Fraud, Fraud in the Inducement, the Independent Tort Doctrine, and the Confusion in Florida Courts

Fraud in the context of contractual relationship brings with it a tricky set of issues that even some Florida Courts fail to fully understand and appreciate. Florida Courts acknowledge the long-standing independent tort doctrine which provides which states in relevant part from Indemnity Ins. Co. of North America v. American Aviation, Inc., 891 So.2d 532, 536-537 (Fla. 2004), :

The prohibition against tort actions to recover solely economic damages for those in contractual privity is designed to prevent parties to a contract from circumventing the allocation of losses set forth in the contract by bringing an action for economic loss in tort. See, e.g., Ginsberg v. Lennar Fla. Holdings, Inc., 645 So.2d 490, 494 (Fla. 3d DCA 1994) (“Where damages sought in tort are the same as those for breach of contract a plaintiff may not circumvent the contractual relationship by bringing an action in tort.”).

It is well settled in Florida that where alleged misrepresentations relate to matters already covered in a written contract, such representations are not actionable in fraud. La Pesca Grande Charters, Inc. v. Moran, 704 So. 2d 710, 712-13 (Fla. 5th DCA 1998) (explaining the difference between fraud in the inducement and fraud in the performance, the latter not constituting a separate cause of action from that of a concurrent breach of contract action). Peebles, 2017 Fla. App. LEXIS 6569, at *6-8.(Emphasis added.)

Simply put, the Court will not entertain a a separate Fraud action when a contact governs the relationship between the parties, and the remedy is consistent with contractual remedied. (An interesting question is whether actionable fraud committed by an individual acting on behalf of the company) could subject such individual to personal liability, even if there is a contractual relationship with a corporate entity.)

Conversely, Florida law is likewise very clear that, if a fraud is perpetrated which induces someone to enter into a contract, there is a separate cause of action for fraud in the inducement and the remedies attendant to that particular tort are available. In such case, the fact that the measure of damages may be the same for both causes of action does not make the fraud claim disappear.

The essential difference lies in the nature of fraud itself, which is a knowing false statement of fact made with the intent that it cause action in reliance and it does cause such action to the detriment of the victim of the knowing false statement. In a fraud in the inducement situation, if there is damage based on a decision to contract that would otherwise not be made, a cause of action for fraud exists.

The fact that the measure of damages may be the same for both causes of action does not make the fraud claim disappear. See La Pesca Grande Charters, Inc. v. Moran, 704 So. 2d 710, 712 (Fla. 5thDCA).

Some Florida Courts have written varying opinions regarding fraud and fraud in the inducement  oftentimes inappropriately conflating the two, fraud and fraud in the inducement.

The 5th DCA has acknowledged this statewide confusion, commenting that the “[t]he cases that speak of there being no claim for fraud where the measure of recovery is the same as that sought for breach of contract are either fraud in the performance cases or cases where the court failed to appreciate the distinction.” See La Pesca Grande Charters, Inc. v. Moran, 704 So. 2d 710, 713 (Fla. 5thDCA 1998.)

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