Burke v. Harman

John Burke (plaintiff) bought a blanket at an antique mall for $115. The tag on the blanket identified it as a 1930s Southwest wool handwoven throw. Burke used the blanket as a rug, and a houseguest suggested that he investigate its origins. Burke, a woodcarver who collected historical wood carvings, remembered Kenneth Harman (defendant). Harman was a teacher who spent significant time collecting various objects and had a large home library of books involving collectibles. Harman and Burke had met a few months earlier when Harman purchased some objects from Burke. Burke took the blanket to Harman’s home for him to evaluate. Burke showed Harman the blanket and asked him what it was. Harman said it could be Mexican and offered Burke $500 and two Indian dolls in exchange for the blanket. Burke refused, and Harman gave Burke $1,000 cash for the blanket. The blanket turned out to be a rare Navajo chief’s blanket, first phase, Ute style, and Harman sold it to a third party for $290,000, its fair market value. Burke sued Harman, asserting a cause of action for negligent representation, among other claims. Burke alleged that Harman should have known the blanket’s value at the time Burke sold it to Harman. Harman’s home reference library contained two books with pictures of Navajo chief’s blankets, first phase, Ute style. The parties stipulated to the blanket’s value at the time of the sale. At the close of trial, Harman moved for a directed verdict on Burke’s negligent-misrepresentation claim. Harman argued that the damages in a negligent-misrepresentation claim, unlike a fraudulent-misrepresentation claim, were limited to out-of-pocket damages. Harman argued that because Burke conceded he had de minimis out-of-pocket expenses in selling the blanket to Harman, Harman was entitled to a directed verdict. The trial court agreed and granted the directed verdict. Burke appealed.