Galen J. Vaa, et al., Appellants, vs. Clay County, Respondent, ERA Evergreen Realty, Inc., Defendant.

This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480 A. 08, subd. 3 (2002).

 

 

STATE OF MINNESOTA

IN COURT OF APPEALS

A04-311

 

Galen J. Vaa, et al.,

Appellants,

 

vs.

 

Clay County,

Respondent,

 

ERA Evergreen Realty, Inc.,

Defendant.

 

Filed November 10, 2004

Affirmed Willis, Judge

 

Clay County District Court

File No. C8-03-473

 

 

Wilbur W. Fluegel, Fluegel Law Office, 150 South Fifth Street, Suite 3475, Minneapolis, MN  55402 (for appellants)

 

Paul D. Reuvers, Iverson Reuvers, LLC, 9321 Ensign Avenue South, Bloomington, MN  55438 (for respondent)

 

            Considered and decided by Randall, Presiding Judge; Willis, Judge; and Minge, Judge.

U N P U B L I S H E D   O P I N I O N

WILLIS, Judge

Appellants Galen and Sharon Vaa challenge the district court's grant of summary judgment to respondent Clay County.  The Vaas sued Clay County, alleging that its Planning Director misrepresented the location of appellants' home relative to the Red River's 100-year floodplain.  They based their action on this state's recognition of claims under the Restatement (Second) of Torts § 552 for information supplied for the guidance of others and the state's recognition of common-law claims against municipalities for negligent misrepresentation of fact. The district court held that Clay County was protected by vicarious official immunity and that it owed no duty to appellants under the Restatement (Second) of Torts § 552, but it found that summary judgment was inappropriate on the claim of negligent misrepresentation of fact.  The Vaas appealed.  Because we find that summary judgment was appropriate because the county owed no duty to the Vaas under the claim based on the Restatement (Second) of Torts § 552 or under the Vaas' common-law claim of negligent misrepresentation of fact, we affirm.

FACTS

 

In the spring of 1985, appellants Galen and Sharon Vaa engaged ERA Evergreen Realty in Fargo, North Dakota, to help them find a new home.  ERA showed the Vaas a home abutting the Red River, but the Vaas expressed concern about purchasing a home so close to a river with a history of flooding.  They wanted to make sure that the property was above the 100-year floodplain, and ERA told the Vaas that it believed that it was.

            The Vaas subsequently entered an agreement to purchase the property, which is located on lots 11 and 11A of the Crestwood Subdivision in Kurtz Township, Clay County.  ERA agreed to arrange a survey of the property to confirm that it was located above the 100-year floodplain, and ERA assessed the Vaas a surveying charge, which is reflected in the closing statement.

            On July 22, 1985, the Vaas granted a mortgage on the property to Norwest Bank to secure a loan for its purchase.  The following day, the Vaas signed a warranty deed of sale to purchase the Crestwood property.  The Vaas contend that their purchase of the property was contingent on the property being located above the 100-year floodplain, but no such contingency is mentioned in the mortgage or warranty deed.

            Shortly after the Vaas closed on the property, ERA contacted the Clay County Planning Director to obtain information regarding the location of the Vaas' property relative to the 100-year floodplain.  The planning director occasionally provides such information, upon request and without charge.  When responding to such requests, the policy of the planning director's office is to advise the inquiring party to verify the information by conducting a survey of the property.  There is no record that the planning director provided the Vaas with such a caveat here.

            On August 6, 1985, the planning director informed ERA, in writing, that his examination of the Federal Emergency Management Agency's (FEMA) flood-insurance-rate map and the plat for the Crestwood Subdivision showed that lot 11 is above the 100-year floodplain.  On August 29, ERA sent the planning director's letter to the Vaas.  Based on this information, ERA refunded the Vaas' survey deposit, and the Vaas decided not to have the property surveyed.

            In 1993, the Vaas refinanced their property through Norwest Bank, which initially required the Vaas to purchase flood insurance as a condition of refinancing.  But when the Vaas produced the planning director's letter stating that the Vaas' property is above the 100-year floodplain's high-water mark, Norwest Bank authorized the Vaas' request for refinancing without requiring flood insurance.

            In April 1997, the Red River flooded and the Vaas' home sustained moderate flood damage.  The Vaas then had their property surveyed, and the survey showed that their home was two feet below the 100-year floodplain.

            In February 2003, the Vaas sued both Clay County and ERA Realty, seeking damages for the negligent misrepresentation of the location of the Vaas' property relative to the 100-year floodplain.  Respondent Clay County moved for summary judgment, arguing that:  (1) the Vaas' claim is barred by the statute of limitations; (2) Clay County is entitled to the protection of the public-duty doctrine; (3) Clay County is entitled to statutory and vicarious official immunity for any consequences flowing from the planning director's providing information regarding the location of the Vaas' property relative to the 100-year floodplain; and (4) the Vaas cannot claim negligent misrepresentation of fact because the allegedly misrepresented facts are matters of public record.

            The district court ruled that there exist genuine issues of material fact as to: (1) whether the statute of limitations had expired and (2) the question of negligent misrepresentation of fact.  The district court also held that statutory immunity is not available here.  But the district court nevertheless granted Clay County's motion for summary judgment, concluding that Clay County owed no duty to the Vaas under the public-duty doctrine and that Clay County is immune under the doctrine of vicarious official immunity.  To expedite appeal, the Vaas voluntarily dismissed ERA from the suit, and this appeal follows.

D E C I S I O N

The Vaas argue that the district court erred by granting Clay County's motion for summary judgment because the district court wrongly concluded that the county did not owe them a duty and that the county was protected by vicarious official immunity. 

On appeal from summary judgment, this court asks two questions:  (1) whether there are any genuine issues of material fact and (2) whether the district court erred in its application of the law.  State by Cooper v. French, 460 N.W.2d 2, 4 (Minn. 1990).  On appeal of a grant of summary judgment, the court reviews the evidence in the light most favorable to the party against whom summary judgment was granted.  Fabio v. Bellomo, 504 N.W.2d 758, 761 (Minn. 1993).

"Tort liability in the first instance always depends on whether the party accused of the tort owes a duty to the accusing party."  M.H. v. Caritas Family Servs., 488 N.W.2d 282, 287 (Minn. 1992).  Existence of a legal duty is generally an issue of law for the court to decide and is reviewed de novo.  ServiceMaster of St. Cloud v. GAB Business Servs., Inc.,  544 N.W.2d 302, 307 (Minn. 1996).  The Vaas argue that by providing them with an opinion letter, the County undertook a duty toward them under Minnesota caselaw recognizing a cause of action against municipal employees for negligent misrepresentation of fact and under Minnesota caselaw recognizing a cause of action for negligent misrepresentation based on the Restatement (Second) of Torts § 552.

The Vaas argue that the district court erred by concluding that Clay County owed no duty to appellants under the Restatement (Second) of Torts § 552. 

In Bonhiver v. Graff, 311 Minn. 111, 122, 248 N.W.2d 291, 298-99 (1976), the Minnesota Supreme Court recognized the tort of negligent misrepresentation described in the Restatement (Second) of Torts § 552:

(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 confidence in obtaining or communicating the information.

 

(2)       Except as stated in Subsection (3), the liability in Subsection (1) is limited to loss suffered

 

(a)       by the person or one of a limited group of persons for whose benefit and guidance he intends to supply the information or knows that the recipient intends to supply it; and

 

(b)       through reliance upon it in a transaction that he intends the information to influence or knows the recipient so intends or in a substantially similar transaction.

 

(3)       The liability of one who is under a public duty to give the information extends to loss suffered by any of the class of persons for whose benefit the duty is created, in any of the transactions in which it is intended to protect them.

 

Restatement (Second) of Torts § 552 (1977).  This cause of action has been asserted most frequently against professionals who negligently supply inaccurate information to a client and cause pecuniary loss to the party receiving the information.  See, e.g., Safeco Ins. Co. of Am. v. Dain Bosworth, 531 N.W.2d 867, 871 (Minn. App. 1995) (discussing cases based on negligent misrepresentation).  But the Minnesota Supreme Court has noted that "conduct actionable against one class of defendant is not automatically actionable against another class of defendants."  Caritas Family Servs., 488 N.W.2d at 287.  We find no case in which a Minnesota court has applied the cause of action described in the Restatement (Second) of Torts § 552 to a claim against a government employee or official.

An essential requirement of negligent misrepresentation under the Restatement is that the person providing the information owes a duty to the recipient of the information.  Smith v. Woodwind Homes, Inc., 605 N.W.2d 418, 424 (Minn. App. 2000).  The district court held that Clay County owed no duty to the Vaas because a municipality does not owe a duty to the general public and because Clay County did not assume a special duty to the Vaas by providing the letter.  Because we conclude that section 552 of the Restatement (Second) of Torts is inapplicable to the facts of this case, we do not need to analyze whether Clay County would have been protected from liability by the public-duty doctrine.

The Vaas concede that the county provided opinion letters regarding the location of the floodplain gratuitously.  But section 552 of the Restatement (Second) of Torts does not apply when information is provided gratuitously: 

The rule stated in Subsection (1) applies only when the defendant has a pecuniary interest in the transaction in which the information is given. If he has no pecuniary interest and the information is given purely gratuitously, he is under no duty to exercise reasonable care and competence in giving it.

 

Restatement (Second) of Torts § 552 cmt. c.  The following illustration is provided in the Restatement:

A, seeking information as to the will of B, asks C Trust Company for a copy of the will. C Trust Company is not in the business of supplying copies of wills, and has no interest in giving this one to A, but gratuitously agrees to supply the copy as a favor to A. By a negligent mistake but in good faith it gives A a copy of the will of another person of the same name as B. In reliance on the copy A incurs pecuniary loss. C Trust Co. is not liable to A.

 

Id. illus. 1.  Because the Clay County Planning Commission is not in the business of supplying opinions regarding the location of property relative to the 100-year floodplain and provided such letters as favors to those who requested them, we conclude that the planning director's conduct is not actionable under subsection (1) of the Restatement (Second) of Torts § 552.

The Vaas also argue that the district court misinterpreted the Restatement's reference to "public duty" in subsection (3), which expands the potential class of persons who may bring a negligent-misrepresentation claim.  The district court held that this subdivision was inapplicable to the Vaas because in the district court they argued that the planning director acted in accordance with a special duty and not a public duty under Minnesota law.  Although we conclude that the term "public duty" in the Restatement does not correlate with Minnesota's public-duty doctrine, we conclude that subsection (3) is nevertheless inapplicable to the facts here.  Therefore, the district court did not err by concluding that the county owed no duty to the Vaas under the Restatement (Second) of Torts § 552.

Under Minnesota law, the public-duty doctrine generally exempts municipal entities from tort liability for violating a duty owed to the public at large.  Hoffert v. Owatonna Inn Towne Motel, Inc., 293 Minn. 220, 222, 199 N.W.2d 158, 160 (1972).  A municipal entity assumes a special duty of care only when it undertakes the responsibility to protect a particular class of persons.  Cracraft v. City of St. Louis Park, 279 N.W.2d 801, 806 (Minn. 1979). 

The term "public duty" in the Restatement (Second) of Torts § 552 is not equivalent with Minnesota's public-duty doctrine.  The comments to the Restatement indicate that the usual case referred to by public duty "is that of a public officer who, by his acceptance of his office, has undertaken a duty to the public to furnish information of a particular kind."  Restatement (Second) of Torts § 552 cmt. k.  The scope of the duty depends on the purpose for which the information is required to be furnished.  Id.  Here, it is undisputed that the planning director, by accepting his position as director of the Clay County Planning Commission, did not undertake a duty to the public to furnish opinion letters regarding the location of property relative to the 100-year floodplain. 

The Vaas point to Northernaire Prods., Inc. v. County of Crow Wing, 309 Minn. 386, 244 N.W.2d 279 (1976), and Mulroy v. Wright, 185 Minn. 84, 240 N.W. 116, (1931), to argue that a public official must be accountable for errors made in representations that he knows a specific member or members of the public will rely on.  But as we conclude below, there is not a cause of action against a municipality for misrepresentation of fact when that fact was otherwise available to the party requesting the information and the party knew of the availability of that fact.

Because the planning director and the county provided floodplain information gratuitously and because the planning director did not have a public duty to provide the information, we conclude that the district court did not err by granting summary judgment on the Vaas' claim under the Restatement (Second) Torts § 552.

The Vaas argue that Clay County undertook a duty prescribed by Minnesota caselaw to provide accurate information when it supplied an opinion regarding the location of the Vaas' property relative to the 100-year floodplain.  Clay County argues that municipalities cannot be held liable for an official's negligent misrepresentation of fact when the misrepresentation concerns information that is publicly available.  The district court held that whether the Vaas "should have known of the existence of the location of the flood plain is a matter of disputed fact" that is inappropriate for summary judgment. 

Minnesota has recognized a cause of action against a government employee or official for a negligent misrepresentation of fact, but it does not recognize causes of action against government employees for a negligent misrepresentation of law.  See Northernaire Prods., Inc., 309 Minn. at 388-89, 244 N.W.2d at 281-82; Mulroy, 185 Minn. at 87-88, 240 N.W. at 117-18; Mohler v. City of St. Louis Park, 643 N.W.2d 623, 637 (Minn. App. 2002).  Clay County relies on Mohler and Northernaire to argue that the misrepresentation here is of information that is available to the public and therefore is not actionable. 

Both Mohler and Northernaire involved misrepresentations of law, and in both cases it was determined that the claims were not actionable.  But dicta in both cases suggest that where factual information is otherwise available to the public, a claim of negligent misrepresentation of fact may not be maintained.  Both cases recognize that negligent misrepresentations of fact remain actionable against government employees when "members of the public have no other access to factual information maintained by the government except through those individuals."  Mohler, 643 N.W.2d at 637; see also Northernaire, 309 Minn. at 390, 244 N.W.2d at 282.

Furthermore, in dictum, the Mohler court analyzed the appellants' negligent-misrepresentation-of-fact claim and concluded that because the appellants failed to provide sufficient evidence to establish that they did not have access to the requested information from sources other than the city, summary judgment for the city would have been appropriate on that claim.  643 N.W.2d at 637-38.

Clay County argues that the Vaas did not need to rely on the planning director for the information regarding the location of their property relative to the 100-year floodplain.  The county asserts that the FEMA map and the Crestwood plat that the planning director relied on were available to the public.  Clay County also argues that the Vaas could have had the property surveyed or had the maps reviewed by a surveyor. 

The Vaas, relying on Nave v. Dovolos, 395 N.W.2d 393 (Minn. App. 1986), argue that "[a]n individual who receives a representation in good faith need not verify its truthfulness."  But Nave discusses fraudulent misrepresentation, not negligent misrepresentation, and it refers specifically to "assertions of fact as to quality intended to induce a business transaction." 395 N.W.2d at 398.  The rule cited by the Vaas does not apply to a claim of negligent misrepresentation of fact by a government employee or official.

The Vaas have provided no evidence that the Clay County Planning Commission was the only source that they could obtain the requested information from.  They had alternative access to the factual information they requested from the planning commission.  In fact, the record is clear that the Vaas knew that they had at least one alternative way to obtain the information: they originally planned to have the property surveyed to determine where it lies relative to the 100-year floodplain.  Because we find the dicta in Mohler and Northernaire to be persuasive, we conclude that a claim of negligent misrepresentation of fact against a government official or employee is not actionable when the requested information is available to the public through alternate means and when the person requesting such information is aware of that availability.  The district court could have granted summary judgment on the issue of negligent misrepresentation of fact because the misrepresentation here involved a fact that is a matter of public record.

Because we conclude that the county did not assume a duty to the Vaas under the Restatement (Second) of Torts § 552 when it provided the opinion letter and that a common-law claim of negligent misrepresentation of fact is inactionable here, we find that summary judgment for Clay County was appropriate.  Because the county did not breach a duty to the Vaas, we do not need to address whether Clay County was entitled to vicarious official immunity.  The district court did not err by granting summary judgment to Clay County.

Affirmed.