Court Opinion

ID: 9526341
Source: CourtListenerOpinion
Date Created: 2023-08-07 03:15:57.943319+00
Date Added: 2024-06-11T13:19:29.358979
License: Public Domain

SIMONETT, Justice
(concurring in part and dissenting in part).
I join the court’s opinion and agree with the affirmance, but I differ somewhat on the cause of action based on the Consumer Fraud Act, which is the basis for Nativity’s claim for investigation costs and attorney fees.
Perhaps it is time to look more closely at the so-called “Private Attorney General Statute,” Minn.Stat. § 8.31, subds. 1 and 3a (1990). Under subdivision 1, the attorney general is charged with investigating and assisting in the enforcement of laws “respecting unfair, discriminatory, and other unlawful practices in business, commerce, or trade * * Subdivision 1 lists some of the laws to be enforced and, among others, specifies the Consumer Fraud Act (Minn.Stat. §§ 325F.68-.70 (1990)). The Consumer Fraud Act prohibits “[t]he act, use, or employment by any person of any fraud, false pretense, false promise, misrepresentation, misleading statement or deceptive practice, with the intent that others rely thereon in connection with the sale of any merchandise * * * ” (emphasis added).
Subdivision 3a of the “Private Attorney General Statute” then provides an incentive for private parties and their counsel to assist the attorney general. It provides that “any person injured by a violation of any of the laws referred to in subdivision 1” may bring a civil action and recover not only damages and taxable costs but costs of investigation and attorney fees (emphasis added).
Read literally, “any person” means just that. But read in context, having in mind the purpose of the statute, “any person” means any consumer and excludes “merchants.” The court’s opinion properly so holds, as have courts elsewhere. See, e.g., United States Welding, Inc. v. Burroughs Corp., 615 F.Supp. 554, 555 (D.Colo.1985); Independent Communications Network, Inc. v. MCI Telecommunications Corp., Inc., 657 F.Supp. 785, 787 (D.D.C.1987). Unlike the attorney general who prosecutes in an official capacity, a consumer who wishes to be a “private attorney general” must show an injury; and, in this case, this means plaintiff must establish it sustained damages by reason of fraudulent business practices on the part of the defendants under the common law fraud count of its complaint.
A “false promise” is something different from a “misrepresentation.” A “false promise” is a promise to do some act in the future, which promise the promisor did not intend to perform at the time the promise was made. See, e.g., Maguire v. Maguire, 171 Minn. 492, 496, 214 N.W. 666, 668 (1927); Maple Hill Farms, Inc. v. Division of N.J. Real Estate Comm’n, 67 N.J.Super. 223, 230, 170 A.2d 461, 464 (1961). In other words, a false promise is intentional misconduct. In this case plaintiff elected to plead and prove only a negligent misrepresentation. Indeed, section 4 of the verdict form is entitled “Negligent Misrepresentation.” Moreover, plaintiff did not ask for separate jury interrogatories on intentional and negligent misrepresentation, see Florenzano v. Olson, 387 N.W.2d 168, 174 n. 5 (Minn.1986), but instead agreed to submission of a double-barreled special interrogatory asking if defendants knew or should *10have known their statements were false and their guarantees would not be honored. Significantly, the parties here have accepted the jury’s affirmative answer to this question (that the defendants “should have known”) as a finding of negligent misrepresentation.
I would hold that a negligent misrepresentation has been proven, and that the Consumer Fraud Act covers negligent as well as intentional misrepresentations. Our court of appeals was of this view. Yost v. Millhouse, 373 N.W.2d 826 (Minn.App.1985). See also Carlock v. Pillsbury Co., 719 F.Supp. 791, 849 (D.Minn.1989) (plaintiff need not prove misrepresentation was intentional to prevail under Minnesota’s Consumer Fraud Act). The misrepresentation here, though not intentional, is made of one’s own knowledge, without knowing if it were true or false; and it is this inexcusable lapse of communication that constitutes “fraudulent intent,” see Florenzano, 387 N.W.2d at 174. This is the kind of fraudulent practice contemplated by the Consumer Fraud Act.
But there remains a further question: Is the misrepresentation the kind of misrepresentation that qualifies under the “Private Attorney General Act” for the recovery of investigation costs and attorney fees? Put another way, does every false promise, every misrepresentation, or every misleading statement carry with it an entitlement to attorney fees? I think not.
If the pertinent parts of sections 8.31 and 325F.69 are read together, as they must be,1 it appears that the legislative intent is directed at deceptive practices to which the consumer public is prey, and that the legislature did not intend thereby to cover ad hoc deceptions arising in private disputes.
The Consumer Fraud Act was meant to protect consumers being hoodwinked by sales promotion scams. Because the attorney general’s office does not have the resources to pursue all deceptive practices, and because an aggrieved consumer may lack the resources to sue, particularly when the claim is small and suit expense is high, the legislature has authorized an award of attorney fees to give the disadvantaged consumer access to the courts and an incentive to assist in the curtailing of consumer fraud practices.
This is a worthy purpose, but there is some concern that enterprising plaintiffs, understandably interested in recovering investigation costs and attorney fees, may expand the Consumer Fraud Act beyond its intended scope. See, e.g., Liess v. Lindemyer, 354 N.W.2d 556, 558 (Minn.App.1984); Boland v. City of Rapid City, 315 N.W.2d 496, 503 (S.D.1982); cf. Martin v. Hancock, 466 F.Supp. 454 (D.Minn.1979) (involving civil rights and 42 U.S.C. § 1988).
The common law rule in the United States is that litigants pay their own attorney fees, unless some contract or statute otherwise provides. The concern is that an aggrieved party, with a little ingenuity and provided it is a consumer, can convert almost any commercial transaction that fails into a case of “negligent misrepresentation,” and then claim attorney fees, if successful. Oddly enough, the prevailing party recovers attorney fees (as in the English system), but only if the prevailing party is the plaintiff (unlike the English system). It seems to me, if there is to be a wholesale change in awarding attorney fees, it should be done by express legislation. A statute in derogation of well-established principles of common law should ordinarily not be extended by construction beyond its most obvious import. Bubar v. Dizdar, 240 Minn. 26, 28, 60 N.W.2d 77, 79 (1953).
The fact that protection against consumer fraud has traditionally been the responsibility of the attorney general; the fact that the statute is directed not at isolated fraud but deceptive “practices” which may be enjoined before they harm consumers; the fact that a consumer fraud violation does not require a plaintiff to be deceived as does a common law fraud action; and the fact that the plaintiff recovers the costs of investigation — all these factors lead to the conclusion that an attorney fee award *11is not intended for so-called “private” disputes.
In my view, for there to be an attorney fee recovery for a violation of the Consumer Fraud Act:
1) the plaintiff must be a consumer, who is
2) injured by an actionable fraud (such as in a common law action for a false pretense, a false promise, or a misrepresentation), and
3) the fraud must have the potential to deceive and ensnare members of the consumer public other than just the plaintiff, so that
4) plaintiffs lawsuit has been of benefit to the public.
Some such requirements, it seems to me, would meet the worthy purposes of the “Private Attorney General Statute” while at the same time keeping the payment of investigation costs and attorney fees within reasonable bounds. Arguably, there should be a remand in this case for findings on the third and fourth requirements, but none has been requested, and I am not inclined to require it in this case. The record shows that defendants were widely marketing a defective roofing product with a standard form guarantee of a watertight roof and that there were some 320 complaints from customers. (It might also be noted the trial judge properly declined to award investigation costs and attorney fees to WatPro and MacArthur, the distributor and supplier of the Flagon material, because they “are not the types of consumers the statute was designed °to protect.”) So I, too, would sustain Nativity’s verdict.

. Originally, Minn.Stat. § 8.31, subd. 3a, was Minn.Stat. § 325.907, subd. 3a (1978), the same chapter wherein the Consumer Fraud Act then appeared.