The West Virginia Intermediate Court of Appeals reversed a decision that a national broker franchisor, Ameriprise Financial, Inc., fraudulently induced a franchisee into buying the business of another Ameriprise franchisee, enforcing the parties’ release agreement waiving any claim of fraudulent inducement. Ameriprise Fin., Inc. v. Vallandingham, 2025 WL 1661539 (W. Va. Ct. App. June 12, 2025).
Charles Vallandingham, a financial advisor and franchisee of Ameriprise, claimed Ameriprise fraudulently induced him to buy the business of another Ameriprise franchise owned by Kenneth Beck. After Vallandingham agreed to purchase Beck’s business, Vallandingham discovered issues with Beck’s practice which allegedly harmed Vallandingham’s practice and reputation. Ameriprise argued Vallandingham’s claims were barred by a consent and release agreement, in which the parties agreed they had independently investigated the transaction, disclaimed reliance on any representations by Ameriprise, and Vallandigham agreed to waive any claims against Ameriprise related to the purchase agreement. The circuit court disagreed, and after a bench trial, entered judgment in favor of Vallandingham. Ameriprise appealed.
The appellate court reversed, holding that Vallandigham’s fraudulent inducement claim was barred by his consent and release agreement. The court considered two issues. First, the court examined whether a party can waive a fraudulent inducement claim against a non-party to the contract through a separate agreement since Ameriprise was not a party to the buy/sell agreement. The court found the release was unambiguous and Vallandingham clearly waived any claim against Ameriprise. Second, the court addressed whether the consent and release was unenforceable under the doctrine of unconscionability. The court found the release was not procedurally or substantively unconscionable because Vallandingham was a sophisticated party. The court further concluded that the terms of the contract were not complicated, nor were they one-sided in favor of Ameriprise, as Ameriprise gave up its right of first refusal to purchase Beck’s practice in exchange for Vallandingham’s waiver. The court enforced the waiver and reversed the judgment. In dissent, Judge White argued that the waiver should not be enforced, invoking the long-standing principle that a party guilty of fraudulent inducement cannot escape liability by utilizing boiler plate clauses “slipped into” an adhesion contract.
*Breanna Hilliard is a Summer Associate for Lathrop GPM who contributed to the writing of this post.