FRAUD CLAIMS AND BREACH OF WARRANTY CLAIMS AGAINST MANUFACTURER

A recent case touches upon two issues that are noteworthy when considering fraud claims and breach of warranty claims against a manufacturer. Below contains a discussion on these claims.

Independent Tort Doctrine

Florida’s independent tort doctrine provides that a party may not recover in tort for a contract dispute unless the tort is independent of any breach of contract.” MidAmerica C2L Inc. v. Siemens Energy, Inc., 2024 WL 414620, *6 (M.D.Fla. 2024).  This means tort allegations and claims MUST be separate and distinct from performance under the contract. Id. (citation omitted).

In MidAmerica C2L, a plaintiff sued a manufacturer relating to sophisticated equipment for a coal gasification plant. The parties entered into different agreements for the equipment and a license where the plaintiff could use the manufacturer’s patented technology for its coal gasification plants. A dispute arose and the plaintiff sued the manufacturer under various legal theories.  The manufacturer moved for summary judgment.

Two claims asserted against the manufacturer were grounded in fraudulent misrepresentation theories dealing with monetary damages and rescission of the contract. Both claims dealt with allegations that the manufacturer knew of defects in its equipment, had superior knowledge of the defects, had a duty to disclose the defects, and failed to do so. However, both fraud claims were a restatement of the SAME facts supporting the plaintiff’s breach of contract claims against the manufacturer. The trial court dismissed these claims because of the independent tort doctrine as the same material facts alleged in the fraud claims were alleged in the breach of contract claims.

Rescission

The trial court further found that the plaintiff’s request for rescission was not proper because “[the plaintiff] does not argue, much less demonstrate, that legal remedies are inadequate” to support the equitable relief of rescission.  MidAmerica C2L, supra, at *6.  The plaintiff attempted to counter by arguing that recission should be warranted because there was a lack of consideration for the contracts. This, however, was shot down because “Florida does not recognize the [equitable] claim of recission based on lack of consideration.” MidAmerica C2L, supra, at *7.  Florida law would recognize damages if there was a failure of consideration. Id. (citation omitted).

Breach of Warranty

Additionally, there was a worthwhile discussion on the plaintiff’s claim for breach of warranty of fitness for particular purpose against the manufacturer.  Although New York (not Florida) law governed this claim, it is still an important discussion for consideration, particularly since the analysis would be analogous under numerous jurisdictions.

The contract, as common, contained a warranty disclaimer which included a disclaimer for breach of the implied warranty of fitness for a particular purpose.

The elements for breach of implied warranty of fitness for a particular purpose are: (1) the seller, at the time of contracting, has reason to know the particular purpose for which the goods are required, (2) the seller has reason to know that the buyer is relying on the seller’s skill and judgment to select suitable goods for the specified purpose, and (3) the buyer did in fact rely on that skill or judgment. That said, a written disclaimer of a warranty of fitness for purpose precludes a party from relying on a representation that is specifically disclaimed in the agreement.

MidAmerica C2L, supra, at *3.

The warranty disclaimer should put the kibosh on this claim, right?  Well, the plaintiff argued that the warranty disclaimer is unconscionable and, thus, should be waived.  Under New York law, to argue unconscionability, the plaintiff must show the contract is both procedurally and substantively unconscionable when the contract was made. MidAmerica C2L, supra, at *4 (citation omitted). Regarding both procedural and substantive unconscionability, the court explained:

“[P]rocedural unconscionability considers whether there has been a lack of meaningful choice to accept a challenged provision by evaluating anumber of factors, including ‘(1) the size and commercial setting of the transaction; (2) whether there was a lack of meaningful choice by theparty claiming unconscionability; (3) the experience and education of the party claiming unconscionability; and (4) whether there was disparity inbargaining power.’ ” “[S]ubstantive unconscionability involves an analysis ‘of the substance of the bargain to determine whether the terms wereunreasonably favorable to the party against whom unconscionability is urged.’ ” “Procedural and substantive unconscionability have been described asoperating on a ‘sliding scale,’ meaning that ‘the more questionable the meaningfulness of choice, the less imbalance in a contract’s terms should be tolerated and vice versa.’ ”

MidAmerica C2L, supra, at *4 (internal citations omitted).

Regardless of the plaintiff’s unconscionability argument, the trial court still dismissed the claim.  The court found that this argument was simply based on the allegation that the manufacturer preyed on the plaintiff’s lack of bargaining power.  Besides, the plaintiff failed to identify any record evidence to remotely support its theory of unconscionability. “The Court finds that [the plaintiff] failed to plead unconscionability in the [complaint], and even if it had preserved this theory of recovery, there is no genuine issue of material fact relating to the applicability of the [warranty] disclaimer and the lack of unconscionability.” MidAmerica C2L, supra, at *5.

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

PARTY CANNOT SKIRT OUT OF THE VERY FRAUD IT PERPETRATES

An interesting case came out of Florida’s Fourth District Court of Appeal that touches upon two important points.

First, the independent tort doctrine does not apply when there is not a contract between the parties.

Second, an officer cannot escape fraud simply by claiming his or her actions were done as an officer of the company when he or she actively participated in the fraud.

Both of these points are best explained by initially going into the facts of this case. As you will see, the Court’s rationale relates to the premise that a party should not be able to skirt out of the very fraud it perpetrates.

Factual Background

Costa Investors, LLC v. Liberty Grande, LLC, 48 Fla.L.Weekly D7b (Fla. 4th DCA 2022) involved the ultimate development and construction of four adjacent properties into the Costa Hollywood Hotel.  The properties were purchased by a company called Liberty Grande.  Its president / manager was also the president of Liberty Grande’s wholly owned subsidiary called Costa Hollywood Property. Liberty Grande transferred the properties to Costa Hollywood Property and the deed was signed by the president / manager.

Shortly after the properties were transferred to Costa Hollywood Property, a group of investors (EB-5 investors) entered into a loan agreement with Liberty Grande for the development of the Costa Hollywood Hotel. The investors were granted a security interest and mortgage in consideration for the loan.  However, the real properties at-issue subject to the loan and security interest were the properties Liberty Grande previously transferred to its wholly owned subsidiary, Costa Hollywood Property.  The loan agreement was signed by the president / manager.

Liberty Grande defaulted under its loan agreement with its investors. The investors learned that Liberty Grande’s president / manager’s representation that Liberty Grande owned the properties at the time of the loan agreement was untrue.  The investors filed an affidavit in the official records with a copy of the loan agreement stating they entered into the loan agreement for the development of the properties.

Costa Hollywood Property sued the investors for slander of title due to the recording of the affidavit. The investors filed a third-party complaint against Liberty Grande and its president / manager.  The investors claimed the president / manager committed fraud.

The president / manager moved for summary judgment arguing the fraud claim should be barred by the independent tort doctrine and because the president / manager was not a party to the loan agreement in his individual capacity. The trial court granted summary judgment for the president / manager.  This was reversed on appeal.

Fourth District Court of Appeal’s Opinion on Two Important Points

First, the Fourth District Court of Appeal held that the independent tort doctrine did NOT apply in this context.

The independent tort doctrine is a general principle of law that provides “a plaintiff may not recover in tort for a contract dispute unless the tort is independent of any breach of contract.”  “This principle only applies, however, to the parties to the contract.” 

Here, as [the president / manager] stated below in his statement of undisputed facts and as is apparent from the loan agreement, he was only the signatory for Liberty [Grande]; he was not a party to the Agreement. Accordingly, the trial court’s reliance on the independent tort doctrine to determine that [the president / manager] was not liable was error. 

Instead, the court should have analyzed the complaint to determine whether the evidence was sufficient to show that fraud occurred and whether [the president / manager] could be liable for fraud or negligent conduct when he actively participated in the fraud, even when he signed as a corporate officer.

Costa Investors, LLC, supra (internal citations omitted).

Second, the Fourth District Court of Appeal held that the president / manager was NOT excused from fraud simply because he signed the loan agreement in an officer (versus personal) capacity.

“As a general rule, ‘a false statement of fact, to be a ground for fraud, must be of a past or existing fact, not a promise to do something in the future.’ ”  “[F]raudulent (‘knowingly false’) representations . . . of a present fact . . . constitute[ ] fraud in the inducement.” 

The agreement and Borrower’s Certificate, both signed by [the president / manager] on behalf of Liberty [Grande], made false statements of “existing fact.” Prior to [the president / manager] signing those documents on behalf of Liberty [Grande], he had previously transferred title to the [properties] from Liberty [Grande] to another one of his entities, Costa Hollywood Property. The agreement represented Liberty [Grande] as the owner of [the properties] which was an existing false statement of fact, and the agreement falsely purported to give [the investors] a security interest and mortgage on the [properties]. The Borrower’s Certificate, which [the president / manager] also signed on behalf of Liberty [Grande], made additional false statements of existing fact, including that “all ‘representations and warranties’ made by Liberty [Grande] in the loan agreement were “true and correct in all material respects.” Thus, [the president / manager] was not entitled to summary judgment based upon the court’s conclusion that [he] had not made any false statements of material fact.

The central question is whether [the president / manager] can be held individually liable for this fraud evidenced by the agreement and certificate when he signed as the corporate officer of Liberty [Grande]. We hold that he can.

***

Generally, courts have applied an “active participation theory” in holding officers and directors individually liable when they actively participated in the torts of the corporation.  “Under the participation theory, the court imposes liability on the individual as an actor rather than as an owner . . . not predicated on a finding that the corporation is a sham and a mere alter ego of the individual corporate officer.”  “Instead, liability attaches where the record establishes the individual’s participation in the tortious activity.” 

***

[The president / manager] actively participated in the wrong, i.e., fraud and misrepresentation, by signing the agreement and Borrower’s Certificate purporting to show Liberty [Grande] as the owner of [the properties] when [he] had, on behalf of Liberty [Grande], previously transferred the title from Liberty [Grande] to another one of his entities. [The president / manager] actively participated in offering to [the investors] in the agreement a “security interest, Lien and mortgage” in the “assets that comprise the Project” including “the Land and Improvements thereon” in order to obtain loans from [the investors]. Under the active participation theory, [the president / manager] can be personally liable for his fraudulent statements even though he signed on behalf of Liberty [Grande].  Otherwise, [the president / manager] would be able to perpetrate this flagrant fraud and escape liability behind the shield of his representative character.

Costa Investors, LLC, supra (internal citations omitted).

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

 

CONCEALMENT OR FRAUD PROVISION IN INSURANCE POLICY

It is common for insurance policies to have a concealment or fraud provision that ultimately says the policy is void if the insured engaged in fraudulent conduct, intentionally concealed or misrepresented material facts, or made false material statements.  In a nutshell, lying is bad, which includes intentionally withholding material facts.

An insured may make misrepresentations during the insurance application process.  Or, an insured may make misrepresentations after a loss occurs, referred to as the post-loss context. The misrepresentations require different burdens of proof.

With respect to misrepresentations (fraud) during the insurance application process, “an insurer can later void a policy based on an insured’s false statement without a showing of intent to mislead.”  Gracia v. Security First Ins. Co., 47 Fla.L.Weekly D1866a (Fla. 5th DCA 2022).

With respect to misrepresentations (fraud) during the post-loss context, there needs to be “proof of intent to mislead” by the insuredGracia, supra.

By way of example, in Gracia, summary judgment was entered in favor of the property insurer on a property insurance roof damage claim initiated by the insured based on misrepresentations the insured made regarding the pre-loss condition of her property. Prior to the issuance of the policy, there was an inspection report that indicated the property had prior roof and ceiling damage. During the insured’s deposition, the insured testified that the roof was in good condition during this time. The carrier, upon learning of this inspection report, raised the concealment or fraud provision in the policy claiming coverage should be voided and moved for summary judgment on this basis. Specifically, the insurer argued that the insured made false statements in her deposition concerning the pre-loss condition of her home supporting her coverage being voided. Yet, the insured’s position was that the loss subject of her claim occurred during the policy period, not before. Nonetheless, the trial court agreed with the insurer and granted summary judgment.  The appellate court reversed because the fraud in this post-loss context required the insurer to prove the insured’s INTENT. (The insurer needed to prove the element of intent.)  “Simply put, factual questions relating to fraudulent intent or state of mind are generally not ripe for summary judgment determination.” Gracia, supra.

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

 

QUICK NOTE: CAN A PARTY DISCLAIM LIABILITY IN THEIR CONTRACT TO FRAUD?

It is possible for a party to contractually disclaim or otherwise foreclose liability to a fraud claim.  However, let’s be honest.  It can be done, but rarely is and would require very specific language to EXPLICITLY disclaim or foreclose such liability to a fraud claim.

A recent case, discussed here, exemplifies this point where as-is language in a purchase-and-sale agreement was NOT specific to contractually foreclose or disclaim liability to a fraud claim.

For a party to contractually waive a fraud claim, there needs to be an express waiver of liability for fraud that might have been made and that any fraudulent misrepresentation, if such fraud was committed, was disclaimed and would not destroy the validity of the parties’ contract.

Without the right contractual disclaiming language, a fraud claim can survive a motion to dismiss and, potentially, even a summary judgment.  While the failure to include the disclaiming language will not go to the merits of the fraud, what it will do is preclude a claim from being dismissed purely because of contractual language.

On the other hand, with the right disclaiming language, the fraud claim may never see the light of day.

Check out the article on the recent case to understand what a party MUST include in their contract to contractually disclaim or foreclose liability to a fraud claim.

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

 

BLINDLY RELYING ON PUBLIC ADJUSTER OR LOSS CONSULTANT’S FALSE ESTIMATE CAN PLAY OUT BADLY

Insurance policies, particularly property insurance policies, have a concealment or fraud provision that, in essence, gives the insurer an out if the insured submits a fraudulent claim, a false claim, or conceals material facts.   Unlike a traditional fraud claim where a party needs to prove intent, the provision is broad enough that it does not require any intent behind making a false statementSee Mezadieu v. Safepoint Ins. Co., 46 Fla.L.Weekly D691c (Fla. 4th DCA 2021).   For this reason, and as exemplified below, do NOT blindly rely on a public adjuster or loss consultant’s estimate that contains false statements because those false statements, particularly if you know they are false, can play out badly for you! Review the estimate and ask questions about it to make sure you understand what is being included in the loss or damages estimate.

In Mezadieu, a homeowner submitted a claim to her property insurance carrier due to a second-floor water leak emanating from her bathroom.  She submitted an estimate from her public adjuster that included damages for her kitchen cabinets directly below the second-floor bathroom, as well as other items on her first-floor.  Her carrier denied coverage based on the exclusion that the policy excludes damage caused by “[c]onstant or repeated seepage of water or steam…which occurs over a period of time.”

The homeowner filed a lawsuit against her property insurance carrier.  In interrogatory answers, she verified she was seeking the damages per the estimate prepared by her public adjuster.  During her deposition, she reiterated this point.  However, and this is a big however, she acknowledged that her public adjuster’s estimate contained false statements: “when asked if the reported leak caused damage to the kitchen cabinets, [she] disclosed that the cabinets had actually been damaged by a prior leak in the kitchen – a leak which [she] made a claim for with a different insurer – and the leak did not cause any damage to the kitchen cabinets.”  Mezadieu, supra.   Indeed, she conceded that her second-floor bathroom leak caused no damage to her kitchen and she did see any water damage on her first floor, although such damage was included in her public adjuster’s estimate.

The insurance carrier, after amending its affirmative defenses, moved for summary judgment based on the concealment or fraud provision which excluded coverage if an insured: “(1) Intentionally concealed or misrepresented any material fact or circumstance; (2) Engaged in fraudulent conduct; or (3) Made a false statement; relating to this insurance.Mezadieu, supra.

The trial court granted summary judgment attributing the false statements to the homeowner “because she adopted the estimate as her own in both her sworn interrogatory answers and deposition testimony, and because [her adjuster] was acting as her agent.”  Mezadieu, supra.  The appellate court concurred because: (a) she adopted the estimate as her own statement; and (b) even if she did not intend to rely on false statements in her public adjuster’s estimate, the policy does not require that a false statement needs to be made with intent.  As the appellate court explained, and reinforcing why reviewing and asking questions about any estimate is a must:

[An] insured cannot blindly rely on and adopt an estimate prepared by his or her loss consultant without consequence.  This is not to say that an insured will always be bound by the representations made in an estimate prepared by his or her loss consultant. However, when an insured relied on or adopt an estimate containing material false statements to support his or her claim, the insured is bound by the estimate and cannot avoid application of the concealment or fraud simply because he or she did not prepare the estimate.

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

 

 

BASIS TO RESCIND A CONTRACT UNDER EQUITABLE REMEDY OF RESCISSION

When a seller of residential real property fails to knowingly disclose defects that are not readily observable and materially affects the value of the real property, this gives rise to a fraudulent nondisclosure or concealment claim, otherwise known as a Johnson v. Davis claim.  (See this article that discusses this claim.).   This is not the easiest claim to prove because a seller rarely will concede they knew of a hidden defect that they failed to disclose.  Thus, discovery is warranted to show they evidently knew but elected not to disclose because doing so would have impacted the sale or the value of the sale.  If you believe you have a fraudulent nondisclosure claim, make sure to consult with counsel so that you understand your rights relative to the facts associated with the claim.

In a recent case, Rost Investments, LLC v. Cameron, 45 Fla. L. Weekly D1717a (Fla. 2d DCA 2020), a lessee/potential buyer of residential property entered into a lease with an option to purchase contract.   The option to purchase needed to be exercised by the lessee.  Immediately after entering into this contract, the lessee claimed the contract should be rescinded based on the lessor’s fraudulent nondisclosure of defects that materially affect the value of the real property and the seller’s refusal to complete warranty-type items on an intake sheet.

First, the lessee claimed that when they moved into the house, the lessor agreed it would repair certain items that were identified on an intake sheet – hot water in the showers, low water pressure, two remote controls for the garage, and the refrigerator needed to be replaced.  The lessor did not.

Second, the lessee claimed there were latent defects with the property that the lessor knew about but failed to disclose.

After trial, the trial court granted rescission in favor of the lessee.  The Second District Court of Appeals reversed.

Rescission of a contract is an equitable remedy if the party seeking rescission has no adequate remedy at law (such as with a breach of contract claim where monetary damages would be awarded for the breach).  Rost Investments, supra (citation omitted).

“[A] party who voluntarily executes a document . . . is bound by its terms in the absence of coercion, duress, fraud in the inducement or some other independent ground justifying rescission.” 

***

While an agreement may be rescinded for fraud relating to an existing fact, as a general rule, rescission will not be granted “for failure to perform a covenant or promise to do an act in the future, unless the covenant breached is a dependent one.”  “A covenant is dependent where it goes to the whole consideration of the contract; where it is such an essential part of the bargain that the failure of it must be considered as destroying the entire contract; or where it is such an indispensable part of what both parties intended that the contract would not have been made with the covenant omitted.”

Rost Investments, supra (internal quotations and citations omitted).

The Second District held that the items on the intake sheet that the seller did not address “were [not] so essential to the bargain that [the lessor’s] failure to attend to them destroyed the contracts.”  These are items that could have been resolved with money damages through a breach of contract claim, i.e., an action at law.  Hence, the lessor’s failure to fix these items did not serve as a basis for the lessee to rescind the contract.

Next, the fraudulent nondisclosure claim for latent defects did not apply because the lessee was leasing the house as the option to purchase the real property had not been exercised.  The fraudulent nondisclosure claim applies to buyers of real property.   While perhaps the lessee had an argument for fraudulent misrepresentation, the trial court found that the lessor’s nondisclosure of certain defects was not intentional and, without the intent, there was no basis for a fraudulent misrepresentation claim.  (Notably, in a fraudulent nondisclosure claim that applies to buyers of real property, a seller’s state of mind is not at-issue– what is at-issue is that the seller had knowledge of a defect not readily observable that materially affects the value of the real property and did not disclose it.)  See Rost Investments, supra, n.7.

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

 

DEMONSTRATING A FRAUDULENT INDUCEMENT CLAIM OR DEFENSE

In a recent case, Florida’s Fourth District Court of Appeal reversed a trial court’s denial of a motion for a temporary injunction sought by an employer due to an independent contractor’s violation of a non-compete and non-solicitation provision in an employment / independent contractor agreement (“employment agreement”). You can find more on this case and the enforcement of the non-compete and non-solicitation clause here.

A worthy discussion in this case centers on the independent contractor’s fraudulent inducement defense. Specifically, the independent contractor, as a defense to the injunction, claimed that he was fraudulently induced into entering into the employment agreement because the employer promised he would make a certain amount of money and he would work predominantly in one geographic location. The employment agreement contained NO such representations. Instead, the employment agreement contained a fee and services schedule and the independent contractor would be compensated based on that schedule. It stated nothing as to the independent contractor only having to work, or predominantly working, in one geographic location, or that the independent contractor would be guaranteed “X” amount of money working in that location. Why is this important?

In order to support a claim or defense of fraudulent inducement, a party must prove the following elements: “1) a false statement concerning a material fact, 2) knowledge by the person making the statement that the representation is false, 3) intent by the person making the statement that the representation will induce another to act upon it, and 4) [justifiable] reliance on the representation to the injury of the other party.” GEICO General Ins. Co. v. Hoy, 136 So.3d 647, 651 (Fla. 2d DCA 2013 (citation omitted); see also Hillcrest Pacific Corp. v. Yamamura, 727 So.2d 1053, 1055 (Fla. 4th DCA 1999). “[T]o satisfy the element of an injury, the claimant must establish that he or she has sustained pecuniary damage or injury by which he or she has been placed in a worse position than he or she would have been absent the fraud.” Hoy, 136 So.3d at 651.

However, and this is a BIG however, “[A] party cannot recover in fraud for oral misrepresentations that are [covered or] later contradicted in a written contract.” Picture It Sold Photography, LLC v. Bunkelman, 45 Fla. L. Weekly D74a (Fla. 4th DCA 2020).

The employment agreement stated it was the entire agreement between the parties. (There is a reason why agreements contain language that states that the agreement is the final and complete agreement between the parties and supersedes prior agreements and representations between the parties. Such provision is not for naught!)

Hence, the independent contractor’s claim that he was induced into entering the agreement based on making a certain amount of money was covered by the agreement that contained a schedule for services and the corresponding fees.  As mentioned, the agreement did not promise a certain amount of money and/or the money would be based on the independent contractor working in a certain location.   In other words, you cannot claim fraud in the inducement if your contract contradicts what you are claiming or the agreement covers that issue.

Further, even if there was an argument that there were misrepresentations as to money and location, the independent contractor would still need to demonstrate that he justifiably relied on the misrepresentations. “Without justifiable reliance, there can be no actionable fraud.” Bunkelman, supra (citation omitted).

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

 

RELEASE OF “UNKNOWN” CLAIM DOES NOT BAR RELEASE OF “UNACCRUED” CLAIM: FAIR OR UNFAIR?

A general release of “unknown” claims through the effective date of the release does NOT bar “unaccrued” claims.   This is especially important when it comes to fraud claims where the facts giving rise to the fraud may have occurred prior to the effective date in the release, but a party did  not learn of the fraud until well after the effective date in the release.  A recent opinion maintained that a general release that bars unknown claims does NOT mean a fraud claim will be barred since the last element to prove a fraud had not occurred, and thus, the fraud claim had not accrued until after the effective date in the release.  See Falsetto v. Liss, Fla. L. Weekly D1340D (Fla. 3d DCA 2019) (“The 2014 [Settlement] Agreement’s plain language released the parties only from “known or unknown” claims, not future or unaccrued claims. Because there is a genuine issue of material fact as to whether the fraud claim had accrued — that is, whether Falsetto [party to Settlement Agreement] knew or through the exercise of due diligence should have known about the alleged fraud at the time the 2014 Agreement was executed — the trial court erred in granting summary judgment on those fraud claims.”).  

 

Fair or unfair?  In certain contexts, perhaps fair — such as when the facts giving rise to the fraud took place after the effective date of the release.   In other contexts, perhaps unfair — such as when the facts giving rise to the fraud occurred prior to the effective date in the release but were unknown.  

 

What are your thoughts?    However, modifying a release to now include “unaccrued” claims may not be the answer as this could have broad implications relating to future claims, which a party may be cautious about releasing in light of current or future relations between the parties.

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.