A Navajo chief’s blanket, first phase, Ute style, is a rare and beautiful object because of its historical and ethnographic significance, as well as its art; all of which add to the blanket’s great value. Such blankets were handwoven by Navajo women before 1850. The plaintiff, John Burke, acquired such a blanket by purchase for $115 from an antique mall in Lincoln. He sold the blanket to the defendant, Kenneth Harman, for $1,000. Harman sold the blanket to an individual in New York for $290,000. Burke has sued Harman for $289,000, claiming that Harman falsely or negligently misrepresented the blanket as a substantially less valuable Mexican weaving.
FACTUAL BACKGROUND
John Burke resides in Ithaca, Nebraska, and his work is primarily wood carvings of Native Americans, mountainmen, early American historical figures, Civil War figures, and the like. In order to lend authenticity to his work, Burke engages in some collecting of historical artifacts involving his subject matter, which he studies and then typically sells or trades when he is finished with them. Burke teaches his wood-carving art throughout the United States and has published several how-to books on the subject.
Kenneth Harman holds a bachelor of arts degree in education and has taught first grade at Arnold Elementary School in Lincoln for over 23 years. Harman says that he has been a collector since he was 10 years old. Initially, he collected toys, and he eventually completed a collection of high quality Lehmann toys made in Germany, which is now on display in Nuremberg, Germany. In the late 1980’s, Harman began collecting Indian baskets. He has also collected advertising signs and comic strip toys. Prior to the transaction at issue here, Harman had owned a total of 12 weavings, which he believed to be Native American. All of those weavings were rugs rather than blankets, and the most expensive was purchased from Daphne Deeds for $4,250. Harman tried to sell that rug in New Mexico without success and ultimately traded it for an Indian basket from the Morning Star Gallery. Three of the other weavings which he acquired turned out to be Mexican rather than Indian, which he returned to the sellers. Mexican weavers have done, and continue to do, imitations of the Navajo weavings, and these imitations are much less valuable than the Navajo weavings. One of the first guideposts in determining the value of a Southwestern weaving is to determine whether the weaving is Indian or a Mexican “knock-off.” Harman estimated that of the eight weavings he owned at the time of the transaction in question with Burke, he had paid $1,200 to $1,400 for all of them.
Harman has a reference library of some consequence in his home dealing with collecting and collectibles. His library
included at least two reference books which displayed pictures of Navajo chief’s blankets, first phase, Ute style. The books are entitled “Weaving of the Southwest,” by Marian Rodee, and “The Navajo Weaving Tradition 1650 to the Present,” by Alice Kaufman and Christopher Selser. He also had copies of American Indian Art magazine, which reported on the sale of several chief’s blankets. Prior to the transaction at issue, Harman had sent one of the other weavings he had acquired to Sara Alexanian of Albuquerque, New Mexico, who works with her husband in the cleaning, buying, and selling of rugs and blankets, including Navajo textiles, but she returned the weaving to Hаrman because it was Mexican and therefore not worth her time or his money. Alexanian explained that the Navajo blankets were much more finely
The story of the particular Navajo chief’s blanket involved in this case began before 1850, when it was handwoven in the Ute style by a Navajo woman. The Ute Indians, with whom the Navajos traded, preferred the ivory, chocolate brown (natural colors from the wool), and indigo (naturally dyed) stripe pattern seen on this blanket — hence the name “Ute style.” The name indicates a particular and recognizable style of chief’s blanket. According to Alexanian, the term “first phase” means that it was woven before there were white settlers in the Southwest.
The history of the blanket involved in this case, at least for us, begins on July 1, 1993, when Burke attended the opening of St. George’s Antique Mall in Lincoln. Burke was the second customer in line to enter the business. There, he purchased the blanket for $115. It had a price tag of $115 on it from its owner, Tedd Whipple of Grand Island, who had placed it at the mall for sale. On the tag, Whipple described it as a “1930’s Southwest wool handwoven throw.” Burke testified that the blanket was placed on the floor in front of the fireplace at his home. On August 1, a houseguest, William Hackett, inquired about the rug. Burke indicated that he did not know anything of its background or origin. Burke and Hackett discussed the matter and concluded that some effort should be made to determine its age and origin, and in that regard, Harman’s name occurred to Burke. Burke and Harman had known each other since early 1993, when Harman had called Burke about some items Burke had displayed for sale at the Antique Market in Lincoln. As a result, the two men met, and Harman purchased items from Burke.
Burke, Hackett, and the blanket proceeded to Harman’s residence on August 1, 1993, after Burke had called Harman about looking at the blanket. There is a sharp conflict about the time of day on August • 1 when the meeting took place. Burke recounts that it was at 8 o’clock in the evening and that he left about 8:30. Burke supports his timeframe with his phone records, which show a call to Harman at 7:30 p.m. for 4 minutes at a cost of 24 cents. Under Burke’s testimony, this is the premeeting phone call to Harman approximately 30 minutes before arrival at Harman’s house. Harman concedes that Burke called before bringing the blanket to his house but asserts that Burke arrived around 1 p.m.
The meeting time is important because of other inferences which might flow therefrom. For example, the record establishes a long distance phone call from Harman’s residence to Whipple on the night of August 1 at 8:28 p.m., which, according to Burke and Hackett, would have been within minutes of their departure. Whipple testified that in this conversation with Harman there was no suggestion that the weaving was of Mexican origin or that Harman did not know what kind of weaving it was. According to Whipple, he remembered Harman using the words “ ‘early Navajo rug’ ” in that conversation. Harman’s timeframe is important to his defense, because he relates that after buying the weaving he attempted to identify the weaving, which included calling St. George’s that day to find out who hаd placed it there, waiting for a return call with that information, looking at his reference books, and only calling Whipple after getting his name from St. George’s. But Harman’s evidence is that St. George’s closes at 8 p.m. and that he could not have gotten that information if the meeting occurred when Burke said it did. In short, Burke says his time-frame shows that Harman did not have to research anything about the weaving, because Harman knew from the outset that the weaving was an extremely valuable Native American blanket. On the other hand, Harman says his timeframe and what he did shows that he did not know what the weaving was and that he undertook a number of steps to find out.
After 1,100 pages of testimony, several videotaped depositions, and three boxes of exhibits, the essence of the case still comes down to the conflicting versions of the conversation at Harman’s home on August 1, 1993, regardless of the time of day that it occurred. When the meeting took place, what Harman did or did not do thereafter, and the inferences to be drawn therefrom arguably support each party’s version of the
Burke’s version of the meeting is that after Harman rolled out the blanket for examination, Harman told Burke that it was Mexican and that in Sante Fe it was worth $1,500 to $2,000. Harman offered Burke $500 plus two Indian Skookum dolls for the weaving. When Burke refused that offer, Harman offered $1,000 cash, which Burke accepted. Burke had also brought an Indian basket along, which Burke sold to Harman for $250. Harman admits in his tеstimony that he was asked by Burke, “What do you think it is?” But he relates that he told Burke that it could be Mexican or Indian and that he gave no opinion as to its value except in reference to its condition in relation to the rug he had acquired from Deeds, Harman saying that Burke’s weaving was in poorer condition. Harman testified that he liked the weaving and that he asked what Burke wanted for it, to which Burke responded with, “ ‘What will you give me?’ ” Harman responded by offering Burke $500 in cash plus the two Indian Skookum dolls which he had lying on the table, preparing to pack them to take to Santa Fe. Harman related that Burke did not think the dolls were worth the $500 asserted by Harman. Harman testified that he then said, “ ‘I’ll give you a thousand dollars for your blanket.’ ” According to Harman, Burke’s response was, “ ‘Hell, yes. I’ll sell it for $1,000.’ ” Harman paid Burke $1,250 in cash for the blanket and the basket, and Burke and Hackett left.
The blanket was identified as a Navajo chief’s blanket, first phase, Ute style. Howard Grimmer, the former owner of Morning Star Gallery in Santa Fe, which handles valuable Indian artifacts, put the matter in perspective when he testified that even if a person had $500,000 in a checking account and wanted to buy a first phase blanket on a particular day, he did not think that anyone could do it, because the blankets are very rare, and there are only a “handful of them in public hands and those only move occasionally.” Harman sold the blanket a year after he got it from Burke to an individual in New York for $290,000. The parties have stipulated that on August 1, 1993, the blanket Burke sold to Harman had a “fair market value of $290,000.” Additional facts from the record will be provided аs necessary in our discussion of the issues raised by the appeal.
PROCEDURAL BACKGROUND
The case was apparently tried on the fourth amended petition (petition), as that is the only petition in our transcript. That petition alleges that Harman represented to Burke that he had knowledge and expertise in reference to Native American artifacts, including weavings, and that Harman represented to Burke after examination of the weaving that it was not of Native American origin but was a Mexican blanket with a value in the area of $1,500 to $2,000. The petition alleges that those representations were false, as the blanket was of Native American origin with a value in excess of $250,000, which facts “were suppressed or concealed by [Harman] with the intention that [Burke] be [misled] as to the true condition of the property; that [Burke] was reasonably so [misled] and suffered damages as a result. . . .”
The petition further alleges that when Harman made the affirmative representations to Burke, Harman “either knew the statements and representations were false, or said statements were made recklessly by [Harman] without knowledge of their truth, but represented to [Burke] as positive assertions.” Alternatively, Burke pleads that the proposed transaction was one where Harman had a pecuniary interest and supplied false information to Burke which Burke justifiably relied upon and that Harman “failed to exercise reasonable care or competence in obtaining or communicating the information” about the origin of the blanket and its value. Burke further alleges that the represеntations of Harman were made with the intent that Burke rely upon them and as an inducement for Burke to sell the blanket to Harman and that, as a result, Burke has been damaged in the sum of $289,000.
Harman’s answer to the petition preserved his demurrer that a cause of action based
Trial before a jury in the district court for Lancaster County began on May 13, 1996, and the jury returned its verdict in favor of Harman on May 21. The trial court submitted the case to the jury only on the claim of fraudulent misrepresentation, outlining that the plaintiff must prove by a greater weight of the evidence that (1) Harman made the claimed representation; (2) the representаtion was false; (3) the representation was made fraudulently; (4) when the representation was made, the intent was that Burke would rely upon it; (5) Burke did rely upon the representation; (6) Burke’s reliance was reasonable; and (7) the representation was the proximate cause of some damage to Burke and the nature and extent of the damage.
In the instructions on effect of findings, the court instructed the jury that if Burke had met his burden of proof, the verdict must be for him in the amount of $289,000. No affirmative defenses were submitted to the jury. After Burke’s motion for new trial was denied, a timely appeal was filed to this court.
ASSIGNMENTS OF ERROR
Burke assigns that the trial court erred (1) in granting Harman’s motion for a partial directed verdict as to Burke’s claim based on negligent misrepresentation; (2) in refusing to allow the use of the deposition of Ralph Soloman Silverheels; and (3) in denying Burke’s proposed jury instructions (a) on presentation of videotape testimony, (b) that contributory negligence is not a defense to fraudulent misrepresentation, (c) on negligent misrepresentation, and (d) on reliance. As his fourth assignment of error, Burke claims that the lower court erred in instructing the jury by giving inconsistent instructions and failed to properly instruct on the issues of justifiable reliance and whether contributory negligence is a defense to fraudulent misrepresentation.
STANDARD OF REVIEW
To establish reversible error from a court’s failure to give a requested instruction, an appellant has the burden of showing that (1) the tendered instruction is a correct statement of the law, (2) the tendered instruction is warranted by the evidence, and (3) the appellant was prejudiced by the court’s failure to give the tendered instruction.
State v. Kinser,
On questions of law, an appellate court has an obligation to reach independent conclusions irrespective of the decision made by the court below.
State
v.
McBride,
A party against whom a motion for
directed
verdict or a motion to dismiss is directed is entitled to have all relevant evidence accepted or treated as true, every controverted fact as favorably resolved, and every beneficial inference reasonably deducible from the evidence.
Burns
v.
Veterans of Foreign Wars,
ANALYSIS
Silverheels’ Deposition.
On February 20, 1996, the deposition of Ralph Soloman Silverheels was taken in Albany, Oregon, at the instance of
Burke.
Silverheels also testified that Harman had been in his store looking at weavings and, in particular, had examined a third phase weaving in the summer of 1993. Silverheels testified that he first heard about Harman’s acquisition of the first phase weаving when an acquaintance told him that Harman had obtained a “very, very nice Navajo weaving” and was looking to sell it for $350,000 to $450,000. Silverheels and Harman talked by phone, and they discussed how Harman had obtained this weaving, as well as a price for the weaving. In particular, Silverheels testified:
He [Harman] had told me that he had bought a first phase chief’s blanket and that he had come onto it with great luck, that — excuse my language, a dumb fat fucker that had bought it at an antique — like a fle[a] market or an antique store, that he told him it was Mexican, and that he gave him a thousand bucks for it, told him it was worth two thousand.
Silverheels indicated to Harman that he would like to see it. According to Silverheels, Harman left a photograph of the weaving in Silverheels’ store when Silverheels was absent from the store. Silverheels testified that his nephew received the photo and wrote “ ‘Photograph of first phase Ute Navajo blanket’ ” with Harman’s phone number on the back of the photograph. By the time Silverheels contacted Harman about the weaving after seeing the photograph, Harman had already sold it.
Under cross-examination at his deposition, Silverheels refused to answer approximately 20 questions posed by Harman’s counsel. Summarized and reorganized, the specific questions he refused to answer were: (1) his father’s last name, (2) his mother’s last name, (3) the name on his birth certificate, (4) the city in California where he went to high school, (5) the year he graduated from college, (6) the college he graduated from, (7) specifics of his military career, (8) whether he still owned his former house in Omaha, (9) whether he was wounded in the line of duty as a police officer, (10) his current residential address, (11) the address of his nephew who worked in his Omaha store, (12) whether he told anyone in Omaha he was the grandson of Tonto from “The Lone Ranger,” (13) whether he told people in Omaha that he was a lawyer in California, (14) whether he had represented himself as the chief of an Indian tribe, (15) specifics about Putgrand Auction and Silverheels’ lawsuit against Heartland Estates and Bill Kauffman, (16) when his name legally became Ralph Soloman Silverheels, (17) whether he has been known by any name other than Silverheels, (18) the significance of June 6, 1980, (19) the name of his shop in Arizona, and (20) the tribe of which he is a member.
Several times after refusing to answer a specific question, Silverheels offered to explain to a judge why he would not answer, adamantly insisting that the judge would rule in his favor, and asserted, “The United States government . . . allow[ed] [him] the privilege [not to answer] by [C]ongress.” He also stated that he would be more than willing to come to Lincoln to testify. At the close of the deposition, Harman’s counsel stated that he was planning to make either a motion to compel Silverheels to answer the questions he refused to answer or a motion to strike his entire deposition testimony. The record before us reveals that Harman’s counsel opted for the latter option, because in a motion in limine filed before trial, Harman asked the court to exclude
all testimony of Ralph Soloman Silverheels contained in his deposition of February 20, 1996 for the reason that:a. The witness indicated in his deposition that he is willing to aрpear and he is therefore not “unavailable” under Neb. Rev. Stat. § 27-804(2)(a);
b. The defendant was deprived of his right to effectively cross-examine the witness at his deposition by the witness’s refusal to answer appropriate questions; and
c. The probative value of the testimony is substantially outweighed by the danger of unfair prejudice, confusion of the issues, or misleading the jury in violation of Neb. Rev. Stat. § 27-403.
In a journal entry, the trial judge ruled that Silverheels’ deposition would be excluded at trial because the questions he refused to answer did not “relate to mere collateral or cumulative matters,” but, instead, were “highly relevant” credibility issues and that Silverheels’ refusal to answer unfairly deprived Harman of his right to cross-examination. Because the motion in limine concerning Silverheels’ testimony was sustained, there was no mention of Silverheels in the trial record other than when Burke unsuccessfully offered the deposition at trial. During cross-examination of Harman, the following exchange took place between Burke’s counsel and Harman:
Q. Okay. Mr. Harman, did you ever tell an antique dealer in Omaha that you purchased a chiefs blanket from a big dumb fat so and so?
A. No, I certainly did not.
Q. Are you aware of anyone, other than . .. Burke, who contends that you made such a statement to a dealer in Omaha?
A. No.
Harman also testified on both direct and cross-examination regarding the people he contacted after he obtained the blanket from Burke, and Silverheels was not one of the people Harman admitted contacting.
Burke argues that the trial judge erred in refusing to admit any of the deposition of Silverheels merely because the witness failed to answer collateral background questions.
Neb. Rev. Stat. § 27-804 (Reissue 1995) states in relevant part:
(2) Subject to the provisions of section 27-403, the following are not excluded by the hearsay rule if the declarant is unavailable as a witness:
(a) Testimony given as a witness ... in a deposition taken in compliance with law in the course of the same or a different proceeding, at the instance of or against a party with an opportunity to develop the testimony by direct, cross, or redirect examination, with motive and interest similar to those of the party against whom now offered.
Unavailability is defined in part by § 27-804(l)(e) as including situations when the declarant “[i]s absent from the hearing and the proponent of his statement has been unable to procure his attendance by process or other reasonable means.” Additionally, Neb. Ct. R. of Discovery 32(a)(3)(B) (rev. 1996) contains a more precise definition of unavailability: “[T]he witness is at a greater distance than one hundred miles from the place of trial or hearing, or out of the state, or beyond the subpoena power of the court, unless it appears that the absence of the witness was procured by the party offering the deposition.” Neb. Rev. Stat. § 25-1227 (Reissue 1995) provides that a witness in a civil trial cannot be compelled to attend a trial outside of the state where he or she is served with a subpoena or at a location more than 100 miles from his or her residence.
Silverheels lived in Oregon, well outside of the reach of a subpoena from the Nebraska trial court. Although Harman’s motion asserted Silverheels was “available” as a ground for excluding this deposition, the trial court did not rely on that ground in excluding the deposition. Harman’s brief in this court does not assert that Silverheels was “available.” Harman did assert at oral argument that Silverheels was “available,” because Silverheels said he would return to Lincoln to testify. But we are cited to no authority that such a statement at deposition makes the witness “available,” nor have we found any authority on our own for this proposition. Rather, § 25-1227 and rule
It has been held that rule 32, in most cases, will not create different conditions for admissibility than does § 27-804.
Maresh
v.
State,
241 Neb 496,
The deposition was taken via stipulation, and no claim is raised under § 27-804 that it was not in accordance with Nebraska law, or Oregon law for that matter. That the parties and their motives were the same in both the deposition and trial cannot be disputed. Thus, the only question remaining on whether the deposition was admissible under § 27-804(2)(a) is whether Harman had the opportunity to develop Silverheels’ testimony through cross-examination when Silverheels refused to answer thе questions we have outlined earlier. The district court’s ruling was that Harman’s counsel did not.
Because we find it clear that Silverheels’ deposition was admissible under § 27-804(2)(a) and rule 32 unless the opportunity to cross-examine was unduly denied, an analysis of cases dealing with the effect of a witness’ refusal to answer questions during cross-examination must be undertaken to determine whether the deposition was admissible in whole or in part despite the fact that Silverheels did not answer all questions put to him on cross-examination.
In a somewhat similar case involving the use of deposition testimony at trial,
U.S.
v.
Salim,
Additionally, the U.S. Court of Appeals for the Eighth Circuit has held that under the federal equivalent to § 27-804(2)(a), opportunity and motive to cross-examine the witness are the important factors, not the actual extent of cross-examination. See
DeLuryea v. Winthrop Laboratories, Etc.,
The seminal case on the issue of the effect of a witness’ refusal to answer questions during cross-examination is
United States
v.
Cardillo,
The first would be one in which the answer would have been so closely related to the commission of the crime that the entire testimony of the witness should be stricken. The second would be a situation in which the subject matter of the testimony was connected solely with one phase of the case in which event a partial striking might suffice. The third would involve collateralmatters or cumulative testimony concerning credibility which would not require a direction to strike and which could be handled (in a jury case) by the judge’s charge if questions as to the weight to be ascribed to such testimony arose.
Id. at 613. In Cardillo, the court struck the entire testimony of this witness because the questions the witness refused to answer fell into the first category of testimony.
A different government witness in Cardillo had testified about the specifics of the crimes attributable to the defendant and then also refused to answer сertain questions on cross-examination. However, the questions this witness refused to answer were about the current charges pending against this witness and his past criminal record. The court first noted that
reversal need not result from every limitation of permissible cross-examination and a witness’ testimony may, in some cases, be used against a defendant, even though the witness invokes his privilege against self-incrimination during cross-examination. In determining whether the testimony of a witness who invokes the privilege . . . may be used against the defendant, a distinction must be drawn between cases in which the assertion of the privilege merely precludes inquiry into collateral matters which bear only on the credibility of the witness and those cases in which the assertion of the privilege prevents inquiry into matters about which the witness testified on direct examination. Where the privilege has been invoked as to purely collateral matters, there is little danger of prejudice to the defendant and, therefore, the witness’s testimony may be used against him.
Id. at 611. The court then held that the district court did not err in refusing to strike the testimony of this witness, because the questions he refused to answer “related solely to his credibility as a witness and had no relation to the subject matter of his direct examination.” Id.
The
Cardillo
analysis and rules have been applied in civil trials as well. In
Board of Trustees
v.
Hartman,
Another civil case,
Air Et Chaleur, S.A. v. Janeway,
Issues concerning a party’s credibility are generally collateral. United States v. Cardillo,316 F.2d 606 , 611 (2d Cir. 1963). While it is true that a plaintiff may not attempt to deny defendants all opportunities to obtain potentially damaging information, assertion of the privilege against self-incrimination in response to questions on collateral issues is not improper. [Citations omitted.] Where evidence sought on cross-examination relates only to credibility, a party may invoke the privilege against self-incrimination. . . .
. . . Therefоre, we hold that the district court did not abuse its discretion in allowing [the witness] to invoke his Fifth Amendment privilege.
Id.
at 496. But see
Magyar
v.
United Fire Ins. Co.,
Additionally, “[t]he test [e]nunciated in
Cardillo
has been followed by nearly all federal circuits and the courts of most states.”
Tyler
v. State,
Although the cases involving this issue frequently arise from the assertion of the Fifth Amendment privilege against self-incrimination, it does not appear that assertion of the privilege is a prerequisite to the admission of the deposition testimony when there are unanswered cross-examination questions. See
U.S. v.
Negrete-Gonzales,
We digress to note that Silverheels’ statement above is not entirely accurate, because he did not refuse to answer all personal questions. Examination of the deposition reveals that Silverheels answered a good number of personal questions. For example, he provided the name of his corporations in both Nebraska and Oregon, the location of his business and its phone number in Oregon, the name of the person from whom he first heard about Harman’s having acquired the rug, the reason why he and his family moved to Oregon, the fact that he had been in the military, his major in college as Indian art and law enforcement, his father’s first name and his mother’s first name, and the fact that he was formerly a police officer. But, as we have earlier stated, there were questions that Silverheels would not answer in the deposition.
In
Negrete-Gonzales,
the defendants were on trial for conspiring to sell cocaine. The U.S. Court of Appeals for the Ninth Circuit said that if the jury believed the defendants’ witness Medina, “it would have had to acquit Negrete and Mendoza on all three counts.”
Id.
at 1279. When the government asked her to identify her source of cocaine on cross-examination, Medina refused, stating it would jeopardize the lives of her children.
She would say only that neither Negrete nor Mendoza provided her with the drugs. Based on the refusal to name her source, the court granted the government’s motion to strike her entire testimony. The Ninth Circuit, citing its previous decision in
United States v. Lord,
The Ninth Circuit also addressed the role that the witness’ reason for refusal to answer plays in the analysis as to whether the testimony should be stricken. The court said:
Medina, unlike the witness in Lord, asserted fear of reprisal rather than her Fifth Amendment privilege as justification for her refusal to answer. Despite this difference, however, we find the Lord analysisapplicable here. The key question is whether the defendant’s right to present witnesses can be protected without frustrating the government’s interest in effective cross-examination. A witness’s reason for refusing to answer is crucial in determining whether to hold the witness in contempt, but it plays no role in considering whether the cross-examination was frustrated. The right to present witnesses is obviously not unlimited, but the rule distinguishing between collateral and direct issues properly limits it. Cf. Panza, 612 F.2d at 436-39 (suggesting without deciding that a nonprivileged refusal to answer does not justify striking a witness’s entire testimony if the questioning pertained only to collateral matters).
Id.
Medina’s testimony in Negrete-Gonzales was not cumulative of other witnesses, and the court described her as a key witness and stated that no other witness could duplicate her testimony. Although the court recognized that the jury could have disbe lieved Medina, the error in striking her testimony was not harmless, as the jury was not given the opportunity to consider her testimony.
In the instant case, the trial judge’s ruling excluding Silverheels’ deposition cited two fundamental reasons: (1) The credibility of the deponent was highly relevant and the unanswered inquiries did not relate to merely collateral matters, and (2) the defense counsel was “deprived of a fair opportunity on cross-examination to test the tmth of the deponent’s direct examination.” In judging the correctness of that ruling, we necessarily consider the subject of confrontation of witnesses on cross-examination. In that regard, the Supreme Court’s opinion in
State
v.
Privat,
(1) he or she is absolutely prohibited from engaging in otherwise appropriate cross-examination designed to show a prototypical form of bias on the part of the witness, or
(2) a reasonable jury would have received a significantly different impression of the witness’ credibility had counsel been permitted to pursue his or her proposed line of cross-examination.
Id.
at 248,
The court in
Privat
cited
State
v.
Hartmann,
The law is well established that when the object of cross-examination is to collaterally ascertain the accuracy or credibility of a witness, some latitude should be permitted; the scope of such latitude is ordinarily subject to the discretion of the trial judge, and unless abused, such exercise is not reversible error.
State
v.
Lewis,
Therefore, it is necessary to put in place a working definition of the concept of “collateral” evidence on cross-examination. In
State
v.
Williams,
The rule is not limited to cross-examination in criminal cases. In
Capps v. Manhart,
An illustration of the limitations upon inquiry into cоllateral matters is the prohibition against questioning about the precise crime or its details, even though the fact of a felony conviction is properly used as impeachment under Neb. Rev. Stat. § 27-609 (Reissue 1995). See,
State
v. Olsan,
In Latham, the court held:
The defendant on cross-examination was asked about matters collateral and immaterial to the issues in the case, and the State was permitted to introduce evidence to disprove what the defendant had said the facts were. This was improper procedure. The apparent purpose of such questions by the State was to lay a foundation for an impeachment argument to the jury based upon false testimony with respect to immaterial matters to prove the defendant unworthy of belief in other matters testified to by him vital to his liberty. When a witness is cross-examined on a matter collateral to the issue, he cannot as to his answer be subsequently contradicted by the party putting the question.
As we read Silverheels’ deposition and Harman’s brief arguing that it was properly excluded, it appears that the foregoing quote is an accurate description of what Harman’s counsel was seeking to do with the unanswered questions and why the deposition was allegedly properly excluded. Thus, in applying the body of law we have detailed to the case at hand, our first inquiry is whether the questions Silverheels refused to answer were collateral or whether they were related to the subject matter of his direct examination.
Questions 12 through 14, regarding statements which he allegedly made about who was a relative, being a lawyer in California, and being the chief of an Indian tribe, are also collateral. We cannot even know if Silverheels’ credibility is involved, because he did not answer, and thus, there are no prior inconsistent statements. We must be mindful of the difference between simply not answering, as happened here, and providing an answer which is inconsistent with a prior statement. Harman did not move to compel answers from Silverheels. (In this regard, we note Oregon Rules of Civil Procedure, which through rule 46A(l)(a) and 46A(2) provide a procedure to seek an order of an Oregon court compelling a witness to answer, including the awarding of expenses under rule 46A(4) for a successful motion. Rule 46B provides for sanctions for a refusal to answer, including contempt. Rule 38C provides that the foregoing rules are applicable to foreign depositions, which would include those taken in Oregon upon notice or agreement in a Nebraska lawsuit.)
Question 15, about other pending lawsuits involving Silverheels, is also collateral in nature, absent a showing that Burke or Harman was also involved in such cases. Had that been the case, counsel for Harman could have used leading questions, as was his right, to demonstrate for the trial court, and us, why the question had materiality and went to Silverheels’ bias or interest. But that was not done. Questions 16 and 17, about Silverheels’ legal name, when he acquired that name, and whether he had used another name, are also collateral — unless counsel sought to explore felony convictions under another name. But no question about prior felonies was asked, irrespective of the name at the time of conviction. Thus, questions 16 and 17 are collateral. The answers to these questions, had they been given, tend to prove nothing about whether Silverheels had the conversations he testified to with Harman.
The answer to question 18, about the significance of June 6, 1980, the date before which Silverheels said he would not provide personal information (even though he did provide some prior information), may well be interesting, but on its face as asked, it does not relate to whether he and Harman discussed a Navajo weaving 13 years later. The name of his shop in Arizona, asked in question 19, may allow the cross-examiner to track down some more information about Silverheels, his reputation, and his knowledge of Indian artifacts. But Silverheels’ testimony was not offered as expert testimony on identification or value of weavings. His testimony is merely that of a person who claims to have had a conversation with Harman in which admissions against Harman’s interest were allegedly made. However, the fact that Silverheels would hide the name of his business, presumably open to the public, is a fact from which a jury could gain a different view of Silverheels’ credibility, and thus, an answer is really not needed to give the jury a negative impression about Silverheels’ credibility. The lack of an answer is probably of more benefit than an answer, because to introduce evidence of negative details of Silverheels’ Arizona busi ness would require Harman to overcome the prohibition against introduction of contradictory evidence on collateral matters. We view Silverheels’ reluctance to discuss his ethnicity in question 20, given that he claims to be a dealer in Native American art, to be curious, but the refusal to answer again inures more to Harman’s benefit in how a jury would judge Silverheels’ credibility than if he had simply said, “I am a member of the Apache Tribe.”
We are, of course, willing to readily concede that the unanswered questions are potentially important background questions to which a lawyer engaged in discovery and trial prepara
tion would like to have answers for followup investigation or additional discovery. However, this is not a discovery issue, but, rather, one of the wholesale exclusion of a witness’ testimony. The questions are collateral because they do not relate to the substance of his direct examination. See, also,
Commonwealth v.
Dwyer, 10 Mass. App. 707,
We note that Silverheels did not refuse to answer any questions bearing on his relationship with either Burke or Harman, nor did he refuse to answer any questions regarding the series of events surrounding the acquisition and selling of the weaving. Harman was not denied the opportunity to cross-examine Silverheels with regard to any matter of substance from his direct examination.
Every question Harman’s counsel asked Silverheels about his conversations with Burke and Harman and about the subject weaving was answered. These are the questions which would properly be characterized under
Cardillo
as “so closely related” to the subject of the case that the entire testimony of Silverheels should have been stricken if he had refused tо answer. See 316
F.2d at 613. Instead, the questions Silverheels refused to answer were collateral matters. Thus, under
Cardillo,
all of Silverheels’ testimony should not have been excluded, and the district court abused its discretion in excluding all of Silverheels’ testimony. See, also,
The importance to Burke of Silverheels’ testimony is obvious. Silverheels’ testimony, if believed by the jury, tends to show that Harman had “suckered” Burke into selling the weaving for $1,000 by telling him that it was Mexican, when Harman knew it was not. The testimony of Silverheels, if believed, is supportive of Burke’s testimony. The deposition testimony also tends to show that Harman had made several inquiries about first, second, and third phase weavings before the transaction with Burke took place, which is relevant on Harman’s prior knowledge and interest in Navajo weavings. The district court abused its discretion in excluding all of Silverheels’ testimony. Silverheels’ refusal to answer the collateral questions, even if they related somehow to his credibility, was at most only grounds for an instruction to the jury to consider his refusal to answer when judging his credibility. See, Grubbs, supra; Siegel, supra.
Harman argues that the witness “had attempted to foreclose any potential impeachment on such things as a dishonorable military discharge, felony convictions, or any other information that might reflect negatively upon his credibility.” Brief for appellee at 33. However, Silverheels was not asked on cross-examination whether he had felony convictions оr if he had been dishonorably discharged. When the questions are not asked, there cannot be any denial of the right to cross-examination. While the right of cross-examination is fundamental, a ruling on evidence of a collateral matter intended to affect the credibility of a witness falls within the discretion of the trial court.
Capps
v.
Manhart, 236
Neb. 16,
In
L. J. Vontz Constr. Co.
v.
Alliance Indus.,
A party has the right to cross-examine the witnesses produced by his adversary touching every relation tending to show their interest or bias. A party has the right to cross-examine a witness with regard to an interest which affects credibility. Failure to permit such inquiry constitutes reversible error if prejudice results to the complaining party. Hegarty v. Campbell Soup Co.,214 Neb. 716 ,335 N.W.2d 758 (1983).
Neither the record made on the motion in limine nor Harman’s brief informs us how the unanswered questions related to Silverheels’ credibility, interest, or bias. The questions appear to be, at most, the sort of “fishing” that lawyers do in pretrial depositions.
The district court’s conclusion that “defense counsel was deprived of a fair opportunity on cross-examination to test the truth of the deponent’s direct examination” has a faulty premise, because none of the questions which Silverheels declined to answer went to Silverheels’ direct testimony or his interest or bias in the case — the unanswered questions were all about collateral matters. Under these circumstances, the trial court’s remedy of refusing to admit Silverheels’ deposition was an abuse of discretion, which operated to Burke’s prejudice.
Failure to Submit Negligent Misrepresentation to Jury.
At the close of Burke’s case, Harman’s counsel made a motion for a directed verdict on the ground that “the type of expectаncy or loss [sic] profit damages which plaintiff seeks are not recoverable under Nebraska law under a theory of negligent misrepresentation.” Following the motion, there was an extensive on-the-record discussion among counsel and the court about damages recoverable under negligent misrepresentation. Burke argued that under either negligent misrepresentation or fraudulent misrepresentation, the damages were the difference in value between what Harman paid for the blanket and the fair market value of the blanket at the time. The record establishes that the parties stipulated that $290,000 was the blanket’s fair market value at the time of the sale by Burke to Harman.
Harman’s position was that the Nebraska Supreme Court had adopted the Restatement
Gibb articulates that liability for negligent misrepresentation is based upon the failure of the actor to exercise reasonable care or competence in supplying correct information. The Gibb opinion quotes the Restatement of Torts, § 552:
“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.”
We have not found a Nebraska case which discusses the matter of the type of damages recoverable for the tort of negligent misrepresentation. However, the issue of recoverable damages under that theory is covered in the Restatement.
The matter of damages takes a bit of a tortured path through the Restatement. Section 552 outlines the basic requirements of the theory of recovery for negligent misrepresentation, and we have no doubt that the portion of § 552 quoted above from Gibb encompasses Burke’s claim against Harman. Harman clearly had a pecuniary interest in the transaction. Section 552 B(l) at 140 sets forth the damages for negligent misrepresentation and provides:
(1) The damages recoverable for a negligent misrepresentation are those necessary to compensate the plaintiff for the pecuniary loss to him of which the misrepresentation is a legal cause, including
(a) the difference between the value of what he has received in the transaction and its purchase price or other value given for it; and
(b) pecuniary loss suffered otherwise as a consequence of the plaintiff’s reliance upon the misrepresentation.
Section 552 B(2) at 140 excludes damages for “the benefit of the plaintiff’s contract with the defendant.” In § 552 B, comment a. at 141, we are referred to the Restatement (Second) of Torts § 549(1) (1977), as the comment states:
The rule stated in this Section applies, as the measure of damages for negligent misrepresentation, the rule of out-of-pocket loss that is stated as to fraudulent misrepresentations in Subsection (1) of § 549. Comments a to/under § 549 are therefore applicable to this Section so far as they are pertinent.
Section 549 at 108, entitled “Measure of Damages for Fraudulent Misrepresentation,” states:
(1) The recipient of a fraudulent misrepresentation is entitled to recover his damages in an action of deceit against the maker the pecuniary loss to him of which the misrepresentation is a legal cause, including
(a) the difference between the value of what he has received in the transaction and its purchase price or other value given for it; and
(b) pecuniary loss suffered otherwise as a consequence of the recipient’s reliance upon the misrepresentation.
It is, of course, important to remember that although this section defines recoverable damages for fraudulent misrepresentation, § 552 B “borrows” § 549(1) for the measure of damages for negligent misrepresentation.
Section 549(1), comment
a.
at 109, states that the most usual loss “is when the falsity
The fact that Burke is the seller and the alleged recipient of the fraudulent or negligent misrepresentation is not of consequence. See
Heise et ux
v.
Pilot Rock Lbr. Co.,
The commentary to § 552 B of the Restatement adopts the out-of-pocket rule as the appropriate measure of damages for negligent misrepresentation and specifically excludes benefit of bargain damages.
Trytko
v.
Hubbell, Inc.,
Admittedly, the difference between “out-of-pocket” and “benefit of the bargain” may seem amorphous. The
Trytko
opinion seeks to articulate the difference by discussing
Gediman v. Anheuser Busch, Inc., 299
F.2d 537 (2d Cir. 1962), where the plaintiff, confused over the range of benefits available under his employer’s retirement plan, asked the employer which option would provide him with the most favorable treatment, but the employer negligently informed him that a certain benefit package was optimal, when in reality the plaintiff would have been significantly better off under a different package. In
Gediman,
the court found liability for negligent misrepresentation under § 552 of the Restatement and awarded damages equal to the difference between the value of the benefit plaintiff would have selected and the value of the plan he did select. The Ninth Circuit later explained the damage award in
Gediman
in
Cunha
v.
Ward Foods, Inc.,
does not represent benefit-of-the-bargain damages, i.e., the difference between what the plaintiff expected he would receive, had the defendant’s representations been true, and the amount actually received under that option. Instead, he was awarded the difference between the value parted with at the time of the misrepresentation, and the value of what he received in return.
(Emphasis in original.)
Accepting the truth of Burke’s evidence, as we must, given that we are addressing the
The
Trytko
opinion also refers at length to
Lewis
v.
Citizens Agency of Madelia, Inc.,
In one sense, measuring plaintiff’s recovery by what she had been assured existed seems to award her the benefit of a hypothetical bargain to buy life insurance. But, in fact, the misrepresentation in Lewis did not lead the plaintiff into a bargain which she sought to enforce. Rather, the misrepresentation caused her to forego something valuable, which, happenstantially, was a “bargain”. Its benefit is not what § 552B(2) bars from recovery. § 552B(2) only directs that a plaintiff is not entitled to recover for expectancy created by the defendant’s negligent misrepresentations — i.e., the benefit of a negligently described and induced bargain. But while expectations negligently created are not recoverable, benefits foregone as a result of such expectations are. Illustrations from the Restatement make clear that reliance is recoverable and expectancy is not; but reliance is fully recoverable even when it matches expectancy.
Id.
The court in Trytko concluded its discussion by summing up that the limitation on benefit of bargain damages refers to the expectancy damages caused when a misrepresentation underlies a bargain or that, in other words, “benefit-of-the-bargain damages arise only where the misrepresentation created an expectancy. The plaintiff is not entitled to recover the expectancy described оr contemplated by the misrepresentation because it was not a real loss suffered.” Id. at 724.
While applying these concepts to the instant case, and importantly remembering the stipulation that the blanket had a fair market value of $290,000 on August 1, 1993, it is clear to us that the damages sought are not benefit of the bargain, but, rather, are a real loss. Burke walked into Harman’s house with a blanket, which, by stipulation, was worth $290,000. He left Harman’s house with $1,000 because of a fraudulent or negligent misrepresentation, according to his evidence. Thus, under the parties’ stipulation, there is a real loss of $289,000. As stated earlier by the Eighth Circuit in
W.K.T. Distributing Co. v. Sharp Electronics,
Rebuttal Witness.
As we have previously detailed in this opinion, there was sharp conflict on the time of day that the meeting between Burke and Harman took place. The impоrtance of that fact relates to Burke’s circumstantially proving what Harman knew
about the blanket and when he knew it, as well as proving what actions Harman took immediately after acquiring the blanket. Burke sought to introduce the testimony of two witnesses on rebuttal to establish that the meeting could not have occurred at the time Harman and his wife said it did, because Burke was otherwise occupied by his attendance at an anniversary celebration lasting the entire afternoon of August 1, 1993. The court sustained Harman’s objection to the rebuttal witness, Judy Pennington, who according to the offer of proof, would testify to Burke’s attendance during the entire afternoon of August 1 at an anniversary celebration. The court ruled that this was improper rebuttal. The district court has a degree of latitude with respect to the admission of evidence in rebuttal. See
Westgate Rec. Assn.
v.
Papio-Missouri River NRD,
Jury Instruction — Deposition.
Burke assigns error concerning the inadvertent playing of a portion of a deposition which had been ruled inadmissible and which prompted a request for a specific admonition in jury instructions. Because a retrial is necessary, and this seems unlikely to recur, we see no need to discuss it further.
Jury Instruction — Forms of False Representation.
At trial, Burke proposed an instruction pursuant to NJI2d Civ. 15.23, “Forms of False Representation,” which was refused by the trial court. This instruction indicates that a false or fraudulent misrepresentation may take three forms, including a person’s failure to disclose a fact known to him when
(b) [he] knows that disclosure would correct the other party’s mistake as to a basic assumption on which that other party is making the contract and where such nondisclosure amounts to a failure to act in good faith and in accordance with reasonable standards of fair dealing; or
(d) The other person is entitled to know the fact because of a relation of trust and confidence between them.
We have not quoted the entire proposed instruction but have focused on the portions which are arguably most directly related to the case. The comment to NJI2d Civ. 15.23 states: “Use only those paragraphs that, in light of the pleadings and the evidence, will assist the jury.” Burke asserts that the importance of the instruction was that it addresses the fact that “failure to disclose is as significant as an affirmative misstatement.” Brief for appellant at 31.
The difficulty with Burke’s argument is that the lawsuit, viewing the evidence from Burke’s standpoint, is not a failure to disclose case, but, rather, an affirmative misrepresentation case. In other words, Burke’s evidence and theory of the lawsuit was that Harman told him that it was a Mexican blanket when Harman knew that it was not, or should have taken more care before making this statement. The instruction quoted above which Burke now argues should have been given is applicable, if at all, in the case of a failure to disclose rather than a case of affirmative misrepresentation.
Burke also argues that his proposed instruction that he was justified in relying upon an assertion of opinion by Harman if Burke stands in a relation of trust and confidence to Harman or Burke reasonably believes that as compared with himself, Harman, whose opinion is asserted, has special judgment, skill, or objectivity with respect to the subject matter. This instruction is derived from the Restatement (Second) of Contracts § 169 (1981). This is, of course, a tort case. In any event, the fundamental concepts upon which Burke seeks instructions
The recipient of a fraudulent misrepresentation solely of the maker’s opinion is not justified in relying upon it in a transaction with the maker, unless the fact to which the opinion relates is material, and the maker (a) purports to have special knowledge of the matter that the recipient does not have, or (b) stands in a fiduciary or other similar relation of trust and confidence to the recipient, or (c) has successfully endeavored to secure the confidence of the recipient, or (d) has some other special reason to expect that the recipient will rely on his opinion.
The category delineated in (d) is quite expansive and would include the situation involved here, where Burke contacted Harman to look at a weaving for the express purpose, admitted by Harman’s testimony, of determining “what it is.” Therefore, Burke’s assignments of error concerning these aspects of the instructions are without merit.
Cross-Appeal.
Harman cross-appeals with respect to a discovery matter because the trial court failed to impose attorney fees on Burke’s counsel for his alleged “abuse of the discovery process.” The cross-appeal arises out of the issuance of a subpoena duces tecum at the instance of Burke’s attorney. A paralegal from the office of Burke’s attorney directed a letter to a court reporter requesting the reporter to do a deposition duces tecum for the custodian of records of Lincoln Telephone and Telegraph (LTT) for Harman’s telephone records, including long distance, from July 1, 1993, through August 1, 1994. The letter advises the court reporter: “You can choose an appropriate date and they can send them to our office by that date in lieu of appearing.” The reporter issued the subpoena duces tecum as requested and set a deposition date for 10 a.m. on January 30, 1995, and then included the following advice to LTT: “You may comply with this Subpoena Duces Tecum and waive your personal appearance by providing copies of the above-requested records, together with any billing for the same, on or before January 27, 1995 to Mr. Charles H. Wagner, Attorney at Law, P.O. Box 277, Wahoo, NE 68066.” An employee of LTT wrote to Burke’s attorney, Wagner, indicating that the records would be forthcoming by January 27. Wagner conceded that he received copies of the records from LTT but that no deposition notice was ever served on Harman’s attorney advising that the procurement of these records was occurring.
Nebraska Ct. R. of Discovery 30(b)(1)(A) (rev. 1996) provides that a “party desiring to take the deposition of any person upon oral examination shall give reasonable notice in writing to every other party to the action.” By Neb. Ct. R. of Discovery 26(f) (rеv. 1996), a copy of the notice must be served on opposing counsel.
Harman argues that providing notice of the deposition allows an individual to move for a protective order or take other action to protect that individual’s confidentiality and privacy rights. Harman also argues that Burke’s counsel circumvented the requirements of the discovery rules and that we should not tolerate “such a blatant abuse of the discovery process and such a cavalier disregard for the privacy rights of individuals.” Brief for appellee at 49.
The response of Burke’s attorney is that a paralegal directed the letter to the court reporter, asking the reporter to choose an appropriate date and indicating to LTT that the records could be sent in lieu of an appearance. Neb. Rev. Stat. § 64-108 (Reissue 1996) authorizes a notary to issue the subpoena only after notice of deposition has been deposited with the reporter, but Burke argues that the reporter in this instance issued the subpoena prior to advising counsel of the date selected so that he could then issue notice to Harman’s counsel. Moreover, Burke asserts that there is no contention that the records were not discoverable or were subject to any privilege. The trial court granted sanctions by precluding Burke’s use of telephone records, except as to those which had otherwise been secured through proper discovery procedures. Burke argues that there was no violation of a court order, no withholding of evidence, and no prejudice to Harman arising from the failure of Burke’s counsel to ensure that notice
In
Booth
v.
Blueberry Hill Restaurants,
The district court in this matter ruled that counsel’s letter to the court reporter was “quite misleading” and that it was “the duty of counsel to make sure that proper notice is given to the adverse party for any manner of formal discovery, particularly when legal process [subpoena] is involved.” The court thus sustained the motion for sanctions to the extent that the phone records acquired pursuant to the subpoena be returned to Harman’s counsel and that those records could not be used in this case.
We analyze this matter from the standpoint of whether the court’s ruling was an abuse of discretion to the extent that fees should also have been awarded against Burke’s counsel. An abuse of discretion is defined as the trial court’s ruling being clearly untenable and unfairly depriving the litigant of a substantial right and a just result.
State
v.
Philipps,
CONCLUSION
We have found that the district court abused its discretion in finding that Silverheels’ deposition should not be received in evidence because the court’s reasoning that the unanswered questions were not collateral matters was incorrect. Moreover, Harman’s counsel was not deprived of the opportunity to cross-examine the witness about material matters. If admitted, Silverheels’ testimony provides support for Burke’s theory of the case and buttresses his other evidence. Thus, it was not harmless error. Moreover, the district court erred in failing to submit the theory of negligent misrepresentation to the jury on the basis that such theory only provided for out-of-pocket loss and there was no out-of-pocket loss. Out-of-pocket loss was in effect stipulated to in the amount of $289,000 and, therefore, existed as a matter of law. The district court imposed an incorrect limitation on recovery for a cause of action involving negligent misrepresentation. Thus, on two grounds, reversal, and a remand for a new trial is required. The other assignments of error do not need to be decided because of the remand. There is no merit to the cross-appeal.
Reversed and remanded for a new trial.