Lower Fees, Inc. v. Bankrate, Inc.
74 So. 3d 517
Fla. Dist. Ct. App.2011Background
- Lower Fees hires Bankrate to purchase its Lower Fees System and related assets under a 47-page asset purchase agreement with 76 attachments.
- The agreement includes a broad 'Entire Agreement' / no-reliance clause stating no representations were made except those in the agreement.
- Bankrate allegedly lacked personnel skilled in LAMP technology; after buyout, the Lower Fees System could not be integrated and was destroyed.
- Lower Fees sues for rescission based on fraudulent inducement, asserting Bankrate misrepresented its expertise with LAMP technology.
- Trial court dismissed the third amended complaint with prejudice, holding the no-reliance clause barred fraud claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does no-reliance bar fraudulent inducement claims? | Lower Fees: clause prohibits fraud defense to contract validity. | Bankrate: clause precludes reliance on any non-written representations. | No-reliance clause does not bar fraud claim unless explicitly negating fraud. |
| Must a contract explicitly negate fraud to preclude rescission for fraud in inducement? | Oceanic Villas prohibits automatic bar without explicit negation of fraud. | Bankrate relies on no-reliance language to extinguish fraud claims. | Explicit negation of fraud is required to preclude fraudulent inducement claims. |
| Can fraud in procurement defeat a broad integration/no-reliance clause? | Fraud in procurement can vitiate contract despite clause. | Clause should bar claims if it explicitly disclaims reliance on pre-contract representations. | Fraud in inducement can support rescission even with a no-reliance clause absent explicit negation of fraud. |
| What is the appellate ruling on the trial court's dismissal? | Reversal warranted to allow fraud-based rescission claim to proceed. | Court should uphold dismissal if clause precludes fraud claim. | The case is reversed and remanded for further proceedings. |
Key Cases Cited
- Oceanic Villas, Inc. v. Godson, 148 Fla. 454 (1941) (fraudulent inducement cannot be barred unless contract explicitly negates fraud)
- Wallace v. Dean, 3 So. 3d 1035 (Fla. 2009) (de novo review of trial court decisions on dismissals)