PCR Contractors, Inc. v. Danial
354 S.W.3d 610
Ky. Ct. App.2011Background
- PCR Contractors, Inc. sued Jacob Danial for fraudulent and negligent misrepresentation arising from a promised personal guaranty for Lexington Holdings’ obligations under Contracts A and B with PCR.
- Lexington Holdings One, LLC, partly owned and co-managed by Danial, entered contracts with PCR for two buildings to be built at the University of Kentucky site.
- PCR obtained a judgment against Lexington Holdings for $1,526,139.94 in related litigation, which remains unpaid.
- PCR introduced an affidavit claiming Danial promised a personal guaranty and funding to pay PCR, asserting the promise induced PCR to contract.
- The trial court ruled that Danial did provide only an oral future promise, held that the statute of frauds did not bar the claims, and dismissed the fraudulent and negligent misrepresentation claims with prejudice.
- On appeal, the court reversed on the fraudulent misrepresentation claim but affirmed dismissal of the negligent misrepresentation claim and remanded for further proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Danial’s alleged future promise can support fraudulent misrepresentation | PCR, via Collavino, proved promise to guarantee payment | Future promises cannot form fraudulent misrepresentation | Fraud claim may stand if evidence shows a present misrepresentation of fact and inducement |
| Whether record supports negligent misrepresentation claim under §552 | Promissory representation of future intent can support negligent misrepresentation | Promises of future intent cannot form negligent misrepresentation under §552 | Kept dismissal of negligent misrepresentation; future promise cannot support §552 claim |
Key Cases Cited
- Bear, Inc. v. Smith, 303 S.W.3d 137 (Ky.App.2010) (fraud elements; intent to perform future promises)
- Johnson v. Cormney, 596 S.W.2d 23 (Ky.App.1979) (circumstantial evidence admissible to prove fraud)
- Presnell Const. Managers, Inc., 134 S.W.3d 575 (Ky.2004) ( Restatement §552 negligent misrepresentation adopted)
- Hanson v. American Nat. Bank & Trust Co., 865 S.W.2d 302 (Ky.1993) (promise to perform may be fraudulent even if not enforceable as contract)
- Gerhardt v. Harris, 934 P.2d 976 (Kan.1997) (§552 does not apply to misrepresentation of intention to perform; exclusive remedy for such is deceit)