§30.3 Promissory Fraud

The Case: Stacks v. Saunders , 812 S.W.2d 587 (Tenn. Ct. App. 1990).

The Basic Facts: Woman sought to set aside last will and testament of decedent alleging, inter alia, fraud and promissory fraud.

The Bottom Line:

• “The plaintiff in this case also raised a claim against the defendant based on the tort of fraud. The basic elements for a fraud action are: (1) an intentional misrepresentation with regard to a material fact, Keith v. Murfreesboro Livestock Market, Inc., [780 S.W.2d 751 (Tenn. Ct. App. 1989)]; (2) knowledge of the representation falsity–that the representation was made ‘knowingly’ or ‘without belief in its truth,’ or ‘recklessly’ without regard to its truth or falsity, Tartera v. Palumbo, [453 S.W.2d 780, 782 (Tenn. 1970)]; (3) that the plaintiff reasonably relied on the misrepresentation and suffered damage, Holt v. American Progressive Life Ins. Co., 7[31 S.W.2d 923, 927 (Tenn. Ct. App. 1987)]; Haynes v. Cumberland Builders, Inc., [546 S.W.2d 228, 232 (Tenn. Ct. App. 1976)]; and (4) that the misrepresentation relates to an existing or past fact, Haynes, 546 S.W.2d at 232, or, if the claim is based on promissory fraud, then the misrepresentation must ’embody a promise of future action without the present intention to carry out the promise,’ Keith, [780 S.W.2d at 754 (citing Brungard v. Caprice Wreckers, Inc., 608 S.W.2d 585, 590 (Tenn. Ct. App. 1980)].” 812 S.W.2d at 592.
• “The fraud in this case is based upon the defendant’s representation that he would cease his homosexual relationship with the decedent’s son if she would not obtain a divorce. The decedent in reliance upon this promise did not institute a divorce proceeding and consequently did not remove the defendant from her will. This representation by its own terms does not relate to an existing or past fact, but instead relates to the defendant’s future conduct or action. Therein lies the plaintiff’s cause of action for promissory fraud.” Id.
• “The doctrine of promissory fraud has not been adopted in Tennessee, but the Supreme Court made it clear that they were willing to adopt the majority rule pertaining to promissory fraud ‘in a proper case where justice demands.’ Bolan v. Caballero, [417 S.W.2d 538, 541 (Tenn. 1967]. In addition, the Supreme Court in Fowler v. Happy Goodman Family, [575 S.W.2d 496 (Tenn. 1978)], judged the facts of that case according to the majority rule which is the acknowledgment of promissory fraud. However, the court held that the complainant failed to produce sufficient proof to support its claim for promissory fraud. Id.” Id. at 592-93.
• “As we have noted, promissory fraud can be established by proving a lack of a present intent with regard to a promise of future action. Brungard v. Caprice Records, Inc., [608 S.W.2d 585 (Tenn. Ct. App. 1980)]. In order for the plaintiff to demonstrate the lack of present intent or that the statement was false when made, the plaintiff must do so ‘by evidence other than subsequent failure to keep the promise or subjective surmise or impression of the promisee.’ Farmers & Merchants Bank v. Petty, [664 S.W.2d 77, 81 (Tenn. Ct. App. 1983)].” Id.

Other Sources of Note: Ray v. Williams , No. W2000-03000-COA-R3-CV, 2002 WL 974671 (Tenn. Ct. App. May 9, 2002) (affirming finding of promissory fraud).

Recent Cases: Styles v. Blackwood , No. E2007-00416-COA-R3-CV, 2008 WL 5396804 (Tenn. Ct. App. Dec. 29, 2008) (upholding trial court’s finding of promissory fraud primarily on basis that trial court is in best position to weigh credibility of witnesses)