(BREAKING NEWS, OP-ED) — This isn’t legal advice. It’s a classic example of what happens when investors fail to do due diligence and react poorly when the sewer backs up.
The foregoing case should teach us a few things …
- Don’t rely on outside, third-party verifications on anything, especially flood zones. The investors should have checked directly with FEMA and talked with a human being and asked for the most recent flood maps and had it verified in writing with FEMA. Duh.
- If you’re going to sue for fraud, at least understand the court is going to require you to meet the 5-point test as to the elements of fraud. Only citing reliance (on someone else’s opinion) does not meet the full criteria for a fraud claim.
- It’s called relative due diligence … if you open a business in a populated area, such as the investor group did here, don’t you think it would have been a good idea to talk to other area business owners to see whether they’re paying for special flood insurance too? I mean, seriously, if you’re going to grow a business in a given market area, don’t you think you should know the terrain?
- On Page 4 of the 5-page ruling, it’s really important to note that: “In alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake (and not simply) … on speculation and conclusory allegations.” “On information and belief” doesn’t cut it if you can’t specifically cite WHERE and HOW the fraud or mistake occurred and who is liable for making that mistake. Best to get a grasp on the elements of fraud and get an attorney that really understands federal Rules of Civil Procedure.