Opinion
No. 3-845 / 03-0048
May 26, 2004.
Appeal from the Iowa District Court for Black Hawk County, James C. Bauch, Judge.
A claimant in a probate proceeding appeals from a district court order that denied his claim. AFFIRMED.
Larry Woods, Oelwein, for appellant.
Quintin Goeke of Hagemann Goeke, Waverly, for appellee.
Considered by Huitink, P.J., and Zimmer and Miller, J.J.
After purchasing a farm from the Estate of Clara Maddigan (Estate), Micheal Roete filed a claim in probate against Roger Maddigan, the Estate's executor. Roete sought the costs associated with the inspection, attempted repair, and eventual replacement of a well located on the farm. Roete asserted that, during the course of the transaction, Maddigan had negligently misrepresented that the well was in functional condition. The district court denied Roete's claim, concluding Maddigan, in his capacity as executor, owed no duty to Roete under Restatement (Second) of Torts section 552 (1977) [hereinafter Restatement section 552]. Roete appeals. Upon our review for the correction of errors at law, In re Estate of Crabtree, 550 N.W.2d 168, 170 (Iowa 1996), we affirm the district court.
Roete's claim, as addressed and passed upon by the district court, is limited to a claim of negligent misrepresentation as defined in Restatement section 552.
Restatement section 552 provides in relevant part:
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.
Despite the reference in Restatement section 552 to "pecuniary interest," our supreme court has held that, in Iowa, a claim for negligent representation will lie only if the defendant is "in the business or profession of supplying information for the guidance of others." Sain v. Cedar Rapids Cmty. Sch. Dist., 626 N.W.2d 115, 125 (Iowa 2001). Because the tort contemplates situations where the supplied information harms the plaintiff in his business with third parties, the tort does not apply when a defendant directly provides information to a plaintiff in the course of a transaction between the two parties, which information harms the plaintiff in the transaction with the defendant. This situation is compatible with our approach that there is no duty imposed on parties who deal at arm's length.
Id. at 126 (citing Fry v. Mount, 554 N.W.2d 263, 265-66 (Iowa 1996)). Distinguishing adversarial transactions from transactions where the defendant is in the business of supplying information is justified "because a transaction between a person in the business or profession of supplying information and a person seeking information is compatible to a special relationship." Id. at 124 (citing Meier v. Alfa-Laval, Inc., 454 N.W.2d 576, 581 (Iowa 1990)).
Substantial evidence in the record supports the conclusion that the real estate sale in this matter was an arm's-length transaction between Roete and the Estate, with the harm alleged by Roete relating directly to that transaction. The record further reveals that Roger Maddigan was acting as a fiduciary of the Estate when he negotiated and finalized the real estate transaction with Roete and/or Roete's agents. He had not undertaken a role of guiding or advising Roete. Thus, he was not "in the business" of supplying information, as contemplated by Restatement section 552. Cf. Sain, 626 N.W.2d at 124-25.
Roete argues that Maddigan nevertheless had a duty to act reasonably when supplying information about the well, because of the requirements of Iowa Code section 558.69 (2001). Section 558.69 requires the transferor of real property to file a statement with the county recorder regarding the existence of potential groundwater hazards. The owner must state the approximate location of any known well, as well as the well's status "with respect to section 159.29 or 455B.190." Id. A groundwater hazard statement for the farm was provided to Roete on behalf of Maddigan, as executor, at the time of closing. The statement acknowledged the existence of the well, and described it as "1. Submersible pump located in small building approximately 75 feet south of barn." The statement made no representations about the well's condition.
Roete asserts that the very existence of section 558.69 somehow renders Maddigan one who "is in the business" of supplying information, and creates a duty in Maddigan under Restatement section 552. Roete, however, provides no legal support for this proposition. His failure to cite authority is sufficient to waive this particular claim. Iowa R. App. P. 6.14(1)( c). Moreover, nothing in section 558.69's requirements implicates the type of special relationship of advice and guidance contemplated by Restatement section 552. See Sain, 626 N.W.2d at 124-25. This claim is without merit.
Roete also appears to assert that section 558.69 creates an independent duty in Maddigan to act reasonably in supplying general information about the well. This claim is also without merit. Even if section 558.69 gives rise to a duty in the seller to act reasonably in complying with its terms, and that duty runs to the buyer, section 558.69 requires disclosure of a well's status only in regard to Iowa Code sections 159.29, "Agricultural drainage wells," and 455B.190, "Abandoned wells properly plugged." There is no evidence Maddigan was required to make disclosures in regard to either section, or that any such disclosures would have revealed conditions Maddigan allegedly misrepresented.
Because the transaction occurred within the context of an administration of an estate, no residential disclosure statement was required. See Iowa Code § 558A.1(4)(c).
Roete failed to establish a duty in Maddigan, on behalf of the Estate, to use reasonable care in disclosing information about the well. The ruling of the district court is affirmed.