P was a 51 year old widow who wanted to be a dancer. She began taking lessons at D's dance studio.
P was a terrible dancer, but D constantly told her that she was graceful and improving and that additional lessons would make her a beautiful dancer.
D used fake designations like "Silver Standard" to entice P to buy more hours of instruction.
P bought over 2300 hours of instruction for ~$32k.
When P discovered that she was not actually improving and was still a terrible dancer, she sued D.
Procedural History:
Lower court found no cause of action, found for D.
FL Court of Appeals reversed, found for P, cause of action valid.
Issues:
Under what circumstances do obviously untrue opinions and puffery as to value and ability become possible fraud, capable of creating a cause of action?
Holding/Rule:
When one party has superior knowledge, statements of opinion can be treated as misrepresented statements of fact and give the other party a cause of action.
Reasoning:
D went beyond unsavory, yet legal, "sales puffing" and used undue influence, suggestion of falsehood, and suppression of truth to swindle P.
The representations made to P were false and known to be false by D and purposefully withheld from P with the sole and specific intent to deceive and defraud the P.
"A statement of a party having superior knowledge may be regarded as a statement of fact although it would be considered as opinion if the parties were dealing on equal terms."
In contractual situations where a party owes no duty to disclose facts, the law says that if he undertakes to do so, he must disclose the whole truth.
Actions that are contrary to good faith should be sufficient to void a contract if there is surprise, mistake, want of freedom, undue influence, suggestion of falsehood, or suppression of the truth.
