Paragon Metals Holdings, LLC v. Michael J. Smith

Summary

The Court affirmed the findings that Smith’s contractual warranties were false and that he intended to defraud the investors, but reversed the finding that the investors’ reliance was unjustified. It held that common-law fraud is proved by a preponderance of the evidence, that the agreement’s anti-reliance provision did not impose a reasonable-diligence obligation, and that the investors’ failure to uncover the fraud did not constitute willful blindness. The Court remanded for assessment of damages.