Opinion ID: 884783
Heading Depth: 2
Heading Rank: 1

Heading: Common law duty: negligent misrepresentation

Text: ¶ 35 We turn initially to the question of whether the State had a common law duty sufficient to support the Jacksons' negligence-based claims in the present case. Of central importance to the Jacksons' suit is their claim for negligent misrepresentation, in which they allege the State misrepresented certain material facts regarding Aaron's family background. ¶ 36 This Court has long recognized the common law tort of negligent misrepresentation. See, e.g., Kitchen Krafters, 242 Mont. at 165, 789 P.2d at 573. In Kitchen Krafters, we set out the following elements of a claim for negligent misrepresentation: a) the defendant made a representation as to a past or existing material fact; b) the representation must have been untrue; c) regardless of its actual belief, the defendant must have made the representation without any reasonable ground for believing it to be true; d) the representation must have been made with the intent to induce the plaintiff to rely on it; e) the plaintiff must have been unaware of the falsity of the representation; it must have acted in reliance upon the truth of the representation and it must have been justified in relying upon the representation; f) the plaintiff, as a result of its reliance, must sustain damage. Kitchen Krafters, 242 Mont. at 165, 789 P.2d at 573. ¶ 37 To succeed with a claim for negligent misrepresentation, a party need not demonstrate an intent on the part of a defendant to misrepresent, but must merely show a failure to use reasonable care or competence in obtaining or communicating... information. Barrett v. Holland & Hart (1992), 256 Mont. 101, 107, 845 P.2d 714, 717. See also Batten v. Watts Cycle and Marine, Inc. (1989), 240 Mont. 113, 117, 783 P.2d 378, 381, cert. denied, 494 U.S. 1087, 110 S.Ct. 1826, 108 L.Ed.2d 955 (1990). For liability to arise, it [is] not necessary that the negligent misrepresentation constitute constructive fraud, nor actual fraud. Bottrell v. American Bank (1989), 237 Mont. 1, 21, 773 P.2d 694, 706. Rather, a want of ordinary care on the part of a defendant may, under certain circumstances, give rise to liability for negligent misrepresentation. Bottrell, 237 Mont. at 21, 773 P.2d at 706. The presence of a duty to exercise due care is thus a requisite element of any claim for negligent misrepresentation. ¶ 38 We have previously held that [t]he existence of a duty of care [in a negligence-based action] depends upon the foreseeability of the risk and upon a weighing of policy considerations for and against the imposition of liability. Singleton v. L.P. Anderson Supply Co., Inc. (1997), 284 Mont. 40, ___, 943 P.2d 968, 971 (quoting Maguire v. Department of Institutions (1992), 254 Mont. 178, 189, 835 P.2d 755, 762).
¶ 39 Among those policy considerations this Court will weigh in determining whether to impose a duty are (1) the moral blame attached to a defendant's conduct; (2) the prevention of future harm; (3) the extent of the burden placed on the defendant; (4) the consequences to the public of imposing such a duty; and (5) the availability and cost of insurance for the risk involved. Singleton, 943 P.2d at 971, 54 St.Rep. at 739 (citing Phillips v. City of Billings (1988), 233 Mont. 249, 253, 758 P.2d 772, 775). See also, Estate of Strever v. Cline (1996), 278 Mont. 165, 172, 924 P.2d 666, 670. ¶ 40 As the question of whether public policy weighs in favor of the imposition of a duty upon the State to use due care in disclosing information regarding an adoptive child's birth parents is one of first impression in Montana, we turn for initial guidance to case law from other jurisdictions. Courts in a number of other states have, under certain circumstances, recognized a cause of action for negligent misrepresentation in the adoption context and the concomitant presence of a duty on the part of an adoption agency to use due care in disseminating medical background information to potential adoptive parents. See, e.g., Mohr v. Commonwealth (1995), 421 Mass. 147, 653 N.E.2d 1104; M.H. and J.L.H. v. Caritas Family Services (Minn.1992), 488 N.W.2d 282, 288; Gibbs v. Ernst (1994), 538 Pa. 193, 647 A.2d 882, 891-92; Mallette v. Children's Friend and Service (R.I.1995), 661 A.2d 67, 71; Meracle v. Children's Service Society of Wisconsin (1989), 149 Wis.2d 19, 437 N.W.2d 532, 537. But see Michael J. v. Los Angeles County, Department of Adoptions (1988), 201 Cal.App.3d 859, 874-75, 247 Cal.Rptr. 504; Richard v. Vista Del Mar Child Care Service (1980), 106 Cal.App.3d 860, 866-68, 165 Cal.Rptr. 370. ¶ 41 In recognizing that an adoption agency may owe such a duty to use reasonable care, these courts have invariably premised that duty on the adoption agencies' voluntary dissemination of health information concerning the child to potential adopting parents. Mallette, 661 A.2d at 70. Courts have commonly recognized that a duty on the part of the adoption agency to use due care may arise only when the agency begin[s] volunteering information to potential adopting parents. Mallette, 661 A.2d at 70. See also Caritas, 488 N.W.2d at 288 (concluding that adoption agencies must use due care to ensure that when they undertake to disclose information about a child's genetic parents and medical history, they disclose that information fully and adequately ...); Meracle, 437 N.W.2d at 537 (where an adoption agency makes affirmative misrepresentations about a child's health and background, it has assumed a duty); Gibbs, 647 A.2d at 890 (recognizing that an adoption agency has assumed the duty to tell the truth when it volunteers information to prospective parents). Thus, courts will, under certain circumstances, impose upon adoption agencies a duty to use due care and to refrain from making negligent misrepresentations where the agencies undertake to volunteer information to potential adoptive parents. ¶ 42 Prior to reaching such a conclusion, virtually every court with occasion to address the question of whether an adoption agency may, under certain circumstances, owe a common law duty to prospective parents has discussed conflicting issues of public policy. See, e.g., Gibbs, 647 A.2d at 891; Meracle, 437 N.W.2d at 537; Caritas, 488 N.W.2d at 287-88; Mallette, 661 A.2d at 71-72; Mohr, 653 N.E.2d at 1111-12; Roe, 167 Ill.Dec. at 724, 588 N.E.2d at 365. ¶ 43 In the case of Gibbs, for example, the Supreme Court of Pennsylvania recognized competing interests between prospective parents and adoption agencies, but ultimately sided with a policy in favor of full and accurate disclosure of a child's medical history because such disclosure ensures that the adopting parents are emotionally and financially equipped to raise a child with special needs. Gibbs, 647 A.2d at 887. Moreover, the court recognized that [f]ailure to provide adequate background information can result in the placement of children with families unable or unwilling to cope with physical or mental problems, leading to failed adoptions. Gibbs, 647 A.2d at 887. ¶ 44 In Gibbs, a couple specifically informed an adoption agency that they wished to adopt a child with no history of sexual or physical abuse or any mental or emotional problems. Gibbs, 647 A.2d at 884. The agency then informed the couple that a five-year-old boy, who was hyperactive and had suffered from neglect, was available for adoption. Gibbs, 647 A.2d at 884-85. The adoption agency provided the adoptive parents with additional background information regarding the child, but, despite repeated requests by the parents for information regarding the child's psychological and emotional history, failed to disclose to them the child's extensive history of sexual and physical abuse, as well as his history of violent behavior. Gibbs, 647 A.2d at 885. Immediately after the adoption was finalized, the child began experiencing severe emotional problems and displaying extremely violent behavior. Gibbs, 647 A.2d at 885. ¶ 45 The adoptive parents subsequently brought suit against the adoption agency, alleging counts for wrongful adoption and negligent placement. Gibbs, 647 A.2d at 886. The Pennsylvania Supreme Court held that traditional common law causes of action grounded in fraud and negligence do apply to the adoption setting, and concluded that the adoptive parents could proceed on the common law claims of fraud, negligent misrepresentation, and negligent failure to disclose suggested by the complaint. [3] Gibbs, 647 A.2d at 887. With respect to the adoptive parents' claim for negligent misrepresentation, the court specifically concluded that the adoption agency has assumed a duty to tell the truth when it volunteers information to prospective parents, but has failed to perform that duty. Gibbs, 647 A.2d at 890. The court noted that recognizing the tort of negligent misrepresentation in the adoption context would place a heightened burden upon adoption agencies, but concluded that public policy considerations justified the imposition of such a burden. Gibbs, 647 A.2d at 891. The court noted the burden was tempered by the fact that adoption agencies need not offer warranties or guarantees as to the information they supply. Gibbs, 647 A.2d at 891. ¶ 46 The Supreme Court of Rhode Island has similarly recognized that when adoption agencies begin volunteering information to potential adopting parents they assume a duty to use due care in refraining from making negligent misrepresentations. Mallette, 661 A.2d at 70-71. In Mallette, adoptive parents alleged the adoption agency negligently misrepresented and failed to disclose information it had regarding their adopted child's family and medical history. Mallette, 661 A.2d at 68. More specifically, the parents alleged the adoption agency informed them that the child's mother suffered from learning disabilities caused solely by head trauma as a young child but failed to disclose to them that the birth mother had been diagnosed as mildly to moderately retarded with only a `possibility' that such retardation resulted from head trauma. Mallette, 661 A.2d at 68. The parents additionally alleged the agency knew, but failed to disclose, that the biological mother had been diagnosed as possessing macrocephaly, pseudoepicanthal folds, a high-arched palate, tachycardia, small clinodactyly of the fifth fingers, tremors of the hands, and poor coordination. Mallette, 661 A.2d at 68. ¶ 47 The court concluded that when the agency began allegedly volunteering information concerning [the child's] and his biological mother's medical and genetic background the agency assumed a duty to refrain from making negligent misrepresentations. Mallette, 661 A.2d at 71. In so concluding, the court reasoned that permitting the adoptive parents to maintain a claim for negligent misrepresentation against the adoption agency would in fact promote public policy and would not create any substantial additional burdens on adoption agencies. Mallette, 661 A.2d at 71-72. The court reasoned that in order to avoid liability, an adoption agency needs simply to refrain from making representations, or if it does begin making representations, it must do so in a nonnegligent manner. Mallette, 661 A.2d at 73. ¶ 48 Turning back to the case at hand, we conclude, as has the recent majority of courts addressing this issue, that recognizing a cause of action for negligent misrepresentation in the adoption context will, in fact, promote public policy and ensure that adoptive parents assume the awesome responsibility of raising a child with their eyes wide open. Roe, 167 Ill.Dec. at 726, 588 N.E.2d at 365. ¶ 49 As have those courts holding adoption agencies assume a duty to refrain from making negligent misrepresentations when they begin volunteering information to potential adoptive parents, this Court has similarly recognized the fundamental principle that, where a person undertakes to do an act or discharge a duty by which the conduct of another may be properly regulated and governed, he is bound to perform it in such a manner that those who are rightfully led to a course of conduct or action on the faith that the act or duty will be duly and properly performed shall not suffer loss or injury by reason of negligent failure so to perform it. Stewart v. Standard Publishing Co. (1936), 102 Mont. 43, 50, 55 P.2d 694, 696 (quoting 45 C.J. 650). See also, Suit v. Scandrett (1947), 119 Mont. 570, 573, 178 P.2d 405, 406-07; Yager v. Deane (1993), 258 Mont. 453, 457, 853 P.2d 1214, 1217 (quoting Stewart and recognizing principle, but finding no duty under the circumstances of that case). ¶ 50 In the instant case, the Jacksons argue the State, in fact, disclosed certain background information regarding Aaron's birth parents, and in doing so, assumed a duty to use due care and to completely and accurately disclose that information. The State, however, argues it made no misleading statements to the Jacksons regarding the psychological background of Aaron's birth mother and putative father, and, therefore, that it assumed no such duty. The State asserts that, although it did provide the Jacksons with a great deal of information about Aaron's background prior to the adoption, it did not provide them with any inaccurate or misleading information regarding the psychological background of his birth parents. Specifically, the State argues its employees knew of no familial predisposition for mental illness, made no attempts to conceal information from the Jacksons, and did not assure them that Aaron would be free from mental illness. ¶ 51 As the State concedes, review of the record indicates that Wallace and Petek did indeed provide the Jacksons with certain information regarding Aaron's background. For example, deposition testimony from the Jacksons indicates that Wallace and Petek informed them of the possibility that Aaron's birth mother had used drugs or alcohol early in her pregnancy, that Aaron had been removed from the custody of his birth mother due to her inability to care for him, and that his birth mother had caused him to aspirate on solid food and soda pop when he was a young infant. The Jacksons' deposition testimony further indicates that Wallace and Petek revealed that Aaron's birth mother came from a multi-generation welfare family and that the family was socially inept, but that Aaron's birth mother was physically healthy. We conclude that the State, when it began volunteering such background information to the Jacksons, assumed a duty to do so with due care. Whether the State breached that duty and negligently misrepresented information to the Jacksons is a question of material fact precluding summary judgment in the State's favor. ¶ 52 With respect to the first of several specific public policy factors implicated in this case, we conclude that to require anything less from the State than the exercise of due care in the dissemination of information in its possession to prospective adoptive parents would be simply unacceptable. We recognize that the imposition of such a duty indeed places a slight burden on the State, but conclude that burden is justified in light of the compelling need for adoptive parents to receive all available information regarding a child who may soon become a permanent part of their family. We conclude that [f]ull disclosure of a child's medical and familial background is warranted not only to enable adoptive parents to obtain timely and appropriate medical care for the child, but also to enable them to make an intelligent and informed decision to adopt. Mohr, 653 N.E.2d at 1112. Furthermore, we note the imposition of such a duty will increase public trust in our State agencies, and will give potential parents more confidence in the adoption process and in the accuracy of the information they receive. Meracle, 437 N.W.2d at 537. Finally, for the reasons discussed later in this opinion, we reject the State's argument that the imposition of a common law duty would conflict with its duty to maintain confidentiality of the birth parents' medical records in this case. In light of the fact that the State undertook to disclose to the Jacksons certain information regarding Aaron's birth parents, we conclude that public policy considerations justify the imposition of a duty upon the State in the present case.
¶ 53 Of additional and equally vital importance to our inquiry into the presence of a common law duty in the instant case is the question of foreseeability. As noted above, we have held that the existence of a duty of care in a negligence-based action depends, not only upon a weighing of policy considerations for and against the imposition of liability, but also upon the foreseeability of the risk involved. Singleton v. L.P. Anderson Supply Co., Inc. (1997), 284 Mont. 40, ___, 943 P.2d 968, 971 (quoting Maguire v. Department of Institutions (1992), 254 Mont. 178, 189, 835 P.2d 755, 762). ¶ 54 In Busta v. Columbus Hospital Corp. (1996), 276 Mont. 342, 370, 916 P.2d 122, 139, we clarified that foreseeability is an element of negligence, and therefore, properly considered with the existence of duty. In evaluating the presence of a duty of care, this court measures foreseeability on a scale of reasonableness pursuant to which the appropriate inquiry is into what the reasonably prudent person would then have foreseen as likely to happen. Schafer v. State, Dept. of Institutions (1979), 181 Mont. 102, 106, 592 P.2d 493, 495, overruled in part on other grounds by Estate of Strever v. Cline (1996), 278 Mont. 165, 178, 924 P.2d 666, 674 (quoting Mang v. Eliasson (1969), 153 Mont. 431, 436-37, 458 P.2d 777, 781). In Mang, we recognized that foreseeability thus constitutes a limitation on the otherwise potentially infinite liability which would follow every alleged negligent act, and concluded that [f]oreseeability is of prime importance in establishing the element of duty. Simply put, if a reasonably prudent person can foresee no risk of injury, that person is not negligent. Mang, 153 Mont. at 437, 458 P.2d at 781. ¶ 55 In the present case, the District Court concluded that the Jacksons failed to demonstrate the requisite element of foreseeability, and thus concluded the Jacksons failed to sustain their burden of establishing... the existence of a duty on the part of the State. More specifically, the court concluded that the Jacksons had failed to adequately demonstrate that the State knew, or should have known, that withholding background medical information regarding Aaron's birth parents would result in a risk of injury to the Jacksons. In so concluding, the court noted that the Jacksons' expert, Dr. Blodgett, has testified that he did not know what caused Aaron's condition and that the Jacksons therefore failed to establish that the State knew or should have known that the psychological information allegedly withheld would result in a risk of injury to the Jacksons. ¶ 56 Other courts faced with the question of whether an adoption agency has a common law duty to accurately communicate information to prospective parents have similarly recognized that foreseeability is a critical element of duty, and that the liability of adoption agencies is limited to those conditions reasonably predictable at the time of placement. Gibbs, 647 A.2d at 891 (citing Vista Del Mar, 106 Cal.App.3d at 867, 165 Cal.Rptr. 370; Roe, 167 Ill.Dec. at 720, 588 N.E.2d at 361; Foster v. Bass (Miss.1990), 575 So.2d 967, 975). In Gibbs, the Pennsylvania Supreme Court held that, under the traditional principles of negligence, the duty of adoption agencies for the purposes of negligent misrepresentation will only apply where the condition of the child was foreseeable at the time of placement so that the agency is blameworthy in making a misrepresentation. Gibbs, 647 A.2d at 892. Moreover, a number of courts have recognized that, in determining whether there exists a duty on the part of an adoption agency under any given set of factual circumstances,  `the common law notion of foreseeability as found in the concepts of duty and proximate cause' prevents the tort of negligent `wrongful adoption' from making adoption agencies guarantors of children's future health. See, e.g., Mohr, 653 N.E.2d at 1113 (quoting Gibbs, 647 A.2d at 891). ¶ 57 With respect to the Jacksons' claim for negligent misrepresentation in the present case, we are of the similar opinion that the State owes the Jacksons a duty of due care only if it was reasonably foreseeable that Aaron was at a greater risk for the development of health problems due to his parents' mental health. As did the District Court, we turn to Dr. Blodgett's deposition testimony to determine whether the Jacksons have sustained their burden of demonstrating that, at the time of Aaron's adoption in 1985, the State could reasonably have foreseen that Aaron was at risk for developing the emotional and psychological problems he presently displays. In concluding that the Jacksons failed to properly demonstrate foreseeability, the court noted that, by his own admission, Dr. Blodgett did not know what caused Aaron's condition. Indeed, in response to questioning by the State's attorney, Dr. Blodgett concedes as follows: Do I know what's caused Aaron's illness?No I do not. ¶ 58 To establish a duty on the part of the State, however, the Jacksons need not prove with absolute scientific and medical certainty the presence of a genetic link between Aaron's psychological and emotional problems and those suffered by his birth mother and putative father. Rather, as stated above, the Jacksons need only demonstrate reasonable foreseeability. In other words, the Jacksons need only demonstrate that the State could reasonably have foreseen that Aaron was at risk for later manifesting an array of psychological and emotional problems, not that the psychological impairments suffered by Aaron's birth mother and putative father have definitively caused Aaron's present difficulties. ¶ 59 With this standard in mind, we hold the District Court erred in concluding that because Dr. Blodgett concedes he does not know what has caused Aaron's illness the Jacksons have failed to demonstrate reasonable foreseeability. Rather, a review of Dr. Blodgett's entire deposition testimony leads us to the opposite conclusion. For example, referring to those psychological evaluations of Aaron's birth mother and putative father allegedly withheld in this case, Dr. Blodgett emphasizes the following: [Y]ou know, the principal point that I'd like to make in this is that I do believe thatgiven the diagnoses of the mother and the putative father, Stevensparticularly the putative father, Stevensthat even by 1980, `82, `83 standards, that there was enough known of familial patterns that we understood that there were significant biological risks to peopleor significant risks to people who were first-degree relatives to people with those diagnoses. ¶ 60 In his ensuing testimony, Dr. Blodgett engages in an at-length discussion of the familial patterns to such disorders as schizophrenia. Having reviewed all of Dr. Blodgett's deposition testimony, we hold the District Court erred in concluding the Jacksons failed to establish the requisite element of foreseeability in this case. Review of Dr. Blodgett's deposition indicates the Jacksons have sufficiently demonstrated that, in light of the information the State had regarding the psychological and emotional health of Aaron's birth mother and putative father, the State could reasonably have foreseen that Aaron would later manifest an array of psychological and emotional problems. ¶ 61 Based on the foregoing discussion, we hold that when the State began volunteering information regarding the health of Aaron's biological family, it assumed a duty to do so with due care and to refrain from negligently misrepresenting that information to the Jacksons. Whether the State in fact breached that duty presents a genuine issue of material fact precluding summary judgment in the State's favor with respect to the Jacksons' claim for negligent misrepresentation.