Business Law and the Regulation of Business 11th Edition by Richard Mann, Barry Roberts

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FACTS Tony Y. Maroun (Maroun) was employed by Amkor when he accepted an offer to work for Wyreless, a start-up company. Wyreless promised Maroun, among other items, the following: (1) annual salary of $300,000; (2) $300,000 bonus for successful organization of Wyreless Systems, Inc.; (3) 15 percent of the issued equity in Wyreless Systems, Inc.; (4) the equity and ''organization bonus'' will need to be tied to agreeable milestones; (5) full medical benefits; and (6) the position of chief executive officer, president, and board member. Maroun began working for Wyreless but was terminated a few months later. Maroun then filed suit alleging he had not received 15 percent of issued equity and had not received $429,145, which represented the remainder of the $600,000. Wyreless filed a motion for summary judgment. The district court granted the motion, and Maroun appealed.
DECISION Judgment of the district court affirmed.
OPINION Trout, J. Maroun argues the district court erred in granting summary judgment in favor of Robinson on the fraud claim. Fraud requires: (1) a statement or a representation of fact; (2) its falsity; (3) its materiality; (4) the speaker's knowledge of its falsity; (5) the speaker's intent that there be reliance; (6) the hearer's ignorance of the falsity of the statement; (7) reliance by the hearer; (8) justifiable reliance; and (9) resultant injury. [Citation.] In opposition to the defendants' motion for summary judgment, Maroun filed an affidavit that stated Robinson made the following representations to Maroun:
(1) That Wyreless was to be a corporation of considerable size, with initial net revenues in excess of several hundred million dollars.
(2) That Robinson would soon acquire one and one-half million dollars in personal assets, which Robinson would make available to personally guaranty payment of my compensation from Wyreless.
(3) That he would have no difficulty in obtaining the initial investments required to capitalize Wyreless as a large, world leading corporation with initial net revenues in excess of several hundred million dollars.
(4) That he had obtained firm commitments from several investors and that investment funds would be received in Wyreless' bank account in the near future.
''An action for fraud or misrepresentation will not lie for statements of future events.'' [Citation.] ''[T]here is a general rule in [the] law of deceit that a representation consisting of [a] promise or a statement as to a future event will not serve as [a] basis for fraud.…'' [Citation.]. Statements numbered one and two both address future events. Robinson allegedly stated Wyreless ''was to be'' and that he ''would soon acquire.'' ''[T]he representation forming the basis of a claim for fraud must concern past or existing material facts.'' [Citation.] Neither of these statements constitutes a statement or a representation of past or existing fact. A ''promise or statement that an act will be undertaken, however, is actionable, if it is proven that the speaker made the promise without intending to keep it.'' [Citation.] There is no indication in the record that Robinson did not intend to fulfill those representations to Maroun at the time he made the statements.
''Opinions or predictions about the anticipated profitability of a business are usually not actionable as fraud.'' [Citation.] Statement number three appears to be merely Robinson's opinion. As to statement number four, no evidence was submitted that Robinson had not received commitments at the time he made the statement to Maroun. Accordingly, the district court's grant of summary judgment against Maroun on the fraud claim is affirmed.
INTERPRETATION Fraud generally must be based on a material fact and not on predictions or a person's opinion.
ETHICAL QUESTION Did Wyreless act in an ethical manner?
CRITICAL THINKING QUESTION When should an employer be held to its ''promises''?