*1 January 10, 1995, affirmed; Argued Appeals decision the Court of submitted 11, 1996 judgment of the court October circuit reversed CONWAY, W.
Patrick Review, on Petitioner v. UNIVERSITY,
PACIFIC on Review. Respondent (CC S41611) CV; CA A80633; C920640 SC
232-a Bernard Jolles, Jolles, Bernstein & Garone, P.C., Port- argued petitioner land, the the cause for on review. With him on petition Klingbeil. was Rick Lang Christ,
Thomas M. of Mitchell, Smith, & Portland, argued respondent the cause for on review. With him on the *3 Meyer. briefs was Scott J.
Alfredo Wheelock, Portland, filed a brief on behalf of Oregon Lawyers amicus curiae Trial Association.
Before Carson, Chief Justice, and Gillette, Van Hoomis Fadeley, sen, Graber, and Durham, Justices.** CARSON, C. J.
Fadeley, opinion. J., dissented and filed an opinion Durham, J., dissented and filed an in which Fade- ley, joined. J.,
** J., Unis, 30,1996, retired June participate and did not in this decision. 232-b
233 C. J. CARSON, negligent misrepresentation,
In this action for the imposed duty upon us is a issue before whether the law (or University university”), to defendant, Pacific “the exercise making representations reasonable care in certain to Con- way, plaintiff. facts this In 1990, case are as follows.1 Con-
way Oregon Community College professor a at Central was (COCC),holding position. At COCC, a “tenure-track” the end goal position of a tenure-track was to achieve tenure after years requisite employment. number of In the fall of 1990, Conway took leave absence from COCC work as a vis- professor iting University’s campus during on Pacific year. university Conway 1990-91 academic had hired temporary replacement, vacancy serve as a order fill a university’s psychology department, while the permanent replacement. During searched for a the 1990-91 year, Conway one-year, appointment” academic had “term university.2 with the January Conway applied perma-
In 1991, for the position University’s psychology nent, tenure-track in Pacific department. May Conway offered position. Conway meantime, In the had received student the fall evaluations for of semester were below those average employed by Conway university. teacher spoke colleagues to some ofhis about how those student eval- might employment. colleague affect his uations future One suggested speak College to the Dean of the (the dean) Arts and Sciences about his concerns. Shortly after Pacific offered Conway approached position, new and, the dean after a con- seniority, salary, versation about matters, and other asked poor whether his student evaluations would affect his jury Conway’s favor, Because a rendered a verdict in we consider the facts light Conway. Gracen, 303, 305, most favorable to v. See 279 Or Hatfield (1977) (stating principle). P2d 546 University, appointment speci At Pacific a term was a contract issued years. fied time that be could from one to three *5 Conway The dean told tenure.
chances to receive that the problem.” a “will not be evaluations student Conway resigned posi- conversation, that After his accepted position the new tion with COCC with Pacific Conway university’s University. returned to teach on the campus annual, in the fall of 1991 under an “tenure-track” During spring during appointment. of 1991 and the 1991- year, Conway’s student evaluations did not 92 academic university improve. efforts, After several remedial Conway only one-year nonrenewable, a offered contract for year. large part, that the 1992-93 academic decision was upon Conway’spoor student evaluations. based
Conway claiming action, filed this tort that the dean negligently misrepresented to him that the student evalu- prospects receiving ations would not affect his tenure.3 trial, claim, Before Pacific moved to dismiss arguing Conway that had not stated a claim for Conway university misrepresentation and the did because type gave have the rise to a not care on the university’s part making negligent to avoid mis- Conway. ruling representations to The trial court deferred on proceedings. trial, that motion until later in the At after Con- way completed university case-in-chief, had his moved for grounds, including a directed verdict based several its argument alleged misrepresentations prior that the were not university Conway duty a actionable because did not owe motion, and, care. The trial court denied that subse- Conway negli- quently, jury on the returned verdict for gent misrepresentation claim and economic and awarded damages. noneconomic University. Conway against also filed a breach of contract claim Pacific only claim could be terminated for certain circum
basis for that was employment “[u]se stances detailed in his contract and that the of student evalua principal teaching legitimate [was] sole or excellence not a tions as the measure evidence, for nonrenewal” of that contract under its terms. At the close of reason university claim. trial court entered a directed verdict for the on the contract the However, jury the trial court to consider the contract claim under still allowed the jury claim. 63 B. The returned a for the on the contract ORCP verdict not That claim is before us. University appealed Appeals,
Pacific to the Court of arguing “plaintiff negligent misrep- cannot recover for misrepresentation during resentation, because the occurred arm’s-length negotiations position, about the tenure track * * * negligent misrepresentations during made arm’s- length negotiations are not actionable.” v. Pacific (1994). University, App 307, 129 Or 309-10, agreed Appeals Court of with the and concluded negotiating possible employment that, “in about contract [University] plaintiff, special with Pacific not was rela- tionship plaintiff give with that would rise to to exer- regarding representations cise due care course that it made in the *6 negotiations.” Consequently, at Id. 313. the Court of Appeals granted held that the trial court should have the university’s pretrial negligent misrep- motion to dismiss the resentation claim. Ibid.
Conway petitioned this court for review. We allowed petition the now affirm the decision of the Court of Appeals. ruling
As noted above, the trial court deferred on University’s pretrial Conway’s Pacific to motion dismiss negligent misrepresentation. ultimately claim for The court rejected university’s argument support of dismissal, ruling university’s but the court did so the context of on the a motion for directed verdict. We therefore address the denial
of the verdict, motion for directed rather than the motion to presented dismiss, and we consider the evidence at trial determining duty Conway whether the owed to making negligent misrepresentations. Upon avoid a denial of a motion for review of verdict,
a directed we will not set jury affirmatively say aside a verdict “unless we can jury there is no evidence from which the couldhave found the necessary plaintiffs [the] facts to establish elements of Penney 695, cause of action.” Brown v. C. 297 Or Co., 705, J. (1984). P2d Corp. In Onita Bronson, v. Trustees 315 Or Pacific (1992), acknowledged, this court for Oregon recognized time, the first the existence a lim- negligent misrepresen- ited version the common-law tort of plaintiffs tation. case, In that and the defendants were negotia- parties sale contract. Before the contract a land plaintiffs complete, that, told the the defendants were tions parcels upon payment, released to certain of land would be the by plaintiffs, payment plaintiffs. the defendants After stating parcels parcels, could not not release did parties. they at resold to third Id. 153- until were be released negligent misrepresen- brought plaintiffs claim for 55. The at 155. tation. Id. circumstances, “under some
This court stated by may sustained others who liable for economic loss one be negligently rely representations made.” Id. at 159. on one’s negligence emphasized, however, that “a claim The court recovery caused another must be of economic losses injured duty predicated to the of the actor on some beyond party exercisereasonable care the common law (footnote Ibid, empha- prevent omitted; harm.” to sis foreseeable added). that the defendants in court then concluded care to avoid to exercise reasonable did not owe Onita plaintiffs, making negligent misrepresentations adversarial. In an arm’s- “the was because negligent misrepresentation negotiation, length is not at Id. 165. actionable.” arm’s-length rela- that, unlike the contends
tionship University and Pacific between *7 gave type relationship that rise to a in the of were university’s part duty reasonable care to to exercise on the misrepresentations making negligent to about avoid university, employment on the other status. The his future duty the reasons that no such existed. For hand, contends university did not owe Con- that the follow, we conclude that misrepresentations. duty making negligent way to avoid a Oregon, negligent of mis in the tort above, As noted relationship requires party owe representation in a that one duty duty “beyond reasonable to exercise the common law a party. Onita, prevent to the other to foreseeable harm” care duty heightened that kind of Onita, Or at 159. Under 315 part, acting, the party to further in one at least arises when is party. In other at 161. Id. interests of the other economic
237 to words, duty for the avoid making misrepresen- the in a arise, to must be relation- parties “special tations the be in which to held liable had some ship,” party sought the to the interests of other obligation pursue party. the of this court some of surveyed types in a which one owes the other party heightened
relationships of duty care, certain including professional relationships one has a obligation which the party professional protect interests of the other Id. at court party. 160-61. This further recognized “contractual also relationships may give rise a duty tort to exercise on of reasonable care behalf is, another’s interests.” 160. Id. at That to a contract parties may themselves of place type relationship gives Indeed, rise to a tort. “it be duty may necessary for a plain tiff to show a contract between himself and the defendant order to establish that the has defendant assumed a position, or status which the general law predicates duty of the terms of the independent contract.” Georgetown (1992) v. Realty Co., The Home Ins. 313 97, 104, Or v. Co., Interstate 168 (quoting Harper Brewery 37, 120 Or (1942) (internal omitted)). P2d 757 marks quotation
In analyzing a relationship between contracting par
ties that may give rise to tort
it is
liability,
important
note
the distinction between contractual
and tort obligations.
Obligations
specified by
terms of contract are “based on
manifested intention
to a
bargaining trans
Page
ed.,
action.” W.
Keeton,
Prosser and
on
Keeton
the Law
(5th
1984).
Torts,
ed
Obligations
tort,
§
or
other
“duties,”
hand,
on the
are
“imposed
apart from
law —
made
independent
promises
and therefore apart from
intention
the parties
injury
avoid
to oth
manifested
—to
added).
Id. at
words,
ers.”
In other
(emphasis
a contract
details
that each
specific obligations
party owes
other
and, if one
contract,
breaches
term of the
party
breach
result
will
in contract
For
tort
liability.
liability to be
imposed, however,
tort
must exist
“independent of
contract and without
to the
terms
the con
specific
reference
added);
tract.”
from the of Currey (citing Realty, at 37 Butcher, 380, Or 102 v. Or 313 (1900)) added). (emphasis P 631 385, 61 significant Just as difference exists between con- obligations duties, tort too is there tractual and so distinc- obligation the of a contractual and the tion between breach duty in This court summarized its treatment breach of a tort. relationship obliga- of between the breach of contractual the GeorgetownRealty. duties and tort tions from this cases “The lesson be drawn court’s discuss- and choice between contract tort remedies is this: ing the contracting par- relationship the involved is between When the that one ties, gravamen complaint party and the is damage performing other negligently caused the its contract, then, though under even the obligations the and contract, between the arises out of injured party may bring negligence claim for if subject independent is to a standard care party other plaintiffs the contract. If the claim is based the terms of contract, which solely provision on a breach of a itself party’s obligation, remedy normally then the spells out only contract, with contract measures of damages will be statutes of limitation. That is so whether the and contract intentional, or negligent, of contract was otherwise. breach may rely situations, be able to on either a party In some theory theory at or a tort or both.” 313 Or 106 contract added). (emphasis misrepresenta case, In this at the time the dean’s Conway’s evaluations, student tions about University employment were a contractual rela Pacific tionship. versity had in force At that also a “Uni time, among things, pro other contained Handbook” employees provide requiring its with visions performance job pertaining to their career information misrepresentation, In his claim for advancement.4 purposes opinion, shall Handbook as this we treat For parties. v. part employment between the See Democrat of the contract Yartzoff (1978) (stating Co., Publishing that an 281 Or P2d 356 -Herald contract). employment employee part can become handbook part, upon provisions, relies, in those handbook con- they obligation tending university’s part a contractual on the created *9 Conway’s giv- interests,
to further economic duty ing in virtue rise to a tort. also contends “nongratuitous of supplier was a terms, the contract’s consequently, and, of information” under Onita Conway duty negligent misrepresen- making owed a avoid to Conway’s employment future For the tations about status. follow, reasons that we conclude that neither contention is well taken.
To determine whether Pacific owed Con- way duty making a to exercise reasonable care to avoid mis- representations, tionship parties’ “we examine the nature of the rela- compare relationship relationships
and to other imposes duty parties in which the law a on to conduct them- reasonably, protect selves so toas the other to the relationship.” Onita, 315 Or at Therefore, 160. as types relationships party we first examine one which duty beyond owes the a other to exercise reasonable care duty prevent common-law foreseeable harm. Oregon duty imposes law such a of care certain
5,6.
professionals
example,
in actions toward their clients. For
lawyers
duty
their
a
owe
clients
to exercise
care,
reasonable
physicians
patients.
as do
toward their
See Chocktoot v.
(1977) (lawyers);
Or
Smith,
567, 570,
280
Other also duty example, agents principal-agent ened of care. For in a duty have a to act due care and their with principals’ Hampton Farms, Jewett, interests. See v. Tree Inc. (1995) (creditor agreed 599, 617,
320 Or
who
represent log
purpose
selling
seller, for the
the latter’s com-
pany,
agent and,
acted as seller’s
therefore, owed seller a
duty
interests);
to act with due care and in seller’s
Lindland
v.
Investments,
318, 322-24,
United Business
298 Or
693 P2d
(1984) (real
acting
agent,
estate broker,
as seller’s
owed
facts).
duty
seller
to exercise due care and to disclose material
heightened duty
Trustees also owe a
to act in the best inter-
duty
good
ests of their
as
beneficiaries, well as
to act in
Seed,
faith. See Strickland v. Arnold
Thomas
277 Or
(1977) (agent marketing pool
169-70,
marized as those in above which the who owes ** * acting, part, care is “at least in to further the economic person duty ‘client,’ interests of the owed of care.” 315 way types Or at 161. Another to characterize the of relation ships heightened duty which of care exists is that the duty party special responsibility who owes the has toward party. party This is the other so because the who is owed the effectively duty party duty has authorized the who owes the independent judgment party’s to exercise in the former party’s doing behalf and in the former interests. In so, party duty placed position who is owed the is in a of reliance upon party duty; who owes the that is, because the former given responsibility has and control over the situation at rely right latter, issue to the the former has a the lat ter to achieve a desired outcome or resolution. special responsibility
This in situations in exists party capac- professional which one has hired the other in a ity, principal-agent as well as in relation- similar other ships. type It also exists in the of situation described Realty, Georgetown party relinquished in which one has con- subject relationship trol over the party matter of the to the other placed potential monetary liability and has its relationships, party other’s hands. In all those one has independent judgment authorized the other to exercise in his consequently, party duty or her and, behalf who owes the special responsibility has a wise take care of certain affairs to administer, oversee, or other-
belonging party. to the other special responsibility duty That carries with it a to exercise making negligent misrepresen- reasonable care to avoid tations. relationship must
We now examine the nature ofthe compare between and Pacific it to types relationships party in which one owes the other a heightened duty to exercise reasonable care, as described doing aspects relationship so, above. In we examine all of the university, including employ- between and the their ment contract, in order to determine whether the special responsibility independent judg- had a to exercise Conway’s emphasize ment in behalf. However, we that, in examining keeping contract, with the commands of GeorgetownRealty, any we do not determine seek to whether obligations university’s part gave contractual on the rise to a making negligent misrepresentations tort to avoid Conway. Rather, we must determine whether the terms of type relationship gives the contract create the rise to duty. examining such a tort In other words, the exercise of help type the contract serves to determine the parties, between the but not to determine the existence or type university may Conway. that have owed to
We first note that, unlike the situation in Conway University strangers coming and Pacific were not to bargaining negotiate the table to a first-time contract misrepresentations because, at the time made, that the were they already employment relationship. were in a contractual Consequently, Conway university fully and the were not in a arm’s-length relationship par- sense as were the same ties in Onita. compared relationships types
When to the of party special responsibility which one has other, a the toward Conway relationship and Pacific Uni- between however, the Conway versity did not authorize the univer- falls short. still judgment by sity independent behalf, in his con- exercise to thereby placing position him in the of otherwise, or tract rely upon university.5 having right at the Indeed, to the misrepresentations, parties acting in time of the both were purpose benefit, each for their own for the of behalf, their own negotiating Conway’s context, a renewal of contract. In that university special responsibility did not have a then, the Conway independent judgment in his to exercise toward administer, oversee, or otherwise take care and to behalf any Consequently, the were not in a his affairs. giving duty relationship special rise to a of care on the uni- making negligent misrepresentations versity’s part avoid to Conway. to provisions that the handbook contends University provide employees
required Pacific to its with job security to their demonstrate that the information related Conway’s university required further economic was to act to thereby giving rise to a of care under Onita. interests, provisions, agreed that those handbook in some if we Even Conway’s university way, obligated economic the to act disagree provisions type create the that those interest, we making negli- gives relationship to avoid rise to already misrepresentations. gent concluded, As have we university provisions nothing that the demonstrates in those independent judg- responsibility special to exercise had a Conway’s behalf.6 ment in Conway’s relying upon emphasize the must the distinction between We Conway’s being placed position in had misrepresentations in a which he and dean’s case, University. right rely upon virtue of its verdict in Con Pacific this fact, favor, jury Conway did, rely upon
way’s the dean’s statement the found that However, Conway problem.” poor if student evaluations “will not be a university relationship had a type in which were not in the right rely behalf, Conway responsibility Conway’s did not have a special to act in particular in his behalf. upon outcome or result achieve Moreover, accurate to communicate the fact that trusted the dean Conway and Pacific Uni- relationship did not transform the between information v. Heights Associates versity “special relationship.” Uptown into a See Seafirst (1995) (court plaintiffs rejected conten- 638, 648-50, Corp., 320 Or of suc- assurances plaintiffs upon defendant’s tion because of the reliance special history prior dealings parties, “a and a cess between defendant, developer, plaintiff, a trust and confidence” existed between the omitted)). (internal plaintiffs quotation creditor marks obligated contractually to act in argument In his that Pacific was provisions handbook interest, Conway his economic additional also relies
243
Conway
the hand
also
virtue of
that,
contends
required
University
provide
provisions
to
that
Pacific
book
university
the
a “non-
information,
certain
was
with
gratuitous supplier
and,
of information” under Onita
conse
Conway, beneficiary
quently,
duty
that information,
owed
of
a
making negligent misrepresentations.
to avoid
We
reject
Onita,
that contention. In
this court did state that
duty
“nongratuitous suppliers of information owe a
to their
beneficiaries of their
* * *
third-party
clients or
contractual,
to intended
professional,
employment relationship
or
to
misrepresenting
exercise reasonable care to avoid
facts.”
opinion,
However,
Finally, Conway employer- also contends that employee relationship “special relationship” imposing is a special upon employer. disagree. care We In the case, circumstances of this the fact that and Pacific employer-employee relationship were in an has no effect our determination that the did not special responsibility independent judg have to exercise *13 Conway’s Conway’s ment in behalf and to look after inter university Instead, ests. as discussed above, and the pursuing each were dean made the their own interests at the time that the Cons eque misrepresentations Conway.8 to ntly, parties special relationship were not in a gave duty university’s part rise to a of care on the to avoid making negligent misrepresentations Conway. to summary, relationship we conclude that between level of a and Pacific did not rise to the
special relationship imposed such that the law university in tort to exercise due care to avoid making negligent misrepresentations Conway. to Accord- ingly, Conway prevail negligent cannot on a claim for misrepresentation. Appeals
The decision of the Court of is affirmed. The judgment of the circuit court is reversed. dissenting.
FADELEY, J., fully I concur the dissent of Justice Durham, fol- lowing special this dissent. I write further, however, because by majority opinion offered rationale is founded on “imposed apart independent promises apart from and of made and therefore any parties bargaining from manifested intention of to a contract or other Therefore, alleged obligation something transaction. if the do or to not to do intent, that was breached could not have existed but then con- for manifested only theory upon liability imposed.” tract law should be the which would be (5th Keeton, ed., Torts, Page 92,§
W. Prosser and Keeton on The Law 656 ed 1984) omitted). added; (emphasis original emphasis Moreover, discussed, University might as we have the fact that Pacific have provisions requiring provide Conway breached the contract it to with information concerning employment security university his does not mean that the is liable Conway in tort. 8 Stores, generally May Dept. See Hall v. The 292 P2d Or (1981) (stating many respects!,] employment arm’s-length, “in an remains securing divergent joint adult between on rather than intent interests”). (Sec- faulty concepts ond) The not there discussed. Restatement got right, majority. has it not the A Torts profes- misrepresentation or in the course of one’s business by damaged is those the care- sional discourse actionable setting. tell less failure to the truth majority case The holds this that a duty (or, majority require, dean “heightened majority as the would no has no duty”) to tell to exercise care the truth. In the view, there case is no in this for a dean to avoid faculty damaging by negligently misrepresenting member misleading faculty person, to and that dean for even one comes who
specific promotion information on or tenure. majority holding The effect this case is that as a mat- special relationship law, ter is no needed, there of the sort faculty as a matter a dean fact, member, between or professors. between a and its majority acknowledges that there is such a rela- tionship professionals persons between most other and the rely may expected rely who or who be or act on information provided by profession. majority simply them in their professional relationship holds that sort rule does not *14 apply holding and thus in here, bases its this on its case own factual declaration that the nature of the relation between a professor, university professor, dean and a aor and a is being grounded adversarial, but a relation in the individual thus, economic self-interest of each that and, relation rises only “arms-length” negotiation to an between business adversaries. authority examined,
When offered for this mis- anthropic say ipse outlook is than dixit, i.e., no more “because we majority examples relating
so.”The offers no cases or to a university community; majority deny indeed, does not accuracy special relationships of the statements about the university community dissenting that are included in this opinion. majority dog- Instead, the on its adversarial, relies university eat-dog contrary construct that is commu- nity’s university, own view of the relation between a its aca- professors. jury demic and one of The dean, its returned its plaintiff negligent misrepresentations by verdict for made professor. the dean to the relationships professionals between in univer-
sity communities, as seen members of those communities, support dog-eat-dog approach. does not Over the course of century, many university community this members of the special relationship among pro- have indicated exists community they fessionals in that length such that are not arm’s- examples university adversaries. A few related to relationships majority pro- suffice, should inasmuch as the examples contrary. vides no to the citing report Carnegie
After of the Foundation for Teaching essay the Advancement of and Woodrow Wilson’s College Oregon For?,” “What Is A the dean of an law school 63 years ago special relationship declared that there is a faculty university, between the and a state as follows: “That leads me to another university observation. A is * * factory department not a or a store *.
“There a need to recognize faculty is are members highly specialists trained and scholars and constitute a pro- high doctors, fessional class of at least as yers, standing as law- and other engineers, professionals.”1 parents of students and other listeners who heard that speech declaration and the remainder dean’s about university governance arranged for the dean’s full remarks to parents attending university be mailed to all at that time. of students attesting university Later, also that a is a community, special Bryant said, James Conant “He who ground.” enters a walks on hallowed In the Godkin speak- Lectures at Harvard Clark Kerr, system ing executive head of the as extensive of universities job university’s top California, described facets ofthe ofthe official, multiversity has become the and the nature
“The presidency change. of the has followed this
‡ * * * Bronson, 149, 160-61, Corp. Onita v. Trustees 315 Or Pacific (1992), professionals stated that such enumerated would be liable for view, misrepresentation. my analogous professional The dean is an a view disputed. is not educator, multiversity leader,
“The is president caretaker, officeholder, he is also power, pump; wielder inheritor, consensus-seeker, bottleneck. But persuader, he mostly Kerr, Clark Uses is a mediator.” Univer- (1963). sity, 34, 36 university dog-eat-dog philosophy within the is No internal expressed above.
Assuming statements individual leaders enough communities, unrebutted, are not special, relationships professional within sort establish community, declaring there much of special relationship is more. Statements on a
have been made national level building implicating faculty. all and In on universities cooperative dating earlier statements to 1940, back the Asso- Governing Colleges ciation Boards of Universities and and representatives faculties, of their the American on Council Education, and the American Association of Pro- jointly fessors, drafted and issued a statement entitled Colleges Joint Statement on Government of and Univer- sities. acknowledges special
The Joint Statement “rela- tionship” among participants all commu- nity, stating: variety
“The complexity performed by and of the tasks of higher institutions education an produce inescapable interdependence among board, governing administration, faculty, students, and others. The calls for ade- quate among components, communication these and full for opportunity appropriate joint planning and effort.” University Professors, American Association of Policy Doc- (7th 1990) added). uments and Reports, (emphasis ed faculty The Joint Statement describes a role the selec- points tion of“academic out that: deans” also “[B]uilding strong faculty joint of a careful requires effort in * * * staff promotion granting selection and of ten- Id. at ure.” 121. part Faculty,” V, entitled “The Academic Institution:
the Joint Statement asserts: *16 “Faculty primarily status and related are a fac- matters ulty responsibility; appointments, reap- this area includes
pointments, reappoint, promotions, decisions not to granting tenure, and dismissal.” at 123. Id. examples
Those demonstrate community setting, professor the status of dean and of con- special, interdependent note a between them enterprise that best forwards their common the dean when professor uses due care not to mislead the to her or his detri- ment, and vice versa. questions promotion tenure,
On and the dean is an bridge university, faculty, information its and between professional is, situation, the students. The dean giving professional in that engaged in advice. All are a common enterprise origin. common-enterprise concept of ancient That university community by adopted Oregon Leg- was (and statutory pub- islature remains the law of this state for universities). provides part: lic ORS 352.010 professors faculty president “The of the state institutions of constitute the ofeach higher education and as such * * * government the immediate ofit and the students
have therein.” dog-eat-dog concept No there. examples recognized special relationships
among university, faculty dean, its and its could be multi- manyfold. plied But there seems little reason to do so here, contrary majority examples because the offers no or other majority arm’s-length its Had the authorities for view. tested by relating dog-eat-dog setting, construct it to a its testing part have revealed that it is of the dean’s would knowledge job and information on the sub- sub- to communicate jects promotion. are, course, tenure and Those jects jury found, fact, as that the about which the in this case faculty misrepresented plaintiff member, as a dean negligently uttered misinfor- who then relied on the dean’s damage.2 mation to his substantial jury, vicinity provided higher which defendant had drawn from the years, misrepresen careless services for 150 determined that dean’s education advice, gave who, professional damaged plaintiff, relying on the dean’s tations
Employing ipse jury dixit to duck the facts found constitutionally practice Oregon. is a forbidden Facts by jury determined are not to be “otherwise re-examined any affirmatively say court of this state, unless the court can support there is no evidence to the verdict.” Or Art Const, VII (Amended), exception § 3. The in the “unless” clause does not apply say here. No one can that there was no evidence of the special relationship existing between the as dean, an aca- professional agent university, demic of the and the fac- ulty professional jury for whom the rendered its verdict in majority deny presence this case. The does not ofthat evi- majority dence. Instead, the declares that the evidence is not *17 good enough, though even it shows that the risk of harm to plaintiff was foreseeable and that the dean’s carelessness (:i.e., negligent misrepresentation his on behalf of the univer- sity) caused that foreseeable harm. majority opinion permits The be, effect, law to in
(a proposition
dissent),
of law from which I also
in
Oregon
play
provided
one can
fast and loose
truth,
with the
negotiation
that it is in a business
and that one’s
misrepresentations
only
cause
economic
course,
harm. Of
provisos
those
do not fit the facts
case,
of this
or the law as
Corp.
declared in Onita
v.
Bronson,
Trustees
315 Or
Pacific
of
(1992),
professional
149,
“[t]he § rule stated in Restatement ofTorts * * * is closeto the But, mark. for follow, the reasons that up job college at position university. secure another to take the offered at the They damages $95,000, $5,000 assessed in the amount of of which were not eco- damages. nomic (Second) (1977) provides: Restatement Torts 552§ “(1) who, business, profession employment, One in the course his or or in any pecuniary interest, supplies other transaction in which he has a false guidance transactions, subject information for the of others in their business is liability pecuniary justifiable for loss caused to them their reliance information, competence if he fails to exercise or reasonable care obtain- ing communicating or the information.
rather than adopting ‘rule.,’ a black letter optwe to develop scope scope recovery and the on case-by- basis, case in the light of related decisions of this court.” following reasoning
The Onita court relied on the concluding impose liability that the Restatement rule did not negligent misrepresentation between negotiating length business adversaries at arm’s in a com- setting: mercial
“The text of section 552 and the comments and illustrations suggest editors, thereto that the in using ‘[o]ne the words who, business, in the course profession of his employ- or ment, in any or other transaction in which he has a pecu- niary interest, supplies false information for the guidance transactions,’ of others in their business had in mind rela- tionships other than the relationship between persons negotiating length. at arm’s provide comments no illus- dealing trations with business adversaries in the commer- cial sense.” Id. at 164. buy-
The court concluded that the who were property, occupied ers and sellers of real the latter relation- ship consequently, liability and, that no existed. By
Onita misreads the Restatement rule. its terms, applies the rule whenever one acts in the course of one’sbusi- profession, employment, ness, or or in a transaction which pecuniary negligently supplies one has a interest, and false *18 guidance information for the of others in their business requirement negligent misrepre- transactions. The that the speaker’s pro- sentation occur in the course of the business, employment, fession, or or in a transaction in which the speaker pecuniarily, relationship is interested the concerns “(2) (1) (3), Except liability in as stated Subsection stated in Subsection is
limited to loss suffered “(a) by person group persons or one of a limited of for whose benefit guidance supply recipient and he intends to the information or knows that the it; supply intends to and “(b) through reliance it in a transaction that he intends infor- recipient substantially mation to influence or knows that the so intends or in a similar transaction. “(3) liability public duty give of one who is under a to information any by persons to extends loss suffered of the class of for whose benefit the created, any protect in is of the transactions in which it is intended to them.” between the business or professional speaker, speaker’s activities If the interests, and and the statement made. state- ment bears a sufficient to the business relationship speaker’s activities and interests, the Restatement rule lia- recognizes bility for the resulting salutary harm. The behind that policy is that, rule environment, persons business those who communicate factual statements for the negligently false in of others their financial transactions should guidance be liable for the that nor the resulting harm. Neither text policy of the Restatement rule the rule’s to precludes application like those in are Onita, who business adversaries parties, at arm’s negotiating length in a commercial setting.2 Some case other afford the to cor- may opportunity rect the Onita of majority’s mischaracterization the Restate- here, ment rule.3 That exercise is unnecessary because the evidence in the record even the satisfies narrow formulation the rule in of described Onita. to
According Onita, judicial task is to determine whether some of aspect parties’ distin- it from of business guishes adversaries at negotiating arm’s Or at length. 315 160. The court listed two circum- stances in which the duty to avoid making negligent misrep- resentations would exist. majority’s governs only par The Onita conclusion that Restatement rule relationships, apply arm’s-length relationships, and to ticular characterization. The rule does not is a mis applies occurring of conduct the course one’s busi
ness, employment, profession, pecuniary or in or a transaction which one has a 552(1). recognizes duty § interest. Restatement negligent misrepresentations The rule to use due care to avoid types acts in whenever one the course those occupy transactions ary is not limited to transactions between who fiduci special relationships. or other majority’s appears Onita the rule have been articulation of more a faulty interpretation depart result its the Restatement rule than a decision to majority apparently operating rule. from the Restatement from a flawed Because the Onita was rule, understanding rule, description retrospect, its of the example, both seems artificial and confused. To cite but one the announcement in that fiduciaries can be sued for their Onita economic losses caused misrepresentations surprise because, many years, already would no one the law imposed liability through had practice, nary tort on for such theories fiduciaries losses of mal advantage, prospective with interference contract or economic and ordi among negligence, departure regard, others. In the net effect of Onita’s plaintiffs theory potential liability from the Restatement rule was to extend to they protect liability did not need fiduciaries in circum defendant from already they enjoyed adequate protection. stances which
252 professionals
First, court noted that certain owe obligation an acting to their clients to exercise reasonable care when lawyers,
on their engi- clients’ behalf. The court cited primary neers, real architects, estate brokers, insurers examples types professionals upon as of the whom the law imposes duty (citing pertinent of care. See id. at 160-61 cases).
Second, the court stated that “contractual relation- may ships give duty also rise to a tort to exercise reasonable care on behalf of another’s interests.” Id. at 160. The court stated:
“Weread Restatement section 552 as consistent with adopted negligence the rule that this court has actions recovery nongratuitous sup- for the pliers losses, ofeconomic viz., employ- ofinformation owea to their clients or third-party ers or to intended beneficiariesoftheir contrac- professional, employmentrelationship tual, or to exercise misrepresenting reasonable care to avoid facts.”Id. at 165. According requires party supply Onita, if a contract one guidance information for the benefit or of another in a busi imposes duty nongratui ness transaction, the law on the supplier misrepresenting tous of information to avoid facts. “ In that circumstance, tort arises ‘fromthe relation of the under the contract, rather than the contract ” Georgetown Realty itself.’ v. The Home Ins. Co., 313 Or (1992) (quoting Currey 102, v. Butcher, 37 Or (1900)). analyzed 385, 61 P The Onita court the record for presence of either of those circumstances and concluded that neither existed. atOr 161-65.
By recognizing, pursuant to the rule, Restatement liability nongratuitous suppliers of information for negligent misrepresentation resulting in economic losses, give policy Onita would effect to of the Restatement rule, expectation participants i.e., to fulfill the reasonable commercial transactions that who, one in the course of busi- profession, employment, guide ness, or acts to another in a by supplying business transaction or information decision supplying must use due care to avoid false information. analysis In a discussion that of the is relevant to its “nongratuitous supplier majority concept, of information” acknowledges “Conway were not in a fully arm’s-length relationship the same as were sense *20 324 and to their Onita,” that, in Or at due exist- they ing employment strangers relationship, “were com- not ing bargaining negotiate contract,” to the table to a first-time Conway import of The those statements is obvious. and Ibid. university negotiating the were not business adversaries at length. Conway rely right arm’s had a to receive on infor- and by university’s agent supplied regarding the mation prospects. tenure university Conway’s partner the Because was in supply Conway the contract information, to accurate tenure university adversary. had no reason to treat the as his majority logical import The avoids the of its state- by creating liability ments a new barrier to that Onita did not impose. majority states:
“However, earlier in its the opinion, Onita court distin- guished between an in adversary transaction, a sales who does not owe a to making representa- avoid negligent tions, and ‘one who holds out the general public that he or information,’ she supplies duty. does owe who such a Id. at added). 162 (emphasis That statement suggests a ‘non- gratuitous supplier of under information’ Onita is someone of supplying business information for a fee. Accord- university, ingly, the contractually promised which to pro- vide its employees, not the general public, with certain information, qualify does not a nongratuitous supplier as Id. at 243 (emphasis original). information.” adopted may qual- Onita no such limitation on who ify nongratuitous supplier passage as a information. quoted by summary from Onita was a court inaccu- —an summary, professor’s rate at that —of a law statement in an summary adopted article;4 was never referred to or as a holding of the Onita court. passage says: The entire Onita “Similarly, distinguishes misrepresenta- Professor Alfred Hill between by adversary by
tions made an in a who sales transaction and one holds out to general public supplies that he or she information and has noted: “ “antagonists.” ‘The situation is different the case of When the aggrieved person buyer, negligent per- complain is a who does not by misrepresentation formance of service but a seller induc- rather ing making contract, conceptual of a been different mold has inception options from the of modern contract law: the have been to sue deceit, ground consisting on the contract or to sue in without a middle applied Onita and concluded that
The trial court Conway and the were not business adversaries analysis. negotiating length. I fault that at arm’s cannot majority acknowledges Conway Even the uni- versity relationship, arm’s-length as were were not in an in right parties Onita, had a to receive accu- prospects regarding the uni- information his tenure from rate Certainly Conway versity. 241. should have Or at right rely tenure that he is enti- on information about articulated in contract to receive. Under the rule tled exposed liability was for its Onita, the nongratuitous supplier misrepresentation informa- as a tion. jury’s supports the deter-
The evidence in the record telling that his student evaluations mination university’s agent negligently problem,” the would be “no Conway’s goal misrepresented that was critical to fact *21 obtaining from that, indicates aside tenure. evidence negative plaintiffs evaluations, file contained no student material on which defendant could have based a termination jury gainsaid found, as the It cannot be decision. injury Conway’s profes- significant denial of tenure was Copeland professor. as a See John D. John sional career Ivory Murray, Getting From the Tower: The Jr., Tossed W. Faculty Implications Evaluating Legal Performance, (1996): 233, 238-39 Mo L Rev important “Obviously,faculty equally membershave an faculty process. Nontenured interest in the evaluation members are year-to-year employees and must be con- following their contracts about the nonrenewal of cerned faculty poor institutions, tenure track In most evaluation. specified do not achieve tenure within a members who only given period for one time are then terminal contracts year Those who are thus ‘tossedfrom of service. more Hill, Misrepresenta- Damages negligence.’ Innocent of actionable for (1973). 679,688 tion, L Rev 73 Colum misrepresentations allowing recovery made states that “Hill also contracts, especially bargaining process the law of would undermine 162. concerning 315 Or at written contracts. Id. at 717-18.” rules of law mention, require, Hill did not let alone passage clear that Professor That makes person supplier be a who holds out to nongratuitous of information must that a supplies general public information. that he or she ivory only tower’ are denied not prestige, security, tenure, financial benefits associated with but are stig- also being ‘unworthy’ matized as faculty members. As ‘tainted goods,’ prospects their of employment at other institutions of higher learning may very be limited.”
Like the trial I court, would uphold the jury’s verdict.
I dissent. respectfully
Fadeley, J., joins in this dissenting opinion.