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Evergreen West Bus. Ctr., LLC v. Emmert

Court of Appeals of Oregon

October 29, 2014

EVERGREEN WEST BUSINESS CENTER, LLC, an Oregon limited liability company, Plaintiff-Respondent Cross-Appellant,
v.
TERRY W. EMMERT, Defendant-Appellant Cross-Respondent, and PREMIER WEST BANK, Impartial

Submitted on Remand March 31, 2014

Clackamas County Circuit Court. CV07020348. On remand from the Oregon Supreme Court, Evergreen West Business Center, LLC v. Emmert, 354 Or. 790, 323 P.3d 250 (2014) . Jeffrey S. Jones, Judge.

Stuart M. Brown and Wiles Law Group filed the briefs for appellant - cross-respondent.

John M. Berman and J. Rion Bourgeois filed the briefs for respondent - cross-appellant.

Before Wollheim, Presiding Judge, and Armstrong, Judge, and Schuman, Senior Judge.

OPINION

[266 Or.App. 692] SCHUMAN, P. J.

In this action for breach of fiduciary duty, plaintiff alleged two alternative forms of relief: damages as compensation for the breach, or imposition of a constructive trust whereby property obtained by virtue of the breach would be sold and the proceeds distributed to plaintiff's creditors and its members. With respect to the damages remedy, the jury returned a verdict in plaintiff's favor for $1 in economic damages and $600,000 in

Page 739

punitive damages. However, the trial court reduced the punitive damages award to $4 (based on a four-to-one ratio of punitive to economic damages), at which point plaintiff requested that the trial court instead impose the equitable remedy of a constructive trust. The trial court granted that request.

Plaintiff appealed, and defendant cross-appealed. In Evergreen West Business Center, LLC v. Emmert, 254 Or.App. 361, 375, 296 P.3d 545 (2012), we held that plaintiff had an adequate remedy for damages at law and was therefore not entitled to the equitable remedy of a constructive trust " simply because the jury returns a lesser verdict than requested." However, we also held that the trial court had erred in reducing the punitive damages award, so we remanded the case for further proceedings consistent with that conclusion. Id. at 385-86.

Plaintiff and defendant both sought review of our decision. The Supreme Court allowed review and reversed our decision regarding plaintiff's entitlement to a constructive trust. Evergreen West Business Center, LLC v. Emmert, 354 Or. 790, 323 P.3d 250 (2014). The court concluded that " the trial court properly permitted plaintiff to elect its equitable remedy" and, for that reason, the court " reinstate[d] * * * the constructive trust award." Id. at 792, 807. The court further concluded that, because plaintiff had pleaded its legal and equitable remedies in the alternative, the reinstatement of the equitable remedy meant that the " jury's damage award--including the punitive damage award--must be vacated." Id. at 806. Thus, the court held that the issues defendant raised [266 Or.App. 693] in its cross-petition regarding the damages award were moot.[1] Id.

Although the Supreme Court's decision obviated the need to address any issues related to plaintiff's damages claim, the court explained that the reinstatement of the constructive trust also put back in play two assignments of error that we had not reached regarding that equitable remedy. Id. at 805 n 4, 807. The first assignment, which was raised by defendant, was whether " he was entitled to a greater reimbursement than the trial court allowed" for the costs he had incurred in keeping and maintaining the property. Id. at 805 n 4. The second assignment, raised by plaintiff, was whether the trial court erred in ruling that punitive damages were not legally available on plaintiff's claim for a constructive trust. Id. at 806-07. So, rather than affirming the trial court's judgment, the Supreme Court remanded the case to us " for consideration, in light of [its] decision, of the parties' remaining assignments of error." Id. at 807.

We now consider those two remaining assignments of error, beginning with defendant's contention that " [t]he Trial Court erred by imposing a constructive trust that included terms that did not require reimbursement of Defendant for his costs incurred in keeping and maintaining the Property from the time he purchased the Property." As the Supreme Court explained, the facts stated in the light most favorable to plaintiff, the prevailing party at trial, Liles v. Damon Corp., 345 Or. 420, 423, 198 P.3d 926 (2008), are as follows:

" Plaintiff is a limited liability company that looked to defendant, who was one of its members, to save its property from foreclosure by a lender. Defendant did save the property from foreclosure by purchasing the loan and associated [266 Or.App. 694] encumbrance for his own benefit for $613,979.49. Defendant then foreclosed on the property himself, bought it at a foreclosure sale with a maximum ...

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