US SUPREME COURT DECISIONS

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. chanrobles.com-red

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.