428 P.3d 1082
Utah2018Background
- Reperex bought May’s Custom Tile in a transaction brokered by Coldwell Banker Commercial (Coldwell); Coldwell acted as dual agent for buyer and seller. May’s had previously engaged CPA firm Child, Van Wagoner & Bradshaw (Bradshaw) for tax work.
- Coldwell’s buyer-seller agreement contained a broad nonreliance clause: Buyer acknowledged reliance on seller, not Coldwell, and agreed to look solely to seller for relief.
- After the purchase May’s failed; Reperex sued Coldwell and Bradshaw for fraud, negligent misrepresentation, and breach of fiduciary duty. Many claims were dismissed pretrial; only fraud claims proceeded to trial against Bradshaw (jury verdict for Bradshaw).
- Lower courts granted Coldwell judgment on the pleadings based on the nonreliance clause and granted summary judgment as to breach of fiduciary duty for lack of expert proof; the court of appeals reversed both rulings as to Coldwell.
- As to Bradshaw, district court granted summary judgment on negligent misrepresentation and breach claims under Utah Code §58-26a-602 (CPA privity statute); court of appeals affirmed. Reperex also sought a jury instruction for fraudulent nondisclosure, which was denied; court of appeals affirmed that denial but on the theory that the statute “occupied the field.”
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Enforceability/applicability of nonreliance clause | Nonreliance clause is void as against public policy or procured by fraud; Reperex alleges Coldwell curated/filtered seller information to induce the deal | Clause unambiguously shields Coldwell from liability for seller-originated representations; thus fraud/negligent misrep claims fail | Clause enforceable as to mere conduit conduct, but does not bar claims for Coldwell’s own independent or curated fraudulent misrepresentations; survival of fraud-in-the-inducement theory remanded |
| Need for expert testimony to prove breach of fiduciary duty against Coldwell | No expert required because alleged misrepresentations (e.g., $310k v. $74k sales; 40% customer bankruptcy; 3-month vs 3-year licensing) are plainly material and within juror common knowledge | Transaction complexity and accounting issues require expert testimony to establish standard of care and breach | No expert required here; materiality and breach claims are within common juror competence; court of appeals affirmed reversal of summary judgment |
| Applicability of Utah Code §58-26a-602 to claims against Bradshaw (privity / writing exception) | Reperex contends it is in privity as third-party beneficiary or fits §58-26a-602(2) writing exception because Bradshaw provided documents and emails related to due diligence | Bradshaw: Reperex not in privity; no writing from accountant to client identifying intent that Reperex rely; statutory exceptions not met | Third-party beneficiary status does not establish privity under the statute; writing exception fails because no writing from Bradshaw to his client (May’s) identifying Reperex as intended beneficiary; summary judgment affirmed against Reperex on these grounds |
| Denial of jury instruction on fraudulent nondisclosure / duty to disclose by Bradshaw | Reperex sought instruction because nondisclosure can constitute fraud when a duty to disclose exists based on the relationship and the due-diligence interaction | Bradshaw and court of appeals argued §58-26a-602 precludes any common-law duty to non-privity third parties (statutory occupation of the field) | Statute does not displace common-law fraud duties; duty-to-disclose question is fact-intensive and remanded for determination whether Bradshaw owed Reperex a duty (court of appeals/district court to resolve or develop record) |
Key Cases Cited
- Lamb v. Bangart, 525 P.2d 602 (Utah 1974) (contractual releases cannot insulate a party from liability for its own fraud)
- Ong Int’l (USA) Inc. v. 11th Ave. Corp., 850 P.2d 447 (Utah 1993) (a release may be voidable if integral to a scheme to defraud)
- Miller v. Celebration Mining Co., 29 P.3d 1231 (Utah 2001) (fraud in the inducement can render contract provisions unenforceable)
- Reynolds v. Bickel, 307 P.3d 570 (Utah 2013) (writing exception may be satisfied by a series of writings forming a memorandum with sufficient nexus)
- Yazd v. Woodside Homes Corp., 143 P.3d 283 (Utah 2006) (existence of fraud/duty to disclose depends on structure and dynamics of the parties’ relationship)