PJC Business

F RAUD AND N EGLIGENT M ISREPRESENTATION

PJC 105.12

“whenever feasible” mandates broad-form submission in any or every instance in which it is capable of being accomplished). For further discussion, see PJC 116.2 regarding broad-form issues and the Casteel doctrine. Source of instruction. The elements of the claim are derived from Tex. Gov’t Code §§ 4008.052, 4008.053 (formerly Tex. Rev. Civ. Stat. art. 581–33A(2), 33B); Kubbernus v. ECAL Partners, Ltd. , 574 S.W.3d 444, 480 (Tex. App.—Houston [1st Dist.] 2018, pet. denied); and Duperier v. Texas State Bank , 28 S.W.3d 740, 745–46 (Tex. App.—Corpus Christi–Edinburg 2000, pet. dism’d by agr.). Regarding the defi nition of “material,” see Duperier , 28 S.W.3d at 745, and compare TSC Industries, Inc. v. Northway, Inc. , 426 U.S. 438, 449 (1976), and Khoury v. Tomlinson , 518 S.W.3d 568, 582 (Tex. App.—Houston [1st Dist.] 2017, no pet.). For the requirement of priv ity between buyer and seller, see Frank v. Bear, Stearns & Co. , 11 S.W.3d 380, 383 (Tex. App.—Houston [14th Dist.] 2000, pet. denied), and In re Enron Corp. Securities, Derivative & ERISA Litigation , 258 F. Supp. 2d 576, 602–07 (S.D. Tex. 2003). Although injury is required in rescission cases under the common law of fraud, see Adickes v. Andreoli , 600 S.W.2d 939, 946 (Tex. App.—Houston [1st Dist.] 1980, writ dism’d), “[a] finding of actual damages is not required for equitable rescission” under the Securities Act. See Texas Capital Securities, Inc. v. Sandefer , 58 S.W.3d 760, 776 (Tex. App.—Houston [1st Dist.] 2001, pet. denied). “Sold or offered to sell.” The Securities Act broadly defines “sell,” as well as “sale” and “offer for sale,” in Tex. Gov’t Code §4001.067 (formerly Tex. Rev. Civ. Stat. art. 581–4E). See In re Enron Corp. , 258 F. Supp. 2d at 603–04. If there is a dis pute about whether a sale occurred or an offer was made, additional instructions may be necessary. If the person who allegedly committed fraud sold the security, then sold or offered to sell should be used in element 1 of this instruction, and purchased the security from should be used in element 2. If the person who allegedly committed fraud bought the security, then bought or offered to buy should be used in element 1, and sold the secu rity to should be used in element 2. Person and company. The Securities Act broadly defines “person” and “com pany” to include “a corporation,” “a person,” “a company, including a joint stock com pany,” “a partnership, including a limited partnership,” “an association,” “a firm,” “a syndicate,” or “a trust,” as well as “a government or a political subdivision or agency of a government.” Tex. Gov’t Code § 4001.064 (formerly Tex. Rev. Civ. Stat. art. 581– 4B). Security. The Securities Act defines the term “security” or “securities” to include— a limited partner interest in a limited partnership, a share; a stock; a treasury stock; a stock certificate under a voting trust agreement; a collateral trust certificate; an equipment trust certificate; a preorganization certificate or

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