Opinion ID: 1865146
Heading Depth: 1
Heading Rank: 2

Heading: Comparative Fault of Neenan.

Text: Freeman's complaint on appeal is that the trial court erred in assessing fault against Neenan for two reasons. First, Freeman argues that Neenan's liability to her rested on a theory of fraud. Since fraud is not fault under Iowa Code chapter 668, Freeman contends that no percentage of fault could be attributed to Neenan. She also claims that the defendant's failure to plead Neenan's fault as an affirmative defense or to at least raise this issue during pretrial proceedings prevented the court from considering this issue at trial. Because we agree that Neenan's liability to Freeman is not fault under the Comparative Fault Act, chapter 668, we do not consider whether the issue of Neenan's fault was adequately raised. Under chapter 668 the court, if there is no jury, must apportion damages among all parties at fault. Iowa Code § 668.3(2) (1993). A party includes a person who has been released. Id. § 668.2. No one disputes that Neenan is a released party. However, Freeman does dispute that Neenan was at fault. Section 668.1 defines fault to mean one or more acts or omissions that are in any measure negligent or reckless towards the person or property of the actor or others, or that subject a person to strict tort liability. The term also includes breach of warranty.... Id. § 668.1. Unfortunately, the trial court did not specify the nature of Neenan's liability in its Findings of Fact, Conclusions of Law and Rulings. Freeman filed a rule 179(b) motion challenging the court's assessment of fault against Neenan. See Iowa R.Civ.P. 179(b). The defendant resisted Freeman's motion, arguing that Freeman could have stated causes of action against Mr. Neenan for negligence, negligent misrepresentation, and breach of warranty. The court overruled Freeman's motion for the reasons set forth in defendant's resistance, without specifying which, if any, of the theories advanced by defendant was the basis for the court's finding that Neenan was at fault. In the future, appellate review would be facilitated if, in cases tried to the court, the court would clearly state the theory of liability and factual basis for assessing fault against a released party. On appeal, defendant relies only on a theory of negligent misrepresentation to support the finding of fault on the part of Neenan. Freeman argues that she would not have had a viable claim against Neenan under this theory and that her only claim against Neenan would be for fraudulent inducement. We have held that chapter 668 does not cover fraud actions. Tratchel v. Essex Group, Inc., 452 N.W.2d 171, 181 (Iowa 1990). Therefore, if Freeman is correct that the only claim she would have against Neenan is for fraud, the Comparative Fault Act does not apply. We now examine whether Freeman would have had a claim against Neenan for negligent misrepresentation. In Iowa the tort of negligent misrepresentation finds its genesis in section 552 of the Restatement (Second) of Torts. Beeck v. Kapalis, 302 N.W.2d 90, 96-97 (Iowa 1981); Ryan v. Kanne, 170 N.W.2d 395, 402 (Iowa 1969). Section 552 details in pertinent part the necessary proof for a claim of negligent misrepresentation as follows: One who, in the course of his business, profession, or other employment, or in any other transaction in which he has a pecuniary interest, supplies false information for the guidance of others in their business transactions, is subject to liability for pecuniary loss caused to them by their justifiable reliance upon the information, if he fails to exercise reasonable care or competence in obtaining or communicating the information. Restatement (Second) of Torts § 552 (1977). In applying the tort of negligent misrepresentation, we have distinguished misrepresentations made by persons engaged in the business or profession of supplying guidance to others from misrepresentations made during commercial transactions where the parties are dealing at arm's length. See Haupt v. Miller, 514 N.W.2d 905, 910 (Iowa 1994); Meier v. Alfa-Laval, Inc., 454 N.W.2d 576, 581 (Iowa 1990). We have held that the tort of negligent misrepresentation applies only to those defendants in the profession or business of supplying information or opinions. Haupt, 514 N.W.2d at 910; Meier, 454 N.W.2d at 581. In Haupt, we held that a claim of negligent misrepresentation was not actionable against the officers of a bank because the alleged misrepresentations were made during arm's-length negotiations between the bank officers and one of the bank's customers. Haupt, 514 N.W.2d at 910. Similarly, in this case there are no facts in the record that support a finding that Neenan was in the business of supplying information. Neenan made representations while negotiating for the sale of his video rental business, a commercial transaction in which the parties were dealing at arm's length. We conclude that Freeman would have no claim for negligent misrepresentation against Neenan. Because Freeman could not have recovered from Neenan under a theory classified as fault under chapter 668, it was error for the court to assign a percentage of fault to Neenan.