In Maryland, to establish a claim of fraudulent misrepresentation, a plaintiff must prove: (1) that a false representation was made, (2) that its falsity was either known or that the representation was made with such reckless disregard to the truth as to be equivalent to actual knowledge of falsity, (3) that the representation was made for the purpose of defrauding the plaintiff, (4) that the plaintiff had the right to, and did, reasonably rely on the representation, and would not have acted had the misrepresentation not been made, and (5) that the plaintiff suffered damage directly resulting from the misrepresentation. See Swinson v. Lords Landing Village Condo., 360 Md. 462, 476, 758 A.2d 1008, 1016 (2000) (citing Gittings v. Von Dorn, 136 Md. 10, 15-16, 109 A. 553, 553-54 (1920); Martens Chevrolet v. Seney, 292 Md. 328, 333, 439 A.2d 534, 537 (1982)).

In determining the amount of damages for fraudulent misrepresentation in Maryland, the Court of Appeals adopted the “flexibility theory” in Hinkle v. Rockville Motor Co., 262 Md. 502, 519, 278 A.2d 42, 47 (1971). In doing so the court stated, “[it] has never taken a rigid stand in adopting one theory of damages to the exclusion of all others but has rather employed a flexible approach.” This approach uses four rules as a guide for the proper measure of damages in cases of fraudulent misrepresentation, which include:

(1) If the defrauded party is content with the recovery of only the amount that he actually lost, his damages will be measured under that rule;