all of his shares in Am-Pro Protective Agency, Inc. to Gladney.
West $150,000 and executed a promissory note for $ 525,000.
failed to make the payments required by the note
declared Gladney in default and accelerated all future payments.
suit on June 3, 1997.
answered and counterclaimed, complaining that a few months after
the sale, Am-Pro filed for bankruptcy.
West knew or should have known at the time of the sale about
Am-Pro's financial condition and that the stock was essentially
asserted that West's failure to fully inform him of Am-Pro's
true financial status and West's failure to deliver the stock
constituted failure of
consideration, misrepresentation, or concealment of material
facts or all three.
Wants Money Back
Not only did
Gladney contend these facts barred West from receiving any
additional payments on the note, he also asserted they justified
his recouping all funds already paid.
West fully performed his obligations under the sales
agreement and note and that Gladney failed to make the
payments when due.
"neither misrepresented the value of the shares of stock . . .
nor did he know or have reason to know at or prior to the
time of the sale" that their value was "anything other than the
it awarded West summary judgment.
Trial Court Erred
the record reveals that genuine issues of material fact exist as
whether Wes was guilty of making misrepresentations.
Element Fraud based on Misrepresentation
or a reckless disregard of its truth or falsity;
that the representation be acted upon;
hearer's ignorance of its
hearer's reliance upon the truth;
right to rely thereon;
hearer's consequent and
elements must be established by clear, cogent, and convincing
Common Law Negligent Misrepresentation (Pecuniary Loss)
In a claim
for the common law tort of negligent misrepresentation where the
damage alleged is a pecuniary loss, the plaintiff must allege
and prove the following essential elements:
defendant made a false representation to the plaintiff;
defendant had a pecuniary interest in making the
defendant owed a duty of care to see that he communicated
truthful information to the plaintiff;
defendant breached that duty by failing to exercise due
plaintiff justifiably relied on the representation; and
plaintiff suffered a pecuniary loss as the proximate
result of his reliance upon the representation.
The Pl must
establish that his reliance on the misrepresentation was
no liability for casual
statements, representations as to matters of law, or
matters which plaintiff could
ascertain on his own in the
exercise of due diligence."
There can be
no reasonable reliance on a misstatement if the plaintiff
knows the truth of the matter."
determination of justifiable reliance involves the evaluation of
the totality of the circumstances, "including the positions and
relations of the parties.
on a misrepresentation and negligent misrepresentation both
include a requirement that the
plaintiff justifiably relied on the
representation made by the
In this case
Brown, the CEO of Am-Pro, negotiated the sale of West's stock as
part of an agreement Gladney entered into with Am-Pro.
his representatives had been present at Am-Pro headquarters for
a number of weeks prior to any meaningful negotiations with him.
extensive conferences with Brown
had more access to the financial records than did West.
in a better position than West to know the financial status of
he never knew on or before the date of the sale that the
value of his shares was anything other than the sales price
negotiated with Gladney.
Gladney failed to establish a
genuine issue of material fact that his reliance on
any alleged representation by West was justified.
court did not err in granting West's motion for summary