Volume 44 Issue 2 Summer

Summer 2014

Justified but Negligent Reliance: Hicks .v Eller Allows Comparative as a to Negligent Misrepresentation Claims

Abigail Marrs Yates

Recommended Citation Abigail M. Yates, Justified but Negligent Reliance: Hicks .v Eller Allows as a Defense to Negligent Misrepresentation Claims, 44 N.M. L. Rev. 435 (2014). Available at: https://digitalrepository.unm.edu/nmlr/vol44/iss2/6

This Student Note is brought to you for free and open access by The University of New Mexico School of Law. For more information, please visit the New Mexico Law Review website: www.lawschool.unm.edu/nmlr 35097-nmx_44-2 Sheet No. 72 Side A 06/25/2014 11:26:56 superseded by Baxter v. Noce, , No. 33,519 (May 8, See also is a valid defense to a is a valid defense 2 cert. denied In so holding, the court of In so holding, the 6 Noting a jurisdictional split on the Noting a jurisdictional 3 abolished contributory negligence, which 435 Scott ALLOWS COMPARATIVE ALLOWS , 1981-NMSC-021, ¶ 27. I. INTRODUCTION Abigail Marrs Yates* Scott the New Mexico Court of Appeals for the first the New Mexico 1 , , 1981-NMSC-021, 96 N.M. 682, 634 P.2d 1234, , 1981-NMSC-021, 96 N.M. 682, 634 P.2d MISREPRESENTATION CLAIMS MISREPRESENTATION 1978, § the 41-3A-1 (1987), the New Mexico Supreme Court adopted adopted the majority rule that the doctrine of comparative adopted the majority , 2012-NMCA-061, ¶ 30. Scott v. Rizzo Hicks v. Eller Hicks JUSTIFIED BUT NEGLIGENT RELIANCE: NEGLIGENT BUT JUSTIFIED Hicks NMSA HICKS V. ELLER HICKS 4 , In applies to negligent misrepresentation. applies to negligent 5 3. misrepresentation, also “Principles of negligence govern the law of negligent 4. 5. and “comparative negli- This case note will use the terms “comparative fault” * University of New Mexico School of Law. The author would of 2015, Class 1. 2012-NMCA-061, 280 P.3d 304, Hicks v. Eller, 2. In NEGLIGENCE AS A DEFENSE TO NEGLIGENT A DEFENSE AS NEGLIGENCE M K claim for negligent misrepresentation. claim for negligent issue, time addressed whether comparative negligence time addressed whether doctrine of comparative negligence. recovering against the defendant. Compara- totally barred a negligent plaintiff from between a negligent plaintiff and defendant tive negligence instead apportions fault the plaintiff’s injury. when each contributes a percentage to P.2d 240 (“In adopting the doctrine of com- 1988-NMSC-024, ¶ 12, 107 N.M. 48, 752 all-or-nothing bar of contributory negligence parative negligence, we supplanted the the claimant’s recovery in proportion to his . . . it still exists to diminish or deny by the comparative negligence rule.”). New relative fault, and it is thus governed which means that “the plaintiff’s Mexico is a “pure” comparative fault jurisdiction, his recovery of total suffered in percentage of contributing fault will reduce at the same time exposing him to liability to an amount equal to his degree of fault, and recovery by defendant for injuries incurred by defendant as a result of plaintiff’s proportionate negligence.” referred to as ‘negligence by words.’” Saylor v. Valles, 2003-NMCA-037, ¶ 17, 133 N.M. 432, 63 P.3d 1152. be- gence” interchangeably as both refer to the same principle of apportioning fault like to thank professor Ted Occhialino for his thoughtful input and Professor Camille like to thank professor Ted Occhialino law. The author would also like to thank Carey for sparking an interest in negligence editing, candid advice, and unconditional her father Clinton Marrs for his patient support throughout law school and beyond. 2012). fault \\jciprod01\productn\N\NMX\44-2\NMX207.txt unknown Seq: 1 25-JUN-14 9:41 statute C Y 35097-nmx_44-2 Sheet No. 72 Side A 06/25/2014 11:26:56 A 06/25/2014 72 Side Sheet No. 35097-nmx_44-2 35097-nmx_44-2 Sheet No. 72 Side B 06/25/2014 11:26:56 M K to C Y 7 but see [Vol. 44 of See also § 1 (2000), which ex- IABILITY L (1977). , 22 A.L.R. Fed. 464 (1994); ’s value as a guide for applying ’s value as a guide § 552 Hicks inadequately distinguished New Mex- inadequately distinguished 8 ORTS PPORTIONMENT T A Applicability of Comparative Negligence Doctrine Applicability of Comparative Negligence : OF Hicks ) ORTS NEW MEXICO LAW REVIEW T ECOND OF ) (S 1981-NMSC-021, ¶ 27. adopted the majority rule, the court provided no guide- the court provided the majority rule, adopted HIRD , 2012-NMCA-061, ¶ 42 (Kennedy, J., dissenting). (T Hicks , 2012-NMCA-061, ¶ 34. See Scott, ESTATEMENT See Hicks R Hicks Or is justified reliance simply another way of saying the plaintiff simply another way of saying Or is justified reliance and Judge Kennedy’s dissent advocating for the minority rule. Part dissent advocating for the minority and Judge Kennedy’s have provided a more thor- and concludes that the court should 9 While Part II reviews the New Mexico Court of Appeals’ rationale in the New Mexico Court of Appeals’ Part II reviews 9. 8. Annotation, Sonja Larsen, 6. 7. ESTATEMENT define negligent misrepresentation, and agreed with the majority of states majority with the agreed and misrepresentation, negligent define physical harm causing the from negligence to distinguish that refuse fault. comparative when allowing Braswell v. People’s Credit Union, 602 A.2d 510, 515 (R.I. 1992) (discussing and Braswell v. People’s Credit Union, 602 A.2d 510, 515 (R.I. 1992) (discussing adopting minority rule). plains, “Causes of action other than those for death, personal injury, or physical dam- plains, “Causes of action other than those for death, personal injury, or physical is age to tangible property are not part of the core to which comparative responsibility directed.” to Actions Based on Negligent Misrepresentation was not negligent? Second, was not negligent? lines for applying comparative negligence to the tort of negligent misrep- to the tort of negligent negligence applying comparative lines for raises more reasoning First, the court’s in New Mexico. resentation to show “justified answers: Is the plaintiff still required questions than it a motion to dis- to state a claim sufficient to survive reliance” in order miss? ico contrary to the court’s holding. Third, the court did not to the court’s holding. Third, ico precedent contrary protection and fair rule’s policy effects on consumer consider the majority flaws diminish bargaining. These R tween the plaintiff and the defendant according to the percentage of negligence of tween the plaintiff and the defendant each party. appeals affirmed New Mexico’s adherence to the Second Restatement Second to the adherence Mexico’s New affirmed appeals \\jciprod01\productn\N\NMX\44-2\NMX207.txt unknown436 Seq: 2 25-JUN-14 9:41 III examines the background and development of the tort of negligent III examines the background and focusing on New Mexico’s reliance on misrepresentation in New Mexico, the claim. Part IV of this case note the Second Restatement to define rules in general and how various explains the majority and minority them. Finally, Part V of this note courts across the country have applied of the court of appeals’ opinion in examines the critical shortcomings Hicks a comparative fault defense to ough analytical framework to evaluate negligent misrepresentation. Hicks comparative fault principles to the tort of negligent misrepresentation. principles to the tort of negligent comparative fault 35097-nmx_44-2 Sheet No. 72 Side B 06/25/2014 11:26:56 B 06/25/2014 72 Side Sheet No. 35097-nmx_44-2 35097-nmx_44-2 Sheet No. 73 Side A 06/25/2014 11:26:56 437 was 16 , http:// He contended that 14 Eller then offered to Eller then offered 15 18 Hicks accepted, and Eller Biographical Information 17 UNTON 13 D Hicks selected Eller to assist her be- Hicks selected Eller 12 ERBERT The estate contained many pieces of artwork, contained many The estate W. H 10 II. THE CASE OF STATEMENT JUSTIFIED BUT NEGLIGENT RELIANCE NEGLIGENT BUT JUSTIFIED Hicks knew nothing of the two paintings’ origin or the two paintings’ nothing of Hicks knew 11 , 2012-NMCA-061, ¶ 8. , 2012-NMCA-061, ¶ 5. , 2012-NMCA-061, ¶ 3. ¶ 3. ¶ 6. Hicks Id. Id. Hicks Id. Hicks Id. Hicks eventually showed Eller the two paintings she had found in Hicks eventually showed Eller the Mary Jane Hicks was appointed personal representative of her late representative of personal Hicks was appointed Mary Jane Hicks and Eller met in person, and Eller explained the terms and met in person, and Eller explained Hicks and Eller 17. 18. 13. 14. Brief-in-Chief at 1, Hicks v. Eller, 2012-NMCA-061 (No. 30,026). Appellant’s 15. 16. Herbert “Buck” Dunton (1878–1936) William Maine. was born in Augusta, 12. 10. 11. M K a member of the Taos Society of Artists active in the 1920s and 1930s. a member of the Taos Society of but Eller nonetheless informed The paintings were slightly damaged, paintings for $4,500. She asked Eller Hicks that he wished to purchase the not respond to the question. Instead, if this was a fair price, but Eller did a deal.” he simply asked her if the two “had during the course of this meeting, it became apparent that Hicks was less of this meeting, it became apparent during the course was more interested professional appraisal services and interested in his the items in her mother’s estate. in selling some of storage, one of which was signed “Dunton.” He took interest in these storage, one of which was signed artist, William Herbert Dunton, works, explaining to Hicks that the take a look at the artwork, and asked if he could make an offer to artwork, and asked if he could take a look at the to him. Hicks agreed to Eller’s pro- purchase any of the works of interest posed arrangement. paid her $4,500 for both of the Dunton paintings. paid her $4,500 for both of the Dunton cause she had previously heard advertisements on a local radio station heard advertisements on cause she had previously appraisal services. touting his expert www.dunton.org/whd_exhibit/whd_biography.htm (last visited May 14, 2014). including two paintings that Hicks located in the basement of her late in the basement Hicks located two paintings that including home. mother’s mother’s estate in 2007. mother’s A. and Background Facts worth, so she contacted Peter Eller, a professional art appraiser and gal- Peter Eller, a professional worth, so she contacted value them. lery owner, to help He journeyed to Montana in 1896, and for many years traveled throughout the South- He journeyed to Montana in 1896, and for many years traveled throughout the 1912 west, including New Mexico. He visited Taos, New Mexico for the first time in of at- and permanently moved there in 1914 after falling in love with the “varieties He mosphere” he found there. Dunton co-founded the Taos Society of Artists in 1915. died in Taos at the age of 57. costs associated with providing his appraisal services. costs associated with \\jciprod01\productn\N\NMX\44-2\NMX207.txt unknown 2014] Summer Seq: 3 25-JUN-14 9:41 C Y 35097-nmx_44-2 Sheet No. 73 Side A 06/25/2014 11:26:56 A 06/25/2014 73 Side Sheet No. 35097-nmx_44-2 35097-nmx_44-2 Sheet No. 73 Side B 06/25/2014 11:26:56 , M K C Y “Ad- [Vol. 44 Id. Regard- 25 The trial 24 In her com- 22 Appellant’s Brief-In-Chief at 13 (ex- http://www.abqjournal.com/news/metro/ Jury Awards $15K in Art Sale Dispute Finally, in July of 2008 that dealer in July of 2008 that Finally, 20 That dealer then sold the two Duntons the two then sold dealer That see also 19 9th ed. 2009). Hicks also filed a motion for additur, which the ( Id. available at Scott Sandlin, NEW MEXICO LAW REVIEW 21 ICTIONARY D See also , 2012-NMCA-061, ¶ 38. The motion for additur was based on AW , Aug. 26, 2009, Eller’s comparative fault defense was based on Eller’s comparative fault defense L 26 J. S ’ Hicks , 2012-NMCA-061, ¶ 24. , 2012-NMCA-061, ¶ 9. , 2012-NMCA-061, ¶ 9; at 10. The judge did not instruct the jury on the Unfair Practices Act claim, at 10. The judge did not instruct the jury ¶ 12. LACK B Hicks Hicks Id. Id. Hicks Id. 23 On August 17, 2009, the matter proceeded to trial in the Second the matter proceeded to trial On August 17, 2009, Several months later, Eller sold the Dunton paintings to a Santa Fe, a Santa to paintings the Dunton Eller sold later, months Several Hicks found out about the auction sale and sued Eller for “, about the auction sale and sued Hicks found out 26. 22. 23. 24. Brief-In-Chief at 2. Appellant’s 25. 20. Brief-In-Chief at 12. Appellant’s 21. 19. LBUQUERQUE ing those claims, and over Hicks’s objection, Eller proposed a compara- and over Hicks’s objection, Eller ing those claims, Hicks’s damages. Despite that Eller tive negligence instruction to reduce answer or in his pre-trial papers, the had not asserted the defense in his negligence instruction, asserting that trial judge permitted a comparative the jury can enter into a comparative “any time you have negligence” fault analysis. judge instructed the jury only on the misrepresentation claims. jury only on the misrepresentation judge instructed the plaint, Hicks requested $495,000 in actual damages, $500,000 in punitive $495,000 in actual damages, plaint, Hicks requested as attorney’s fees and in treble damages, as well damages, and $1,486,500 costs. sold the paintings at the Couer d’Alene auction in Las Vegas, Nevada for in Las Vegas, d’Alene auction paintings at the Couer sold the $600,000. a staggering to yet another dealer for $300,000. dealer for to yet another finding that Hicks failed to establish an essential component of the claim—thatfinding that Hicks failed to establish an she had acquired services from Eller. court denied. expert testimony that the Dunton paintings were worth at least $405,000. 26225982719newsmetro08-26-09.htm. jury’s ditur” is a trial court order “with the defendant’s , that increases the term award of damages to avoid a new trial on grounds of inadequate damages. The the may also refer to the increase itself, the procedure, or the court’s power to make order.” plaining that the ultimate seller sold the works for $600,000 less 5 percent, receiving plaining that the ultimate seller sold the $575,000 for them). Judicial District Court in Bernalillo County, New Mexico. Court in Bernalillo County, New Judicial District New Mexico dealer for $35,000. dealer for Mexico New A dispossession and , negligent misrepresentation, violation of conversion, negligent misrepresentation, dispossession and Act], and professional negligence.” the [Unfair Practices B. District Court the Second Judicial Posture from Procedural \\jciprod01\productn\N\NMX\44-2\NMX207.txt unknown438 Seq: 4 25-JUN-14 9:41 35097-nmx_44-2 Sheet No. 73 Side B 06/25/2014 11:26:56 B 06/25/2014 73 Side Sheet No. 35097-nmx_44-2 35097-nmx_44-2 Sheet No. 74 Side A 06/25/2014 11:26:56 439 At 27 Appellee’s An- Based on the Based on 28 30 See ¶ 25. While the court The appeals court 32 Id. ¶¶ 25–28. See id. The jury awarded Hicks $20,000 and reduced it and reduced awarded Hicks $20,000 The jury 29 33 ¶ 2. JUSTIFIED BUT NEGLIGENT RELIANCE NEGLIGENT BUT JUSTIFIED Id. Hicks claimed that comparative negligence, as a matter of comparative negligence, as a Hicks claimed that , 2012-NMCA-061, ¶ 11. The jury instruction read: , 2012-NMCA-061, ¶ 11. The jury instruction 31 If you find [Hicks’] injury was caused by a combination of negligence of If you find [Hicks’] injury was caused by a I have given you, de- First: In accordance with the damage instruction and [Eller] and determine a Second: Compare the negligence of [Hicks] ¶ 30. ¶ 28. Hicks further argued the trial court should have granted her motion ¶ 28. Hicks further argued the trial court ¶ 30. Another of Hicks’ contentions on appeal was that because Eller ¶ 12. Id. Id. Id. Id. Hicks [Eller] and negligence of [Hicks], you must determine the amount of damages [Eller] and negligence of [Hicks], you must to be awarded as follows: by [Hicks]. termine the total amount of damages suffered percentage equals 100%. percentage for each so that the total of the On appeal, Hicks contended the district court erred in permitting contended the district court erred On appeal, Hicks 33. 32. 31. 27. Brief-In-Chief at 11. Hicks objected to evidence introduced at Appellant’s 30. 28. Brief-in-Chief at 19. Appellant’s 29. ¶ 23 (alteration in original). M K trial, Eller’s attorney extensively cross-examined Hicks on her “experi- on her Hicks cross-examined extensively attorney Eller’s trial, intelli- portray her as equally in order to use of computers” ence in the negligent in comparatively Eller, and therefore sophisticated as gent and paintings. value of the Dunton learn the true failing to comparative fault instruction, the jury found Hicks 27 percent at fault and Hicks 27 percent the jury found fault instruction, comparative percent at fault. Eller 73 noted it was dealing with a matter of first impression: whether the affirm- with a matter of first impression: noted it was dealing misrepresenta- comparative fault applies to a negligent ative defense of tion cause of action. accordingly to a final judgment against Eller of $14,600. accordingly to a of appeals ultimately disagreed with Hicks on that narrow point, an examination of of appeals ultimately disagreed with Hicks on that narrow point, an examination the question is beyond the scope of this article. failed to raise comparative fault before trial in his answer or the pre-trial order, he failed to raise comparative fault before trial in his answer or the pre-trial order, was precluded from claiming the defense at the end of trial. law, does not apply to negligent misrepresentation. law, does not apply for additur in light of the expert’s testimony, and claimed that her UPA claim should for additur in light of the expert’s testimony, on have gone to the jury. The New Mexico Court of Appeals affirmed the trial court these issues as well. trial regarding her background as a PhD in electrical engineering. trial regarding her background as a PhD Id. Eller to raise a comparative fault defense to her negligent misrepresenta- fault defense to her negligent Eller to raise a comparative tion claim. relating to Hicks’ professional background as an electrical engineer. an electrical as background professional to Hicks’ relating C. the New Mexico Court of Appeals Rationale from \\jciprod01\productn\N\NMX\44-2\NMX207.txt unknown 2014] Summer Seq: 5 25-JUN-14 9:41 swer Brief at 7, Hicks v. Eller, 2012-NMCA-061 (No. 30,026). Eller contented that swer Brief at 7, Hicks v. Eller, 2012-NMCA-061 she was well educated in the sciences and Hicks was comparably negligent because based on the notion that she should have experienced with computers, apparently paintings before relying on Eller’s pro- taken it upon herself to research the Dunton Brief at 7–8.fessional representations. Appellee’s Answer C Y 35097-nmx_44-2 Sheet No. 74 Side A 06/25/2014 11:26:56 A 06/25/2014 74 Side Sheet No. 35097-nmx_44-2 35097-nmx_44-2 Sheet No. 74 Side B 06/25/2014 11:26:56 M K C Y [Vol. 44 a New 42 Otero v. , The court then The court 35 , § 107, at 704 (4th ed. 1971) The court discussed The court discussed Neff v. Bud Lewis Co. ORTS involved a negligent misrepre- 36 T Neff noted the difference between fraudu- noted the difference 43 AW O F where the New Mexico Supreme Court where the New because it dealt with fraudulent misrep- because it dealt with fraudulent , L 37 , Hicks Otero ROSSER The court first noted that Hicks had not raised Hicks had not first noted that The court NEW MEXICO LAW REVIEW 34 L. P held that the defendant could not use contributory held that the defendant could not UJI 13-1632 NMRA (“A negligent misrepresentation is one UJI 13-1632 NMRA (“A negligent relied primarily on public policy in prohibiting a com- on public policy in prohibiting a relied primarily UJI 13-1633 NMRA. Neff ILLIAM The majority in 44 41 38 Otero W , 1996-NMSC-047, ¶ 17. , 2012-NMCA-061, ¶ 30. see also , 1975-NMCA-029, ¶ 17. see also 40 ¶ 4. ; ; ¶ 30. ¶ 29 (citing Reichert v. Atler, 1994-NMSC-056, 117 N.M. 623, 875 P.2d ¶ 29 (citing Reichert v. Atler, 1994-NMSC-056, whereas negligent misrepresentation does not require knowledge misrepresentation does not require whereas negligent 39 Otero Neff Id. Id. Hicks Id. Id. Id. Id. After distinguishing The court of appeals began its analysis by observing that compara- that by observing analysis began its appeals court of The 41. 42. 1976-NMCA-029, 89 N.M. 145, 548 P.2d 107. 43. 44. 40. 37. 122 N.M. 187, 922 P.2d 569. 1996-NMSC-047, 38. 39. 35. 36. 34. Mexico Court of Appeals decision that dealt with a defendant’s attempt Mexico Court of Appeals decision a complete defense to the plaintiff’s to raise contributory negligence as negligent misrepresentation claim. moved to distinguishing prior New Mexico appellate decisions that, while appellate decisions New Mexico distinguishing prior moved to the specific inapposite to matters,” were “closely related dealing with and com- concerned only negligent misrepresentation case at hand, which an . parative fault as Jordan Restaurant Enterprises Jordan Restaurant sentation claim against a defendant who had a fiduciary relationship with sentation claim against a defendant the plaintiff. held that comparative negligence is never a defense to fraudulent misrep- negligence is never a defense held that comparative resentation. (“When the representation is made directly to the plaintiff, in the course of his deal- (“When the representation is made directly to the plaintiff, in the course of his that ings with the defendant, or is exhibited to him by the defendant with knowledge he intends to rely upon it . . . there has been no difficulty in finding a duty of reasona- ble care.”). any public policy arguments in favor of her position that comparative her position that in favor of policy arguments any public negligent misrepresentation. not apply to fault does where the speaker has no reasonable ground for believing that the statement made where the speaker has no reasonable ground was true.”); lent misrepresentation and negligent misrepresentation: fraudulent and negligent misrepresentation: lent misrepresentation misleading state- involves intentionally or recklessly misrepresentation ments, parative fault defense to fraudulent misrepresentation because a defen- to fraudulent misrepresentation parative fault defense by operation of law to profit by dant “guilty of fraud cannot be allowed that fraud.” or intent. 379). resentation, the court of appeals turned to resentation, the court of appeals turned tive negligence principles apply unless inconsistent with New Mexico New with inconsistent unless apply principles negligence tive concerns. public policy \\jciprod01\productn\N\NMX\44-2\NMX207.txt unknown440 Seq: 6 25-JUN-14 9:41 35097-nmx_44-2 Sheet No. 74 Side B 06/25/2014 11:26:56 B 06/25/2014 74 Side Sheet No. 35097-nmx_44-2 35097-nmx_44-2 Sheet No. 75 Side A 06/25/2014 11:26:56 53 46 441 explained , 98 Cal. App. 3d Hicks In distinguishing In 45 was a fiduciary and a fiduciary was court turned to other court turned First, 47 Neff Hicks Carroll v. Gava majority rejected the minor- majority rejected 55 , the 50 Hicks Neff The 51 and then considered the minority rule, which then considered , 602 A.2d at 514 and Otero Hicks Braswell JUSTIFIED BUT NEGLIGENT RELIANCE NEGLIGENT BUT JUSTIFIED 54 These courts determine that the majority rule is consistent that the majority rule is These courts determine Majority rule jurisdictions hold that comparative fault is a hold that comparative Majority rule jurisdictions emphasized that the defendant in defendant that the emphasized , 2012-NMCA-061, ¶ 33. 49 48 Reichert v. Atler, 1994-NMSC-056, ¶ 8, 117 N.M. 623, 875 P.2d 379. It found no reason why applying comparative fault to negligent It found no reason why applying ¶ 34. ¶ 32 (citing ¶ 33. (citing Estate of Braswell v. People’s Credit Union, 602 A.2d 510, 513 (R.I. (citing Estate of Braswell v. People’s Credit ¶ 33. ¶ 31. ¶ 22. 52 See Hicks Id. Id. Id. Id. Id. Id. Id. Id. Hicks The majority concluded by stating that, because principles gov- The majority concluded by stating The majority in After distinguishing After distinguishing , 51. 52. 53. 54. 55. 50. 48. 49. 46. Eller, 2012-NMCA-061, ¶ 30. Hicks v. 47. 45. M K that the case was decided under the rubric of contributory negligence. of contributory under the rubric case was decided that the Neff the majority rule, which applies comparative fault to negligent misrepre- fault to negligent comparative rule, which applies the majority from negligence it is not meaningfully distinguishable sentation because in general. ity rule. 892, 897 (Cal. Ct. App. 1977)). 1992)). convenient way to apportion liability when the misrepresentation is “only apportion liability when the misrepresentation convenient way to negligent.” with the principles outlined in the Restatement, principles that “have outlined in the Restatement, with the principles in New Mexico. been widely accepted” misrepresentation would be contrary to public policy in New Mexico. misrepresentation would be contrary holds that principles of comparative fault have “no place” in business of comparative fault have “no holds that principles should be fully that any risk of making false statements transactions and making them. borne by the party jurisdictions’ decisions on whether comparative fault applies to negligent fault applies whether comparative decisions on jurisdictions’ split. a jurisdictional noting misrepresentation, erning negligence set forth in the Restatement apply to all in New erning negligence set forth in the comparative fault to negligent Mexico, those principles support applying trial court had not erred in permitting misrepresentation. It held that the Eller’s comparative fault jury instruction. Instead, the appeals court explained that comparative fault would be a Instead, the appeals court explained between a negligent defendant and a “simple” way to apportion fault of everyday business exchanges negligent plaintiff, even in the context provided by experts and where individuals rely upon information professionals. negligence as a total bar to the plaintiff’s recovery. the plaintiff’s bar to a total as negligence \\jciprod01\productn\N\NMX\44-2\NMX207.txt unknown 2014] Summer Seq: 7 25-JUN-14 9:41 C Y 35097-nmx_44-2 Sheet No. 75 Side A 06/25/2014 11:26:56 A 06/25/2014 75 Side Sheet No. 35097-nmx_44-2 35097-nmx_44-2 Sheet No. 75 Side B 06/25/2014 11:26:56 M K C Y [Vol. 44 Michael D. These early 60 See also 58 Id. NEW MEXICO LAW REVIEW LAW IN NEW MEXICO He reasoned: 57 , Chatham Furnace Co. v. Moffatt, 18 N.E. 168, 169–70 1888) (Mass. 59 (internal quotation marks omitted). ¶ 42 (Kennedy, J., dissenting). Judge Kennedy noted the “moral repug- ¶ 42 (Kennedy, J., dissenting). Judge Constructing a New Action for Negligent Infliction of Economic Loss: Building Id. See, e.g. Id. Id. Id. He explained that because justified reliance is an element of negli- an element is reliance justified that because explained He Judge Kennedy pointed out that Hicks was completely justified in out that Hicks was completely Judge Kennedy pointed Judge Kennedy dissented, vigorously advocating for the minority for advocating vigorously dissented, Kennedy Judge of negligent mis- that the analysis by these cases I was persuaded one of which—the components, only requires two representation other representation—involvesnegligence of the The negligence. by the mis- reliance on the misrepresentation element of justified assessment is an element requiring an representation’s recipient view’ in reliance, but justification. The ‘minority not of negligence the require- negligence in reliance negates holds that to compare I agree. reliance entirely, a point with which ment of ‘justified’ scale or ‘the not to be graded on a sliding Justification is therefore is either of a misrepresentation, to my mind, curve.’ A recipient or is not. ‘justified’ in her reliance New Mexico recognized negligent misrepresentation later than most New Mexico recognized negligent 56 59. 60. 57. 58. 56. III. ON NEGLIGENT MISREPRESENTATION BACKGROUND (defendant falsely represented information in a land survey but honestly believed it to (defendant falsely represented information in a land survey but honestly believed be true, and the court held the defendant could still be liable for the misrepresenta- 663 tion despite no intent to deceive); Int’l Products Co. v. Erie R. Co., 155 N.E. 662, a (N.Y. 1927) (discussing “liability for negligent language” stating, “[i]n some cases negligent statement may be the basis for a recovery of damages”). Lieder, nancy” of the defendant’s behavior, noting that had it not been for Eller presenting nancy” of the defendant’s behavior, noting would not have gained access to Hicks’ late himself as an expert art appraiser, he mother’s home in the first place. gent misrepresentation claims, comparative negligence should not enter negligence should comparative claims, gent misrepresentation analysis. into the her reliance on Eller’s skill and expertise regarding accurately appraising her reliance on Eller’s skill and expertise that he would have regarded the works of art. Judge Kennedy concluded as error, and would have awarded jury’s comparative fault instruction without reduction based on her own Hicks all that she was entitled to negligence. rule. other jurisdictions. By the late 1800s, many states recognized that individ- other jurisdictions. By the late 1800s, exercise a reasonable degree of care in uals should be liable for failing to intent to deceive. information exchanges, even without \\jciprod01\productn\N\NMX\44-2\NMX207.txt unknown442 Seq: 8 25-JUN-14 9:41 35097-nmx_44-2 Sheet No. 75 Side B 06/25/2014 11:26:56 B 06/25/2014 75 Side Sheet No. 35097-nmx_44-2 35097-nmx_44-2 Sheet No. 76 Side A 06/25/2014 11:26:56 62 E- 443 See R see also The tort 61 set forth in the Second set forth 63 937, 948 (1991) (explaining that the cause . EV 64 , 155 N.E. at 663 (discussing iterations of the early , 155 N.E. at 663 (discussing iterations of . L. R § 552 (1938) (liability when defendant does not “ex- § 552(1) (1977)). Essentially, the speaker has abso- ASH ORTS ORTS W T T na Ana County, 1999-NMCA-110, ¶¶ 18–19,na Ana County, 1999-NMCA-110, ¶¶ 127 N.M. 785, OF OF , 66 ) JUSTIFIED BUT NEGLIGENT RELIANCE NEGLIGENT BUT JUSTIFIED ) IRST Int’l Products Co. , (F ECOND , 1990-NMCA-094, ¶¶ 12–14. The elements of negligent misrepresenta- (S STATEMENT See, e.g. While New Mexico follows the Restatement to define the elements follows the Restatement to define While New Mexico One who, in the course of his business, profession or employment, One who, in the course interest, in which he has a pecuniary or in any other transaction their busi- for the guidance of others in supplies false information caused to is subject to liability for pecuniary loss ness transactions, if he fails reliance upon the information, them by their justifiable or com- care or competence in obtaining to exercise reasonable municating the information. 61. 62. some New Mexico opinions have dealt with negligent misrepresen- However, 63. of negligent misrepresentation is governed by negligence princi- “The law 64. v. Hester, 1978-NMCA-067, ¶ 12, 92 N.M. 26, 582 P.2d 403 (citing Stotlar M K ESTATEMENT deals with negligent information causing economic harm to the plaintiff. harm to causing economic negligent information deals with Restatement: of action arose from a number of New York decisions in the early 1900s); of action arose from a number of New lutely no reasonable basis for believing the statement that he made was true. lutely no reasonable basis for believing the statement that he made was true. Sandia Corp. tion should not be confused with those required to establish fraudulent misrepresen- tation: “[F]raudulent misrepresentation requires the defendant to make the statement only recklessly or with knowledge that it is false, while negligent misrepresentation state- requires a failure to exercise ordinary care in obtaining or communicating the ¶ 55, ment . . . .” Eckhardt v. Charter Hosp. of Albuquerque, Inc., 1998-NMCA-017, 124 N.M. 549, 953 P.2d 722. ercise that care and competence in obtaining and communicating the information ercise that care and competence in obtaining which its recipient is justified in expecting”). English rule prohibiting recovery for negligent words). English rule prohibiting recovery for negligent strictly economic harm. Davis v. Board of tation involving physical, as opposed to County Comm’rs of Do ˜ involving risk of physical 987 P.2d 1172 (discussing negligent misrepresentation harm). ¶ 26, 115 N.M. 269, 850 P.2d 972 (citing Peck, ples.” Ruiz v. Garcia, 1993-NMSC-009, ¶ 10, 108 N.M. 84, 766 P.2d 928). Inc. v. Liberty Fed. Sav. Bank, 1988-NMCA-111, one of reasonableness. The reasonableness “The issue in a negligence action is always a mixed question of law and fact which or unreasonableness of anything is ordinarily Mech. Contractors, Inc. v. Sandia Corp., should be determined by a jury.” W. States P.2d 1062. 1990-NMCA-094, ¶ 14, 110 N.M. 676, 798 a plaintiff must prove to establish a defendant’s liability, courts also look to establish a defendant’s liability, a plaintiff must prove on Cardozo and Coase R cases noted a departure from the narrow English rule that there was no that there rule English the narrow from departure noted a cases when even words, for negligent damages recover law to claim at valid financial detriment. words to their acted on those individuals the defi- courts accepted in New Mexico, the cause of action In adopting negligent misrepresentation nition of \\jciprod01\productn\N\NMX\44-2\NMX207.txt unknown 2014] Summer Seq: 9 25-JUN-14 9:41 C Y 35097-nmx_44-2 Sheet No. 76 Side A 06/25/2014 11:26:56 A 06/25/2014 76 Side Sheet No. 35097-nmx_44-2 35097-nmx_44-2 Sheet No. 76 Side B 06/25/2014 11:26:56 M K C Y [Vol. 44 Before when a 66 69 stated, the com- Snell (9th ed. 2009). ICTIONARY D AW L S ’ as the equitable remedy), 68 LACK B NEW MEXICO LAW REVIEW (with rescission 67 , 1970-NMSC-029, ¶ 11. Courts used the term “rescission” to describe the 65 Maxey v. Quintana, 1972-NMCA-069, ¶ 15, 84 N.M. 38, 499 P.2d 356 (cit- Maxey v. Quintana, 1972-NMCA-069, Snell See [A] breach of legal or equitable duty law declares fraudulent be- moral guilt of the fraud feasor, the which, irrespective of the to violate public or private cause of its tendency to deceive others, A party is liable for damages caused by his negligent and material caused by his negligent liable for damages A party is misrepresentation. which a party is an untrue statement misrepresentation A material which the other party on and upon other party to rely intends the did in fact rely. has no is one where the speaker A negligent misrepresentation made was for believing that the statement reasonable ground true. Following early English case law, New Mexico courts initially re- English case law, New Mexico courts Following early 69. 65. NMRA. UJI 13-1632 66. 67. fraud is “a breach of a legal or equitable duty irrespective of the Constructive 68. an equitable remedy, is “[a] party’s unilateral unmaking of a con- Rescission, . plaintiff could not establish the defendant’s fraudulent state of mind. The plaintiff could not establish the defendant’s fraud as supreme court once defined constructive recognizing negligent misrepresentation as a viable claim, early New recognizing negligent misrepresentation cause of action, sometimes called con- Mexico cases recognized a similar structive fraud cause of action itself, or to describe the equitable remedy available under constructive fraud. Either way, a had to exist to rescind upon. As mon view was that a plaintiff’s only recovery apart from proving fraud and suing for mon view was that a plaintiff’s only recovery apart from proving fraud and suing money damages was to “declare a rescission and sue to recover consideration already . . . ” paid” or “sue to rescind the contract and for restoration of the status quo ante Id ing Peek v. Derry, [1887] 37 Ch. 541, 14 App. Cas. 337 (Eng.)). ing Peek v. Derry, [1887] 37 Ch. 541, 14 not necessary that actual dishonesty of pur- moral guilt of the fraud feasor, and it is Cornehl, 1970-NMSC-029, ¶ 8, 81 N.M. 248, pose nor intent to deceive exist.” Snell v. 466 P.2d 94. as the other partys material breach, or a tract for a legally sufficient reason, such judgment rescinding the contract.” quired a plaintiff to pursue an equitable cause of action to rescind a con- to pursue an equitable cause of action quired a plaintiff in order to establish the high burden of proving fraud, tract, or to satisfy resulting in pecuniary harm. liability for false representations A.Rescind a Contract, Plaintiff Must Prove Fraud or Early Case Law: Otherwise No Recovery to New Mexico’s Uniform Jury Instruction (UJI) on negligent on (UJI) Instruction Jury Uniform Mexico’s to New misrepresentation: \\jciprod01\productn\N\NMX\44-2\NMX207.txt unknown444 Seq: 10 25-JUN-14 9:41 35097-nmx_44-2 Sheet No. 76 Side B 06/25/2014 11:26:56 B 06/25/2014 76 Side Sheet No. 35097-nmx_44-2 35097-nmx_44-2 Sheet No. 77 Side A 06/25/2014 11:26:56 445 But 71 Hockett 74 five years before 75 , the New Mexico Su- 77 , Hockett v. Winks Foreshadowing negligent misrepresenta- Foreshadowing negligent 72 , in thus established that for a plaintiff to proceed in thus established that for a plaintiff Anaya 70 JUSTIFIED BUT NEGLIGENT RELIANCE NEGLIGENT BUT JUSTIFIED Anaya 76 , 1972-NMCA-069, ¶ 9. , 1972-NMCA-069, ¶ 9 (citing Sauter v. St. Michael’s College, 1962- , 1970-NMSC-029, ¶ 11 (explaining that a plaintiff could either receive On the other hand, unlike the equitable cause of action for re- unlike the equitable cause of On the other hand, ¶ 8. Prudential Insurance Co. of America v. Anaya Prudential Insurance 73 Maxey Snell Maxey Id. Four years after In confidence, or to injure public interests. Neither actual dishonesty Neither public interests. to injure or confidence, of con- element essential is an to deceive intent nor of purpose fraud. structive or deceit from fraud cause of action was an independent Rescission 77. 1971-NMSC-059, 82 N.M. 597, 485 P.2d 353. 70. v. Hart, 1941-NMSC-004, ¶ 16, 45 N.M. 76, 110 P.2d 536 (emphasis Scudder 71. 72. 73. 361, 258 P.2d 1131. Jones v. Friedman, 1953-NMSC-051, ¶ 22, 57 N.M. 74. 75. 1967-NMSC-132, 78 N.M. 101, 428 P.2d 640. 76. M K rescission was not an action for money damages, so it required a contract so it required for money damages, was not an action rescission rescind. that the parties could a New Mexico court recognized negligent misrepresentation as a valid recognized negligent misrepresentation a New Mexico court clarified the principles governing claim, the New Mexico Supreme Court that “rescission is allowed where rescission. Our supreme court stated of a material fact, the misrepresenta- there has been a misrepresentation has in fact been relied on. Again gen- tion was made to be relied on, and which the misrepresentation is made erally speaking, the good faith with is immaterial.” noted that plaintiffs could not conflate the two separate causes of action noted that plaintiffs could not conflate of good faith misrepresentations in or- by relying on rescission principles preme Court further articulated the distinction between rescission of a preme Court further articulated the remedy, and the necessary proof to ob- contract, an exclusively equitable Importantly, tain money damages at law for misrepresentations. tion, rescission was articulated in terms of justifiable reliance by the articulated in terms of justifiable tion, rescission was faith with which a was that “irrespective of the good plaintiff. The rule relied on by of material fact is made, if it is justifiably misrepresentation should be al- of the contract, such rescission one seeking rescission lowed.” rescission, there had to be a contract. Despite the defendant’s good faith, rescission, there had to be a contract. based on the defendant’s misrep- the plaintiff could rescind the contract money damages. resentation, but could not recover scission, “[t]o recover damages for fraud or deceit, the misrepresentation damages for fraud or deceit, scission, “[t]o recover to deceive.” or recklessly made with intent must be knowingly because in the former the defendant’s state of mind did not matter. of mind did not defendant’s state in the former the because removed) (citation omitted) (internal quotation marks omitted). removed) (citation omitted) (internal quotation back any consideration already paid, or to restore the “status quo ante”). NMSC-107, ¶ 9, 70 N.M. 380, 374 P.2d 134). \\jciprod01\productn\N\NMX\44-2\NMX207.txt unknown 2014] Summer Seq: 11 25-JUN-14 9:41 C Y 35097-nmx_44-2 Sheet No. 77 Side A 06/25/2014 11:26:56 A 06/25/2014 77 Side Sheet No. 35097-nmx_44-2 35097-nmx_44-2 Sheet No. 77 Side B 06/25/2014 11:26:56 M K 82 C Y [Vol. 44 . Id 80 recognized that negligent The court of appeals rejected the de- The court of appeals rejected the held that the equitable principles appli- principles equitable that the held 85 did what earlier cases had been unwilling Maxey v. Quintana The plaintiff appealed the lower court’s dis- The plaintiff appealed the lower Hockett 83 Maxey 78 NEW MEXICO LAW REVIEW : the New Mexico Supreme Court Recognizes : the New Mexico 86 Specifically, they argued that a plaintiff could ei- Specifically, they argued that a plaintiff 84 79 , 1972-NMCA-069, ¶ 16 (explaining the old view that because negli- , 1972-NMCA-069, ¶ 16 (explaining the , the defendants sold real property to the plaintiff but mis- real property to the plaintiff but , the defendants sold ¶ 14. ¶¶ 15–16. ¶ 8. ¶¶ 3–4. ¶ 2. The plaintiff also asserted fraudulent misrepresentation. ¶ 14. ¶ 6. 81 Maxey disavowed the notion that a plaintiff could recover money dam- that a plaintiff could recover disavowed the notion Id. Id. Id. Id. Id. Id. Id. See Maxey Id. In This early case law established that if the plaintiff could not prove plaintiff could not that if the case law established This early In 1972, only one year after the New Mexico Supreme Court in year after the New Mexico Supreme In 1972, only one Maxey v. Quintana 86. 84. 85. 83. 82. 81. 79. 80. 78. fendants’ assertion and noted that it was dealing with situation apart from fendants’ assertion and noted that “the claim that misrepresen- fraud and apart from rescission; specifically, were negligently made tations occurred and that the misrepresentations to plaintiffs’ damage.” missal of the negligent misrepresentation claim, and the defendants missal of the negligent misrepresentation was not a viable cause of ac- contended that negligent misrepresentation tion in New Mexico. cable to a rescission claim were not applicable to a claim for fraud or for to a claim applicable not claim were to a rescission cable separate combined these “new tort” which could be no deceit; there action. causes of ther recover for fraudulent misrepresentation, or under the equitable ther recover for fraudulent misrepresentation, claim of rescission, or not at all. to do—it recognized that certain situations involve “neither rescission nor gent misrepresentation did not fall under fraud or deceit, “no other action was availa- gent misrepresentation did not fall under fraud or deceit, “no other action was ble and that the wrong of negligent misrepresentation was without a remedy”). represented essential information regarding the property’s mortgage. represented essential information fraud or could not rescind on a contract, she or he would be without a she or he would on a contract, could not rescind fraud or negligent misrepresentations. a defendant’s remedy for The plaintiff incurred substantial mortgage costs in light of the defend- The plaintiff incurred substantial ants’ misrepresentations. der to recover damages. recover der to B. \\jciprod01\productn\N\NMX\44-2\NMX207.txt unknown446 Seq: 12 25-JUN-14 9:41 ages for misrepresentations not involving fraudulent intent, the New not involving fraudulent ages for misrepresentations Appeals in Mexico Court of apart from rescission was a valid cause of action wholly misrepresentation or fraud. Hockett Negligent Misrepresentation 35097-nmx_44-2 Sheet No. 77 Side B 06/25/2014 11:26:56 B 06/25/2014 77 Side Sheet No. 35097-nmx_44-2 35097-nmx_44-2 Sheet No. 78 Side A 06/25/2014 11:26:56 447 the 91 Snell v. to recog- Maxey § 102, at 720 (3d ed. Lastly, the court in Lastly, the court 93 ORTS In holding that a negli- In holding that a 90 T AW O F It further explained that the tort It further explained , L 92 ROSSER P L. The court then confronted the question directly: then confronted The court ¶ 14. 88 ILLIAM Id. W JUSTIFIED BUT NEGLIGENT RELIANCE NEGLIGENT BUT JUSTIFIED 95 This question set up the framework for This question set concluded that despite no contractual relationship be- concluded that despite no contractual 89 explained that neither fraud nor rescission were at issue, just that explained that neither fraud nor rescission , 1972-NMCA-069, ¶ 17. Maxey 87 ¶ 17. (explaining that “it was not necessary that actual dishonesty of purpose or ¶ 16 (citing ¶ 17. ¶ 15. ¶ 9. 94 noted that its adoption of negligent misrepresentation was not of negligent misrepresentation noted that its adoption Id. Maxey Id. Id. Id. Maxey Id. Id. Id. Id. First, the court of appeals acknowledged the early doctrine requiring acknowledged the court of appeals First, the 95. 93. 94. 92. 91. 90. 89. 87. 88. M K court reasoned that the essential basis of tort liability could be transferred the essential basis of tort liability court reasoned that only economic loss. to injuries causing Maxey New Mexico pre- with the Restatement, but also recent only compatible cedent. gence action could be based upon loss causing only pecuniary harm, be based upon loss causing only gence action could of negligent misrepresentation was informed by general negligence prin- was informed by general of negligent misrepresentation was wholly separate from fraud. ciples and that it intent to deceive exist,” only that there was “breach of a legal duty” (citing Cornehl, 1970-NMSC-029, ¶ 8)). 1964) (“This position has prevailed, and the negligence action is now generally al- 1964) (“This position has prevailed, and the negligence action is now generally harm lowed for negligent misrepresentation, even though it causes only pecuniary . . . .”)). “Where a plaintiff is so circumstanced that he cannot or does not wish to he cannot or does that a plaintiff is so circumstanced “Where fraud or de- for the tort of the proof required and cannot meet rescind, a misrepresentation a remedy for damages cause by ceit, is he without short of fraud?” “misrepresentations occurred and that the misrepresentations were negligently made “misrepresentations occurred and that the claims for fraud or “constructive to plaintiffs’ damage.” The court thus distinguished to allow the plaintiff to recover for negli- fraud/rescission” in laying the foundation gent misrepresentation. nize the new tort of negligent misrepresentation. nize the new tort tween two parties and no fraud by the defendant, a plaintiff could go tween two parties and no fraud damages under the tort of negligent forward with a claim for money misrepresentation. a plaintiff to prove fraud or rescission, without which the plaintiff would which the plaintiff or rescission, without to prove fraud a plaintiff remedy at law. have no the tort of fraud,” but still should give rise to a plaintiff’s right to to a plaintiff’s give rise should but still fraud,” tort of the damages. \\jciprod01\productn\N\NMX\44-2\NMX207.txt unknown 2014] Summer Seq: 13 25-JUN-14 9:41 C Y 35097-nmx_44-2 Sheet No. 78 Side A 06/25/2014 11:26:56 A 06/25/2014 78 Side Sheet No. 35097-nmx_44-2 35097-nmx_44-2 Sheet No. 78 Side B 06/25/2014 11:26:56 M K 103 C Y . The con- [Vol. 44 96 102 Three years 105 of contract be- of contract 98 rejected this argu- Id. , the New Mexico Su- Stotlar v. Hester Stotlar v. Stotlar He argued that to succeed He argued that to 100 104 Ultramares Corp. v. Touche Rejects the Privity Requirement the Privity Rejects asserted that he was entitled to re- that he was entitled asserted rule requiring the plaintiff to show at 448. Id. Stotlar 101 Ultramares NEW MEXICO LAW REVIEW Stotlar v. Hester Stotlar Because there was no privity, the defendant Because there 99 Fidelity & Deposit Co. v. Atherton The plaintiff in The plaintiff 97 ¶ 9. It is notable for the proposition that absent fraud, courts required , 1978-NMCA-067, ¶ 5. A third party, the seller of the real estate at , 1978-NMCA-067, ¶ 5. A third party, Id. at 444. The court later explained: “the ensuing liability for negligence is ¶ 11. ¶ 9. ¶ 6. ¶ 13. Id. Id. Id. Stotlar Id. Id. In 1943, in The defendant’s assertion that negligence causing financial harm assertion that negligence causing The defendant’s In 1977, the Restatement (Second) of Torts was published. The fol- was published. (Second) of Torts the Restatement In 1977, 98. in privity with another is a person so identified in interest with “A person 99. 96. 92 N.M. 26, 582 P.2d 403. 1978-NMCA-067, 97. 105. case did not mention a tort 1943-NMSC-046, 47 N.M. 443, 144 P.2d 157. This 103. 174 N.E. 441 (N.Y. 1931). 104. 101. 102. 100. leading case articulating this principle was leading case articulating this principle cluded that the Restatement would define negligent misrepresentation in negligent misrepresentation would define the Restatement cluded that New Mexico. tween the parties. ment, noting that privity of contract was no longer required when consid- privity of contract was no longer ment, noting that negligence. ering liability for the plaintiff would either have to prove fraud or would have to show either have to prove fraud or the plaintiff would plaintiff and the defendant. privity between the of negligent misrepresentation but instead dealt with the equitable remedy of “sub- of negligent misrepresentation but instead dealt with the equitable remedy of rogration.” contended that he was not liable to plaintiffs. contended that he one that is bounded by the contract, and is to be enforced between the parties by one that is bounded by the contract, and is to be enforced between the parties whom the contract has been made.” cover damages despite the fact that there was no privity fact that there despite the cover damages preme Court adopted the privity with the defendant to recover for negligent words. privity with the defendant to recover another that he represents the same legal right.” Lewis v. City of Santa Fe, 2005- another that he represents the same legal 558 (citation omitted) (internal quotation NMCA-032, ¶ 15, 137 N.M. 152, 108 P.3d marks omitted). appraise their property, which is why there issue, had arranged for the defendant to and defendant. was not privity of contract between plaintiff was not actionable arose from a line of early New Mexico cases requiring arose from a line of early New Mexico was not actionable words. parties to establish liability for negligent privity between lowing year the New Mexico Court of Appeals in Court of Appeals the New Mexico lowing year that the potential class of plaintiffs There, Justice Cardozo explained unconstrained by privity of con- would be unreasonably large if a plaintiff made by anyone else; there- tract could recover for negligent statements required for a plaintiff to sue for fore, a contractual relationship was injury. misrepresentations causing economic C. the Tort: Clarifying Approach Restatement Adopts the and \\jciprod01\productn\N\NMX\44-2\NMX207.txt unknown448 Seq: 14 25-JUN-14 9:41 35097-nmx_44-2 Sheet No. 78 Side B 06/25/2014 11:26:56 B 06/25/2014 78 Side Sheet No. 35097-nmx_44-2 35097-nmx_44-2 Sheet No. 79 Side A 06/25/2014 11:26:56 , 449 that , 2005- Ultramares Stotlar court distinguished adopted the Restatement, Stotlar Stotlar First Interstate Bank of Gallup v. See 112 However the However The court further noted, “[a]bsent fraud, The court further ¶ 10. Parker v. E.I. DuPont de Nemours & Co., Inc. , 174 N.E. at 441) (internal quotation marks , 174 N.E. at 441) (internal quotation the court returned to the privity issue in issue the privity to court returned the 109 110 Id. 106 , supported the defendant’s claim in the defendant’s supported officially adopted the Restatement to define negligent officially adopted the Restatement to Ultramares as having been implicitly rejected by the supreme as having been ¶ 17 (citing Stotlar Valdez JUSTIFIED BUT NEGLIGENT RELIANCE NEGLIGENT BUT JUSTIFIED id. The court reiterated its commitment to the to the reiterated its commitment The court Healthsource, Inc. v. X-Ray Associates of New Mexico 107 Valdez and Saylor v. Valles, 2003-NMCA-037, ¶ 17, 133 N.M. 432, 63 P.3d 1152 Saylor v. Valles, 2003-NMCA-037, ¶ 17, , 1978-NMCA-067, ¶ 7. See ¶ 13. After ¶ 14 (citing ¶ 9 (citing Steinberg v. Coda Roberson Const. Co., 1968-NMSC-055, 79 ¶ 9 (citing Steinberg v. Coda Roberson ¶ 16. and Valdez v. Gonzales Valdez The court reiterated the principles it had recently articulated in the principles it had recently The court reiterated 108 and held that the Second Restatement of Torts would define negli- Second Restatement of Torts would and held that the Id. Id. Id. Id. Stotlar Id. 111 Atherton 111. 112. 108. 109. 110. 106. 50 N.M. 281, 176 P.2d 173. 1946-NMSC-044, 107. M K Atherton no relevance in deter- that the existence of privity had court when it held negligence. mining liability for the tort requires a duty on the part of the person furnishing the informa- a duty on the part of the person furnishing the tort requires have a right to rely the person receiving the information tion and requires on it.” the context of a plaintiff’s claim that negligent information caused him caused information negligent that claim a plaintiff’s of the context harm. economic misrepresentation, New Mexico appellate courts continued to recognize claims for misrepresentation, New Mexico appellate harm. negligence by words causing pecuniary 749, 764 P.2d 1307 (affirming New Mexico’s Foutz, 1988-NMSC-087, ¶ 8, 107 N.M. on measuring damages pursuant to the adoption of the Restatement and focusing which Restatement). But despite the clarity with some of the courts unfortunately defined negligent misrepresentation in a manner some of the courts unfortunately defined by conflating the elements required to that departed from the Restatement entirely those required to establish negligent misrep- prove fraudulent misrepresentation with resentation. holding. 1995-NMCA-086, ¶ 44, 121 N.M. 120, 909 P.2d 1)). The court of appeals issued a 1995-NMCA-086, ¶ 44, 121 N.M. 120, 909 P.2d 1)). The court of appeals issued similar decision in its NMCA-097, ¶ 30, 138 N.M. 70, 16 P.3d 861, where it required a defendant to know statement was false, or to make it recklessly. N.M. 123, 440 P.2d 798). (explaining that the court of appeals had framed the issue as one of recklessness in- (explaining that the court of appeals had framed the issue as one of recklessness defen- stead of reasonableness; the New Mexico Court of Appeals reasoned that the have dant must have made the false representation knowing it was false, or must “made it recklessly” based on the lack of privity, the plaintiff could not recover for negligent not recover the plaintiff could the lack of privity, based on pecuniary harm. words causing Maxey in New Mexico. gent misrepresentation omitted). “contractual duty to make [reports], under the terms of their contract, with the care “contractual duty to make [reports], under and caution required of experts.” later, in later, \\jciprod01\productn\N\NMX\44-2\NMX207.txt unknown 2014] Summer Seq: 15 25-JUN-14 9:41 C Y 35097-nmx_44-2 Sheet No. 79 Side A 06/25/2014 11:26:56 A 06/25/2014 79 Side Sheet No. 35097-nmx_44-2 35097-nmx_44-2 Sheet No. 79 Side B 06/25/2014 11:26:56 M K C Y [Vol. 44 It fur- 116 The Restatement 118 115 , 657 A.2d 212, 221 (Conn. 1995). 845, 852 (2008). Negligent Misrepresentation in Texas: . EV § 552 cmt. a (1977). § 552(1) (1977). 119 , § 552(2) (1977). , § 552A (1977). , § 552A cmt. a (1977). L. R ORTS ORTS ORTS ORTS ORTS T T T T T ECH OF OF OF OF OF . T ) ) ) ) ) EX 117 T NEW MEXICO LAW REVIEW ECOND ECOND ECOND ECOND ECOND , 40 As the Connecticut Supreme Court has explained, Court has Connecticut Supreme As the (S (S (S (S (S 114 Robert K. Wise & Heather E. Poole, ESTATEMENT ESTATEMENT ESTATEMENT ESTATEMENT ESTATEMENT Williams Ford, Inc. v. Hartford Courant Co. See R R R R R The defendant only needs to be reasonably aware that the aware that to be reasonably only needs The defendant [L]iability for negligent misrepresentation is limited to loss suf- [L]iability for negligent misrepresentation limited group of persons for fered (a) by the person or one of a intends to supply informa- whose benefit and guidance defendant to supply it; and (b) through tion or knows that recipient intends that he intends the in- reliance upon information in a transaction the recipient so intends, or in formation to influence or knows that a substantially similar transaction. The Restatement outlines the elements a plaintiff must prove to es- outlines the elements a plaintiff must The Restatement negligent, is not fraudulent but only [W]hen the misrepresentation negligence, and the ordinary the action is founded solely upon Therefore the contributory rules as to negligence liability apply. upon the misrepresentation negligence of the plaintiff in relying will bar his recovery. require that the parties to an ex- While the Restatement does not The Restatement does not require that the person making the mis- person making require that the does not The Restatement 113 119. 116. 114. 115. 117. 118. 113. ther explains: states: The Misunderstood Tort liability is not limited to business exchanges in which the information it- to business exchanges in which liability is not limited representations of the exchange; rather, it includes self is the subject employment or expertise. made as part of ones’ individual will use that information for guidance in his or her own busi- in his or for guidance will use that information individual ness transactions. tablish a claim for negligent misrepresentation and adds, “[t]he recipient negligent misrepresentation and tablish a claim for for pecuniary is barred from recovery of a negligent misrepresentation so relying.” upon it if he is negligent in loss suffered in reliance not permit simply anyone to recover change know one another, it does of anyone else. damages for the negligent words representation know the individual with whom he or she is communicat- he or she is individual with whom know the representation ing. D. of Negligent Torts’ Definition of Restatement Second The Misrepresentation \\jciprod01\productn\N\NMX\44-2\NMX207.txt unknown450 Seq: 16 25-JUN-14 9:41 35097-nmx_44-2 Sheet No. 79 Side B 06/25/2014 11:26:56 B 06/25/2014 79 Side Sheet No. 35097-nmx_44-2 35097-nmx_44-2 Sheet No. 80 Side A 06/25/2014 11:26:56 122 451 There are 123 Thus “[w]hen there is Thus “[w]hen Because New Mexico 120 126 121 , § 552(2) cmt. a (1977). ORTS T OF ) , Sawyer v. USAA Ins. Co., 912 F. Supp. 2d 1118, 1147 ECOND have continued to endorse the Restatement and the have continued to endorse the Restatement (S JUSTIFIED BUT NEGLIGENT RELIANCE NEGLIGENT BUT JUSTIFIED This framework does not clearly require the plaintiff’s This framework does not clearly See, e.g. The commentary further explains that to “avoid over- The commentary further explains 124 125 Stotlar The United States District Court for the District of New Mexico has refer- ESTATEMENT Id. Id. Id. Id. R The UJI first states, “[a] negligent misrepresentation is one where “[a] negligent misrepresentation The UJI first states, Comment A to the Restatement explains that negligent misrepre- negligent that explains to the Restatement A Comment At first glance New Mexico’s Uniform Jury Instruction (UJI) Mexico’s Uniform Jury Instruction At first glance New 121. 122. NMRA. UJI 13-1632 123. 124. 125. UJI 13-1632 NMRA, cmt. 126. 120. M K no New Mexico appellate court decisions to the contrary. no New Mexico for believing that the statement the speaker has no reasonable ground made was true.” no intent to deceive but only good faith coupled with negligence, the fault with negligence, good faith coupled to deceive but only no intent justify a nar- less to is sufficiently of the misrepresentation of the maker consequences.” for its rower responsibility courts since for a fuller definition of the UJI’s commentary points to the Restatement like the Restatement requires justi- tort, it is safe to assume that the UJI a negligent misrepresentation claim. fied reliance in order to succeed in (D.N.M. 2012); Carroll v. Los Alamos Nat. Sec., LLC, 704 F. Supp. 2d 1200, 1213 (D.N.M. 2012); Carroll v. Los Alamos Nat. Sec., LLC, 704 F. Supp. 2d 1200, same (D.N.M. 2010) (treating the UJI and Restatement as containing the requirements). enced both the UJI and the Restatement, and harmonized the two definitions on a enced both the UJI and the Restatement, and harmonized the two definitions number of opinions. reliance to be “justified,” but the committee commentary recognizes that reliance to be “justified,” but the misrepresentation as defined by the New Mexico has adopted negligent the reader to the Restatement, and Restatement. It specifically directs elements that must be proved to estab- notes that there are “a number of lish the claim.” burdening the jury, other elements are not included in the instruction burdening the jury, other elements in the case.” unless they are actually at issue sentation is less objectionable than fraudulent misrepresentation, which is which misrepresentation, than fraudulent objectionable is less sentation under the former. is more restricted why liability E.Uniform Jury Instruction on Negligent New Mexico’s and the Restatement Misrepresentation misrepresen- the Restatement definition of negligent seems to vary from explicitly require a Restatement, the UJI does not tation. Unlike the the reader to the “justified reliance.” The UJI refers plaintiff to show reference implicitly further guidance, and arguably this Restatement for element. Restatement’s “justified reliance” incorporates the \\jciprod01\productn\N\NMX\44-2\NMX207.txt unknown 2014] Summer Seq: 17 25-JUN-14 9:41 C Y 35097-nmx_44-2 Sheet No. 80 Side A 06/25/2014 11:26:56 A 06/25/2014 80 Side Sheet No. 35097-nmx_44-2 35097-nmx_44-2 Sheet No. 80 Side B 06/25/2014 11:26:56 M K C Y [Vol. 44 Tracking the Restate- 132 The court emphasized that when 130 134 affirmed the trial court’s finding that affirmed the trial court’s finding Neff argued that if they were negligent, “the argued that if they were negligent, (internal quotation marks omitted) (citing Iriart v. was the first case in New Mexico to address first case in New was the Id. Neff NEW MEXICO LAW REVIEW The defendants represented that the building’s The defendants 1981-NMSC-021, ¶ 27. , : The Rejection of Contributory Negligence as a as Negligence of Contributory Rejection : The 129 was decided in 1976, five years before New Mexico abol- years before New in 1976, five was decided , the plaintiff sued a real estate broker as well as the indi- estate broker as sued a real , the plaintiff Neff Neff , 1976-NMCA-029, ¶ 4. 127 Scott v. Rizzo ¶ 21. ¶ 16. ¶ 20 (emphasis removed). ¶ 14. The court explained that the defendants were fiduciaries and as bro- ¶ 14. The court explained that the defendants ¶ 5. The court next reasoned that the plaintiff reasonably relied on reasoned that the plaintiff reasonably The court next The court distinguished the plaintiff’s reliance in terms of justifi- The court distinguished the plaintiff’s In Id. Id. Id. Id. See Neff Id. 131 133 The defendants in The court of appeals first explained that because the defendants first explained that because The court of appeals Neff v. Bud Lewis Co. Neff v. Bud 128 Neff v. Bud Lewis v. Bud Neff 134. 133. 132. 131. 127. 89 N.M. 145, 548 P.2d 107. 1976-NMCA-029, 128. 129. 130. ment’s language, the court in on the defendants’ misrepresenta- the plaintiff had justifiably relied tions. plaintiff was guilty of contributory negligence” and that this contributory plaintiff was guilty of contributory a plaintiff’s reliance on the expertise of the defendant is justified, the de- a plaintiff’s reliance on the expertise claiming the plaintiff’s reliance was fendant cannot later succeed in negligent. heating and cooling system was in good working order prior to the sale, system was in good working order heating and cooling with the system, later learned of substantial problems but the plaintiff $30,000 in repairs. which required over ished the doctrine of contributory negligence in favor of comparative in favor of negligence doctrine of contributory ished the fault. kers were “under a legal obligation to make a full, fair and prompt disclosure to his kers were “under a legal obligation to make a full, fair and prompt disclosure which employer of all facts within his knowledge which are or may be material, or to the might affect his principal’s rights and interest or influence his action relative disposition of the property.” Johnson, 1965-NMSC-147, 75 N.M. 745, 411 P.2d 226). the defendants’ material misrepresentations. cation, not negligence: “The issue is not that plaintiff had a duty to cation, not negligence: “The issue a determination whether to rely on exercise reasonable care in making defendants’ negligent representation.” vidual who sold him a building for misrepresenting facts related to the him a building for misrepresenting vidual who sold building’s condition. were real estate brokers, they owed the plaintiff a specific duty to disclose they owed the plaintiff a specific were real estate brokers, building prior to sell- known about the condition of the all material facts ing it. whether contributory negligence is a valid defense to negligent misrepre- defense to negligent is a valid contributory negligence whether sentation. F. Misrepresentation to Negligent Defense \\jciprod01\productn\N\NMX\44-2\NMX207.txt unknown452 Seq: 18 25-JUN-14 9:41 35097-nmx_44-2 Sheet No. 80 Side B 06/25/2014 11:26:56 B 06/25/2014 80 Side Sheet No. 35097-nmx_44-2 35097-nmx_44-2 Sheet No. 81 Side A 06/25/2014 11:26:56 453 in 139 464 (1994) . emphasized ED The court of The 135 Neff 137 A.L.R. F , 22 This section provides an over- § 552. 138 136 ORTS T Applicability of Comparative Negligence Doc- OF ) . The issue is not that plaintiff had a duty to . The issue is not that ECOND (S This rule does not speak in terms of contributory This rule does not JUSTIFIED BUT NEGLIGENT RELIANCE NEGLIGENT BUT JUSTIFIED NEGLIGENT MISREPRESENTATION? indicated that the Restatement would not permit indicated that the Restatement ESTATEMENT R Neff held that the affirmative defense of contributory negligence did defense of contributory negligence held that the affirmative Sonja Larsen, Annotation, ¶ 22. ¶¶ 20–21 (emphasis added). ¶ 17. COMPARATIVE FAULT PROVIDE A DEFENSE TO COMPARATIVE FAULT PROVIDE See See Id. Id. Id. There is currently a split among courts that permit a defendant in a There is currently a split among courts Neff The Restatement language means that a defendant who supplies means that a defendant language The Restatement misrepresen- in tort for negligent is subject to liability information in obtaining that care and competence fails to exercise tation if he in is justified which the plaintiff information and communicating relies on the negligent misrepresentation expecting, if the plaintiff in a transaction. negligence as a defense whether to care in making a determination exercise reasonable reli- negligent representation . . . . Justifiable rely on defendants’ the issue . . . . ance by plaintiff is 139. 138. 137. 136. 135. M K IV. RULE AND THE MINORITY RULE: DOES THE MAJORITY contributory negligence to apply as an affirmative defense. Rather, the contributory negligence to apply is a core issue in a negligent mis- court affirmed that justifiable reliance tort could not be simultaneously ana- representation claim. As such, the justified reliance and negligence in lyzed in terms of the plaintiff’s are essentially the same. reliance because the two inquiries negligent misrepresentation claim to raise comparative fault as an affirm- negligent misrepresentation claim it. ative defense and those that prohibit that the defendant was a fiduciary, which went towards the plaintiff’s jus- was a fiduciary, which went towards that the defendant The court’s explana- on the fiduciary’s representation. tification in relying tion in appeals rejected this argument: this rejected appeals view of both the majority rule and the minority rule, emphasizing the view of both the majority rule and element of “justifiable reliance” minority jurisdiction’s focus on the (“Although many states have adopted the doctrine of comparative negligence, juris- (“Although many states have adopted the doctrine of comparative negligence, dictions remain divided over whether it should apply to cases of negligent misrepresentation.”). trine to Actions Based on Negligent Misrepresentation not apply to the negligent misrepresentation claim. not apply to the negligence “was a of plaintiff’s damage.” plaintiff’s cause of a proximate “was negligence \\jciprod01\productn\N\NMX\44-2\NMX207.txt unknown 2014] Summer Seq: 19 25-JUN-14 9:41 C Y 35097-nmx_44-2 Sheet No. 81 Side A 06/25/2014 11:26:56 A 06/25/2014 81 Side Sheet No. 35097-nmx_44-2 35097-nmx_44-2 Sheet No. 81 Side B 06/25/2014 11:26:56 R , M K C Y [Vol. 44 § 107, at Florenzano ORTS T In 142 AW O F Gilchrist Timber Co. , L relied on the Restate- ROSSER Gilchrist cited was L. P 148 Hicks , the supreme court of Florida held ILLIAM The court finally noted that it had The court finally noted that it W 144 to illustrate this principle. to illustrate this Gilchrist 141 (citing , The court held that the plaintiff had established The court held that cited a case from the Supreme Court of Minne- cited a case from Id. In NEW MEXICO LAW REVIEW 143 146 Hicks note 138, at § 2(a). , 387 N.W.2d at 172. 140 The defendant had sold a tract of land to the plaintiff and The defendant had sold a tract of supra 147 , 2012-NMCA-061, ¶ 31. at 336. at 335. The court also agreed with the idea that there is no compelling reason to at 176. Id. Id. Id. Id. Florenzano Hicks Florenzano v. Olsen Another majority rule decision The majority of courts that have dealt with whether comparative have dealt with of courts that The majority 145 148. 146. 696 So.2d 334 (Fla. 1997). 147. 145. 144. 143. 140. Larsen, 141. 168 (Minn. 1986). 387 N.W.2d 142. the defendant insurance agent misrepresented pertinent information re- agent misrepresented pertinent the defendant insurance her ineligible to social security benefits, rendering garding the plaintiff’s receive those benefits. ment’s definition of negligent misrepresentation for guidance, explaining, ment’s definition of negligent misrepresentation previously “applied [comparative fault] expansively, even extending it to previously “applied [comparative within the scope of negligence,” many causes of action not traditionally it to negligent misrepresentation as and therefore it was logical to extend well. 706 (4th ed. 1971)). a claim for negligent misrepresentation, but that it would permit the de- misrepresentation, but that it a claim for negligent determining liability. the plaintiff’s own negligence in fendant to compare discern any reason to court explained that it could not In so holding, the other type of negli- misrepresentation from any distinguish negligent was a “long favored” way to ap- gence, and that comparative negligence portion liability in tort claims. statute applied to negligent misrep- that the doctrine of comparative fault resentation. treat negligent misrepresentation differently from any other form of negligence when treat negligent misrepresentation differently from any other form of negligence applying comparative fault. sota, supplied a false property appraisal. The appraisal stated the land was supplied a false property appraisal. but it was actually zoned as preserva- zoned to permit residential usage, use. tion land that prohibited residential v. ITT Rayonier, Inc. fault applies to negligent misrepresentation note that because the tort is note that because misrepresentation to negligent fault applies comparative fault the standard rules governing grounded in negligence, “should apply.” holding that the defense is ill-suited to apportion fault in a negligent mis- in a negligent fault apportion to is ill-suited the defense that holding of action. cause representation A. to Negligent Fault Applies Rule: Comparative Majority Misrepresentation \\jciprod01\productn\N\NMX\44-2\NMX207.txt unknown454 Seq: 20 25-JUN-14 9:41 35097-nmx_44-2 Sheet No. 81 Side B 06/25/2014 11:26:56 B 06/25/2014 81 Side Sheet No. 35097-nmx_44-2 35097-nmx_44-2 Sheet No. 82 Side A 06/25/2014 11:26:56 151 455 153 Accord- 150 looked to the is the seminal case Braswell In that case, the plaintiffs 154 149 It justified a tolerable burden on It justified a tolerable 152 reasoned that negligence is more tolerable that negligence reasoned Gilchrist JUSTIFIED BUT NEGLIGENT RELIANCE NEGLIGENT BUT JUSTIFIED 155 at 338. at 515. at 337. at 339. Id. Id. Id. Id. Id. Id. Estate of Braswell v. People’s Credit Union Estate of Braswell v. People’s Credit In sum, the majority rule holds that comparative negligence applies rule holds that comparative negligence In sum, the majority The court in The court a “parade of that it did not foresee that The court also explained 150. 151. 153. 154. A.2d 510 (R.I. 1992). Estate of Braswell v. People’s Credit Union, 602 155. 152. 149. M K ingly, the same prohibition on comparative fault in fraudulent torts would fault in fraudulent on comparative same prohibition ingly, the it appropriate the court found which is why to negligent torts, not apply negligent misrepresentation. fault statute to the comparative to extend Restatement in determining the scope of the defendant’s liability for neg- Restatement in determining the scope court rejected the proposition that the ligent misrepresentation, but the affirmative defense of contributory Restatement contained a built-in negligence. took out a loan from the defendant’s credit union and were told the loan took out a loan from the defendant’s The plaintiff had taken out ten simi- was insured when it actually was not. from the defendant and each time the lar loans in the preceding decades entitled “Certificate of Insurance” and defendant sent them a document The court in told them the loans were insured. future plaintiffs by reasoning that “a recipient of information will not by reasoning that “a recipient of future plaintiffs a recipient will every piece of information furnished; have to investigate a for investigating information that only be responsible to investigate.” the recipient would be expected in the position of adopting and explaining the minority rule. adopting and explaining the minority than fraud because the state of mind involved is less culpable. of mind involved because the state than fraud to negligent misrepresentation claims as it would to any other negligence claims as it would to to negligent misrepresentation the Restatement have rule courts that have adopted tort. The majority reliance and the tensions that arise not discussed the element of justified element to a simultaneous consider- when subjecting the justified reliance in relying. ation of the plaintiff’s negligence B. Does Not Apply to Negligent Minority Rule: Comparative Fault Misrepresentation horribles” would result from allowing comparative fault to apply to a result from allowing comparative horribles” would misrepresentation. claim for negligent “a misrepresenter is liable only if the recipient of the information justifia- of the information if the recipient only is liable “a misrepresenter information.” the erroneous on bly relied \\jciprod01\productn\N\NMX\44-2\NMX207.txt unknown 2014] Summer Seq: 21 25-JUN-14 9:41 C Y 35097-nmx_44-2 Sheet No. 82 Side A 06/25/2014 11:26:56 A 06/25/2014 82 Side Sheet No. 35097-nmx_44-2 35097-nmx_44-2 Sheet No. 82 Side B 06/25/2014 11:26:56 M K C Y , the Bras- 159 [Vol. 44 which 157 On ap- 158 161 Carroll In 160 . Carroll v. Gava The court focused on the relative focused on the The court The court held that comparative that emphasized policy considera- that emphasized 156 162 Hicks NEW MEXICO LAW REVIEW , 602 A.2d at 513. focused on policy concerns, reasoning that it would be im- be that it would reasoning concerns, on policy focused Otero v. Jordan Rest. Enter., 1996-NMSC-047, ¶ 17 (rejecting compara- Otero v. Jordan Rest. Enter., 1996-NMSC-047, at 896. at 897. at 894. at 513. However, it is important to consider the counter-argument to the minority However, it is important to consider the at 515. See Id. Id. Id. Braswell Id. Id. Id. 163 Other minority decisions similarly focused on the Restatement’s ele- Other minority decisions similarly Another decision cited by Another decision Braswell recognized the critical “need to protect consumers, to remedy dispa- “need to protect consumers, recognized the critical 162. 163. 160. 98 Cal. App. 3d 892 (Cal. Ct. App. 1979). 161. 157. 159. 158. 156. well practices” and to prevent unfair business rate bargaining power, would be undermined by permitting the defendant to avoid full liability by permitting the defendant would be undermined cited the related state fault defense. The court also with a comparative consumers.” unknowledgeable or innocent interest in “protect[ing] peal, the defendants urged the court to apply a comparative fault analysis, peal, the defendants urged the court the justification of the plaintiffs’ reli- which the court rejected. Discussing defendants were “in the mobile home ance, the court emphasized that the real estate sellers, and had previously park business,” were experienced sold a similar site to another party. plaintiffs purchased a mobile home park site from the defendants, and a mobile home park site from plaintiffs purchased the site’s zoning requirements. the defendants misrepresented expertise of each party and stated “[t]he imposition of a higher duty on of a higher stated “[t]he imposition of each party and expertise bargaining disparate aimed at correcting is apparently such defendants consumers.” unknowledgeable or innocent power and protecting fault should not apply to claims for negligent misrepresentation because a fault should not apply to claims for confusion and complexity” and contrary rule would “create unnecessary . . . of everyday [business] exchanges reduce the “essential predictability . . . .” rule’s rationale that experts should not be able to hide behind the plaintiff’s negli- rule’s rationale that experts should not the damages: an expert in a given field is gence when the expert’s negligence causes give the plaintiff a likely claim for fraud more likely to know the truth, which would is an invalid defense to fraudulent misrepre- against the expert, and comparative fault sentation. that a defendant “guilty of fraud cannot be tive fault in fraud context and holding allowed by operation of law to profit by that fraud”). tions in adopting the minority rule was tions in adopting proper to allow comparative fault principles to apply to negligent misrep- negligent apply to to principles fault comparative to allow proper (or with expert knowledge defendants acting claims because resentation in communicating to a higher responsibility should be held as fiduciaries) rely on. that others might information ment of “justified reliance” in holding that element is not subject to a ment of “justified reliance” in holding \\jciprod01\productn\N\NMX\44-2\NMX207.txt unknown456 Seq: 22 25-JUN-14 9:41 35097-nmx_44-2 Sheet No. 82 Side B 06/25/2014 11:26:56 B 06/25/2014 82 Side Sheet No. 35097-nmx_44-2 35097-nmx_44-2 Sheet No. 83 Side A 06/25/2014 11:26:56 457 In other 169 the Tennessee Court of Court Tennessee the 164 , Williams Ford, Inc. v. Hartford case for negligent misrep- case for negligent 166 an element of the tort of negligent mis- see also is Citing the Restatement, the court the Restatement, Citing 165 prima facie McNeil v. Nofal McNeil blind faith. not JUSTIFIED BUT NEGLIGENT RELIANCE NEGLIGENT BUT JUSTIFIED 168 Viewed this way, a plaintiff’s unreasonableness in relying Viewed this way, a plaintiff’s unreasonableness 167 Lawyers Title Ins. Corp. v. Baik, 55 P.3d 619, 627 (Wash. 2002) (“We see Lawyers Title Ins. Corp. v. Baik, 55 P.3d at 408 (citations omitted) (emphasis in original). at 408 (citations omitted) (emphasis in at 409. See Id. Id. Most courts following the minority rule similarly view “justifiable Most courts following the minority The New Mexico Supreme Court has used unjustified reliance to Supreme Court has used unjustified The New Mexico A successful claim for negligent misrepresentation requires justifi- for negligent misrepresentation requires A successful claim a able reliance. To establish relied . . . must show that he justifiably resentation, the plaintiff under a made by an individual upon a material misrepresentation reli- inform as to the material facts. Justifiable duty to properly is ance in this context 167.v. Garcia, 1993-NMSC-009, ¶ 27. Ruiz 168. 169.4010308 In re Brownsville Property Corp., Inc., No. 10–21959–TPA, WL 2013 166. 164. 402 (Tenn. Ct. App. 2006). 185 S.W.3d 165. M K Appeals held it is illogical to apply comparative negligence when an ele- when negligence apply comparative to it is illogical held Appeals the plaintiff reliance. Because justified the tort is the plaintiff’s ment of representa- the defendant’s relied on she or he reasonably has to show tempered by cannot later be case, the element a prima facie tions to make fault analysis.” “a comparative reasoned: precludes recovery and disposes of meritless negligent misrepresentation precludes recovery and disposes of that a plaintiff is either justified or was claims. The minority rule suggests fault does not need to come into the not, and the task of apportioning analysis at all. representation; merging justifiable reliance and comparative negligence would elimi- representation; merging justifiable reliance and comparative negligence would nate the requirement of justifiable reliance altogether.”). at *19 (Bankr. W.D. Penn. Aug. 1, 2013); no clear-cut way to distinguish between a plaintiff’s reasonableness in relying on a no clear-cut way to distinguish between in causing his or her own damages.”); misrepresentation and a plaintiff’s culpability Plan Adm’rs, Inc., 433 F. Supp. 2d 1181, Honolulu Disposal Serv., Inc. v. Am. Ben. 1193 (D.Haw. 2006) (“[J]ustifiable reliance Courant Co., 657 A.2d 212, 222 (Conn. 1995) (“Although we conclude that no special Courant Co., 657 A.2d 212, 222 (Conn. 1995) (“Although we conclude that no relationship is required to state a claim of negligent misrepresentation, the plaintiff or must allege and prove that the reliance on the misstatement was justified reasonable.”). reliance” as equivalent to a plaintiff’s lack of negligence. These cases reliance” as equivalent to a plaintiff’s a plaintiff justifiably relied on a negli- question the logic of holding that negligent for so relying. gent misrepresentation but was also limit the plaintiff’s recovery in the past, holding that unless the plaintiff recovery in the past, holding that limit the plaintiff’s on the defen- showing that his or her reliance makes some affirmative there is no negligent misrepresentation dant’s statement(s) was justified, claim at all. comparative fault analysis. In In fault analysis. comparative \\jciprod01\productn\N\NMX\44-2\NMX207.txt unknown 2014] Summer Seq: 23 25-JUN-14 9:41 C Y 35097-nmx_44-2 Sheet No. 83 Side A 06/25/2014 11:26:56 A 06/25/2014 83 Side Sheet No. 35097-nmx_44-2 35097-nmx_44-2 Sheet No. 83 Side B 06/25/2014 11:26:56 R M K 175 C Y the Hicks 171 [Vol. 44 , UFFOLK S , 27 § 552 cmt. a. ORTS T OF ) , 602 A.2d 510, 514 (R.I. 1992). ECOND held that under the Restate- held that (S , which stood for the proposition In business exchanges where one In business exchanges gave it cursory attention. Second, Condor 174 Neff 172 Tort Law-Consumers’ Contributory Negligence Hicks ESTATEMENT R 176 NEW MEXICO LAW REVIEW see also note 138, at § 2(a). 173 V. ANALYSIS AND IMPLICATIONS court’s reasoning is flawed in three ways. First, court’s reasoning is flawed in three supra at 715; Condor Enterprises, Inc. v. Boise Cascade Corporation v. Boise Cascade Enterprises, Inc. Condor Hicks 576, 579–80 (1993). Christine E. Carlstrom, . In EV See See Estate of Braswell v. People’s Credit Union Condor inadequately distinguished The The minority rule therefore emphasizes that those with superior therefore emphasizes that those The minority rule 170 173. (Wash. 2002) (explaining the Lawyers Title Ins. Corp. v. Baik, 55 P.3d 619, 627 174. 175. 176. Ct. App. 1979). Carroll v. Gava, 98 Cal. App. 3d 892, 897 (Cal. 170. Larsen, 171. 713 (1993). 856 P.2d 172. court reasoned that the Restatement “equates justifiable reliance with a justifiable reliance “equates that the Restatement court reasoned negligence.” lack of contributory party usually possesses inferior expertise, the individual with superior inferior expertise, the individual party usually possesses are dealing should be field in which the two parties knowledge in the economic harm. for misrepresentations causing wholly responsible ment, if the plaintiff is not justified in relying on a representation, he or on a representation, justified in relying the plaintiff is not ment, if Equating state a claim. he or she cannot nothing because she recovers means that merg- with a lack of contributory negligence justified reliance eliminates the ele- with comparative fault essentially ing justified reliance ment altogether. (1977). problem with distinguishing “a plaintiff’s reasonableness in relying on a misrepresen- tation and a plaintiff’s culpability in causing his or her own damages”). Will Not Bar or Reduce Recovery in Negligent Misrepresentation Actions failed to reconcile the conflict between requiring that a plaintiff prove failed to reconcile the conflict between that the plaintiff was comparatively justifiable reliance and determining which emphasizes the plaintiff’s justi- negligent. Unlike the minority rule, fied reliance, the decision in Hicks upon the plaintiff after the plaintiff that the defendant may not lay fault the court did not consider the public establishes justified reliance. Third, knowledge in a particular field should be held to a higher field should be held to a higher knowledge in a particular party. than the less-knowledgeable U. L. R Moreover, the minority rule holds that the purpose of comparative fault, rule holds that the purpose Moreover, the minority consequences of physical injury, which is to deal with the catastrophic claims where only commer- does not apply to negligent misrepresentation cial losses are sustained. words, because a plaintiff cannot make a claim at all if her reliance was her reliance at all if a claim make cannot a plaintiff because words, recov- plaintiff’s the limits already reliance “unreasonable justified, not ery.” \\jciprod01\productn\N\NMX\44-2\NMX207.txt unknown458 Seq: 24 25-JUN-14 9:41 35097-nmx_44-2 Sheet No. 83 Side B 06/25/2014 11:26:56 B 06/25/2014 83 Side Sheet No. 35097-nmx_44-2 35097-nmx_44-2 Sheet No. 84 Side A 06/25/2014 11:26:56 R 459 the , the 180 Hicks note 138, at supra As New Mexico 181 But in 177 would have provided have would Larsen, Hicks See also ¶¶ 27–28. Id. would have been helpful for future 179 affirms New Mexico’s adherence to the Re- affirms New Mexico’s Hicks JUSTIFIED BUT NEGLIGENT RELIANCE NEGLIGENT BUT JUSTIFIED is in harmony with New Mexico negligence law in gen- is in harmony with New Mexico negligence 1978, § 41-3A-1 (1987). A fuller analysis of justified reliance in light of a compara- of justified reliance in light of a A fuller analysis Hicks 178 Ruiz v. Garcia, 1993-NMSC-009, ¶ 27. See NMSA , the Act now applies to negligent misrepresentation claims. , the Act now applies to negligent While In New Mexico, a plaintiff must establish justified reliance to pro- a plaintiff must establish justified In New Mexico, Negligence by Plaintiff 1. of the Claim is Equated with No Justified Reliance as an Element 181. 180. law favors holding all Since the adoption of comparative fault, New Mexico 177. Garcia, 1993-NMSC-009, ¶ 27 (holding that the plaintiff’s negligent Ruiz v. 178. v. Eller, 2012-NMCA-061, ¶ 33. Hicks 179. M K court neglected to carefully analyze why justified reliance could now be court neglected to carefully analyze fault when it had been more com- considered in light of comparative by the plaintiff. monly viewed as a lack of negligence court did not consider the Restatement’s element of justified reliance at the Restatement’s element court did not consider under a compar- the element’s diminished meaning all, nor did it examine is puzzling This cursory treatment of the Restatement ative fault analysis. in because the opinion statement. courts and practitioners, because under the majority rule adopted in courts and practitioners, because Hicks eral that favors apportioning fault to the plaintiff when it is due, eral that favors apportioning fault tive fault defense would have helped clear up the confusion that results would have helped clear up the tive fault defense negligent misrepre- negligence to a claim for from applying comparative justifiable reliance because New Mexico law requires sentation, namely which already limits the ability of a as an element of a prima facie claim, a brief discussion of New negligent plaintiff to recover. Furthermore, Mexico’s Several Liability Act parties, not just the defendant, responsible for their own respective acts to the degree parties, not just the defendant, responsible for their own respective acts to the those acts have caused harm. Scott v. Rizzo, 1981-NMSC-021, ¶ 29. The underpin- nings of this doctrine are based on fairness. misrepresentation claim failed because she had not satisfied “the element of justifia- misrepresentation claim failed because ble reliance as a matter of law”). § the plaintiff’s unjustifiable reliance does not allow the plaintiff to 2(a) (“[W]here would make a prima facie case for negligent misrepresentation, unreasonable reliance already serve to limit the plaintiff’s recovery.”). policy repercussions that the minority rule warns of. Had the court of Had the of. rule warns minority that the repercussions policy these issues, fully examined more appeals \\jciprod01\productn\N\NMX\44-2\NMX207.txt unknown 2014] Summer Seq: 25 25-JUN-14 9:41 ceed with a claim for negligent misrepresentation. ceed with a claim more comprehensive guidance for future practitioners in harmonizing practitioners in for future guidance more comprehensive claim. misrepresentation nature of a negligent fault with the comparative A. on the Fault Reliance and Apportioning Between Justified Tension Plaintiff Justified C Y 35097-nmx_44-2 Sheet No. 84 Side A 06/25/2014 11:26:56 A 06/25/2014 84 Side Sheet No. 35097-nmx_44-2 35097-nmx_44-2 Sheet No. 84 Side B 06/25/2014 11:26:56 R M K 182 185 C Y 1, 12 . [Vol. 44 EV N.M. L. R , 33 183 Bartlett Revisited: New Mexico Tort Law Twenty Years Bartlett Revisited: New Mexico Tort Law failed to deal with the confusion in the overlap failed to deal with NEW MEXICO LAW REVIEW Understood this way, the doctrine of comparative Understood this way, the doctrine 186 Hicks note 168 and accompanying text. could have explained that justifiable reliance should no could have explained that justifiable made no effort to reconcile the potential inconsistency of re- reconcile the potential inconsistency made no effort to , 1993-NMSC-009, ¶ 27. M.E. Occhialino, McNeil v. Nofal, 185 S.W.3d 402, 409 (Tenn. Ct. App. 2006). McNeil v. Nofal, 185 S.W.3d 402, 409 Hicks Ruiz See See See supra Hicks from considering a plaintiff’s To dissipate the confusion that results 184 Comparative Fault 2. Reliance and to the Tension Between Justified Possible Solutions 186. 651, 655 (Wash. 1998) (en ESCA Corp. v. KPMG Peat Marwick, 959 P.2d 182. 185. 183. 184. (2003) (“[T]he current requirement that plaintiff prove justifiable reliance as an ele- (2003) (“[T]he current requirement that ment of a negligent misrepresentation case may be incompatible with comparative plain- negligence principles and perhaps should be transformed from an element of tiff’s case to the affirmative defense of comparative negligence.”). com- banc) (discussing tension between finding justifiable reliance on one hand, and can parative fault on the other;the court explained that comparative fault principles plain- apply to other aspects of the plaintiff’s behavior that proximately caused the tiff’s harm, apart from the reliance element). fault applies only after the plaintiff established his or her reasonableness fault applies only after the plaintiff given the circumstances; it in relying on the defendant’s representations lack of negligence. Such reason- would have no bearing on the plaintiff’s Mexico’s preference for comparative ing would be compatible with New longer be considered a required element of the plaintiff’s claim, but longer be considered a required plaintiff’s general right to recover. should instead be viewed only as the After the Abolition of Joint and Several Liability–PartAfter the Abolition of Joint and Several One Comparative negligence would then apply to determine “the proper Comparative negligence would then amount of recovery.” quiring a plaintiff to justifiably rely on a defendant’s words while allowing to justifiably rely on a defendant’s quiring a plaintiff by showing that the offset practically all of its liability the defendant to In choosing relied on defendant’s representations. plaintiff negligently the majority rule, law requires, the plaintiff’s ability to state a claim for negligent misrepre- for negligent a claim to state ability the plaintiff’s law requires, reliance. justified establishing on place depends the first in sentation representa- on the defendant’s in relying plaintiff is negligent When the misrepre- case of negligent assert a prima facie plaintiff fails to tion, the from the from recovering at the threshold and is barred sentation defendant’s reliance on the that the plaintiff’s By establishing defendant. she or he was has shown that the plaintiff was justified, representations reasonable. indeed, that the reliance was not negligent in relying; negligence as reliance as an element of and comparative between justified misrepresentation. a defense to negligent \\jciprod01\productn\N\NMX\44-2\NMX207.txt unknown460 Seq: 26 25-JUN-14 9:41 negligence when the plaintiff has already established justifiable reli- negligence when the plaintiff has ance, 35097-nmx_44-2 Sheet No. 84 Side B 06/25/2014 11:26:56 B 06/25/2014 84 Side Sheet No. 35097-nmx_44-2 35097-nmx_44-2 Sheet No. 85 Side A 06/25/2014 11:26:56 190 461 The Multi- , 2006- Id. “contributed to the and See Gulf Ins. Co. v. Cottone , 86 S.W.3d 219, 224 (Tenn. Ct. App. held that comparative negligence is a held that comparative negligence Indeed, the UJI’s description of negligent the UJI’s description Indeed, 189 Staggs v. Sells 188 Hicks 603 (2007). . JUSTIFIED BUT NEGLIGENT RELIANCE NEGLIGENT BUT JUSTIFIED it does not strictly require justified reliance as an ele- justified reliance not strictly require it does EV 1978, § Liability Act requires the jury 41-3A-1(A) (1987). The Several Furthermore, analyzing justified reliance in terms of the terms of in reliance justified analyzing Furthermore, made no similar effort to clarify its interpretation of justified reliance made no similar effort to clarify its interpretation 187 because Scott v. Rizzo, 1981-NMSC-021, ¶ 27. N.M. L. R Hicks NMSA See Alternatively, New Mexico courts could permit the justified reliance Mexico courts could permit the Alternatively, New Because the court in Misrepresentation , 37 3.Act Now Applies to Negligent New Mexico’s Several Liability 187. 188. the UJI simply requires that the defendant had “no reasonable Instead, 189. the court in For example, 190. M K misrepresentation is arguably better suited to an application of compara- to an application better suited is arguably misrepresentation tive fault ment equal to non-negligence. ment equal plaintiff’s right to recover, instead of as an element equivalent to a plain- to equivalent an element of as instead to recover, right plaintiff’s not explic- UJI, which does with the is harmonious tiff’s non-negligence, justified reliance. itly require to account for all parties who contributed to the plaintiff’s injury in apportioning dam- to account for all parties who contributed to the plaintiff’s injury in apportioning ages in any claim where comparative fault applies. is that NMCA-150, ¶ 20, 140 N.M. 728, 148 P.3d 814 (explaining “the general rule for each tortfeasor is severally responsible for its own percentage of comparative fault that injury”) (internal citations omitted); for a comprehensive overview and analysis of New Mexico’s Several Liability Act and related cases, see Megan P. Duffy, v. ple Tortfeasors Defined by the Injury: Successive Tortfeasor Liability After Payne Hall element to operate as a form of the old doctrine of contributory negli- as a form of the old doctrine element to operate plaintiff’s claim if the act as a total-bar defense to a gence, which would justified in relying on establish that the plaintiff was not defendant could to guess as to what This way, plaintiffs would not have the representation. a damage award. negligence could factor in to reducing degree their own were caused by would understand that if more damages Rather, plaintiffs they would than the defendant’s representations, their own fault rather all. recover nothing at ground for believing that the statement made was true” and that the plaintiff did in ground for believing that the statement fact rely on it. UJI 13-1632 NMRA. valid defense to a negligent misrepresentation claim, it should have clari- valid defense to a negligent misrepresentation New Mexico’s Several Liability Act fied its holding by explaining that now applies to the tort as an additional method of apportioning fault to now applies to the tort as an additional negligence. \\jciprod01\productn\N\NMX\44-2\NMX207.txt unknown 2014] Summer Seq: 27 25-JUN-14 9:41 2001) explained that a plaintiff could have justifiably relied 2001) explained that a plaintiff could have court in in this manner. amount of damage suffered. Justifiable reliance is one of the elements that must be amount of damage suffered. Justifiable judge by a preponderance of the evidence established to the satisfaction of the trial can be established by a plaintiff. Such a before the tort of negligent misrepresentation fault on the part of the plaintiff.” finding is not inconsistent with comparative C Y 35097-nmx_44-2 Sheet No. 85 Side A 06/25/2014 11:26:56 A 06/25/2014 85 Side Sheet No. 35097-nmx_44-2 35097-nmx_44-2 Sheet No. 85 Side B 06/25/2014 11:26:56 , M K C Y , the Neff [Vol. 44 Hicks was that the If the Several 191 Neff Neff did not consider why would have been useful would have been , not only can the plain- , not only ” and that “[t]he issue is not Hicks meant that justified reliance Hicks without really considering its Hicks failed to fully distinguish failed to fully distinguish Neff emphasized that a negligent mis- , the defendant was acting within Neff should have focused on the court’s Neff Hicks By refusing to allow the defendant to By refusing to allow Hicks as a defense 192 Hicks 193 was decided five years before New Mexico was decided five years before New , 1976-NMCA-029, ¶¶ 20–21. was decided, NEW MEXICO LAW REVIEW 1981-NMSC-021. Neff note 185, at 11–12 (footnotes omitted). Professor Occhi- Hicks quickly dismissed that negligent misrepresentation “does not speak in that negligent misrepresentation supra at 12. Id. v. Rizzo, Hicks Neff Scott Neff v. Bud Lewis Co. See Related to its failure to analyze the “justified reliance” element of a to analyze the “justified reliance” Related to its failure Instead, , this is because 192. 193. 191. Occhialino, Liability Act now applies, carrying with it sweeping implications with re- sweeping implications carrying with it Act now applies, Liability misrep- liable for negligent now potentially the additional parties gards to discussion of the Act in resentation, a brief the plaintiff’s right to of appeals focused exclusively on where the court the plaintiff exer- representations, not whether rely on the defendant’s such reliance. cised due care in for future litigants. B. Appeals Inadequately Distinguished The Court of claim, negligent misrepresentation adopted comparative fault. assert the plaintiff’s negligence as an affirmative defense, the court did negligence as an affirmative assert the plaintiff’s because he had already established not consider the plaintiff’s negligence court’s argument in justified reliance. The thrust of the negligence was not at issue in rationale. While it is true that comparative Neff defendant, acting in the scope of his expertise, failed to disclose known defendant, acting in the scope of facts to the plaintiff. Similarly in analysis altogether. This is alarming court skipped the justified reliance because at the time equaled a lack of contributory negligence. representation claim solely concerned the defendant’s negligence once representation claim solely concerned justified reliance. But in the plaintiff succeeded in establishing terms of contributory negligence justified reliance would no longer be viewed this way. justified reliance would no longer the scope of his profession and comparably failed to disclose facts he the scope of his profession and should have known to the plaintiff. emphasis in alino explained that if justified reliance were “transformed from an element of plain- alino explained that if justified reliance were “transformed from an element of tiff’s case to the affirmative defense of comparative negligence. The Several Liability mis- Act and the doctrine of several liability would then apply to claims for negligent representation.” others. The Act allows a defendant to allocate fault to individuals other individuals fault to allocate to a defendant allows The Act others. would fault comparative where of action cause in any the plaintiff than established in under the rule apply. Thus, \\jciprod01\productn\N\NMX\44-2\NMX207.txt unknown462 Seq: 28 25-JUN-14 9:41 tiff’s negligence be considered, but also the negligence of additional par- negligence of additional but also the be considered, tiff’s negligence injury. plaintiff’s economic contributed to the ties that 35097-nmx_44-2 Sheet No. 85 Side B 06/25/2014 11:26:56 B 06/25/2014 85 Side Sheet No. 35097-nmx_44-2 35097-nmx_44-2 Sheet No. 86 Side A 06/25/2014 11:26:56 R 463 as or Neff simi- Neff Under 194 Neff It is puzzling 196 , the court in analyzed at 11–12. In analyzing 195 Id. Braswell Braswell but did not distinguish that but did not distinguish Contrary to the court’s conten- note 185, at 11. Occhialino notes that 198 opinion, which explained that neg- which explained opinion, should have more carefully distin- more carefully should have supra Braswell Neff Hicks Moreover, like 197 . Id. Occhialino, cited to Neff was decided, some courts had interpreted had interpreted some courts was decided, Hicks when the defendant is acting with expert knowledge when the defendant JUSTIFIED BUT NEGLIGENT RELIANCE NEGLIGENT BUT JUSTIFIED see also Hicks made no effort to show why they would not be problematic made no effort to show why they , 2012-NMCA-061, ¶ 32. that was not the requirement in New Mexico; the requirement was that that was not the requirement in New Mexico; did not address the worrisome public policy repercussions of did not address the worrisome public , 1976-NMCA-029, ¶ 20 (emphasis added). ¶ 29. ¶¶ 21–22; Id. Hicks Neff Id. Hicks Hicks Hicks By the time By the time , the justifiably reliant plaintiff’s own negligence cannot be used to cannot be own negligence reliant plaintiff’s , the justifiably , Professor Occhialino explained, “[o]ne might expect that the comparative negli- 198. 196. A.2d 510, 513 (R.I. 1992) Estate of Braswell v. People’s Credit Union, 602 197. 194. 195. M K ligent misrepresentation afforded no such defense. no such afforded ligent misrepresentation Neff defendant’s liability. reduce the of the holding in light guished it’s that the court in that the court in of court’s interpretation permitting comparative fault in the negligent misrepresentation context. permitting comparative fault in the rule cases that espoused those con- Despite citing to several minority cerns, seemed concerned with the policy consequences of permitting a fiduciary with the policy consequences of seemed concerned to the fiduciary’s elevated . to lay off fault on the plaintiff due C. Public Policy Implications of the The Court Failed to Address the Majority Rule treatment of policy indicates a lesser in New Mexico. This perfunctory fair bargaining, and reliability concern for protecting innocent consumers, attempted to justify its decision not to in business exchanges. The court that the plaintiff made no policy engage in a policy discussion by asserting rule. arguments in favor of the minority pursuant to a fiduciary relationship,” placing “a higher duty on such de- relationship,” placing “a higher pursuant to a fiduciary bargaining power aimed at correcting disparate fendants is apparently or innocent consumers.” and protecting unknowledgeable larly, explaining, “ larly, explaining, (emphasis added). Neff New gence defense would apply in an action for negligent misrepresentation, but Mexico law is to the contrary.” standing for the proposition that someone owing an elevated duty, in that that someone owing an standing for the proposition comparative fault to should not be permitted to raise case a fiduciary, misrepresentation. defend against negligent justified reliance was an element of the cause of action. it might be appropriate to transform justified reliance from an element of a prima it might be appropriate to transform justified negligence, but prior to the deci- facie case to an affirmative defense of comparative sion in that plaintiff had a duty to exercise reasonable care in making a determi- making a care in reasonable to exercise had a duty plaintiff that representation.” negligent on defendants’ to rely whether nation \\jciprod01\productn\N\NMX\44-2\NMX207.txt unknown 2014] Summer Seq: 29 25-JUN-14 9:41 C Y 35097-nmx_44-2 Sheet No. 86 Side A 06/25/2014 11:26:56 A 06/25/2014 86 Side Sheet No. 35097-nmx_44-2 35097-nmx_44-2 Sheet No. 86 Side B 06/25/2014 11:26:56 M K C Y [Vol. 44 Unlike its policy 206 § 1 cmt. a 204 such as the need such IABILITY 201 199 chose the majority chose the L chose not to explain chose not Hicks , 1994-NMSC-056, ¶ 8). Hicks 200 PPORTIONMENT cited this proposition, The minority rule is therefore in Reichert A 205 : , defendants like the art dealer in that , defendants like the art dealer in Hicks ORTS , there were compelling policy arguments , there were compelling might have imposed a restriction against might have imposed T Hicks OF While ) Hicks Hicks 203 NEW MEXICO LAW REVIEW HIRD (T , 2012-NMCA-061, ¶ 32. , 602 A.2d at 514–15. 202 , 2012-NMCA-061, ¶ 33 (citing (explaining the “intellectual underpinning” of tort law is based on the no- ESTATEMENT Id. R Braswell See Hicks Hicks , the minority rule refuses to allow comparative negligence mostly , the minority rule refuses to allow Lastly, permitting comparative fault in negligent misrepresentation Lastly, permitting comparative fault Furthermore, in New Mexico comparative fault applies only unless New Mexico comparative fault applies Furthermore, in In neglecting to analyze these principles, to analyze In neglecting 206. 205. 199. Brief-in-Chief at 25 (“The actions and attitude of Peter Eller in Appellant’s 200. 201. 202. Appellant’s Brief-in-Chief at 25. 203. Reichert v. Atler, 1994-NMSC-056, ¶ 8. 204. because of state concerns such as inadequate consumer protection and because of state concerns such as Hicks discussion ended there. In discussion ended in favor of prohibiting comparative fault. But in failing to address them, in favor of prohibiting comparative allowing comparative fault in a negli- the court failed to recognize that be contrary to the interests New Mex- gent misrepresentation claim might ico hopes to promote. Under for their careless representations case are now arguably less responsible fault to others. because they can successfully apportion of the tort itself. The reason claims undermines the policy underpinnings in the first instance is because “various multiple types of tort claims exist torts raise different policy concerns.” to protect less knowledgeable consumers. less knowledgeable to protect why similar needs were not important in New Mexico. important in New needs were not why similar accordance with the notion that policy can justify a rule of law. accordance with the notion that policy tion that multiple torts exist because each one raises varying policy considerations). (2000). rule, which alleviates the defendant’s burden to use the utmost care in to use the utmost defendant’s burden alleviates the rule, which the plaintiff can assert that the defendant because making representations does not have the investigated, even when the plaintiff should have also same level of expertise. professionals or experts being permitted to raise comparative negligence, being permitted to raise comparative professionals or experts would protect even- opinions do. Such a limitation as the minority rule would only apply to as well as innocent consumers and bargaining power scope of business financial injury in the limited situations involving transactions. policy. contrary to public his dealings with Mary Jane Hicks, are not actions that the courts of this state should his dealings with Mary Jane Hicks, are adopt a policy that comparative fault has no support or encourage. This court should transactions . . . .”). place in the context of ordinary business tion, the plaintiff did urge the court of appeals to consider the worrisome to consider appeals court of urge the did the plaintiff tion, rule, minority by the emphasized considerations policy \\jciprod01\productn\N\NMX\44-2\NMX207.txt unknown464 Seq: 30 25-JUN-14 9:41 35097-nmx_44-2 Sheet No. 86 Side B 06/25/2014 11:26:56 B 06/25/2014 86 Side Sheet No. 35097-nmx_44-2 35097-nmx_44-2 Sheet No. 87 Side A 06/25/2014 11:26:56 465 was failed to § 1 cmt. d Hicks Moreover, provides a 209 Hicks § 1 reporter’s note IABILITY Hicks L As the minority rule As the minority held that comparative 207 IABILITY L , it remains unclear exactly Hicks Hicks PPORTIONMENT A gave them. In simply finding the finding In simply them. gave missed an opportunity to address an opportunity to missed : PPORTIONMENT ORTS Hicks Hicks T : A OF ) VI. CONCLUSION ORTS T ignored, policy considerations should enter the ignored, policy HIRD OF declined to discuss these policy implications, future declined to discuss ) (T JUSTIFIED BUT NEGLIGENT RELIANCE NEGLIGENT BUT JUSTIFIED Hicks HIRD Policy implications can render comparative fault inappro- Policy implications Hicks 208 (T Maxey v. Quintana, 1972-NMCA-069, ¶ 16 (explaining the old view that Maxey v. Quintana, 1972-NMCA-069, ESTATEMENT R See The New Mexico Court of Appeals in The New Mexico Court of Appeals Because 209. in the sense of judi- “Courts should not merely rely on ease of administration, 207. 208. M K ESTATEMENT when a consumer can safely rely on information given by an expert, and when a consumer can safely rely on to investigate further. when the consumer will face an obligation future decisions will likely need to address just how much independent will likely need to address just how future decisions and professionals will representations made by experts investigation into After now be required in New Mexico. fault applies to negligent misrepresentation claims and refused to distin- fault applies to negligent misrepresentation grounded in negligence. guish the tort from any other tort analysis when evaluating the propriety of comparative fault applying to the propriety of comparative analysis when evaluating certain torts. emphasizes, and likely attempting to make New Mexico law on negligent misrepresenta- likely attempting to make New Mexico in general by refusing to distinguish tion congruent with negligence law other torts. However, negligent misrepresentation from reliance” and the element’s dimin- comprehensively examine “justified fault analysis. ished meaning under a comparative (2000) (noting that “specific policies embodied in a particular cause of action” can (2000) (noting that “specific policies embodied in a particular cause of action” mean that applying comparative fault to the cause of action should be precluded). torts.” cial time and effort, to disregard important policy differences among different (2000). litigants and courts dealing with comparative negligence in the negligent dealing with comparative negligence litigants and courts them. context should take care to address misrepresentation priate in certain causes of action. priate in certain because negligent misrepresentation did not fall under fraud or deceit, “no other ac- because negligent misrepresentation did of negligent misrepresentation was without a tion was available and that the wrong remedy”). the strong repercussions in favor of the minority rule, which hinge upon rule, which favor of the minority repercussions in the strong The rea- types of negligence. as unlike other of the tort itself the nature the first place developed in misrepresentation tort of negligent son the that re- spoken words problem of negligently the narrow was to remedy instead of physical injury. sulted only in financial R majority rule more persuasive, rule more persuasive, majority promoting unfair bargaining. These concerns are important enough to enough are important These concerns bargaining. unfair promoting than more consideration merit \\jciprod01\productn\N\NMX\44-2\NMX207.txt unknown 2014] Summer Seq: 31 25-JUN-14 9:41 C Y 35097-nmx_44-2 Sheet No. 87 Side A 06/25/2014 11:26:56 A 06/25/2014 87 Side Sheet No. 35097-nmx_44-2 35097-nmx_44-2 Sheet No. 87 Side B 06/25/2014 11:26:56 M K C Y [Vol. 44 failed to reconcile the conclusion that reconcile the conclusion failed to Hicks NEW MEXICO LAW REVIEW did not provide a clear framework for reconciling justified reliance clear framework for reconciling did not provide a justifiably relied plaintiff can have , a negligent misrepresentation can rely on a the degree to which a plaintiff , it remains unclear Overall, the opinion in Overall, a plaintiff could negligently but justifiably rely on a representation. While rely on a representation. but justifiably could negligently a plaintiff justified—or a plaintiff’s difficult to harmonize it seems reasonable—reli- the plaintiff that a simultaneous determination information with ance on this tension. to further analyze was unwilling negligent, the court was also Hicks claim with a jury of a negligent misrepresentation as a requisite element relying. The opinion plaintiff was also unreasonable in finding that the with the tension in for future practitioners dealing offers little guidance claim. Under fault to a negligent misrepresentation applying comparative Hicks justified reliance can to state a claim, but that to the degree necessary reliance. After an analysis of the plaintiff’s negligent later be subject to Hicks any risk of being negligent representation without professional or expert the resulting economic harm. held comparatively responsible for weak guide for applying comparative fault principles to negligent to principles fault comparative for applying guide weak misrepresentation. \\jciprod01\productn\N\NMX\44-2\NMX207.txt unknown466 Seq: 32 25-JUN-14 9:41 35097-nmx_44-2 Sheet No. 87 Side B 06/25/2014 11:26:56 B 06/25/2014 87 Side Sheet No. 35097-nmx_44-2