Blankenheim

Henry J. Blankenheim and Philip L. Kaefer purchased limited partnership interests in three computer research and development firms and stock in the corporation marketing the partnerships’ software. After the investments became worthless, they sued, among others, E. F. Hutton, the stock brokerage firm that sold them their interests, and Hutton’s sales representative, F. Sanford Frederickson. E. F. Hutton & Company, Inc., and Frederickson moved for summary judgment and the court granted their motion, ruling that (1) plaintiffs’ reliance on Frederickson’s representations was unjustifiable as a matter of law, and (2) plaintiffs had waived their alleged claims. As will appear, we reverse the judgment.

Facts

Since E. F. Hutton’s summary judgment motion was predicated, at least in part, on the contention that plaintiffs were “well-educated and sophisticated businessmen with extensive experience in business finance” who should have known better than to rely on Frederickson’s representations, we begin with a summary of plaintiffs’ prepurchase educational and business experience.

The more “sophisticated businessman” of the two, Blankenheim, earned his bachelor’s degree in…