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Htaike v. Sein

Court of Appeals of Oregon

February 25, 2015

Thein HTAIKE and Naw Myint, Plaintiffs-Respondents, Cross-Appellants,
Rosalind SEIN, aka Daw Myint Myint Sein; Victor Sein; Sanda Altman; and Family Trust of Rosalind Sein, Defendants-Appellants, Cross-Respondents

Argued and Submitted November 7, 2013.

Page 528

Washington County Circuit Court C093264CV. Suzanne Upton, Judge.

Margaret H. Leek Leiberan argued the cause for appellants-cross-respondents. With her on the briefs was Jensen & Leiberan.

Emil R. Berg argued the cause for respondents-cross-appellants. With him on the briefs were Leonard D. DuBoff and The DuBoff Law Group, LLC.

Before Ortega, Presiding Judge, and Sercombe, Judge, and Hadlock, Judge.


Page 529


[269 Or.App. 286] Plaintiffs filed this action seeking recovery of over $200,000 on the general theory that defendants had secured a series of promissory notes at exorbitant interest rates from plaintiffs through loansharking. Over the years, plaintiffs paid substantial sums on those notes but, despite repeated requests from plaintiffs, defendants never gave them an accounting of how much they owed at any given time. Seven years after the first note was given, defendants issued past due notices, asserting that plaintiffs still owed more than $180,000 to defendants. At that point, plaintiffs stopped making payments, consulted an attorney, and brought an action alleging several claims for relief. Before trial, the trial court granted summary judgment to defendants on plaintiffs' claim for fraud and a claim brought under the Oregon Racketeer Influenced and Corrupt Organization Act (ORICO), ORS 166.715 - 166.735. After a bench trial, the court concluded that plaintiffs had proved claims for restitution, unjust enrichment, money had and received, and rescission, and entered judgment for plaintiffs awarding damages, prejudgment interest, attorney fees, costs, and an enhanced prevailing party fee. Defendants appeal, raising eight assignments of error, and plaintiffs cross-appeal, claiming that the trial court incorrectly granted summary judgment on plaintiffs' ORICO claim. We affirm on appeal, and reverse and remand on cross-appeal.


We state the facts in the light most favorable to plaintiffs, who prevailed at trial.[1] Fowler v. Cooley, 239 Or.App. 338, 340, 245 P.3d 155 (2010). The facts in this case are extremely convoluted, but an exhaustive history of the various loans and promissory notes involved in this case is not necessary to our resolution of the appeal and cross-appeal. Accordingly, we state the general background facts that are necessary to provide

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context to our analysis, and where necessary, we include additional facts that relate to specific assignments of error.

[269 Or.App. 287] To begin, all of the parties are Burmese immigrants who are connected through the Burmese community that exists in the United States. The parties' dealings began in February 2001 when plaintiffs, at the suggestion of defendant Sanda Altman, borrowed $40,000 from Altman's mother, defendant Rosalind Sein, for a down payment and improvements on a home in Beaverton. Plaintiffs knew Sein as a respected " elder" of the Burmese community who was a member of Buddhist monasteries in California. Plaintiffs also knew that Sein was in the business of lending money to other members of the Burmese community. To memorialize the loan, plaintiffs traveled to Sein's home in California, where they executed a promissory note to Sein. The terms of the note were 5 percent interest per month, compounded monthly, with monthly payments of $2,000 plus interest. Plaintiffs testified that the note was already prepared when they arrived and that they did not ask questions of Sein out of respect for her status as an elder and because they trusted her. The note was secured by a deed of trust to the home that plaintiffs had purchased, although Sein had told plaintiffs previously that she would not secure the note with a lien on the home.

Plaintiffs made their first payment of $4,000 to Sein three weeks later, and thereafter made payments ranging from $2,100 to $3,900 each month for the rest of 2001. In total, plaintiffs paid Sein $31,900 in 2001. Sein did not provide plaintiffs with receipts or any other documentation.

Plaintiffs' business experienced a downturn in late 2001, and they struggled to make payments to Sein throughout 2002. They missed some payments and made others late. In response, Sein informed plaintiffs that her business partner, " Linda," would " sue them" and " throw them in jail." After plaintiffs filed this action, Sein admitted that she had invented " Linda" as a method of dealing with borrowers who missed payments. In 2002, plaintiffs paid Sein $15,300, but Sein refused plaintiffs' requests for an accounting.

Plaintiffs' financial troubles persisted into 2003 and, in May of that year, they attempted to refinance their home through their mortgage company. The mortgage company informed plaintiffs that they could not refinance unless [269 Or.App. 288] Sein agreed to subordinate her interest in the property. Sein refused, but offered plaintiffs new terms on their existing debt to her. On her instruction, plaintiffs signed a new promissory note for $60,000 with an annual interest rate of 12 percent. Further, she informed them that the $60,000 was for the balance of the original $40,000 note, plus interest, penalties, and late fees. Sein rejected their requests for an accounting or other documentation to justify that figure, and explained that she was simply trying to negotiate on their behalf with " Linda." Plaintiffs made payments in 2003 totaling $11,095.

In 2004, plaintiffs borrowed an additional $20,000 from Sein to pay for a trip to Burma for a family funeral. They gave Sein a note for $20,000 at two percent interest per month, and the note was secured by another deed of trust to their home. Later in 2004, plaintiffs fell behind on their mortgage, and the bank threatened them with foreclosure. Plaintiffs worked out a repayment plan with the bank, but Sein informed them that " Linda" was demanding payment on the notes and that they would have to sell their home to satisfy their obligations. Sein also counseled plaintiffs that the house would need work before they put it on the market. Plaintiffs agreed to borrow an additional $40,000 from Sein to fix up the house. They gave Sein a note at two percent interest per month and a deed of trust to secure it.

Sein put Altman in charge of the home sale and dictated the asking price to plaintiffs. Plaintiffs received an offer at the asking price in June 2005. However, Altman informed plaintiffs that Sein would release her liens and allow the sale to close only if plaintiffs gave her an installment note for $70,000 with an annual interest rate of 24 percent. Plaintiffs signed the note and a trust deed. Both documents were backdated to December 2004.

After the sale closed, Sein received $74,420 from the proceeds. Before closing, Sein demanded

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that plaintiffs sign another installment note for $56,000 with five percent interest per month. She claimed that that note was for money that they still owed her, plus $10,000 for Altman's services related to the house sale. She threatened them with legal action and jail. In addition to the money that Sein [269 Or.App. 289] received from the sale, plaintiffs paid her $44,500 in 2005 and $34,400 in 2006. Again, all of plaintiffs' requests for an accounting were rebuffed.

In 2006, at the demand of Sein, plaintiffs gave five more notes to Sein ranging from $5,000 to $10,000 at five percent interest per month. Sein instructed plaintiffs to deposit the funds related to those notes into her account so that it would appear to " Linda" that plaintiffs had paid more than $34,400 that year. That pattern was repeated in 2007: plaintiffs paid Sein $39,600; Sein demanded that they give another $5,000 note. In 2007, Sein told plaintiffs that they could make reduced payments and that the new principal balance was $80,000. They made payments of $19,125 during 2008, but received a " past due" notice from defendant Victor Sein on June 5, 2008, that showed a balance of $187,400 and demanded payment of $7,933 within two weeks. On June 23, 2008, plaintiffs received another notice from Victor that showed a balance of $195,942 and demanded payment of $9,300 by July 7, 2008. At that point, plaintiffs stopped making payments, and sought the counsel of an attorney.

In June 2009, plaintiffs filed an action against defendants alleging an ORICO claim, as well as claims for restitution, declaratory judgment, unjust enrichment, money had and received, breach of fiduciary duty, and fraud. As the basis for their claims, plaintiffs alleged facts that demonstrated a pattern of threatening, manipulative, and deceitful behavior by defendants that induced plaintiffs to give a series of notes at exorbitant interest rates to Sein. Plaintiffs later amended their complaint to add a claim for rescission. They sought damages of $209,367 to account for money paid to defendants in excess of the principal that plaintiffs had actually received. Alternatively, plaintiffs sought a declaratory judgment that they owed no further obligation to defendants, or a judgment rescinding the notes because they were " defective in their formation." Plaintiffs alleged a right to reasonable attorney fees under ORICO.

Before trial, defendants moved for summary judgment, arguing that plaintiffs' claims for fraud, breach of fiduciary duty, and recovery under ORICO were barred [269 Or.App. 290] by the applicable statutes of limitations. Defendants contended that plaintiffs' claims for unjust enrichment, restitution, money had and received, and rescission were based on allegations that defendants had charged a usury rate, and that ORS 82.010(4) precluded any claim by plaintiffs seeking to recover interest that they had already paid to defendants because a borrower may use ORS 82.010(4) only as a defense in an action brought by a lender seeking to collect on the usurious note. Further, defendants maintained that ORS 82.010 provided plaintiffs an exclusive " remedy," such that no other provision in ...

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