An aggrieved party to a contract will sometimes claim that they were fraudulently induced into entering the contract. These types of claims may often be difficult to prove. A plaintiff cannot prevail on a fraudulent inducement claim by simply showing that he or she was deceived. A plaintiff must also show evidence of a defendant’s fraudulent intent. Island Travel & Tours, Ltd., Co. v. MYR Indep., Inc., 45 Fla. L. Weekly D704 (Fla. 3d DCA Mar. 25, 2020). Peter Mavrick is a Fort Lauderdale business litigation lawyer, and also represents clients in business litigation in Miami and Palm Beach. The Mavrick Law Firm represents clients in breach of contract litigation, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, and other legal disputes in federal and state courts and in arbitration.
To prevail on a claim of fraudulent inducement, a plaintiff must prove that a defendant “(1) made a statement concerning a material fact, (2) knowing that the statement was false, (3) with intent that the plaintiffs act on the false statement; and (4) the plaintiffs were damaged as a result of their reasonable reliance on the false statement.” Gemini Inv’rs III, L.P. v. Nunez, 78 So. 3d 94 (Fla. 3d DCA 2012). The defendant’s intent is often the most difficult element to prove in a fraudulent inducement claim.
It is not uncommon in business litigation for fraud claims to be based on failure to keep a promise. However, a fraudulent inducement claim cannot be asserted merely because the other contracting party is purposefully refusing to do what it promised. “An action for fraud generally may not be predicated on statements of opinion or promises of future action, but rather must be based on a statement concerning a past or existing fact.” Mejia v. Jurich, 781 So. 2d 1175 (Fla. 3d DCA 2001). In other words, if the other contracting party is selling Miami Dolphins’ season tickets, states that the NFL declared that the season will not be affected by the pandemic. However, if the person knows that to be a false statement, then there may be an action for fraud. “[U]nder certain circumstances, a promise may be actionable as fraud where it can be shown that the promissor had a specific intent not to perform the promise at the time the promise was made, and the other elements of fraud are established.” Alexander/Davis Properties, Inc. v. Graham, 397 So.2d 699 (Fla. 4th DCA 1981). “In order for a promise of future performance to serve as a predicate for a claim of fraud, it must be established that the promise was made with the present intention not to comply.” Alexander/Davis Properties, Inc. v. Graham, 397 So.2d at 699.
A fraudulent inducement claim may sometimes be based on a statement that is the contracting party’s opinion rather than a past or existing fact. “Where the person expressing the opinion is one having superior knowledge of the subject of the statement and the plaintiff can show that said person knew or should have known from facts in his or her possession that the statement was false, then the opinion may be treated as a statement of fact.” Mejia v. Jurich, 781 So. 2d 1175 (Fla. 3d DCA 2001).
Business litigation often involves contracts that contain a non-reliance clause, which expressly state that the contracting parties are not relying on the other party’s statement in entering the contract. Such non-reliance clauses can sometimes protect a party from claims of fraudulent inducement. Similarly, a “merger” or “integration” clause states that all of the agreement terms are incorporated into the contract, and any oral representations which are not memorialized in the agreement are unenforceable. The merger or integration clause, however does not affect an oral statement that forms the basis of a fraudulent claim. “The existence of a merger or integration clause, which purports to make oral agreements not incorporated into the written contract unenforceable, does not affect oral representations which are alleged to have fraudulently induced a person to enter into the agreement.” Mejia v. Jurich, 781 So. 2d 1175 (Fla. 3d DCA 2001).
In the recent Miami case, Island Travel & Tours, Ltd., Co. v. MYR Indep., Inc., 45 Fla. L. Weekly D704 (Fla. 3d DCA Mar. 25, 2020), the business litigation involved the question of whether a motion for a directed verdict should have been granted concerning a claim of fraudulent inducement. Island Travel found that there had been no evidence of a fraudulent intent on behalf of the defendant. Without evidence of fraudulent intent, the directed verdict should have been entered in favor of the defendant on that count. Additionally, Island Travel held that fraudulent inducement claims “cannot be based on alleged misrepresentations that were never mentioned in the operative complaint.” Because the Island Travel plaintiff did not identify in the complaint particular misstatements made by defendant that had allegedly induced the plaintiff into entering into the agreement, the claim of fraud in the inducement failed as a matter of law.
Island Travel demonstrates that a plaintiff claiming fraudulent inducement must be able to articulate specific misstatements in the complaint and support those allegations with evidence of fraudulent intent. Peter Mavrick is a Fort Lauderdale business litigation attorney who also practices business litigation in Miami and Palm Beach. This article does not serve as a substitute for legal advice tailored to a particular situation.