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Payne v. Kersten

Court of Appeals of Oregon

April 18, 2018

Myron Dale PAYNE, individually, and as Trustee of the Payne Living Trust, Plaintiff-Appellant,
v.
Lee D. KERSTEN, Defendant-Respondent.

          Argued and submitted September 27, 2016

          Lane County Circuit Court 161224041; Josephine H. Mooney, Judge.

          Terrence Kay argued the cause and fled the briefs for appellant.

          Janet M. Schroer argued the cause for respondent. With her on the brief were Ruth C. Rocker and Hart Wagner LLP.

          Before DeHoog, Presiding Judge, and Hadlock, Judge, and Aoyagi, Judge. [*]

         Case Summary: Plaintiff, individually and as trustee of the Payne Living Trust, fled an action against defendant, his former attorney, for negligence and breach of fiduciary duty. The trial court granted summary judgment in favor of defendant. The trial court applied issue preclusion to conclude that the judgment in a separate action between plaintiff and his son established that, even if defendant was negligent, he did not cause any damages to plaintiff. The trial court also ruled that plaintiff could not pursue claims on behalf of the trust or its beneficiaries. On appeal, plaintiff assigns error to both aspects of the court's ruling. Held: The trial court erred in granting summary judgment on plaintiff's individual claims based on issue preclusion because the summary judgment record did not conclusively establish that the court's findings and conclusions in the first action entirely foreclosed plaintiff from proving damages in this action. The trial court did not err in dismissing plaintiff's claims to the extent they were brought on behalf of the trust and its beneficiaries.

         [291 Or.App. 437] AOYAGI, J.

         In this legal malpractice case, plaintiff, individually and as trustee of the Payne Living Trust, filed an action against his former attorney for alleged negligence and breach of fiduciary duty. The trial court granted summary judgment in favor of defendant. The court applied issue preclusion to conclude that the judgment in a separate action between plaintiff and his son established that, even if defendant was negligent, he did not cause any damages to plaintiff. The court also ruled that plaintiff could not pursue claims on behalf of the trust or its beneficiaries. Plaintiff assigns error to both aspects of the court's ruling. For the reasons that follow, we agree with plaintiff that the record is inadequate to conclusively establish issue preclusion and, accordingly, reverse and remand the judgment in that regard. Otherwise, we affirm.

         We state the facts, which are largely undisputed, in the manner most favorable to plaintiff as the party who opposed summary judgment. Wyers v. American Medical Response Northwest, Inc., 360 Or. 211, 214, 377 P.3d 570 (2016).

         Prior to filing this action, plaintiff filed an action against his son Clayton (the Clayton action). Plaintiff and his son had been business partners and, upon dissolution of their partnership, distributed their partnership assets, including certain real property. At the time, plaintiff was the trustee of the Payne Living Trust, which "includes" the Family Trust.[1] Plaintiff filed the Clayton action both individually and in his capacity as trustee of the Payne Living Trust. Essentially, plaintiff took issue with the distribution of property upon dissolution of the partnership with his son and alleged, among other things, that certain property should have been distributed to him personally rather than transferred to the Family Trust. Plaintiff's [291 Or.App. 438] son counterclaimed that plaintiff had breached his fiduciary duties to the Family Trust by failing to fund the trust properly, keep adequate records, and use the trust assets properly.

         After a bench trial in the Clayton action, the trial court denied plaintiff's claims against his son, declared the value of the Family Trust's assets, and concluded that the partnership had been dissolved and wound up. As to the counterclaims, the court ruled that plaintiff had failed to act impartially in inventorying, managing, and distributing the property of the Family Trust and had failed to keep adequate records. Consequently, it removed plaintiff as trustee of the Family Trust, but otherwise denied the son's counterclaims. The court did not award damages to either party but authorized the Family Trust to pay up to $50, 000 in attorney fees to each party.

         In the meantime, plaintiff filed this action against defendant. As he in the Clayton action, plaintiff brought his claims both individually and as trustee of the Payne Living Trust. He asserted two claims against defendant-(1) legal malpractice, and (2) breach of fiduciary duty-based on legal advice that defendant gave plaintiff regarding personal matters and trust matters. Plaintiff alleged that defendant negligently advised him on a variety of topics, including the ownership of real property as among him, his son, and three trusts; the value of certain real and personal property; the division and deeding of real property; the administration of the Family Trust and related real property issues; and an agreement between plaintiff and his son regarding plaintiff's home.

         After the trial court issued its decision in the Clayton action, defendant moved to amend his answer in this action to add the defense of issue preclusion, which motion the court granted. Defendant also moved for summary judgment. Defendant argued that plaintiff, who had been removed as trustee, lacked authority to pursue claims on behalf of the trust. As for the claims brought in plaintiff's individual capacity, defendant argued that the outcome of the Clayton action conclusively established that, regardless of any alleged negligence or breach of fiduciary duty on [291 Or.App. 439] defendant's part, plaintiff had not suffered any damages and therefore could not prevail against defendant as a matter of law.

         The trial court granted defendant's motion. As stated in the court's written order, "The Court and counsel agreed that Defendant's pending Motion for Summary Judgment (filed May 7, 2014) is to be ruled upon as if it ...


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