Failing to Perform Contract Promise is Not Fraudulent Inducement

Florida Law is well settled that a contractual promise not performed is not tantamount to fraud. As a general rule, fraud cannot be predicated upon a mere promise not performed.  Alexander/Davis Properties, Inc. v. Graham, 397 So.2d 699, 706 (Fla. 4th DCA 1981), petition for review denied, 408 So.2d 1093 (Fla. 1981).  Moreover, to cross over from a breach of contract to fraud through an allegation of fraud in the inducement, there must be an affirmative misrepresentation, not simply a failure to complete the contract or simple breach of the contract entered between the parties.

The potential for recovery of both punitive damages and consequential tort damages makes the pleading of an alternative count alleging fraud in the inducement extremely tempting in breach of contract cases.  In Puff ‘ N Stuff of Winter Park, Inc. v. Bell, 683 So. 2d 1176 (Fla. 5th DCA 1996), Judge Harris recognized this problem in a special concurrence when he observed that “almost any contract claim can also be framed as a fraud in the inducement action.” Id. at 1179 (Harris, J., specially concurring). Judge Griffin responded in a dissenting opinion, however, that the problem should be resolved by the courts requiring specific allegations of all of the necessary elements of fraud. See id. at (Griffin, J., dissenting). Judge Griffin stated, I agree with Judge Harris that fraud is a much overused and misused cause of action. Its abuse has been fueled by the access it provides to otherwise unavailable discovery and to punitive damages. Its misuse has been exacerbated by Florida’s embrace of the “promissory” form of fraud whereby a promise made with no intent to perform is deemed actionable as fraud. Unfortunately, too many cases have gotten to the jury and large tort verdicts have been rendered on a theory of fraud that had no business being anything other than breach of contract. The problem is not with the distinction between fraud and breach of contract, however, the problem lies in our courts’ failure to appreciate or require competent proof of the distinct elements. The statement that virtually any breach of contract action can be pleaded as fraud in the inducement proves the point. Every breach of contract cannot be pleaded as fraud in the inducement–at least, not properly. Certainly, the classic type of fraud present in this case–a knowingly false representation of fact–requires a specific allegation of such a false representation. Even “promissory fraud, ” however, requires a specific allegation (and ultimate proof) that the promise was made with no intent to perform. See Connecticut Gen. Life Ins. Co. v. Jones, 764 So. 2d 677, 682 (Fla. Dist. Ct. App. 1st Dist. 2000).

It seems that a Court’s inquiry into whether a fraudulent inducement claim arises  from a breach of contract turns on whether the initial promise was made with the intent not to perform such promise , and whether proof of such intent is alleged and ultimately made.

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