Does our merger / 'no representations were made' clause block a claim that the deal was induced by an oral misrepresentation?
Not reliably, and Florida's highest-court authority does not settle it. In Oceanic Villas (1941) the Supreme Court held that a lease clause reciting that the lessee was not influenced by any representations and that no verbal agreements had been made did not bar rescission for fraud. Such a clause 'evidences an agreement between the parties that no fraud had been committed', and fraud in procuring the contract vitiated every part of it, including the clause; the Court drew the distinction expressly between a stipulation that recognises fraud may have been committed and provides it shall not vitiate the contract, and one in which the parties merely stipulate that no fraud has been committed and that neither relied on the other's pre-contract representations. Read the result at its real width: the Court held the bill 'not entirely without equity' but also held it short of the allegations constituting an offer to do equity, so the circuit court 'was without error' in dismissing it with leave to amend, and the lessee was to secure the lessor's accrued and accruing rentals pending the suit. The Court also recognised that parties may, by special provision, make a contract incontestable on account of fraud. Two years earlier, in Cassara v. Bowman (1939), the Court had held that an entire-agreement clause meant the parties agreed no oral representations would vary the lease, and affirmed dismissal of a bill to rescind for oral misrepresentations of profits. Oceanic Villas distinguished Cassara on the allegations rather than overruling it. District courts of appeal have reached conflicting results: the Fifth District in Billington (2016) held that the non-reliance and waiver components of a disclaimer clause negated the buyer's fraud claims. Billington reconciled the two Supreme Court decisions by the clause type (Cassara's was a classic merger or integration clause and Oceanic Villas' a non-reliance clause), and concluded that an express waiver of the right to base a claim on pre-contract representations renders a contract incontestable on account of fraud within Oceanic Villas. It then certified three questions to the Florida Supreme Court, including whether Oceanic Villas overruled Cassara sub silentio, which is why the point is still open.
The trap
Florida boilerplate advice usually states one side of this split as settled. A buyer relying on Oceanic Villas to escape a merger or no-reliance clause may face Cassara and the Billington line. A seller relying on the clause may face Oceanic Villas, which is still Supreme Court law and was not overruled in any opinion we hold. What Oceanic Villas does say clearly is the drafting point: a clause that merely recites no representations were made is weaker than a special provision stating that the contract may not be rescinded for fraud. The results in the cases cited also turn on facts outside the clause. Cassara rested in part on the lessee's failure to make an easy inquiry into the hotel's reputation. And the Fifth District itself asked the Supreme Court to settle the question rather than treating it as settled: it certified whether Oceanic Villas sub silentio overruled Cassara, whether a Cassara-style merger clause negates a fraud claim if it did not, and whether clear and unambiguous disclaimer clauses make such a claim incontestable.
18 authorities
The words that state the rule
If the lease was procured by fraud and misrepresentation as to a material fact, the truth or falsity of which was known only to the Lessor (and *458 it is so alleged in the bill of complaint) and which misrepresentations, if proved, would be sufficient basis for a decree of recission, then such fraudulent misrepresentation vitiated every part of the lease contract and the Lessee was not bound by the above quoted clause.
The words that state the rule
The clause of the contract here relied on does not stipulate that the lease may not be rescinded for fraud, but it does stipulate “and that no verbal agreements, stipulations, representations, exceptions or conditions whatsoever have been made or entered into in regard to the above described property which will in any way vary, contradict or impair the validity of this lease, or of any of the terms and conditions herein contained.” This provision in the contract does not make the contract incontestable because of fraud, but evidences an agreement between the parties that no fraud had been committed.
The words that state the rule
We recognize the rule to be that fraud in the procurement of a contract is ground for rescission and cancellation of any contract unless for consideration or expediency the parties agree that the contract may not be cancelled or rescinded for such cause, and that by such special provisions of a contract it may be made incontestable on account of fraud, or for any other reason.
The words that state the rule
We think the factual conditions differentiate this case from the Cassara case. The allegations of the two bills of complaint are entirely different as to the nature of the representations alleged to have been false.
The words that state the rule
By the inclusion of the latter clause the parties agreed that the lease contained the entire contract between the parties and that no oral representations, promises or undertakings, and that no act or acts done at or taken pursuant to such oral representations, promises or undertakings shall effect, vary, alter or modify the terms of the lease. The lease contained no representations as to the amount or profits made by the owner on the operation of the hotel and no representatons as to the amount for which the pent house had been leased and, therefore, the les'see foreclosed *304 any right on his part to claim a forfeiture or rescission of the lease because of such oral representations if the same had been made.
- case192 So. 3d 77Billington v. Ginn-LA Pine Island, Ltd.Fla. 5th DCAdecided 2016-05-20read it at the source ↗
The words that state the rule
Concluding that the “non-reliance” and “waiver” components of the disclaimer clauses negate Appellant’s fraud claims, we affirm.
- case192 So. 3d 77Billington v. Ginn-LA Pine Island, Ltd.Fla. 5th DCAdecided 2016-05-20read it at the source ↗
The words that state the rule
Courts have struggled to reconcile and apply Oceanic Villas and Cassara, yielding conflicting results.
The words that state the rule
The lease contains the following clause: “It Is Distinctly Understood and Agreed that the Lessee herein accepts the property herein leased and demised in its present condition, being governed by its own personal inspection of the premises, and in executing this lease it has not been governed or influenced by any representations of the Lessors as to the age and condition, or character of improvements situated upon said property, or as to the earning capacity thereof, and Lessee is guided in making this lease in accordance with the present terms only by its own judgment and without any influence, representation, fraud or duress of any nature on the part of the Lessors, and that the Lessee herein shall under no circumstances assert or maintain any claims for damages against the Lessors by reason of any present or future condition of improvements or buildings, if any, situated upon the above described property, and that no verbal agreements, stipulations, reservations, exceptions or conditions whatsoever have been made or entered into in regard to the above described property, which will in any way vary, contradict or impair the validity of this lease, or of any of the terms and conditions herein contained.”
The words that state the rule
The appeal brings for review order dismissing amended bill of complaint. The suit was for rescission of a lease contract and for judgment requiring refund of moneys paid on the lease. The grounds upon which the right of rescission is based are, in effect three: (1) that the lessor knowingly and wil *303 fully misrepresented the amount of profits made on the operation of the hotel during the year or season preceding the lease; (2) that he misrepresented the amount for which he had leased the pent house on top of the premises leased and which were included within the lease, for the year or season preceding the date of the lease; and (3) that the hotel bore a good reputation as a first class hotel when in truth and in fact it did not bear such a reputation.
The words that state the rule
The bill of complaint shows that the lessee was on the ground a stranger to the lessor and that he elected to act upon the alleged representations of the lessor and made no inquiry elsewhere as to the character and reputation which the hotel had acquired and maintained under its operation by the lessor. Character and reputation are measured by the opinion of the, public and not by the opinion of one interested individual. Our knowledge of men and affairs leads to the conclusion that there is nothing more easily acquired by inquiry than is the character and reputation of a hotel and casual inquiry among citizens and residents, business people and frequenters of hotels will easily elicit reliable information as to the character and reputation of any hotel in any city.
The words that state the rule
With these factual conditions in mind, we conclude that the lower court followed the enunciations of controlling legal principles found in Carmadella v. Cartright, 126 Fla. 536 , 171 Sou. 225 ; People v. Rogers, 104 Fla. 462 , 140 Southern 205; Willis v. Fowler, et al., 102 Fla. 35 , 136 Sou. 358 . *305 It, therefore, follows that the order appealed from should be, and is, affirmed.
The words that state the rule
We think there is clearly a distinction in the effect of a stipulation of a contract which recognizes that fraud may have been committed and stipulates that such fraud, if found to have been committed, should not vitiate the contract, and one in which the parties merely stipulate that no fraud has been committed and that neither party has relied upon the representations of the other party made prior to the execution of the contract.
The words that state the rule
So the bill is not entirely without equity but we do not find that the bill contains sufficient allegations constituting offers to do equity. It would be inequitable to allow *460 the plaintiff to retain possession of valuable property and enjoy the rents, issues and profits thereof pending what may be long litigation without offering any security to the lessor for his rentals, or so much thereof as he may be found entitled to receive. It, therefore, follows that the circuit court was without error in its order dismissing the bill of complaint with leave to amend.
The words that state the rule
For the reasons stated, certiorari is granted and quashed with directions that the cause be remanded to the lower court for further procedings not inconsistent with the views herein expressed. So ordered. Brown, C. J., Whitfield and Adams, J. J., concur.
The words that state the rule
The lease attached to and made a part of the bill of complaint has , two pertinent provisions, One is: “4. That the said premises shall not be used for any purpose other than that of conducting a hotel of a reputation and character as good as is enjoyed by the said hotel under its present management and in this connection the parties understand and agree that the said hotel enjoys a first class' reputation and rating at the present time.” And the other is: “10. It is understood and agreed that this lease contains the entire contract between the parties and that no oral representations, promises or undertakings' and that no act or acts done at or taken pursuant to such oral representations, promises or undertakings shall effect, vary, alter or modify the terms of this lease in any particular' where the payment of money is required to be made by the lessee.”
- case192 So. 3d 77Billington v. Ginn-LA Pine Island, Ltd.Fla. 5th DCAdecided 2016-05-20read it at the source ↗
The words that state the rule
In Cassara, the lease contained a classic “merger” or “integration” clause. 186 So. at 514. The contract in Oceanic Villas contained a “non-reliance” clause. 4 So. 2d at 690. Accordingly, a superficial resolution of the apparent conflict between the cases is that a “merger” clause negates a fraud claim but a “non-reliance” clause does not. Because the contracts at issue here contain both such clauses, it would follow from Cassara that the “merger” language negates Appellant’s fraud claim.
- case192 So. 3d 77Billington v. Ginn-LA Pine Island, Ltd.Fla. 5th DCAdecided 2016-05-20read it at the source ↗
The words that state the rule
We also conclude, pursuant to Oceanic Villas, that an express waiver of the right to base a claim on pre-contract representations renders the contract “incontestable . . . on account of fraud.” Oceanic Villas, 4 So. 2d at 690. We emphasize that the disclaimer clauses here are as clear and conspicuous as they are comprehensive. If these clauses are insufficient to render a claim for fraud “incontestable” within the contemplation of the Oceanic Villas court, then no disclaimer can possibly accomplish that objective—an objective that is both reasonable and essential in our complex and litigious society.
- case192 So. 3d 77Billington v. Ginn-LA Pine Island, Ltd.Fla. 5th DCAdecided 2016-05-20read it at the source ↗
The words that state the rule
We certify the following questions to the Florida Supreme Court as involving great public importance: Did the court’s decision in Oceanic Villas, Inc. v. Godson, 4 So. 2d 689 (Fla. 1941), sub silentio overrule its decision in Cassara v. Bowman, 186 So. 514 (Fla. 1939)? If Oceanic Villas did not overrule Cassara, does a merger clause such as that discussed in Cassara, negate a claim for fraud? Do clear and unambiguous disclaimer clauses, such as those in this case, negate or “ma[ke] incontestable” a claim for fraud as discussed in Oceanic Villas?
“Defective” means that reading found something to correct. What you are reading is the rule as it stands after that reading.