Smith v. Brutger Companies

569 N.W.2d 408, 1997 Minn. LEXIS 781, 1997 WL 656239

• Court: Supreme Court of Minnesota
• Decided: October 23, 1997
• Docket: C2-96-600
• Status: Published

Opinions

OPINION

ANDERSON, Justice.

The Minnesota Court of Appeals reversed grant of summary judgment in favor of appellants Brutger Companies, Brutger Management Company, and Management Dynamics Company (Brutger) and Hegg Capital Company, Inc. (Hegg) and remanded for trial a negligent misrepresentation claim brought by respondents Jane Smith and her husband Joe Smith (Smiths). The court of appeals concluded that summary judgment was procedurally invalid and that the district court applied an incorrect legal standard when it entered judgment for Brutger and Hegg. We reverse.

In the early morning hours of August 11, 1988, respondent Jane Smith was sexually assaulted by an intruder who entered her ground-level apartment at Woodridge Apartments (Woodridge) in Eagan, Minnesota. The evening before the assault was a warm summer evening, and Jane Smith left the dining room window open and unlocked to improve ventilation. The intruder cut the screen and entered the apartment through this window.

During the summer of 1994, the Smiths sued Brutger and Hegg, the companies that own and manage Woodridge, for damages. The Smiths brought four claims against Brutger and Hegg. The first claim was based on Brutger and Hegg’s alleged negligent failure to provide information to the Smiths about security devices designed to prevent forced entry into their apartment and to warn the Smiths about criminal activities in and around Woodridge before the assault. The second claim alleged that Brutger and Hegg negligently failed to provide proper lighting for the Woodridge grounds and apartments. The third claim asserted that Brutger and Hegg negligently failed to provide adequate security devices on the Wood-ridge grounds and in the apartments. The fourth claim alleged negligent misrepresentation by Brutger and Hegg and damages to the Smiths as a result of the misrepresentation.

The Smiths’ misrepresentation claim is based upon the following facts. In May 1988, Joe Smith met with Kimberly Gorman, a Woodridge representative, to inquire about leasing an apartment. Smith asserts that when he met with Gorman, he told her that his family’s safety was a crucial factor in his choice of an apartment because he often traveled out of town on business. Smith stated in his deposition that, as part of her sales pitch, Gorman told him about the various security features of Woodridge, which features included security key access to the building and the garage and a security intercom system at the front entrance.¹ According to Smith, Gorman told him that Wood-ridge was a “luxury apartment complex,” and she also “represented [Woodridge] as a very safe environment with several security systems and one that was full of good people and that this would be a very good place for us to be with our child.” Smith claimed that he relied on this information in selecting Woodridge. He also stated that he and his wife “left the windows open, if we did, to get fresh air, and we believed, based on what I was told at the time that I rented this apartment, that it would be very safe to do so.”² Joe Smith conceded, however, that Gorman did not describe to him any specific feature or system of Woodridge that did not exist. He also acknowledged that he did not have any discussion with Gorman about crime in the area. The Smiths’ lease, which Jane Smith stated she read, provided that the management would not be responsible for the actions, damages, or injuries caused by intruders or other third parties.

In November 1995, Brutger and Hegg each brought a separate motion for summary judgment on the ground that they did not have a duty to protect the Smiths from the criminal acts of a third party. In Hegg’s memorandum in support of the summary judgment motion, it framed the issues as follows:

Plaintiffs’ claims against Defendants are based in negligence. Plaintiff alleges (1) failure to warn, (2) failure to provide adequate lighting, (3) failure to provide adequate security measures and (4) misrepresentation. * * * To prove any of these claims, Plaintiff must first prove that Defendants had a duty to protect her from assault by a third party.

The parties’ memoranda addressed the legal issue of whether Brutger and Hegg had a duty to protect the Smiths. The parties did not address whether Brutger and Hegg had a duty to exercise reasonable care in conveying information to the Smiths regarding the safety of Woodridge and, if such a duty existed, whether Brutger and Hegg had breached the duty.

In opposition to the summary judgment motions, the Smiths submitted evidence that Brutger and Hegg had encouraged the Smiths and other Woodridge residents to rely on Woodridge as a security complex located in a safe neighborhood. The Smiths presented numerous police reports of burglaries, break-ins, and other crimes that had occurred at Woodridge during the more than two and one-half years from the date Wood-ridge opened to the date of the sexual assault on Jane Smith. The Smiths also offered evidence that Brutger and Hegg contacted the Eagan Police Department two months before the sexual assault on Jane Smith because they were concerned about the level of crime at Woodridge. The Smiths, however, did not submit any police reports documenting any acts of physical violence against Woodridge residents that had occurred before the sexual assault on Jane Smith.

The summary judgment motions were heard on December 20, 1995, and on the following day, the district court granted partial summary judgment. The court concluded that there was no “special relationship” between the Smiths and Brutger and Hegg and that Brutger and Hegg had no duty to protect the Smiths from the criminal acts of third parties. The court’s judgment did not address whether Brutger and Hegg had a duty to use reasonable care in conveying information to the Smiths about safety at Woodridge.

The Smiths’ attorney subsequently contacted the district court to clarify whether summary judgment had been granted on all of the Smiths’ claims or, alternatively, the misrepresentation claim was still pending. In response, on December 26,1995, the court scheduled a conference call for January 2, 1996, to discuss the trial set for January 1996 and the “misrepresentation issue from the original complaint that has not been dismissed.” The court also sent the parties a letter scheduling the conference call and stating that they would discuss the misrepresentation claim during the conference call.

The conference call was held as scheduled. During the call, the parties gave their arguments and Brutger and Hegg again argued that the court should dismiss the Smiths’ misrepresentation claim. Without requiring the parties to submit additional motion papers, the court issued an order on January 3, 1996, dismissing the Smiths’ misrepresentation claim and ordering the immediate entry of judgment. The court determined that the misrepresentation claim was a claim in negligence, that a claim in negligence must be based on a duty, and that “since there were no ‘special circumstances’, there could be no duty as a matter of law.” The court concluded the previous order granting Brutger’s and Hegg’s motions for summary judgment specifically included the Smiths’ “misrepresentation claim based upon negligence that are [sic] set forth in Plaintiffs’ complaint” and therefore dismissed the “entire matter.”

The court of appeals affirmed the district court’s grant of summary judgment on the first three counts of the complaint, holding that Brutger and Hegg had no duty to warn the Smiths of criminal activity at Woodridge nor to protect the Smiths against the criminal acts of third parties. However, the court of appeals reversed summary judgment on the misrepresentation claim and remanded the issue for trial. The court of appeals held that Brutger and Hegg violated the notice requirements of Minn. Gen. R. Pract. 115 and Minn. R. Civ. P. 56.03 by failing to serve a motion for summary judgment on the misrepresentation claim at least ten days before the January 2 hearing on the motion. In addition, the court of appeals held that the Smiths were prejudiced due to the lack of notice because neither party addressed the misrepresentation claim in the original summary judgment motions and memoranda. Finally, the court of appeals held that the district court did not apply the proper duty of care in dismissing the misrepresentation claim. The court of appeals determined that the duty of care owed in the context of negligent misrepresentation was defined in Florenzano v. Olson, 387 N.W.2d 168, 174 (Minn.1986), as “an objective .standard of reasonable care or competence” applicable “when supplying information, either for the guidance of others in the course of a transaction in which one has a pecuniary interest, or in the course of one’s business, profession or employment.”

On appeal to this court, Brutger and Hegg argue that their motions for summary judgment were procedurally valid because the original summary judgment motions placed the misrepresentation claim before the district court and gave the Smiths proper notice. They assert that discovery had been completed, the case was less than a month from trial, and all of the dispositive facts relating to the Smiths’ misrepresentation claim were part of the record.

As to the merits of the Smiths’ misrepresentation claim, Brutger and Hegg argue that the misrepresentation claim must fail because they did not owe the Smiths any duty of care. In addition, Brutger and Hegg assert that the claim must fail because Gor-man did not convey any false statement or information to the Smiths. Finally, Brutger and Hegg assert that the Smiths cannot as a matter of law establish that they reasonably relied upon Gorman’s statements because the statements were not false, were vague and mere opinion or conjecture about future events, and because the lease stated explicitly that the landlord would not be liable for injury caused by intruders.

I.

We first address the issue of whether the court of appeals erred in concluding that summary judgment on the Smiths’ misrepresentation claim was procedurally improper. Under Minn. Gen. R. Pract. 115.03, no motion shall be heard unless motion papers are served at least 28 days prior to the hearing. Minn. R. Civ. P. 56.03 requires that a motion for summary judgment must be served at least ten days before the hearing. Notice requirements for motions under Minn. R. Civ. P. 56.03 are mandatory, absent a clear waiver by the adversary. McAllister v. I.S.D. No. 306 of Hubbard County, 276 Minn. 549, 550, 149 N.W.2d 81, 82 (1967).

We conclude that Brutger’s and Hogg’s original motions for summary judgment included the negligent misrepresentation claim and therefore the notice requirements of Minn. Gen. R. Pract. 115.03 and Minn. R. Civ. P. 56.03 were satisfied. The original motions were made within two months of trial and heard a month before trial. The motions included a request that the court grant summary judgment dismissing the Smiths’ complaint with prejudice and made clear that Brutger and Hegg were seeking to have the entire lawsuit dismissed. In addition, the motions were heard after full discovery had been completed and were decided on undisputed facts.

Following its December 21 grant of partial summary judgment, the court received an inquiry from the Smiths’ counsel regarding the “issue of misrepresentation that was in the [Smiths’] original complaint.” The court responded to the inquiry by issuing an order and sending a letter which set a conference call between the judge and the parties for one week later for the explicit purpose of discussing the January 1996 trial date and “the misrepresentation issue from the original complaint that has not been dismissed.” Following further argument on the motion during the conference call, the court determined that the misrepresentation claim should be included in its original judgment.

In their memoranda on the summary judgment motions, it is apparent that the parties based their legal arguments on the erroneous assumption that whether Brutger and Hegg had a duty to protect the Smiths was disposi-tive of the misrepresentation claim. Nonetheless, the parties’ erroneous legal arguments did not diminish the Smiths’ notice that the misrepresentation claim was before the district court. The court’s failure to include the misrepresentation claim in its December 21 grant of summary judgment did not require the submission of new motion papers. It is clear from the record that the Smiths had adequate notice and opportunity to prepare for the hearing on their misrepresentation claim. We hold that the court of appeals erred in concluding that summary judgment on the misrepresentation claim was procedurally improper under Minn. Gen. R. Pract. 115.03 and Minn. R. Civ. P. 56.03.

II.

Having concluded that the notice requirements of Minn. Gen. R. Pract. 115.03 and Minn. R. Civ. P. 56.03 were satisfied, we next address whether the district court properly granted summary judgment in favor of Brut-ger and Hegg on the misrepresentation claim. Summary judgment is proper when the pleadings, depositions, answers to interrogatories, admissions on file, and affidavits, if any, submitted show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law. Minn. R. Civ. P. 56.03. On appeal from an order of summary judgment, the reviewing court must review the record for the purpose of answering two questions: (1) whether there are any genuine issues of material fact to be determined; and (2) whether the district court erred in its application of the law. Offerdahl v. Univ. of Minn. Hosps. & Clinics, 426 N.W.2d 425,427 (Minn.1988). On review, this court views the evidence in the light most favorable to the party against whom summary judgment was granted. Id.

This case presents us with a claim of negligent misrepresentation involving the risk of physical harm, a tort that we have neither specifically adopted nor rejected in Minnesota. The Restatement (Second) of Torts § 311 (1965) defines negligent misrepresentation involving risk of physical harm as follows:

(1) One who negligently gives false information to another is subject to liability for physical harm caused by action taken by the other in reasonable rebanee upon such information, where such harm results

(a) to the other, or

(b) to such third persons as the actor should expect to be put in peril by the action taken.

(2) Such negligence may consist of failure to exercise reasonable care

(a) in ascertaining the accuracy of the information, or

(b) in the manner in which it is communicated.

The elements of this tort are: (1) a duty of reasonable care in conveying information; (2) breach of that duty by negligently giving false information; (3) reasonable reliance on the misrepresentations, which reliance is the proximate cause of physical injury; and (4) damages.

The tort of negbgent misrepresentation involving the risk of physical harm differs from the companion tort of negbgent misrepresentation involving damages for pecuniary loss as defined in Restatement (Second) of Torts § 552 (1977).³ This court adopted negbgent misrepresentation involving pecuniary loss as defined in Restatement (Second) of Torts § 552 in Bonhiver v. Graff, 311 Minn. 111, 121-22, 248 N.W.2d 291, 298-99 (1976) and reaffirmed the use of this definition in Florenzano, 387 N.W.2d at 174 n. 3.⁴ The court of appeals relied on Florenzano when it made its decision in this case. Unlike the situation before us, negligent misrepresentation involving damages for pecuniary loss applies primarily to business situations in which false information is supplied to guide others in business transactions and a pecuniary loss is suffered. See, e.g., id. at 175 (holding that negligent misrepresentation was basis for liability of insurance agent who supplied client with false information leading to client’s loss of social security benefits). The Smiths did not plead negligent misrepresentation resulting in pecuniary loss; thus, Bonhiver and Florenzano do not dictate the outcome of this case.

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 iheir 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.

While we do not foreclose the possibility of recognizing in Minnesota the tort of negligent misrepresentation involving the risk of physical harm, we decline to do so today. This case is not the appropriate vehicle to do so. Even if we were to recognize the tort of negligent misrepresentation and even if there was some material misrepresentation by Brutger and Hegg, the facts foreclose the possibility of the Smiths proving that any misrepresentation had any causal connection to the assault on Jane Smith. The undisputed material facts of this ease do not give rise to an actionable claim for negligent misrepresentation because the Smiths did not reasonably rely on Gorman’s statements. The intruder gained access to the Smiths’ apartment by cutting a screen on the unlocked dining room window. It is undisputed that the window had a locking mechanism. Before going to bed, Jane Smith locked the sliding glass doors and the front door. She stated that she locked the doors for security purposes. She also stated that she may have given consideration to locking the window before going to bed, but did not, even though when she left the apartment, she would lock the window for security purposes.

Joe Smith admitted that the safety features of Woodridge Gorman described to him did in fact exist. Gorman’s statements that Woodridge was a “luxury apartment complex” and a “very safe environment” in which to live were generalized opinions, and therefore are not actionable misrepresentations as a matter of law. See, e.g., M.B. v. City of San Diego, 233 Cal.App.3d 699, 708, 284 Cal. Rptr. 555 (1991) (holding that police officers’ generalized reassurances “not to worry” about person who burglarized plaintiffs residence and made obscene phone calls to plaintiff and generic advice as to precautionary measures were not actionable on negligent misrepresentation theory when burglar subsequently raped plaintiff); also see generally W. Page Keeton, et al., Prosser and Keeton on the Law of Torts § 109 at 755-765 (5 ed.1984) (discussing the relation between opinion statements and justifiable reliance). Finally, Gorman had no special knowledge of crime in the neighborhood surrounding Woodridge that was not readily available to the Smiths when they chose to live there. Cf. Kociemba v. G.D. Searle & Co.,. 707 F.Supp. 1517, 1525 (D.Minn.1989) (stating that intentional representations made by a party with special knowledge and relied upon by the injured party may be considered to be facts rather than opinions). We conclude that summary judgment in favor of Brutger and Hegg was properly granted; therefore, we reverse.

Reversed.

1 . Joe Smith and Jane Smith answered an interrogatory as to the factual basis supporting their misrepresentation claim as follows:

INTERROGATORY 12: Set forth with specificity each and every factual basis supporting the plaintiffs’ claim, contained in paragraph 28 of Plaintiffs' Complaint, that defendant represented to the plaintiffs that Woodridge was a security apartment complex.

ANSWER: Plaintiff Joe Smith was told that Woodridge was safety and security conscious. He was told the underground garage entrance was accessible only to residents by use of a card inserted into a garage door device to gain entry. He was told all entrances were locked and entry could only be done by a key or consent by a resident. The pool, community rooms and exercise rooms were for Woodridge residents only. Woodridge represented they had well lighted common grounds that were safe and secure.

2 . At his deposition, Joe Smith gave the following answers to questions with respect to locking the windows to the apartment:

Q. We were talking about the latching system on the windows at your apartment and I understood you to be saying thát you did not view those as a security device before the date of [Jane's] attack; is that correct?

A. Yes.

Q. So am I understanding that you would not make a point then to shut those latches because you did not view it as a safety protector?

MR. CROSBY: If you can answer the question, go ahead.

A. We left the windows open, if we did, to get fresh air, and we believed, based on what I was told at the time that I rented this apartment, that it would be very safe to do so. BY MR. DODGE:

Q. What were you told that suggested to you that it would be safe not to latch the windows?

A. Kim represented Woodridge to me as a luxury apartment complex. I realized I was paying more. She represented to me the security features of the buildings and that it was a safe environment in and around the buildings, and because of all that, I relied on all of that and I viewed it as being safe, based on that, to allow a window to be open to get fresh air.

3 . The Restatement (Second) of Torts § 552 provides:

4 . In M.H. v. Caritas Family Servs., we also cited Bonhiver when we dealt with the issue of alleged negligent misrepresentations made by an adoption agency. 488 N.W.2d 282, 287 (Minn.1992). In Caritas, the defendant adoption agency argued that holding them liable for negligent misrepresentations would be against public policy. Id. at 286. We answered only the narrow question of whether public policy precludes "a negligent misrepresentation action against an adoption agency where the agency, having undertaken to disclose information about the child’s genetic parents and medical background to the adoptive parents, negligently withholds information in such a way that the adoptive parents were misled as to the truth.” Id. at 288. In answering this question, we decided solely that a negligent misrepresentation claim against an adoption agency was not barred under the specific facts of that case. Id. We did not, however, specifically adopt the tort of negligent misrepresentation in all contexts.

We clearly did not adopt the specific tort of negligent misrepresentation resulting in physical harm. The plaintiffs in Caritas did not specifically allege physical harm in their complaint. Id. at 290. They did, however, allege that they had "suffered grevious [sic] mental pain and anguish.” Plaintiff’s Complaint at 3, Appellant's Brief at Appendix 4, M.H. v. Caritas Family Servs., 475 N.W.2d 94 (Minn.App.1991) (Nos.CX-91-406, C9-91-672), rev'd in part and aff'd. in part, 170 Wis.2d 155, 488 N.W.2d 282 (Minn. 1992). Because the question before us was so narrow, we did not address the broader issue of alleged harm. We did not answer the broader question of whether negligent misrepresentation resulting in physical harm was a viable tort in Minnesota.