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Westerlund v. Murphy Overseas USA Astoria Forest Products, LLC

United States District Court, D. Oregon

January 29, 2018

DAVID WESTERLUND and WESTERLUND LOG HANDLERS, LLC, Plaintiffs,
v.
MURPHY OVERSEAS USA ASTORIA FOREST PRODUCTS, LLC; MURPHY OVERSEAS U.S.A. TIMBER AND LAND DEVELOPMENT, LLC; MURPHY OVERSEAS U.S.A. HOLDINGS, LLC, and DENNIS J. MURPHY, Defendants.

          George L. Kirklin, Stephen C. Thompson, and Kristen Chambers, Kirklin Thompson LLP, Of Attorneys for Plaintiffs.

          Michael E. Haglund and Michael K. Kelley, Haglund Kelley LLP, Of Attorneys for Defendants.

          OPINION AND ORDER

          Michael H. Simon United States District Judge

         Three consolidated lawsuits arise out of business relationships between Plaintiffs and Defendants. The Plaintiffs in the lead action are David Westerlund and Westerlund Log Handlers, LLC (“WLH”). They are collectively referred to as “the Westerlund Parties.” The Defendants in the lead action are Murphy Overseas USA Astoria Forest Products, LLC (“AFP”); Murphy Overseas U.S.A. Timber and Land Development, LLC; Murphy Overseas U.S.A. Holdings, LLC; and Dennis J. Murphy. They are collectively referred to as “the Murphy Parties.” Before the Court is the Murphy Parties' motion for partial summary judgment. For the reasons that follow, the Murphy Parties' motion is granted in part and denied in part.

         STANDARDS

         A party is entitled to summary judgment if the “movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). The moving party has the burden of establishing the absence of a genuine dispute of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). The court must view the evidence in the light most favorable to the non-movant and draw all reasonable inferences in the non-movant's favor. Clicks Billiards Inc. v. Sixshooters Inc., 251 F.3d 1252, 1257 (9th Cir. 2001). Although “[c]redibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the facts are jury functions, not those of a judge . . . ruling on a motion for summary judgment, ” the “mere existence of a scintilla of evidence in support of the plaintiff's position [is] insufficient . . . .” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252, 255 (1986). “Where the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no genuine issue for trial.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (citation and quotation marks omitted).

         BACKGROUND

         David Westerlund and Roger Nance are, respectively, the 60 percent and 40 percent owners of WLH.[1] WLH was in the business of procuring, processing, and selling logs for export.

         AFP purchases logs and resells them on the international market. In January 2014, WLH and AFP entered into a written contract (the “Log Handling Agreement”) under which WLH agreed to provide log handling and processing services to AFP. The Westerlund Parties allege that they also entered into an oral joint venture partnership with the Murphy Parties in approximately December 2013. At the time of the alleged oral partnership agreement, WLH was operating under a contract to provide log handling services to China National Building Materials Import and Export Corporation (“China National”).[2] The Westerlund Parties allege that the written Log Handling Agreement was intended to create the false appearance of an arms-length transaction, even though the two parties were in fact working as partners at the time. According to the Westerlund Parties, this was done to deceive China National. The Murphy Parties deny the existence of any deception or secret partnership.

         The Westerlund Parties assert the following claims: (1) breach of partnership agreement; (2) breach of the Log Handling Agreement; (3) breach of contract; (4) fraud; (5) quantum meruit; (6) unjust enrichment; and (7) promissory estoppel.[3] The Murphy Parties seek partial summary judgment. First, the Murphy Parties argue that the parol evidence rule bars Plaintiffs' allegations of an oral agreement inconsistent with the written Log Handling Agreement. Thus, the Murphy Parties argue, Plaintiffs' claims for breach of partnership agreement, breach of contract (which are essentially the same claims), and promissory estoppel should be dismissed.[4] Second, the Murphy Parties seek partial summary judgment against all claims for lost profits alleged by Plaintiffs, arguing that such claims cannot be proven with the requisite reasonable certainty and without speculation.

         DISCUSSION

         A. Claims Relating to Alleged Secret Oral Partnership

         The Murphy Parties argue that the Westerlund Parties' claims of breach of partnership agreement, and breach of contract relating to the alleged partnership agreement, rely on the Westerlund Parties' assertion that there was a secret, unwritten partnership agreement between the Westerlund and Murphy Parties. The Murphy Parties argue, first, that evidence of a secret, unwritten partnership agreement is barred by the parol evidence rule. Second, the Murphy Parties argue that, even if the Court could consider the Westerlund Parties' evidence of a secret agreement, there is insufficient evidence to create a genuine issue on the existence of such a partnership. Therefore, the Murphy Parties argue, the Westerlund Parties' claims relying on this secret, unwritten partnership agreement should be dismissed.

         Despite its name, “[t]he parol evidence rule is a substantive, not an evidentiary, rule because ‘it declares that certain kinds of fact are legally ineffective in the substantive law.” Wirth v. Sierra Cascade, LLC, 234 Or.App. 740, 771 (2010) (quoting Abercrombie v. Hayden Corp., 320 Or. 279, 286 (1994)). Oregon's parol evidence rule is codified in § 41.740 of the Oregon Revised Statutes (“ORS”):

When the terms of an agreement have been reduced to writing by the parties, it is to be considered as containing all those terms, and therefore there can be, between the parties and their representatives or successors in interest, no evidence of the terms of the agreement, other than the contents of the writing, except where a mistake or imperfection of the writing is put in issue by the pleadings or where the validity of the agreement is the fact in dispute. However this section does not exclude other evidence of the circumstances under which the agreement was made, or to which it relates, as defined in ORS 42.220, or to explain an ambiguity, intrinsic or extrinsic, or to establish illegality or fraud. The term “agreement” includes deeds and wills as well as contracts between parties.

Or. Rev. Stat. § 41.740. ORS § 42.220, in turn, provides:

In construing an instrument, the circumstances under which it was made, including the situation of the subject and of the parties, may be shown so that the judge is placed in the position of those whose language the judge is interpreting.

Or. Rev. Stat. § 42.220.

         “Oregon courts have never read [ORS § 41.740] in a literal manner, but have instead ‘treated the statute as a codification of the common law parol evidence rule.'” Wirth, 234 Or.App. at 771 (quoting Abercrombie, 320 Or. at 286). The Oregon Supreme Court has summarized the parol evidence rule as meaning “that a binding, completely integrated, written agreement supersedes or discharges all agreements, written or oral, that were made before the completely integrated agreement, to the extent that the prior agreements are within the scope of the completely integrated agreement.” Abercrombie, 320 Or. at 286 (citing Restatement (Second) of Contracts § 213(2) (1979)). Furthermore, “a binding, partially integrated, written agreement supersedes or discharges all agreements, written or oral, that were made before the partially integrated agreement, to the extent that the prior agreements are inconsistent with the partially integrated agreement.” Id. at 286-87s (citing Restatement (Second) of Contracts § 213(1) (1979)) (emphasis added). Thus, regardless of whether a written agreement is completely or partially integrated, prior oral agreements may not be considered to contradict the written terms. State ex rel. Cipriano v. Triad Mech., Inc., 144 Or.App. 106, 114-15 (1996) (citing Abercrombie, 320 Or. at 288-91 for the proposition that “the court need not address the question of whether an integrated writing is completely or partially integrated after finding that the asserted parol evidence is inconsistent with an express term of the writing”).

         As an initial matter, “[t]he parol evidence rule does not prohibit the introduction of evidence extrinsic to a writing when the writing is not an integrated agreement.” Abercrombie, 320 Or. at 287. An agreement is integrated if “the parties intended [it] to be a final expression of some or all of the terms of the agreement.” Id. (citing Restatement (Second) of Contracts § 209 (1979)). This is “a question of fact for the court, ” for which a court may rely on all relevant evidence, including parol evidence. Id. at 288. The Westerlund Parties concede that the Log Handling Agreement was at least partially integrated.

         The parties dispute, however, whether the Log Handling Agreement was fully or only partially integrated. Regardless of whether it was fully or partially integrated, extrinsic evidence may not be admitted if it contradicts the terms of a written agreement. The Murphy Parties argue that the alleged secret, oral partnership agreement contradicts the Log Handling Agreement because the Log Handling Agreement expressly disclaims the creation of a partnership, which the Westerlund Parties argue was the subject of the purported oral agreement.[5]

         The Log Handling Agreement states: “It is not the intent of the parties to create a partnership or joint venture hereunder and no party to this agreement shall contend to the contrary.” The Agreement's integration clause provides:

         This agreement contains the entire agreement of the parties hereto with respect to the Astoria Forest Products logs that WHL will receive, process, store and transport for Astoria Forest Products and supersedes all prior understandings and agreements of the parties with respect to the subject matter hereof.

         The Westerlund Parties seek to present evidence that there was, in fact, a separate oral agreement that WLH ...


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