Shores v. Sklar
United States Court of Appeals for the Fifth Circuit
647 F.2d 462 (1981)
- Written by Kelly Simon, JD
Facts
Clarence E. Bishop, Jr. (plaintiff), along with other investors, purchased First Mortgage Revenue Bonds of the Industrial Development Board of Frisco City (Industrial Development). Almost immediately after the purchase, the value of the bonds dropped significantly. Bishop purchased the bonds based only upon his broker’s oral representations. He did not review or know that an offering circular, the formal written document outlining the terms of the security offered for sale, existed. Bishop sued most of those involved in the issuance of the bonds, including Jerald H. Sklar (defendant), the attorney who served as bond counsel, arguing that a materially misleading offering circular had been fabricated by defendants to induce Industrial Development to issue and investors to buy the bonds. The district court allowed Bishop to amend his complaint twice to allege that he had relied on the offering circular; however, he could not make that allegation. The district court dismissed the case. James L. Shores (plaintiff), the executor of Bishop’s estate, appealed the motion to dismiss.
Rule of Law
Issue
Holding and Reasoning (Clark, J.)
Dissent (Randall, J.)
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