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Barrie v. V.P. Exterminators - 625 So. 2d 1007 (La. 1993)

Rule:

Negligent misrepresentation entails representations made in the course of rendering service pursuant to a contract, when made with an honest belief in its truth, but because of lack of reasonable care or an absence of skill or competence in ascertaining the facts or making the opinion, and/or in the manner of communicating the facts or opinion, the representation causes economic loss to be suffered by a third party, but an intended user of the information, who relies on the information to their detriment.

Facts:

Plaintiffs Judy and Michael H. Barrie filed a lawsuit for negligent misrepresentation in Louisiana state court seeking to rescind the sale of a home they purchased and for damages against defendant Secor Bank ("Secor"), the vendor of the home, as well as defendants V.P. Exterminators, Inc. and its owner Vincent Palumbo (collectively, "V.P."), and V.P.'s insurance company, XYZ Insurance Company ("XYZ"), all of which were responsible for the issuance of a "wood destroying insect report" prior to and connected with the sale. The Barries' claimed that they agreed to buy the home on condition that Secor provide a certificate that the home was termite-free, that Secor hired V.P. to perform a termite inspection, and that V.P. issued a report that the home was termite-free, when in fact the home was infested with termites. The trial court sustained the peremptory exceptions of no cause of action filed by the V.P. and XYZ. Their motions for summary judgment, dismissing the Barries' suit as to them, were also granted. The appellate court affirmed, indicating the Barries' action for negligent misrepresentation could not lie against V.P. and XYZ because there was no privity between them. The state supreme court granted the Barries a writ of certiorari.

Issue:

Was privity between the Barries and V.P. necessary to establish a breach of duty of by V.P.?

Answer:

No.

Conclusion:

The Supreme Court of Louisiana vacated the lower courts' judgments and remanded the case for further proceedings. The court ruled, in general, that a termite inspector had a duty to exercise reasonable care and competence in obtaining and communicating information in a termite inspection report, so as to protect third persons for whose benefit and guidance the information was sought and supplied, and who could detrimentally rely on its contents thereby suffering pecuniary loss. The court explained that Louisiana general tort principles provided a cause of action against V.P., in the course of his business, allegedly failed to exercise reasonable care, competence or skill in ascertaining facts and/or in communicating the facts or opinion in a termite inspection report, which was contracted for and supplied to Secor to facilitate the sale of the home to the Barries. No privity was needed because the inspection report was prepared and supplied for the Barries' guidance. The duty of care attached to the Barries' identity because V.P. knew that Secor intended to transmit the report to the Barries.

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