November 29, 2023
Making a Deal With No Intent to Honor – A Special Type of Fraud

When a person enters into an agreement with no intention of honoring the agreement at the time it was made, that is a unique species of fraud that is actionable alongside the related breach of contract claim in Florida. HTP, Ltd. v. Lineas Aereas Costarricenses, S.A., 685 So. 2d 1238, 1239 (Fla. 1996). It does not matter that the fraud is also the subject of a contract, and it does not matter that the two claims may have similar or identical damages. E.g. La Pesca Grande Charters, Inc. v. Moran, 704 So. 2d 710, 712-13 (Fla. 5th DCA 1998).

Importantly, when the principal of a company causes the company to make a deal with no intention of honoring it, the individual and the company may both be sued together for fraud. E.g. First Fin. USA, Inc. v. Steinger, 760 So. 2d 996, 997-98 (Fla. 4th DCA 2000)

Obviously, it’s normally difficult to ascertain someone’s subjective intent at the time they entered into an agreement, but occasionally you find a “smoking-gun” communication revealing their present intent to dishonor the deal when it is made. Or, as in a situation that we just litigated, sometimes your adversary inadvertently confesses to this type of fraud, so you should be on the lookout for it.

In our case, in order to support an ill-conceived duress argument for a summary judgment motion, our opponent filed a summary judgment affidavit professing (i.e. confessing) that he had absolutely no intention of honoring the parties’ agreement when he signed it. He apparently thought his subjective intent to dishonor the deal had some bearing on our client’s reasonable expectation that the deal would be performed. He thought wrong.

We promptly sought an amendment of the complaint to add fraud and punitive damages claims, and the amendment was granted. Once you have a solid fraud claim in the case, the jury is always entitled to consider punitive damages because fraud, by its very nature, necessarily involves intentional misconduct to cause financial or other harm. Rappaport v. Jimmy Bryan Toyota of Fort Lauderdale, Inc., 522 So. 2d 1005, 1006 (Fla. 4th DCA 1988) (holding that “in all cases of fraud the jury is empowered to award punitive damages”).

If you have a breached contract that needs aggressive legal enforcement, please contact us.

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THIS BLOG IS INTENDED FOR GENERAL INFORMATION PURPOSES ONLY. IT DOES NOT CONSTITUTE LEGAL ADVICE. THE READER SHOULD CONSULT WITH KNOWLEDGEABLE LEGAL COUNSEL TO DETERMINE HOW APPLICABLE LAWS APPLY TO SPECIFIC FACTS AND SITUATIONS. BLOG POSTS ARE BASED ON THE MOST CURRENT INFORMATION AT THE TIME THEY ARE WRITTEN. SINCE IT IS POSSIBLE THAT THE LAWS OR OTHER CIRCUMSTANCES MAY HAVE CHANGED SINCE PUBLICATION, PLEASE CALL US TO DISCUSS ANY ACTION YOU MAY BE CONSIDERING AS A RESULT OF READING THIS BLOG.

Published: November 29, 2023
Author: Bo Boatman
Categories : Uncategorized