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Rescission – Material Misrepresentations

By: Derek Hawkins//August 25, 2015//

Rescission – Material Misrepresentations

By: Derek Hawkins//August 25, 2015//

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Civil

7th Circuit Court of Appeals

Officials: WOOD, Chief Judge, FLAUM, Circuit Judge, and KENNELLY, District Judge.

Rescission – Material Misrepresentations

No. 14-2904 CMFG Life Insurance Company v. RBS Securities, Incorporated

Assumption of what documents might say based on understandings and representations in prior deals that were established per industry standard made summary judgment on material misrepresentation claim inappropriate.

“We wish to emphasize, however, the narrowness of our conclusion. We do not establish a rule that a party to a transaction may claim justifiable reliance on representations that were not made, or that he had not read. To the contrary, a party entering into a business transaction cannot do so based on assumptions and suppositions and then complain after the fact that they turned out to be unfounded. That would not constitute justifiable reliance. And indeed, the finder of fact in this case may conclude after a trial that CUNA has not proven reliance or at least not justifiable reliance. Our determination that the issue is reserved to the finder of fact in this case is premised on the relatively unusual situation laid out in Prusha’s testimony—which we are required to take as true at the summary judgment stage—that his prior dealings with RBS warranted him in understanding that the representations that he knew had been made in the prior deals he had reviewed and that were established standards in the industry were also being made in the deals at issue. Given that testimony, but only given that testimony, entry of summary judgment in RBS’s favor was inappropriate.”

 

Reversed in part. Affirmed in part.

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Attorney Derek A. Hawkins is the managing partner at Hawkins Law Offices LLC, where he heads up the firm’s startup law practice. He specializes in business formation, corporate governance, intellectual property protection, private equity and venture capital funding and mergers & acquisitions. Check out the website at www.hawkins-lawoffices.com or contact them at 262-737-8825.

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