United States District Court, D. Oregon, Medford Division
ABDUL JALEEL M. REDHA. aka A.J. REDHA, Plaintiff.
BENJAMIN B. ZARE, as an individual and as Trustee of the Zare Loving Trust dated Oct. 14, 1996, LINDA M. ZARE as an individual and as Trustee of the Zare Loving Trust dated Oct. 14, 1996, and REDHA CORPORATION, an Oregon Corporation Defendants.
OPINION & ORDER
D. CLARKE UNITED STATES MAGISTRATE JUDGE
matter comes before the Court on Defendants Benjamin B. Zare
("Mr. Zare") and Redha Corporation's (the
"Corporation") Motion for Protective Order to
Bifurcate Discover} ("Motion to Bifurcate") (#34)
and Defendant Linda M. Zare's ("Ms. Zare")
(collectively. "Defendants") Motion for Joinder
(#36) in the Motion to Bifurcate. For the reasons stated
below. Mr. Zare and Redha Corp.'s Motion to Bifurcate is
DENIED, and Ms. Zare's Motion for Joinder is DENIED as
action arises out of a failed business venture between
Plaintiff Abdul Jaleel M. Redha ("Redha") and the
Zares. See First Am. Compl. ("FAC"). In
1993, Redha, who knew the Zares because his brother was
married to Mr. Zare's sister, agreed with the Zares to
form the Corporation for the purpose of buying, developing,
and selling properties. FAC at ¶¶ 7, 8. They agreed
that Redha would be sole shareholder and receive 75% of the
net profit, while Mr. Zare would manage the Coiporation and
receive 25% of the net profit. FAC at ¶ 8.
lived in Kuwait and relied on the Zares to run the
Corporation in Redha's "best interests." FAC at
¶¶ 11, 12. Redha alleges that Mr. Zare repeatedly
told him that the Coiporation was not profitable. FAC at
¶ 13. The Corporation ultimately failed, but in 2016. a
business associate of Redha's visited Jackson County and
allegedly discovered evidence that the Corporation had
actually been profitable. FAC at ¶ 16. As a result of
this discovery, Redha alleges that the Zares fraudulently
misrepresented the profitability of the Corporation and
improperly retained funds and proceeds received in the
management of the Corporation. See FAC.
Defendants contend that, since events relevant Redha's
claims of fraud and misrepresentation took place roughly
20-25 years ago. those claims are presumptively time-barred.
Defendants argue that, because some claims may be
time-barred, discovery should be bifurcated for discovery and
summary judgment on timeliness issues before full discovery
as to the merits of Redha's claims. They argue that this
bifurcation as to timeliness issues would promote judicial
efficiency and reduce litigation expenses. Defendants
concede, however, that under Oregon law, the
''discovery rule" may be applicable to
determining the timeliness of Redha's fraud and breach of
fiduciary duty claims.
discovery rule governs the timeliness of claims of fraud and
breach of fiduciary duty. Cole v. Sunnyside Marketplace,
LLC, 212 Or.App. 509 (2007) (explaining that the
discovery rule generally applies to actions under §
12.110). "[T]he discovery rule does not require actual
discovery or knowledge of the claim but, instead, imputes to
the plaintiff the level of knowledge that an exercise of
reasonable care would have disclosed." Johnson v.
Multnomah Cty. Dep't of Cmty. Justice. 344 Or. 111,
118 (2008). The statutory time period begins to run when
"a plaintiff knows or, in the exercise of reasonable
care should know, that he or she has been injured and that
there is a substantial possibility that the injury was caused
by an identified person's tortious conduct."
Id. "For purposes of determining what facts a
plaintiff knows or should have known, 'the discovery rule
applies an objective standard-how a reasonable person of
ordinary prudence would have acted in the same or a similar
situation.'" Padrick v. Lyons, 277 Or.App.
455, 466, review denied, 360 Or. 26 (2016) (quoting
Kaseberg v. Davis Wright Tremaine, LLP, 351 Or. 270,
278 (2011)). Plaintiffs must "act diligently to discover
the relevant facts." Id. "Whether a
plaintiff has discovered an injury generally presents a
factual question for the jury, but the question is
susceptible to judgment as a matter of law if 'the only
conclusion a reasonable jury could reach is that the
plaintiff knew or should have known the critical facts at a
specified time and did not file suit within the requisite
time thereafter.'" Padrick, 277 Or.App. at
466 (quoting T.R. v. Boy Scouts of America, 344 Or.
282, 296 (2008)).
rely on Interstate Prod. Credit Ass'n v.
Fireman's Fund Ins. Co., 1988 WL 121240 (D. Or.
1988) to support their argument that discovery should be
bifurcated to resolve timeliness issues before moving to the
merits. In that case, the court was considering the issue of
coverage with regard to a bond issued to insure IPCA against
losses incurred through dishonesi or fraudulent acts of IPCA
employees. Interstate, 1988 WL 121240, at *1. The
court granted bifurcation in that case, stating that
"[bifurcation of coverage issues is likely to promote
judicial efficiency and minimize litigation expenses for both
case, bifurcation of timeliness issues is not likely to
promote judicial efficiency, nor minimize litigation expenses
for both parties. To be disposed of at the summary judgment
stage, a timeliness issue governed by the discovery rule must
present facts to which "the only conclusion a reasonable
jury could reach is that the plaintiff knew or should have
known the critical facts at a specified time and did not file
suit within the requisite time thereafter."
T.R., 344 Or. at 296. In this case, the critical
facts relevant to the timeliness issue necessarily include
some facts relevant to the substantive fraud claims. The
question of when Redha knew, or reasonably should have known
about the alleged fraud, implicates the circumstances
surrounding the fraud; functionally, it necessitates inquiry
into the substantive allegations in determining the
reasonableness of Redha's prolonged ignorance of the
alleged fraud. As a result, a motion for summary judgment as
to timeliness would require at least some discovery into the
substantive allegations. Therefore, while bifurcating
discovery as to timeliness would be possible, it is likely
more efficient in this case to continue discovery on both the
timeliness issue and the merits of the substantive claims.
reasons stated above, Mr. Zare and the Corporation's
Motion to Bifurcate is DENIED, and Ms. Zare's Motion for
Joinder is DENIED as moot. The Court requests the parties to
confer in person or by phone about ...