Elements of Negligent Misrepresentation in Tennessee

Disclaimer: As much as I love educating blog readers about the law, sometimes, I use this site as a notepad for myself on legal issues.

Frankly, I can’t tell you how many times I think to myself–in court–“I’ve blogged about that,” and then use the “Search” box on this blog to look a citation/issue up.

So, real quick, here’s a good guide to the elements of “negligent misrepresentation” in Tennessee, as stated in a recent Tennessee Court of Appeals case,  Jerry Faerber, et. al. v. Troutman & Troutman, P.C., et. al., No. E2016-01378-COA-R3-CV, May 23, 2017.

In order to state a claim for negligent misrepresentation, the plaintiff must establish by a preponderance of the evidence that:

  • the defendant supplied information to the plaintiff;
  • the information was false;
  • the defendant did not exercise reasonable care in obtaining or communicating the information; and
  • the plaintiff justifiably relied on the information.

See Morrison v. Allen, 338 S.W.3d 417, 437 (Tenn. 2011).

Negligent misrepresentation occurs when:

  • a defendant, acting in the course of his or her business, profession, or employment, or in a transaction in which she has a pecuniary interest, supplies faulty information meant to guide another in his or her business transaction;
  • the defendant fails to exercise reasonable care in obtaining or  communicating information; and
  • the plaintiff justifiably relies upon the information provided by the defendant.

See Robinson v. Omer, 952 S.W.2d 423 (Tenn. 1997)

“Justifiable reliance in [the] context [of negligent misrepresentation] is not blind faith.” McNeil v. Nofal, 185 S.W.3d 402, 408 (Tenn. Ct. App. 2005). The defendant is liable “only to those, whether in contractual privity or not, for whose benefit and guidance the information is supplied.” The information may be either direct or indirect. In that regard, the foreseeability of use is critical to liability. John Martin Co., Inc. v. Morse/Diesel, Inc., 819 S.W.2d 428, 431 (Tenn. 1991)

“[T]he usual measure of damages in a negligent misrepresentation action is the benefit of the bargain rule, that is, the difference between the actual value of the property received at the time of the making of the contract as compared to the value if the representations had been true.” Cary v. Evans, 1986 WL 6642, at *3 (Tenn. Ct. App. June 12, 2986) (citations omitted).

Ok, so this isn’t the most interesting blog post I’ve ever done, but, trust me, I’m going to search for “negligent misrepresentation” at least ten times.

 

 

 

Quick Note on Negligent Misrepresentation in Tennessee

One of the ways this blog helps me is as a research note. When I find a statement of an issue of law, I’ll post it here so I’ll know where to find it later.  Good for me, sort of boring for you. 

In the case of First Tennessee Bank, N.A. v. Shelby Village Mobile Home Park, LLC, et. al., the Tennessee Court of Appeals outlined the elements of the Tennessee tort negligent misrepresentation. Here’s what the Court said:

“A party pursuing a claim of negligent misrepresentation “must prove by a preponderance of the evidence that the defendant supplied the information to the plaintiff; the information was false; the defendant did not exercise reasonable care in obtaining or communicating the information; and the plaintiff justifiably relied on the information.” Hill v. John Banks Buick, Inc., 875 S.W.2d 667, 670 (Tenn. Ct. App. 1993) (citations omitted). The tort of negligent misrepresentation is most often recognized “in connection with business or professional persons who carelessly or negligently supply false information for the guidance of others in their business transactions.” Houghland v. Sec. Alarms & Servs., Inc., 755 S.W.2d 769, 774 (Tenn. 1988). Our Supreme Court has recognized, however, that, “[t]his theory of law . . . does not convert every breached promise or contractual undertaking into a basis for the rescission of otherwise valid contracts and the abrogation of their terms.” Id.”