DEMAND LETTER - FRAUD AND MISREPRESENTATION
State of California
[LAW FIRM NAME]
Attorneys at Law
[FIRM ADDRESS]
[CITY], California [ZIP]
Tel: [TELEPHONE]
Fax: [FAX]
State Bar of California No. [BAR NUMBER]
SENT VIA CERTIFIED MAIL, RETURN RECEIPT REQUESTED
[DATE]
[RECIPIENT NAME]
[RECIPIENT TITLE]
[COMPANY NAME]
[ADDRESS]
[CITY, STATE ZIP]
Re: DEMAND FOR DAMAGES - FRAUD AND INTENTIONAL MISREPRESENTATION
Our Client: [CLIENT NAME]
Transaction: [DESCRIPTION]
Demand Amount: $[AMOUNT] (plus punitive damages)
Dear [RECIPIENT NAME]:
This firm represents [CLIENT NAME] regarding fraud claims arising from your intentional misrepresentations in connection with [DESCRIBE TRANSACTION]. Your fraudulent conduct caused substantial damages for which we now demand compensation.
UNDER CALIFORNIA CIVIL CODE SECTION 3294, PUNITIVE DAMAGES ARE AVAILABLE WHERE FRAUD IS PROVEN BY CLEAR AND CONVINCING EVIDENCE. OUR CLIENT INTENDS TO SEEK SUCH DAMAGES.
I. CALIFORNIA FRAUD LAW
A. Common Law Fraud
Under California law, the elements of intentional misrepresentation (fraud) are:
- A misrepresentation (false representation, concealment, or nondisclosure);
- Knowledge of falsity (scienter);
- Intent to defraud (to induce reliance);
- Justifiable reliance; and
- Resulting damage.
See Lazar v. Superior Court, 12 Cal. 4th 631, 638 (1996); Small v. Fritz Companies, Inc., 30 Cal. 4th 167, 173 (2003).
B. Negligent Misrepresentation
Alternatively, California recognizes negligent misrepresentation, requiring:
1. A misrepresentation of a past or existing material fact;
2. Made without reasonable ground for believing it to be true;
3. With intent to induce reliance;
4. Justifiable reliance; and
5. Resulting damage.
See Conaway v. Prestia, 191 Cal. App. 3d 558, 566 (1987).
C. Fraudulent Concealment
Where there is a duty to disclose, concealment is actionable. See Hoffman v. 162 North Wolfe LLC, 228 Cal. App. 4th 1178 (2014).
II. THE FRAUDULENT MISREPRESENTATIONS
A. First Misrepresentation
Statement Made:
"[QUOTE THE SPECIFIC FALSE STATEMENT VERBATIM]"
When Made: [DATE]
Where Made: [LOCATION]
How Made: [Oral statement / Written document / Email / Marketing materials]
By Whom: [NAME], [TITLE] of [COMPANY]
To Whom: [OUR CLIENT OR REPRESENTATIVE]
Falsity: This statement was false because [EXPLAIN IN DETAIL WHY THE STATEMENT WAS FALSE AT THE TIME IT WAS MADE].
Your Knowledge of Falsity (Scienter): You knew this statement was false because:
☐ [DESCRIBE EVIDENCE OF ACTUAL KNOWLEDGE]
☐ You made the statement with reckless disregard for its truth
☐ Documents in your possession contradicted the statement
☐ Prior communications showed your awareness of the true facts
B. Second Misrepresentation
[FOLLOW SAME FORMAT]
C. Fraudulent Concealment (if applicable)
You actively concealed material facts from our Client:
Fact Concealed: [DESCRIBE]
Your Duty to Disclose: You had a duty to disclose because [EXPLAIN - fiduciary relationship, partial disclosure, active concealment, statutory duty].
Your Knowledge: [DESCRIBE HOW YOU KNEW THE CONCEALED FACTS]
III. MATERIALITY AND RELIANCE
A. Materiality
Under California law, a misrepresentation is material if a reasonable person would attach importance to it in determining a course of action. See Engalla v. Permanente Medical Group, Inc., 15 Cal. 4th 951, 977 (1997).
The misrepresentations were material because [EXPLAIN].
B. Justifiable Reliance
Our Client justifiably relied on your misrepresentations:
- Our Client specifically inquired about [SUBJECT] before proceeding
- The facts were peculiarly within your knowledge
- You were in a position of expertise regarding [SUBJECT]
- Our Client conducted reasonable due diligence
Under California law, reliance must be reasonable under the circumstances. See OCM Principal Opportunities Fund, L.P. v. CIBC World Markets Corp., 157 Cal. App. 4th 835, 864 (2007).
IV. ADDITIONAL CALIFORNIA STATUTORY CLAIMS
A. Unfair Competition Law (Bus. & Prof. Code section 17200)
Your conduct constitutes "unfair," "unlawful," and "fraudulent" business practices under California Business & Professions Code section 17200, entitling our Client to:
- Restitution
- Injunctive relief
B. Consumer Legal Remedies Act (Civ. Code section 1750)
[IF CONSUMER TRANSACTION:]
Your conduct violates the Consumer Legal Remedies Act, including:
☐ Representing that goods have characteristics they do not have (section 1770(a)(5))
☐ Representing that goods are of a particular standard or quality when they are not (section 1770(a)(7))
☐ Advertising goods with intent not to sell them as advertised (section 1770(a)(9))
☐ Making false or misleading statements of fact (section 1770(a)(14))
CLRA Notice: [IF SEEKING DAMAGES UNDER CLRA:] This letter serves as the 30-day notice required by Civil Code section 1782(a) before filing suit for damages under the CLRA. You must correct your practices and make appropriate restitution within 30 days.
C. False Advertising Law (Bus. & Prof. Code section 17500)
Your advertising and statements constitute false or misleading advertising under Bus. & Prof. Code section 17500.
V. DAMAGES UNDER CALIFORNIA LAW
A. Compensatory Damages
| Category | Description | Amount |
|---|---|---|
| Out-of-Pocket Loss | Amount paid minus actual value received | $[AMOUNT] |
| Benefit of the Bargain | Value as represented minus actual value | $[AMOUNT] |
| Consequential Damages | Lost profits, additional costs | $[AMOUNT] |
| Incidental Damages | Investigation costs, mitigation | $[AMOUNT] |
| SUBTOTAL COMPENSATORY | $[SUBTOTAL] |
B. Prejudgment Interest
At 10% per annum under California Constitution Article XV: $[AMOUNT]
C. Punitive Damages
Under California Civil Code section 3294(a):
"In an action for the breach of an obligation not arising from contract, where it is proven by clear and convincing evidence that the defendant has been guilty of oppression, fraud, or malice, the plaintiff... may recover damages for the sake of example and by way of punishing the defendant."
Your intentional misrepresentations constitute "fraud" as defined in Section 3294(c)(3), entitling our Client to punitive damages.
California law does not cap punitive damages. Courts consider the ratio between punitive and compensatory damages, but punitive awards may be substantial where conduct is particularly egregious.
D. Restitution and Disgorgement
Under the UCL (Bus. & Prof. Code section 17203), our Client is entitled to restitution of all amounts wrongfully obtained.
E. Attorney Fees
☐ Under CLRA (Civ. Code section 1780(e))
☐ Under private attorney general doctrine (CCP section 1021.5)
☐ Under contract
F. Total Damages Summary
| Category | Amount |
|---|---|
| Compensatory Damages | $[AMOUNT] |
| Prejudgment Interest (10%) | $[AMOUNT] |
| Attorney Fees | $[AMOUNT] |
| SUBTOTAL | $[SUBTOTAL] |
| Punitive Damages | TO BE DETERMINED AT TRIAL |
VI. STATUTE OF LIMITATIONS
Under Code of Civil Procedure section 338(d), fraud claims must be brought within 3 years from discovery of the facts constituting the fraud. The discovery rule postpones accrual until the plaintiff discovers, or has reason to discover, the cause of action. See Norgart v. Upjohn Co., 21 Cal. 4th 383, 397 (1999).
Our Client did not discover the fraud until [DATE], when [DESCRIBE DISCOVERY]. This claim is timely.
VII. DEMAND
Based on the foregoing, our Client demands:
Within [30] calendar days of your receipt of this letter:
-
Pay $[COMPENSATORY DEMAND AMOUNT] in compensatory damages and interest;
-
[IF CLRA:] Cure the CLRA violations by [DESCRIBE REQUIRED CORRECTIVE ACTIONS] and provide appropriate restitution;
-
Confirm in writing that you will cease the fraudulent practices described herein.
Punitive damages are reserved for trial and are not subject to pre-litigation settlement demand.
VIII. DOCUMENT PRESERVATION
You are legally obligated to preserve all documents and ESI relating to this matter. California courts impose sanctions for spoliation. See Cedars-Sinai Medical Center v. Superior Court, 18 Cal. 4th 1 (1998).
IX. CONSEQUENCES OF NON-COMPLIANCE
Failure to resolve this matter will result in immediate litigation in [California Superior Court, County of [COUNTY] / United States District Court for the [District] of California], seeking:
- Full compensatory damages;
- Punitive damages under Civil Code section 3294;
- Restitution under the UCL;
- CLRA damages and attorney fees (if applicable);
- Prejudgment interest at 10%;
- Attorney fees where available;
- Injunctive relief;
- Any other relief the court deems just.
X. RESERVATION OF RIGHTS
Our Client reserves all rights and remedies at law and in equity, including the right to:
- Seek punitive damages at trial
- Pursue class action remedies
- Report to the California Attorney General
- Seek injunctive relief
Govern yourself accordingly.
Very truly yours,
[LAW FIRM NAME]
By: _______________________________
[ATTORNEY NAME]
State Bar of California No. [BAR NUMBER]
Enclosures:
☐ Exhibit A - Documents Containing Misrepresentations
☐ Exhibit B - Evidence of Falsity
☐ Exhibit C - Damage Calculations
cc: [CLIENT NAME]