Court Opinion

ID: 9735224
Source: CourtListenerOpinion
Date Created: 2023-08-26 18:05:57.306345+00
Date Added: 2024-06-11T18:26:56.156509
License: Public Domain

Connolly, Judge.
This appeal arises from the decision of the Lincoln County District Court sustaining the demurrer of the appellees, Wilkinson Agency, Inc., doing business as Century 21 Wilkinson Agency, and Michael G. Lashley, to the third amended petition of the appellants, William E. Simon and Elizabeth M. Simon. The Simons’ third amended petition alleged four theories of recovery, two based on negligent misrepresentation and two based on fraudulent misrepresentation. The trial court sustained the appellees’ demurrer and dismissed the third amended petition. We affirm in part because, in Nebraska, the claim of negligent misrepresentation has not been recognized outside the context of the relationship between an insured and his or her insurance agent. We in part reverse and remand for further proceedings because, considering the appellees’ superior knowledge of real estate matters and the Simons’ reliance on that superior knowledge, the appellees were liable for fraudulent misrepresentation for legal advice they provided to the Simons.
I. FACTS
For the purpose of reviewing the trial court’s ruling on the demurrer, we accept as true the following facts:
The Simons employed the appellees to sell their real estate. An agreement was prepared by the appellees for the sale of the Simons’ property for $224,000. After the buyers signed the purchase agreement, the appellees made several representations to the Simons. They informed the Simons that the Simons would have to pay for the removal of asbestos from the *879residence on the property. The appellees told the Simons that if the Simons failed to remove the asbestos, the buyers could refuse to complete the sale and could stop the sale of the property to any subsequent buyer for a considerable length of time. The appellees advised the Simons that in order to preserve the sale, the Simons had to reduce the selling price by $13,500 and deposit $1,600 in escrow to cover the cost of potential damage to the residence sustained during the removal of asbestos. The Simons relied on these representations and executed an addendum to the purchase agreement. The addendum incorporated into the purchase agreement the recommendations of the appellees regarding the reduced selling price and the escrow deposit.
In their brief, the Simons assert that they discovered after the closing of the deal that the representations made by the appellees were false. They filed a claim for damages based on the reduction in price and the escrow deposit. Their third amended petition is the subject of this appeal.
The appellees demurred on grounds that there was a defect of parties, that several causes of action were improperly joined, and that the petition did not state facts sufficient to constitute a cause of action.
The trial court sustained the demurrer, stating, “The Court specifically finds, Flamme v. Wolf Insurance Agency, 239 Neb. 465 (1991), not withstanding [sic] to the contrary, that no cause of action for negligent misrepresentation exists in the State of Nebraska.” The court gave the Simons 20 days to amend their petition, after which time, if the petition was not amended, the court would entertain a motion to dismiss. The Simons stood on their petition, and the appellees filed a motion for dismissal with prejudice. The motion was sustained, and the Simons’ cause of action was dismissed with prejudice.
II. ASSIGNMENTS OF ERROR
The Simons’ assignments of error can be summarized as follows: The trial court erred in sustaining the demurrer and dismissing the Simons’ petition.
III. STANDARD OF REVIEW
In ruling on a demurrer, the petition is to be construed *880liberally; if as so construed the petition states a cause of action, the demurrer is to be overruled. Matheson v. Stork, 239 Neb. 547, 477 N.W.2d 156 (1991).
In considering the sustaining of the demurrer, we recall the rule that a court accepts the truth of the facts well pled and the factual and legal inferences which may be reasonably deduced therefrom, but does not accept the conclusions of the pleader. Barelmann v. Fox, 239 Neb. 771, 478 N.W.2d 548 (1992).
IV. ANALYSIS
Before addressing the merits of the appeal, we note that the Simons did not allege four causes of action, but, rather, one cause of action alleging four theories of recovery. A cause of action consists of the set of facts on which a recovery may be had. Lewis v. Craig, 236 Neb. 602, 463 N.W.2d 318 (1990). Two or more claims in a petition arising out of the same set of operative facts and involving the same parties constitute separate legal theories of recovery and not separate causes of action. Id. All of the Simons’ claims arise out of the same set of operative facts.
1. Negligent Misrepresentation
The appellees correctly point out that in Nebraska, the claim of negligent misrepresentation has been recognized only in the context of the relationship between an insured and his or her agent. In Flamme v. Wolf Ins. Agency, 239 Neb. 465, 476 N.W.2d 802 (1991), the insureds sued their insurance agency and the agent for negligent misrepresentation concerning underinsured motorist coverage. In recognizing the insureds’ claim for negligent misrepresentation, the court stated the following proposition of law:
It is well established that an insurance agent or broker may be held liable for a negligent misrepresentation made to an insured. See, e.g., Connell v. State Farm Mut. Auto Ins. Co., 482 So. 2d 1165 (Ala. 1985); Clary Ins. Agcy. v. Doyle, 620 P.2d 194 (Alaska 1980); Runia v. Marguth Agency, Inc., 437 N.W.2d 45 (Minn. 1989); Rotanelli v. Madden, 172 A.D.2d 815, 569 N.Y.S.2d 187 (1991); Annot., 72 A.L.R.3d 704 (1976).
*881Flamme, 239 Neb. at 471, 476 N.W.2d at 807. We note that in the four cases cited by the court to support this proposition of law, negligent misrepresentation is limited to the area of an insurance agent’s liability to an insured. The American Law Reports annotation cited by the court is entitled “Liability of Insurance Agent or Broker on Ground of Inadequacy of Liability Insurance Coverage Procured.” Annot., 72 A.L.R.3d 704 (1976). The concurring opinion in Flamme asserts that the majority haphazardly created a broad-based cause of action in Nebraska for negligent misrepresentation, see Flamme, supra (Shanahan, J., concurring), but we find nothing in the majority opinion to support the broad interpretation of negligent misrepresentation that is described in the concurrence. We believe that if the majority had intended to expand the cause of action in the manner suggested in the concurrence, the majority would have done so in its opinion. Therefore, we conclude that Flamme does not create a cause of action for negligent misrepresentation outside the context of the relationship between an insured and his or her insurance agent.
2. Fraudulent Misrepresentation
To recover in an action for fraud based on misrepresentation of facts, a plaintiff must prove that (1) the defendant made a representation of a material fact; (2) the representation was false; (3) the representation, when made, was known to be false or was made recklessly as a positive assertion without knowledge concerning the truth of the representation; (4) the representation was made with the intention that the plaintiff would rely on it; (5) the plaintiff reasonably relied on the representation; and (6) as a result of such reliance, the plaintiff suffered damage. Henderson v. Forman, 240 Neb. 939, 486 N.W.2d 182 (1992); Broekemeier Ford v. Clatanoff, 240 Neb. 265, 481 N.W.2d 416 (1992).
The Simons did not allege that the appellees made a false representation of a material fact. They alleged that the appellees falsely represented that the Simons’ legal right to sell their real estate would be restricted unless the Simons executed the addendum to the purchase agreement. The Simons’ claim for fraudulent misrepresentation is based not on a statement of *882fact but on an opinion of the Simons’ legal rights, i.e., that the marketability of the Simons’ title would be impaired unless they removed the asbestos at their own expense.
It is a general rule that fraud and deceit cannot be predicated upon misrepresentation of law for the reason that everyone is presumed to know the law. Loringer v. Kaplan, 179 Neb. 215, 137 N.W.2d 716 (1965). An exception to the foregoing rule may exist under some circumstances where there is a relation of trust and confidence between the parties or where the speaker has, or professes to have, superior knowledge of the law. Id. In their petition, the Simons described their relationship with the appellees. Construing the Simons’ petition liberally and considering the factual and legal inferences which may be reasonably deduced from the facts well pled, we find that the relationship between the Simons and the appellees requires application of the exception set out in Loringer. The appellees possessed superior knowledge of real estate matters, and the Simons relied on that superior knowledge. Thus, the appellees could be held liable for any legal advice they provided.
V. CONCLUSION
As to the claims for negligent misrepresentation, we affirm the judgment of the trial court sustaining the appellees’ demurrer. As to the claims for fraudulent misrepresentation, we reverse the judgment of the trial court sustaining the appellees’ demurrer. Therefore, we reverse the order dismissing the Simons’ petition and remand the cause to the trial court for further proceedings consistent with this opinion.
Affirmed in part, and in part reversed and
REMANDED FOR FURTHER PROCEEDINGS.