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June 30, 1982

Emily SHERIDAN, as Administratrix of the Estate of Robert R. Sheridan, and individually, and David W. Sheridan, Plaintiffs,
UNITED STATES of America, Defendant

The opinion of the court was delivered by: NEAHER


This is an action brought by the parents of Robert R. Sheridan, individually and on behalf of his estate, under the Federal Torts Claims Act (FTCA), 28 U.S.C. §§ 1346(b), 2671-80. The gravamen of the complaint is that the United States Army negligently failed to timely and correctly inform plaintiffs that their son's death during Army service in Vietnam resulted from his prescribed use of a sulfa drug called Dapsone. The complaint alleges that by the time plaintiffs were apprised of the true cause of death the statute of limitations had expired on their cause of action against the manufacturer of Dapsone. Plaintiffs seek damages for the value of the time-barred claim.

 The Government has moved for dismissal of the complaint, contending first that under the FTCA, no claim arising out of misrepresentation or deceit may be brought against the United States, 28 U.S.C. § 2680(h), *fn1" and second that because plaintiffs' claims arise out of circumstances incident to Robert Sheridan's military service, they are precluded under Feres v. United States, 340 U.S. 135, 71 S. Ct. 153, 95 L. Ed. 152 (1950).

 Taking as true on the instant motion the allegations of the complaint, the material facts are as follows. In June 1969, while serving with the United States Army in Vietnam, Robert Sheridan died as a result of agranulocytosis. The Army immediately informed plaintiffs that agranulocytosis with septicemia was the cause of death and, in December 1969, advised that no evidence could be found of his having received a sulfa drug either during or prior to his illness. In fact, Army personnel had caused the decedent to take a sulfa drug called Dapsone prior to his death, and ingestion of Dapsone caused the fatal agranulocytosis. In 1970, Dr. Ognibene, a military physician in defendant's employ, knew that the use of Dapsone had caused the agranulocytosis which led to Sheridan's death. However, the Army failed to transmit the correct diagnosis to plaintiffs until July 1980. By letter dated July 10, 1980, Colonel George E. T. Stebbing, M.D., of the Department of the Army, informed plaintiffs that their son's agranulocytosis resulted from his use of Dapsone, which the Army had caused him to use.

 At the time of the Army's notifications to plaintiffs in 1969, and at the time of Dr. Ognibene's knowledge of the cause of death in 1970, plaintiffs allegedly had a cause of action against the manufacturer of Dapsone. But in 1980, when they first received notice that their son had used Dapsone prior to his death, the complaint alleges that their cause of action against the manufacturer was time-barred. *fn2" On this basis, plaintiffs claim that the Army's original misinformation, as well as its subsequent failure to promptly correct the known inaccuracy, constituted negligence which caused plaintiffs to lose their claims against the manufacturer of the drug.

 Under the clear authority of United States v. Neustadt, 366 U.S. 696, 702, 81 S. Ct. 1294, 1298, 6 L. Ed. 2d 614 (1961), § 2680(h) excludes recovery under the FTCA upon claims arising out of negligent misrepresentation. In determining the applicability of the exclusion, "a court must look, not to the theory upon which the plaintiff elects to proceed, but rather to the substance of the claim which he asserts." Lambertson v. United States, 528 F.2d 441, 443 (2d Cir. 1976). In the circumstances evidenced by the pleadings, plaintiffs' argument that the instant claims arise out of negligence rather than misrepresentation "is nothing more than an attempt to circumvent § 2680(h) by denying that it applies to negligent misrepresentation." United States v. Neustadt, supra, 366 U.S. at 703, 81 S. Ct. at 1298.

 In Indian Towing Co. v. United States, 350 U.S. 61, 76 S. Ct. 122, 100 L. Ed. 48 (1955), the malfunction of a United States Coast Guard lighthouse caused a tugboat to run aground. Recognizing the validity of petitioner's claim under the FTCA, the Supreme Court held:

"The Coast Guard need not undertake the lighthouse service. But once it exercised its discretion to operate a light on Chandeleur Island and engendered reliance on the guidance afforded by the light, it was obligated to use due care to make certain that the light was kept in good working order; and, if the light did become extinguished, then the Coast Guard was further obligated to use due care to discover this fact and to repair the light or give warning that it was not functioning. If the Coast Guard failed in its duty and damage was thereby caused to petitioners, the United States is liable under the Tort Claims Act." Id. at 69, 76 S. Ct. at 126.

 Subsequently, in Neustadt, the Court addressed the relative bounds of the Indian Towing doctrine and the misrepresentation exception. Plaintiffs there had purchased a house, relying on an inaccurate appraisal by the Federal Housing Authority (FHA). The Supreme Court rejected the Fourth Circuit's analysis that the cause of action arose out of the FHA's negligence:

"To say, as the Fourth Circuit did, that a claim arises out of "negligence,' rather than "misrepresentation,' when the loss suffered by the injured party is caused by the breach of a "specific duty' owed by the Government to him, i.e., the duty to use due care in obtaining and communicating information upon which that party may reasonably be expected to rely in the conduct of his economic affairs, is only to state the traditional and commonly understood legal definition of the tort of "negligent misrepresentation.' " 366 U.S. at 706, 81 S. Ct. at 1300.

 See also, id. at 711, n.26, 81 S. Ct. at 1302, n.26.

 The pivotal decision in the Second Circuit is Ingham v. Eastern Air Lines, Inc., 373 F.2d 227 (2d Cir.), cert. denied, 389 U.S. 931, 88 S. Ct. 295, 19 L. Ed. 2d 292 (1967). The defendant airline sought indemnification from the United States for injuries caused by a plane crash allegedly resulting from the failure of the Air Traffic Controllers and the United States Weather Bureau to accurately report weather information. Recognizing that certain kinds of negligence involve an element of misrepresentation yet remain actionable under the FTCA, the Court of Appeals concluded that the air controller's conduct bore close resemblance to that of the Coast Guard in Indian Towing and that the commercial context in Neustadt involved distinguishable circumstances. Ingham establishes the following analytical principle: "Where the gravamen of the complaint is the negligent performance of operational tasks, rather than misrepresentation, the government may not rely upon § 2680(h) to absolve itself of liability." 373 F.2d at 239.

 However artfully pleaded, the gravamen of the instant complaint is that the Government's breach of its duty to act with care when it provides information to parents of deceased servicemen, i.e., its negligent misrepresentation, caused plaintiffs' economic injury. *fn3" It is long established law in New York and other States that negligent misrepresentation is actionable where a duty to provide correct information arises out of the relationship of the parties. Ultramares Corp. v. Touche, 255 N.Y. 170, 174 N.E. 441 (1931); International Products Co. v. Erie R. Co., 244 N.Y. 331, 155 N.E. 662 (1927). As stated by the New York Court of Appeals:

"Liability in such cases arises only where there is a duty, if one speaks at all, to give the correct information. And that involves many considerations. There must be knowledge or its equivalent that the information is desired for a serious purpose; that he to whom it is given intends to rely and act upon it; that if false or erroneous he will because of it be injured in person or property. Finally the relationship of the parties, arising out of contract or otherwise, must be such that in morals and good conscience ...

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