Date: Mon, 21 Apr 2003 16:09:16 -0600

From: Lewis Klar

Subject: Reasonable Reliance Case

I am having difficulty figuring out what the actual decision in AVCO was. At trial the negligent statement claim against AVCO succeeded, but the plaintiff was held 50% contributorily negligent. This judgment had the effect of reducing the plaintiff's obligations to AVCO under the mortgage covenant.

The plaintiff appealed the contributory negligence finding. The defendant AVCO did not cross-appeal from the decision holding it liable for negligent statement. Nevertheless, in response to the plaintiff's appeal it argued that the trial judge was wrong in holding it liable for negligent misrepresentation since the plaintiff's reliance was unreasonable and hence no duty was owed. The Court of Appeal agreed that the plaintiff's reliance was not reasonable and hence no duty was owed. It therefore dismissed the plaintiff's appeal re its own contributory negligence.

Question: did this holding automatically lead to the complete dismissal of the plaintiff's action for neg statement even though the defendant did not actually ever appeal this? Or does the original trial judgment stand, even though the Court of Appeal thought it was wrong?

I will have more on the merits of the argument later once I get this point clear.

Lewis Klar

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