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Annett Holdings, Inc. v. Kum & Go, L.C.

Supreme Court of Iowa
801 N.W. 2d 499 (2011)


Facts

Annett Holdings, Inc. (Annett) (plaintiff) owned TMC Transportation (TMC), a trucking company. Annett had a contract (Agreement) with Comdata, a credit-card provider, under which Comdata provided cards to be used by authorized Annett employees to purchase fuel and obtain cash advances at Comdata service centers. Annett accepted full responsibility for purchases made with the Comdata cards, including unauthorized or fraudulent purchases, and indemnified Comdata from liability resulting from acts of Annett employees. The Agreement extended to both TMC and Annett. Comdata had a contract with Kum & Go, L.C. (Kum & Go) (defendant) enabling a Kum & Go store to lease a Comdata terminal. Comdata would reimburse Kum & Go for transactions at the terminal. Annett had no contract with Kum & Go. Between November 2002 and April 2006, a TMC employee fraudulently used the Comdata terminal at the Kum & Go store to obtain money for himself. Before the fraud was discovered, Comdata reimbursed Kum & Go for the fraudulent transactions, of which TMC received a daily report, per their contract, and Annett subsequently reimbursed Comdata. The TMC employee was convicted of theft. Annett then sued Kum & Go for negligence and as a third-party beneficiary of the contract between Comdata and Kum & Go, seeking to recover the money used to reimburse Comdata. Kum & Go moved for summary judgment on the negligence claim, arguing that Kum & Go could not be sued for negligence because of the economic-loss rule and because Kum & Go owed no duty to Annett. The district court granted the motion, holding that a negligence suit was barred by the economic-loss rule. Annett appealed.

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Holding and Reasoning (Mansfield, J.)

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Dissent (Wiggins, J.)

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