EDWARD MARRAM, trustee, [Note 1] vs. KOBRICK OFFSHORE FUND, LTD., & others. [Note 2]

MARSHALL, C.J. We review a judgment entered in the Superior Court dismissing an action commenced by an investor for violation of the Uniform Securities Act, G. L. c. 110A, § 410 (a) (2) [Note 3]; negligent misrepresentation; and unfair and deceptive trade practices, G. L. c. 93A, § 11, against a mutual fund, its investment manager, and its corporate managing entity, on allegations that the manager made materially misleading statements to the plaintiff before and after the plaintiff's investment in the fund, and that the plaintiff sustained losses on its investment. Edward Marram, as trustee for Geo-Centers, Inc. Profit Sharing Plan and Trust (plan), maintained that Frederick R. Kobrick (Kobrick) made misleading statements concerning Kobrick Offshore Fund (offshore fund), which Kobrick controlled, in an effort to attract and retain the plan as an investor. The defendants countered that the express terms of the offshore fund's offering memorandum and subscription agreement, which Marram acknowledged having received, read, and understood in full, precluded Marram from bringing his claims. The defendants placed particular emphasis on the terms of an integration clause in the subscription agreement, which we discuss below. A judge in the Superior Court allowed the defendants' motion to dismiss all claims pursuant Mass. R. Civ. P. 12 (b) (6), 365 Mass. 754 (1974), which the defendants filed ten days after the action commenced. Marram appealed, and we transferred this case from the Appeals Court on our own motion. We conclude that, in the circumstances of this case, the

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complaint in its entirety must survive the defendants' motion to dismiss. We vacate the judgment and remand the case to the Superior Court for further proceedings consistent with this opinion.

1. Standard of review. The standard of review for a motion to dismiss pursuant to rule 12 (b) (6) is well settled. We take as true " 'the allegations of the complaint, as well as such inferences as may be drawn therefrom in the plaintiff's favor . . .' Blank v. Chelmsford Ob/Gyn, P.C., 420 Mass. 404, 407 (1995). In evaluating the allowance of a motion to dismiss, we are guided by the principle that a complaint is sufficient 'unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.' Nader v. Citron, 372 Mass. 96, 98 (1977), quoting Conley v. Gibson, 355 U.S. 41, 45-46 (1957)." Warner-Lambert Co. v. Execuquest Corp., 427 Mass. 46, 47 (1998). Although errors of law based on the facts alleged will not surmount a rule 12 (b) (6) challenge, the plaintiff's burden is "relatively light." Id., citing Gibbs Ford, Inc. v. United Truck Leasing Corp., 399 Mass. 8, 13 (1987). Under the "generous principles" governing our review in this matter, Connerty v. Metropolitan Dist. Comm'n, 398 Mass. 140, 143 (1986), we summarize the facts alleged in the unverified complaint and in uncontested documents of record. [Note 4]

2. Alleged facts. The plan is a profit-sharing plan for

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employees of Geo-Centers, Inc., a high technology and professional services firm headquartered in Massachusetts. The offshore fund is a hedge fund [Note 5] that solicits business in Massachusetts. It is incorporated under the mutual fund laws of the Cayman Islands. [Note 6]

The complaint alleges that, on December 17, 1999, Marram and Kobrick met to discuss the possibility of the plan investing in one of Kobrick's mutual funds. Marram told Kobrick that the plan was seeking to invest in a diversified fund that would preserve capital. Kobrick touted his "long history of success as a fund manager," represented that the offshore fund was "diversified" and "invested in a variety of industries," and "represented that the stock of high technology companies did not constitute a majority of the [offshore fund's] holdings and that he managed the [offshore fund] in such a way that it would not be a volatile investment vehicle." After the meeting, Kobrick forwarded to Marram a private offering memorandum and a subscription agreement for the offshore fund. The documents contain numerous representations and covenants. We summarize some of the pertinent terms here, reserving others for later discussion. [Note 7]

The private offering memorandum describes the offshore fund's objectives as follows: "to achieve above-market growth in shareholders' capital, principally through investment in equity securities and equity related instruments while seeking to control risk." It further states:

"The Fund will hold a diversified portfolio of securities, use leverage in pursuit of additional return and hold

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short positions as a hedge and potential source of additional return. . . . The Fund expects to invest in companies of all sizes and a variety of industries. However, the Fund does not have fixed guidelines for diversification and may concentrate investments in specific industries or companies if the Investment Manager believes that such concentration will offer optimal opportunity for risk adjusted capital appreciation. . . . In general, the Fund's investment program has been broadly structured to provide the Investment Manager with maximum flexibility to achieve the Fund's investment objective." [Note 8]

Elsewhere, the private offering memorandum describes the offshore fund as "speculative" and entailing "a high degree of risk." [Note 9]

The subscription agreement directs the investor to "the risk factors referred to in the [m]emorandum." Two statements in the subscription agreement are particularly germane here. The first represents:

"The Investor has received and read a copy of the Memorandum outlining, among other things, the organization and investment objectives and policies of, and the risks and expenses of an investment in, the Fund. The Investor acknowledges that in making a decision to subscribe for Shares the Investor has relied solely upon the Memorandum, the other Fund Documents and independent investigations made by the Investor. The Investor understands the investment objectives and policies of, and the investment strategies which may be pursued by, the Fund. The Investor's investment in the Shares is consistent with the investment purposes and objectives and cash flow requirements of the Investor and will not adversely affect the Investor's overall need for diversification and liquidity. The investor acknowledges that it has had the opportunity to ask questions of the Investment Manager, prior to the

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sale of the Shares and to obtain any additional information to the extent the Fund possesses such information or could acquire it without unreasonable effort or expense, necessary to verify the accuracy of the information contained in the Memorandum." [Note 10]

The second is an integration (or merger) clause, whereby the investor acknowledges: "This Subscription Agreement constitutes the entire arrangement and understanding between the parties hereto regarding its subject matter, and supersedes any prior or contemporaneous agreements, arrangements and understandings, written or oral, between the parties regarding the same." [Note 11]

On January 1, 2000, shortly after Marram executed and submitted the subscription agreement, the plan purchased 1,500 shares of Series 2 stock for $1.5 million. On March 1, 2000, the plan invested an additional $500,000 in the offshore fund, purchasing 500 shares of Series 4 stock. On March 23, 2000, three months after the plan's initial investment, Marram received the offshore fund's audited financial statements for the year ending December 31, 1999. The report stated that the offshore fund was not diversified and was heavily invested in high technology stock. [Note 12]

Beginning in March, 2000, the offshore fund's value declined precipitously. Thereafter, Kobrick made numerous, almost monthly, reassuring statements to Marram, by letter, by telephone, and by facsimile transmission, that the offshore fund's losses would be recouped and that the market situation

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worked well for Kobrick's investment style. [Note 13] When the two men met on October 19, 2000, Kobrick urged Marram to maintain the plan's investment, telling him that no investors had left the offshore fund and that new money was coming into it. While declining to provide Marram with a list of securities in the offshore fund's portfolio, Kobrick told Marram that the offshore fund was diversified, that the "economy plays well into [his] philosophy," and that the economy was rebounding. Yet share value continued to fall. By November 30, 2000, the Series 2 stock had declined 60.67%, and the Series 4 stock had declined 67.60%.

On December 11, 2000, Marram directed the offshore fund, by letter, to liquidate the account. Kobrick asked Marram to reconsider. In a telephone conversation with Marram on December 27, 2000, he urged Marram to stay with the offshore fund. Kobrick stated that he was "very confident" that, in doing so, the plan would reap the "highest reward[s]." Kobrick also promised to provide Marram with a list of companies the offshore fund held, an analysis of the sectors that caused the offshore fund's losses, and an analysis of the sectors that would recover losses. Kobrick allegedly told Marram that the offshore fund had started to do better, and that it was not invested in any "dot.coms." After this conversation, Marram rescinded the December 11, 2000, liquidation order.

Marram never received the information Kobrick promised. On April 3, 2001, Marram again requested that the plan's investment

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be liquidated. While it is unclear from the complaint exactly when the shares were liquidated, [Note 14] Marram alleges that, in total, the plan invested $2 million in the offshore fund and incurred a loss of $1,415,210 over the investment period.

3. Uniform Securities Act, G. L. c. 110A, § 410. Before addressing the merits of the defendants' motion to dismiss the securities claim, we discuss in some detail the background and purpose of G. L. c. 110A, § 410 (a) (2). The Uniform Securities Act, G. L. c. 110A (act), broadly regulates securities offerings in Massachusetts. [Note 15] Like its counterpart, the Federal Securities Act of 1933, 15 U.S.C. §§ 77a et seq. (2000), the act creates criminal and civil liability for securities-related infractions. See, e.g., G. L. c. 110A, §§ 409, 410. See also 15 U.S.C. §§ 77k, 77l, 77y. However, G. L. c. 110A, § 410 (a) (2), "provides the only civil remedy under the Uniform Securities Act for misrepresentations and omissions." J.C. Long, Blue Sky Law § 9:23 (2003). It imposes "civil liability for sales [of securities] by means of fraud or misrepresentation." L. Loss, Commentary on the Uniform Securities Act, draftsmen's commentary to § 410 (a), at 147 (1976).

The Legislature has directed that we interpret the act in coordination with the Securities Act of 1933. See St. 1972, c. 694 (enacting G. L. c. 110A, § 415, and directing court "to coordinate the interpretation and administration of this chapter with the related federal legislation"). See also Adams v. Hyannis Harborview, Inc., 838 F. Supp. 676, 684 n.9 (D. Mass. 1993) (Massachusetts securities laws "are substantially similar to the Federal securities laws and therefore decisions construing the Federal statutory language are applicable to the state statute as well"). General Laws c. 110A, § 410 (a) (2), "is almost identical with § 12 (2) of the Securities Act of 1933, 15 U.S.C.

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§ 771(2)." L. Loss, supra at official comment to § 410 (a), at 146. See id. at draftsmen's commentary to § 410 (a), at 147 ("The resemblance to § 12 [2] of the Securities Act of 1933 will once more make for an interchangeability of federal and state judicial precedence in this very important area"). Accordingly, we look to Federal decisions under § 12(2), as well as to the plain language of the statute and decisions of our appellate courts, for our interpretation of G. L. c. 110A, § 410 (a) (2).

We begin with the general purposes of G. L. c. 110A, § 410 (a) (2). The statute's thrust is both "redressive" and "preventive." Shulman, Civil Liability and the Securities Act, 43 Yale L.J. 227, 227 (1933) (Shulman). It aims, of course, to compensate the buyer for a loss. [Note 16] More importantly, it creates a strong incentive for sellers of securities to disclose fully all material facts about the security. Section 410 (a) (2) "provide[s] a heightened deterrent against sellers who make misrepresentations by rendering tainted transactions voidable at the option of the defrauded purchaser," regardless of the actual cause of the investor's loss. Casella v. Webb, 883 F.2d 805, 809 (9th Cir. 1989) (construing § 12[2] of the Securities Act of 1933). See Kaminsky, An Analysis of Securities Litigation Under Section 12 (2) and How it Compares with Rule 10b-5, 13 Hous. L. Rev. 231, 239 (1976) ( "§ 12 [2] is designed to induce sellers to be assiduous in insuring full disclosure to the buyer by threatening the seller with liability almost as an insurer in the event that there has been any material inaccurate disclosure or nondisclosure in the sale traceable in any way to the seller's carelessness or affirmative wrongdoing"); J.C. Long, Blue Sky Law, supra at § 9:24, at 9-38 ("The Securities Act was intended to reverse the age-old concept of caveat emptor and replace it with the concept of caveat venditor or seller beware"). The "[a]ct seeks not only to secure accuracy in the information that is volunteered to investors, but

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also, and perhaps more especially to compel disclosure of significant matters that were heretofore rarely, if ever, disclosed." Shulman, supra at 227 (discussing Federal law).

Thus, the act provides strong protections for a buyer who received misleading information from a seller of securities. While not imposing strict liability on the seller for untrue statements or omissions, it holds the seller to the heavy burden of proof "that he did not know, and in the exercise of reasonable care could not have known, of the untruth or omission." G. L. c. 110A, § 410 (a) (2). See J.C. Long, Blue Sky Law, supra at § 9:23, at 9-35 (defendant held to "inverse negligence standard" that is "a very difficult defense to sustain").

The plaintiff's burden is considerably lighter. It is enough for the plaintiff to establish that (1) the defendant "offers or sells a security"; (2) in Massachusetts [Note 17]; (3) by making "any untrue statement of a material fact" or by omitting to state a material fact; (4) the plaintiff did not know of the untruth or omission; and (5) the defendant knew, or "in the exercise of reasonable care [would] have known," of the untruth or omission. G. L. c. 110A, § 410 (a) (2). See Wright v. National Warranty Co., 953 F.2d 256, 262 n.3 (6th Cir. 1992) (listing elements of § 12[2] claim); Adams v. Hyannis Harborview, Inc., supra at 686 (listing elements of § 410 [a] [2] claim); J.C. Long, Blue Sky Law, supra at § 9:24 (listing elements of Uniform Securities Act claim). Oral as well as written material misstatements are actionable. See 15 U.S.C. § 77l(2) ("offers or sells a security . . . by means of a prospectus or oral communication"); Mid-America Fed. Sav. & Loan Ass'n v. Shearson/American Express Inc., 886 F.2d 1249, 1255 (10th Cir. 1989) (interpreting "untrue statement of a material fact" under Oklahoma Securities Act to apply to both oral communications and written prospectus); L. Loss, Commentary on the Uniform Securities Act, draftsmen's commentary to § 410 (a) (2), at 148

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(1976) (noting that "for clarity's sake, it would be better" if statute explicitly stated "by the use of any written or oral communication which contains any untrue statement").

There are other factors providing substantial protection to a buyer of securities who receives any false or misleading information. The plaintiff does not need to prove either negligence or scienter to meet his burden of proof. J.C. Long, Blue Sky Law, supra at § 9:23, at 9-34.1. Moreover, because G. L. c. 110A, § 410 (a) (2), holds the seller liable for inaccurate disclosure or nondisclosure of material information, "[f]oremost among the elements that the buyer does not have to prove is reliance." [Note 18] Kaminsky, An Analysis of Securities Litigation Under Section 12 (2) and How it Compares with Rule 10b-5, 13 Hous. L. Rev. 231, 264-265 (1976). The buyer's sophistication is also irrelevant to his claim. See MidAmerica Fed. Sav. & Loan Ass'n v. Shearson/American Express Inc., supra at 1256 (distinguishing 17 C.F.R. § 240.10b-5 claim, where reliance is element, from § 12[2] claim, where reliance is not element); Wright v. National Warranty Co., 953 F.2d 256, 262 (6th Cir. 1992) ("Section 12 [2], on the other hand, has no requirement of justifiable reliance . . . a purchaser's investment sophistication is immaterial to a [§] 12 [2] claim"); L. Loss, supra at draftsmen's commentary to § 410 (a) (2), at 148 ("The 'by means of' clause . . . is not intended as a requirement that the buyer prove reliance on the untrue statement or the omission. He must show only that he did not know of it"). Nor does the buyer have any duty to investigate or to "verify a statement's accuracy." MidAmerica Fed. Sav. & Loan Ass'n v. Shearson/American Express Inc., supra at 1256. The buyer needs only to show "lack of knowledge of a misleading statement or omission

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in order to prevail." [Note 19] Id. at 1254. "All that is required is ignorance of the untruth or omission." Sanders v. John Nuveen & Co., 619 F.2d 1222, 1229 (7th Cir. 1980), cert. denied, 450 U.S. 1005 (1981).

As a counterweight to its consumer-oriented focus, the act contains several provisions favoring sellers. First, it holds the plaintiff to an abbreviated limitations period. [Note 20] Second, it specifically allows for two affirmative defenses in addition to a direct attack on one of the prima facie elements of a § 410 (a) (2) claim, i.e., the defendant was not a "seller" or did not offer securities "in Massachusetts." It "preclude[s] recovery whenever a plaintiff [buyer] actually knows that a representation is false or knows that existing information has been withheld." Haralson v. E.F. Hutton Group, Inc., 919 F.2d 1014, 1032 & n.10 (5th Cir. 1990), overruled in part by Gustafson v. Alloyd Co., 513 U.S. 561 (1995). See Mayer v. Oil Field Sys. Corp., 803 F.2d 749, 755-756 (2d Cir. 1986) (defendants not liable where plaintiff testified in deposition to reading prospectus and thus had knowledge of fact misrepresented). And it provides that the defendant is not liable if he "did not know, and in the exercise of reasonable care could not have known, of the untruth or omission." G. L. c. 110A, § 410 (a) (2). Adams v. Hyannis Harborview, Inc., 838 F. Supp. 676, 688 (D. Mass. 1993). Finally, the act limits the buyer's remedy to recision (returning

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buyer to status quo). See G. L. c. 110A, § 410 (a) (2) ("Damages are the amount that would be recoverable upon a tender less the value of the security when the buyer disposed of it and interest at six per cent per year from the date of disposition"). Contract damages are not recoverable, nor are punitive or multiple damages. Cabot Corp. v. Baddour, 394 Mass. 720, 724 (1985).

Against this background we turn to the merits of the defendants' motion to dismiss the securities claim. The defendants assert that, as a matter of law, they are immune from the plaintiff's claims because (1) Marram purchased shares in the offshore fund solely on the basis of written representations contained in documents, whose truth is uncontested, (2) Marram's sophistication and equal bargaining power are relevant to the applicability of the integration clause, and (3) the defendants could not possibly have been aware that Marram secretly purchased the securities in reliance on preinvestment oral representations as well as on the documents. These are contract defenses. Were this a contract action, they might have merit. But it is not. As we have seen, reliance and sophistication of the buyer are not elements of this statutory claim. And the existence of contradictory written statements, in an integration clause or otherwise, does not provide a defense to the charge of preinvestment materially misleading oral statements. See, e.g., MidAmerica Fed. Sav. & Loan Ass'n v. Shearson/American Express, Inc., supra at 1256 (liability even where misleading oral statements corrected by written prospectus); Wright v. National Warranty Co., supra at 262 ("Section 12 [2], on the other hand, has no requirement of justifiable reliance on the part of a purchaser. Because of this, a purchaser's investment sophistication is immaterial to a [§] 12 [2] claim"). Indeed, to permit the seller of securities to discharge, or to defeat, his statutory obligation of truthfulness to the buyer merely by attaching an integration clause to a subscription agreement would enfeeble the statute.

In any event, in this case it is far from obvious that the representations in the offering memorandum and the subscription agreement contravene the specific, detailed oral representations that Kobrick is alleged to have made to Marram. We note,

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for example, that Kobrick allegedly told Marram that the offshore fund was "diversified" in a "variety of industries." This oral representation is echoed in the statements in the offering memorandum, quoted above, i.e., that the offshore fund "will hold a diversified portfolio of securities" and that the offshore fund "expects to invest in companies of all sizes and a variety of industries." To be sure, the offering memorandum also represents that the investment manager "may" concentrate holdings in one industry in order to maximize returns, but such statements do not refute the specific representations about diversification that Kobrick made to Marram during their preinvestment meeting and that are echoed elsewhere in the offshore fund's documents. At trial the defendants may wish to introduce the written representations in the offshore documents as evidence to refute Marram's allegations. See Meason v. Gilbert, 226 Ga. 862, 864 (1976) (integration provision has "evidentiary value on the question of whether representations were made to the purchaser inducing the stock purchase other than those contained in the prospectus"). However, the mere existence of the integration clause is insufficient, in itself, to support the defendants' motion to dismiss the securities claim.

We find further support for our conclusion that an integration clause cannot release the defendants from liability under G. L. c. 110A, § 410 (a) (2), in another section of the Uniform Securities Act. General Laws c. 110A, § 410 (g), [Note 21] prohibits any person from waiving compliance with any provision of the Act. [Note 22] See L. Loss, Commentary on Uniform Securities Act draftsmen's commentary to § 410 (g), at 151 (1976) (provisions prohibiting waiver "are clearly advisable in view of the frequent disparity of bargaining power and sophistication between sellers and buyers"). Other jurisdictions have held that written contract

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terms, including an integration clause, cannot be construed to waive the plaintiff's rights under Federal or State securities law. "To permit this remedy to be 'waived' or 'released' prior to or contemporaneously with the sale of unregistered securities would thwart the very objective of the statute and violate the declared public policy of this State. Such a holding would pave the way for the virtual nullification of this important legislative enactment." Foreman v. Holsman, 10 Ill. 2d 551, 554 (1957) (written agreement contained release of liability from provisions of Illinois Securities Act). See, e.g., FS Photo, Inc. v. Picturevision Inc., 61 F. Supp. 2d 473, 480 (E.D. Va. 1999) (merger clause in settlement agreement, "while not an explicit waiver of compliance with the Securities Act, is nonetheless covered by § 78cc[a] [the equivalent Federal statute] and is thus ineffective to bar plaintiffs' federal securities fraud claims"); Doody v. E.F. Hutton & Co., 587 F. Supp. 829, 833 (D. Minn. 1984) ("enforcing an indemnity provision . . . would discourage prospective plaintiffs from bringing securities fraud actions whenever there is an integration clause in a subscription agreement. . . . Since the securities laws are a remedial measure intended to encourage the prosecution of securities fraud actions, the Court refuses to enforce this indemnity provision"); Meason v. Gilbert, supra ("We also reject the seller's contention that the [integration] clause as a matter of law estops the purchaser from raising any alleged oral misrepresentations"). See also Jones v. Miles, 656 F.2d 103, 106-107 (5th Cir. 1981) (waiver by estoppel is waiver defense "not available in a case involving only violations of Georgia and/or federal securities laws"). [Note 23]

Finally, the defendants argue that the securities count must be dismissed because the alleged oral statements Kobrick made to Marram were not as a matter of law material, an element of a § 410 (a) (2) claim. [Note 24] The test whether a statement or omission is material is objective: "there must be a substantial likelihood

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that the disclosure of the omitted fact would have been viewed by the reasonable investor as having significantly altered the 'total mix' of information made available." Craftmatic Sec. Litig. v. Kraftsow, 890 F.2d 628, 641 (3d Cir. 1989), quoting TSC Indus., Inc. v. Northway, Inc., 426 U.S. 438, 449 (1976). The determination of materiality is a mixed question of law and fact ordinarily decided by the trier of fact. "Only if the alleged misrepresentations or omissions are so obviously unimportant to an investor that reasonable minds cannot differ on the question of materiality is it appropriate for the district court to rule that the allegations are inactionable as a matter of law." TSC Indus., Inc. v. Northway, Inc., supra at 450. Shapiro v. UJB Fin. Corp., 964 F.2d 272, 280 n.11 (3d Cir.), cert. denied, 506 U.S. 934 (1992). In re Trump Casino Sec. Litig., 7 F.3d 357, 369 n.13 (3d Cir. 1993), cert. denied sub nom. Gollomp v. Trump, 510 U.S. 1178 (1994).

Here the alleged oral misrepresentations relate to the diversification of the offshore fund, the industries in which the offshore fund was invested, the concentration of the offshore fund in certain industries, and the suitability (risk profile) of the offshore fund given the investment goal of the investor (capital preservation). It is difficult to imagine concerns more material to the reasonable investor when considered in the total mix of information that drives an investment decision. See DeBruyne v. Equitable Life Assur. Soc'y, 920 F.2d 457, 465-466 (7th Cir. 1990) ("allegations as to . . . risk and volatility . . . appear more likely to raise a genuine issue of fact as to misrepresentation," but dismissing securities claim for other reasons); Casella

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v. Webb, 883 F.2d 805, 807 (9th Cir. 1989), quoting Admiralty Fund v. Hugh Johnson & Co., 677 F.2d 1301, 1306 (9th Cir. 1982) ("test for materiality is 'whether the existence or non-existence of the fact in question is a matter to which a reasonable man would attach importance in determining his choice of action' "); Miller v. New Am. High Income Fund, 755 F. Supp. 1099, 1104-1105 (D. Mass. 1991), aff'd sub nom. Lucia v. Prospect St. High Income Portfolio, Inc., 36 F.3d 170 (1st Cir. 1994) (statements that "did not accurately reflect the investments that the [defendants] would be making," statements about 'techniques' to reduce risk," and statements that led an investor to believe the fund would not invest in "a riskier segment of the market" form a sufficient basis for claim under § 12[2]).

The plaintiff, in short, has sufficiently alleged a claim under G. L. c. 110A, § 410 (a) (2), to survive a motion to dismiss for failure to state a claim. See Mass. R. Civ. P. 12 (b) (6).

4. Negligent misrepresentation. Although it has no bearing on a claim pursuant to G. L. c. 110A, § 410 (a) (2), justifiable reliance is integral to a claim for negligent misrepresentation. [Note 25] Reliance normally is a question for a jury. Golber v. BayBank Valley Trust Co., 46 Mass. App. Ct. 256, 257 (1999). However, in some circumstances a plaintiff's reliance on oral statements in light of contrary written statements is unreasonable as a matter of law. See, e.g., Sound Techniques, Inc. v. Hoffman, 50 Mass. App. Ct. 425, 433-434 (2000) ("no reasonable basis [existed] for ignoring the plain language of the merger clause, in which [the plaintiff] agreed that it was entering into the contract free from influence by or in reliance upon any representations other than those set out in the contract"). Our courts have so held, but generally only after some record has

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been established on a motion for summary judgment or after a trial. See, e.g., Kuwaiti Danish Computer Co. v. Digital Equip. Corp., 438 Mass. 459, 468 (2003) (summary judgment appropriate because it was unreasonable to rely on oral statements that conflicted with written quotation, where "[a]ll that was required of [the plaintiffs' representatives] was that they read the document to ascertain the obvious"); Mahaney v. John Hancock Mut. Life Ins. Co., 6 Mass. App. Ct. 919, 920 (1978), quoting Yorke v. Taylor, 332 Mass. 368, 374 (1955) (after trial, court held as matter of law that it was unreasonable to rely on oral statements that were "preposterous or palpably false" in face of contradictory written statements). See also Sands v. Ridefilm Corp., 212 F.3d 657, 665 (1st Cir. 2000) (summary judgment affirmed where "[i]t was unreasonable for the plaintiff to rely on the alleged oral representations because of the express written word"); Triforo v. New York Life Ins. Co., 845 F.2d 30, 33 (1st Cir. 1988) (summary judgment appropriate "[w]hen a person acts in a way contrary to his own acknowledged understanding of the facts, his acts must be deemed unreasonable as a matter of law. . . . Confronted by such conflict a reasonable person investigates matters further; he receives assurances or clarification before relying").

We do not agree with the defendants and the Superior Court judge that the issue of Marram's reliance on the oral representations alleged in this case is ripe for decision at this preliminary stage. First, as this appeal concerns a motion to dismiss, there is no factual record that the specific oral representations Kobrick allegedly made to Marram were contradicted elsewhere. Additionally, extinguishing the plaintiff's negligent representation claim would be inappropriate because the subscription agreement implicitly acknowledges Kobrick's preinvestment oral statements to be part of the mix of preinvestment information available for the prospective buyer to weigh. The private offering memorandum states that the offshore fund "will make available to each prospective investor . . . the opportunity to ask questions of, and receive answers" from the offshore fund administrator concerning "the terms and conditions of this offering of Shares," and from the offshore fund manager concerning "the investment program of the Fund." The private offering

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memorandum further states that the administrator will provide the investor, on request, with such additional information "necessary to verify the accuracy" of the memorandum as the administrator "could acquire . . . without unreasonable effort or expense." See also note 10, supra. Implicit in these representations is the guarantee that whatever information the agents of the offshore fund provide will be reliable. In essence, the subscription agreement and private offering memorandum implicitly vouch for the accuracy of Kobrick's preinvestment oral statements to Marram about the offshore fund. In such circumstances, and without any factual record developed through discovery, we cannot conclude that, as a matter of law, no factual scenario exists under which the plaintiff might establish a claim of negligent misrepresentation.

5. General Laws c. 93A claim. The third count of the complaint alleges violations of G. L. c. 93A, § 11, [Note 26] unfair or deceptive trade practices resulting in proximate and foreseeable losses. The claim applies to both Kobrick's preinvestment and postinvestment statements to Marram. The Superior Court judge reasoned that the postinvestment statements were not actionable because (1) they were statements of opinion, not fact, and (2) the plan redeemed its shares at the earliest date it could under the subscription agreement and thus could not establish actual damages, as required by the statute. The judge also agreed with the defendants that the integration clause rendered the preinvestment statements immaterial. We conclude that the plaintiff may maintain a cause of action under G. L. c. 93A, § 11, as to each class of statement.

In a G. L. c. 93A claim, the existence of unfair or deceptive acts ordinarily must be determined from the circumstances of each claim. Spence v. Boston Edison Co., 390 Mass. 604, 615-

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616 (1983). Because a negligent misrepresentation may be so extreme or egregious as to constitute a violation of G. L. c. 93A, § 11, and because Marram's claim for negligent misrepresentation remains viable while the specific content is yet to be explored, the G. L. c. 93A claim as to preinvestment statements must be reinstated. See Golber v. BayBank Valley Trust Co., 46 Mass. App. Ct. 256, 261 (1999), quoting Glickman v. Brown, 21 Mass. App. Ct. 229, 235 (1985) ( "negligent misrepresentation of fact the truth of which is reasonably capable of ascertainment is an unfair and deceptive act or practice under G. L. c. 93A, § 2 [a]").

Marram also has properly alleged a claim for unfair and deceptive trade practices for the postinvestment statements made by Kobrick. Marram avers that Kobrick made postinvestment misrepresentations about the offshore fund's investment portfolio and misleadingly offered to forward him a list of the offshore fund's holdings and an analysis of its underperformance, causing Marram to rescind the December 11, 2000, liquidation order. On the facts alleged, it cannot be said conclusively at this early stage of the proceedings that such statements are unactionable "mere puffery," as the defendants claim. See Spence v. Boston Edison Co., supra at 616 ("Courts have deliberately avoided setting down a clear definition of conduct constituting a violation of G. L. c. 93A").

Nor can we say as a matter of law that in no set of circumstances will the plaintiff be able to establish that the plan suffered actual damages as a result of the defendants' postinvestment actions. The defendants maintain, and the judge concluded, that the plan could not have sustained cognizable damages because the earliest it could have redeemed shares after notice was the quarter ended March 31, 2001 (that is, the last day of the first fiscal quarter after a one-year mandatory holding period) and the plaintiff requested redemption of the plan's shares on April 3, 2001. [Note 27] But Marram did in fact request redemption on an earlier date, December 11, 2000. He alleges that further false information from Kobrick caused him to

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rescind that instruction. Had he not done so, the plan's investment could have been liquidated earlier. In any event, just because the plan's investment may have been liquidated soon after the end of the March quarter does not mean that the plan suffered no actual damages from holding its 2,000 shares beyond the end of the March quarter.

6. Conclusion. We vacate the judge's decision allowing the motion to dismiss and remand the matter to the Superior Court for further proceedings consistent with this opinion.

So ordered.