Proving ALL of the Elements of a Fraudulent or Negligent Misrepresentation Claim
Fraud claims are hard to prove. Any fraud claim or claim predicated on a misrepresentation is an intentional tort; therefore, it requires proof that the defendant had the intent to induce the plaintiff to act on a misrepresentation and the plaintiff actually relied on and acted on the misrepresentation. While fraud-type claims are perhaps commonly pled, pleading a fraud-type claim and proving a fraud-type claim are two different things. A party can plead a fraud-type claim to get passed a motion to dismiss. Proving the fraud-type claim, however, is a different story. Plaintiffs need to understand the elements they are required to prove so they know the evidence they need to introduce at trial to satisfy the elements and, hence, their required burden of proof. Likewise, defendants also need to understand the elements so that they can move for a directed verdict and preserve any appellate issue.
An example of the difficulty in proving a fraud claim can be found in Arlington Pebble Creek, LLC v. Campus Edge Condominium Association, Inc., 42 Fla. L. Weekly D2370a (Fla. 1st DCA 2017). Here, the defendants converted an apartment complex into a condominium and sold the condominium units. The unit owners took control of the condominium association from the defendants. The association then sued the defendants claiming that they knew of water intrusion problems, failed to fully remedy the problems, and turned over the association to the unit owners knowing the association would incur huge expense in upkeep and preserving common areas.
The association sued the defendants for both fraudulent misrepresentation and negligent misrepresentation.
A claim for fraudulent misrepresentation requires the association to prove the following four elements: 1) the defendants committed a false statement of a material fact (a misrepresentation); 2) the defendants knew the representation was false; 3) the defendants intended that the misrepresentation would induce the association to act on it; and 4) the association was injured acting in reliance on the misrepresentation. Arlington Pebble Creek, supra.
A claim for negligent misrepresentation requires the association to prove the following four elements: 1) the defendants committed a false statement of material fact that they believed to be true but was in fact false (a misrepresentation); 2) the defendants should have known the representation was false; 3) the defendants intended to induce the association to act on the misrepresentation; and 4) the association acted in justifiable reliance on the misrepresentation causing injury to the association. Arlington Pebble Creek, supra.
During trial, the defendants moved for a directed verdict arguing the plaintiff failed to prove all of the elements of a fraudulent or negligent misrepresentation claim. “‘A direct verdict is proper when the evidence and all inferences from the evidence, considered in the light most favorable to the non-moving party, support the movant’s case as a matter of law and there is no evidence to rebut it.’” Arlington Pebble Creek, supra, quoting Wald v. Grainger, 64 So.3d 1201, 1205 (Fla. 2011). The trial court denied the defendants’ motion for a directed verdict and ultimately a jury verdict and final judgment was entered against the defendants. The defendants appealed the trial court’s denial of their motion for directed verdict.
The appellate court reversed the final judgment directing the trial court to enter judgment in favor of the defendants because the association did not prove all of the required elements of either a fraudulent misrepresentation or negligent misrepresentation claim. Specifically, the association failed to prove the third and fourth elements of the claims. The association failed to prove any evidence of intent by the defendants or that the defendants induced reliance by the association—there was also no evidence that the association actually relied on any misrepresentation.
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