Smith v. Brutger Companies

• Decision Date: 23 October 1997
• Docket Number: No. C2-96-600,C2-96-600
• Citation: 569 N.W.2d 408
• Parties: Jane SMITH, et al., Respondents, v. BRUTGER COMPANIES & Brutger Management Company, subsidiaries of Brutger Equities, Inc., et al., Appellants, Hegg Capital Company, Inc., Appellant.
• Court: Minnesota Supreme Court

Page 408

569 N.W.2d 408

Jane SMITH, et al., Respondents, v. BRUTGER COMPANIES & Brutger Management Company, subsidiaries of Brutger Equities, Inc., et al., Appellants Hegg Capital Company, Inc., Appellant.

No. C2-96-600.

Supreme Court of Minnesota.

Oct. 23, 1997.

Syllabus by the Court

Summary judgment on negligent misrepresentation claim was procedurally proper when claim was included in summary judgment motion.

Summary judgment for defendants was properly granted when undisputed material facts of case did not give rise to claim on theory under which plaintiffs sought relief and, therefore, defendants were entitled to judgment as a matter of law.

Thomas H. Crouch, Kenneth W. Dodge, Meagher & Geer, P.L.L.P., Minneapolis, for appellants Brutger Companies, Brutger Management Co. and Management Dynamics Co.

Lawrence J. Hayes, Jr., Eagan, for appellant Hegg Capital Co., Inc.

Joepsh M. Crosby, Crosby & Grimshaw, Minneapolis, for respondent Smith.

Heard, considered, and decided by the court en banc.

OPINION

ANDERSON, Justice.

The Minnesota Court of Appeals reversed grant of summary judgment in favor of appellants Brutger Companies, Brutger Management Company, and Management Dynamics Company (Brutger) and Hegg Capital Company, Inc. (Hegg) and remanded for trial a negligent misrepresentation claim brought by respondents Jane Smith and her husband Joe Smith (Smiths). The court of appeals concluded that summary judgment was procedurally invalid and that the district court applied an incorrect legal standard when it entered judgment for Brutger and Hegg. We reverse.

In the early morning hours of August 11, 1988, respondent Jane Smith was sexually assaulted by an intruder who entered her ground-level apartment at Woodridge Apartments (Woodridge) in Eagan, Minnesota. The evening before the assault was a warm summer evening, and Jane Smith left the dining room window open and unlocked to improve ventilation. The intruder cut the screen and entered the apartment through this window.

During the summer of 1994, the Smiths sued Brutger and Hegg, the companies that own and manage Woodridge, for damages. The Smiths brought four claims against Brutger and Hegg. The first claim was based on Brutger and Hegg's alleged negligent failure to provide information to the Smiths about security devices designed to prevent forced entry into their apartment and to warn the Smiths about criminal activities in and around Woodridge before the assault. The second claim alleged that Brutger and Hegg negligently failed to provide proper lighting for the Woodridge grounds and apartments. The third claim asserted that Brutger and Hegg negligently failed to provide adequate security devices on the Woodridge grounds and in the apartments. The fourth claim alleged negligent misrepresentation by Brutger and Hegg and damages to the Smiths as a result of the misrepresentation.

The Smiths' misrepresentation claim is based upon the following facts. In May 1988, Joe Smith met with Kimberly Gorman, a Woodridge representative, to inquire about leasing an apartment. Smith asserts that when he met with Gorman, he told her that his family's safety was a crucial factor in his choice of an apartment because he often traveled out of town on business. Smith stated in his deposition that, as part of her sales pitch, Gorman told him about the various security features of Woodridge, which features included security key access to the building and the garage and a security intercom system at the front entrance. ¹ According to Smith, Gorman told him that Woodridge was a "luxury apartment complex," and she also "represented [Woodridge] as a very safe environment with several security systems and one that was full of good people and that this would be a very good place for us to be with our child." Smith claimed that he relied on this information in selecting Woodridge. He also stated that he and his wife "left the windows open, if we did, to get fresh air, and we believed, based on what I was told at the time that I rented this apartment, that it would be very safe to do so." ² Joe Smith conceded, however, that Gorman did not describe to him any specific feature or system of Woodridge that did not exist. He also acknowledged that he did not have any discussion with Gorman about crime in the area. The Smiths' lease, which Jane Smith stated she read, provided that the management would not be responsible for the actions, damages, or injuries caused by intruders or other third parties.

In November 1995, Brutger and Hegg each brought a separate motion for summary judgment on the ground that they did not have a duty to protect the Smiths from the criminal acts of a third party. In Hegg's memorandum in support of the summary judgment motion, it framed the issues as follows:

Plaintiffs' claims against Defendants are based in negligence. Plaintiff alleges (1) failure to warn, (2) failure to provide adequate lighting, (3) failure to provide adequate security measures and (4) misrepresentation. * * * To prove any of these claims, Plaintiff must first prove that Defendants had a duty to protect her from assault by a third party.

The parties' memoranda addressed the legal issue of whether Brutger and Hegg had a duty to protect the Smiths. The parties did not address whether Brutger and Hegg had a duty to exercise reasonable care in conveying information to the Smiths regarding the safety of Woodridge and, if such a duty existed, whether Brutger and Hegg had breached the duty.

In opposition to the summary judgment motions, the Smiths submitted evidence that Brutger and Hegg had encouraged the Smiths and other Woodridge residents to rely on Woodridge as a security complex located in a safe neighborhood. The Smiths presented numerous police reports of burglaries, break-ins, and other crimes that had occurred at Woodridge during the more than two and one-half years from the date Woodridge opened to the date of the sexual assault on Jane Smith. The Smiths also offered evidence that Brutger and Hegg contacted the Eagan Police Department two months before the sexual assault on Jane Smith because they were concerned about the level of crime at Woodridge. The Smiths, however, did not submit any police reports documenting any acts of physical violence against Woodridge residents that had occurred before the sexual assault on Jane Smith.

The summary judgment motions were heard on December 20, 1995, and on the following day, the district court granted partial summary judgment. The court concluded that there was no "special relationship" between the Smiths and Brutger and Hegg and that Brutger and Hegg had no duty to protect the Smiths from the criminal acts of third parties. The court's judgment did not address whether Brutger and Hegg had a duty to use reasonable care in conveying information to the Smiths about safety at Woodridge.

The Smiths' attorney subsequently contacted the district court to clarify whether summary judgment had been granted on all of the Smiths' claims or, alternatively, the misrepresentation claim was still pending. In response, on December 26, 1995, the court scheduled a conference call for January 2, 1996, to discuss the trial set for January 1996 and the "misrepresentation issue from the original complaint that has not been dismissed." The court also sent the parties a letter scheduling the conference call and stating that they would discuss the misrepresentation claim during the conference call.

The conference call was held as scheduled. During the call, the parties gave their arguments and Brutger and Hegg again argued that the court should dismiss the Smiths' misrepresentation claim. Without requiring the parties to submit additional motion papers, the court issued an order on January 3, 1996, dismissing the Smiths' misrepresentation claim and ordering the immediate entry of judgment. The court determined that the misrepresentation claim was a claim in negligence, that a claim in negligence must be based on a duty, and that "since there were no 'special circumstances', there could be no duty as a matter of law." The court concluded the previous order granting Brutger's and Hegg's motions for summary judgment specifically included the Smiths' "misrepresentation claim based upon negligence that are [sic] set forth in Plaintiffs' complaint" and therefore dismissed the "entire matter."

The court of appeals affirmed the district court's grant of summary judgment on the first three counts of the complaint, holding that Brutger and Hegg had no duty to warn the Smiths of criminal activity at Woodridge nor to protect the Smiths against the criminal acts of third parties. However, the court of appeals reversed summary judgment on the misrepresentation claim and remanded the issue for trial. The court of appeals held that Brutger and Hegg violated the notice requirements of Minn. Gen. R. Pract. 115 and Minn. R. Civ. P. 56.03 by failing to serve a motion for summary judgment on the misrepresentation claim at least ten days before the January 2 hearing on the motion. In addition, the court of appeals held that the Smiths were prejudiced due to the lack of notice because neither party addressed the misrepresentation claim in the original summary judgment motions and memoranda. Finally, the court of appeals held that the district court did not apply the proper duty of care in dismissing the misrepresentation claim. The court of appeals determined that the duty of care owed in the context of negligent misrepresentation was defined in Florenzano v. Olson, 387 N.W.2d 168, 174 (Minn.1986), as "an objective standard of reasonable care or competence" applicable "when supplying information, either for the guidance of others in the course of a transaction in which one has a pecuniary interest, or in the course of one's business, profession or employment."

On appeal to this court, Brutger and Hegg argue that their motions for summary judgment were procedurally...