State v. United States Steel Corp.6/24/1996
ection 552, which provides that "one who, . . . 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 . . ." The above strict and narrow interpretation of the tort of negligent misrepresentation fails to take into account those circumstances where the supplier of false information has a pecuniary interest in the transaction at hand and also fails to realize that "pecuniary loss" is by its very definition "economic loss." See Black's Law Dictionary (6 Ed. 1990) 1131; see, also, Harrell [v. Crystal], 81 Ohio App. 3d [515,] 523, 611 N.E.2d [908,] 913 [(Ohio 1992)], recognizing recovery for pecuniary damages.
Id. 622 N.E.2d at 1105-06 (ellipses in original).
Similarly, in Vermont Plastics, Inc. v. Brine, Inc., 824 F. Supp. 444 (D. Vt. 1993), the United States District Court for the District of Vermont, applying Vermont law, which recognizes section 552, rejected an argument that purely economic damages are not recoverable for negligent misrepresentation and noted:
First, as indicated above [referencing text of section 552(1)], the Restatement allows for any pecuniary loss suffered by a party relying on the misrepresentation. Second, in Kramer v. Chabot, 152 Vt. 53, 564 A.2d 292 (1989), the Vermont Supreme Court allowed a plaintiff to recover for purely economic damages under a negligent misrepresentation theory. The court allowed the plaintiff to recover the benefit of her bargain for losses that she suffered in purchasing a house which was worth considerably less money than represented to her by an independent appraiser. Id. at 58, 564 A.2d at 294-95. Therefore, under the Restatement and under Vermont law, a plaintiff can recover contract-type damages -- or in other words, purely economic damages -- for the tort of negligent misrepresentation.
Id. at 451-52 (footnote omitted). See also Advanced Drainage Systems, Inc. v. Lowman, 210 Ga. App. 731, 437 S.E.2d 604, 607 (Ga. Ct. App. 1993) (recognizing section 552 as an "exception" to the economic loss rule); Moorman Mfg. Co. v. National Tank Co., 91 Ill. 2d 69, 435 N.E.2d 443, 452, 61 Ill. Dec. 746 (Ill. 1982) (recognizing that economic loss is recoverable for intentional and negligent misrepresentation, but not innocent misrepresentation).
Finally, one of the principal considerations enunciated by courts adopting the economic loss rule is that permitting recovery of economic losses in a claim based on products liability would undermine provisions of the Uniform Commercial Code (UCC). However, such consideration is not applicable to actions based on negligent misrepresentation because the UCC itself contemplates actions based on misrepresentation.
The logic and policy considerations supporting the adoption of the economic loss rule in the products liability context are compelling. As the court in East River noted:
Products liability grew out of a public policy judgment that people need more protection from dangerous products than is afforded by the law of warranty. See Seely v. White Motor Co., 63 Cal. 2d 9, 15, 45 Cal. Rptr. 17, 21, 403, 403 P.2d 145, P.2d 145, 149 (1965). It is clear, however, that if this development were allowed to progress too far, contract law would drown in a sea of tort. See G. Gilmore, The Death of Contract 87-94 (1974).
476 U.S. at 866 (emphasis added). Representative of the reasoning utilized by courts adopting the economic loss rule are the comments of the Oklahoma Supreme Court in Waggoner v. Town & Country Mobile Homes, Inc., 808 P.2d
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