In the state of Florida, relief for a fraudulent misrepresentation may be granted only when the following elements are present: (1) a false statement concerning a material fact; (2) the representor's knowledge that the representation is false; (3) an intention that the representation induce another to act on it; and, (4) consequent injury by the party acting in reliance on the representation.
In May of 1982, the Davises (respondents) entered into a contract to buy for $310,000 the home of the Johnsons (the petitioners). At the time of the contract, the house was three years old. The contract required a $5,000 deposit payment, an additional $26,000 deposit payment within five days and a closing by June 21, 1982. The contract provided for a provision on roof inspection, under which, the respondents shall have the right to obtain a written report from a licensed roofer stating that the roof is in a watertight condition. It further provided that in case of leaks or damages, the petitioner would pay for any repair or damage replacement costs. Before the Davises made the second deposit payment, they have noticed some buckling and peeling plaster around the corner of a window frame in the family room and stains on the ceilings in the family room and kitchen of the home. Upon inquiring, the Johnsons told the Davises that the window had had a minor problem that had long since been corrected and that the stains were wallpaper glue and the result of ceiling beams being moved. The Davises thereafter paid the remainder of their deposit and the Johnsons vacated the home. Several days later, following a heavy rain, Mrs. Davis entered the home and discovered water "gushing" in from around the window frame, the ceiling of the family room, the light fixtures, the glass doors, and the stove in the kitchen. Three roofers hired by the Davises found that the roof was inherently defective, that any repairs would be temporary because the roof was "slipping," and that only a new $15,000 roof could be "watertight." The Davises filed a complaint alleging breach of contract, fraud and misrepresentation, and sought rescission of the contract and return of their deposit. The Johnsons counterclaimed seeking the deposit as liquidated damages. Without determining findings of facts, the trial court awarded respondents $ 26,000 and petitioners $ 5,000. On appeal, the appellate court found petitioners made fraudulent misrepresentations of facts materially affecting the value of the property.
Are the Davises entitled to the return of their deposit payment, on the account of the Johnsons’ alleged fraud and misrepresentation as to the quality of the house?
The Court held that the Davises are entitled to return of the total deposit payments, including costs and fees. According to the Court, the evidence shows that even prior to entering into the contract of sale and receiving the $5,000 deposit payment, the Johnsons knew of and failed to disclose that there had been problems with the roof of the house; thus, the Court concluded that the Johnsons have made fraudulent misrepresentations of facts about a damaged roof which materially affected the value of the home.