December 2, 2021
As we got ready for our Thanksgiving family circuit, my three year old son, Noah, didn’t want to take his allergy medicine. So I did what any good parent would do: promised him a “prize” in exchange for cooperation.
It worked. He immediately took his medicine without any further complaints. But then he asked for his prize.
I suppose I should have been happy that he understood the significance of a deal. I promised him something, and now he wanted to collect. But I didn’t have a prize for him. At least not in that moment. And I hadn’t thought much about what the prize would be when I instinctively promised it in exchange for his cooperation.
I quickly changed the subject and put on Blippi (if you have a toddler and don’t know who Blippi is, are you even a real parent?), and he then quickly forgot about the whole thing.
But I found myself thinking—had I just committed fraud on my three-year-old son?
Many clients come to me complaining that they have been the victim of a fraud. But often what they are complaining about is not fraud at all. Fraud is a very specific type of claim, and under New York law, you have to plead allegations of fraud in “detail.” C.P.L.R. 3016(b). So what exactly is required to assert a fraud claim, and could I be liable for having defrauded my own son out of a prize?
Fraud requires an (1) intentional (2) misrepresentation (3) that was knowingly false when made, (4) on which the plaintiff reasonably relied to his or her detriment, and (5) which caused the plaintiff damages.
My promise of a prize was knowingly false when made. Though I didn’t give it much thought, I knew I didn’t have a prize to give Noah in exchange for taking his medicine. Yet I told him I had one anyway.
I could argue that I didn’t intend to defraud Noah, since I just quickly promised him a prize in the heat of the moment, and only later decided to renege. If true, this wouldn’t be fraud. Nonperformance of a contractual obligation doesn’t give rise to a fraud claim. Indeed, fraud exists only if the misrepresentation relates to a then-existing fact, rather than future performance. But if Noah could show that I never had an intent to hold up my end of the bargain—that I misrepresented my then-existing intent to give him a prize, or even whether I had a prize available—he could satisfy the intent element. And given how quickly I reneged after making the promise, with a favorable inference, he could get past a motion to dismiss by arguing that my actions right after making the promise showed my intent to defraud when I made it.
Noah also relied on my misrepresentation, since he was not going to take his medicine but for my promise. But was his reliance reasonable? For a fraud claim to be actionable, it’s not enough to subjectively rely on a promise if your reliance was objectively unreasonable.
On the one hand, I am his father, so Noah arguably had no reason to doubt me. And he knows that we have “prizes” in the house, because he has gotten them before. But he also knows that he normally gets prizes only for doing special things, like going to the bathroom or staying in his bed all night. And he takes his allergy medicine every day, yet never gets a prize for it. So I could argue that he should have known I was lying, or should have at least done some diligence—asked follow-up questions—before relying on my promise.
On balance, though, this would likely get to a jury. Whether a plaintiff’s reliance was reasonable is inherently a question of fact, and it is only in rare circumstances in which reliance is deemed unreasonable as a matter of law. Further, there is generally no duty to do diligence when a fiduciary relationship exists, and as his caretaker and financial steward, I arguably owed Noah fiduciary duties.
We then come to damages. How did my misrepresentation harm Noah? This is probably where his claim would fail. True, he took allergy medicine he wouldn’t have otherwise taken. But that didn’t hurt him. To the contrary, it kept him healthy throughout the long day of Thanksgiving festivities. And he takes allergy medicine every day, so today was no different. Thus, even if Noah had a claim, it would likely fail for lack of damages.
In the end, I rested easier knowing Noah wouldn’t prevail in a fraud suit against me. But what about next time? What if my false promises caused him to give up something of value? A toy truck? A Bluetooth microphone? An electric car? It was disconcerting to realize I had come so close to becoming a fraudster—with my own son as my victim!
After a few minutes, however, I stopped worrying and returned to joining my son in a dance party he was having with himself. Fortunately, it will be a while until he knows enough to threaten me with a lawsuit. And even then, he’ll have to get a good lawyer…