308 Ga. 842 FINAL COPY
S19G1000. GLOBAL PAYMENTS, INC. v. INCOMM FINANCIAL SERVICES, INC.
ELLINGTON, Justice.
In InComm Financial Svcs. v. Global Payments, 349 Ga. App.
363, 365 (1) (825 SE2d 839) (2019), the Court of Appeals reversed
the trial court’s order dismissing InComm’s negligent
misrepresentation claim against Global based on Global’s having
transmitted to InComm allegedly false information generated by a
third party. We granted Global’s petition for a writ of certiorari to
consider that holding. Because the allegations of the complaint show
that Global merely transmitted data concerning debit and credit
card transactions without representing that the transactions were
legitimate, the Court of Appeals erred, and we reverse.
We begin with the well-settled standard that
[a] motion to dismiss for failure to state a claim upon which relief may be granted should not be sustained unless (1) the allegations of the complaint disclose with certainty that the claimant would not be entitled to relief under any state of provable facts asserted in support thereof; and (2) the movant establishes that the claimant could not possibly introduce evidence within the framework of the complaint sufficient to warrant a grant of the relief sought. If, within the framework of the complaint, evidence may be introduced which will sustain a grant of the relief sought by the claimant, the complaint is sufficient and a motion to dismiss should be denied. In deciding a motion to dismiss, all pleadings are to be construed most favorably to the party who filed them, and all doubts regarding such pleadings must be resolved in the filing party’s favor.
(Citations omitted.) Anderson v. Flake, 267 Ga. 498, 501 (2) (480
SE2d 10) (1997). “On appeal, a trial court’s ruling on a motion to
dismiss for failure to state a claim for which relief may be granted
is reviewed de novo.” Northway v. Allen, 291 Ga. 227, 229 (728 SE2d
624) (2012). So viewed, InComm’s complaint shows the following.
InComm issues pre-paid debit and credit cards under the
“Vanilla VISA” brand to cardholders who use the cards to buy goods
and services. Global is a financial data payment processor. Global
provides its clients, primarily merchants, with payment technology
hardware and software that allows them to accept card payments
and to communicate electronically with card networks and card issuers. For example, when a Vanilla VISA cardholder makes a
purchase from a merchant who is a client of Global, Global transmits
the payment data it receives from the merchant to the VISA
network, and the VISA network relays the data to the card issuer,
InComm. In this case, thieves purchased Vanilla VISA pre-paid
debit and credit cards and used them to buy goods and services.
Then, using certain merchants that were not the merchants who
originally sold the goods and services, the thieves initiated
counterfeit electronic “reversal transactions” — basically requests
for refunds on behalf of the cardholders. Upon receiving the reversal
transaction data from the merchants, Global relayed the data to the
VISA network. The VISA network then submitted the reversal
transaction data to InComm. InComm received the data, posted the
reversal transactions to the cardholder accounts, and then issued
credits to the merchants who, in turn, passed the credits on to the
thieves holding the Vanilla VISA cards. The thieves then converted
those credits (in excess of $1.5 million made over 3,600 transactions)
to their use. InComm does not allege that Global participated in creating
the counterfeit reversal transactions. InComm alleged in its
complaint that thieves used merchants to create the counterfeit
reversal transactions at issue. Specifically, InComm alleged that “all
of the Reversal Transactions were initiated through the accounts of
the Reversal Merchants and electronically transmitted to [Global].”
Although Global had no role in creating the counterfeit transactions,
InComm nevertheless asserted that Global is liable for the losses
InComm suffered as a consequence of those transactions because
Global negligently supplied to the VISA network the data created by
the reversal merchants. In support of its claim, InComm asserted
that Global, as a payment processor, “had a duty to exercise
reasonable care in supplying the VISA Network and its participants
with the transactions initiated by the Reversal Merchants.”
InComm alleged that Global
knew or should have known that the Reversal Transactions were invalid because: (a) the Originating Merchants (who debited the Vanilla VISA cards) were different from the Reversal Merchants; (b) the preauthorization keys transmitted by the Reversal Merchants in the Reversal Transactions did not match any prior preauthorization key sent by the same Reversal Merchant; and (c) the preauthorization keys of the Reversal Transactions did not match any preauthorization keys in any Originating Transaction processed by [Global].
Citing this Court’s decision in Robert & Co. Assoc. v. Rhodes-Haverty
Partnership, 250 Ga. 680 (300 SE2d 503) (1983), InComm alleged
that Global owes it a common-law duty of ordinary care and is liable
to it under a negligent misrepresentation tort theory of liability for
supplying it with “bogus data.” InComm has not alleged, however,
that Global transmitted data that had been altered intentionally or
negligently by Global or that otherwise failed to accurately reflect
the counterfeit transactions.
“In [Robert,] this Court first recognized a claim for negligent
misrepresentation and adopted the liability standard set forth in
section 552 of the Restatement (Second) of Torts.” BDO Seidman,
LLP v. Mindis Acquisition Corp., 276 Ga. 311, 311 (1) (578 SE2d
400) (2003).1 Under the standard adopted in Robert,
1 Although this Court has looked to § 552 of the Restatement (Second) of one who supplied information during the course of his business, profession, employment, or in any transaction in which he has a pecuniary interest has a duty of reasonable care and competence to parties who rely upon the information in circumstances in which the maker was manifestly aware of the use to which the information was to be put and intended that it be so used. This liability is limited to a foreseeable person or limited class of persons for whom the information was intended, either directly or indirectly.
(Citation, punctuation and emphasis omitted.) Badische Corp. v.
Caylor, 257 Ga. 131, 132-133 (356 SE2d 198) (1987). Liability for a
negligent representation attaches when a defendant makes a false
representation upon which the plaintiff relies. See, e.g., Robert, 250
Ga. at 681-682 (“If it can be shown that the representation was made
for the purpose of inducing third parties to rely and act upon the
reliance, then liability to the third party [for negligent
misrepresentation] can attach.”); Ali v. Fleet Finance, 232 Ga. App.
13, 14 (500 SE2d 914) (1998) (“[B]ecause [the defendant] did not
Torts for guidance in defining the tort of negligent misrepresentation under Georgia law, § 552 is not a statute or other authority binding on Georgia’s courts, and the Restatement should be considered as a whole for what it is — a learned treatise. InComm’s efforts to have us parse § 552 and, in particular, to read it in isolation from the comments and illustrations that accompany it, are misplaced.
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308 Ga. 842 FINAL COPY
S19G1000. GLOBAL PAYMENTS, INC. v. INCOMM FINANCIAL SERVICES, INC.
ELLINGTON, Justice.
In InComm Financial Svcs. v. Global Payments, 349 Ga. App.
363, 365 (1) (825 SE2d 839) (2019), the Court of Appeals reversed
the trial court’s order dismissing InComm’s negligent
misrepresentation claim against Global based on Global’s having
transmitted to InComm allegedly false information generated by a
third party. We granted Global’s petition for a writ of certiorari to
consider that holding. Because the allegations of the complaint show
that Global merely transmitted data concerning debit and credit
card transactions without representing that the transactions were
legitimate, the Court of Appeals erred, and we reverse.
We begin with the well-settled standard that
[a] motion to dismiss for failure to state a claim upon which relief may be granted should not be sustained unless (1) the allegations of the complaint disclose with certainty that the claimant would not be entitled to relief under any state of provable facts asserted in support thereof; and (2) the movant establishes that the claimant could not possibly introduce evidence within the framework of the complaint sufficient to warrant a grant of the relief sought. If, within the framework of the complaint, evidence may be introduced which will sustain a grant of the relief sought by the claimant, the complaint is sufficient and a motion to dismiss should be denied. In deciding a motion to dismiss, all pleadings are to be construed most favorably to the party who filed them, and all doubts regarding such pleadings must be resolved in the filing party’s favor.
(Citations omitted.) Anderson v. Flake, 267 Ga. 498, 501 (2) (480
SE2d 10) (1997). “On appeal, a trial court’s ruling on a motion to
dismiss for failure to state a claim for which relief may be granted
is reviewed de novo.” Northway v. Allen, 291 Ga. 227, 229 (728 SE2d
624) (2012). So viewed, InComm’s complaint shows the following.
InComm issues pre-paid debit and credit cards under the
“Vanilla VISA” brand to cardholders who use the cards to buy goods
and services. Global is a financial data payment processor. Global
provides its clients, primarily merchants, with payment technology
hardware and software that allows them to accept card payments
and to communicate electronically with card networks and card issuers. For example, when a Vanilla VISA cardholder makes a
purchase from a merchant who is a client of Global, Global transmits
the payment data it receives from the merchant to the VISA
network, and the VISA network relays the data to the card issuer,
InComm. In this case, thieves purchased Vanilla VISA pre-paid
debit and credit cards and used them to buy goods and services.
Then, using certain merchants that were not the merchants who
originally sold the goods and services, the thieves initiated
counterfeit electronic “reversal transactions” — basically requests
for refunds on behalf of the cardholders. Upon receiving the reversal
transaction data from the merchants, Global relayed the data to the
VISA network. The VISA network then submitted the reversal
transaction data to InComm. InComm received the data, posted the
reversal transactions to the cardholder accounts, and then issued
credits to the merchants who, in turn, passed the credits on to the
thieves holding the Vanilla VISA cards. The thieves then converted
those credits (in excess of $1.5 million made over 3,600 transactions)
to their use. InComm does not allege that Global participated in creating
the counterfeit reversal transactions. InComm alleged in its
complaint that thieves used merchants to create the counterfeit
reversal transactions at issue. Specifically, InComm alleged that “all
of the Reversal Transactions were initiated through the accounts of
the Reversal Merchants and electronically transmitted to [Global].”
Although Global had no role in creating the counterfeit transactions,
InComm nevertheless asserted that Global is liable for the losses
InComm suffered as a consequence of those transactions because
Global negligently supplied to the VISA network the data created by
the reversal merchants. In support of its claim, InComm asserted
that Global, as a payment processor, “had a duty to exercise
reasonable care in supplying the VISA Network and its participants
with the transactions initiated by the Reversal Merchants.”
InComm alleged that Global
knew or should have known that the Reversal Transactions were invalid because: (a) the Originating Merchants (who debited the Vanilla VISA cards) were different from the Reversal Merchants; (b) the preauthorization keys transmitted by the Reversal Merchants in the Reversal Transactions did not match any prior preauthorization key sent by the same Reversal Merchant; and (c) the preauthorization keys of the Reversal Transactions did not match any preauthorization keys in any Originating Transaction processed by [Global].
Citing this Court’s decision in Robert & Co. Assoc. v. Rhodes-Haverty
Partnership, 250 Ga. 680 (300 SE2d 503) (1983), InComm alleged
that Global owes it a common-law duty of ordinary care and is liable
to it under a negligent misrepresentation tort theory of liability for
supplying it with “bogus data.” InComm has not alleged, however,
that Global transmitted data that had been altered intentionally or
negligently by Global or that otherwise failed to accurately reflect
the counterfeit transactions.
“In [Robert,] this Court first recognized a claim for negligent
misrepresentation and adopted the liability standard set forth in
section 552 of the Restatement (Second) of Torts.” BDO Seidman,
LLP v. Mindis Acquisition Corp., 276 Ga. 311, 311 (1) (578 SE2d
400) (2003).1 Under the standard adopted in Robert,
1 Although this Court has looked to § 552 of the Restatement (Second) of one who supplied information during the course of his business, profession, employment, or in any transaction in which he has a pecuniary interest has a duty of reasonable care and competence to parties who rely upon the information in circumstances in which the maker was manifestly aware of the use to which the information was to be put and intended that it be so used. This liability is limited to a foreseeable person or limited class of persons for whom the information was intended, either directly or indirectly.
(Citation, punctuation and emphasis omitted.) Badische Corp. v.
Caylor, 257 Ga. 131, 132-133 (356 SE2d 198) (1987). Liability for a
negligent representation attaches when a defendant makes a false
representation upon which the plaintiff relies. See, e.g., Robert, 250
Ga. at 681-682 (“If it can be shown that the representation was made
for the purpose of inducing third parties to rely and act upon the
reliance, then liability to the third party [for negligent
misrepresentation] can attach.”); Ali v. Fleet Finance, 232 Ga. App.
13, 14 (500 SE2d 914) (1998) (“[B]ecause [the defendant] did not
Torts for guidance in defining the tort of negligent misrepresentation under Georgia law, § 552 is not a statute or other authority binding on Georgia’s courts, and the Restatement should be considered as a whole for what it is — a learned treatise. InComm’s efforts to have us parse § 552 and, in particular, to read it in isolation from the comments and illustrations that accompany it, are misplaced. make any representations, [the plaintiffs] cannot set forth the
requisite elements of [a claim for] negligent misrepresentation.”).
See also Financial Security Assurance v. Stephens, Inc., 500 F.3d
1276, 1289 (III) (C) (11th Cir. 2007) (Under Georgia law, in
advancing either a claim for fraud or negligent misrepresentation,
“a plaintiff must establish that the defendant made false
representations on which the plaintiff justifiably relied.”).
Thus, under a negligent misrepresentation theory of liability,
one who did not create the false information may nevertheless be
liable for supplying it if the supplier represented that the false
information was legitimate, accurate, or trustworthy. See Robert,
250 Ga. at 681-682; Smiley v. S & J Investments, 260 Ga. App. 493,
497 (2) (580 SE2d 283) (2003) (physical precedent only) (The Court
of Appeals concluded that sellers of real property were not liable for
making a negligent misrepresentation because they had simply
transmitted an engineering report to the buyers without making any
representations as to its accuracy. The sellers “communicat[ed]
exactly what [the engineering company] reported to them in turn to the plaintiffs without any additions, deletions, or opinions of their
own.”).
In this case, the Court of Appeals failed to consider the most
fundamental aspect of InComm’s negligent misrepresentation claim
against Global, that is, whether the reversal transaction data that
Global transmitted constituted false representations. InComm’s
own complaint reveals that the data Global transmitted from the
reversal merchants to the VISA network was accurate and
unaltered and that the transactions could be determined to be
“bogus” only by comparing the merchants and authorization keys of
each refund request with the same for the corresponding original
purchase and by comparing the preauthorization key for a reversal
transaction with others from the same merchant. InComm has not
alleged that Global had any duty, whether common-law, statutory,
or contractual, to make such comparisons. Further, InComm did not
allege that, in relaying the refund transaction data, Global
represented that the underlying transactions were legitimate. See
Robert, 250 Ga. at 681-682; Smiley, 260 Ga. App. at 497 (2). Given that InComm’s complaint does not allege that Global
made false representations to InComm and fails to allege that
Global owed it a duty to detect and flag discrepancies between
original purchase data and refund transaction data, InComm has
failed to state a claim for negligent misrepresentation. See Robert,
250 Ga. at 681-682; Ali, 232 Ga. App. at 13-14 (Where the defendant
did not make any representations about a building it sold to another
“as is,” the Court of Appeals concluded that a subsequent purchaser
failed to set forth the requisite elements of a claim for negligent
misrepresentation. (punctuation omitted)); cf. Levine v. SunTrust
Robinson Humphrey, 321 Ga. App. 268, 280 (6) (b) (740 SE2d 672)
(2013) (In affirming the denial of summary judgment to the
defendant on the plaintiff’s negligent misrepresentation claim, the
Court of Appeals concluded that a question of fact remained
concerning whether the defendant was negligent in representing
that data obtained from others and incorporated into a valuation
report provided to the plaintiff was true or whether the defendant
knew or should have known that the data was inaccurate.). For these reasons, the Court of Appeals erred in reversing the trial
court’s order dismissing InComm’s negligent misrepresentation
claim against Global.
Judgment reversed. All the Justices concur, except Peterson and
McMillian, JJ., disqualified.
DECIDED JUNE 1, 2020. Certiorari to the Court of Appeals of Georgia — 349 Ga. App. 363. Bondurant, Mixson & Elmore, Steven J. Rosenwasser, Benjamin W. Thorpe, Patrick C. Fagan, Frank M. Lowrey IV, for appellant. The Finley Firm, Andrew M. Gibson, Daniel P. Hendrix, for appellee. Gilbert Harrell Sumerford & Martin, Judson H. Turner, Mark D. Johnson, amici curiae.