Michele M. Pitts v. Farm Bureau Life Insurance Company and Donald Schiffer

PITTS, Appellant, Michele M.

FARM LIFE BUREAU INSURANCE Schiffer,

COMPANY and Donald

Appellees.

No. 11-0117.

Supreme Court of Iowa.

July 2012.

Rehearing Denied Aug. Fry of &

Christopher C. O’Connor Thomas, P.C., appellant. Dubuque, for Combs, Nayi- L. Nicole Nicolino Terri ma, Faegre Baker Ryan P. Howell of Moines, Daniels, appellees. Des ZAGER, Justice. requires us to determine

This case a life insurance owes a whether beneficiary intended of a life of care to the policy. Additionally, we must insurance agent life insurance can decide whether a misrepresentation negligent be liable for in- provides he information to the when beneficiary regard- and the intended sured beneficiary designation listed ing If we determine the life insurance beneficiary an intended is owed a agent life of care and that a insurance regarding the identi- providing information a defendant in ty beneficiary proper of a action, then negligent misrepresentation a there is a we must determine whether fact that would genuine issue material summary judgment. For preclude below, find that a life reasons set forth we duty of care to an insurance owes a beneficiary of life insurance a that a life insurance can policy and negligent misrepresentation. be liable for genuine we also determine that is- Since case, exist in this sues of material fact been summary judgment should not have granted. Background

I. Factual Proceed- ings. stipulation

Pursuant to a and order en- (Tom) Pitts became tered Thomas support payments for child responsible Pitts, daughter, the benefit of his Jamie part sup- As of his April born 1987. obligation, required Tom was to main- port $35,000 payable of life insurance to his tain long support as his child daughter for the child was obligation continued. Unless school, high pursuing designation further still in on the life insur- education, postseeondary this obli- support policy ance so that his daughter would no gation April end in would longer primary be the $35,000 first proceeds. Mi- 1993, Tom plaintiff, and the Michele chele Tom filled paperwork “believe[d] out (Michele), Pitts were married. That same complete change, this but [she did] Schiffer, they met with year, Donald know what he did with paperwork.” Farm agent for Bureau Life Insurance (Farm separate Michele claims that on Bureau), occasions life Company to discuss her Schiffer told and Tom Tom and inter- that Tom’s insurance. Michele were policy daughter no purchasing longer ested life insurance was listed aas benefi- satisfy support that would Tom’s child obli- ciary policy under the and that Michele provide gation a benefit to if Michele sole now the ex- These purchased she were survive Tom. Tom changes person occurred and over the Bureau, life insurance from Farm telephone. 30, 1993, August signed and on Tom passed After away Tom in November designation Tom’s listing 2007, Michele went to to Schiffer’s office primary beneficiary as the for daughter fill out the paperwork needed to claim the $50,000 in proceeds listing the first and proceeds the life of insurance policy. beneficiary Michele as the of the “balance Michele, Schiffer told allegedly pres- in the any.” of if proceeds, On December [the] parents, ence of her that she would be 28, 1995, completed Tom a new and filed full receiving the amount of life Tom’s beneficiary designation form. After the $108,000. proceeds insurance —about change, daughter primary Tom’s was the office, in While she was tele- Schiffer’s $35,000 beneficiary of the first insur- of life phone rang, and she heard him “Are say, ance and the to be proceeds, balance was you always sure?” and “Tom and I talked if paid to Michele she survived Tom.1 A percentages about for the he kids.” After change final written of was beneficiaries hung up telephone, Schiffer informed 13,1996, August made on but the terms of daughter Michele that Tom’s was still However, change illegible. are Mi- beneficiary $35,000 in primary for the first August not allege chele does that the result, Mi- proceeds and as a change primary removed Jamie as the $74,000. chele would receive about

beneficiary $35,000 of the first in proceeds. Schiffer, According to this was last 25, 2009, On November Michele filed beneficiary change designation that Tom Schiffer against suit and Farm Bureau.2 made, neither party produced any and has against alleged negli- Her claim Schiffer other written documentation regarding gence negligent misrepresentation, and change in subsequent beneficiary. against and the Farm al- claim Bureau Michele, leged liability under the doctrine re-

According shortly to after support spondeat superior.3 Farm Bureau moved obligation April Tom’s ended ' change Tom asked Schiffer summary judgment.. for Farm Bureau designation original complaint alleged 1. It if this is unclear 3.The also a breach was effective it does not that it was duty, show fiduciary which was dismissed in recorded at the home office Bureau. of Farm granting district order court’s Farm Bureau's summary judgment. motion not for Pitts has on, point this 2. From unless Schiffer’s indi- appealed ruling, this and will therefore we discussed, being vidual actions are "Farm Bu- alleged fiduciary consider breach of collectively reau” refers and Farm Schiffer duty. Bureau. statements, these summary judg- jury entitled Michele claimed a claimed it was negligence claim because the reasonably ment on the could find in her favor on the any change policy required negligence negligent misrepresenta- and writing signed by the owner. to be in tion claims. The district court denied the provided any had not evi- Since Michele motion, appealed. and Michele trans- We writing, Farm Bureau was dence of such court appeals, the case ferred under no which the district affirmed court. Michele argued that it did not Farm also Bureau review, sought which granted. further we Michele because she was not owe a any claim policyholder, therefore II. of Review. Standard negligent misrepresenta- granted The district court Farm matter of Farm Bu- tion as a law. failed summary for judgment. Bureau’s motion in the argued reau Schiffer was not also court’s grant “We review a district of a supplying infor- profession business or motion summary judgment for for errors of another in an guidance mation for the Solutions, of law.” Seneca Waste Inc. therefore, as a mat- advisory capacity ., Mfg. 410-11 Co Sheaffer law, be liable negligent ter of could not (Iowa 2010). grant A court should sum Finally, Farm Bureau misrepresentátion. mary judgment had Michele not come for- claimed that “if pleadings, depositions, answers to that she ward with admissible evidence file, interrogatories, admissions on of the first the intended affidavits, if together any, show $35,000 proceeds. in insurance genuine any no issue there is as to found that “[i]t [was] The district court that the moving party material fact and Mr. Pitts did not execute a undisputed that judgment is as a entitled to a matter of pri- make request to

written Plaintiff law.” and mary beneficiary” therefore Schiffer’s (quoting Id. at 411 Iowa R. P. Civ. daughter Tom’s as a failure to remove 1.981(3)). word's, summary judg- In other product negli- not a of beneficiary “was ment is “if appropriate the record reveals lack of gence, but rather from his resulted only legal a conflict concerns the conse- authority primary [her] to remove quences undisputed City of facts.” Ce- beneficiary without Thomas Pitts’ written of Inc., dar request.” granted Rapids Props., The district court then v. James 701 (Iowa 2005) (citations summary judg- motion for Farm Bureau’s N.W.2d omitted). entirety ment in its dismissed the internal quotation marks When case. grant decision to reviewing a court’s sum- mary judgment, “we examine the record in Iowa Rule of Proce- Pursuant Civil light to the nonmoving most favorable 1.904(2), dure Michele filed a motion to party legitimate and we draw all infer- of fact and conclusions enlarge findings ences the evidence bears order to estab- of claimed that as the in- law. Michele questions lish the of fact.” existence policy, Schiffer tended Moines, Kragnes City Des owed of care. Michele also her a (Iowa 2006). N.W.2d We also disputed there were issues of ma- claimed note the court should consider entry terial of sum- precluded fact that (cid:127) “such facts as would be admissible in evi- mary Specifically, Michele judgment. her, considering dence” the affidavits told when claimed that Schiffer her hus- band, summary judg- parents supporting opposing her that she was the 1.981(5); sole on the Based on ment. R. P. see also Iowa Civ. Chiropractic, ficiary. Palmer questions Kern v. Coll. are whether Schif- 2008); 656 n. 3 McCar fer negligent in responding to Tom’s Register v. Des Moines & Tribune ney made, request, oral if and whether Schiffer (Iowa 1976). Co., 152, 157 negligent misrepresentations made after allegedly receiving Tom’s oral request. Ruling. III. The District Court’s We therefore reverse the district The district court held Tom’s oral state- grant court’s of summary judgment on the impose duty- ments were insufficient to ground stated its initial change judgment. on Schiffer to If we reverse a policy. Specifically, the district court stat- district court’s decision to ed, grant summary judgment ground, on one however, may

It we still affirm undisputed ruling that Mr. Pitts did not on request execute a written grounds make Plain- alternative raised but not ruled on primary beneficiary. tiff the Thomas subsequently below and urged appeal. Pitts knew the procedures Kern, that he must 757 N.W.2d at 662. The district follow to make Plaintiff the sole benefi- granted court Farm Bureau’s motion for ciary, as he had previously changed his summary judgment based solely on the beneficiary designation under those fact that there nowas evidence of a writ terms on two separate occasions. Thus request ten beneficiaries. Hav Defendant Schiffer’s failure to act was ing summary judgment concluded on that product negligence, not a but rather error, ground inwas we must now turn to authority resulted from his lack of to the other grounds raised below to deter remove daughter] primary as the [Tom’s if they mine will support granting Farm beneficiary without Thomas Pitts’ writ- Bureau’s summary judgment. motion for ten request. granted Negligence The district court then Farm Bu- IV. Michele’s Claim. summary reau’s motion for judgment and alleged Michele that Schiffer owed both dismissed the entire case. her and Tom a to use reasonable granted The district court erred when it Michele, professional skill. According to summary judgment plaintiffs on all of Schiffer duty by “failing breached that to claims. claiming Michele was not change beneficiary take action to des- Tom proper procedures followed the and ignation upon Thomas J. Pitts’s request,” beneficiary actually had been to “failing necessary paperwork deliver the that, changed. claiming She was despite to Thomas J. Pitts to effectuate a change beneficiary designation, Tom intended in designation after [his] her policy. to be the sole of his request to make a change,” “failing and to According petition, to her negli- Schiffer’s display degree reasonably a of skill or gence and negligent misrepresentations ordinarily necessary performing as an led to daughter remaining Tom’s as the agent in the insurance business.” These primary beneficiary on portion a of the being failures resulted in Michele not des- proceeds of Tom’s life insurance at the ignated primary beneficiary as the for all death, time of his which caused her to lose n ' proceeds of Tom’s $35,000 proceeds. in life insurance The A. Did Schiffer Owe Michele question presented by this case is not as Duty a of Care? Farm Bureau claimed simple as whether Tom’s oral expression of beneficiary, that Michele was not the his desire to change on his Tom, policy was gave only duty effective or whether it Schiffer owed a and that authority Schiffer the duty bene- he did not owe a no Michele since 98 others, failure to conform to that relationship protect existed be-

agent-insured standard, cause, proximate damages.” Michele.4 The district tween Schiffer Kaczinski, v. Thompson 774 N.W.2d duty simply but stat- not discuss court did (Iowa 2009) (citation quo- 884 and internal that, failure to act was not a “Schiffer’s ed omitted). Thompson, In we tation marks but rather resulted negligence, product (Third) adopted the Restatement of Torts: authority to remove from his lack Harm Liability Physical and Emotional primary beneficia- daughter] [Tom’s and, general, rejected the use of fore- request.” written Pitts’ Thomas ry without seeability determining, when as matter grant affirmed the appeals court The of. law, duty not owe a party that one did finding there no summary judgment, Langwith Id. at 835. to another. an insurance to an by “duty owed National Insurance American General beneficiary of a life insurance intended Co., (Iowa 2010), supersed- 215 N.W.2d policy.” statute, 70, § by ed 2011 Iowa Acts ch. (codified 522B.11(7) § actionable claim of Generally, (Supp. at Iowa Code “[a]n 2011)), duty the existence of a we noted that when “is based negligence requires economic agency principles conduct on and involves to a standard of to conform argued appeal that contracted with the defendant. has not 4. Farm Bureau Here, recov- loss rule creates a bar to had a contract with Schiffer and the economic Tom Bureau, The economic loss rule is ery in this case. Farm but Michele did not contract general Schiffer, well-established rule Tom, on “[t]he based either or Farm Bureau. plaintiff who has ... that a suffered Second, claim is not as remote as Michele’s to another’s has economic loss due Innkeepers. rejected the claim in Nebraska legally injured in a manner which is not been alleged negligence at 504. Schiffer's See id. Innkeep- cognizable compensable.” Neb. by was the direct cause of loss suffered ers, Corp., Pittsburgh-Des Moines Inc. v. questions to an- Michele. These are difficult 1984). general "As swer, they difficult are made more rule bars re- proposition, the economic loss party fact that neither has briefed this issue. plaintiff covery negligence when the has potential problem regard- There is another only economic loss.” Annett Hold- suffered ing application of the economic loss rule Go, L.C., ings, Inc. v. Kum & recognized at in this case. We have least (Iowa 2011). partly rule is qualifications loss rule: three economic law.” prevent the "tortification of contract care arises out of a cases where the for this limitation on Id. Another “rationale negli- principal-agent relationship, claims of recovery '[pjurely economic losses usu- is that neg- gent misrepresentation, professional ally of a contract and result from the breach against attorneys ligence and account- claims ordinarily compensable in contract be should " Id. We have not held that these are the ants. actions, Van Sickle Constr. tort actions.’ not rule, only qualifications the however. See Inc., Mortg., 783 Co. v. Wachovia Commercial Sickle, id.; 783 N.W.2d at 692 n. see also Van 2010) (citation (Iowa omit- N.W.2d 693 professional negli- possible It that the 5. is ted) (alteration original). gence qualification may extend to insurance involving recently a case We have decided attorneys agents, well as or accountants. as rule. application of the economic loss the merits, Whatever the Farm Bureau has ”delineat[ing] precise contours Instead of appeal or the economic loss rule on raised rule in Iowa” we exam- economic loss court. Our rule is that before district case has "characteristics ined whether the argued appeal are deemed issues not bring scope the economic it within the Seering, See State v. 701 N.W.2d waived. Holdings, N.W.2d at loss rule.” Annett 801 2005). We decline to decide this may place of this case it 504. The features argued or to this case on an issue not briefed scope loss rule. outside the of the economic Accordingly, opinion as to First, we offer no court. there no chain of contracts between is Annett, would be whether Michele’s claim plaintiff In Michele and Schiffer. by loss rule. party, had barred the economic had with a third who contracted loss, duty analysis adopted by this an insurance agent is appropriate.” court in based [Thompson], on Restate- N.W.2d at 221. We held (Third) Liability Physi- ment of Torts: that it is for determine, the fact finder to Harm, cal and Emotional is not disposi- based on a consideration of all the cir- at 221 n. tive.” N.W.2d cumstances, the agreement of par- ties with respect to the service to be case, any duty In this that Schiffer owed by rendered agent insurance and to Tom or Michele would arise out of their whether service performed agency relationship agent, as insurance in- with the- skill knowledge normally sured and intended See possessed by insurance agents under (“[T]he Langwith, 793 N.W.2d at 219 rela- like circumstances. Some of the circum- tionship between an insured and an insur- may stances that be by considered agent ance is one prineipal/agent.”); see fact finder in determining undertak- Collegiate also Mfg. Co. v. McDowell’s ing of the insurance agent include the Inc., Agency, 857-58 nature and content of the discussions (Iowa 1972). Thus, this a case that “is agent client; between the and the based on agency principles.” Langwith, prior dealings parties, of the if any; the 793 N.W.2d at n. 3. Michele claims she knowledge sophistication $35,000 has suffered the loss of in life client; agent whether the holds himself proceeds, insurance which is a purely eco- out an specialist, insurance consul- nomic harm. Since this is a case based on tant, counselor; or and whether agency principles and involving economic compensation receives for addi- harm, rely we will not concept on the tional specialized or services. duty Thompson embodied in to determine (citation omitted). Id. at 222 if duty Schiffer owed Michele a of care. legislature The responded by amending scope of the duties an insurance Iowa Code section 522B.11.2011Iowa Acts agent owes his client recently has been the 70, § ch. 45. The new act “declares that subject litigation of both legislation. the holding Langwith is abrogated to Sandbulte Farm Bureau Mutual In- the extent that it overrules Sandbulte and Co., (Iowa 1984), surance 343 N.W.2d 457 imposes higher greater duties and re- by overruled Langwith, 793 sponsibilities on producers insurance than we agent’s held that an insurance “general those set forth in (empha- Sandbulte.” Id. care, is the duty to use reasonable added). sis The new subsection also states diligence, judgment in procuring the “[ujnless producer an insurance holds requested an insured.” specialist, oneself out as an insurance con- Sandbulte, 343 N.W.2d at 464. This sultant, or compen- counselor and receives could be expanded “when the sation for consultation apart and advice holds himself out as an insurance special- insurer, paid by from commissions ist, consultant or counselor and is receiving responsibilities duties and of an insurance compensation for consultation and advice producer are limited to those duties and apart premiums paid by from the insured.” responsibilities set forth in Sandbulte.” Id. In Langwith, we reexamined this re- added). Id. (emphasis approach strictive duty an insurance agent owes an insured and stated that “the These cases the statute ad general principles governing agency rela- dress what duties an insurance owes tionships insured, convinces us that a more flexible the not who the can be method of determining undertaking the liable to when those duties are breached. Iowa at 6 N.W.2d at duty controlling. case, scope of Schiffer’s the

In this in the is no indication clear. There Tom is Schiffer had modified Tom and record that Farm Bu- despite also note that We relation- principal-agent their scope the contention, claiming is not reau’s Michele agree- agency way. Since ship any in duty solely that Schiffer owed her a based Schiffer, modified, been had not ment member of the family her status as a him owed agent, Tom’s true claim is that Michele’s deceased. required skill as use of such particular an insured intends for a when object employ- of his accomplish of a life insur- person to be reason- he to exercise fail[ed] ment. If expresses and the insured policy, ance care, judgment in diligence, and able agent, to his or her life insurance desire task, principal to his for he is liable this in- insurance for the agent procuring thereby. damage occasioned any loss or the insured’s intended benefi- sured owes 857; N.W.2d at see Collegiate Mfg., 200 the insur- procure ciaries of care to 6; at 223 n. 793 N.W.2d Langwith, also now address requested. ance We

Sandbulte, at 464. 343 N.W.2d claim. as the intended ben claims that Michele by analogy that Schrein- Michele claims policy, Tom’s life insurance eficiary of (Iowa 1987), Scoville, er v. 410 N.W.2d 679 duty as well. We her a Schiffer owed owed her contention that Schiffer supports Farm Bureau’s acknowledge and dismiss care as the intended benefi- her a desig was not Michele claim that because $35,000 proceeds in from ciary of the first beneficiary for the primary nated as the case, life insurance In that Tom’s show $35,000 she cannot proceeds, in first Scoville, wit- attorney, prepared and an Tom intended to person that she was Schreiner, will. Mary nessed Eickholt’s $35,000 in beneficiary of the first be the The will left Schreiner 410 N.W.2d at 680. as the is not listed Michele proceeds. of real estate piece one-half interest $35,000 first beneficiary of the primary in the residue of a one-half interest in of Tom’s This is evidence proceeds. the will the estate. Id. Seven months after itself, fact, is not tent, in and of but this drafted, wit- prepared Scoville was Michele is not The fact that dispositive. that eliminated a codicil to the will nessed beneficiary only es primary named as of Eick- of the residue Schreiner’s share designated is not the tablishes that she left one-half holt’s estate but Schreiner’s necessary steps beneficiary Id. One in the real estate intact. interest change were not taken drafted, Sco- the codicil was month after to Michele. fact daughter from Tom’s partition an action for brought ville actually designated as is not that Michele Eight Id. months of the real estate. sale why Mi beneficiary does not establish later, was sold at property partition it beneficiary, nor does chele is not the year of the Eickholt died within a sale. Id. not intend Michele that Tom did establish sale, the codicil were and her will and Michele this to be the claims probate. Id. admitted intended, but his what Tom precisely was de- court found Eickholt’s The “[district negli frustrated Schiffer’s intent was adeemed when her vise to Schreiner had Thus, Kubin v. cases such as Ku gence. transformed property in the interest (1942), bin, 232 Iowa property in real into from an interest she plaintiff sought to show where the property.” Since personal interest the name “took action sufficient relating to express bequests are there were no beneficiary” policy, on the not of the personal property, the distribution of this of the main purposes “[0]ne which the proceeds part from the sale of became transaction between defendant and the the residue of the estate. Id. Since the testator intended to accomplish was to adeemed, property real had and the codicil provide for the transfer property of .to eliminated Schreiner’s of the resi- plaintiffs; share damage to plaintiffs in the due, Schreiner received nothing. Id. at event invalidity of of bequest foreseeable; clearly certain, it became upon death of the testator without suit, alleging

Schreiner filed that “Sco- will, change of plaintiffs would negligent ville was in failing properly have received the intended benefits but advise negli- Eickholt” and that “Scoville for the negligence defendant; asserted gently failed to draft Eickholt’s testamen- and if persons plaintiffs such as are tary way protected instruments in a recover, permitted to for the loss result- testamentary fulfilled her true intent.” ing draftsman, no from Id. Since Scoville and of. Schreiner did not ¡and so, one would be able to do attorney-client have an relationship, Sco- policy of preventing future harm would ville moved to dismiss for failure to state a impaired.” be claim, and the district court granted the motion. See id. Hamm, (quoting Id. at 682 Lucas v. 583, 821, Cal.Rptr. Cal.2d 364 P.2d review, On we began by noting long- (1961))(alteration original). standing rule that special “absent circum- considerations, collusion, light of these stances such as fraud or we con- an at- lawyer cluded that “a torney professional is liable for owes a of care malpractice added). direct, intended, specifically to a client.” Id. (emphasis stated, We identifiable beneficiaries of the testator as expressed in the testamentary testator’s privity requirement This flows from the instruments.” Id. That limited group of Supreme Court case of National Sav- plaintiffs be permitted bring would Ward, (10 Otto) ings Bank v. 100 U.S. “only claim when as a direct result 621, 623, 25 L.Ed. lawyer’s professional negligence the testa- (1880), premised upon and is two basic tor’s intent as expressed the testamen- First, requirement concerns. absent a tary instruments is frustrated in whole or privity, parties to a contract legal for in part and the beneficiary’s interest in the easily services could lose control over lost, diminished, estate is either or unreal- Second, agreement. their imposing a ized.” Id. at 683. specifically We noted general public upon lawyers that “a beneficiary who is simply disap- would expose lawyers virtually to a un- pointed what he or she received from potential limited liability. the estate will have no cause of action (citation omitted). time, Id. At the there against lawyer.” the testator’s was a allowing trend towards an intended beneficiary of a testamentary argues instrument Michele relationship between bring a claim “when testamentary insured, an an insurance agent, and the instruments themselves are rendered in- life valid in part whole or in as a direct result analogous relationship be- attorney error.” testator, Id. at 681-82. We tween a attorney, and the in- following justifications noted the for alter- tended testamentary in- ing the privity requirements in certain cir- analogy strument. This accepted has been cumstances: jurisdictions. other See Jones Hart-

102 Co., against have a cause of action 443 would not Accident Ins. & Life ford if (D.D.C.2006) Finally, these no cause of defendants.5 (noting that 3, 6-7 F.Supp.2d be maintained the intended action could duty attorney owes a an finding cases beneficiary, very purpose for which partic- a will are beneficiary of an intended be employed would insurance determining whether an ularly relevant frustrated. id. benefi- owes an intended Cf. insurance care). The duty of independent ciary an application to the In its resistance many similarities. share relationships review, argues Farm Bureau for further instrument, testamentary main a Like was correct when appeals that the court of transaction defendant’s of the purpose limited subsequent opinions it noted benefit the intended insured is to with the holding in Schreiner. The scope of our Schreiner, 410 See beneficiary-plaintiff. cited to Carr v. Bankers appeals court of Likewise, par- damage at 682. (Iowa 1996), Co., Trust 546 N.W.2d as policyholder, such than the McGrath, ties other 521 N.W.2d Holsapple and event of beneficiary in the 1994). Holsapple, we reiter In defendant. to the negligence, is foreseeable in expressed two concerns we ated the wills and life the case of both See id. In con parties might that the lose Schreiner: estate policies, the decedent’s that “the agreement, insurance their trol over bring the action. very duty general public little incentive a to the imposition has lawyers virtually because Tom’s to a unlimit significantly, expose More could See id. at liability.” as the beneficia- designated potential was not ed estate However, party plaintiffs and no we allowed the policy, life insurance 713. ry of the preparation in the of a negligence the estate was the intend- claim of has claimed that proceed because the quitclaim the estate deed policy, ed applicable to the case at bar. Des is not v. Bankers’ Ass’n 5. Duffie Life Duffie Moines, 19, (1913), First, negligence pre- N.W. 1087 160 Iowa the insurer’s in Duffie negligence brought ac- a a deceased's widow obtaining policy vented the deceased from company in both against a life insurance tion paid applied for and for. Unlike in he had capacity capacity and in her as individual an Duffie, alleged negligence did not Schiffer’s Duffie, 160 Iowa at the executor of his estate. obtaining pol- prevent an Tom from 21, alleged the com- 139 N.W. at 1087. She Thus, any icy. Tom’s estate has not suffered negligent processing of her husband's pany’s alleged negli- damage of Schiffer's as result dying prior to a application led to him damages gence. pre- The absence of would though "had being even the deceased issued bringing from a successful clude the estate required to obtain all that was of him done Second, negligence was decid- action. Duffie paying necessary including all fees insurance” Schreiner, if ed decades before Duffie submitting physical examination. today, might differ- were decided the result be 22-24, According to at 139 N.W. at 1087-88. light in ent in of that case. The widow Duffie widow, company “owed the the insurance application. in 160 Iowa at was named reject- applicant the either affirmative clearly She would 139 N.W. 1087. ing application accepting it within a or of direct, intended, qualify specifically iden- as a time, upon breach of such reasonable expressed in the written tifiable damages liable for all suffered [was] it Schreiner, 410 N.W.2d at instrument. See consequences breach.” Id. at of such 682. the widow at 1088-89. We held that N.W. in the North Western We also note that bring action on behalf of could plaintiff’s spelled "Duf- reporter, the name is estate, capacity individual but not her However, Duffy, fy.” See 139 N.W. at 1087. company timely any duty had to because reporter, plaintiff’s Iowa the official process application would have been owed Duffie, deceased, spelled "Duffie.” See name is the widow. Id. at Iowa at 139 N.W. 139 N.W. at 1090. “(1) relying performance was of alleged plaintiff the the the complaint custodial donor, identified, by as an for the legal protection the services of specifically their (2) intent; finances, jobs, the own and grantor’s reputations,” of the and object it was as a inappropriate impose was lost or diminished a expectancy duty to the Id. at professional negligence.” plaintiffs Summary of on the defendants. Id. result holding than limit in judgment 714. Rather the was therefore Id. appropriate. Schreiner, actually reaffirms Holsapple holding The in Carr does not address the namely duty in principles the found that case: a defendant owes to the intended intended, beneficiary of a identifiable of life insurance policy. that an Ad- against bring can an ditionally, exactly a transaction action Michele the person attorney despite the lack an attor- reasonably of Schiffer could know and fore- ney-client relationship relying professional the defendant. see was on his per- Therefore, her protection. formance for an in- dispute began Carr when imposing duty Carr is not at odds with a of advisor for the Iowa mis- vestment Trust care on Schiffer Michele in this case. over million in trust as- appropriated $65 sets, led to the removal of the which Farm argues Bureau also that “public 546 N.W.2d at Three trustees. 902-03. against a policy imposition advises the of trustees filed suit the cus- against They in this situation.” claim that attorneys and the for the trust todian recognizing legal duty “a exists be- claiming that the of misappropriation family tween an insurance and the was a result of on the negligence funds policy member a owner would create attorneys. the custodian and the part of potential sharp the conflicts of interest alleged The trustees defen- Id. policy express whenever the owner’s in- financial dants’ caused them family struction contradicts the member’s damaged and their damages reputations. added.) desire.” In ex (Emphasis J.A.H. they 906. The Id. at defendants claimed Associates, reí. R.M.H. v. Wadle & summary judgment were entitled to be- (Iowa 1999),we N.W.2d 256 were asked they did not a cause owe the trustees a determine whether minor child could sue care. duty of care provider a mental health for loss determining summary judg- parental arising whether out of negli- consortium appropriate, gent ment for defendants was treatment the child’s mother. 589 liability In determining we discussed limitations on N.W.2d at 257. whether provider imposed that were in Schreiner and Hol- the health care owed the child sapple. duty, analyzed relationship Id. at 906. we between We discussed eases, defendant, of those plaintiff rationale and we reaffirmed fore- harm, liability limited seeability public policy must be con- principle who were intended to siderations. Id. at 261-62. We noted that “specifically to those plaintiff from the Id. We even though benefit defendant [transaction].” other, “[njothing present in the record were with each privity noted that either or the lack of was not outcome privity shows custodian determina- [the attorneys] to answer it could have foreseen trus- tive. Id. We declined whether their in their performance tees’ reliance on to the defendants that foreseeable harmed if capacities.” individual Id. at 907. We child could be his mother re- improper held that without evidence that the defen- ceived mental health treatment public “could or have to consider reasonably proceeded policy dants know foreseen that the individual were considerations. Id. at 262. trustees Instead, argued claiming it was the interests ber. she is that Farm

The child pursue him to his her allow Bureau owed of care based on public such claims are beneficiary because as the “[u]nless claim her status intended the negligent ... harmful allowed circum- policy, the which is a much more may well continue unchecked treatment group. Imposing duty scribed a on insur- emotionally patient the is too al- because agents beneficiary ance to the intended harm that has recognize the taken tered to a life insurance not would threaten a rejecting “paternal- Id. such place.” relationship, insured —insurer nor allowing we noted that approach,” istic imposing duty create would such a of suit could create an inherent type this types loyalties” of “divided that led to our pro- interest a mental health conflict of for J.A.H., conclusion in J.A.H. See 589 con- Specifically, vider. Id. 262-68. at 264. N.W.2d might how cerns over treatment affect jurisdictions Other have found “that an might influence how thera- parties third from an intended can recover patients. treat Id. We also noted pists insurance agent other’s if the intended against a in order defend suit beneficiary can prove that intent to benefit by a third the doctor brought party, would him, her, was purpose or a direct patient privilege. violate need to doctor— agent transaction between the insured and “[eliminating Id. concluded that We negligence.” mid the other elements of loyalties and main- potential for divided Parlette, 628, v. Md.App. Parlette 88 596 outweigh ... taining confidentiality far (Md.Ct.Spec.App.1991); 670-71 A.2d nonpa- harm to any threat of foreseeable Holmes, 12 Ap also Eric M. Holmes’ see family tient Id. at 264. Ac- members.” 2d, § pleman on Insurance at 333- held, law, matter of cordingly, we “as a (1999). noted, As one has 35 commentator duty running there is no from a mental critical establishing element in a [t]he provider nonpatient family health care duty a third party [to who claims have members.” Id. damaged by agent’s been failure to potential were also We mindful procure foreseeability is the insurance] professional relationship to the be- “threat potential plaintiff. of harm to a Liabili- lawyer” tween the testator and will not lie ty against an [insurance if might exist “intended beneficiaries” if agent] injury a third-party’s loss against attor- bring were allowed suits not foreseeable. Schreiner, at 682. neys. 410 N.W.2d We Jeffrey Mootz, E. 1 Thomas & Francis J. are mindful of the same concern here. Appleman New Law Li- on Insurance against imposing Farm Bureau a cautions (2011) 2.07[1], § brary Edition at 2-84 family to all on insurance members (footnotes Appleman omit- [hereinafter ] claiming agents, produce it will conflicts ted).6 Requiring plaintiff to show that agents. accept if we for insurance Even was the contention, she intended is point Farm Bureau’s in- agent transaction between the and the this case. Mi- relevant outcome of sured, she owed was aware arguing chele is not family on her mem- status as beneficia- plaintiffs based status as the intended 2009), opportunity 6. We take this to reiterate that 829 based on Restatement duty analysis (Third) in this case is Liability Physical "[b]ecause of Torts: agency principles and involves Harm, based eco dispositive.” Lang Emotional is not loss, duty analysis adopted nomic this with, at 221 n. 3. Kaczinski, Thompson court in tract, ry, potential plain- limits the universe of but one as to whom the insured tiffs to those who would be foreseeable to intended to gift by way make a of insur- agent. Any the insurance communication ing his life for same.” plaintiff between the and the insurance Basse, (quoting Bosse v. Ky. regarding coverage the insured’s (1933))(alteration S.W.2d in origi- plaintiffs as the status insured’s nal). makes harm to the Iowa’s compliance” “substantial doctrine plaintiff agent procuring foreseeable to the has been summarized as follows: (“Courts coverage. the insurance See id. It is apparently the law in Iowa that generally are reluctant [agents] to hold where it appears that an clearly insured liable to third-parties negligence theo- intended to change the beneficiary specific ries absent communications be- in a policy named of insurance permit- third-party tween the and the [agent] (foot- ting change, such a coverage prior about the to be and that procured.” his omitted)). Also, disagree on how these minds could able in limited circumstances. We parties third fact should be resolved. Seneca issues of hold that an insurance therefore Solutions, 791 at 411. Mo N.W.2d Waste beneficiary of duty to the intended owes a summary judgment must also be tions in limited circum policy life insurance a on admissible evidence. decided based Ins. Co. Olympic See stances. United Life Kern, 1.981(5); P. see also Iowa R. Civ. Gunther, 92-36710, No. 1994 WL at 656 n. 3. We now examine 757 N.W.2d (9th Cir.1994); Jones, 443 at *2-3 case to the admissible evidence this 7; Parlette, A.2d at 670- at F.Supp.2d minds could determine whether reasonable was the in disagree on whether Michele potential limit the lia In order to policy. entire beneficiary tended of the insurers, inter bility avoid conflicts of opposing In affidavit Farm Bureau’s her ests, with the insured- and not interfere summary judgment, Michele motion for require we will a relationship, insurer 2005, shortly after his April claims that in the that he or she was plaintiff show ended, obligation “Tom asked support “direct, intended, identifi specifically beneficiary designa- change Schiffer well as beneficiar[y]” policy able of the that Jamie Pitts would policy tion on his so negligence. elements other beneficiary of the longer primary no be the 682; Schreiner, 410 see also $35,000 Michele be- proceeds.” first Further, Parlette, 596 A.2d at 670-71. necessary paper- lieved Tom filled out evidence from the plaintiff produce must complete change beneficia- work to written instrument itself that indicates what he with ry, but she does not know did plaintiff beneficiary is the intended that it. Michele claims Schreiner, at 682. If meeting a in 2006 Tom came home from that he or she is plaintiff cannot show then beneficiary policy, the intended and told that [her] [she] with Schiffer that the insurance does not owe from proceeds all of the would receive plaintiff duty a of care. he life insurance when [Tom’s] told passed away.... [Michele] Tom Summary Judgment B. Was told he sure because Schiffer was Appropriate? she was the Michele claims the sole him that was now [Michele] policy, of the entire beneficiary. $35,000. Bureau including the first Farm that two weeks after Michele also claims disputes claim and states that Tom’s this Tom, Schiffer confirmed beneficiary of Schiffer met with daughter was the intended her in a conversation that court telephone granted summary district judgment longer was no a under Jamie and dismissed the case based on a lack of claims policy. She further that Schif- part a on Farm Bureau’s to make a continued to her that she was the fer tell change in It beneficiary. therefore never policy after beneficiary on the Tom’s sole decided the limine motion in and did not office, In a meeting death. in Schiffer’s address the hearsay claims Farm Bureau explained to Michele that she Schiffer Likewise, raised. the district court did receiving be the full amount would of not address whether Farm Bureau’s claim life which proceeds, Tom’s any statements Tom or Schiffer may $108,000. during about It was this meet- have regarding made des ing that Schiffer learned Tom’s ignation were under par- inadmissible daughter listed a Jamie was still as benefi- ol evidence rule. In order to determine ciary telephone when he call received merits of the motion for summary from Farm Bureau. judgment, we must review the evidence interrogatory, Michele offered Michele to determine whether normally Schiffer what he procedure asked it is admissible and whether the admissi when an insured makes an oral follows genuine ble evidence factual creates dis request Schiffer pute. responded, orally requests If an insured a change by examining appli We start in his or her life beneficiary insurance cability of the parol evidence rule to Mi designation, I inform insured that negligence parol chele’s claim. “The evi such a change may be made in rule dence forbids use of extrinsic evidence writing by the owner of the policy. If to, vary, add or subtract from a written go the insured desires to forward with agreement.” Racquet I.G.L. Club v. Mid the change, I work with the insured to Builders, Inc., states complete paperwork necessary (Iowa 1982) (citation quotation and internal make the submit change, and the writ- omitted). marks does dispute Michele not request ten to Farm Bureau’s home of- the beneficiary designation that on the pol fices. icy daughter indicates Tom’s is still the reply its support brief in its motion $35,000 primary beneficiary of the first summary Farm judgment, Bureau proceeds. seeking She is to use not ex that the claimed statements Tom made to vary trinsic evidence to the terms of the regarding Michele desig his policy; seeking she is to use extrinsic evi hearsay, nation are or a vio inadmissible negligence dence show that Schiffer’s is rule, parol lation of the evidence reason of the policy the terms still therefore the could statements not be daughter primary include Tom’s as the considered when on a motion for ruling beneficiary. theory liability, Under this summary day judgment. One before the parol evidence does not bar rule granted summary court judgment district admission of Schiffer’s statements to Tom case, and dismissed the Farm Bureau Michele, or other evidence of Tom’s filed a motion in limine to any exclude daughter intent to pri on the remove his as the by ground statements made Tom they hearsay.7 mary that are inadmissible argued alleges Farm Bureau has not Schiffer Schiffer’s statements Michele made reviewing statements to Michele constitute inad- to her when the motion would for sum- Therefore, hearsay. mary judgment. missible we will consider 5.803(3), intent statements of declarant’s of the argues that several Bureau

Farm prove relies “to declarant Michele to act are admissible representations oral alleged are out-of- summary judgment action.” 7 Laurie in the intended engaged on to defeat for their truth Series, offered Dore, statements Practice Evi- Kratky court Iowa inadmissible hear- (2011) constitute 5.803:3, and therefore (citing § at 836-37 dence 5.801(c), 5.802. Rs. Evid. Iowa say. See the doc- applying cases state and federal claims that “[t]o also Farm Bureau Ins. in Mutual Co. trine established Life these statements argues Plaintiff extent Hillmon, 12 S.Ct. 145 U.S. Pitts’ intent Mr. to show are offered (1892)). Since Tom’s statement L.Ed. 706 beneficiary or sole as the name Plaintiff his intent to remove his own demonstrates so, they are he had done his belief beneficiary once his primary as a daughter It notes that immaterial.” irrelevant ended, obligation it is admissible support express Mr. Pitts to required policy “the his steps he took to remove prove submitting signed written his intent beneficiary of the daughter primary as the beneficiary designa- change his request to $35,000 life proceeds of his of the first is tion, that he did not do so the fact Michele’s affidavit also case.” in this dispositive all she “would receive states that Tom said Tom claiming Michele is Again, his life insurance proceeds from on his successfully changed away.” This state- passed when he policy or sub- by complying, life insurance to show also be admissible ment would She with its terms. stantially complying, give intent Michele all Tom’s to be intended her claiming that Tom policy. Iowa of his life insurance proceeds poli- of the entire primary 5.803(3). R. Evid. prevented cy, and Schiffer’s Tom’s intent and occurring. that from statement to Tom would Schiffer’s pri- named as the who was belief about party opponent be admissions of a are both beneficiary policy on his mary hearsay rule from the would be excluded considerations. and material relevant 5.801(d)(2). However, Tom re rule under mind, the statements in this use of With Michele, inter layed those statements to claim that Farm Bureau’s we now consider hearsay. of In order posing layer another in Mi- the evidence contained some of admissible, the statements Tom to be inadmissible chele’s affidavit constitute fall another made to Michele must within hearsay. hearsay exception or to the exemption Farm Bu The first statements only possible The ex rule. Id. r. 5.805. hearsay are reau claims are inadmissible found applies exception that is the ception to Schiffer at alleged Tom’s statement 5.803(3), makes admissible in rule which support child meeting in 1993 “that declarant’s then ex- statement [a] by life was to be secured obligation emotion, sensation, mind, isting state of daughter] turned insurance until [Tom’s (such intent, as condition physical or Schiffer to remove 18” and that Tom asked motive, design, feeling, mental plan, beneficiary of as the daughter primary his health), not includ- bodily but pain, obli policy support the entire once his memory or belief to ing a statement of Mi because he wanted gation terminated or believed the fact remembered prove beneficiary of the be the sole chele to execution, revoca- it to the unless relates of the declarant’s proceeds. Statements tion, identification, of declar- or terms hearsay to the rule. exception intent are an 5.803(3). will. rule ant’s R. Evid. Under Iowa added). 5.803(3) 5.803(3). Michele (emphasis Therefore, version of any Id. r. rule of his admit Tom’s statement may seeks to Schiffer statements that have made to to memory of what Schiffer said belief or relayed Tom that then Tom to Michele are it. This actually Schiffer prove that said hearsay. inadmissible excluded expressly statement type of Even Tom’s Mi- without statement exemption, “unless it relates from the that, Schiffer, according chele was she execution, revocation, identification, or now the primary beneficiary of the entire declarant’s will.” Id. terms of is still policy, enough there evidence to state- acknowledges Michele that Tom’s dispute create a factual over who Tom’s of a will. ment does relate to the terms (not actual) beneficiary was and However, that relate to argues she it does expressed whether he intent to Schif- of a life designation fer. There are also statements from Schif- of rule policy scope and that the fer herself to Michele where he stated that 5.803(3) include should be extended to now the Michele was sole like statements Tom’s. See Primerica Life alleged by The admissions Schiffer would Watson, Ins. 362 Ark. Co. admissible. also be (2004) 443, 447-48 (applying S.W.3d above, As noted Michele must point also the de- exception relating statements to evidence in the written instrument itself statements his beliefs regarding clarant’s her that identifies as the intended benefi- of a life insurance about ciary According entire policy. Primerica, In policy). the court noted the last written designation, 'that court statements of a declar- out the primary beneficiary are not the Michele was all ant’s belief admissible under 803(3). found in rule at 447- exception $35,000 proceeds, pay- but which were However, law, “provi- under Arkansas daughter required by able to Tom’s refer- sions in life insurance contracts with words, intent, court In other order. Tom’s benefi- changes ence to beneficiaries itself, expressed policy in the in the will and ciaries are nature a last Michele receive all proceeds would and, therefore, ‘are construed in testament except required for those were with the rules applicable accordance payable daugh- be court order to to Tom’s ” (quoting construction of wills.’ Id. at 448 support ter. when Tom’s child Wampler, 254 Am. Found. Ins. Co. v. Life ended, obligation longer Tom was no re- (1973)). Ark. S.W.2d quired any to maintain life insurance nam- found court thus the declarant’s state- ing as the Thus daughter his belief about his life ments of the terms of in- policy provides the evidence that Tom policy admissible under the ex- proceeds that re- tended for all were not hearsay the rule. ception to satisfy his obli- quired support to child to the interpretation This runs counter to gation paid to be Michele. 5.803(3), which, language of express rule Mi Having established terms, its admits “a statement writ produced chele has evidence from the memory prove or belief to the fact remem- itself in ten instrument that she was the believed bered or it relates [if] beneficiary, we the tended now turn to execution, revocation, identification or question summary judgment whether terms of declarant’s will.” lan- When appropriate. clear, the rule is guage of we need summary entitled to party judg- A is meaning beyond search for the words genuine ment the record shows no adopt therefore Ar- when used. We decline to expanded interpretation of its fact kansas’s issue of material and that the mov- dispute whether as a Michele and Schiffer judgment to a is entitled ing party change beneficiary deciding “In whether Tom intended to law.... matter of fact, material requested issue of and whether he to genuine his there is nonmoving ... policy. They afford[s] court of his change the rec- every legitimate inference party Schiffer dispute representations what ord will bear.” regarding Michele the status of made to Depending on (citations beneficiary designation. Kern, at 657 omit- are resolved it case, disputes how these factual ted) (alteration In this original). to infer that Schiffer’s might be reasonable admissible evidence produced Michele has Michele was the reason that his beneficia- change to that Tom intended an inter- response primary to designation. In was not ry if an Accordingly, insured there were dis- policy. Schiffer stated entire rogatory, change to a benefi- request summary an oral made issues of material fact and puted in- would inform the he ciary designation, inappropriate. claim was judgment on this must be made in request such a sured that Negligent Misrepresen- Michele’s V. then “work with the

writing and he would tation Claim. paperwork neces- complete insured and submit the make the sary change, negli a claim of Michele asserted Farm Bureau’s home request written Farm Bu gent misrepresentation against claims that she believed Michele offices.” Schiffer. Farm Bureau moved reau and complete paperwork out the Tom filled count, on this al summary judgment not know what he but she does change, undisputed material facts es leging “[t]he Further, produced she has with it. did negligent misrepre tablish that Plaintiffs that after Tom met evidence admissible also be dismissed sentation claim should Schiffer, told her that she Schiffer a matter prove, Plaintiff cannot because beneficiary of the entire primary was the law, that she was harmed in a transac policy. December party.” tion with a third its factual allega- all of Michele’s Assuming decision, the court did not district true, it reasonable to infer that tions are is misrep specifically negligent address the change he wanted to Tom Schiffer told Instead, issue. after deter resentation It is also reason- of his act was based mining Schiffer’s failure to responded that Schiffer as he able to infer authority, the court stated on a lack of and that he interrogatory indicated in his hereby matter dismissed.” One “the with the neces- provided paperwork Tom later, en week Michele filed a motion to beneficiary, paper- sary disputed facts large, claiming there were Tom filled out. work that Michele believed Mi summary judgment precluded alleged statement Based on Sehiffer’s negligent misrepresentation claim. chele’s Michele, to infer that it is reasonable denied. The motion was provided that Tom had Schiffer believed begin our discussion We will necessary to make paperwork him with the negligent of of with a brief review the tort with provided If Tom Schiffer change. negligent mis misrepresentation. When necessary his paperwork personal injury in representation results but the designation, treated damage, the claim is property or designation changed, was not it is reason- any negligence claim. Van like other negligence able to infer that some v. Wachovia Commer beneficiary Sickle Constr. Co. led to Tom’s part Schiffer’s Inc., 684, 690 Mortg., 783 N.W.2d cial designation remaining unchanged.

m 2010). (Iowa “However, (Second) negli- when Restatement § of Torts at (1977).8 gent misrepresentation only interferes 126-27 This definition does not interests, intangible rely economic courts on “the traditional foreseeability limi- developed have more applicable restrictive rules of tation claims” but recovery.” Id. Iowa first recognized the instead limits “the group of persons to Kanne, tort in Ryan liable, 170 N.W.2d whom may [a] 895 defendant be short of (Iowa 1969), adopted foreseeability the definition the possible harm.” Sain (Second) Dist., found Restatement v. Cedar Rapids Cmty. of Torts Sek 626 (Iowa 2001) (citations Ryan, section 552. 170 N.W.2d at 403. N.W.2d Restatement, According to the negligent internal quotation omitted); marks see misrepresentation Sickle, is defined as follows: also Van 783 N.W.2d at 690.

(1) who, One in the course of his busi- past Our cases have only held that those ness, profession or employment, or in who “in are the business of in supplying any other transaction in which he has a formation to others” can be liable for neg interest, pecuniary supplies false infor- ligent misrepresentation. Meier v. Alfa- guidance mation for the in Laval, Inc., others transactions, 1990).

their subject business is explained We have the need for a liability pecuniary for loss caused to more restricted view of liability: by them justifiable their upon reliance narrowing This of the universe of poten- information, if he fails to exercise tial defendants liable negligent mis- competence reasonable or in obtain- care representations promotes fairness ing communicating the information. ensuring that those liable are those (2) (3), Except as stated in supply Subsection who information in advisory (1) the liability capacity stated in Subsection “manifestly is and are aware” of limited to loss suffered how the information will be used and to supply purpose.” “intend[ ] it for that

(a) by person or one of a limited The restriction also ensures that those group persons for whose benefit and position liable are “in a weigh the use guidance he intends supply the infor- against for the information magni- mation or recipient knows that the in- tude probability of the loss it; supply tends to might attend the use information (b) through reliance upon it in a if it is incorrect.” transaction that he intends the informa- Sickle, (citations Van tion to influence or recip- knows that the omitted) (alteration original). ient so intends or in a substantially simi- ' lar transaction. When determining whether (3) The liability of one who is a person under is in the business of in supplying public duty give others, the1information ex formation to we consider several by any tends to loss suffered of the class factors. distinguish We between relation persons for whose benefit ships arm’s-length are and adversari created, any Sain, advisory. transactions in al and those that are which it is protect intended to them. N.W.2d at 124-25. We also' consider 8. While this case concerns the existence of a economic loss. We will therefore continue to duty, concepts relating that are principles developed use the we have based (Third) discussed in the Restatement of Torts (Second) on section 552 of the of Restatement apply to those situations where tortious con- Torts. harm, physical duct causes and emotional

112 time negotiations. infor- to the At the Schiffer providing the person whether the Tom, relationship use their manifestly policy aware of the sold the mation “is and in- put, buyer, relationship will be that of seller and a information was that the purpose.” it for that clearly arm’s-length and adversari- supply that is. tends whether the defen- al, consider opposed advisory, at 125. We in nature. plaintiff to the information states, gave dant “The transaction Farm Bureau incidental to a different “gratuitously in purchase at issue this case is ap- have also found it Id. We service.” Policy from Schiffer.” If that were the defen- the role the propriate to consider case, a proper then Schiffer would not be alleged when mis- dant was playing negligent misrepresentation in a defendant Meier, See 454 representation occurred. action. a (determining whether at 581 N.W.2d However, not claim Michele does lie where the defen- would cause of action misrepresen negligent that Schiffer made in his “role as a suppliéd dant information in purchased policy Tom tations when merchant”). retail point in 1993. She claims that at some accountants, appraisers, found We have 2006, daugh her that Tom’s Schiffer told and investment school counselors guidance longer primary ter no potential fall within this class of brokers all Tom was point, on the At 126; Sain, 626 N.W.2d at defendants. already relationship an insured. “[T]he Savings & Loan Fed. Larsen v. United an insured and an insurance between (Iowa Ass’n, 281, 287-88 300 N.W.2d Lang agent principal/agent.” is one of 408; 1981); at Ryan, 170 N.W.2d with, (citing Collegiate at 219 793 N.W.2d Co.,& 445 D. Jones v. Edward McCracken 858); v. Mfg., 200 N.W.2d at Wolfswinkel (Iowa 375, 376, Ct.App.1989). 382 N.W.2d (Iowa 1970) Gesink, 452, 180 456 N.W.2d However, to allow a suit have refused we (“The on the agent or broker is liable where the negligent misrepresentation for agent he is the of the insured theory that a retailer in the business defendant was he for a and that owes negotiating merchandise, servicing a seller selling and reason principal to his exercise misrepresentations pursuant who made skill, care, diligence effecting able business, nego officer a bank the sale of insurance.”). keep We will Schiffer’s a bank cus guarantee a loan tiating as Tom’s mind when consid role tomer, negotiating with an employer or an “ whether he was ‘in the business of ering Mount, Fry v. employment. employee to others’” at the supplying information (Iowa 1996); Free 554 N.W.2d 266 were alleged misrepresentations time Young, 516 man v. Ernst & N.W.2d Sickle, made. Van (Iowa Miller, 1994); Haupt 582). Meier, (quoting 454 N.W.2d at Meier, 1994); 454 N.W.2d at 581. jurisdictions recognized Other have can negligent misrepresentation actions be falls

A life insurance somewhere intermediaries. brought against insurance one two On the. groups. these between 2.05[2][d][i], (listing § at 2-33 Appleman, retailer, hand, agent, like a an insurance action). permitting cases the cause sells to a customer. This .product Iowa, jurisdictions apply Like these arm’s-length transaction —the clearly misrepresentation negligent definition of give cannot rise to type relationship Restate- that is found in section 552 misrepresentation. negligent an action for (Second) See, e.g., Torts. Merrill ment Any given prospective information Ins., App.3d E. 87 Ohio time would be incidental v. William Ward customer at this

H3 743, (1993); 622 N.E.2d 748-49 Nast might loss that attend the use of the Co., v. State Farm Fire & Cas. 82 S.W.3d (citation information if it is incorrect” (“We (Tex.App.2002) perceive no omitted)). internal quotation marks why reason section 552 should not apply We conclude Schiffer is among the class agents.”). Privity insurance of contract of defendants against whom an action for between the insurance and the party negligent misrepresentation may be to whom the misrepresentation was made brought. When Schiffer allegedly made is not required maintain an action the misrepresentations at issue in this against agent. Aesoph insurance case, he was acting as an insurance agent (S.D. Kusser, 656-57 providing information regarding the identi- 1993). Instead, such a arises out of ty beneficiary of a of a life insurance policy relationship parties, arising “the of the out to both the insured and the intended bene- otherwise, contract or must be such that ficiary The information was good in morals and conscience the one has “ provided therefore ‘in the course of his right rely upon the other for infor ” business,. profession or employment.’ Id. mation, giving and the other the informa (Second) (quoting at 690 Restatement (citation give tion to it with care.” Id. Torts, 126). § at The information omitted); quotation internal marks see Schiffer Merrill, provided was not given for his also N.E.2d 748-49. own benefit but was instead provided for holdings These are consistent with our the benefit of Michele and her husband. limiting liability rule to those in the busi- Sain, See 626 N.W.2d at 126 (noting that a supplying ness of information. When “school counselor does not act for his or allegedly Schiffer advised Tom and Mi- benefit, her own provides but information chele that Tom’s daughter longer was no students”). for the benefit of Schiffer did the primary beneficiary policy, on the he directly receive payment for the ad- functioning as Tom’s agent. The advi- vice; however, sory nature of principal-agent pecuniary relation- defendant’s ship supports allowing a claim of negligent interest in providing the may information Sain, misrepresentation. See 626 N.W.2d be indirect. Id. How the information at 124-25. Michele claims Schiffer knew possible would be used and the harm that that Tom intended to remove his daughter might result if the provided information he primary beneficiary as the in favor of Mi- was incorrect were both foreseeable. Cor- chele. The logical consequence of telling rectly informing the policyholder or the Michele and Tom that daughter Tom’s had identity as to the primary been removed as the on a life insurance would be that Tom would not make further critical- information that is essential efforts to daughter remove his pri- Schiffer’s as an role mary Thus, Schiffer would “is not incidental to some more central have to be “aware of the use that function provided or service” he to Tom. information put.” will be Id. at 125. The consequence providing incorrect infor- though Even Michele was not the mation regarding identity of the bene- policyholder, proper plaintiff she is a in an ficiary of the policy is obvious and would against Liability action Schiffer. for negli clearly be foreseeable to Schiffer. See gent misrepresentation is to loss Sickle, “limited Van 783 N.W.2d at (restricting suffered ... ... possible person for whose defendants to “in position those to weigh guidance the use for benefit and the information in [the defendant] against the magnitude probability to supply tended] the information or supply grant intends to Since the district court’s decision to recipient

knows that Sickle, (quot- at 690 783 N.W.2d summary judgment it.” Van cannot be sustained on (Second) § of Torts ing Restatement ground, the district court’s an alternate 126-27). alleged misrepresenta- reversed, and the case re- decision is made to Michele were that Schiffer tions manded. busi- in the course Schiffer’s also made

ness, on these state- reliance and Michele’s Respondeat Superior. VI. foreseeable. Once Mi- equally were ments daughter Tom’s was no told that chele was respondeat superior against Pitts’s claim poli- on the longer primary along Farm Bureau was dismissed her husband no reason to ask cy, she had misrepresen- negligence negligent change policy further action to take long As as Schiffer’s liabili- tation claims. insurance on her obtain additional or to unclear, impossible it is to re- ty remains if Tom from another source life husband’s summary judgment. solve this issue on necessary steps to take the refused court’s order Accordingly, district dis- beneficiary designa- effectively claim is reversed as well. missing this named as the beneficia- Michele was tion. proceeds beyond that any amount of ry of Disposition. VII. necessary to child secure Tom’s which was infor- When asked for support obligation. granted when it The district court erred potential other beneficia- regarding mation summary judg- Farm Bureau’s motion for ries, “to exercise was under Schiffer ment and dismissed the case. There is a repre- accurate provide care to reasonable genuine dispute issue of material fact existing information sentations about bene- to whether Michele was the intended Merrill, by him.” was ascertainable which of Tom’s ficiary proceeds of all at 749. 622 N.E.2d Schiffer’s led to and whether dispute rep- what Schiffer and Michele carried out. There being Tom’s intent made to her. Mi- Schiffer resentations dispute a factual over whether is also alleges that she asked chele’s affidavit misrepresenta- negligent Schiffer made still daughter Tom’s Schiffer whether ma- disputes to Michele. These over tions poli- under Tom’s primary summary judgment inap- make terial facts daugh- Tom’s cy told her that and Schiffer Having found no propriate at this time. beneficiary under the longer ter “was no on which to affirm the ground alternative interrogatory, policy.” response grant summary judg- court’s district may that while Michele Schiffer stated ment, the dis- we reverse the decision of from time to telephone have answered court, trict vacate the decision of the court Tom, he could not time when he called the case for fur- appeals, and remand may conversations he any specific recall proceedings. ther subsequent to Tom have had with Michele is, life insurance. There purchasing the OF AP- OF COURT DECISION therefore, fact issue of material genuine VACATED; PEALS DISTRICT COURT told Michele that as to whether Schiffer AND CASE JUDGMENT REVERSED primary daughter longer Tom’s was no REMANDED. disputed on the This outcome of clearly fact is material to the justices except All concur is therefore Summary judgment

this case. Seneca, C.J., MANSFIELD, J., CADY, this time. See inappropriate at WATERMAN, J., Solutions, who dissent. at 411. Waste

H5 (or MANSFIELD, (dissenting). here, Justice that the testator grantor) the attempted put to the donative wishes I dissent. For the reasons respectfully into effect and failed to only do so be- herein, I would affirm the well- stated intervening cause of the of negligence a of appeals. reasoned decision the court of

lawyer. Majority Incorrectly I. Elimi- The Id.; Co., see v. also Carr Bankers Trust Require- Legal the Previous nates (Iowa 1996) 546 (noting N.W.2d 906 that the ment Plaintiffs as Status in Holsapple that “the spe- claimants were Beneficiary Asset Intended cifically identified and the extent of their Appear in Had the Decedent’s interest known [and was that t]he claim- Written Documentation. undisputably ants were objects the of majority’s opinion is The an unwarrant- intent”). short, clients’ donative prior not an of exist- expansion, application, ed negligence Iowa law pu- allowed claims by Scoville, ing Iowa law. In Schreiner v. we tative beneficiaries to the extent the attorney an a will held that who drafted plaintiffs status as recipient intended interest in a benefi- leaving property the property in was revealed the written ciary be liable in for fail- could instrument. ing steps to take additional protect majority changes The that law. It does beneficiary’s interest property when the by removing so the limitation that was sold before the testator 410 died. intent to for the provide beneficiary must (Iowa 1987). 688 We said N.W.2d “expressed have been in” in- the written lawyer that “a owes of care Holsapple, strument. See 521 N.W.2d intended, direct, identifi- specifically case, 713. In this the life insurance able ex- beneficiaries the testator as $35,000 left concededly to Tom’s pressed testamentary in- in testator’s daughter, not Michele. The daughter, added). Id. at (emphasis struments.” 682 Michele, “expressed” beneficiary was the stated, intent, We further “If the testator’s $35,000. Nothing in the transaction expressed instru- testamentary documents indicated that Tom intended ments, fully implemented, is further no $35,000. Thus, Michele to receive the we challenge will be at 683. allowed.” Id. do not have a situation as in Schreiner We reaffirmed the same basic limitation pre- Holsapple plan where written was McGrath, v. Holsapple pared simply neg- and thwarted due to the 1994). 713-14 There we held ligence Holsapple, professional. of a See grantees quitclaim of a could named deed Schreiner, (citing at 713 410 attorney prepared sue the who the deed 682-83). Instead, N.W.2d at we have negligently but failed to have it notarized. swearing contest over whether a indicating Id. While that could Schreiner requested the written over plan applied be inter vivos as well as testa- failing carry who is to blame for transfers, mentary we also the lan- quoted change into effect. guage from Schreiner that the had plaintiff “ points ‘specifically majority to be a The out that Michele identifiable’ beneficia- ry in the expressed ‘as testator’s testamen- was but designated beneficiary for all $35,000 tary (quoting instruments.’” Id. at life proceeds. Schreiner, 682). 410 N.W.2d at We said goes majority emphasize on to than more plaintiff produce “the must evidence from

an unrealized the written instrument itself expectation of benefits that indicates shown; a plaintiff plaintiff must be must show the is the the intended bene improperly advised a worthwhile limita- This is policy.” who is not benefi they that someone were the actual means ficiaries that tion. It documentation the written ciaries); & Acci referred to Jones Life Hartford not have a cause of (D.D.C. will Co., as a F.Supp.2d dent Ins. fact that not erase the it does But action. 2006) that “she was the (plaintiff alleged the law. Under expanding majority policy); under the Sun beneficiary” named law, was question salient prior our Barnard, v. Assurance Can. Life expressed instrument the written whether 681, (holding (La.Ct.App.1995) So.2d beneficiary of her the to make an intent liable to agent could be that an insurance ie., $35,000. issue, See at the interest life insurance beneficiary of a an intended Thus, today’s Carr, at 906. form policy when by allowing people ground new rule breaks valid be but was not had been executed increase the claims to negligence bring to properly). it agent failed to date cause writ- over what the payout amount of their pattern cited only exception The to And al- provided. ten documentation Parlette, v. majority is Parlette caution is majority’s partial though the appel- intermediate Maryland’s decision of to see the it is difficult praiseworthy, 596 A.2d Md.App. late court. 88 requires a rule that rhyme reason of case (Md.Ct.Spec.App.1991). That 670-71 in the written documenta- mention some per- then ticket but facts. The son of unique tion as an admission involved some argue the admission plaintiff mits the life insur- purchased a parents divorced ticket was a mistake. father, an insurance policy ance from the The died three agent. Id. at 667. son alleging file suits people to

Allowing later, learned at that years and the mother negligent- their someone who wasn’t designated that the father was the point receive a arrange for them to ly failed to and sib- they beneficiary. were Id. Various friends proof written benefit—without lead receive that benefit—will son informed the mother supposed lings of the instability. We would uncertainty and actually intended her to re- the son had rule the Schreiner sticking off be better An Id. ceive the benefits in the written expressed that if intent present reported that he was eyewitness no chal- fully implemented, instrument to the the father had sold when beneficiary will be lenge by alleged would the father had said he son and that Schreiner, 683. allowed. beneficiary. Id. at make the mother the persons where Notably, past instances witness, According to the the son 668. failure to be to sue for have been able the father application, a blank but signed benefi- as insurance properly designated beneficiary. filled in his own name as later ciaries, always been writ- has almost there Id. their status to establish ten documentation (her the father ex- The mother sued pro- of those as intended beneficiaries among negligence, for fraud and spouse) Ins. Olympic Co. ceeds. See United Life Id. at 667-68. The court other claims. 92-36710, Gunther, 1994 WL v. No. pro- negligence action could held that the 1994) (9th (allowing *1 March Cir. Although jury. to the Id. at 670. ceed insurance against claim for did not involve written documen- Parlette “Policy Change company where written sup- was showing that the mother tation by the insured signed form was Request” beneficiary, it has several posed to be the accepted the company and the not disin- distinctive facts. form, insured about re- improperly advised receive position was in a beneficiary, terested but changing quirements H7 proceeds if the mother not. Id. at did ceeds at issue. The insured is no longer Also, eyewitness there was testimo- around to speak to his or her own intent. herself, All ny, not from the mother we know for certain is that the insured did not father-agent legally effect that that the had essen- make a designation valid the plaintiff as tially tricked the son and the mother. A documenta- ry proof requirement, as we Nothing present recognized at 668. like those facts is Schreiner and Holsapple, protects here. legal- ly binding document from being circum- Meanwhile, body there is a substantial vented by an opportunistic claim that the declining of law to allow “intended benefi decedent intended otherwise. If negli- ciaries” maintain negligence actions gence law can be used without limitation to against See, agents. e.g., life insurance modify the beneficiaries set forth in a writ- Cabrera, Jackson Nat’l Ins. Co. Life instrument, ten then the instrument (9th 618, Cir.2002) (hold Fed.Appx. 619-20 drained of much of its legal force. ing any duty that arose out of by conduct It makes sense for the life agent the life insurer’s was a insurance to the company to require the in change insured as the owner of the benefi- policy, not to ciary to be in writing. made This purported the beneficiaries of avoids policy); the Servs., competing claims Inc., proceeds. to the same Equifax Smith v. 587 It So.2d (Ala.1988) 468, (“[A] also avoids fraudulent Allowing claims. beneficiary named negligence recovery in a without pending application insurance does not written docu- proceeds mentation as to the right per- have a to maintain at issue against an action mits an end run an around the company negligently insurance contractual pro (citation safeguard of requiring the to be in cessing application.” writing. The result is to omitted)); expose and internal the insur- quotation marks er to potentially paying Assocs., twice on the same State ex rel. William Ranni Inc. Here, Hartenbach, death claim. the 134, daughter as the 742 S.W.2d 140-41 (Mo.1987) $35,000 named beneficiary collects the (holding that beneficiaries of a $35,000 while another paid must be life insurance merely were inciden- widow as the “intended” if she tal beneficiaries any who were not owed negligence wins her claim. Wilson, by agent); duties the Rihon v. cf. 94, 415 So.2d 95-96 (Fla.Dist.Ct.App.1982) Moreover, Farm while Bureau and the (dismissing negligence brought by action Schiffer, agent, are separate parties in this additional insured under automobile liabili- case, many policies life insurance are sold ty insurance policy against insured’s by captive agents employed by the insurer. Inc., agent); Workman v. McNeal Agency, today’s majority holding apply Could 217 Ga.App. 458 S.E.2d 709 equally captive agents? Again, neg- (1995) (finding plaintiff alleged that a who ligence claim based on mere oral testimony that she should have been named on a eviscerates the otherwise enforceable con- liability policy as an additional insured requirement tract changes to the ben- could not maintain a negligence action eficiary designation writing. must be in against agent). None of those cases Here, we really do not know whether by are my colleagues. discussed Tom Pitts still daughter get wanted his by

If suits “intended $35,000 beneficiaries” are upon his death and never exe- allowed, going to be there good are rea- cuted the written change form for that sons to limit them to situations where doc- may reason. He have been mulling over umentary proof exists that plaintiff the matter in his own or stalling mind was the of the pro- having a difficult discussion with his wife. general proposition, “As a overtly the risk of loss rule. speculation

This recovery negli- rule bars economic loss by requiring are avoided claims fraudulent only gence plaintiff when the has suffered replace Tom intended to proof written Holdings, Annett Inc. v. economic loss.” $85,000. his for that wife daughter his Go, L.C., & Kum majority’s view disagree with I also 2011).9 (Iowa for conflicts of potential is no that there Holdings, reiterated the In Annett we ex rel. J.A.H. generally interest. See general rule ... that a “well-established P.C., Assocs., & R.M.H. v. Wadle who has suffered economic plaintiff 1999). Agents are has not loss due to another’s Once a principals. their supposed serve legally in a manner which is injured been imposed protect obligation is legal compensable.” Id. at 503 cognizable or well, interests beneficiaries (citation marks quotation and internal necessity the wishes of balance must omitted). explained that the We further disap- of a possibility principal against limited to the situa- rule “is no means example, For alleged pointed and the defendant plaintiff tion where tells an an insured suppose privity.” contractual Id. at are direct make his wife the of his wife to presence stranger economic loss rule” 504. “[T]he life insurance beneficiary of a sole plaintiff cases where the sues applies to Later, however, to have agent he tells the recovery pure seeking the defendant partial beneficiary daughter remain as his due to the defen- economic losses suffered he has done that. the wife and not tell a negligent performance of contract dant’s quandary in a because The is now agent (“In complex a party. with a third places instructions obeying the insured’s ours, society such as economic reverber- a lawsuit. agent at risk of widely, resulting quickly ations travel by concern majority dismisses this The liability.”). limitless We also potentially asserting a that Michele is not stating the economic qualifications noted three family her status as a member based on (1) asserting “actions claims of loss rule: beneficiary, intended “a much but as an negligence against attorneys professional group.” I fail to see circumscribed more (2) accountants”; misrepre- “negligent potential for con- how this eliminates (3) claims”; “when sentation flict of interest. rela- principal-agent of care arises out of a general negli- tionship.” Id. Michele’s Economic Loss Rule Should

II. The excep- of these claim falls into none gence Duty a Preclude the Existence of asserting professional a tions. She is in This Case. claim, alleging nor she negligence is whom an ruling principal also carves out an she was a majority’s duty.10 breached a exception to the economic unwarranted day, simply I make these comments majority points Farm Bureau another out that 9. The concerning my time. argument to set forth views this specific make a failed to loss rule. I do not believe the economic relationship 10. The between an ben- necessary economic loss rule because the eficiary is not one of and an insurance duty ques- simply aspect the overall is (1) “Agency ... principal/agent. results from my at the core of this case. tion that is by person, one view, of consent manifestation proceed apply proper we should another, agent, shall act on principal, that including duty question, the eco- law to the However, subject to the for- the former’s behalf and given majori- nomic loss rule. and, (2) by the latter to application mer's control consent ty’s decision to reserve Ward, Pillsbury act.” Co. v. present facts for so economic loss rule to

H9 time, negligence ing consequences to financial our At Michele’s com- the same plex society generally the characteristics claims the allo- claim shares honors historically rejected under that we have cation of those risks contract. “Th[e] loss rule. It is remote. the economic partly ... prevent rule intended to theory agent negli- is that the Plaintiffs tortification of contract law.” Annett gently perform agency agree- his failed to Holdings, phys- 801 N.W.2d at 503. When Tom, thereby resulting in Tom ment with occurs, ical harm or when antisocial con- beneficiary change, failing to effectuate place, such fraud takes we duct have resulting in loss to Mi- thereby economic generally provided injured with party Historically, chele. this court has held set of judge-made recovery— rules of economic parties alleging pure that remote dealing those of tort law. But in theo- may loss not recover on a loss, our judicial system mere economic id,.; See, ry. State ex rel. Miller v. e.g., historically has allowed the to fix parties Inc., 577 Philip Morris N.W.2d 406- rules through themselves consensual (Iowa 1998); v. 07 Anderson Plasterers i.e., arrangements, contracts. (Iowa Meinecke, N.W.2d 613 major- The unfortunate side effect of the 1996); Corp., v. Hoechst Tomka Celanese ity’s ruling give is to to a nonparty 1995); Neb. N.W.2d rights contract more than a party Pittsburgh-Des Moines Innkeepers, Inc. have. contract would Tom’s estate could (Iowa 1984). 124, 127-30 Corp., 345 N.W.2d not have sued Farm Bureau he because attempt It is one or more bypass also an failed and return benefi- execute a new See, e.g., Holdings, contracts. Annett ciary designation form. Farm Bureau 503-05; Johnson, N.W.2d at Determan v. honored its contract with Tom. Yet now a (Iowa 2000); 262-63 Pre effectively putative modify can Mktg. Hawkeye Assocs. Co. v. Nat’l ferred obligations through the those contractual (Iowa Co., 389, Ins. 452 N.W.2d 397 Life of a tort device suit. 1990); Ltd., v. Nelson Todd’s 426 N.W.2d majority correctly The that the (Iowa Sandbulte, in any which did not mention Langwith holding of v. Am. that appeals duties nonclients. The court of (No. 08-0778) Co., Ins. [793 Nat’l Gen. contrary took a view that this case is not 2010) (Iowa abrogated is 215] legislation by controlled the 2011 because it overrules Sandbulte the extent general duty it care involves same higher greater or duties imposes Sandbulte, only in question articulated produc- on insurance responsibilities being duty may whether that extend to an those set forth in Sandbulte. ers than poli- of an insurance 70, § Acts ch. (emphasis Iowa cy- added) § (amending Iowa Code 522B.11 (2009)). debatable, however, What is not is that recognizes the majority opinion a bright-line had set forth a

Sandbulte part agents not of insurance that has rule that an insurance does not owe recognized heretofore been Iowa. his or her client regarding to advise up a legislature put stop sign insurance needs “the client’s unless previous after we modified our law of out as holds himself an insurance agent’s based on the Restatement specialist, and is duties consultant counselor (Third) a much compensation Agency larger for consultation receiving more persuasive body authority my than According to the majority: “When Schif- colleagues Langwith, have cited here. 798 fer allegedly advised Tom and Michele minimum, N.W.2d at 220-23. At a further daughter Tom’s was no longer the expansion legal liability should be primary beneficiary on policy, he was by something backed more than sprin- functioning agent.” as Tom’s I agree that kling of caselaw and treatise citations in to the extent Sehiffer made a negligent majority otherwise, opinion; public misrepresentation in his capacity as Tom’s this area is best legisla- left to the agent to Tom regarding the status of bene- State, ture. Galloway See v. 790 N.W.2d ficiaries, potential claim negligent (Iowa 2010) J., (Cady, dissenting) (or misrepresentation estate) by Tom his (stating that unless the public policy is may scenario, lie. In this Sehiffer is like apparent, “public clear and policy is best guidance counselor in Sain. Id. at 126- left legislative to our branch govern- information, He was supplying as in- ment to decide as representatives of the do, agents surance to his client Tom to people”).11 guide Tom in a transaction with a third party, namely Farm Bureau. Majority’s

IV. Under the Own Rea- soning, However, There Is majority’s No Basis for a reasoning does Negligent Misrepresentation support negligent misrepresentation Claim. by claim Michele. Michele had no ability to designate beneficiaries under the life

The majority engages in a thorough and The action she accurate review of our negligent misrepre- could have taken try was to to influence sentation precedents. Ultimately, though, Thus, Tom to take some action. any state- analysis its by undermined a lack of ments made to her Sehiffer as conceptual clarity. Tom’s agent were not guid- statements for her majority has correctly described the dealings else; ance in with someone they two forks the road. Generally speaking, were statements for her guidance in deal- (or if A agent) A’s negligently provides ings with Tom. See id. at 126. Put another false information to B to B guide in a way, could Michelle have sued Tom for C, transaction with then a potential negli- negligently misrepresenting that she was gent misrepresentation claim may lie. $35,000? going to receive the Clearly not. However, (or if A agent) A’s negligently Therefore, she person cannot sue a who provides false information to B in a trans- making statements on Tom’s behalf A, action with then this is the classic situa- Miller, either. Haupt See involving only tion parties two where the 1994) (finding tort of negligent misrepresentation the mo- is not by available. See tions to dismiss filed generally Sain v. individuals who Cedar Dist., Rapids Cmty. 115, Sch. allegedly 626 made negligent misrepresenta- (Iowa 2001). 125-26 capacity tions in their as officers and di- majority’s 1087, 11. The regarding duty 1913). conclusion 1087-88 She also filed a contrary is precedent also to a venerable of petition as administratrix. Id. at 139 . this court. v. Bankers’ Ass’n pursue N.W. at 1087. We Duffie held that she could Life of Moines, Des the widow of a life insurance negligence the claim on behalf of the estate applicant brought designated an action as but could not maintain her action beneficiary application alleging in the that the beneficiary negligence, any, as because "the if negligent delay insurer’s processing failing discharge duty owing was that of application deprived pol- her of the insurance the deceased.” Id. at 139 N.W. at 1090. 19, 21, icy proceeds. 160 Iowa 139 N.W. go jury. claim Id. at on the other side of tation could party rectors of the plaintiff from should The me as 748-50. decision strikes some- transaction granted).12 been have court concedes what result-oriented. The children not have relied on that the could try cites treatise majority The agent’s misrepresentations, but with- legal is within suggest position that its authority out citation of concludes Jeffrey E. Thomas & See mainstream. of decedent’s reliance is suffi- “evidence Mootz, In- Appleman New Francis J. liability impose cient to for defendants’ Library Edition Law surance (2011). 2.05[2][d][i], misrepresentation.” Id. at 749- negligent § at 2-33 to 2-34 However, part discussion is this treatise 50.13 entitled, “Intermediaries’ Liabili- a section Finally, agreed majori- even if I with the ty Insureds.” Id. at 2-28. ty bring negligent that Michele could majority where a actual case cited Schiffer, against claim misrepresentation beneficiary putative was allowed to sue credibly why it majority explain cannot E. agent insured’s is Merrill William summary judgment not affirm for does Ins., N.E.2d App.3d 87 Ohio Ward According that claim. Farm Bureau on (1993). That case involved somewhat majority, acting Schiffer was as Tom’s being diagnosed facts. After exceptional indeed, that essential to the ma- agent; illness, executed

with a fatal the decedent basis for jority’s analysis. So there is no of his insurance leaving proceeds a will vicariously liable for Farm Bureau to be Merrill, to his children. policies superior. respondeat Tom’s conduct under time, at 746. At the same he N.E.2d reasons, I dissent and foregoing For change executed a form for negli- deleting his would affirm the dismissal policies one of the insurance However, misrepresentation wife Id. the de- gence negligent written a let- cedent’s insurance had claims. incorrectly that the wife

ter which stated WATERMAN, J., policy. CADY, C.J., not a of another join Id. at 745-46. No dissent. this Following Id. occurred as to that death,

the decedent’s the children discov- happened what had and sued

ered misrepresentation. negligent Ohio held Appeals

at 746. The Court negligent misrepresen-

that the children’s transaction, a business we acknowledge that like "arm’s transaction is not 12. I terms length” apply length going typical and "adversarial” would not be- are not to see arm’s alleged with Tom and Schiffer’s conversations incongruous It be of us to havior. would Sain, But Michele. See 626 N.W.2d at 126. element of relax the "business transaction” just emphasized negligent as we in Sain that misrepresentation negligent in Restatement ac- misrepresentation can exist as a cause of (Second) strictly requir- § Torts while when there is no business transac- tion even tion, ing length” behavior for an exclusion "arm’s 125-26, be id. at so it also needs to from that tort. align- emphasized that what matters is the parties i.e., ment of the did the information — Notably, was considerable written there supplied plaintiff in its relations "harm[ ] the decedent’s in- documentation to establish parties, opposed harm to a with third beneficiaries, tent to make his children provider plaintiff in with the its relations dissent, part my I above. unlike here. See the information”? Id. at 126. When notes if the plaintiff gave death he written notice the in- to. shows that he or she was the intended intended, surer of change the law beneficiary policy of the at the time of the give will change effect to the although death, insured’s then there is no conflict of the insured has not complied with all of interest for the because the agent’s specified formalities in the contract duty carry remains the same: out for effecting a of beneficiary, by intent of the insured procuring the provided his failure in that regard was Sandbulte, insurance requested. See excusable under all the circumstances. N.W.2d at 464. words, In proof intent, other of clear One court that has faced this issue found plus written notice to prior the insurer unnecessary it to impose duty a on insur- death, appears enough, to be under ance agents to intended beneficiaries. law, Iowa change, effect the desired Inc., Agency, Mims v. Western-Southern where the failure to meet all the re- (Ky.Ct.App.2007), S.W.3d 833 the Ken- quirements is excusable. tucky court of appeals noted that if a Co., Franck v. Equitable Ins. 203 F.2d Life plaintiff could show that he or she was the (8th Cir.1953). 476-77 As the above intended beneficiary policy as re- demonstrates, passage there are signifi- Parlette, quired by then he or “she would requiring plain- cant differences between a proving effect also be that [the insured] tiff compliance to show substantial substantially complied with the [change the policy merely terms of show- beneficiary] provisions his insurance ing plaintiff was the intended policy.” 226 S.W.3d at 836. Showing of a life insurance Id. In addition “substantial compliance” policy’s with the intent,” to “clear plaintiff pro- must also plaintiff terms would make the a third- insurer, vide written notice as well party beneficiary, which would make it failing as an excuse for to meet the other unnecessary to establish an independent requirements of the policy. Since Iowa’s duty beneficiary” to the “intended of the compliance substantial doctrine is not as policy. See id. Kentucky’s “very Due to liberal as Kentucky’s, merely establishing doctrine, liberal” compliance substantial plaintiff that the was the intended benefi- inquiry threshold [t]he under either a ciary policy of the would not satisfy the negligence or contract theory is essen- compliance substantial doctrine as it exists tially identical: “The question herein is in Iowa. dispute adopt [a] between the We therefore decline to contracting parties ... as to the expressed terms of the con- rationale in Mims. $35,000 of the and that the first “The critical element estab foreseeability of harm the intended duty is the Michele was lishing a Appleman, plaintiff.” proceeds. If Michele potential of the balance of 2.07[1], imposes caselaw 2-84. Our § truly is the intended for foreseeable professionals duty claims, on other as she then Schiffer policy, entire See intended beneficiaries. harm to to the duty respect owed her a of care with Schreiner, ju 682. Other 410 N.W.2d at fact, $35,000. If she cannot establish duties on insur impose similar risdictions did not owe her a then Schiffer injuries agents and brokers ance Jones, F.Supp.2d at 7 n. 3. care. See strangers profes who are persons Thus, ben- Michele’s status as foreseeably relationship but who are sional eficiary material to the outcome of negligence. professional’s harmed case. should be agents and brokers Insurance disputed are when reason Facts owe a of care to similarly held to

Notes

notes 120,125 1988); Richards v. Midland Kaczinski, duty analysis Thompson in v. Co., 649, Brick 551 650-52 Sales N.W.2d (Iowa 2009), (Iowa 774 N.W.2d 834-36 does by As the dis- Ct.App.1996). noted court, it apply trict entered an insurance to economic loss claims. But Tom into (without placed in a spe- asserting citing single with Farm Bureau that errs cific requirements on what must be done authority) Iowa element “[t]he critical Also, to Tom a had a foreseeability is establishing in a with in- principal agent relationship his harm to If a potential plaintiff.” — Schiffer, agent, surance and his estate sue “foresee- party any remote could over ability would have the for breach of sue neg- resulting able” economic loss from agreement. duties out of that arising basic ligence party, of another our common law essentially by This action effort his is an upside say up- would be turned down. I widow to avoid effects of these two precedents actually down our side because agreements. recognize something opposite prin- like the (where Nelson, ciple. 426 N.W.2d at 125 recognizes The loss rule economic may many ripple damage events have a effect lead- foreseeable result from Adams, claim, (Iowa 1977); reasons I 38 see also Peak v. tation which defective for 2011). (Iowa 2 547 n. discuss below. claim, general Apart her from separate misrepresen- negligent Michele has a 120 premiums by and from product properly, apart paid work advice failure Richards, contract); in at remedy Lang- lies the insured.” 343 N.W.2d (same). Certainly, 651 551 N.W.2d with overruled Sandbulte and decided that many in if not all the that occurred losses scope agent’s of an insurance duties to cited above were fore- cases economic loss his or her client would be based on a See, Neb. e.g., Innkeepers, seeable. consideration of all circumstances. 793 (harm to business owners N.W.2d at legislation, N.W.2d at 222. The 2011 closure). bridge from turn, Langwith negated holding and holding majority’s expressly that the that “the duties and recognize provided I agents. limited to insurance appears be responsibilities producer of an insurance no reason deviate from the But there is responsibil- are to those duties and limited rule here. loss economic ities set forth Sandbulte.” 2011 Iowa added). 70, § Acts ch. (emphasis Majority’s Opinion Is Incon- III. The specific Langwith in both issue Legislation. Recent sistent agent’s Sandbulte was the extent while by appeals, As the court noted duties his or her client. Sandbulte had appeal the General As- this was on case holding agents an earlier reiterated following legislation: sembly enacted care, have a duty “to use reasonable dili- producer an insurance 7. a. Unless gence, in- judgment procuring an spe- out as oneself holds by surance an requested insured.” 343 consultant, cialist, and re- counselor Collegiate (citing Mfg. N.W.2d at 464 Co. compensation consultation ceives Inc., Agency, v. McDowell’s apart paid from commissions advice (Iowa 1972)). Langwith allowed insurer, and responsibili- the duties for the of a more extensive possibility producer limited an insurance are ties of duty. 219-223. 793 N.W.2d at This case responsibilities duties and set those (if agent’s any) concerns the duties to a in Sandbulte Farm Bureau forth Still, nonclient. a case can be made that Co., 343 N.W.2d 457 Mut. Ins. the 2011 freezes the legislation duties 1984). responsibilities agents to those forth set assembly declares general b. The

Case Details

Case Name: Michele M. Pitts v. Farm Bureau Life Insurance Company and Donald Schiffer

Court Name: Supreme Court of Iowa

Date Published: Jul 6, 2012

Citation: 818 N.W.2d 91

Docket Number: 11–0117

Court Abbreviation: Iowa