MERCHANTS PAPER CO., an Oregon corporation, Plaintiff-Appellant,
Paul W. NEWTON, Defendant-Respondent.
and submitted January 4, 2018.
Multnomah County Circuit Court 15CV04306. Eric J. Neiman,
Judge pro tempore.
Zachariah H. Allen argued the cause for appellant. With him
on the briefs were Bonnie Richardson and Folawn Alterman
& Richardson LLP.
Stephen P. Rickles argued the cause for respondent. With him
on the brief were Martin W. Jaqua and The Rickles Law Firm,
James, Presiding Judge, and DeVore, Judge, and DeHoog, J.
Or.App. 498] Case Summary: Plaintiff filed suit against its
former attorney for professional negligence in advising
plaintiff concerning a contract. The trial court found for
defendant on summary judgment, concluding that
plaintiff's claim was barred by the statute of
limitations, because plaintiff knew of the existence of all
elements of the claim-including the existence of harm
measurable in damages-more than two years prior to the fling
of the malpractice suit. On appeal, plaintiff assigns error
to the trial court's grant of summary judgment, arguing
that, because it incurred damages only as a result of
terminating the contract, the operative time when it knew, or
should have known, that defendant's conduct harmed it in
a measurable way was when plaintiff was sued for breach of
contract and retained new counsel. Held: The trial
court erred in granting summary judgment. On this record, in
the light most favorable to plaintiff, the termination of the
contract came as a result of defendant's advice that
ending the contract would have no negative consequences for
plaintiff. A reasonable trier of fact could determine that
the operative time for assessing harm was when plaintiff
learned from new counsel that defendant's assurances of
escaping the contract unscathed were incorrect, which
occurred within the statute of limitations.
Or.App 499] JAMES, P. J.
a corporation, filed suit on February 24, 2015, against its
former attorney, defendant, for professional negligence in
advising the company concerning a distribution contract. The
trial court found for defendant on summary judgment,
concluding that plaintiff's claim was barred by the
statute of limitations, because the company knew of the
existence of all elements of the claim-including the
existence of harm measurable in damages-more than two years
prior to the filing of the malpractice suit. We reverse and
state the facts adduced by the parties on summary judgment in
the light most favorable to the nonmoving party, in this
case, plaintiff. Outdoor Media Dimensions, Inc. v. State
of Oregon, 331 Or. 634, 638, 20 P.3d 180 (2001);
Hampton Tree Farms, Inc. v. Jewett, 320 Or. 599,
613, 892 P.2d 683 (1995). In early 2012, Northwest Cups, a
company that would later become Pact Trading Group (Pact),
approached plaintiff, Merchants Paper Co., about entering an
exclusive distribution deal for Oregon for its paper cup
products. Pact had been plaintiffs competitor in the
wholesale paper cup business. Under the proposed deal, Pact
would withdraw from direct customer sales and instead serve
as an intermediary between plaintiff's and Pact's
paper cup suppliers in Asia.
requested defendant review the distribution contracts, and
defendant responded with comments and some proposed drafting
changes. However, at the time of negotiations, defendant did
not call to plaintiff's attention that the agreements
included a unilateral opt-out clause, which gave Pact the
right to terminate the contract without cause on 30 days'
notice, but provided no corresponding right for plaintiff to
terminate the deal in a similar manner.
in the negotiations, Pact and plaintiff sought to expand the
proposed deal beyond Oregon to include paper cup sales in
Washington. A second, proposed contract was drafted-this one
for Washington-and defendant reviewed that contract as well.
The Washington contract contained all the terms of the Oregon
contract, including the unilateral [292 Or.App 500] opt-out
provision. It also contained the same minimum purchase
requirements; thus, signing the two agreements would commit
plaintiff to two mandatory minimum purchase orders instead of
March 1, 2012, once the final agreements had been drafted,
plaintiff forwarded them to defendant for defendant to review
and give plaintiff his "okay." On March 3, 2012,
defendant informed plaintiff that the agreements "look
OK to me."
agreements became effective April 1, 2012. Very quickly after
Pact and plaintiff entered into the agreements, issues began
to arise, such as Pact's former customers'
unwillingness to buy from plaintiff and problems around lead
times and shipping. In June of 2012, plaintiff ordered over
$64, 000 of product from Pact, pursuant to its purchase
obligations under the contract. Plaintiff made no further
purchases after June. On January 23, 2013, Pact contacted
plaintiff asking it to place its contractually obligated
order. However, plaintiff had substantial inventory that
remained unsold. Plaintiff emailed Pact, saying that its
inventory was too high to consider another order from Pact at
that time and ended the email with "* * * I think we are
going to terminate our agreement." Pact responded that
termination was not possible.
January 25, 2013, plaintiff emailed defendant informing
defendant that plaintiff had tried to terminate the
distribution agreements and commented that plaintiff had
noticed that "* * * we neglected to say we also have the
right to terminate." Plaintiff also told defendant that
Pact was unwilling to allow plaintiff to walk away from the
agreements, but that plaintiff did not see "anything
that shows what relief if any they can get if we do not live
up to our agreement and are found ...