John Casella Joan Casella v. William Webb Private Ledger, Anita Chalmers Dba Private Ledger Financial Services, and Anita Chalmers, AKA Anita Webb

John and Joan Casella appeal the district court’s summary judgment for Anita Chal-mers in an action alleging Chalmers’ material misrepresentations induced them to purchase interests in a limited partnership, in violation of section 12(2) of the 1933 Securities Act, 15 U.S.C. § 111(2), and of the common law prohibition against fraud.

I.

The Casellas bought shares in a real estate limited partnership known as Hondo House, Ltd., allegedly in reliance on the following false representations by Chal-mers: (1) Hondo House “was qualified with [the] IRS as an IRS approved tax shelter;” (2) if the Casellas invested $41,000.00 over a three-year period to purchase limited partnership interests in Hondo House they could obtain an income tax credit in an amount greater than their investment; (3) after “a reasonable amount of time,” the Casellas “would realize a return of their original investment plus a profit in that Hondo House was a secure investment, a sure thing.” Chalmers denies making such representations.

The Casellas took tax deductions in 1983 and 1984 based on the Hondo House investment. The IRS did not challenge these deductions, but subsequently informed the Casellas the limited…