In re Ivey Management Corp. (Chapter 7, Case No. 11-50274, Adv. No. 11-05029)

The debtor's representative executed two promissory notes which were secured by a deed to secure debt. The debtor contended that the mortgagee's representative had stated that the debtor would not be required to repay the notes, but that one note would be repaid through the sale of certain real property owned by a third party and that the other notes. repayment would be treated as a distribution from a certain trust. The debtor later sought to rescind or cancel the notes. The court held that the debtor could not sue for breach of contract because the merger clause in the deed to secure debt prevented the debtor from asserting that the mortgagee's representative made fraudulent misrepresentations concerning repayment of the notes. The court held that the debtor could not rescind the notes and sue for fraud because the debtor was not able to return to the mortgagee the money it had received under the notes.

Thursday, December 22, 2011