California Civil Jury Instructions (CACI) (2017)

1903. Negligent Misrepresentation

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1903.Negligent Misrepresentation
[Name of plaintiff] claims [he/she/it] was harmed because [name of
defendant] negligently misrepresented a fact. To establish this claim,
[name of plaintiff] must prove all of the following:
1. That [name of defendant] represented to [name of plaintiff] that a
fact was true;
2. That [name of defendant]’s representation was not true;
3. That [although [name of defendant] may have honestly believed
that the representation was true,] [[name of defendant]/he/she]
had no reasonable grounds for believing the representation was
true when [he/she] made it;
4. That [name of defendant] intended that [name of plaintiff] rely on
this representation;
5. That [name of plaintiff] reasonably relied on [name of defendant]’s
representation;
6. That [name of plaintiff] was harmed; and
7. That [name of plaintiff]’s reliance on [name of defendant]’s
representation was a substantial factor in causing [his/her/its]
harm.
New September 2003; Revised December 2009, December 2013
Directions for Use
Give this instruction in a case in which it is alleged that the defendant made certain
representations with no reason to believe that they were true. (See Civ. Code,
§ 1710(2).) If element 5 is contested, give CACI No. 1907, Reliance, and CACI
No. 1908, Reasonable Reliance.
If both negligent misrepresentation and intentional misrepresentation are alleged in
the alternative, give both this instruction and CACI No.1900, Intentional
Misrepresentation. If only negligent misrepresentation is alleged, the bracketed
reference to the defendant’s honest belief in the truth of the representation in
element 3 may be omitted. (See Bily v. Arthur Young & Co. (1992) 3 Cal.4th 370,
407–408 [11 Cal.Rptr.2d 51, 834 P.2d 745].)
Sources and Authority
• Negligent Misrepresentation. Civil Code section 1710.
“Negligent misrepresentation is a separate and distinct tort, a species of the tort
of deceit. ‘Where the defendant makes false statements, honestly believing that
they are true, but without reasonable ground for such belief, he may be liable
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for negligent misrepresentation, a form of deceit.’ ” (Bily, supra, 3 Cal.4th at
pp. 407, internal citations omitted.)
• “This is not merely a case where the defendants made false representations of
matters within their personal knowledge which they had no reasonable grounds
for believing to be true. Such acts clearly would constitute actual fraud under
California law. In such situations the defendant believes the representations to
be true but is without reasonable grounds for such belief. His liability is based
on negligent misrepresentation which has been made a form of actionable
deceit. On the contrary, in the instant case, the court found that the defendants
did not believe in the truth of the statements. Where a person makes statements
which he does not believe to be true, in a reckless manner without knowing
whether they are true or false, the element of scienter is satisfied and he is
liable for intentional misrepresentation.” (Yellow Creek Logging Corp. v. Dare
(1963) 216 Cal.App.2d 50, 57 [30 Cal.Rptr. 629], original italics, internal
citations omitted.)
• “The elements of negligent misrepresentation are (1) a misrepresentation of a
past or existing material fact, (2) made without reasonable ground for believing
it to be true, (3) made with the intent to induce another’s reliance on the fact
misrepresented, (4) justifiable reliance on the misrepresentation, and (5)
resulting damage.” (Ragland v. U.S. Bank National Assn. (2012) 209
Cal.App.4th 182, 196 [147 Cal.Rptr.3d 41].)
• “ ‘To be actionable deceit, the representation need not be made with knowledge
of actual falsity, but need only be an “assertion, as a fact, of that which is not
true, by one who has no reasonable ground for believing it to be true” and
made “with intent to induce [the recipient] to alter his position to his injury or
his risk. . . .’ ” The elements of negligent misrepresentation also include
justifiable reliance on the representation, and resulting damage.” (B.L.M. v. Sabo
& Deitsch (1997) 55 Cal.App.4th 823, 834 [64 Cal.Rptr.2d 335], internal
citations omitted.)
• “[Plaintiffs] do not allege negligence. They allege negligent misrepresentation.
They are different torts, as the Supreme Court expressly observed in [Bily,
supra, 3 Cal.4th at p. 407]: ‘[N]either the courts (ourselves included), the
commentators, nor the authors of the Restatement Second of Torts have made
clear or careful distinctions between the tort of negligence and the separate tort
of negligent misrepresentation. The distinction is important not only because of
the different statutory bases of the two torts, but also because it has practical
implications for the trial of cases in complex areas . . . . [¶] Negligent
misrepresentation is a separate and distinct tort, a species of the tort of deceit.’
In short, the elements of each tort are different. Perhaps more importantly, the
policies behind each tort sometimes call for different results even when applied
to the same conduct.” (Bock v. Hansen (2014) 225 Cal.App.4th 215, 227−228
[170 Cal.Rptr.3d 293].)
• “As is true of negligence, responsibility for negligent misrepresentation rests
upon the existence of a legal duty, imposed by contract, statute or otherwise,
CACI No. 1903 FRAUD OR DECEIT
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owed by a defendant to the injured person. The determination of whether a duty
exists is primarily a question of law.” (Eddy v. Sharp (1988) 199 Cal.App.3d
858, 864 [245 Cal.Rptr. 211], internal citations omitted.)
• “The tort of negligent misrepresentation is similar to fraud, except that it does
not require scienter or an intent to defraud. . . . [T]he same elements of
intentional fraud also comprise a cause of action for negligent
misrepresentation, with the exception that there is no requirement of intent to
induce reliance . . . .” (Tenet Healthsystem Desert, Inc. v. Blue Cross of
California (2016) 245 Cal.App.4th 821, 845 [199 Cal.Rptr.3d 901], internal
citation omitted.)
• “ ‘ “Where the defendant makes false statements, honestly believing that they
are true, but without reasonable ground for such belief, he may be liable for
negligent misrepresentation, a form of deceit.” ’ If defendant’s belief ‘is both
honest and reasonable, the misrepresentation is innocent and there is no tort
liability.’ ” (Diediker v. Peelle Financial Corp. (1997) 60 Cal.App.4th 288, 297
[70 Cal.Rptr.2d 442], internal citations omitted.)
• “Parties cannot read something into a neutral statement in order to justify a
claim for negligent misrepresentation. The tort requires a ‘positive assertion.’
‘An “implied” assertion or representation is not enough.’ ” (Diediker, supra, 60
Cal.App.4th at pp. 297–298, internal citations omitted.)
• “Whether a defendant had reasonable ground for believing his or her false
statement to be true is ordinarily a question of fact.” (Quality Wash Group V,
Ltd. v. Hallak (1996) 50 Cal.App.4th 1687, 1696 [58 Cal.Rptr.2d 592], internal
citations omitted.)
• “[T]here are two causation elements in a fraud cause of action. First, the
plaintiff’s actual and justifiable reliance on the defendant’s misrepresentation
must have caused him to take a detrimental course of action. Second, the
detrimental action taken by the plaintiff must have caused his alleged damage.”
(Beckwith v. Dahl (2012) 205 Cal.App.4th 1039, 1062 [141 Cal.Rptr.3d 142].)
• “The law is well established that actionable misrepresentations must pertain to
past or existing material facts. Statements or predictions regarding future events
are deemed to be mere opinions which are not actionable.” (Cansino v. Bank of
America (2014) 224 Cal.App.4th 1462, 1469 [169 Cal.Rptr.3d 619], internal
citation omitted.)
• “Where, as here, a negligent misrepresentation claim is brought against the
provider of a professional opinion based on special knowledge, information or
expertise regarding a company’s value, the California Supreme Court requires
the following: ‘The representation must have been made with the intent to
induce plaintiff, or a particular class of persons to which plaintiff belongs, to act
in reliance upon the representation in a specific transaction, or a specific type of
transaction, that defendant intended to influence. Defendant is deemed to have
intended to influence [its client’s] transaction with plaintiff whenever defendant
knows with substantial certainty that plaintiff, or the particular class of persons
FRAUD OR DECEIT CACI No. 1903
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to which plaintiff belongs, will rely on the representation in the course of the
transaction. [However,] [i]f others become aware of the representation and act
upon it, there is no liability even though defendant should reasonably have
foreseen such a possibility.’ ” (Public Employees’ Retirement System v. Moody’s
Investors Service, Inc. (2014) 226 Cal.App.4th 643, 667−668 [172 Cal.Rptr.3d
238].)
Secondary Sources
5 Witkin, Summary of California Law (10th ed. 2005) Torts, §§ 818–820, 823–826
Chin et al., California Practice Guide: Employment Litigation, Ch. 5(I)-H,
Negligent Misrepresentation, ¶ 5:781 et seq. (The Rutter Group)
Croskey et al., California Practice Guide: Insurance Litigation, Ch. 11-D, Negligent
Misrepresentation, ¶ 11:41 et seq. (The Rutter Group)
3 Levy et al., California Torts, Ch. 40, Fraud and Deceit and Other Business Torts,
§ 40.10 (Matthew Bender)
23 California Forms of Pleading and Practice, Ch. 269, Fraud and Deceit, § 269.14
(Matthew Bender)
10 California Points and Authorities, Ch. 105, Fraud and Deceit, § 105.270 et seq.
(Matthew Bender)
2 California Civil Practice: Torts, §§ 22:13–22:15 (Thomson Reuters)
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