## Facts

- Hoyt Properties, Inc., a commercial landlord, entered a large commercial lease in 2001 with Haas Multiples Environmental Marketing and Design, Inc. for office and warehouse space.
- Before possession, the tenant’s interest was assigned to its successor corporation, Entolo, Inc.; the landlord’s interest was later assigned to a related entity.
- Entolo defaulted, and the landlord pursued possession and unpaid rent.
- During negotiations addressing the default, Hoyt considered whether Production Resource Group, L.L.C. (PRG) could be liable for Entolo’s lease obligations under a veil-piercing/alter-ego theory based on PRG’s relationship to Entolo.
- The parties reached a settlement allowing Entolo to remain for two additional months and pay $104,000; the settlement included Hoyt’s release of PRG from liability.
- Hoyt alleged it granted the release in reliance on PRG’s attorney’s statements that there was “no reason” to pierce the corporate veil and that PRG and Entolo were “totally separate.”
- After the release, Hoyt learned of separate litigation seeking to hold PRG liable for Entolo’s obligations by piercing the corporate veil.
- Hoyt sued PRG for fraudulent misrepresentation and sought rescission of the release; if rescission were granted, Hoyt intended to pursue PRG on veil-piercing theories.

## Issues

1. Whether opposing counsel’s statements during settlement negotiations that there was “no reason” to pierce the corporate veil and that the entities were “totally separate” could be treated as actionable misrepresentations (as factual assertions or fact-implying statements) rather than nonactionable legal opinions.
2. Whether the summary-judgment record presented genuine issues of material fact on scienter (knowledge or reckless disregard of falsity) and on the reasonableness of Hoyt’s reliance.
3. Whether PRG was entitled to summary judgment on Hoyt’s fraudulent misrepresentation claim seeking rescission of the release.

## Decision

- The Minnesota Supreme Court affirmed the court of appeals and held PRG was not entitled to summary judgment.
- The court concluded the attorney’s statements could be construed as representations that directly asserted facts and implied additional facts about corporate separateness and veil-piercing exposure.
- The court held there were triable fact disputes on whether the statements were knowingly false or made without knowing whether they were true or false.
- The court held the reasonableness of Hoyt’s reliance was not resolvable as a matter of law on this record and was generally for the factfinder.
- The case was remanded to the district court for further proceedings.

## Legal Principles

- A statement framed as an opinion may be actionable as fraud if it asserts facts or implies the existence of facts that do not exist.
- Representations made by an attorney in settlement negotiations can support a fraud claim when they convey or imply concrete facts relevant to liability, rather than merely arguing legal conclusions.
- Summary judgment is improper when, viewing the evidence favorably to the nonmovant, reasonable jurors could differ on material elements of fraudulent misrepresentation, including falsity, scienter, and reasonable reliance.
- No categorical rule bars a party from reasonably relying on statements made by opposing counsel; reasonableness of reliance is ordinarily a fact question.

## Conclusion

The Minnesota Supreme Court allowed Hoyt’s fraudulent misrepresentation claim seeking rescission of a release to proceed because the alleged settlement statements by PRG’s attorney could be read as fact-laden representations, and the record contained genuine disputes about scienter and reasonable reliance that required resolution by a jury rather than on summary judgment.


Hoyt Props., Inc. v. Prod. Res. Grp., L.L.C., 736 N.W.2d 313 (Minn. 2007)