Opinion ID: 1714159
Heading Depth: 2
Heading Rank: 3

Heading: Duty to Avoid Negligently Providing Information

Text: ¶34 Even if we accept, arguendo, Wells Fargo's arguments that its notice to Duplessie constituted notice to Erickson, we still must address the fact that Sevig continued to advise Erickson to contribute money to the trust to save estate taxes after he knew the trust was defective. ¶35 Wisconsin courts have frequently held that claims for professional malpractice lie in tort. See, e.g., Milwaukee County v. Schmidt, Garden & Erikson, 43 Wis. 2d 445, 452-53, 168 N.W.2d 559 (1969) (architects); Smith v. Long, 178 Wis. 2d 797, 802, 505 N.W.2d 429 (Ct. App. 1993) (lawyers); Milwaukee Partners v. Collins Engineers, Inc., 169 Wis. 2d 355, 363, 485 N.W.2d 274 (Ct. App. 1992) (engineers). ¶36 Wells Fargo admitted at oral argument that it had a professional duty to furnish complete and accurate information to Erickson. We need not go that far. This is not a duty to disclose case. [7] ¶37 In this case, despite its knowledge of the problem with the trust, Wells Fargo assured Erickson that she had nothing to worry about, and that for estate tax purposes, it makes sense to do the gifts. These assertions are not disputed. Thus, we decide only whether, by affirmatively making such statements to Erickson, Wells Fargo breached a duty. We conclude that it did. ¶38 Wisconsin has adopted Restatement (Second) of Torts § 552. See Citizens State Bank v. Timm, Schmidt & Co., 113 Wis. 2d 376, 385-86, 335 N.W.2d 361 (1983); Milwaukee Partners, 169 Wis. 2d at 362-63. That section provides in relevant part: § 552. Information Negligently Supplied for the Guidance of Others. (1) One who, in the course of his business, profession or 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. ¶39 We conclude that all the elements listed in § 552 are present here. Wells Fargo made false statements to Erickson by telling her that for estate tax purposes, it makes sense to do the gifts and that there were no problems with her trust after it knew of the Crummey problem. Wells Fargo made the statements in the course of its business. Wells Fargo intended to guide Erickson's business practices (it makes sense to do the gifts). Wells Fargo had a pecuniary interest in the transactions, as it received a fee for serving as the trustee. Erickson relied on Wells Fargo's statements and suffered pecuniary loss in the amount of more than $173,000 in taxes. Accordingly, Wells Fargo hadand breacheda duty under § 552. ¶40 Similarly, we have no difficulty concluding that Wells Fargo's statements to Erickson are negligent misrepresentations under Wisconsin common law. [8] The tort of negligent misrepresentation has four elements. Gorton v. Am. Cyanamid Co., 194 Wis. 2d 203, 223, 533 N.W.2d 746 (1995). They are: (1) a duty of care or voluntary assumption of a duty on the part of the defendant; (2) a breach of that duty, i.e., failure to exercise ordinary care in making the representation or in ascertaining the facts; (3) a causal link between the conduct and the injury; and (4) actual loss or damage as a result of the injury. Id.; see also Wis JICivil 2403. ¶41 Wells Fargo's conduct satisfies all these elements. We have already discussed Wells Fargo's potential duty under various theories: its duty as trustee, its duty as financial planner or advisor, and its duty under the Restatement (Second) of Torts to avoid negligent misrepresentations. Under any of these theories, Wells Fargo had a duty to ensure that the information it actually provided to Erickson was correct. Wells Fargo breached that duty by failing to exercise ordinary care; it told Erickson to continue contributing to the trust even though it knew the trust was defective for her objective. Finally, both the causal link and resulting injury are clear; Erickson's estate paid increased taxes due to Wells Fargo's failure to inform her of the deficiencies. Had it told her of the problem, she could have remedied it in part by giving the beneficiaries a present interest in future gifts or by setting up a new trust. ¶42 As a matter of law, we conclude that, because Wells Fargo held itself out as an expert in managing Erickson's finances, it had a duty to avoid providing false information to its client. It breached that duty, and we therefore affirm the court of appeals. ¶43 Our holding should not be interpreted as encouraging trustees and financial professionals to remain silent rather than risk providing false information to their clients. As we have recognized, trustees have a duty to disclose relevant information. Hammes, 79 Wis. 2d at 368.