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IV. Misrepresentation and Fraud

Alaska recognizes claims for negligent misrepresentation and fraud.

1. Negligent Misrepresentation
2. Misrepresentation by Omission
3. Fraud

A. Negligent Misrepresentation

Alaska allows for recovery of economic loss arising out of a negligent misrepresentation. Alaska follows the definition of negligent misrepresentation contained in the Restatement (Second) of Torts § 552. First, the party accused of the misrepresentation must have made the statement in the course of his business, profession or employment, or in any other transaction in which he has a pecuniary interest. Second, the representation must supply false information. Third, there must be justifiable reliance on the false information supplied. Fourth, the accused party must have failed to exercise reasonable care or competence in obtaining or communicating the information. Willard v. Khotol Services Corp., 171 P.3d 108, 118-19 (Alaska 2007); Reeves v. Alyeska Pipeline Service Co., 56 P.3d 660, 670-71 (Alaska 2002).

For a representation to be actionable, the representation must be false when made. Bubbel v. Wien Air Alaska, Inc., 682 P.2d 374, 381 (Alaska 1984). A statement made as to future intentions and actions is not a misrepresentation if it is accurate when it is made, even if future events render it inaccurate. Valdez Fisheries Development Ass'n, v. Alyeska Pipeline Service Co., 45 P.3d 657, 672 (Alaska 2002). Moreover, the misrepresentation must proximately cause the loss, i.e., the claimant "must suffer pecuniary loss or incur liability as a result of the misrepresentation." Bubbel, 682 P.2d at 381.

Not every misrepresentation is actionable. The misrepresentation must be material to the transaction, because an immaterial representation cannot induce justifiable reliance. Diblik v. Marcy, 166 P.3d 23, 28 (Alaska 2007). A "material fact" is one "to which a reasonable man might be expected to attach importance in making his choice of action. It is a fact which could reasonably be expected to influence someone's judgment or conduct concerning a transaction." Id.

B. Misrepresentation by Omission

Negligent misrepresentation can also occur as a result of the failure to disclose material information. Alaska has adopted the standard of the Restatement (Second) of Torts § 551 regarding misrepresentation by omission. One who fails to disclose to another a fact that he knows may justifiably induce the other to act or refrain from acting in a business transaction is subject to the same liability as for an affirmative misrepresentation if, but only if, he is under a duty to the other to exercise reasonable care to disclose the matter. Arctic Tug & Barge, Inc. v. Raleigh, Schwarz & Powell, 956 P.2d 1199, 1202 (Alaska 1998).

C. Fraud

Fraudulent misrepresentation requires proof that the maker knew of the untrue character of his or her representation. Willard v. Khotol Services Corp., 171 P.3d 108, 118-19 (Alaska 2007); Restatement (Second) of Torts § 530, comment (b). The elements of a fraud claim are (1) a misrepresentation of fact or intention, (2) made fraudulently (that is, with "scienter"), (3) for the purpose or with the expectation of inducing another to act in reliance, (4) with justifiable reliance by the recipient, (5) causing loss. Lightle v. State, Real Estate Com'n, 146 P.3d 980, 983 (Alaska 2006). A misrepresentation is fraudulent if it is "consciously false" and "intended to mislead another." Industrial Commercial Elec., Inc. v. McLees, 101 P.3d 593, 600 (Alaska 2004). However, fraud does not require the maker of a false statement to act with the specific "intent to deceive". Rather, it requires the maker to have reason to expect that the other's conduct will be influenced. Lightle, 146 P.3d at 984.

The circumstances under which the elements of scienter are met are set forth in the Restatement (Second) of Torts § 526. A misrepresentation can be fraudulent if the maker (a) knows or believes that the matter is not as he represents it to be, (b) does not have the confidence in the accuracy of his representation that he states or implies, or (c) knows that he does not have the basis for his representation that he states or implies. Bubbel v. Wien Air Alaska, Inc., 682 P.2d 374, 381 (Alaska 1984).