Has your Michigan-based business been accused of engaging in commercial fraud? While these cases are among the most complex types of commercial litigation in Michigan, there are several strategies that could help you protect your company’s reputation and interests. Let’s explore five potential options, as well as the importance of having experienced legal help as you pursue them.
Understanding Commercial Fraud Under Michigan Law
Some of the most common allegations made in commercial fraud cases in Michigan include:
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Material misrepresentations and omissions
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Deceptive business practices, such as “bait-and-switch” tactics or falsely representing the origin of goods or services
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False accounting
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Misappropriation of intellectual property
In most commercial fraud cases, a claimant must prove that:
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A defendant made a material misrepresentation either intending to defraud another party or knowing of the falsity of their representation,
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The claimant relied upon that material misrepresentation, and
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The claimant suffered financial losses due to their reliance.
Complicated contractual agreements and financial issues can further raise the legal stakes of potential commercial litigation.
Strategy #1: Challenge the Specificity of the Fraud Allegations
One of the most common methods of defending against commercial fraud allegations involves challenging the specificity of the accusation. Rules of civil procedure require claimants to allege claims of fraud with “specificity” – describing the “who,” “what,” “where,” “when,” and “how” of their claim. Courts routinely dismiss fraud claims based on vague, speculative, or conclusory allegations, or allegations that fail to specify each party’s role in the alleged fraud.
Strategy #2: Conduct a Thorough Internal Investigation
Those facing commercial fraud claims should also conduct a comprehensive investigation into the allegations to secure all available evidence, including communications, financial records, and documentation of contract negotiations. Parties may also interview or depose employees and other key personnel involved in a commercial deal. Gathering all the facts can help strengthen a defense and provide an early strategic advantage in litigation.
Strategy #3: Contest the “Intent to Deceive” Element
A defense strategy may also focus on a claimant’s lack of evidence proving a defendant’s “intent to deceive.” A commercial fraud claim requires a claimant to show that a defendant intended to defraud the claimant or knew that they made materially misleading statements or actions that the claimant would rely upon to their detriment. Attacking the sufficiency of a claimant’s case on the “intent to deceive” element may include presenting evidence of good-faith decision-making, compliance with industry standards or practices, or honest mistakes. A defendant may argue that any discrepancy resulted from normal business risk rather than deception or fraudulent behavior.
Strategy #4: Challenge Reliance and Causation
A defense may also show that a claimant did not rely on the defendant’s representations or that the claimant could not have reasonably relied upon those representations, such as when a representation involves clear boasting or “puffery.” Parties can also contest a claimant’s reliance by highlighting the representation, integration, or disclaimer clauses in the relevant contracts, thereby undermining a claimant’s assertion that they relied on an extracontractual representation.
Strategy #5: Use Expert Witnesses to Refute Technical Claims
Some commercial fraud claims require parties to present complex accounting or financial modeling. As a result, parties may rely upon expert witnesses to refute technical claims of commercial fraud, including by showing that financial projections or performance fell within industry norms. Experts can also help refute a claimant’s allegations of the losses they incurred.
Contact a Commercial Litigation Attorney Today
Allegations of business fraud can have significant adverse consequences for your business or professional reputation, which is why it is critical to have a comprehensive plan to address commercial fraud claims. Contact August Law, PLLC today for a confidential consultation with a commercial litigation lawyer in Michigan, and let’s discuss the strategies that might help you win your case and protect your interests.