In the holiday film classic White Christmas, Bob Wallace tells Betty Haynes on their first meeting:  “Everybody’s got a little larceny operating in them, surely you know that.”  Betty has just confessed that her sister Judy tricked Bob and his business partner Phil Davis into watching the Haynes Sisters singing act at a Florida club.  Bob is amused by the confession.  Betty finds his reaction cynical.    

The scene touches on a deep philosophical debate about human nature­—Hobbes vs. Rousseau.  It also raises an interesting question about a potential cause of action by Bob and Phil’s production company for falling victim to Judy’s trick.  Within apologies to Bob, the trickery is not “larceny.”  That’s a criminal concept, not a potential cause of action in a civil case.  But it may be fraud.  For this, my second post about lessons our favorite holiday movies offer on the law of business disputes, I take a closer look.  (My first post, on It’s a Wonderful Life and the business tort of conversion, can be found here.)

A few more White Christmas facts are in order.  Bob and Phil served in the Army together during World War II, and now have a successful production company.  They are at the Florida club that night because they put on their own singing act earlier.  In two hours, they are scheduled to catch a train to New York, where their company is rehearsing for a television spot.  Bob wants to spend those hours out on the town.  Instead, they stay at the club to watch the Haynes Sisters.  The reason?  A letter from their Army pal Benny Haynes, asking them to check out his sisters’ musical act. 

But in reality, Benny didn’t write that letter.  Judy did.  Knowing that a letter from her to the famous producers would go unnoticed, she impersonated her brother requesting a favor.  This gets us to Betty’s confession about it to Bob, described above.

Fraud is often asserted as a cause of action in business litigation.  Being tricked is not enough.  The elements of a fraud claim are:  (1) a false representation, (2) of a present material fact, (3) made intentionally and knowingly, (4) with intent to mislead, (5) reasonable reliance by the party misled, and (6) resulting damage.

With Judy’s trick, elements 1 through 5 are easily established:  Judy falsely represented, intentionally and knowingly and with the intent to mislead, that she was Benny seeking a favor.  We know these representations were material because Bob and Phil say out loud that they have decided to stay longer at the club so that they can watch the sister act as a favor for an old army pal.  It was reasonable for them to rely on Judy’s misrepresentation that she was Benny.  She forged his name on the letter.

So far, so good.  But the final element—resulting damages—poses a challenge.  How were Bob and Phil, or their production company, hurt by Judy’s trick?  They already had two hours to kill before their train to New York.  At most, the damage was missing those couple of hours out on the town.  That’s not a lot of damage, and monetizing it would be harder.  This is a frequent challenge with fraud claims. 

Let’s change the facts a bit.  The Haynes Sisters hit the stage after the train to New York is scheduled to depart.  So Bob and Phil—again, reasonably relying on the forged letter—stay an extra night in Florida, which means that they can’t rehearse for the television spot the next day.  As a result, their production company loses the spot, ultimately leading to lost ticket sales.  Now we’re getting closer to a damages theory.

This is what we do as trial lawyers specializing in business disputes.  Of course we can’t change facts, but we spend a lot of time investigating the facts, and thinking hard about possible damages theories fitting the facts.  And then we work to figure out how evidence—including expert witness testimony about damages­—might be presented at trial to prove those facts.  Not quite as dazzling as the incomparable Danny Kaye and Vera Ellen, but fun and rewarding work.