Section 8.19 Negligent Misrepresentation

• Library: Tort Law 2016

VIII. (§8.19) Negligent Misrepresentation

Before 1973, Missouri only recognized negligent misrepre- sentation in personal injury actions when a defendant’s conduct, most appropriately described as a representation, proximately caused bodily harm to the plaintiff. See, e.g., Miller v. Watkins, 355 S.W.2d 1 (Mo. 1962) (the defendant truck driver was negligent for waving a car on to pass and into a head-on collision).

In cases involving business or economic loss, Missouri decisions consistently denied recovery for misrepresentations made negligently unless, under a contractual analysis, there was a relationship that could be regarded as one of privity. Fearing the "indefinite liability" of a defendant to third persons unknown to the defendant at the time of the negligent misrepresentation, and relying on Ultramares Corp. v. Touche, 174 N.E. 441 (N.Y. 1931), Missouri courts examined the facts of each case to determine if there was privity between the plaintiff and the defendant or, alternatively, a relationship so close as to constitute privity. Thus, in Anderson v. Boone County Abstract Co., 418 S.W.2d 123 (Mo. 1967), the defendant abstractor was not held liable for a negligent misrepresentation made in a certified abstract of title, which subsequently passed from the original owner through two other owners to the plaintiff, because he had no reason to expect that the plaintiff would rely. In contrast, the defendant was held liable in Slate v. Boone County Abstract Co., 432 S.W.2d 305 (Mo. 1968), when the evidence established that the defendant supplied an abstract to the owner knowing at the time that the plaintiff, a prospective buyer, would rely on it. These cases show that, in determining liability for negligent misrepresentation and consequent economic injury, little, if any, deference was given to a traditional negligence theory based on principles of duty, foreseeability, and proximate cause. Rather, liability was ascertained by viewing the circumstances of each case within the confines of an arbitrary perimeter of immunity established by focusing on principles of contract law.

A 1973 decision by the Missouri Court of Appeals, Eastern District, largely rejected the privity requirement in an economic injury case based on negligent misrepresentation. The opinion appears to consider traditional negligence "duty" concepts and holds that the maker of a negligent misrepresentation will be liable if the maker knew that the individual plaintiff would rely on...