Similar to fraudulent misrepresentation, a negligent misrepresentation claim is hard to prove. Usually, a plaintiff will allege both fraudulent and negligent misrepresentation because with negligent misrepresentation no proof is required regarding a defendant’s intent to defraud.
The Restatement Second of Torts defines “negligent misrepresentation” as,
One who, in the course of his business, profession or employment, or in a 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 of competence in obtaining or communication the information.
Restatement (Second) of Torts § 552. Section 552 was adopted by the Minnesota Supreme Court in 1976 in the case Bonhiver v. Graff, 248 N.W.2d 291 (Minn. 1976). However, a defendant is liable only for loss suffered from either (a) people for whose benefit and guidance the defendant supplied the information, or knew that the recipient of the information intended to supply it; and (b) through a plaintiff’s reliance on the information in a transaction that the defendant intended the information to influence, or knew that the recipient so intended, or in a substantially similar transaction. Id. at 298–99.
Pursuant to Minn. R. Civ. P. 9.02, to plead a fraud claim, a plaintiff must state with “particularity” the “circumstances constituting fraud or mistake.” This is a heightened standard when compared with Minnesota’s regular pleading standard which only requires a “short and plain statement of the claim showing that the pleader is entitled to relief.” Minn. R. Civ. P. 8.01.
More specifically, Minnesota cases from federal court interpreting Federal Rules of Civil Procedure 9(b) have flushed out this requirement as indicated the complaint must include the “who, what, when where, and how…..” Great Plains Trust Co. v. Union Pacific R. Co., 492 F.3d 986, 995 (8th Cir. 2007).
Statute of Limitations
Commencing a fraud action is controlled by Minn. Stat. § 541.05, subd. 1(6) which states,
Except where the Uniform Commercial otherwise prescribes, the following actions shall be commenced within six years:
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(6) for relief on the ground of fraud, in which case the cause of action shall not be deemed to have accrued until the discovery by the aggrieved party of the facts constituting fraud.
The key question to ask when analyzing Section 541.05, subd. 1(6) is to determine when a party has “discovered” the “facts constituting fraud.” Per the Minnesota Supreme Court, the six years begins running when plaintiff actually discovers the fraud or “when the facts constituting fraud were discovered or, by reasonable diligence, should have been discovered.” Toombs v. Daniels, 361 N.W.2d 801, 809 (Minn. 1985)
Since a negligent misrepresentation claim is based on negligence, the usual defenses found in a negligence case (i.e. contributory negligence and assumption of risk) can also be asserted in a negligent misrepresentation case. This is not so for an intentional fraudulent misrepresentation claim since fraud is an intentional tort.