Court Opinion

ID: 9493074
Source: CourtListenerOpinion
Date Created: 2023-08-05 14:57:40.463243+00
Date Added: 2024-06-11T17:55:38.453599
License: Public Domain

' ILANA DIAMOND ROVNER, Circuit Judge,
concurring.
I join in the.majority opinion, and agree that uhder the facts of this case, the non-reliance clause precludes damages for the prior oral statements. I write separately only to explain further the basis for, and scope of, that holding. As the majority opinion notes, our holding follows that of the courts of appeals in Jackvony v. RIHT Financial Corp., 873 F.2d 411 (1st Cir.1989) (Breyer, J.) and One-O-One Enterprises, Inc. v. Caruso, 848 F.2d 1283 (D.C.Cir.1988) (R.B. Ginsburg, J.). The reasoning in those cases, as well as other cases in this court, reveals that all circumstances surrounding the transaction are *388relevant in determining whether reliance on prior oral statements can be deemed reasonable. Thus, although it may be determinative in many — and perhaps most— cases, the existence of a non-reliance clause will not automatically preclude damages for prior oral statements.
In Jackvowy, the First Circuit set forth eight factors that are relevant in determining whether an investor’s reliance on prior statements was reasonable: (1) the sophistication and expertise of the plaintiff in financial and securities matters; (2) the existence of long standing business dr personal relationships; (3) access to the relevant information; ' (4) the existence of a fiduciary relationship; (5) concealment of the fraud; (6) the opportunity to detect the fraud; (7) whether the plaintiff initiated the stock transaction or sought to expedite the transaction; and (8) the generality or specificity of the misrepresentations. 873 F.2d at 416. The court then held that the reliance on the prior statements in Jackvo-ny was unreasonable because the prior statements were vague, Jackvony was a sophisticated investor, the written proxy statement instructed Jackvony not to rely on any other statements, Jackvony seemed anxious to expedite the transaction, and Jackvony helped draft the written acquisition documents. Thus, the Jackvony court did not hold that a non-reliance statement precludes a fraud claim in all cases, but noted that it is a factor that may defeat a claim of reliance.
Similarly, the D.C. Circuit in One-O-One, in holding that an integration clause rendered reliance on prior representations unreasonable, set forth the context in which that written agreement was reached. Specifically, the court noted that the parties reached the written agreement after eight months of vigorous negotiations involving many offers, promises and representations, and that the integration clause was included to avoid misunderstandings as to what was agreed upon in the course of those extensive negotiations. 848 F.2d at 1286. The court also rejected the plaintiffs’ claim of fraud in the inducement based on the circumstances present in that particular case, holding that “[w]e have here the case of ‘a party with the capacity and opportunity to read a written contract, who [has] execute[d] it, not under any emergency, and whose signature was not obtained by trick or artifice;’ such a party, if the parol evidence rule is to retain vitality, ‘cannot later claim fraud in the inducement.’ ” Id. at 1287, quoting Management Assistance, Inc. v. Computer Dimensions, Inc., 546 F.Supp. 666, 671-72 (N.D.Ga.1982), aff'd. mem. sub nom. Computer Dimensions, Inc. v. Basic Four, 747 F.2d 708 (11th Cir.1984). In fact, in Whelan v. Abell, 48 F.3d 1247, 1258 (D.C.Cir.1995), the court explicitly recognized that the conclusion in One-O-One “was plainly not intended to say that an integration clause bars fraud-in-the-inducement claims ’ generally or confines them to claims of fraud in execution.... Such a reading would leave swindlers free to extinguish their victims’ remedies simply by sticking in a bit of boilerplate.” Id.
Thus, both Jackvony and One-O-One recognize that courts must consider all of the surrounding circumstances in determining whether reliance on a prior oral settlement is reasonable, and that the existence of a non-reliance clause is but one factor, albeit a fairly convincing one in many cases. This is also consistent with our decision in Carr v. CIGNA Securities, Inc., 95 F.3d 544, 547 (7th Cir.1996), which held that “[i]f a literate, competent adult is given a document that in readable and comprehensible prose says X ... and the person who hands it to him tells him, orally, not X ... oür literate competent adult cannot maintain an action for fraud against the issuer of the document.” In discussing disclaimers in the context of a fiduciary relationship, Carr noted that a written disclaimer may not provide a safe harbor in every case, because “[n]ot all principals of fiduciaries are competent adults; not all disclaimers are clear; and the relationship involved may involve such *389a degree of trust invited by and reasonably reposed in the fiduciary as to dispel any duty of self-protection by the principal.” Id. at 548. The reasonableness of the reliance thus depends on an analysis of the surrounding circumstances. Just as it would be unreasonable to expect a person to pore through a 427 page document looking for “nuggets of intelligible warnings,” a person may not claim reasonable reliance when a written disclaimer is apparent in an eight page document. Id.
This is nothing new. The issue of reasonable reliance has always depended upon an analysis of all relevant circumstances. I write separately merely to avoid the inevitable quotes in future briefs characterizing our holding as an automatic rule precluding any damages for fraud based on prior oral statements when a non-reliance clause is included in a written agreement. The world is not that simple, and our holding today cannot be interpreted so simplistically. On the facts in this case, involving extensive negotiations aided by counsel and with numerous rejections of efforts to include the oral representations in the written agreement, the non-reliance clause rendered any rebanee on the prior statements unreasonable.