428 P.3d 1082 (Utah 2018), 20170354, Reperex, Inc. v. Coldwell Banker Commercial
|Citation:||428 P.3d 1082, 2018 UT 51|
|Opinion Judge:||Lee, Associate Chief Justice.|
|Party Name:||REPEREX, INC., Brad Ball, and David Ball, Respondents and Cross-Petitioners, v. COLDWELL BANKER COMMERCIAL, Duane Bush, Child, Van Wagoner & Bradshaw PLLC, and J. Russton Bradshaw, Petitioners and Cross-Respondents.|
|Attorney:||J. Spencer Ball, Salt Lake City, for respondents and cross-petitioners Joseph M. Stultz, Salt Lake City, for petitioners and cross-respondents Coldwell Banker Commercial and Duane Bush Tyler S. Foutz, Salt Lake City, Shane W. Norris, Midvale, for petitioners and cross-respondents Child, Van Wagon...|
|Judge Panel:||Associate Chief Justice Lee authored the opinion of the court, in which Justice Himonas, Justice Pearce, Justice Petersen, and Judge Davis joined. Having recused himself, Chief Justice Durrant does not participate herein; District Judge Lynn W. Davis sat.|
|Case Date:||September 18, 2018|
|Court:||Supreme Court of Utah|
[Copyrighted Material Omitted]
[Copyrighted Material Omitted]
Third District, Salt Lake, The Honorable Todd M. Shaughnessy, No. 110916924
J. Spencer Ball, Salt Lake City, for respondents and cross-petitioners
Joseph M. Stultz, Salt Lake City, for petitioners and cross-respondents Coldwell Banker Commercial and Duane Bush
Tyler S. Foutz, Salt Lake City, Shane W. Norris, Midvale, for petitioners and cross-respondents Child, Van Wagoner & Bradshaw PLLC and J. Russton Bradshaw
Associate Chief Justice Lee authored the opinion of the court, in which Justice Himonas, Justice Pearce, Justice Petersen, and Judge Davis joined.
Having recused himself, Chief Justice Durrant does not participate herein; District Judge Lynn W. Davis sat.
On Certiorari to the Utah Court of Appeals
Lee, Associate Chief Justice.
[¶ 1] Reperex, Inc. bought a business in a deal brokered by Coldwell Banker Commercial. After the purchased business failed, Reperex sued Coldwell and Bradshaw, an accounting firm, for fraud, negligent misrepresentation, and breach of fiduciary duty. All of the claims against Coldwell were dismissed before trial. The negligent fraud and breach of fiduciary duty claims against Bradshaw were likewise dismissed. The remaining fraud claim went to trial, where Bradshaw prevailed.
[¶ 2] Reperex appealed. The court of appeals affirmed as to Bradshaw but reversed as to Coldwell. Coldwell and Reperex filed cross-petitions for certiorari. We granted both petitions.
[¶ 3] The first question presented in Coldwells petition is whether Coldwell can be held liable despite a nonreliance clause in Coldwells contract with Reperex. We determine that the nonreliance clause protects Coldwell from representations that it passed along from Mays (the company Reperex purchased), but not from misrepresentations that Coldwell made independently. And we uphold the enforceability of this provision despite Reperexs public policy challenge to it. The second question presented by Coldwell is whether expert testimony was required to sustain Reperexs breach of fiduciary duty claim. We hold that it was not required because the misrepresentations alleged by Reperex were clearly material.
[¶ 4] Reperexs cross-petition also raises two issues. The first concerns the question whether Reperex has a basis to assert a claim against Bradshaw under Utah Code section 58-26a-602, a statute that limits claims against CPAs to those in "privity of contract" or that can establish the applicability of the general requirement of privity. We affirm the court of appeals decision that Reperex failed to establish a basis for overcoming the protections available to Bradshaw under this statute. The second question in Reperexs cross-petition is whether Reperex was entitled to a jury instruction on nondisclosure fraud. The court of appeals affirmed the district courts refusal to give such an instruction on the ground that Utah Code section 58-26a-602 "occupies the field" and forecloses a duty of disclosure by not expressly prescribing one. We reverse on this issue and remand for a determination of whether Bradshaw owed Reperex a duty under the common law.
[¶ 5] Reperex, Brad Ball, and David Ball (collectively, "Reperex") purchased a company called Mays Custom Tile in a transaction that was brokered by Coldwell Banker Commercial and Duane Bush (collectively, "Coldwell"). Coldwell represented both Reperex and Mays seller, Steve May, in a "dual agency capacity."
[¶ 6] In the course of the transaction, an accounting firm called Child, Van Wagoner &
Bradshaw1 provided some financial information to Reperex about Mays. Mays had previously hired Bradshaw to prepare its tax returns. And when another party had considered buying Mays, Bradshaw had agreed to share the companys tax returns with that potential buyer. So when Reperex was looking into buying the company, Mays asked Bradshaw to share "similar documents" with Reperex. Bradshaw allowed Reperex to look through those documents at its office in a due diligence meeting. The details of that interaction are disputed.
[¶ 7] At some point after the purchase, Mays went out of business. Reperex sued Coldwell, alleging various nondisclosures and misrepresentations. First, some of the financial statements Coldwell gave Reperex indicated that Mays profits in 2006 were over $300,000. But according to Reperex, the actual profits for that year were only $74,000— a fact that Bradshaw had mentioned to Coldwell over email. Second, when Reperex asked whether Mays had commingled funds with a sister business, Coldwell said it hadnt even though Bradshaw had told Coldwell earlier that in fact there had been a "lot of intercompany mingling." Third, Coldwell failed to inform Reperex that one of Mays clients, which accounted for 40 percent of its business, had gone bankrupt the year before. Fourth, Coldwell told Reperex that it would take the company 90 days to acquire the license they needed to run the business, when it actually took three years to qualify. On these facts Reperex asserted claims for fraud, negligent misrepresentation, and breach of fiduciary duty against Coldwell.
[¶ 8] Reperex asserted the same three claims against Bradshaw. It alleged that Bradshaw had provided "attestation services" to Reperex and that it had made several misrepresentations at the due diligence meeting. Bradshaw contests most of these basic facts and asserts that it simply handed over documents and gave mostly noncommittal answers to the questions that Reperex asked at the meeting. Bradshaw denies that it provided "attestation services" or that there was an agreement to provide such services.
[¶ 9] Coldwell moved for judgment on the pleadings, asserting that it was immune from liability because Reperex had disclaimed any reliance on Coldwells representations. The contract between Coldwell and Reperex included an acknowledgment that Reperex was "relying on its own inspection of the involved business and the representations of the Seller and not of [Coldwell] and/or any of its agents or employees" with regard to any material facts about the business. The agreement also included an acknowledgment that Coldwell had not "verified the representations of the Seller, and should any representations be untrue, Buyer agrees to look solely to Seller for relief and to indemnify [Coldwell] ... and hold them harmless in connection with all losses and damages caused to Buyer thereby." Reperex argued in response that this provision was effectively a disclaimer of liability for fraud, making it void as against public policy.
[¶ 10] The district court granted judgment on the pleadings as to the fraud and negligent misrepresentations claims, but denied the motion as to the breach of fiduciary duty claim. In disposing of the fraud and negligent fraud claims, the court relied on an unpublished court of appeals opinion called Ruf, Inc. v. Icelandic Investments, Inc., 1999 UT App 103, 1999 WL 33244779. In that case, the court of appeals held that releases like the one in this case are distinguishable from releases from liability for fraud, because they merely "define[ ] roles." Id. at *1 n.1. It reasoned that such provisions dont permit fraud— by disclaiming the essential element of reliance they instead render the plaintiff unable to prove fraud. Id. at *1.
[¶ 11] At the close of expert discovery, Coldwell moved for summary judgment on the remaining breach of fiduciary duty claim. It argued that the claim failed as a matter of law because Reperex had not designated the requisite experts to establish the elements of that claim. The district court agreed and granted summary judgment.
[¶ 12] Bradshaw moved for summary judgment on the claims against it as well. In so doing Bradshaw relied on Utah Code section 58-26a-602, which states generally that a CPA cannot be liable "to persons with whom they are not in privity of contract for civil damages resulting from acts, omissions, decisions, or other conduct in connection with professional services performed by that [CPA]." The statute also recognizes two exceptions: one for fraud claims and another where there is a writing indicating an intent to rely on the CPAs representations. UTAH CODE § 58-26a-602(1) & (2).
[¶ 13] Bradshaw argued that this statute precludes liability, as Reperex was not in privity of contract or able to establish either exception. The district...
To continue readingFREE SIGN UP