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Atkeson v. T & K Lands, LLC

Court of Appeals of Oregon

August 28, 2013

GREGORY G. ATKESON, Plaintiff-Appellant Cross-Respondent,
T & K LANDS, LLC, an Oregon limited liability company; TOM SKEELE, an individual; and KIMBERLEE SKEELE, an individual, Defendants-Respondents Cross-Appellants, and T. R. HUNTER REAL ESTATE, INC., an Oregon corporation, et al., Defendants.

Argued and submitted on November 28, 2012.

Lane County Circuit Court 160916234, Charles D. Carlson, Judge.

Steven E. Turner argued the cause and filed the briefs for appellant-cross-respondent.

William H. Sherlock argued the cause for respondents-cross-appellants. With him on the answering and cross-opening brief was Hutchinson, Cox, Coons, DuPriest, Orr & Sherlock, P.C. With him on the reply brief was Hutchinson, Cox, Coons, Orr & Sherlock, P.C.

Before Schuman, Presiding Judge, and Wollheim, Judge, and Hadlock, Judge.


Plaintiff, a dissatisfied purchaser of land, sued defendants--the LLC from which he purchased the property and two of the LLC's members--for rescission of the land-sale contract.[1] The trial court granted summary judgment to defendants and awarded them costs and attorney fees. Plaintiff appeals, arguing that disputed issues of fact preclude the entry of summary judgment in defendants' favor. Plaintiff also contends that the trial court erred in granting defendants' motion to compel discovery of certain material that plaintiff asserts was subject to an attorney-client privilege. Defendants cross-appeal, challenging the trial court's decision to award them less than the full amount of attorney fees requested. We reject without discussion the arguments raised in defendants' cross-appeal and, for the reasons set forth below, also reject the arguments raised by plaintiff on appeal. Accordingly, we affirm.

Most of the facts pertinent to our analysis are undisputed, but where there is a disagreement, we describe the facts in the light most favorable to plaintiff, the party opposing summary judgment. See Jones v. General Motors Corp., 325 Or 404, 420, 939 P.2d 608 (1997) (describing summary judgment standard). In 2008, plaintiff searched for property on which he could build a vacation home and, during the course of that search, learned of a lot owned by defendant T & K Lands. A flyer described that lot, which abutted Siltcoos Lake in Dunes City:

"Approx. 4 acre lakefront lot with a beautiful, cleared home site. The well is in, septic approved, and it has all underground utilities. Lot is graced by mature trees, a small steelhead/salmon stream, bridges, and a large covered deck. A wide, level nature trail goes back to the lake. Gated community of 8 homes is still under development."

That flyer included pictures of those developments, which plaintiff described as follows:

"[T]here was a fence installed along the northern border of the property, there was a gazebo surrounded by paving stones on the bank of the creek, there was a large lawn area extending to the banks of the creek, there were two bridges spanning the creek that ran across the property in two locations, and there was a manicured trail leading through the woods to the shores of Siltcoos Lake."

Plaintiff decided to buy the lot, but he hired attorneys to research the property before he purchased it. Following an investigation by one of those attorneys, Weatherhead, the parties closed on the sale. In their purchase agreement, the parties acknowledged that plaintiff was "purchasing [the] property in 'as is' condition." The agreement included a statutory warranty deed urging plaintiff to research the permissible uses of the property.[2] The agreement also stated that plaintiff's purchase was subject to, among other things, his "review and approval of all zoning and other land use laws, ordinances, restrictions and regulations that affect the development of the property."

Plaintiff asserts that, shortly after the sale was finalized, he discovered certain conditions that restricted the ways in which he could use the property, including that (1) the property sat within a wetland inventory, so plaintiff needed a wetland delineation to determine whether he could build a home, (2) the bridges and gazebo had been built without required permits, (3) some improvements violated a 50-foot riparian setback from a creek on the property, and (4) the nature trails had been installed in wetland areas. Moreover, Dunes City declared that the improvements on the property were nuisances that plaintiff had to cure. Consequently, the city ordered plaintiff to remove the fence, lawn, paving stones, gazebo, and bridges; he also had to replant native vegetation along the creek. Plaintiff made those changes "at substantial personal expense." According to plaintiff, "[a]t no time before [he] purchased the subject property" did defendants or Weatherhead--or anybody else--inform him about the wetlands or the other conditions described above.

After he learned of what he deemed "the full extent of the problems with the property, " plaintiff asked defendant T & K Lands to rescind the agreement, and he also instituted a malpractice claim against Weatherhead. When the company declined his request for rescission, plaintiff initiated this litigation. Almost a year later, the Oregon Department of State Lands released its wetland delineation report for the property, which established that the wetlands would not prevent plaintiff from building a vacation home.

Plaintiff's complaint included a single claim for rescission against defendant T & K Lands, which encompassed three counts representing alternative bases for relief: mutual mistake, innocent misrepresentation, and intentional misrepresentation. Plaintiff also named two of T & K Lands' members as defendants, arguing that they had alter ego and direct liability. According to plaintiff, he had relied on defendants' affirmative misrepresentations and material omissions in deciding to purchase the property. Plaintiff also asserted, alternatively, that all parties had held mistaken beliefs about the property that "were so material that--had the parties known the truth--the contract would not have been made." Plaintiff insisted that Weatherhead had not told him about the problems with the property, despite having been hired to perform due diligence. For all of those reasons, plaintiff claimed, he was entitled to rescission of the land-sale contract.

During pretrial discovery, defendants sought "[a]ny and all documents relating to due diligence investigation of the disputed property prior to plaintiff receiving title * * *, " and, at plaintiff's deposition, asked him about research that had been performed by Weatherhead, who no longer represented plaintiff. Plaintiff initially declined to produce the documents or to answer the questions, asserting his attorney-client privilege. Defendants then moved to compel production of communications between plaintiff and Weatherhead, as well as deposition answers from plaintiff. In ...

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