MUST NEGLIGENT MISREPRESENTATION BE PLED WITH PARTICULARITY?

MUST NEGLIGENT MISREPRESENTATION BE PLED WITH PARTICULARITY?

By Todd McMurtry | tmcmurtry@dbllaw.com 3-24-2012

 

Federal Circuits are split on whether the tort of negligent misrepresentation must be pled with particularity. The Second and Eighth Circuits have held Fed. R. Civ. P. 9(b) applies to negligent misrepresentation claims. See Trooien v. Mansour, 608 F.3d 1020, 1028 (8th Cir. 2010), Aetna Cas. & Sur. Co. v. Aniero Concrete Co., 404 F.3d 566, 583 (2d Cir. 2005). The Seventh and Fourth have held it does not. See Tricontinental Indus., Ltd. v. PricewaterhouseCoopers, LLP, 475 F.3d 824, 833 (7th Cir. 2007) and Baltimore Cnty. v. Cigna Healthcare, 238 Fed. App’x 914, 921–22 (4th Cir. 2007).

Fed. R. Civ. P. 8(a)(2) generally requires only “a short and plain statement of the claim showing that the pleader is entitled to relief.” Rule 9(b) by comparison requires that “a party must state with particularity the circumstances constituting fraud or mistake.” In Denver Health and Hosp. Auth. vs. Beverage Distribs. Co., LLC, 2012 WL 400320 (D. Colo., Feb. 8, 2012), the U.S. District Court for Colorado found that where the allegations sound primarily in negligence, then claims for negligent misrepresentation need only be pled in accord with Rule 8(a)(2).

 

In this case, a motorcyclist (Hood) was severely injured in an accident. Hood had health benefits through a domestic partner. Another defendant, Principal Life Insurance Company, repeatedly authorized the Denver Health and Hospital Authority (DHHA) to provide care to Hood. Concurrently, Beverage Distributors Company (Beverage), which administered the health plan, advised Hood’s domestic partner that there was no medical coverage for Hood. DHHA billed Hood over $750,000 for medical care. The motorcyclist assigned his claims to DHHA, which brought the action alleging, in part, negligent misrepresentation.

 

DHHA alleged that Beverage’s negligence prevented Hood and DHHA from seeking other sources of third-party coverage. The Court examined the facts and concluded that the “crux of the claim is that Beverage failed to use reasonable care or competence in obtaining and communicating information concerning Hood’s eligibility. This rings not of fraud but negligence.” Id. at *4. “Moreover, the general tenor of the complaint weighs against applying Rule 9(b). This is because none of the causes of action or allegations implicate fraud.” Id.

 

The Court reasoned that where the tenor of the complaint is one of fraud, then Rule 9(b) applies. Citing Benchmark Electronics Capital Corp. v. J.M. Huber Corp., 343 F.3d 719, 723 (5th Cir. 2003) (stating that “[a]lthough Rule 9(b) by its terms does not apply to negligent misrepresentation claims,” it will apply the rule when the negligent misrepresentation claim is based on the same set of facts as a fraud claim). But, where the complaint alleges negligence, as in this matter, then negligent misrepresentation need not be pled with particularity. Id. The take-away from this analysis is that if a complaint alleges negligent misrepresentation founded upon fraudulent conduct, it should be pled with particularity. Otherwise, it need only be made by a short and plain statement of the claim.

Todd McMurtry is a Cincinnati attorney practicing at Dressman Benzinger LaVelle psc.

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