Anthony Boccamazzo Publishes Article in Law360 on How Recent Delaware Rulings Clarify M&A Deal Fraud Carveouts

Olshan litigation counsel Anthony Boccamazzo authored an article in Law360 entitled “How Recent Del. Rulings Clarify M&A Deal Fraud Carveouts.” In the article, Tony discusses how recent Delaware court decisions have clarified the enforceability of anti-reliance provisions and the “justifiable reliance” standard in M&A fraud claims, offering critical guidance to help ease tensions between buyers and sellers who are navigating disputes that exceed the limits of Reps and Warranty Insurance and indemnity caps. “Parties are not limited to the policy limits under which representations and warranties insurance applies or the caps of the agreement's indemnity provisions if fraud is present and if the agreement permits the party to assert a fraud claim,” he notes. “The fundamental and complicated questions then become whether a party can assert a claim for fraud under the parties' agreement, and whether a party's misrepresentation constitutes fraud.” Tony explores this issue by examining two landmark Delaware decisions that together define the boundaries of fraud claims in M&A transactions. In Johnson & Johnson v. Fortis Advisors, the Delaware Supreme Court addresses whether a one-sided anti-reliance clause, one that bars only one party from relying on extra-contractual representations, can also protect the drafting party from a fraud claim based on its own representations made outside the agreement. In Paragon Metals Holdings, LLC v. Smith, the Delaware Superior Court examines whether a buyer can “justifiably rely” on a seller’s representations when the buyer knew or should have known those representations were false through its own due diligence. “While this recent Delaware guidance is helpful in understanding certain complex issues relating to fraud claims in M&A transactions, many questions and complexities remain as to the viability of parties to assert fraud claims in addition to their breach of contract claims" Tony said.