Opinion ID: 697890
Heading Depth: 2
Heading Rank: 1

Heading: Misrepresentation and Failure to Disclose in the Inducement.

Text: 12 District courts sitting in diversity actions must apply the choice of law rule of the forum state. Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496 (1941); Erie R.R. Co. v. Tompkins, 304 U.S. 64, 80 (1938). In an action for tortious conduct, such as fraud in the inducement, Virginia applies the doctrine of lex loci delecti and selects the law of the site of tortious activity. See Ryder Truck Rental, Inc. v. UTF Carriers, Inc., 790 F.Supp. 637, 641 (W.D.Va.1992). Boginis' initial employment contract with MORI was formed and signed in Florida, and the parties and the district court have agreed that Florida law should govern Boginis' claim of fraudulent misrepresentation and nondisclosure in the inducement of Boginis to sign the contract. 13 The contract Boginis signed contained an integration clause stating that it sets forth the entire agreement between the parties. In finding that Boginis could not state a claim for fraud or failure to disclose, it is unclear whether the district court found that the integration clause prevented Boginis from introducing extrinsic, parole evidence as to the statements allegedly made and the information not disclosed. Under Florida law, however, [w]hile final agreements may not be contradicted by parole or extrinsic evidence, an exception is made in actions alleging negligent misrepresentation or, otherwise, fraud in the inducement. In such cases, the parole evidence rule does not preclude admission of extrinsic evidence. Baggett v. Electricians Local 915 Credit Union, 620 So.2d 784, 785-86 (Fla. Dist. Ct.App.1993); accord, Palmer v. Santa Fe Healthcare Sys., Inc., 582 So.2d 1234, 1235 (Fla. Dist. Ct.App.), cert. denied, 593 So.2d 1052 (Fla.1991). 1 Thus, the merits of each allegedly fraudulent misrepresentation and each alleged failure to disclose must be examined, under the summary judgment standard, in light of the evidence thus far produced by the parties. 14
15 Under Florida law, relief for fraudulent or negligent misrepresentation may be granted only when all of the following elements are shown: (1) a false statement of material fact; (2) proof that the representor knew or should have known that the representation was false; (3) an intention that the representation induce another to rely on it; and (4) consequent injury to the party acting in reliance on the representation. E.g., Johnson v. Davis, 480 So.2d 625, 627 (Fla.1985); Stow v. Nat'l Merchandise Co., Inc., 610 So.2d 1378, 1382 (Fla. Dist. Ct.App.1992); Baggett, 620 So.2d at 786. Generally speaking, a nonspecific statement of opinion such as occurs in puffing, cannot form the basis for a fraud action, because the listener is not expected to rely on the statement. Savic v. Grand Bahama Dev. Co., Ltd., 701 F.2d 879, 883 (11th Cir.1983). Typically, a prediction of future events alone also cannot be a basis for fraud, because it is not a representation that is false when made. See id. However, under Florida law, a promise of future conduct can be a predicate to a fraud claim when the promise is made either without the intention to perform, or with the positive intention not to perform. E.g., Stow, 610 So.2d at 1382; Palmer, 582 So.2d at 1236. 16 Boginis claims that MORI made to him several fraudulent or negligent misrepresentations about the Barbados project: (1) that the project's occupancy rate would average 85 percent with a 98 percent peak; (2) that the project had the highest Honored Guest award redemption rate in the Marriott system; (3) that trained personnel would be available to work at the project; (4) that MORI intended to construct first-rate units; (5) that MORI intended to develop other Caribbean projects; and (6) that MORI intended to convert the entire resort into time-share units. Boginis' sworn statement claims that he would not have signed the contract if he had known that the statements were false. 17 However, as to each of the alleged misrepresentations, Boginis has failed to produce evidence as to at least one of the elements of a fraudulent misrepresentation claim. As to the occupancy rate, neither the 98 percent peak nor the projection of an 85 percent average rate were false statements of fact or of present intention. Although the average in the past may have been somewhat lower, a projection is an estimate of future events--it is not a promise of existing fact or a statement of intent, because MORI has no control over what the precise occupancy percentage will be. As to the Honored Guest rate, Boginis has submitted no evidence that the hotel did not have the highest Honored Guest occupancy rate in the system; he submitted no evidence of what the rate was at the Barbados hotel or at other MORI hotels. Likewise, regarding the trained staff, Boginis has not produced evidence that trained personnel were not available to him, and has not defined what MORI meant by trained when MORI made the representation. Similarly, Boginis has admitted that MORI was in the process of developing various Caribbean projects, and so the statement by MORI that it intended to develop such projects was not false. 18 Boginis claims that MORI told him, during the late 1991 negotiations, that the project would be converted to a first rate hotel. 19 Boginis claims that MORI actually used low budget surplus furnishings rather than the high quality furnishings typically used by MORI in its hotels, and submitted as evidence of MORI's intentions an April, 1992 document showing that MORI intended, due to budgetary constraints, not to do a first rate conversion. However, Boginis has presented no evidence to show that MORI did not intend the conversion to be first rate when MORI told him so in late 1991; he has shown only that by April of 1992, MORI did not intend it to be first rate. A party that honestly represents its intentions has not committed fraud, even if its plans end up changing. Under Florida law, a promise of future conduct can be a predicate to a fraud claim only when the promise is made either without the intention to perform, or with the positive intention not to perform. E.g., Stow, 610 So.2d at 1382; Palmer, 582 So.2d at 1236. Boginis has presented no evidence that MORI did not intend the conversion to be first-rate when MORI told him of its intentions in 1991. Therefore none of the statements has been shown to be false, and none can form the basis of a claim for misrepresentation. 20 Boginis claims that MORI told him the units would eventually be 100 percent converted to time-share units, and that he would not have taken the job if he had known that the units would not be so converted. Boginis has submitted a MORI report which shows that MORI intended to convert only 31 percent of the hotel rooms. However, Boginis has not shown that MORI intended for him to rely on its intention to convert all of the units, because he has not shown that MORI would have reason to think he would find his position as Project Director any less desirable with fewer units converted. Therefore, he has not shown an intention by MORI that he rely on the allegedly false statement, and therefore it cannot serve as the basis of a misrepresentation claim. 21
22 Florida recognizes actions for non-disclosure of information, or fraudulent concealment, between two parties in privity when: (1) one party deliberately and in order to deceive withholds material facts from the other; (2) the withholder has superior knowledge concerning the matters represented, or acts as a fiduciary, or tricks the other party to prevent that party from performing an independent investigation; and (3) the other party lacks an equal opportunity to discover the facts. E.g., Hauben v. Harmon, 605 F.2d 920, 924 (5th Cir.1979); Taylor v. Am. Honda Motor Co., Inc., 555 F.Supp. 59, 64 (M.D. Fla.1982). 23 Boginis claims the following facts were material and not disclosed by MORI, despite its duty to do so: lack of housing near the project, crime and labor strife near the project, and a commitment by MORI to limit employment of American nationals. However, the uncontradicted evidence submitted by the parties shows that the labor strife and crime problems did not occur until after Boginis had begun working at the Barbados project. Thus, MORI could not possibly have had superior knowledge of the facts during the contract negotiations which all occurred several months prior to the strife and crime, and cannot have committed fraud by not disclosing them. The uncontradicted evidence also shows that during the contract negotiations, MORI offered to show Boginis housing in Barbados, and Boginis understood that he would have to find his own housing. Thus, Boginis had an equal opportunity to discover the facts surrounding the existence of housing, and the fact that he would have to find housing himself was disclosed, thereby vitiating any fraud claim. The uncontradicted evidence shows that Boginis did hire a staff of some Americans and some non-Americans. Thus, Boginis has not shown that the alleged commitment not to hire Americans was a material fact, and its non-disclosure cannot be actionable fraud. 24
25 Because Boginis has failed to produce sufficient evidence from which a reasonable jury could find that MORI fraudulently or negligently misrepresented facts, or breached a duty to disclose certain facts, we affirm summary judgment as to Boginis' fraudulent inducement claim. 26