No reasonable reliance on alleged misrepresentation where plaintiff could have read the contract which contradicted defendant’s statement.

Where plaintiff gave her husband permission to sign her name to an indemnity agreement in conjunction with obtaining insurance bonds, and plaintiff’s husband had the opportunity to read the indemnity agreement and discover its contents, summary judgment on plaintiff’s negligent misrepresentation claim against the insurance agent who allegedly stated that the indemnity agreement did not include plaintiff’s personal property was affirmed.

In King v. Bradley, No. E2021-00261-COA-R3-CV, 2022 WL 678568 (Tenn. Ct. App. Mar. 8, 2022), plaintiff’s husband and step-son owned a commercial electrical contracting business. In conjunction with a work project, the business was required to obtain performance and payment bonds. Defendant was the insurance agent who assisted in obtaining these bonds, and in conjunction with getting the bonds, plaintiff, plaintiff’s husband, plaintiff’s step-son, and the business were required to sign an indemnity agreement. Plaintiff was not present when the indemnity agreement was to be signed, but she gave her husband verbal permission over the phone to sign her name. According to plaintiff, she told her husband that she did not care what he signed her name to “as long as we’re not putting up our personal stuff.” Plaintiff asserted that defendant was asked whether any personal property, as opposed to business property, was covered by the indemnity agreement, to which he responded that it was not. Plaintiff’s husband signed the indemnity agreement without reading it or having an attorney review it.

When the business was unable to finish the work project, the company for whom the work was to be done enforced its contract with plaintiff and her husband and took possession of various properties owned personally by plaintiff and her husband. This negligent misrepresentation suit followed.

Plaintiff asserted that defendant negligently misrepresented that the indemnity agreement did not cover personal property, and that she relied on that statement in allowing her husband to sign her name thereto. The trial court granted defendant’s motion for summary judgment, finding that plaintiff could not have reasonably relied on defendant’s alleged statement, and the Court of Appeals affirmed.

In a claim for negligent misrepresentation, a plaintiff must show, among other elements, that he or she justifiably relied on the false information supplied by defendant. (internal citation omitted). “Justifiable reliance is an essential component of a cause of action for negligent misrepresentation, and until the justifiable reliance element is established, there is no negligent misrepresentation.” (internal citation omitted). In determining whether a plaintiff’s reliance was justifiable, several factors come into play:

(1) the plaintiff’s business expertise and sophistication; (2) the existence of a longstanding business or personal relationship between the parties; (3) the availability of the relevant information; (4) the existence of a fiduciary relationship; (5) the concealment of the fraud; (6) the opportunity to discover the fraud; (7) which party initiated the transaction; and (8) the specificity of the misrepresentation.

(internal citation omitted). Generally, where a plaintiff has “access and opportunity to discover the truth with respect to the misrepresented issue and [has] failed to inform themselves of the truth, they must abide the consequences of their own inattention and carelessness.” (internal citation and quotation omitted).

Considering the facts of this case and the relevant factors listed above, the Court of Appeals agreed that plaintiff’s alleged reliance on defendant’s statement in this case was not justifiable. Plaintiff had given her husband authority to act on her behalf in signing this contract, a contract to which he had unlimited access. The Court reasoned:

There was no evidence that the Kings were discouraged or prevented from reading the contract, and there was no evidence that they were hindered in any way from taking the [indemnity agreement] to an attorney for review and clarification if they wished to do so. The unrefuted testimony is that [husband] simply did not read the [indemnity agreement]. This is unfortunate, because an individual who signs a contract is presumed to have read the contract and is bound by its contents. As to the first fact, [plaintiff’s] business expertise and sophistication, she had been a real estate agent for over a decade and was generally familiar with executing contracts. …[Husband] was a businessowner, therefore, he was also relatively sophisticated and experienced. In fact, the evidence shows that [plaintiff and her husband] both signed a similarly worded [indemnity agreement] in 2012. …[Husband] had the motivation and means—the contract itself and the ability to read paragraph 9—to obtain the information needed to discover the discrepancy between [defendant’s] alleged statements and the contract’s terms regarding the Kings’ personal assets.

(internal citation omitted). Accordingly, summary judgment on the negligent misrepresentation claim was affirmed.

Plaintiff argued on appeal that she also asserted a claim for “agent and/or broker negligence,” but the Court of Appeals ruled that some of her allegations under this claim simply restated her negligent misrepresentation claim, and the other possible allegation was not “articulate[d]…in a manner that allows us to sufficiently assess it.”

This case is a reminder of the importance of the element of justifiable reliance in any negligent misrepresentation claim. When material contradicting the allegedly false statement is readily available, such as in a contract that you or your agent had the opportunity to read, proving justifiable reliance will be a difficult task.

This opinion was released 1.5 months after oral arguments in the case.

Note:  Chapter 81, Section 4 of Day on Torts: Leading Cases in Tennessee Tort Law has been updated to include this decision.

Day on Torts: Leading Cases in Tennessee Tort Law contains summaries of leading cases on over 500 topics and citations to more than 1500 additional cases.  The 500,000+ word book  (and two others, Tennessee Law of Civil Trial and Compendium of Tennessee Tort Reform Cases) is available by subscription at and is continually updated as new decisions and statutes impact Tennessee law.  Click on the link to see the book’s Table of Contents.

BirdDog Law also provides Tennessee lawyers with free access to user-friendly versions of the Tennessee rules of evidence and procedure.

Contact Information