Opinion ID: 1830951
Heading Depth: 2
Heading Rank: 4

Heading: the lower court erred in dismissing the negligent misrepresentation claim against bankplus.

Text: ¶ 65. The lower court dismissed the negligent misrepresentation claim against BankPlus, because Donald had ample opportunity to inspect the property prior to inspection and BankPlus made no representations whatsoever through its quitclaim to Donald. The lower court based its opinion on Stonecipher v. Kornhaus, where this Court stated the general rule that a vendor of real estate is not liable to the purchaser in possession, ... which is caused by a dangerous condition on the premises, whether natural or artificial, which existed when the purchaser took possession. 623 So.2d 955, 962 (Miss. 1993). ¶ 66. The requirements for a cause of action for negligent misrepresentation are: 1) A misrepresentation or omission of fact; 2) That the representation or omission is material or significant; 3) The failure to exercise reasonable care on the part of the defendant; 4) Reasonable reliance on the misrepresentation or omission; and 5) Damages as a direst result of such reasonable reliance. Id. at 964. Donald asserts that the Amended Complaint alleges these five elements. ¶ 67. First, Donald contends that BankPlus made an implied misrepresentation of material fact. As BankPlus notes, this allegation is developed more fully in the brief than the complaint. Second, BankPlus failed to exercise reasonable care by not properly inspecting the property when it knew the previous owner was in the oil field waste disposal business. Donald relied on these representations when he decided to purchase the property. His damages were the result, because he would not have knowingly purchased property contaminated with hazardous waste. ¶ 68. In Midsouth Rail Corp. v. Citizens Bank & Trust Co., 697 So.2d 451, 459-60 (Miss.1997), this Court held that Miss. Code Ann. Section 17-17-29(4) [5] did not impose liability on lenders as any person creating, or responsible for creating, ... immediate necessity for remedial or cleanup action. Midsouth Rail at 460 ( quoting Miss.Code Ann. § 17-17-29(4) (1995)). In Midsouth Rail, Citizens Bank filed a declaratory judgment action to determine liability to MidSouth Rail for environmental clean-up costs arising from sulphur processing by an ultimately bankrupt sulphur processor, who had leased the land from MidSouth Rail and obtained a loan from Citizens Bank. Id. at 453-54. The trial court held Citizen's Bank liable for clearly enabling the operator of the facility to continue its business. Id. at 459. ¶ 69. This Court reversed declining to extend liability to Citizens Bank for public policy reasons, as follows: [E]xtending the scope of the statute would negatively impact lenders and their customers across the state. By placing liability on lenders for enabling business operations, banks would be subject to liability for environmental contamination to which they did not cause or contribute.... This liability would serve to discourage business development and to apply the consequences of one party's act to a more financially sound party with no fault. An innocent lender could become subject to liability in virtually any type of loan. [T]he ... only reasonable conclusions are an increase in the cost of loan transactions, a decrease in business capital due to stricter loan guidelines, and a corresponding decrease in business development. Midsouth Rail at 459. ¶ 70. Under the same rationale and with public policy in mind, this Court extends the holding of Midsouth Rail to prevent lender liability where the innocent lender has foreclosed on a parcel of real estate with a latent environmental defect and then sold by quitclaim deed that parcel to a third party at a foreclosure sale. Therefore, this Court affirms the lower court's dismissal of this claim.