Prove Notice Without Knowledge – Show Facts That Required Inquiry
Article written by Justin Kahn.
Whether you’re impeaching a President or filing suit for a shopper who slipped on a grape, there’s one important fact you must establish: What did the Defendant know, and when did he know it?
When you can’t show “actual” knowledge, you may be able to establish the facts sufficient to show the Defendant should have made an inquiry and that, had he done so, he would have had actual knowledge. This is called Inquiry Notice. “It is a general rule that whatever puts a party on inquiry amounts in judgment of law to notice, provided the inquiry becomes a duty, and would lead to knowledge of the facts by the exercise of ordinary intelligence and understanding.” 46 C.J. Notice § 28 (1928).
In other words, “a man does know what he ought to know.” Endowment Rank, Knights of Pythias v. Rosenfeld, 92 Tenn. 508, 22 S.W. 204, 205 (1893).
Inquiry Notice Defined
Inquiry Notice establishes a duty to act that can lead to actual knowledge. Thus, a finder of fact can impute actual knowledge to a party who should have inquired into certain facts but who failed to do so. A party seeking to establish an Inquiry Notice must first present facts showing the other had a duty to inquire. Next, the party must show the inquiry would have led to actual notice of facts or conditions sufficient to create a duty for him to act on that knowledge. Because notice — inquiry or otherwise — is a question of fact for the jury, a plaintiff may be able to withstand summary judgment by showing facts exist as to what the Defendant knew or should have known. See, e.g., Ford v. S.C. Dept. of Transp., 328 S.C. 481, 488-89, 492 S.E.2d 811, 815 (Ct. App. 1997).
Citing South Carolina law in Nettles v. Childs, 100 F.2d 952, 957-58 (4th Cir. 1939), the Fourth Circuit Court of Appeals explained:
[T]he law imputes knowledge when opportunity and interest, coupled with reasonable care, would necessarily impart it…[A]nd if a person has actual knowledge of facts which would lead an ordinarily prudent man to make further investigation, the duty to make inquiry arises and the person is charged with knowledge of the facts which inquiry would have disclosed.
Here is an example of an Inquiry Notice:
Within the elements of duty-breach-cause-harm, notice helps establish duty. For example, a store manager who knows a bag of marbles has spilled on Aisle 10 has a duty to his customers to clean them up. If the spill just happened and no one notified the manager, he may not be liable to the customer who slips because his lack of knowledge established no duty to act. But what if the manager saw a couple of marbles roll past a cash register or heard something that sounded like marbles clattering on the floor? If the “ordinarily prudent man” in his position would have investigated and the manager did not, then he may be held to have Inquiry Notice of what he would have seen had he looked.
Show notice of facts sufficient to excite inquiry, and you may be able to establish duty. Show duty and no action, and you are on the road to showing liability.
Inquiry Notice Can Equal Actual Notice
The doctrine of Inquiry Notice punishes one who chooses to remain ignorant by serving as the legal equivalent of actual notice. Strother v. Lexington County Recreation Com’n, 332 S.C. 54, 64, 504 S.E.2d 117, 122 (1998). Since at least the 1800s, our Supreme Court has repeatedly determined that “[w]hen a person has notice of such facts as are sufficient to put him upon inquiry, which, if pursued with due diligence, would lead to knowledge of other facts, he must be presumed to have knowledge of the undisclosed facts.” Norris v. Greenville, S. & A. Ry. Co., 111 S.C. 322, 97 S.E. 848, 850 (1919). “[I]f there are circumstances sufficient to put the party upon inquiry, he is held to have notice of everything…that inquiry…would certainly disclose.” City of Greenville v. Washington Am. League Baseball Club, 205 S.C. 495, 32 S.E.2d 777, 782 (1945).
Claiming Inquiry Notice
The foundation for proving Inquiry Notice is showing that the Defendant should have inquired given the situation. Such notice can be imputed to a defendant because his profession or position demands an inquiry, or because the Defendant had or should have had an inkling or a clue such that a reasonable person would have inquired further. South Carolina courts have applied Inquiry Notice to establish duty in a wide variety of scenarios over the years, including:
- Products Liability: A company’s general knowledge that refurbished wheel assemblies could explode created a duty to inspect them — that is, to inquire. Scott by McClure v. Fruehauf Corp., 302 S.C. 364, 369, 396 S.E.2d 354, 357 (1990).
- Insurance: An insured’s general comments to his agent about past kidney problems put the insurer on inquiry notice of the man’s serious health issues, barring the insurer from voiding the policy for failure to disclose. Huestess v. South Atlantic Life Ins. Co., 88 S.C. 31, 70 S.E. 403, 406 (1911).
- Mitigating hazards: Whether a neighbor’s warning to the Highway Department about falling trees amounted to inquiry notice was at least a question of fact in the plaintiff’s attempt to establish duty. Ford v. South Carolina Dept. of Transp., 328 S.C. 481, 488-489, 492 S.E.2d 811, 815 (Ct. App. 1997).
- Securities law violations: Public court filings about alleged corporate misdeeds put “reasonable” investors on inquiry notice that securities violations could be forthcoming. Latham v. Matthews, 662 F. Supp.2d 441, 455-456 (D. S.C. 2009).
Inquiry Notice can even be used defensively. For example, repeated reports of trouble with certain rebar put a plaintiff on inquiry notice of actionable defects, which started the clock running on the statute of limitations. Republic Contracting Corp. v. S.C. Dept. of Highways and Public Transp., 332 S.C. 197, 208, 503 S.E.2d 761, 767 (Ct. App. 1998). See also Burgess v. American Cancer Soc., 300 S.C. 182, 185, 386 S.E.2d 798, 799-800 (Ct. App. 1989) (Inquiry notice of a problem is sufficient to start the clock running under South Carolina’s discovery rule).
Inquiry Notice can provide circumstantial evidence of actual notice. Even if one lacks the facts to show actual knowledge, one may be able to cobble together enough evidence that, given the facts of the case, the other party should have investigated further. Thinking about this concept in advance can allow an attorney to tailor discovery and advance the case.
Proving Inquiry Notice
Inquiry notice can help defeat a motion for summary judgment on actual notice, as in an action for negligent entrustment against a rental car company that provided a car to a habitually bad driver who caused a collision. The Defendant moved for summary judgment and argued it was under no duty to check the driving record of the renter before handing him the keys. The plaintiff provided facts to show the jury could have determined the company was on Inquiry Notice about the bad driving record, and thus the company owed a duty to the public to not supply the driver with a car. Further, the plaintiff presented facts showing the company had Inquiry Notice about the feasibility of checking driving records.
First, the plaintiff showed Defendant knew the renter had rented a car following two collisions within a year. Defendant agreed had it known of renter’s driving record, it would not have rented the car. If the Defendant acted on the collision information and looked at state DMV records, used an electronic records check system, or even simply asked the driver about his record, the company would have discovered the driving record. “With actual knowledge of two prior collisions within a year, a jury may conclude Enterprise had facts sufficient to alert it or excite inquiry. It is a question for the jury to determine whether Enterprise acted reasonably light of the facts and circumstances then existing and known to it.”[i]
Second, the rental car company claimed it did not know that other companies routinely checked renters’ driving history. But industry publications, competitors’ web sites, newspaper articles, and even a flyer from the Federal Trade Commission showed that for years rental agencies were checking driving records to improve safety and reduce liability.
Third, the company claimed checking driving records was not economically feasible. However, several newspaper stories, competitor websites, and trade publications about the practice contradicted this assertion. A jury may not have agreed the Defendant had actual knowledge, but showing Inquiry Notice created a question of fact sufficient to defeat summary judgment. “Notice sufficient to put a person on inquiry need not be complete, but ‘[w]hatever is notice enough to excite attention and put the party on guard and call for inquiry is notice of everything to which such inquiry might have led.’”[ii]
Discovery of Inquiry Notice
To establish facts giving rise to Inquiry Notice, consider obtaining public records, newspaper articles, court filings, trade publications, and industry standards, or data showing facts the other party avoided or chose to ignore. Engage in discovery, including taking depositions, to establish that that had the other party known of the facts, it would have acted on them in a way that would have minimized or eliminated the harm to your client.
Proving Inquiry Notice is fact-specific and requires creative thinking about what clues were there to be seen and acted upon. Show facts that a reasonable person would act upon, and you have another method of establishing actual notice when the Defendant claims ignorance.
Mr. Kahn and Mr. Allison of Kahn Law Firm, LLP litigate cases involving professional and corporate negligence, medical malpractice, and catastrophic injuries. Learn more at www.kahnlawfirm.com or email the authors at firstname.lastname@example.org or email@example.com.
[i] Jones by Jones v. Enterprise Leasing Co.—Southeast, Order Denying Defendant’s Motion for Summary Judgment, p. 13 (Richland Co. Circuit Court Aug. 1, 2012). The complete order is available at https://www.kahnlawfirm.com/Blog/2014/January/Car-Rental-Company-Can-be-Liabile-for-Negligent-.aspx
[ii] Order at 21, citing 58 Am.Jur. 2d Notice § 15.
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