Onita Pacific Corp. v. Bronson Trustees

Charles Bronson’s trustees (Bronson) (defendants) owned the right to develop land owned by Betty Camomile. The debt to Camomile was to be paid as the lots were developed and sold, but lots could not be sold until development was completed. Bronson told Onita Pacific Corp. and others (collectively, Onita) (plaintiffs) that the monies Onita paid to purchase a share of the project would be used to pay down the debt to Camomile so that lots could be sold and the sale proceeds used to finance development. Onita borrowed funds to invest in the project. As it turned out, Bronson was wrong, and lots could not be sold before full development. As a result, there was no income for development or for repaying the money Onita had borrowed. Onita’s lender foreclosed on Onita’s interest in the transaction, causing the loss of Onita’s investment. Onita sued Bronson for negligent misrepresentation based on Restatement (Second) of Torts § 552, which provided that one who, in the course of his business, profession, employment, or other transaction in which he had a pecuniary interest, supplied false information to guide others in their business transactions and failed to exercise reasonable care in obtaining or communicating information could be held liable for pecuniary loss caused by others’ justifiable reliance upon the information. The jury returned a verdict for Onita. The trial court granted Bronson’s motion for a new trial. Reversing, the Oregon Court of Appeals held that Bronson’s conduct was actionable and that the verdict was supported by the evidence. Bronson petitioned the Oregon Supreme Court for review.