Greer v. ADVANCED EQUITIES, INC.
964 N.E.2d 772
Ill. App. Ct.2012Background
- In 1999, plaintiffs purchased Pixelon shares from defendants after receiving a private placement memorandum (PPM).
- Plaintiffs signed a subscription agreement containing a nonreliance clause stating they relied solely on the PPM and not on any oral or other representations.
- Plaintiffs later alleged defendants made false oral representations about Pixelon.
- Plaintiffs filed suit, initially in federal court, then in Cook County circuit court, asserting common-law fraud based on oral misrepresentations.
- The circuit court dismissed the fraud claim under 735 ILCS 5/2-619, and the case proceeded on appeal via Rule 308 to address a certified question.
- The court reviewed Illinois law on whether a nonreliance clause bars justifiable reliance for a common-law fraud claim based on oral statements in a securities transaction.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does a nonreliance clause bar justifiable reliance on oral misrepresentations in a fraud claim? | Adler rule should not be universal; reliance may be preserved if not contradicted by written terms. | Nonreliance clause disclaims reliance on oral representations, barring a fraud claim. | Yes; nonreliance clause bars justifiable reliance on oral misrepresentations. |
| Is Adler controlling even when there is no direct contradiction between oral and written statements? | Adler relies on contradictions; should extend beyond direct contradictions. | Adler disclaims reliance whenever a nonreliance clause exists, regardless of contradictions. | Adler applies regardless of explicit contradiction; nonreliance clause is dispositive. |
| Should Illinois follow Adler, Tirapelli, and Benson over federal approaches that limit nonreliance effects? | Federal cases limit on reliance should guide state law. | State law controls; Adler rule is distinct from federal treatment. | Illinois adheres to Adler/Tirapelli/Benson; nonreliance clause bars the claim. |
Key Cases Cited
- Adler v. William Blair & Co., 271 Ill. App. 3d 117 (1995) (nonreliance clause bars reliance on outside information)
- Tirapelli v. Advanced Equities, Inc., 351 Ill. App. 3d 450 (2004) (nonreliance clause dispositive; argues Adler rule applicability)
- Benson v. Stafford, 407 Ill. App. 3d 902 (2010) (reaffirms Adler rule; nonreliance clause defeats oral fraud claim)
- Rissman v. Rissman, 213 F.3d 381 (2000) (Seventh Circuit view on nonreliance principle in federal law)
- Extra Equipamentos E Exportacao Ltda. v. Case Corp., 541 F.3d 719 (2008) (Seventh Circuit on nonreliance clauses and reliance in fraud)
- Barbara's Sales, Inc. v. Intel Corp., 227 Ill. 2d 45 (2007) (limits certified-question discussions; review of precedent)