Stanford v. Owens

• Decision Date: 06 August 1985
• Docket Number: No. 8421SC886,8421SC886
• Citation: 76 N.C.App. 284,332 S.E.2d 730
• Court: North Carolina Court of Appeals
• Parties: T.C. STANFORD and wife, Phyllis A. Stanford, and Silas Creek Station, Inc. v. Edward P. OWENS and wife, Nancy P. Owens, J.R. Yarbrough, and S. Revelle Gwyn and Allen Holt Gwyn, Jr., Co-Executors of the Last Will of Susanna R. Gwyn.

Page 730

332 S.E.2d 730

76 N.C.App. 284

T.C. STANFORD and wife, Phyllis A. Stanford, and Silas Creek Station, Inc. v. Edward P. OWENS and wife, Nancy P. Owens, J.R. Yarbrough and S. Revelle Gwyn and Allen Holt Gwyn, Jr. Co-Executors of the Last Will of Susanna R. Gwyn.

No. 8421SC886.

Court of Appeals of North Carolina.

Aug. 6, 1985.

Harrell Powell, Jr., David Crescenzo, Winston-Salem, and Hafer, Hall & Schiller by Marvin Schiller, Raleigh, for plaintiffs-appellants.

Weston P. Hatfield and Carol L. Allen, Winston-Salem, for defendants-appellees.

PHILLIPS, Judge.

In the preceding appeal, Stanford v. Owens, supra, it was determined that plaintiffs had alleged an enforceable claim for negligent misrepresentation. Thus, the main question raised by this appeal is whether the evidence that plaintiffs presented at trial, when viewed in the light most favorable to them, is sufficient to support the claim stated. We hold that it is and that the verdict against the claim was erroneously directed.

The requirements for an action based on negligent misrepresentation are as follows:

INFORMATION NEGLIGENTLY SUPPLIED FOR THE GUIDANCE OF OTHERS.

One who in the course of his business or profession supplies information for the guidance of others in their business transactions is subject to liability for harm caused to them by their reliance upon the information if

(a) he fails to exercise that care and competence in obtaining and communicating the information which its recipient is justified in expecting, and

(b) the harm is suffered

(i) by the person or one of the class of persons for whose guidance the information was supplied, and

(ii) because of his justifiable reliance upon it in a transaction in which it was intended to influence his conduct or in a transaction substantially identical therewith.

Restatement of Torts § 552 (1938). Davidson and Jones, Inc. v. County of New Hanover, 41 N.C.App. 661, 255 S.E.2d 580 (1979). In our opinion, the evidence presented, when favorably viewed for the plaintiffs, tends to establish all the foregoing stated requirements and plaintiffs are entitled to have a jury pass on the claim.

In substance, plaintiffs' evidence tends to show that: In developing the entire tract where the sanitary landfill had been, defendants graded the land and filled it in where necessary. While plaintiffs knew that a garbage dump or landfill had occupied part of the tract, they did not know which part, and when plaintiffs asked defendants about the stability of the lot they were interested in defendants stated that it was "virgin" soil and they would have an engineer verify it. Defendants' engineer tested the soil in the lot plaintiffs bought and in two lots adjacent to it, and gave defendants a written report which showed that no garbage had been found under plaintiffs' lot at depths of 20 feet in the front and 10 and 15 feet depths in the back, but that garbage was found at depths of only 15 feet on the lots contiguous to plaintiffs'. At defendants' request the engineer then prepared a separate report for each of the three tracts tested and the only report that defendants gave plaintiffs was of the testing that was done on their lot. Finding no indication in the report received from defendants that the land was not stable, plaintiffs completed the transaction and erected their restaurant building. Later, after plaintiffs' building began to settle their engineers tested the soil and found garbage under the lot at depths of 17 to 27 feet. These engineers testified that the information contained in the first report prepared by defendants' engineer about garbage being found at 15 feet under the adjacent lots would have alerted plaintiffs' architect or builder to the necessity of testing their lot further before putting a building on it. The evidence also tends to show that defendants specifically instructed their engineer where to drill and how deep. All this evidence, if believed, would warrant a jury concluding, we think, that: In the course of their real estate developing and selling business defendants undertook to supply plaintiffs with information for their guidance in building on the property acquired; in doing so they neglected to include information that tended to show that the land was not suitable for plaintiffs' building; and plaintiffs justifiably relied thereon and suffered harm and damage thereby. Thus, whether the defendants negligently misrepresented that the land was suitable for plaintiffs' building is an issue that the jury should have decided, rather than the court.

Even so, the directed verdict was still proper if plaintiffs' evidence establishes their own contributory negligence, Beatty v. H.B. Owsley & Sons, Inc., 53 N.C.App. 178, 280 S.E.2d...