lazar v. Superior Court - Citation: 12 Cal. 4th 631, 49 Cal. Rptr. 2d 377, 909 P.2d 981 (1996)

Rule:

The elements of fraud, which give rise to the tort action for deceit, are: (a) misrepresentation; (b) knowledge of falsity; (c) intent to defraud; (d) justifiable reliance; and (e) resulting damage.

Facts:

Andrew Lazar who had been terminated from his management position brought an action against his former employer for various causes of action, including fraudulent inducement of employment contract. Lazar alleged in his complaint that the employer, Rykoff-Sexton, Inc. (“Rykoff”), induced him to relocate from New York to Los Angeles with his family, and to relinquish a secure job as the president of the family company where he had worked all of his life, based on verbal representations of continued employment, the company's strong financial base, and pay raises, all of which were false and which the employer's agents knew to be false when making them. Lazar further alleged that, after two years of exemplary performance at his new position with Rykoff, he was terminated and was unable to find comparable employment. The trial court sustained the Rykoff’s demurrer without leave to amend as to all causes of action, except the breach of contract claim and the claim under Lab. Code, § 970 (false representations to induce relocation). The Court of Appeal, Second Dist., Div. Three, No. B083795, issued a writ of mandate directing the superior court to vacate its order, insofar as it sustained defendant's demurrers to Lazar’s causes of action for wrongful termination in violation of public policy, fraud and deceit, negligent misrepresentation, and intentional infliction of emotional distress, and to enter a new order overruling the demurrers to those causes of action.

Issue:

Were the allegations in Lazar’s complaint adequate to state a cause of action for fraud?

Answer:

Yes

Conclusion:

The Court affirmed the order, finding that Lazar’s allegations established all of the elements of promissory fraud. The Court further found that Lazar's reliance on Rykoff's representations was truly detrimental. Accordingly, the Court held that Lazar could properly seek damages for the costs of uprooting his family, expenses incurred in relocation, and the loss of security and income associated with his former employment in New York. On the facts as pled, however, Lazar had to rely on his contract claim for recovery of any loss of income allegedly caused by the wrongful termination of his employment with Rykoff.

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