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Criteria for Negligent Misrepresentation Cause of Action Explained

The First Department determined the complaint sufficiently alleged a cause of action for negligent misrepresentation and laid out the criteria, including a “special relationship” close to privity:

To properly assert a claim on a theory of negligent misrepresentation, a plaintiff must plead: “(1) that the existence of a special or privity-like relationship imposed a duty on the defendant to impart correct information to the plaintiff; (2) that the imparted information was actually incorrect; and (3) that the plaintiff reasonably relied on the information” … .

As to the first element, a court will find a special relationship if the record supports “a relationship so close as to approach that of privity” … or, stated another way, the “functional equivalent of contractual privity” … . Under this standard, before liability for negligent misrepresentation may attach in favor of a third party, there must be: (1) an awareness by the maker of the statement that the statement is to be used for a particular purpose; (2) reliance by a known party on the statement in furtherance of that purpose; and (3) some conduct by the maker of the statement linking it to the relying party and evincing its understanding of that reliance… . North Star Contr Corp v MTA Capital Constr Co, 2014 NY Slip Op 06238, 1st Dept 9-18-14

 

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