Legal Memorandum: Claim of Fraudulent Inducement in Tort

Issue: Under the law of the Virgin Islands, what must a plaintiff establish to prevail on a claim of fraudulent inducement in tort?

The Virgin Islands has adopted the Restatement (Second) of Torts definition of fraudulent inducement.  V.I. Port Auth. v. Callwood, No. ST-11-CV-305, 2014 V.I. LEXIS 11, 10, (V.I. Super. Ct. Feb. 28, 2014) (Dunston, J.) (quoting Island Insteel Systems, Inc. v. Waters, 296 F.3d 200, 212, 44 V.I. 389 (3d Cir. 2002)).*FN1 *FN2 The Restatement provides:

One who fraudulently makes a misrepresentation of fact, opinion, intention or law for the purpose of inducing another to act or to refrain from action in reliance upon it, is subject to liability to the other in deceit for pecuniary loss caused to him by his justifiable reliance upon the misrepresentation.

Restatement (Second) of Torts § 525.  Looking again at the Restatement, “[a] misrepresentation is fraudulent if made: with knowledge or belief of falsity; without confidence in the truth; or with knowledge that he does not have the basis for his representation.”*FN3  Callwood, 2014 V.I. LEXIS 11, 15 (citing Island Insteel, 296 F.3d at 200).  Courts can measure damages by considering the following:

(1)  The recipient of a fraudulent misrepresentation is entitled to recover as damages in an action of deceit against the maker the pecuniary loss to him of which the misrepresentation is a legal cause, including

(a) the difference between the value of what he has received in the transaction and its purchase price or other value given for it; and

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