When do nonreliance clauses protect business brokers from fraud claims? Reperex v. Coldwell Banker Commercial Explained

The Utah Supreme Court’s decision in Reperex v. Coldwell Banker Commercial provides important guidance on the enforceability and scope of nonreliance clauses in business transactions and clarifies when expert testimony is required for breach of fiduciary duty claims.

Background and Facts

Reperex purchased May’s Custom Tile through Coldwell Banker Commercial, which acted as a dual agent. After the business failed, Reperex sued Coldwell for fraud, negligent misrepresentation, and breach of fiduciary duty, alleging various misrepresentations about the company’s financial condition. The purchase agreement contained a nonreliance clause stating that Reperex was “relying on its own inspection of the involved business and the representations of the Seller and not of [Coldwell].” Reperex also sued accounting firm Bradshaw under similar theories.

Key Legal Issues

The court addressed four primary issues: (1) whether the nonreliance clause protected Coldwell from all fraud claims, (2) whether expert testimony was required for the fiduciary duty claim, (3) whether Reperex could overcome Utah Code section 58-26a-602‘s privity requirements for claims against CPAs, and (4) whether Bradshaw owed a duty of disclosure for nondisclosure fraud claims.

Court’s Analysis and Holding

The court held that nonreliance clauses are enforceable but limited in scope. While such clauses protect brokers from representations they merely pass along from sellers, they do not insulate brokers from liability for their own independent fraudulent misrepresentations or strategic curation of misleading information. The court found no public policy basis for striking down properly limited nonreliance provisions. Regarding expert testimony, the court affirmed that expert testimony was not required for the fiduciary duty claim because the alleged misrepresentations were clearly material and within common understanding. For the CPA liability issues, the court affirmed that Reperex failed to establish privity or satisfy the statute’s writing exception but remanded the nondisclosure fraud issue for further proceedings.

Practice Implications

This decision has significant implications for drafting and litigating commercial transactions. Practitioners should carefully draft nonreliance clauses to specify their limited scope, ensuring they cover only third-party representations, not the contracting party’s own statements. When challenging such clauses, focus on allegations of independent fraud rather than arguing the clauses are per se unenforceable. The decision also clarifies that expert testimony is not automatically required for professional liability claims when the alleged misconduct involves clearly material misrepresentations within common understanding.