Court Opinion

ID: 9658126
Source: CourtListenerOpinion
Date Created: 2023-08-23 20:47:40.554193+00
Date Added: 2024-06-11T18:13:51.731824
License: Public Domain

Shanahan, J.,
concurring.
Since the majority has correctly concluded that summary judgment was improperly granted, I concur that the district court’s judgment must be reversed. However, an aspect of the majority opinion should be emphasized and even underscored as an innovation in Nebraska law — expansion or enlargement *475of the cause of action for misrepresentation of a material fact, sometimes called “fraudulent misrepresentation.”
If some have not taken note, as the result of the Flamme decision today, Nebraska recognizes a cause of action for “negligent misrepresentation,” which might be more accurately labeled “misrepresentation through negligence,” when one’s negligence causes or results in misrepresentation of a material fact. The majority states that a cause of action for “a negligent misrepresentation” is “well established,” and then refers to decisions in other jurisdictions which recognize actionable negligent misrepresentation. “Well established” is at the most misleading and at the least an inaccurate descriptive reference to “negligent misrepresentation,” which has never inhabited Nebraska law before the Flamme decision. The rather casual introduction of “negligent misrepresentation” as a cause of action in Nebraska is attributable to the majority’s failure to mention the elements of actionable misrepresentation, before and after the Flamme decision. Today’s innovation for Nebraska, recognition of actionable negligent misrepresentation, is appropriately described by paraphrase of a Churchillian characterization: This court has stumbled over the newly expanded cause of action for negligent misrepresentation, but hastily picked itself up and hurried on as if nothing had happened. On the other hand, if aware of the Flamme consequences, this court is regrettably reticent about enunciating an innovation which will undoubtedly have a substantial impact on causes of action for fraudulent misrepresentation in Nebraska.
Before today, deceit or recklessness was necessary for actionable fraudulent misrepresentation. As we stated in Edwin Bender & Sons v. Ericson Livestock Comm. Co., 228 Neb. 157, 165-66, 421 N.W.2d 766, 771 (1988):
To recover in an action for fraud based on a misrepresentation of fact, 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 *476with the intention that the plaintiff would rely on it; (5) the plaintiff reasonably relied on the representation; and (6) as the result of such reliance, the plaintiff suffered damage.
See, also, Alliance Nat. Bank v. State Surety Co., 223 Neb. 403, 390 N.W.2d 487 (1986).
In Edwin Bender & Sons, supra, a jury question existed, when, in connection with Bender’s purchase of heifers, Ericson, without knowledge of the heifers’ condition, represented to Bender that the cattle were “open,” i.e., not pregnant, whereas the cattle were pregnant, which resulted in damages to Bender, who had relied on the misrepresentation as an inducement for the sale. In a similar vein, an actor’s statement of fact, made in the absence of knowledge, has satisfied the element of “recklessness” necessary for actionable fraud by misrepresentation of a material fact. See, Willard v. Key, 83 Neb. 850, 120 N.W.2d 419 (1909) (an actor, without knowing the number of acres in a parcel of real estate, represented an incorrect acreage); Campbell v. C & C Motor Co., 146 Neb. 721, 21 N.W. 427 (1946) (a statement made without knowledge of truth is made recklessly).
Nevertheless, the plain fact is that for quite some time this court has endeavored, and at times has struggled, to characterize as “recklessness” that conduct which is more appropriately within the boundaries of “negligence.”
As Prosser has noted, “A representation made with an honest belief in its truth may still be negligent, because of lack of reasonable care in ascertaining the facts, or in the manner of expression, or absence of the skill and competence required by a particular business or profession.” Prosser and Keeton on the Law of Torts, Misrepresentation and Nondisclosure § 107 at 745 (5th ed. 1984).
In Springdale Gardens v. Countryland Dev., Inc., 638 S.W.2d 813, 816 (Mo. App. 1982), thecourt observed:
The elements of negligent misrepresentation differ from those of fraudulent misrepresentation in one major respect: while the latter requires proof that the defendant knew the statement was untrue or was reckless as to whether the statements were true or false, the former *477merely requires proof that the defendant failed to exercise reasonable care or competence to obtain or communicate true information.
See, also, Restatement (Second) of Torts § 552, comment a. (1977) (unlike fraudulent misrepresentation, negligent misrepresentation imposes liability when there is good faith, i.e., absence of an intent to deceive, coupled with negligence).
The tort of negligent misrepresentation was recognized in Ryan v. Kanne, 170 N.W.2d 395 (Iowa 1969), when the Iowa Supreme Court decided that “an accountant should be liable in negligence for careless financial misrepresentation relied upon by actually foreseen and limited classes of persons.” Id. at 402. In Ryan, the court also “recognize[d] that the same rule may be applicable in other recognized professions, such as abstracters and attorneys.” Id. Later, in Beeck v. Kapalis, 302 N.W.2d 90, 97 (Iowa 1981), the Iowa Supreme Court set out the elements for a recovery based on negligent misrepresentation by one who is engaged in a profession or business involving dissemination of information:
“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____”
Furthermore, Iowa is not alone in recognizing a cause of action for negligent representation. See, Guardian Const. v. Tetra Tech Richardson, 583 A.2d 1378 (Del. 1990); Gilliland v. Elmwood Properties, 301 S.C. 295, 391 S.E.2d 577 (1990); Lund v. North Dakota State Highway Dept., 403 N.W.2d 25 (N.D. 1987); Duffy v. Brown, 708 P.2d 433 (Wyo. 1985); State Bank of Townsend v. Maryann’s, Inc., 204 Mont. 21, 664 P.2d 295 (1983); Moore v. Kluthe & Lane Ins. Agency, 89 S.D. 419, 234 N.W.2d 260 (1975); Broderick Inv. v. Strand Nordstrom et al., 794 P.2d 264 (Colo. App. 1990); Springdale Gardens v. Countryland Dev., Inc., supra. See, also, Restatement (Second) of Torts § 552(1977).
*478Consequently, a cause of action for negligent representation is a realistic and logical development of Nebraska law. However, the majority should have emphasized the change in Nebraska law and thereby provided clarity and direction, not confusion from uncertainty, pertaining to actionable misrepresentation. For example, concerning “fraudulent misrepresentation,” NJI2d 9.01 refers to a representation made either with knowledge that the representation is false or made recklessly as a positive assertion in the absence of the actor’s knowledge concerning the represented fact. See, also, NJI2d 15.08 (definition of fraudulent representation). Obviously, “recklessness,” as a disregard for consequences, is quite different from “negligence,” the lack of reasonable care. Hence, today’s decision blurs some of the law governing actions for misrepresentation of a material fact. Also, admissibility of evidence may now be considered in light of the law on negligence rather than the more restrictive standard required for “recklessness.”
Nonetheless, while there may still be cases based on deceit or recklessness in reference to misrepresentation of a material fact, this court has correctly chosen to also allow recovery for negligent misrepresentation as a cause of action in Nebraska.