Burlington Insurance v. Artisan Mechanical, Inc.

Cunningham, Judge,

concurring in part and dissenting in part.

{¶ 24} I agree with my colleagues that CRC was entitled to summary judgment on Artisan’s negligent-misrepresentation claim, but for a different reason than the one advanced by the majority. And I would affirm the trial court’s entry of summary judgment for both Wells Fargo and CRC on the basis that Artisan failed to show that there was a genuine issue of material fact for a jury to *568consider on the existence of the necessary elements of its negligent-misrepresentation claim against each of them.

{¶ 25} Artisan’s negligent-misrepresentation claim was based upon 3 Restatement of the Law 2d, Torts (1965), Section 552, which the Ohio Supreme Court adopted in Haddon View Invest. Co. v. Coopers & Lybrand.15 That section provides the following:

{¶ 26} “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 the information, if he fails to exercise reasonable care or competence in obtaining or communicating the information.” 16

{¶ 27} The majority holds that CRC was entitled to summary judgment on Artisan’s negligent-misrepresentation claim because it was not in privity of contract with Artisan, based upon this court’s holding in Trustcorp. Mtge. Co. v. Zajac.17 But privity of contract is not a prerequisite to liability under Section 552. In Corporex Dev. & Constr. Mgt. Inc. v. Shook, Inc., the Ohio Supreme Court clarified that liability imposed under this section is “based exclusively upon [the] pre-existing duty in tort and not upon any terms of a contract or rights accompanying privity.”18 “Corporex thus makes clear that although tort claims are generally barred by the economic loss doctrine, the discrete tort generally referred to as negligent misrepresentation is not.” 19 And while a number of courts have held that negligence claims by insureds against their insurance brokers for failure to produce coverage were barred by the economic-loss *569doctrine, they have also held that negligent-misrepresentations claims against the brokers were not.20

{¶ 28} Here, Artisan asserted negligent-misrepresentation claims against insurance brokers CRC and Wells Fargo. Since the Ohio Supreme Court has recognized that the economic-loss doctrine does not apply to such claims, I cannot agree with that part of the majority opinion that upholds the summary judgment entered for CRC on the basis that Artisan’s claim for negligent misrepresentation was barred by the economic-loss doctrine.

{¶ 29} I also disagree with the majority’s conclusion that Artisan presented sufficient evidence to withstand Wells Fargo’s motion for summary judgment. As I have stated earlier, I would affirm the trial court’s entry of summary judgment to both Wells Fargo and CRC on the basis that Artisan failed to show that there were genuine issues of material fact for a jury to consider on the existence of the necessary elements of its negligent-misrepresentation claim asserted against each of them.

{¶ 30} One of those elements is a misrepresentation of a material fact. Artisan failed to produce evidence that the claimed misrepresentations by Wells Fargo and CRC concerned a past or present fact. Ohio courts, including this one, have held that a promise of future conduct is not a statement of fact capable of supporting a claim for fraudulent or negligent misrepresentation.21

{¶ 31} Here, Artisan only identified misrepresentations that were made by Wells Fargo and CRC concerning how Burlington was to calculate the premium in a future audit. Under the express terms of Artisan’s insurance policy with Burlington, the audit would not occur until the expiration of the policy. Thus, any agreement or understanding regarding how sales would be defined in that future audit necessarily related to a future event, not to an existing or past fact.

{¶ 32} Finally, Artisan failed to present any evidence that it justifiably relied on any misrepresentations that were made about the definition of the term “sales” in the insurance policy.22 Abbe Sexton, Artisan’s owner, admitted during her deposition that she had received the insurance policy, read the contract, and *570expressly noted to Wells Fargo that the policy did not contain the limitation on the definition of sales that had been previously discussed. She asked Wells Fargo to obtain a letter from Burlington that clarified the definition. When no letter was forthcoming, she nonetheless bound the insurance and accepted the policy without that written commitment.

{¶ 33} Furthermore, when Wells Fargo delivered the insurance policy to Artisan, it provided a cover letter to Artisan that described an adjustable rate for the policy. The policy itself contained a deposit-rate endorsement that clearly stated that the $30,000 premium was a “deposit only premium” and that, “[u]pon expiration of the policy, we will compute the earned premium by applying to the composite rate shown above the actual amount of the exposure units as developed by final audit divided by the number shown in the Exposure Description.” Despite this language, Artisan accepted the policy and did not cancel.

{¶ 34} Because Artisan failed to identify a genuine issue of material fact as to the essential elements of its negligent-misrepresentation claims, I would affirm the trial court’s entry of summary judgment to CRC and Wells Fargo on this basis.

. (1982), 70 Ohio St.2d 154, 24 O.O.3d 268, 436 N.E.2d 212.

. See id. at 156, fn. 1.

. Trustcorp, 2006-Ohio-6621, 2006 WL 3690299, at ¶ 1 and 6.

. 106 Ohio St.3d 412, 2005-Ohio-5409, 835 N.E.2d 701, at ¶ 9; see also McCarthy, Lebit, Crystal & Haiman Co. L.P.A. v. First Union Mgt., Inc. (1993), 87 Ohio App.3d 613, 631, 622 N.E.2d 1093 (holding that “[a]doption of the 'economic loss’ rule in Floor Craft [Floor Covering, Inc. v. Parma Community Gen. Hosp. Assn. (1990), 54 Ohio St.3d 1, 3, 560 N.E.2d 206,] does not necessarily preclude recovery in the instant case since Section 552 specifically provides that damages are recoverable for negligent misrepresentation made by those who have a pecuniary interest in a transaction”).

. See J.F. Meskill Ent., L.L.C. v. Acuity (2006), N.D.Ohio No. 05-CV-2955, 2006 WL 903207; see also HDM Flugservice v. Parker Hannifin Corp. (C.A.6, 2003), 332 F.3d 1025, 1032; Long v. Time Ins. Co. (S.D.Ohio 2008), 572 F.Supp.2d 907, 912; Potts v. Safeco Ins. Co., 5th Dist. No. 2009 CA 0083, 2010-Ohio-2042, 2010 WL 1839738, at ¶ 21.

. Potts at ¶ 25.

. See Schuster Elec. Co. v. Hamilton Cty. Stores, Inc. (1939), 61 Ohio App. 331, 334-335, 15 O.O. 222, 22 N.E.2d 582; Tibbs v. Natl. Homes Constr. Corp. (1977), 52 Ohio App.2d 281, 287, 6 O.O.3d 300, 369 N.E.2d 1218; Williams v. Edwards (1998), 129 Ohio App.3d 116, 124, 717 N.E.2d 368; Telxon Corp. v. Smart Media of Delaware, 9th Dist. Nos. 22098 and 22099, 2005-Ohio-4931, 2005 WL 2292800, at ¶ 33; Isaac v. Alabama Corp., 7th Dist. No. 05 JE 55, 2007-Ohio-1396, 2007 WL 901596, at ¶ 55.

. See, e.g., Trepp L.L.C. v. Lighthouse Commercial Mtge., Inc., 10th Dist. Nos. 09AP-597 and 09AP-850, 2010-Ohio-1820, 2010 WL 1664901, at ¶ 19-23.