Addaman v. Lanford - 46 S.W.3d 199 (Tenn. Ct. App. 2000)

Rule:

The elements of the tort of negligent misrepresentation are: (1) One who, in the course of his business, profession or employment, or in any other transaction in which he has a pecuniary interest, supplies false information for the guidance of others in their business transactions, is subject to liability for pecuniary loss caused to them by their justifiable reliance upon this information, if he fails to exercise reasonable care or competence in obtaining or communicating the information. (2) Except as stated in Subsection (3), the liability stated in Subsection (1) is limited to loss suffered (a) by the person or one of a limited group of persons for whose benefit and guidance he intends to supply the information or knows that the recipient intends to supply it; and (b) through reliance upon it in a transaction that he intends the information to influence or knows that the recipient so intends or in a substantially similar transaction.

Facts:

Plaintiff real estate sellers sued defendant real estate appraiser for negligent misrepresentation based upon defendant's appraisal of the value of the property that plaintiffs were attempting to sell. After the trial court had denied defendant's motion for a directed verdict as to the negligent misrepresentation claim, the jury returned a verdict in favor of plaintiffs on that claim. On appeal, defendant alleged that the trial court erred in denying her motion for a directed verdict as to the negligent misrepresentation claim.

Issue:

Under the circumstances, could the defendant be held liable for negligent misrepresentation, thereby justifying the denial of defendant’s motion for a directed verdict as to the negligent misrepresentation claim? 

Answer:

No.

Conclusion:

The court reversed the trial court's judgment and dismissed the case. According to the court, the plaintiffs had failed to establish the element of justifiable reliance in order to prevail on their claim of negligent misrepresentation. Defendant's appraisal was not performed for plaintiffs' benefit and guidance and plaintiffs had not taken any action, or refrained from taking any action, in reliance upon the appraisal.