Can non-reliance clauses protect brokers from fraud claims? Reperex Inc. v. Child, Van Wagoner & Bradshaw Explained

A recent Utah Court of Appeals decision in Reperex Inc. v. Child, Van Wagoner & Bradshaw clarifies important boundaries around contractual liability limitations and professional accountability in business transactions.

Background and Facts

The Buyers purchased May’s Custom Tile with assistance from business broker Coldwell Banker Commercial and accountant J. Russton Bradshaw. The business ultimately failed, and the Buyers discovered several material misrepresentations: the broker had provided financial statements showing $300,000 in profits when the business actually made only $74,000, the broker knew but failed to disclose that the business’s largest client had filed for bankruptcy, and the broker misrepresented licensing requirements. The purchase agreement contained a non-reliance clause limiting the broker’s liability, stating buyers would rely on their own inspection rather than broker representations.

Key Legal Issues

The case presented three main issues: (1) whether non-reliance clauses can shield brokers from fraud liability, (2) whether expert testimony is required to establish breach of fiduciary duty by business brokers, and (3) whether accountants can be held liable to non-clients under Utah’s Accountant Liability Statute.

Court’s Analysis and Holding

The court rejected the district court’s reliance on Ruf, Inc. v. Icelandic Investments, an unpublished memorandum decision, finding it inconsistent with established Utah fraud jurisprudence. The court held that contractual liability limitations cannot protect against fraud claims when the limitation itself was procured by fraud or integral to a fraudulent scheme. Regarding expert testimony, the court concluded that the broker’s alleged misconduct—misrepresenting profits, failing to disclose bankruptcy, and misstating licensing requirements—fell within the “common knowledge and experience” of jurors, making expert testimony unnecessary.

However, the court affirmed summary judgment for the accountant, finding the Buyers could not satisfy the writing requirement under Utah Code Section 58-26a-602(2)(b), which requires accountants to identify in writing that their services were intended for reliance by specific third parties.

Practice Implications

This decision reinforces that fraud claims can pierce contractual liability shields when the limitations themselves are tainted by fraudulent conduct. For practitioners representing clients in business transactions, the decision highlights the importance of examining whether non-reliance clauses were procured through misrepresentation. The ruling also demonstrates Utah’s strict interpretation of accountant liability protections, requiring precise compliance with statutory writing requirements for third-party claims.