Opinion ID: 2010928
Heading Depth: 1
Heading Rank: 1

Heading: In his only assignment plaintiff asserts the trial court erred in sustaining defendant's motion to dismiss based upon lack of jurisdiction of subject matter.

Text: Prior to March 30, 1965, the effective date of the Iowa Tort Claims Act (herein called the Act), our courts lacked jurisdiction over suits brought against the State and its agencies sounding in tort. In Montandon v. Hargrave Construction Co., 256 Iowa 1297, 130 N.W.2d 659, we held the doctrine of governmental immunity to tort actions was jurisdictional and affirmed the lower court's order sustaining the special appearance filed by defendant State agency. The parties' contentions here present the issue whether plaintiff's petition asserts a claim specifically excluded from coverage under the Act by the misrepresentation clause of section 25A.14. In support of trial court's ruling defendant argues the Act waives governmental immunity to claims sounding in tort only as to claims defined and to the extent provided in chapter 25A; exclusions in section 25A.14 are applicable to the subject matter of plaintiff's petition. This section provides in pertinent part: The provisions of this chapter shall not apply to: 1.    2.    3. Any claim for damages caused by the imposition or establishment of a quarantine by the state, whether such quarantine relates to persons or property. 4. Any claim arising out of    misrepresentation, [or] deceit,    Section 25A.2(5) defines a claim for the purpose of the Act: 'Claim' means any claim against the state of Iowa for money only, on account of damage to or loss of property or on account of personal injury or death, caused by the negligent or wrongful act or omission of any employee of the state while acting within the scope of his office or employment   . The State contends the Act excludes from coverage a claim arising out of misrepresentation or decit and also any claim for damages caused by imposition or establishment of a quarantine by the State. It argues this is such a claim because it arises out of testing of his cattle by the State agency on the basis it had negligently tested the livestock, had found and reported to plaintiff such livestock were diseased when in fact they were not, and as a result of such report plaintiff's herd was subjected to quarantine and sale at reduced prices. Plaintiff, on the other hand, contends his claim is for negligence in improperly diagnosing his herd, not for misrepresentation. The negligence is said to be failure to exercise skill and care requisite to the duty to properly diagnose. He argues diagnosis of the herd was conducted by a series of completed tests; the results were compiled and given plaintiff; the results were not misrepresented, and the actionable tortious conduct is the State's negligence in conducting the tests which is clearly within the general provisions of the Act. II. If we sustain the State's contention the cause is based on misrepresentation and thus within the exclusion, the case is governed by Montandon and the trial court was correct in its ruling. On the other hand, if plaintiff's contention that his cause is based upon negligence is upheld, the trial court was in error since the Montandon holding has been modified by the Act to the extent governmental immunity is waived under its provisions. To some extent our Act is patterned after the federal Tort Claims Act and contains many of the same exclusions, including the quarantine exception in 28 U.S.C.A. § 2680(f) and the misrepresentation exception in 28 U.S.C.A. § 2680(h). The misrepresentation exception of the federal statute has been construed by the Tenth Circuit Court of Appeals contrary to plaintiff's contention here in Hall v. United States (1959), 274 F.2d 69. The Hall decision was subsequently cited and strongly relied on by the United States Supreme Court in United States v. Neustadt (1961), 366 U.S. 696, 81 S.Ct. 1294, 6 L.Ed.2d 614. Hall v. United States, supra, was an action filed pursuant to the provisions of the federal Tort Claims Act. Plaintiff had alleged in substance that he was engaged in the cattle business in New Mexico; at all times material he owned approximately 333 head of livestock; defendant through its Department of Agriculture, Agricultural Research Division, Animal Disease Eradication Division, and its agents and employees was engaged in testing livestock for Brucellosis; they tested his herd; the results of the tests were made known to him; they revealed one or more of his cattle were suffering from the disease; and as a result of such report, his herd was subject to quarantine and a sale was made at reduced prices. Plaintiff had alleged that, in truth and in fact, the tests were negligently performed by defendant's agents; there were in fact no diseased cattle in his herd; and as a direct and proximate result of defendant's negligence, plaintiff was forced to dispose of his herd at less than fair market value. The district court had predicated its judgment of dismissal on the ground the damages alleged resulted from the imposition or establishment of a quarantine and that liability resulting from the establishment of a quarantine was excluded from the Act. The circuit court affirmed the lower court but on the ground that in addition to excluding liability because of a quarantine, the Act also excludes liability because of misrepresentation. In its opinion the circuit court said:    If we take the literal meaning of the language of the complaint, it seeks to recover damage resulting from the negligent testing of the cattle for which there would be liability. But there is no claim that because of negligent testing these cattle suffered physical damages which made them less valuable, such as may come from the use of a noxious or poisonous substance. We must then look beyond the literal meaning of the language to ascertain the real cause of complaint. Plaintiff's real claim is that because of the negligent manner in which these tests were made, the result showed that plaintiff's cattle were diseased; whereas, in fact, they were free from disease and that the Government misrepresented the true condition of these cattle. Plaintiff's loss came about when the Government agents misrepresented the condition of the cattle, telling him they were diseased when, in fact, they were free from disease. The claim is that this misrepresentation caused plaintiff to sell his cattle at a loss. This stated a cause of action predicated on a misrepresentation. Misrepresentation as used in the exclusionary provision of the Statute was meant to include negligent misrepresentation. The question for decision in United States v. Neustadt, supra, was whether the United States may be held liable under the federal Tort Claims Act to a purchaser of residential property who has been furnished a statement reporting the results of an inaccurate FHA inspection and appraisal and who, in reliance thereon, has been induced by the seller to pay a purchase price in excess of the property's fair value. The Court stated the answer turned upon the correct interpretation of 28 U.S.C.A., section 2680(h), which precludes recovery upon any claim arising out of misrepresentation. The material facts giving rise to the controversy were not in dispute. The district court adjudged the Government liable and on appeal the judgment was affirmed. United States v. Neustadt (4 Cir.), 281 F.2d 596. In reversing the circuit court the Supreme Court said:    The Government's position is that, since Congress employed both the terms `misrepresentation' and `deceit' in § 2680(h), it clearly meant to exclude claims arising out of negligent, as well as deliberate, misrepresentation; and therefore, even assuming that the District Court correctly found that the inaccurate FHA appraisal in this case resulted from a negligent inspection, and that respondents relied upon that appraisal to their detriment, the claim must nevertheless fail as one `arising out of    [negligent] misrepresentation.' We are in accord with the view urged by the Government, and unanimously adopted by all Circuits which have previously had occasion to pass on the question, that § 2680(h) comprehends claims arising out of negligent, as well as willful, misrepresentation. The leading precedent has been the Second Circuit's decision in Jones v. United States, 207 F.2d 563, which involved a statement issued to the plaintiffs by the United States Geological Survey erroneously estimating the oil-producing capacity of certain land. In reliance upon that statement, plaintiffs sold securities representing oil and gas rights in the land for less than their actual value, and later sought to recoup their loss from the Government under the Tort Claims Act on a complaint alleging negligent misrepresentation. Affirming a dismissal of the complaint, the Second Circuit tersely pointed out that § 2680(h) applies to both `misrepresentation' and `deceit,' and, `[a]s deceit means fraudulent misrepresentation, misrepresentation must have been meant to include negligent misrepresentation, since otherwise the word misrepresentation would be duplicative.' 207 F.2d at page 564. Following this interpretation, in an unbroken line,    [citing authorities]. Throughout this line of decisions, the argument has been made by plaintiffs, and consistently rejected by the courts, until this case, that the bar of § 2680(h) does not apply when the gist of the claim lies in negligence underlying the inaccurate representation, i, e., when the claim is phrased as one `arising out of' negligence rather than `misrepresentation.' But this argument, as was forcefully demonstrated by the Tenth Circuit in Hall v. United States, supra, is nothing more than an attempt to circumvent § 2680(h) by denying that it applies to negligent misrepresentation.