888 N.W.2d 644
Iowa2016Background
- Dinsdale Construction built an addition; Lumber Specialties contracted to supply trusses and limited engineering services but not temporary-bracing engineering or midconstruction evaluation.
- Lumber Specialties sales rep Ryan Callaway made a brief, gratuitous site visit at the request of Moeller & Walter and told the contractor "everything looked good" regarding temporary bracing; he later emailed a similar, informal assessment.
- Nine days after Callaway’s visit the partially constructed roof collapsed due to inadequate temporary bracing that did not follow the industry plan; costs were incurred to rebuild.
- Dinsdale sued Lumber Specialties for negligent misrepresentation (and breach of contract as a third-party beneficiary); a jury returned a verdict for Dinsdale on negligent misrepresentation but found no contract breach.
- Lumber Specialties moved for judgment notwithstanding the verdict arguing no duty existed because Callaway’s comments were a gratuitous courtesy, not part of a pecuniary informational transaction; the district court denied the motion, the court of appeals affirmed, and the Iowa Supreme Court granted further review.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Lumber Specialties owed a duty to use reasonable care in supplying Callaway's interim assessment | Callaway’s statement was relied on and caused economic loss; a duty exists because Lumber Specialties supplies information as part of its business | No duty: Callaway’s comments were a gratuitous, cursory opinion outside any paid or expected informational service or pecuniary transaction | No duty; court reversed JNOV denial and vacated appellate decision |
| Whether Lumber Specialties is "in the business of supplying information" for §552 purposes | Dinsdale: mixed business supplies engineering info; supplying any such info can create duty | Lumber: mixed business but this specific act was not within its information-providing capacity or compensated/service-based transaction | Being a mixed business is not dispositive; duty depends on the specific transaction and pecuniary interest, which was absent here |
| Whether indirect/attendant goodwill or promotional activity can create the necessary pecuniary interest | Dinsdale: supplying the opinion as a courtesy advanced Lumber Specialties’ sales interests (indirect pecuniary benefit) | Lumber: general goodwill and passing out pencils are too attenuated to establish pecuniary interest or regularity | General goodwill and isolated promotional acts are too attenuated to create the pecuniary interest required for duty |
| Whether the issue of duty was properly for the jury or the court | Dinsdale: factual question about Callaway’s role and expectations should go to jury | Lumber: duty is a question of law for the court and no duty existed as a matter of law | Duty is a question of law; court erred by submitting duty to jury and must grant JNOV |
Key Cases Cited
- Ryan v. Kanne, 170 N.W.2d 395 (Iowa 1969) (adopted Restatement approach recognizing negligent misrepresentation claim)
- Meier v. Alfa-Laval, Inc., 454 N.W.2d 576 (Iowa 1990) (narrowed duty: retailers not generally subject to §552 duty)
- Fry v. Mount, 554 N.W.2d 263 (Iowa 1996) (duty to supply accurate information normally limited to those in the business of supplying information)
- Sain v. Cedar Rapids Cmty. Sch. Dist., 626 N.W.2d 115 (Iowa 2001) (indirect pecuniary interest can support duty where provider is compensated as part of role)
- Van Sickle Constr. Co. v. Wachovia Commercial Mortg., Inc., 783 N.W.2d 684 (Iowa 2010) (standard of review for JNOV; negligent misrepresentation not governed by economic loss rule)
- Ultramares Corp. v. Touche, 174 N.E. 441 (N.Y. 1931) (historic common-law limit on negligent misrepresentation liability contrasted with Restatement approach)
- Nationwide Agribus. v. Structural Restoration, Inc., 705 F. Supp. 2d 1070 (S.D. Iowa 2010) (gratuitous inspections held part of sales model—supporting an indirect pecuniary interest)