IN THE SUPREME COURT OF IOWA No. 15–0164
Filed December 23, 2016
Amended February 24, 2017
DINSDALE CONSTRUCTION, LLC, Appellee,
vs.
LUMBER SPECIALTIES, LTD., Appellant.
On review from the Iowa Court of Appeals.
Appeal from the Iowa District Court for Grundy County, Kellyann
Lekar, Judge.
A construction materials manufacturer and provider of engineering
services seeks further review of a court of appeals decision affirming the
district court’s denial of its motion for judgment notwithstanding the
verdict finding liability for negligent misrepresentation. DECISION OF COURT OF APPEALS VACATED; DISTRICT COURT JUDGMENT
REVERSED AND CASE REMANDED.
Michael A. Carmoney and Allison J. Frederick of Carmoney Law
Firm, PLLC, Des Moines, for appellant.
Chad A. Swanson and Nathan J. Schroeder of Dutton, Braun,
Staack & Hellman, P.L.C., Waterloo, for appellee. 2
CADY, Chief Justice.
In this case, we must decide if an employee of a business that sells
building materials and services who supplied false information to a
builder about the structural integrity of a building under construction
had a duty to use reasonable care in supplying the information when it
was done as a courtesy to the builder and for the general goodwill of the
business. Following a jury trial on claims for negligent
misrepresentation and breach of contract, the jury returned a verdict
against the business on the negligent misrepresentation claim and the
district court denied a motion for judgment notwithstanding the verdict.
The business appealed, and we transferred the case to the court of
appeals, who affirmed the decision of the district court. On further
review, we vacate the decision of the court of appeals and reverse the
decision of the district court. We conclude the business owed no duty of
care in supplying the information to the plaintiff. We reverse the
judgment of the district court and remand for the case to be dismissed.
I. Factual Background and Proceedings.
In 2012, Phelps Implement (Phelps) hired Moeller & Walter, LTC, a
lumberyard, to provide building materials and to oversee the
construction of an addition to its existing implement dealership. Moeller
& Walter subcontracted with Lumber Specialties to provide the truss 1
package, headers and columns for the doors, and connections and hold
downs, in addition to certain engineering services. The engineering
services included structural building design, 2 a structural site visit,3
1Aroof truss is an assemblage of beams arranged in a triangle to form a rigid framework that supports the ceiling, insulation, roof, steel, and snow load. 2This project, due to its size, required a permanent bracing plan that would ensure the building would not collapse once in use. 3
retaining wall engineering, 4 and an existing building truss review.5
Finally, Lumber Specialties provided an industry standard temporary
bracing plan. 6 The contract did not provide for engineering services
pertaining to the temporary bracing of the trusses and did not require
Lumber Specialties to evaluate the temporary bracing during the course
of the construction. 7 In all, Lumber Specialties contracted to provide
$33,247 worth of tangible building materials and approximately $4150
worth of engineering services. Phelps also hired Dinsdale Construction
to supply the labor and building materials for the project.
On June 28, the owner of Moeller & Walter, Lynn Trask, visited the
Phelps site and met with Kirk Dinsdale, the owner of Dinsdale
Construction. By this time, the construction was underway, with some
of the smaller trusses placed and supported by temporary bracing.
Trask and Dinsdale agreed the construction should be evaluated to
ensure the chosen method of temporary bracing was sufficient, especially
considering the larger trusses would be going up soon. Later that day,
_________________________ 3Steve Kennedy, an engineer who works with Lumber Specialties, was to do a postconstruction site visit assessing the permanent bracing, connections, and hold downs. Lynn Trask of Moeller & Walter acknowledged that the “site visit” item referred to a postconstruction, not midconstruction, assessment. 4Phelps requested a concrete retaining wall to separate the project from a
neighboring residential area. 5Once the addition was attached to an existing Phelps building, additional
engineering services would be needed to ensure the structure could handle the extra load. 6The BCSI-B1 Summary Sheet, published by the Structural Building Components Association and Truss Plate Institute, is provided with the sale of every truss by Lumber Specialties. Steve Kennedy testified that engineers could, though none did prior to the collapse, draft a site-specific temporary bracing plan. He also testified the BCSI-B1 was a conservative approach that would be sufficient in most structures and that less bracing would be sufficient in others. 7Although invoices from Select Structural Engineering, another subcontractor on the project, referenced temporary bracing design assisted by Lumber Specialties, these were for services rendered after the cause of action arose. 4
Trask emailed Ryan Callaway, a sales representative for Lumber
Specialties. Trask wanted Callaway to visit the site to “take a look at
what [Dinsdale Construction] ha[s] done” and advise “[i]f there is any
bracing that [is] missing.” Email from Lynn Trask, Moeller & Walter LTC
to Ryan Callaway, Lumber Specialties (June 28, 2012, 11:35 a.m.).
Callaway felt comfortable performing this visit, and he did so that
afternoon. He also believed Trask and Dinsdale should have been able to
rely on his opinion.
Callaway had prepared the quote for the Phelps project. He had
also worked in construction for approximately twenty years. Prior to
working with Lumber Specialties, Callaway studied architectural and
construction drafting at a community college for one year. He then
worked in residential remodeling before accepting a job with Plumb
Building Systems (Plumb), another truss manufacturer. At Plumb,
Callaway worked in truss design, using software to design project-
specific trusses. After three years, he left Plumb and worked a brief stint
at a factory before accepting a position with Lumber Specialties, again
working in truss design. After another four years, he transitioned to
sales, where he has been for approximately ten years. In his capacity as
sales representative, he no longer does building designs, nor does he
install trusses. His primary job responsibilities involve customer
relations and preparing bids.
Callaway characterized the visit to Phelps as a courtesy to his
customer, Trask. When he arrived at the Phelps site, Dinsdale was
working with his crew on the roof. Callaway looked around, introduced
himself, left some promotional pencils, and said something to the effect
of, “Everything looks great. Keep doing what you’re doing.” Dinsdale did
not know Callaway was a sales representative; he only knew Callaway 5
was from Lumber Specialties. Callaway was on-site for only a short
time. 8 The next day Callaway emailed Trask:
I stopped by the Phelps site yesterday. They were still installing purlins[ 9] and bracing on the trusses that they had set. Steve Kennedy will be doing the final inspection on the building which will include inspecting the bracing. If needed, recommendation will [be] made at that time. Please give Steve at least three day[’s] lead time to schedule the final inspection on the building. Thank you.
Ryan Callaway
Outside Sales
Email from Ryan Callaway, Lumber Specialties to Lynn Trask, Moeller &
Walter LTC (June 29, 2012, 06:18 a.m.). Trask replied:
Thanks Ryan, I am aware Steve will be doing the inspection when done. Just thought it would be good to have you stop and check progress [to] see if there are any obvious things that you see that could create more stability during the set stage. Thanks for stopping. Let me know if you have any suggestions or saw anything that I need to be aware of. Thanks, Lynn Lynn Trask Moeller & Walter LTC
Email from Lynn Trask, Moeller & Walter LTC to Ryan Callaway, Lumber
Specialties (June 29, 2012, 09:56 a.m.). Callaway replied: Nothing “jumped” out at me that needed more temporary bracing. I thought everything looked good on what they had completed. Email from Ryan Callaway, Lumber Specialties to Lynn Trask, Moeller &
Walter LTC (June 29, 2012, 10:05 a.m.). Trask concluded the
conversation:
8While Dinsdale estimates Callaway was on-site for approximately thirty minutes, Callaway himself believes it was only around ten. 9Purlins are horizontal beams along the length of the roof providing structural support. 6 That’s what I was really asking for.
I have a lot of confidence in you[r] experience and opinion.
Thanks, Lynn
Email from Lynn Trask, Moeller & Walter LTC to Ryan Callaway, Lumber
Specialties (June 29, 2012, 11:39 a.m.).
Nine days later, the structure collapsed. There was no personal
injury or property damage, but the parties incurred substantial costs in
rebuilding the structure. A postcollapse investigation revealed the
collapse was due to inadequate temporary bracing of the trusses.
Dinsdale had not followed the industry standard temporary bracing plan.
Dinsdale Construction brought suit against Lumber Specialties on
breach of contract (as a third-party beneficiary) and negligent
misrepresentation theories. Lumber Specialties moved for summary
judgment, arguing, among other things, it had no duty to use reasonable
care in providing Callaway’s interim assessment of the adequacy of the
temporary bracing erected by Dinsdale Construction. It argued it was a
product manufacturer that should be categorically excluded from owing
a duty under existing Iowa law. The district court denied the motion,
finding negligent misrepresentation was a question for the jury. After
Dinsdale Construction presented its evidence at trial, Lumber Specialties
moved for directed verdict, again arguing the negligent misrepresentation
claim should not be submitted to the jury. The district court denied the
motion. The jury returned a verdict for Dinsdale Construction on the
negligent misrepresentation claim, but found no breach of contract.
Lumber Specialties moved for judgment notwithstanding the verdict,
reiterating that it owed no duty to Dinsdale Construction under Iowa
negligent misrepresentation law. The district court again denied the 7
motion, finding the court had already ruled on the issue and that
whether Lumber Specialties was in the business of supplying information
was a fact question the court appropriately submitted to the jury.
Lumber Specialties appealed. The court of appeals affirmed, holding the
question was for the court, but finding that Lumber Specialties had a
duty of care because it was in the business of supplying information at
the time of the misrepresentation. We granted further review.
II. Standard of Review.
“We review the denial of a motion for judgment notwithstanding
the verdict for correction of errors at law.” Van Sickle Constr. Co. v.
Wachovia Commercial Mortg., Inc., 783 N.W.2d 684, 687 (Iowa 2010).
Whether the defendant owed a legal duty is “always a question of law for
the court.” Fry v. Mount, 554 N.W.2d 263, 265 (Iowa 1996). We review
the evidence in the light most favorable to the nonmoving party. See
Molo Oil Co. v. River City Ford Truck Sales, Inc., 578 N.W.2d 222, 224
(Iowa 1998).
III. Analysis.
The Restatement states,
One who, in the course of his business, profession or employment, or in any other transaction in which he has a pecuniary interest, supplies false information for the guidance of others in their business transactions, is subject to liability for pecuniary loss caused to them by their justifiable reliance upon the information, if he fails to exercise reasonable care or competence in obtaining or communicating the information.
Restatement (Second) of Torts § 552, at 126–27 (Am. Law Inst. 1977)
[hereinafter Restatement]. We first recognized and adopted the tort of
negligent misrepresentation in providing information in Ryan v. Kanne,
rejecting the narrow approach of the common law rule at the time,
represented by cases such as Ultramares Corp. v. Touche, 174 N.E. 441 8
(N.Y. 1931). See Ryan v. Kanne, 170 N.W.2d 395, 401–03 (Iowa 1969).
We instead followed the path paved by the Restatement, then in its draft
form. See id. at 402–03 (citing Restatement (Second) of Torts § 552 (Am.
Law Inst., Tentative Draft No. 11, 1965)).
Two decades after adopting the tort, we began to narrow our
approach, finding the “duty . . . is generally not applicable to a retailer in
the business of selling and servicing his merchandise.” Meier v. Alfa-
Laval, Inc., 454 N.W.2d 576, 581 (Iowa 1990); see also Greatbatch v.
Metro. Fed. Bank, 534 N.W.2d 115, 117 (Iowa Ct. App. 1995) (“Although
the language of the Restatement (Second) of Torts supports a broad view
of the types of businesses covered by the tort, our appellate cases reflect
a rather narrow scope.” (Footnote omitted.)). We later affirmed this
position, stating, “Where the defendant is not in the business of
supplying information, and the parties deal at arm’s length in a
commercial transaction, our courts have refused to recognize a duty
arising under section 552.” Fry, 554 N.W.2d at 265–66 (Iowa 1996)
(citing Freeman v. Ernst & Young, 516 N.W.2d 835, 838 (Iowa 1994);
Haupt v. Miller, 514 N.W.2d 905, 910 (Iowa 1994); Meier, 454 N.W.2d at
581–82; Greatbatch, 534 N.W.2d at 118). Thus, under Iowa law,
normally only those in the business of supplying information to others
owe a duty to ensure that information is correct, accurate, and thorough.
See Sain v. Cedar Rapids Cmty. Sch. Dist., 626 N.W.2d 115, 123 (Iowa
2001) (noting restrictions on the tort are due to the “fear that liability for
misinformation could be virtually unlimited . . . under the traditional
foreseeability limitation applicable to negligence claims”). Other
jurisdictions follow similar approaches. See, e.g., Rankow v. First Chi.
Corp., 870 F.2d 356, 360 (7th Cir. 1989) (applying Illinois law) (“Illinois
law only allows recovery for purely economic losses under a negligent 9
misrepresentation theory when the defendant is ‘in the business of
supplying information for the guidance of others . . . .’ ” (quoting Rankow
v. First Chi. Corp., 678 F. Supp. 202, 205 (N.D. Ill. 1988))); Millsboro Fire
Co. v. Constr. Mgmt. Serv., Inc., C.A. No. 05C-06-137 MMJ, 2006 WL
1867705, at *3 (Del. Super. June 7, 2006) (“In Delaware, only . . . those
expressly in the business of supplying information . . . can be liable in
tort for purely economic losses.”).
In our effort to distinguish those circumstances when a person has
a duty to use reasonable care in supplying information from those
circumstances when there is no duty, we have articulated various
considerations derived from the framework of the Restatement rule. We
seek to distinguish advisory relationships from relationships that are
adversarial and at arm’s length. See Pitts v. Farm Bureau Life Ins. Co.,
818 N.W.2d 91, 111 (Iowa 2012). We seek to distinguish the sale of
information as a product from information given incidentally as part of
another transaction. Id. at 112. We distinguish professional purveyors
of information from those who work in another capacity. Id. Finally, we
seek to capture the concept of foreseeability within those circumstances
that impose a duty of care. Id. at 111–12.
These considerations are principles of law that help frame the
parameters of the tort and express its rationale more than they are
factors to weigh in determining the existence of a duty. In each instance,
we must only impose a duty on persons who, “in the course of [their]
business, profession or employment, or in any other transaction in which
[they have] a pecuniary interest,” supply information to others in their
business transactions. Restatement § 552(1), at 126. The distinctions
we have observed exist to help in the application of this rule and are
often aligned with the presence or absence of a pecuniary interest in 10
giving the information. See Sain, 626 N.W.2d at 124–25; Molo Oil Co.,
578 N.W.2d at 227 (“[I]f the transaction at issue took place at arm’s
length, the plaintiff’s cause of action must fail.”); Fry, 554 N.W.2d at 266
(noting allowing recovery for negligent misrepresentation in adversarial
relationships would allow “recover[y] in tort on the same factual grounds
on which the law would deny . . . recovery in contract”); Meier, 454
N.W.2d at 581 (noting in an arm’s length transaction “the law of contract
and warranty may provide the more appropriate remedies for
misstatements”). Compare Pitts, 818 N.W.2d at 113 (“The advisory
nature of the principal–agent relationship supports allowing a claim of
negligent misrepresentation.”), and Sain, 626 N.W.2d at 126 (“The
counselor and student have a relationship which extends beyond a
relationship found in an arm’s length transaction.”), with Jensen v.
Sattler, 696 N.W.2d 582, 588 (Iowa 2005) (denying recovery when
relationship was between seller and buyer of a home); Haupt, 514 N.W.2d
at 906, 910 (accord, between banker and consumer in loan guarantee
transaction).
In this case, Lumber Specialties is in the business of providing a
variety of products and services, some of them information and others
not. See Greatbatch, 534 N.W.2d at 117 (noting “[n]o clear guideline
exists” and many businesses “fall[] somewhere in the middle of the
spectrum”); see also Hartford Fire Ins. Co. v. Henry Bros. Constr. Mgmt.
Servs., LLC, 877 F. Supp. 2d 614, 619–20 (N.D. Ill. 2012) (“[I]t may be
useful to ‘envision a continuum [of enterprises] with pure information
providers at one end and pure tangible good providers at the other[].’ ”
(quoting Tolan & Son, Inc. v. KLLM Architects, Inc., 719 N.E.2d 288, 296
(Ill. App. Ct. 1999))). Lumber Specialties contracted to provide both
tangible construction materials (trusses, headers and columns, and 11
connections and hold downs) and intangible engineering services
(designs, site visits, reviews). Thus, Lumber Specialties operates a
“mixed” business. 10 See Rankow, 870 F.2d at 365 (describing “ ‘mixed’
cases, where both goods (or services) and information were exchanged”).
When a person is in the business, profession, or employment that
both sells products and supplies information for the guidance of others,
it is necessary to look at the specific transaction that gives rise to the
claim of liability. See Pitts, 818 N.W.2d at 112–13 (noting insurance
agent acting as insurance salesperson would not be a proper defendant
but imposing duty when acting as an agent to the insured). Thus, even
though the tort normally only applies to a person in the business of
supplying information, when a business engages in mixed services, the
specific transaction must be examined to determine if the person had a
pecuniary interest in the transaction. See Restatement § 552 cmt. c, at
129 (“The rule . . . applies only when the defendant has a pecuniary
interest in the transaction in which the information is given.”).
As explained in Sain, the pecuniary interest that a person has in a
business, profession, or employment that supplies information to others
gives rise to the factors that support the imposition of a duty, such as
the awareness, foreseeability, and justifiable reliance compatible with a
special relationship. 626 N.W.2d at 124–25 (noting those in the business
10Lumber Specialties argues we follow Illinois courts who have adopted a strict ends and aims of the transaction test. See Hartford Fire Ins. Co., 877 F. Supp. 2d at 620 (“[I]f the intended end result of the relationship is for the defendant to create a product—a tangible thing—then the defendant will not [be in] the ‘business of supplying information’ . . . .”); see also id. (noting architects and engineers might supply information, but the end result will be a tangible product (examples include a building and a water supply system), and thus they are not in the business of supplying information). Because we resolve this matter using our existing law, we need not reach whether we should adopt such a test or whether it would even apply to the facts of this case. 12
of supplying information are “also in a position to weigh the use for the
information against the magnitude and probability of the loss that might
attend the use of the information if it is incorrect”). Although we have
not yet applied the tort beyond persons in the course of their business or
profession of supplying information, section 552(1) of the Restatement
includes persons who supply false information “in any other transaction
in which [they have] a pecuniary interest.” 11 Restatement § 552(1), at
126. Transactions involving a pecuniary interest share the attributes of
a business, profession, or employment supplying information to others,
as well as the rationale for imposing a duty. The key to the imposition of
a duty to use reasonable care in supplying information necessarily
involves a pecuniary interest in supplying the information. Restatement
§ 552(1) cmt. c, at 129.
The comments to the Restatement provide examples that give
context to the rule. When the information is given to others in the
course of a defendant’s business, a pecuniary interest normally exists
even though no consideration may be given at the time. Id. cmt. d. The
operation of the business supports the existence of pecuniary interest.
See also Pitts, 818 N.W.2d at 113. Yet, this basis for imposing a duty is
not conclusive. Restatement § 552(1) cmt. d, at 130. If a defendant who
works in a business or profession that supplies information to others
11A tentative draft of the Restatement (Third) of Torts: Liability for Economic Harm, parallels the current section 552. See Restatement (Third) of Torts: Liab. for Econ. Harm §§ 5, 6 (Tentative Draft No. 1, 2012). However, it splits the tort into negligent misrepresentation and negligent performance of services, though “[n]o substantive differences are intended,” id. § 5 cmt. a, and “[n]othing should depend on [the] characterization,” id. § 6 cmt. a. The comments to draft-section 5 note the requirement “serves several purposes,” including “confin[ing] liability to cases where information is offered in a sufficiently serious spirit to make the plaintiff’s reliance reasonable” and avoiding the chilling of gratuitous speech. Id. § 5 cmt. c. We note that both of these concerns are present here. 13
gives information but not in the course of the business or profession and
does not expect or receive compensation or financial remuneration for
the information, no duty arises. The classic illustration of this rule is a
lawyer who gives a “curbstone” opinion. Id.
The comments to the Restatement further identify the source of the
financial interest requirement of the rule when information is given in
the course of a transaction with another. Here, the pecuniary interest
requirement normally comes from the consideration paid or given to the
person who supplies the information as a part of the transaction. Id.
This consideration does not necessarily need to be direct. Id. It can also
be indirect. Id.; see also Sain, 626 N.W.2d at 126. Thus, corporate
officers who stand to profit from transactions by others in the
corporation have a pecuniary interest in the transaction. Restatement
§ 552(1) cmt. d, at 129. Likewise, agents of a corporation who expect to
receive compensation on sales of information have pecuniary interests,
even though the sale may not ultimately be completed. Id. The
important characteristic of the consideration is the expectation of
compensation of some form at some time for giving the information to
another. 12 See Sain, 626 N.W.2d at 126.
12The comments to the tentative draft of the Restatement (Third) of Torts: Liability for Economic Harm section 5 state, when the defendant made a representation to a plaintiff with whom the defendant has no direct commercial relationship, “[t]he important question then is whether speaking will redound to the defendant’s economic benefit in some reasonably clear way, perhaps because it helps another party with whom the defendant has a contract.” See Restatement (Third) of Torts: Liab. for Econ. Harm § 5, cmt. c. To the extent this comment could apply, we do not find it reasonably clear Callaway’s misrepresentations were intended to redound to his economic benefit. The comments also discuss the professional who is typically paid to speak but supplies the information without charge and note liability can turn on the regularity of providing “free” advice. See id. (“The regularity suggests that providing certain advice for ‘free’ is part of the defendant’s business, not an isolated favor with unconsidered implications.”). There is nothing in the record to suggest Callaway provided similar opinions with any regularity, let alone regularity sufficient for us to conclude it was his business to do so. 14
In this case, Lumber Specialties did not contract with Moeller &
Walter or Dinsdale Construction to provide engineering services
pertaining to the temporary bracing work. It did, however, through its
employee, supply Moeller & Walter and Dinsdale Construction with
information or advice concerning the integrity of the bracing work. This
was done outside the scope of the contract, and the duty question turns
on whether Callaway or Lumber Specialties had a pecuniary interest in
the informational transaction.
No evidence was presented at trial to reveal any direct
consideration was paid to Lumber Specialties or Callaway for supplying
the interim assessment of the temporary bracing. Furthermore, no
evidence was presented at trial to show Callaway received direct
consideration from Lumber Specialties for supplying the temporary
bracing information to Moeller & Walter and Dinsdale Construction. No
information was presented to show Callaway was responsible to supply
the information as a part of his job responsibilities. Additionally, no
evidence was presented that Callaway had an expectation that Lumber
Specialties or either Moeller & Walter or Dinsdale Construction would
compensate him for giving the information. Instead, the evidence at trial
showed Callaway supplied the information as a courtesy to a customer in
furtherance of the overall business interests of Lumber Specialties. This
is the evidence Dinsdale Construction asserts supports the imposition of
a duty based on the rule that indirect consideration can be sufficient to
establish a pecuniary interest in supplying information. See Nationwide
Agribus. v. Structural Restoration, Inc., 705 F. Supp. 2d 1070, 1081 (S.D.
Iowa 2010) (finding an indirect financial interest for information provided
“as a ‘sales tool’ ”). 15
In Nationwide, the defendant was engaged in a business of
inspecting and repairing silos. Id. at 1080. The defendant inspected the
plaintiff’s silo free of charge and wrote a letter to the plaintiff describing
the results of the inspection, which the plaintiff alleged misrepresented
its condition. Id. at 1078. The silo subsequently collapsed. Id. at 1075.
The court found the defendant had an indirect financial interest in the
inspection to support imposing the duty of care because the information
was done as a “sales tool” to procure future repair services for
compensation. Id. at 1081. The court found the facts in that case
supporting its conclusion the defendant had an indirect pecuniary
interest analogous to the facts in Sain. Id. (citing Sain, 626 N.W.2d at
126). Contrary to this observation, we do not find the facts in Sain
analogous.
In Sain, we held that a high school counselor had an indirect
pecuniary interest in supplying information to a student athlete
concerning his eligibility to play college basketball, even though the
student athlete did not pay any consideration to the counselor. 626
N.W.2d at 120, 126. We found the consideration paid to the counselor
by the school system to provide advice and information to students
constituted sufficient pecuniary interest. Id. The indirect pecuniary
interest in Sain was not supplied by the future expectation of direct
consideration for future transactions as in Nationwide. Compare id.,
with Nationwide, 705 F. Supp. 2d at 1081. The defendant in Nationwide
had inspected the plaintiff’s silos a few years earlier and submitted a bid
at that time to perform restoration services. Nationwide, 705 F. Supp. 2d
at 1073. The inspection and bid did not result in a contract, but it was
viewed as part of a business model that would lead to contracts. See id.
at 1075. The inspection and bid were a common component to the sales 16
transaction. See id. at 773. When the defendant inspected the silos a
second time, it knew the silo owner was concerned about the condition of
one of the silos. Id. at 1074. It also knew the inspection could lead to
the procurement of future restoration-services contracts for
consideration. Id. at 1075. Thus, at least some evidence suggested the
gratuitous inspection was part of an overall sales technique to support a
finding of a financial interest in making the inspection. See id. at 1081.
Unlike in Nationwide, there is no evidence in this case to support
finding an expectation that the requested inspection done by Callaway
would result in additional or future transactions for the purchase of
building materials or engineering services by Moeller & Walter, Dinsdale
Construction, or any other entity or person. There was also no evidence
that the actions by Callaway in making a cursory inspection of the
trusses was part of a business model or “sales tool” used by Lumber
Specialties to procure future sales or services. Nothing was said during
the course of the transaction and no representations were made about
future sales. 13
We conclude the district court erred in failing to grant the motion
for judgment notwithstanding the verdict made by Lumber Specialties. The tort of negligent misrepresentation is not broad enough for the
pecuniary interest in a transaction to come from general goodwill
potentially derived by a business in supplying requested advice or
information to a customer as a courtesy following the sale of a product.
A transaction of this nature is too attenuated and abstract from those
contemplated by the Restatement to impose a duty of care. Although
13We note Callaway passed out promotional pencils bearing Lumber Specialties’ name. Even taking the evidence in the light most favorable to Dinsdale Construction, as we must, we do not find this dispositive. 17
some degree of foreseeability and reliance may result from a gratuitous
opinion, no special relationship is created to impose the duty of care
without a pecuniary interest. In effect, Callaway’s casual observations
requested by Moeller & Walter expressed nothing more than a “curbstone
opinion” excluded from the imposition of duty under the tort.
IV. Conclusion.
As one commentator asserts, “Negligent misrepresentation has
become the most facile tort theory available to a construction project
participant who would recover purely economic loss from another
participant.” See Carl J. Circo, Placing the Commercial and Economic
Loss Problem in the Construction Industry Context, 41 J. Marshall L. Rev.
39, 87 (2007). In Iowa, negligent misrepresentation is not subject to the
economic loss rule. See Van Sickle, 783 N.W.2d at 694. It can, and has,
been applied to a variety of businesses. See Pitts, 818 N.W.2d at 112
(noting tort has been applied in Iowa to “accountants, appraisers, school
guidance counselors and investment brokers”). Yet, the doctrine does
have limits. A duty is normally only imposed on those in the business of
providing information because this is the most common example of those
who are paid for or otherwise have a pecuniary interest in providing the
information that gave rise to the dispute. The duty is imposed because it
is fair to hold these professional purveyors of information to the
foreseeable consequences of their actions. We do not impose a duty on
defendants who do not have a pecuniary interest in the transaction, nor
do we impose a duty when the defendant is not acting in its information-
giving capacity. Callaway’s statements fall in the former category. This
question of duty was for the court to decide, and the district court erred
in denying Lumber Specialties’ motion for judgment notwithstanding the
verdict. 18
DECISION OF COURT OF APPEALS VACATED; DISTRICT
COURT JUDGMENT REVERSED AND CASE REMANDED.