In addition, "[f]ragmentary information may be as misleading ... as active misrepresentation, and half-truths may be as actionable as whole lies" (citation omitted). Kannavos v. Annino, 356 Mass. 42, 43, 48-49, 247 N.E.2d 708 (1969), and cases cited (intentionally deceptive and fraudulent where defendants marketed property as investment property due to multifamily use when in fact zoning ordinance banned mutlifamily use, and defendants knew purchasers planned to use property for apartments but did not disclose zoning violations). Moreover, "where there is reliance on fraudulent representations or upon statements and action treated as fraudulent, our cases have not barred plaintiffs from recovery merely because they โdid not use due diligence ... [when they] could readily have ascertained from ... recordsโ what the true facts were.
The first is where the defendant fails to disclose material information when the defendant has a legal duty to do so. The Massachusetts Supreme Judicial Court (the "SJC") has long adhered to the "rule of nonliability for bare nondisclosure," Kannavos v. Annino, 356 Mass. 42, 247 N.E.2d 708, 711 (1969); a defendant is not liable for simple failure to disclose material information. Instead, liability for a material omission arises only where the defendant was under a duty to disclose the information.
The first is where the defendant fails to disclose material information when the defendant has a legal duty to do so. The Massachusetts Supreme Judicial Court (the "SJC") has long adhered to the "rule of nonliability for bare nondisclosure," Kannavos v. Annino, 247 N.E.2d 708, 711, 356 Mass. 42 (1969); a defendant is not liable for simple failure to disclose material information. Instead, liability for a material omission arises only where the defendant was under a duty to disclose the information.
Cummings v. HPG International, Inc., 244 F.3d 16, 21 (1st Cir. 2001) (citing McEneaney v. Chestnut Hill Realty Corp., 38 Mass. App. Ct. 573 (1995)). As for material omissions, Massachusetts law does not contemplate liability for "bare nondisclosure," Kannavos v. Anninno, 356 Mass. 42, 46-48 (1969) (citing Swinton v. Whitinsville Savings Bank, 311 Mass. 677, 678-79 (1942)), but does recognize a duty of additional disclosure where partial or incomplete statements are made. V.S.H. Realty, Inc. v. Texaco, Inc., 757 F.2d 411, 414-15 (1st Cir. 1985).
Swinton v. Whitinsville Savings Bank, 311 Mass. 677, 679 (1942); Salinsky v. Perma-Home Corp., 15 Mass. App. Ct. 193, 197, review denied, 388 Mass. 1105 (1983). In rebuttal, Kiley asserts that partial disclosures and half-truths satisfy the affirmative statement element of the torts of deceit and misrepresentation, citing Kannavos v. Annino, 356 Mass. 42, 47-48 (1969) and Nei v. Boston Survey Consultants, Inc., 388 Mass. 320, 322-323 (1983). The Court in Kannavos stated that if a person "does speak with reference to a given point in information, voluntarily or at the other's request, he is bound to speak honestly and to divulge all the material facts bearing upon the point that lie within his knowledge.
The deceptive conduct need not be direct to be fraudulent; rather, โ[f]ragmentary informationโ and โhalf-truths may be as actionable as whole lies.โ Kannavos v. Annino, 356 Mass. 42, 48 (1969), quoting Harper & James, Torts, ยง 7.14. Further, Wahlstrom will not be barred from recovery โmerely because [she] โdid not use due diligence . . . [when she] could readily have ascertained from . . . records' what the true facts were.โ Sullivan v. Five Acres Realty Tr., 487 Mass. 64, 74 (2021),
In Massachusetts, a claim for misrepresentation can encompass the failure to disclose a material fact. "Although there may be no duty imposed upon one party to a transaction to speak for the information of the other ... if he does speak with reference to a given point of information ... he is bound to speak honestly and to divulge all the material facts bearing upon the point that lie within his knowledge." Kannavos v. Annino, 356 Mass. 42, 247 N.E.2d 708, 711 (1969) (internal quotation marks omitted). Accordingly, "[f]ragmentary information may be as misleading ... as active misrepresentation, and half-truths may be as actionable as whole lies."
See also International Trust Co. v. Myers, 241 Mass. 509, 512-513; White Tower Management Corp. v. Taglino, 302 Mass. 453, 454-455; Boston Five Cents Sav. Bank v. Brooks, 309 Mass. 52, 55-56 ("Deception need not be direct. . . . Declarations and conduct calculated to mislead . . . which . . . do mislead one . . . acting reasonably are enough to constitute fraud").Kannavos v. Annino, 356 Mass. 42, 48 (Mass. 1969) (emphasis added); see also AT T Corp. v. Stockard, 2006 U.S. Dist. LEXIS 98447, at *28 (D. Mass. Apr. 24, 2006) (citing Lawson v. Affirmative Equities Co., L.P., 341 F. Supp. 2d 51, 66 (D. Mass. 2004) (quoting First Circuit Pattern Jury Instructions: Criminal ยง 4.12 (1998))) ("Falsity includes `matters that were either known to be untrue when made or made with reckless indifference to their truth,' and incorporates `actual, direct false statements as well as half-truths and the knowing concealment of facts.'"). A party's mere failure to disclose information during contract formation is not, of course, actionable absent a relationship that gives rise to a special duty to disclose.
In addition, "[f]ragmentary information may be as misleading . . . as active misrepresentation, and half-truths may be as actionable as whole lies" (citation omitted). Kannavos v. Annino, 356 Mass. 42, 43, 48-49 (1969), and cases cited (intentionally deceptive and fraudulent where defendants marketed property as investment property due to multifamily use when in fact zoning ordinance banned mutlifamily use, and defendants knew purchasers planned to use property for apartments but did not disclose zoning violations). Moreover, "where there is reliance on fraudulent representations or upon statements and action treated as fraudulent, our cases have not barred plaintiffs from recovery merely becuase they 'did not use due diligence . . . [when they] could readily have ascertained from . . . records' what the true facts were.
Fragmentary information may be as misleading . . . as active misrepresentation, and half-truths may be as actionable as whole lies.'" Ibid., quoting from Kannavos v. Annino, 356 Mass. 42, 48 (1969). We think the bank's conduct, utilizing an innocuous and vague reference to the deduction of Fleet service charges, while omitting any reference to the differential rates it would employ to derive a hefty profit at Gossels's expense, was a clear breach of the bank's duty of good faith and reasonable care as Gossels's agent for collection.