Discovery in Fraud Cases and Other Bad Acts
Discovery in Fraud Cases and Other Bad Acts
This issue causes many discovery battles. If there are allegations of fraud the plaintiff need to prove intent, which is tough to do in litigation, and prove it by clear and convincing evidence. However the court should provide a wide latitude of discovery in these matters since fraud is almost never subject to direct proof but rather indirect proof or circumstantial evidence.
New Jersey Court Rules provide that parties may obtain discovery regarding any matter, not privileged, which is relevant to the subject matter involved in the pending action, whether it relates to the claim or defense of the party seeking discovery or to the claim or defense of any other party, including the existence, description, nature, custody, condition and location of books, documents or other tangible things and the identity and location of persons having knowledge of any discoverable matter. It is not grounds for objection that the information sought will be admissible at trial if the information sought appears reasonably calculated to lead to the discovery of admissible evidence. See, Rule 4:10-2. The public policies of expeditious handling of cases, avoiding stale evidence, and providing uniformity, predictability and security in the conduct of litigation is the policy underlining the New Jersey Discovery Rules. See, Abtrax Pharmaceuticals v. Elkinssinn, Inc., 139 N.J. 499, 512 (1995). The effect of the discovery rules cite that in effect, the discovery rules were designed to eliminate, as far as possible, concealment and surprise in the trial of law suits to the end that judgments rest upon the real merits of the causes and not upon the skill and maneuvering of counsel. See, Payton v. NJ Turnpike Authority, 148 N.J. 524 (1997). Discovery, however, is intended to lead to facts supporting or opposing an asserted legal theory; it is not designed to lead to formulation of a legal theory. Energy Rec. v. Dept. of Environmental Protection, 320 N.J. Super 59, 64 (App. Div. 1999). The relevant standard of the Court Rules does not relate only to matters which would necessarily be admissible in evidence, but includes information reasonably calculated to lead to admissible evidence respecting the cause of action or a defense. See Comments to New Jersey Court Rules 2000, R. 4:10-2, Comment 2, Page 1203.
Evidence of other acts is admissible. In Harris v. Peridot Chemical, Inc., 313 N.J. Super 257 (App. Div. 1998) the Appellate Division held that evidence of other gaseous releases from the defendant’s facility of magnesium oxide was admissible as other civil wrong evidence. The New Jersey Evidential Rules have historically prohibited admission of evidence of other crimes or wrongs, except for limited purposes. New Jersey evidentiary rules ONLY bar the introduction of evidence of other acts/civil wrongs when offered for the purpose of showing a person’s disposition and that the person acted in conformity with that general propensity. N.J.R.E. 404(b) states:
Evidence of other wrongs, crimes, wrongs or acts
is not admissible to prove disposition of a person
in order to show that he acted in conformity therewith.
Such evidence may be admitted for other purposes,
such as proof of motive, opportunity, intent, prepara-
tion, planned, knowledge, identity or absence of mistake
or accident when such matters are relevant to a material
issue in dispute.
The Court in Peridot stressed that N.J.R.E. 404(b) clearly permits the admission of relevant evidence in the form of other acts or omissions. By its clear terms, the Rule permits admission of such evidence when relevant to prove some other fact genuinely in issue. This type of evidence may be critical to the establishment of the truth as to a disputed issue, especially where the claimant’s access to significant information is limited. Where such evidence tends to make the existence of a material fact “reasonably likely”, it should be admitted if its prohibitive worth outweighs its potential for causing confusion, undue consumption of time or improper prejudice. It has long been the law in New Jersey that evidence of other acts may be offered to show a defendant’s notice of a particular defect or danger involved, the magnitude of defective or danger involved, and the defendant’s ability to correct a known defect. For example, in Harris, the Trial Court permitted the admission into evidence that the defendant had been releasing the disputed toxin into the air for some period of time to demonstrate notice. The Appellate division upheld the Trial Court’s decision.
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