In her complaint in the later-described action, respondent
asserted the following facts. She obtained a loan from the Farmers
Home Administration (FmHA) under the Housing Act of 1949 for the
construction of a prefabricated house. She then contracted with a
builder to construct the house. The contract required the work to
conform to plans approved by FmHA and granted FmHA the right to
inspect and test all materials and workmanship and reject any that
were defective. During and at the completion of construction of the
house, an FmHA official inspected the site and reported that the
construction accorded with FmHA-approved drawings and
specifications. After respondent moved into the house, she
discovered, and FmHA officials identified, a number of defects. The
builder refused to comply with FmHA's request to cure the defects
in accordance with the builder's warranty, and FmHA declined to pay
for certain defects. Respondent then brought an action in Federal
District Court under the Federal Tort Claims Act (FTCA), alleging
that the defects were partly attributable to FmHA's employees'
failure properly to inspect and supervise construction of the
house. The District Court dismissed the complaint for failure to
state a claim on which relief could be granted. The Court of
Appeals reversed, holding that the complaint stated a claim for
negligence and that the action was not barred by 28 U.S.C. §
2680(h), which precludes recovery under the FTCA for "[a]ny claim
arising out of . . . misrepresentation."
Held: Respondent's claim did not "aris[e] out of . . .
misrepresentation" within the meaning of § 2680(h), and thus is not
barred by that provision, because respondent did not seek to
recover on the basis of misstatements made by FmHA officials.
United States v. Neustadt, 366 U.
S. 696, distinguished. Although FmHA may have undertaken
both to supervise construction of respondent's house and to provide
her with information regarding the progress of construction, her
action is based solely on the former conduct. The essence of an
action for misrepresentation is the communication of misinformation
on which the recipient relies. Here, the FmHA's duty to use due
care to ensure that the builder adhered to the approved plans and
cured all defects before completing construction was distinct from
any duty to use due care in communicating information to
respondent. Pp.
460 U. S.
294-299.
Page 460 U. S. 290
646 F.2d 1178, affirmed.
MARSHALL, J., delivered the opinion of the Court, in which
BRENNAN, WHITE, BLACKMUN, POWELL, REHNQUIST, STEVENS, and O'CONNOR,
JJ., joined. BURGER, C.J., concurred in the judgment.
JUSTICE MARSHALL delivered the opinion of the Court.
The Secretary of Agriculture is authorized by Title V of the
Housing Act of 1949, 63 Stat. 432, as amended, 42 U.S.C. § 1471
et seq. (1976 ed., and Supp. V), to extend financial and
technical assistance through the Farmers Home Administration (FmHA)
to low-income rural residents who seek to obtain housing.
Respondent Onilea Neal, the recipient of an FmHA loan for the
construction of a prefabricated house, brought this action under
the Federal Tort Claims Act, 28 U.S.C. §§ 1346(b), 2671-2680. She
alleged that defects discovered after she set up residence were
partly attributable to the failure of FmHA employees properly to
inspect and supervise construction of her house. This case presents
the question whether respondent's action is barred by 28 U.S.C. §
2680(h), which precludes recovery under the Tort Claims Act for
"[a]ny claim arising out of . . . misrepresentation."
I
A
The facts described in respondent's complaint may be summarized
as follows. Unable to obtain credit from other
Page 460 U. S. 291
sources, Neal applied for a Rural Housing Loan from FmHA
pursuant to § 502(a) of the Housing Act of 1949, 42 U.S.C. §
1472(a). FmHA approved her application in June, 1977. During the
summer of that year, Neal received advice from S. Lain Parkison,
the FmHA Supervisor for Roane County, Tenn.
On August 8, 1977, Neal contracted with Home Marketing
Associates, Inc. (Home Marketing), for the construction of a
prefabricated house. [
Footnote
1] The contract required that Home Marketing's work conform to
plans approved by FmHA. It also granted FmHA the right to inspect
and test all materials and workmanship and reject any that were
defective. At the same time, Neal entered into a deed of trust with
FmHA and signed a promissory note providing for repayment of the
principal sum of $21,170, plus interest of 8% per annum on the
unpaid principal.
Page 460 U. S. 292
Home Marketing commenced work on Neal's house in August, 1977,
and finished the following month. An FmHA official, Mary Wells,
inspected the site on three occasions: soon after construction
began, shortly before it was concluded, and after the house was
completed. Her inspection reports contained no adverse comments on
the construction work. After her third inspection, Wells issued a
final report, signed by Neal, which indicated that the construction
accorded with the drawings and specifications approved by FmHA.
Home Marketing issued a one-year builder's warranty covering
workmanship, materials, and equipment.
Neal moved into the house in 1977. During the winter, she
discovered that the heat pump in the house was not working
properly. She notified FmHA and Home Marketing. An inspection by
Parkison, the County FmHA Supervisor, revealed that the heat pump
unit was either defective or undersized. On March 22, 1978, FmHA's
State Director and other FmHA officials conducted a complete
inspection and identified 13 additional defects in the construction
of the house. These included deviations from plans approved by FmHA
and from applicable Minimum Property Standards. The inadequacies in
materials and workmanship included defects in caulking, bridging,
sealing, and plumbing, and extended to all areas of the house, such
as the porch, the rear door, the floor, the roof, the exterior
paint, and the interior wall finish. Home Marketing refused to
comply with FmHA's request to cure these defects in accordance with
the builder's warranty.
In November, 1978, respondent asked FmHA to pay for the
correction of the heating system and other structural defects. It
declined to do so.
B
The United States District Court for the Eastern District of
Tennessee dismissed Neal's complaint for failure to state a claim
on which relief can be granted.
Neal v. Bergland, 489 F.
Supp. 12 (1980). It found that no contractual duty to supervise
Page 460 U. S. 293
the construction of respondent's home was created either by the
Federal Housing Act of 1949 and the regulations promulgated
thereunder or by the various agreements between respondent and
FmHA. The court concluded that regulations requiring FmHA officials
to ensure that the builder adhere to the terms of its construction
contract were intended solely to protect the Government's security
interest, and were not intended to make FmHA warrant the quality of
construction for the benefit of those receiving rural assistance
loans.
Id. at 514-515. The District Court also concluded
that respondent failed to state a claim against FmHA under
applicable tort law.
Id. at 515.
The Court of Appeals reversed.
Neal v. Bergland, 646
F.2d 1178 (CA6 1981). It agreed with the District Court that FmHA
had no contractual obligation to provide Neal with technical
assistance or to inspect and supervise construction of her house.
Id. at 1181. However, the Court of Appeals found that
respondent's complaint stated a claim for negligence under the
principle
"that one who undertakes to act, even though gratuitously, is
required to act carefully and with the exercise of due care and
will be liable for injuries proximately caused by failure to use
such care."
Id. at 1181-1182, citing Restatement (Second) of Torts
§ 323 (1965). It noted that, subject to express exceptions, the
Tort Claims Act, 28 U.S.C. § 2674, authorizes suit against the
Government for the negligence of a federal agency in performing a
voluntary undertaking.
Ibid. [
Footnote 2]
The Court of Appeals then considered the question now before us:
whether respondent's claim "aris[es] out of . . .
misrepresentation," 28 U.S.C. § 2680(h), and is therefore
excluded
Page 460 U. S. 294
from coverage by the Tort Claims Act. Distinguishing this case
from others, including
United States v. Neustadt,
366 U. S. 696
(1961), the court concluded that respondent's negligence claim did
not fall within this exception to the waiver of sovereign immunity.
The Secretary of Agriculture and other Government officials
petitioned for certiorari and suggested summary reversal on the
ground that the decision below cannot be reconciled with this
Court's decision in
Neustadt. We granted the writ, 456
U.S. 988 (1982), and we now affirm.
II
The question before us is a narrow one. Petitioners argue only
that respondent's claim is a claim of "misrepresentation" within
the meaning of § 2680(h). They do not seek review of the threshold
determination that respondent's complaint states a claim for
negligence under the Good Samaritan doctrine that is otherwise
actionable under 28 U.S.C. § 2674. Thus, we need not decide
precisely what Neal must prove in order to prevail on her
negligence claim, nor even whether such a claim lies. [
Footnote 3] Nor are we called on to
consider whether recovery is barred by any other provision of the
Tort Claims Act, including the exception for any action "based upon
the exercise or performance or the failure to exercise or perform a
discretionary function." § 2680(a). Finally, we are not asked to
determine whether the administrative remedy created by the Housing
Act of 1949, 42 U.S.C. § 1479(c) (1976
Page 460 U. S. 295
ed., Supp. V), provides the exclusive remedy against the
Government for damages attributable to the negligence of FmHA
officials. [
Footnote 4]
The scope of the "misrepresentation" exception to the Tort
Claims Act was the focus of this Court's decision in
United
States v. Neustadt, supra. Neustadt purchased a house in
reliance on an appraisal undertaken by the Federal Housing
Administration (FHA) for mortgage insurance purposes. After he took
up residence, cracks appeared in the ceilings and walls of his
house. The cracks were caused by structural defects that had not
been noticed by the FHA appraiser during the course of his
inspection. Neustadt sued the Government under the Tort Claims Act
to recover the difference between the fair market value of the
property and the purchase price. He alleged that the FHA had
negligently inspected and appraised the property, and that he had
justifiably relied on the appraisal in paying a higher price for
the house than he would otherwise have paid.
This Court held that the claim in
Neustadt arose out of
"misrepresentation" under § 2680(h). We determined initially that §
2680(h) applies to claims arising out of negligent, as well as
intentional, misrepresentation. 366 U.S. at
Page 460 U. S. 296
366 U. S.
703-706. This Court found that Neustadt's claim that the
Government had breached its
"duty to use due care in obtaining and communicating information
upon which [the plaintiff] may reasonably be expected to rely in
the conduct of his economic affairs,"
merely restated the traditional legal definition of "negligent
misrepresentation" as would have been understood by Congress when
the Tort Claims Act was enacted.
Id. at
366 U. S.
706-707. [
Footnote
5] Finally, we examined the National Housing Act of 1934, as
amended, under which the FHA had conducted its appraisal, and found
nothing to indicate "that Congress intended, in a case such as
this, to limit or suspend the application of the
misrepresentation' exception of the Tort Claims Act."
Id. at 366 U. S.
708-710.
We cannot agree with petitioners that this case is controlled by
Neustadt. As we recognized in that decision, the essence
of an action for misrepresentation, whether negligent or
intentional, is the communication of misinformation on which the
recipient relies. The gravamen of the action against the Government
in
Neustadt was that the plaintiff was misled by a
"Statement of FHA Appraisal" prepared by the Government. Neustadt
alleged no injury that he would have suffered independently of his
reliance on the erroneous appraisal. Because the alleged conduct
that was the basis of
Page 460 U. S. 297
his negligence claim was in essence a negligent
misrepresentation, Neustadt's action was barred under the
"misrepresentation" exception.
Section 2680(h) thus relieves the Government of tort liability
for pecuniary injuries which are wholly attributable to reliance on
the Government's negligent misstatements. As a result, the
statutory exception undoubtedly preserves sovereign immunity with
respect to a broad range of Government actions. [
Footnote 6] But it does not bar negligence
actions which focus not on the Government's failure to use due care
in communicating information, but rather on the Government's breach
of a different duty.
In this case, unlike
Neustadt, the Government's
misstatements are not essential to plaintiff's negligence claim.
The Court of Appeals found that, to prevail under the Good
Samaritan doctrine, Neal must show that FmHA officials voluntarily
undertook to supervise construction of her house; that the
officials failed to use due care in carrying out their supervisory
activity; and that she suffered some pecuniary injury proximately
caused by FmHA's failure to use due care. [
Footnote 7] FmHA's duty to use due care to ensure that
the builder adhere to previously approved plans and cure all
defects before completing construction is distinct from any duty to
use due care in communicating information to respondent. And it
certainly does not "appea[r] beyond doubt" that the only damages
alleged in the complaint to be caused by FmHA's conduct were those
attributable to Neal's reliance on FmHA inspection reports.
Conley v. Gibson, 355 U. S. 41,
355 U. S. 45-46
(1957). Neal's factual allegations would be consistent with proof
at trial that Home Marketing would never have turned
Page 460 U. S. 298
the house over to Neal in its defective condition if FmHA
officials had pointed out defects to the builder while construction
was still underway, rejected defective materials and workmanship,
or withheld final payment until the builder corrected all
defects.
Of course, in the absence of the "misrepresentation" exception
to the Tort Claims Act, respondent could also have brought a claim
for negligent misrepresentation to recover for any injury caused by
her misplaced reliance on advice provided by FmHA officials and on
the FmHA inspection reports. Common to both the misrepresentation
and the negligence claim would be certain factual and legal
questions, such as whether FmHA officials used due care in
inspecting Neal's home while it was under construction. But the
partial overlap between these two tort actions does not support the
conclusion that, if one is excepted under the Tort Claims Act, the
other must be as well. Neither the language nor history of the Act
suggests that, when one aspect of the Government's conduct is not
actionable under the "misrepresentation" exception, a claimant is
barred from pursuing a distinct claim arising out of other aspects
of the Government's conduct.
"'The exemption of the sovereign from suit involves hardship
enough where consent has been withheld. We are not to add to its
rigor by refinement of construction where consent has been
announced.'"
United States v. Aetna Surety Co., 338 U.
S. 366,
338 U. S. 383
(1949), quoting
Anderson v. Hayes Constr. Co., 243 N.Y.
140, 147, 153 N.E. 28, 29-30 (1926) (Cardozo, J.). Any other
interpretation would encourage the Government to shield itself
completely from tort liability by adding misrepresentations to
whatever otherwise actionable torts it commits.
We therefore hold that respondent's claim against the Government
for negligence by FmHA officials in supervising construction of her
house does not "aris[e] out of . . . misrepresentation" within the
meaning of 28 U.S.C. § 2680(h). The Court of Appeals properly
concluded that Neal's claim is
Page 460 U. S. 299
not barred by this provision of the Tort Claims Act because Neal
does not seek to recover on the basis of misstatements made by FmHA
officials. Although FmHA in this case may have undertaken both to
supervise construction of Neal's house and to provide Neal
information regarding the progress of construction, Neal's action
is based solely on the former conduct. Accordingly, the judgment of
the Court of Appeals is
Affirmed.
THE CHIEF JUSTICE concurs in the judgment.
[
Footnote 1]
Regulations then in effect allowed the recipient of an FmHA loan
under § 502 of the Housing Act of 1949, 42 U.S.C. § 1472, to obtain
new housing in one of three ways. The method undertaken by
respondent, known as the "contract method" of financing new
construction, involved the performance of work by a builder in
accordance with a signed contract approved by FmHA.
See 7
CFR § 1804.4(d) (1977). Although the FmHA "will not become a party
to a construction contract nor incur any liability thereunder,"
ibid., its officials were significantly involved in all
phases of the construction of respondent's house. For example, the
FmHA County Supervisor was authorized to assist the borrower in
selecting a contractor based on the bids or proposals and the
contractor's qualifications. § 1804.4(d)(6). He reviewed all plans
and specifications, § 1804.4(a), and was required to give prior
approval of any changes in the plans, § 1804.4(d), or in the
contract. § 1804.4(d)(8). He was responsible for making periodic
and final inspections. § 1804.4(d)(6)(i)(
j).
See
also §§ 1803.2, 1803.5, 1804.4(g). He also had a
responsibility to see that partial payments made to the contractor
were properly applied against his bills for material and labor, §
1804.4(d)(7)(iv), and to determine that work was performed in
compliance with all the terms and conditions of the contract before
making final payment. § 1804.4(d)(7)(vii). Finally, he assisted the
borrower with respect to claims arising under the builder's
warranty. § 1804.4(g)(5).
[
Footnote 2]
The court cited,
inter alia, Indian Towing Co. v. United
States, 350 U. S. 61 (1955)
(Coast Guard's failure to maintain the beacon light in a
lighthouse);
Seaboard Coast Line R. Co. v. United States,
473 F.2d 714 (CA5 1973) (negligent design and construction of a
drainage ditch); and
Barron v. United
States, 473 F.
Supp. 1077 (Haw.1979) (failure to require a subcontractor to
comply with a contract's safety requirements).
[
Footnote 3]
The Court of Appeals found that respondent stated a claim
against the United States under the common law Good Samaritan
doctrine which is described in § 323 of the Restatement (Second) of
Torts (1965). However, the court did not expressly find that
Tennessee law recognizes this doctrine,
see 28 U.S.C. §
1346(b), and would apply it to a private person responsible for
similar negligence.
See 28 U.S.C. § 2674;
Rayonier,
Inc. v. United States, 352 U. S. 315,
352 U. S. 319
(1957);
Indian Towing Co. v. United States, supra. Nor did
the court describe in any significant detail what respondent must
show in order to prevail on her negligence claim.
[
Footnote 4]
Compare, e.g., Johansen v. United States, 343 U.
S. 427 (1952) (Federal Employees' Compensation Act
provides exclusive remedy for civilian employees),
with United
States v. Muniz, 374 U. S. 150,
374 U. S. 160
(1963) (provision allowing compensation of certain prison inmates
for work-related injuries was not exclusive remedy for inmate),
and United States v. Brown, 348 U.
S. 110,
348 U. S. 111
(1954) (receipt of disability payments under the Veterans Act does
not bar recovery under the Tort Claims Act).
Petitioners do argue at length, however, that neither the
Housing Act of 1949 nor subsequent amendments were intended to
expand liability beyond that established under the Tort Claims Act.
Brief for Petitioners 22-32. Because we find that respondent's
claim under the Good Samaritan doctrine is not barred by the
"misrepresentation" exception to the Tort Claims Act, we do not
consider whether the Housing Act provides an alternative basis for
respondent's claim.
[
Footnote 5]
The Court distinguished negligent misrepresentation from the
"many familiar forms of negligent misconduct [which] may be said
to involve an element of 'misrepresentation,' [only] in the generic
sense of that word."
366 U.S. at
366 U. S. 711,
n. 26. The "misrepresentation" exception applies only when the
action itself falls within the commonly understood definition of a
misrepresentation claim, which
"'has been identified with the common law action of deceit,' and
has been confined 'very largely to the invasion of interests of a
financial or commercial character, in the course of business
dealings.'"
Ibid., quoting W. Prosser, Law of Torts § 85, pp.
702-703 (1941 ed.). Thus, the claim in
Indian Towing Co. v.
United States, 350 U. S. 61
(1955), for damages to a vessel which ran aground due to the Coast
Guard's alleged negligence in maintaining a lighthouse, did not
"aris[e] out of . . . misrepresentation" within the meaning of §
2680(h).
[
Footnote 6]
See Restatement (Second) of Torts § 552(3) (1977).
[
Footnote 7]
Although this negligence claim may include an element of
reliance on FmHA's voluntary undertaking to supervise construction
in a competent manner, this element of the claim would constitute
"misrepresentation" only in the generic sense of the word.
See n 5,
supra.