L & P CONVERTERS, INC. v. Alling & Cory Co.

MOYLAN, Judge. L & P Converters, Inc., appellant, appeals from an order of the Circuit Court for Anne Arundel County entering judgment in favor of Ailing & Cory Company. After denying both parties’ motions for summary judgment and proceeding on the merits of the action, the circuit court found for Ailing & Cory Company on its negligent misrepresentation claim and awarded it $25,615.40, along with costs and prejudgment interest on $9,135.40 as of March 1, 1991. No findings were made as to its other claims of breach of contract and breach of warranty for fitness for particular purpose.

On appeal, L & P Converters, Inc. contends that the trial court erred in denying its motion for summary judgment. Although the appellant expressed its argument in that manner, it acknowledged in oral argument before this court that it had intended, rather, to challenge the circuit court’s judgment by asserting that the circuit court’s determination of liability was clearly erroneous in that the tort of negligent misrepresentation was not established by the evidence presented at trial. We find that the circuit court was not clearly erroneous, and, thus, we affirm. ⁵⁶⁷ FACTS Ailing & Cory Company (Ailing & Cory) is a paper merchant located in Savage, Maryland. It supplies paper bought from paper mills and converters to printing companies and other corporations.

In late October, 1990, United Book Press (United Book), a book publisher, contacted Ailing & Cory, soliciting a bid for a contract to supply 16,000 pounds of a sixty or seventy pound dull coated offset paper meeting JCP A260 code for a United States Department of the Army job on which United was bidding. Michael Hoffner, a sales representative for Ailing & Cory, telephoned L & P Converters, Inc. (L & P), a paper converter located in Massachusetts, to obtain a quotation on the paper. Hoffner spoke to Terri Gough and explained his requirements. Gough responded that L & P had sixty-five pound paper and that she was not certain whether it met JCP A260.

Subsequently, Gough sent a sample of the paper to Hoffner with a note stating that it would meet the JCP A260 code. Ailing & Cory bid on the paper contract using L & P’s quotation. United Book, in turn, used Ailing & Cory’s bid to bid on the government job and won the bid. Consequently, Ailing & Cory won their bid for the paper contract and placed an order for the paper in the amount of $9,135.40 with L & P. The paper was delivered directly to United Book.

United Book expressed concern to Ailing & Cory as to whether the shade of the paper met the JCP A260 code. Specifically, United Book indicated that the shade appeared “to be more of a cream than white.” Hoffner contacted Gough and asked for assurance that the paper met the specifications. Gough confirmed verbally and in writing that the paper met the JCP A260 code. Hoffner conveyed that information to United Book, and it produced the job for the government.

Upon inspection, the government rejected the job because the paper was too rough, the color of the paper was too yellow, and the paper was the wrong weight. Additionally, the color of the endleaves did not meet the government’s specifications. United Book reprinted the job at a cost of $16,480, and the ⁵⁶⁸ government accepted it. Ailing & Cory reimbursed United Book for its reprinting costs.

Subsequently, Ailing & Cory demanded reimbursement from L & P. L & P refused. In March, 1992, Ailing & Cory filed a complaint in the Circuit Court for Anne Arundel County. L & P filed a Motion to Dismiss the complaint in May, 1992, which was denied by the circuit court in July, 1992. Discovery was conducted by both parties.

Ailing & Cory filed a Motion for Summary Judgment as to count II of its complaint in October, 1992. Subsequently, L & P filed a Motion for Summary Judgment as to all counts of the complaint in early May, 1993. On May 12, 1993, a hearing was held. The circuit court denied all motions for summary judgment, without consideration of the merits of the motions, and proceeded to conduct a trial.

At the close of the evidence offered by Ailing & Cory, L & P made a motion for judgment, which was denied. L & P presented its case and renewed its motion for judgment. 1 The circuit court found in favor of Ailing & Cory. The circuit court then proceeded to determine the amount of damages and entered judgment in favor of Ailing & Cory in the amount of $25,-615.40, along with costs and prejudgment interest on $9,135.40 as of March 1, 1991. This appeal resulted.

Legal Analysis The trial court found, after hearing the evidence presented at trial, that L & P was liable for negligent misrepresentation. The tort of negligent misrepresentation is actionable when it is shown that (1) the defendant, owing a duty of care to the plaintiff, negligently asserts a false statement; (2) the defendant intends that his statement will be acted upon by the plaintiff; (3) the defendant has knowledge that the plaintiff will probably rely on the statement, which, if erroneous, will cause loss or injury; ⁵⁶⁹ (4) the plaintiff, justifiably, takes action in reliance on the statement; and (5) the plaintiff suffers damage proximately caused by the defendant’s negligence. Gross v. Sussex, 332 Md. 247, 259 , 630 A.2d 1156, 1162 (1993). L & P argues that the evidence presented did not support a finding that it owed Ailing & Cory a duty of care, that L & P knew that Ailing & Cory would rely on its statements, that Ailing & Cory justifiably relied on its statements, and that Ailing & Cory suffered damage proximately caused by L & P’s negligence.

We disagree. On appeal, the judgment of a trial court will not be set aside on the evidence unless it is clearly erroneous. Md. Rule 8-131(c). In determining whether the trial court was clearly erroneous, an appellate court considers the evidence produced at trial in a light most favorable to the prevailing party.

If, viewed in that light, there is competent evidence present to support the trial court’s determination, the trial court is not clearly erroneous and its judgment will not be disturbed on appeal. Maryland Metals v. Metzner, 282 Md. 31, 41 , 382 A.2d 564, 570 (1978). In this case, therefore, our analysis of the appellant’s contentions is limited to whether, viewing the evidence in a light most favorable to Ailing & Cory, competent evidence was produced at trial to support the trial court’s finding of liability for negligent misrepresentation. Duty L & P argues that Ailing & Cory’s claim for negligent misrepresentation is precluded because it failed to establish that L & P owed it a duty of care.

The appellant asserts that the evidence presented does not support a finding that there was a special relationship between the parties at the time the statements were made. Consequently, it contends that, because its negotiations concerning the sale of the paper to Ailing & Cory were at arm’s length, resulting in monetary loss only, it did not owe Ailing & Cory a tort duty of care. ⁵⁷⁰ Where failure to exercise due care only creates a risk of economic loss, an intimate nexus between the parties is generally required. Weisman v. Connors, 312 Md. 428, 446-448 , 540 A.2d 783, 791-793 (1988); Jacques v. First Nat’l Bank, 307 Md. 527, 534 , 515 A.2d 756, 759 (1986). The requirement of an intimate nexus is satisfied by contractual privity or its equivalent. 307 Md. at 534-535 , 515 A.2d at 759-760 .

In the absence of contractual privity, its equivalent has been found and a tort duty of care has been imposed when “a sufficiently close nexus or relationship” is shown. Weisman v. Connors, 312 Md. at 448 , 540 A.2d at 793 . In Weisman , the Court of Appeals found that false statements made by Weisman to Connors during pre-contractual discussions conducted with regard to an employment contract established the relationship necessary to impose a tort duty of care. The Court stated, 312 Md. at 448-449 , 540 A.2d at 793 : We think the jury could have found from the evidence that the circumstances under which the two men came together in precontractual negotiations created a sufficiently close nexus or relationship as to impose a duty on Weisman not negligently to make statements of present or past facts about FWC or the new position of executive vice president.

The manifest purpose of the meeting between the two high level executives was for Weisman to impart, and Connors to digest, relevant and accurate information concerning FWC and the proposed new position which Weisman intended to create. See Martens Chevrolet v. Seney, 292 Md. 328, 338 , 439 A.2d 534, 539 (1982) (evidence sufficient to submit claim for negligent misrepresentation to jury in situation where misrepresentations were made during bargaining period prior to the signing of a contract for sale of automobile distributorship); Giant Food v. Ice King, 74 Md.App. 183, 189 , 536 A.2d 1182, 1185 (1988) (special relationship between potential supplier and buyer existed so as to impose a duty of care by virtue of communications over a period of seven months). ⁵⁷¹ In this case, L & P’s initial misrepresentation occurred before it entered into a contract with Ailing & Cory for the sale of paper. Evidence revealed that L & P is