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Dinsdale Construction, Llc v. Lumber Specialties, Ltd.

Supreme Court of Iowa

December 23, 2016


         On review from the Iowa Court of Appeals.

         Appeal from the Iowa District Court for Grundy County, Kellyann Lekar, Judge.

         A construction materials manufacturer and provider of engineering services seeks further review of a court of appeals decision affirming the district court's denial of its motion for judgment notwithstanding the verdict finding liability for negligent misrepresentation. DECISION OF COURT OF APPEALS VACATED; DISTRICT COURT JUDGMENT REVERSED AND CASE REMANDED.

          Michael A. Carmoney and Allison J. Frederick of Carmoney Law Firm, PLLC, Des Moines, for appellant.

          Chad A. Swanson and Nathan J. Schroeder of Dutton, Braun, Staack & Hellman, P.L.C., Waterloo, for appellee.

          CADY, Chief Justice.

         In this case, we must decide if an employee of a business that sells building materials and services who supplied false information to a builder about the structural integrity of a building under construction had a duty to use reasonable care in supplying the information when it was done as a courtesy to the builder and for the general goodwill of the business. Following a jury trial on claims for negligent misrepresentation and breach of contract, the jury returned a verdict against the business on the negligent misrepresentation claim and the district court denied a motion for judgment notwithstanding the verdict. The business appealed, and we transferred the case to the court of appeals, who affirmed the decision of the district court. On further review, we vacate the decision of the court of appeals and reverse the decision of the district court. We conclude the business owed no duty of care in supplying the information to the plaintiff. We reverse the judgment of the district court and remand for the case to be dismissed.

         I. Factual Background and Proceedings.

         In 2012, Phelps Implement (Phelps) hired Moeller & Walter, LTC, a lumberyard, to provide building materials and to oversee the construction of an addition to its existing implement dealership. Moeller & Walter subcontracted with Lumber Specialties to provide the truss[1]package, headers and columns for the doors, and connections and hold downs, in addition to certain engineering services. The engineering services included structural building design, [2] a structural site visit, [3] retaining wall engineering, [4] and an existing building truss review.[5]Finally, Lumber Specialties provided an industry standard temporary bracing plan.[6] The contract did not provide for engineering services pertaining to the temporary bracing of the trusses and did not require Lumber Specialties to evaluate the temporary bracing during the course of the construction.[7] In all, Lumber Specialties contracted to provide $33, 247 worth of tangible building materials and approximately $4150 worth of engineering services. Phelps also hired Dinsdale Construction to supply the labor and building materials for the project.

         On June 28, the owner of Moeller & Walter, Lynn Trask, visited the Phelps site and met with Kirk Dinsdale, the owner of Dinsdale Construction. By this time, the construction was underway, with some of the smaller trusses placed and supported by temporary bracing. Trask and Dinsdale agreed the construction should be evaluated to ensure the chosen method of temporary bracing was sufficient, especially considering the larger trusses would be going up soon. Later that day, Trask emailed Ryan Callaway, a sales representative for Lumber Specialties. Trask wanted Callaway to visit the site to "take a look at what [Dinsdale Construction] ha[s] done" and advise "[i]f there is any bracing that [is] missing." Email from Lynn Trask, Moeller & Walter LTC to Ryan Callaway, Lumber Specialties (June 28, 2012, 11:35 a.m.). Callaway felt comfortable performing this visit, and he did so that afternoon. He also believed Trask and Dinsdale should have been able to rely on his opinion.

         Callaway had prepared the quote for the Phelps project. He had also worked in construction for approximately twenty years. Prior to working with Lumber Specialties, Callaway studied architectural and construction drafting at a community college for one year. He then worked in residential remodeling before accepting a job with Plumb Building Systems (Plumb), another truss manufacturer. At Plumb, Callaway worked in truss design, using software to design project-specific trusses. After three years, he left Plumb and worked a brief stint at a factory before accepting a position with Lumber Specialties, again working in truss design. After another four years, he transitioned to sales, where he has been for approximately ten years. In his capacity as sales representative, he no longer does building designs, nor does he install trusses. His primary job responsibilities involve customer relations and preparing bids.

         Callaway characterized the visit to Phelps as a courtesy to his customer, Trask. When he arrived at the Phelps site, Dinsdale was working with his crew on the roof. Callaway looked around, introduced himself, left some promotional pencils, and said something to the effect of, "Everything looks great. Keep doing what you're doing." Dinsdale did not know Callaway was a sales representative; he only knew Callaway was from Lumber Specialties. Callaway was on-site for only a short time.[8] The next day Callaway emailed Trask:

I stopped by the Phelps site yesterday. They were still installing purlins[[9] and bracing on the trusses that they had set. Steve Kennedy will be doing the final inspection on the building which will include inspecting the bracing. If needed, recommendation will [be] made at that time. Please give Steve at least three day['s] lead time to schedule the final inspection on the building. Thank you.
Ryan Callaway
Outside Sales

         Email from Ryan Callaway, Lumber Specialties to Lynn Trask, Moeller & Walter LTC (June 29, 2012, 06:18 a.m.). Trask replied:

Thanks Ryan,
I am aware Steve will be doing the inspection when done. Just thought it would be good to have you stop and check progress [to] see if there are any obvious things that you see that could create more stability during the set stage. Thanks for stopping. Let me know if you have any suggestions or saw anything that I need to be aware of.
Thanks, ...

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