## Facts

- Out-of-state purchasers sought to buy a Florida resort property known as Redfish Lodge.
- The sellers and their broker allegedly made material misrepresentations to induce the purchase, including:
  - the acreage offered for sale (stated about 5.5 acres, allegedly actually 1.44 acres),
  - the lodge’s prior business income (allegedly overstated),
  - the condition of a building roof (represented as new; allegedly not new and leaking),
  - the availability of additional land for future expansion.
- The purchasers alleged they relied on these statements and bought the property.
- The trial court dismissed the fraudulent misrepresentation complaint for failure to state a cause of action, reasoning that the purchasers did not allege they investigated the truth of the representations.
- The district court reversed, holding the complaint was sufficient without alleging investigation.
- The sellers and broker sought review based on conflict with prior Florida precedent requiring investigatory allegations.

## Issues

1. In a fraudulent misrepresentation action, must a plaintiff plead that they investigated the truth of the defendant’s statements (or could not have discovered the truth), where the falsity could have been discovered by investigation?

## Decision

- The Supreme Court of Florida approved the district court’s decision and reinstated the complaint.
- The Court held that a fraud plaintiff may rely on a material misrepresentation even if an investigation could have revealed the falsity.
- The Court disapproved the stricter rule to the extent it required allegations of investigation or unavoidable ignorance as a prerequisite to stating a fraud claim.

## Legal Principles

- A recipient of a fraudulent misrepresentation is justified in relying on it even though the falsity could have been discovered through investigation.
- Reliance is not justified if the recipient knows the representation is false or if the falsity is obvious.
- Ordinary negligence or inattention in failing to investigate does not, by itself, bar a fraudulent misrepresentation claim at the pleading stage.

## Conclusion

Florida law permits fraud claims to proceed without pleading that the plaintiff investigated the truth of a defendant’s material misstatements; the focus is on intentional misrepresentation and reliance, limited where falsity is known or obvious.


Besett v. Basnett, 389 So. 2d 995 (Fla. 1980)