Fraud-In-The-Performance Doctrine is Alive and Well in Florida
Commercial lawyers are well familiar with the doctrine known as “fraud in the performance.” In practice, it means that if an alleged false statement occurred during the performance of a contract, that false statement might support a claim for breach of contract, but it cannot support a separate claim for fraud.
In the author’s personal experience, some Florida trial courts in recent years—in the shadow of a Florida Supreme Court opinion that limited the application of the economic loss rule to cases involving product liability—have questioned whether the “fraud in the performance” doctrine is different from the economic loss rule. Several Florida appellate opinions have been issued over the past two years confirming that the “fraud in the performance” doctrine is alive and well, despite the narrowing of the economic loss rule. The most recent such appellate decision is Island Travel & Tours, Ltd. v. MYR Independent, Inc., — So.3d —, Case No. 3D16-1364 (Fla. 3d DCA March 25, 2020) (reversing final judgment on fraud claims).
In that case, Florida’s Third District Court of Appeal reviewed a final judgment that resulted from a jury verdict against several defendants on a plaintiff’s claims for breach of contract and fraud. The appellate court reversed the final judgment on the fraud claims for two reasons. First, the plaintiff’s Complaint did not include references to the specific fraudulent acts that were argued at trial; therefore, those alleged fraudulent acts should not have been used to support the fraud claims at trial. Second, the alleged fraudulent acts occurred while the parties were performing (or were supposed to be performing) their contract obligations; therefore, the fraud claims were barred because they were not independent from the claims for breach of contract.
The motto of this story: if there is a contract in effect and the plaintiff alleges “fraud” during the course of performance, the claim may be barred. This doctrine is different from the economic loss rule, and it continues to apply in Florida.