An actor who makes a misrepresentation is subject to liability to another for physical harm, which results from an act done by the other or a third person in reliance upon the truth of the representation, if the actor intends his statement to induce or should realize that it is likely to induce action by the other, or a third person, which involves an unreasonable risk of physical harm to the other, and knows that the statement is false, or that he has not the knowledge which he professes.
An administrator hired on the recommendations made by defendants, school districts and employees, sexually molested plaintiff student. The trial court granted a demurrer in favor of defendants on all causes of action, but an appeals court reversed as to the negligent misrepresentation, fraud, and negligence per se counts. The court reversed the appeals court as to the negligence per se claim because plaintiff was not a member of the class protected by the statute relied on to establish negligence per se.
Can courts impose tort liability on employers who fail to use reasonable care in recommending former employees for employment without disclosing material information bearing on their fitness?
The court held that plaintiff stated causes of action for fraud and negligent misrepresentation. First, defendants owed plaintiff a duty to not misrepresent the character of the vice principal since it was reasonably foreseeable that an employer would read the unequivocally favorable letters and hire the vice principal and that he would molest a student such as plaintiff. Second, defendants' letters constituted "misleading half-truths" rather than mere nondisclosures. Third, as to reliance, although defendants made no representations to plaintiff, she was entitled to protection since she suffered physical injury resulting from the reliance of the district that ultimately hired the vice principal. Fourth, plaintiff adequately pleaded causation between defendants' misconduct and her injuries. The court also held that plaintiff did not state a cause of action for negligence per se since she was not a member of the class for whose protection the Child Abuse and Neglect Reporting Act was enacted. The act was intended to protect only those children in the custodial care of the person charged with reporting the abuse and not all children who may at some future time be abused by the same offender. Defendants were never the "custodians" of plaintiff and accordingly owed her no obligations under the act.