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Smith v. Central Point Pawn, LLC

Court of Appeals of Oregon

February 27, 2019

David J. SMITH, Plaintiff-Appellant,
v.
CENTRAL POINT PAWN, LLC, Defendant-Respondent.

          Submitted March 2, 2018

          Jackson County Circuit Court 14CV20545 Timothy C. Gerking, Judge.

          David J. Smith fled the brief pro se.

          Kendell H. Ferguson and Sorenson, Ransom, Ferguson & Clyde, LLP, filed the brief for respondent.

          Before Armstrong, Presiding Judge, and Tookey, Judge, and Shorr, Judge.

         Case Summary:

         Plaintiff appeals from an order granting summary judgment to defendant, Central Point Pawn, LLC (CPP). One of CPP's member-managers had borrowed money from plaintiff purportedly to be used for CPP's business operations. Plaintiff sued after CPP failed to repay the loan. CPP moved for summary judgment under ORS 63.140(1)(a), arguing that the loan had not been arranged in the ordinary course of business and that the other member-managers had not authorized the loan. The trial court granted CPP's motion, and plaintiff appeals. Held: The trial court erred. Based on the evidence in the summary judgment record, there is a genuine issue of material fact whether CPP incurred the debt from plaintiff's loan in the ordinary course of business.

         Reversed and remanded.

         [296 Or.App 342] SHORR, J.

         Plaintiff sued defendant, Central Point Pawn, LLC (CPP), after CPP failed to repay a loan from plaintiff that was arranged by a member-manager of CPP, without the knowledge or approval of the other member-managers. CPP moved for summary judgment, maintaining that it was not responsible for repaying the loan because it was not made in the ordinary course of business and not approved by a majority of CPP's member-managers. The trial court granted CPP's motion.[1] For the reasons explained below, we reverse and remand.

         In reviewing a trial court's summary judgment ruling, we view the evidence in the light most favorable to the nonmoving party, here plaintiff, to determine whether there is a genuine issue of material fact that precludes summary judgment. Rush v. Corvallis School District 5O9J, 291 Or.App. 252, 253, 419 P.3d 746 (2018). There is no genuine issue of material fact if, "based upon the record before the court viewed in a manner most favorable to the adverse party, no objectively reasonable juror could return a verdict for the adverse party on the matter that is the subject of the motion for summary judgment." ORCP 47 C. We state the facts and apply the law consistently with that standard.

         CPP is a member-managed limited liability company (LLC) that owns and operates a pawn shop in Oregon. Under its operating agreement, the purpose of CPP is to "engage in any Pawnbroker act or activity for which a limited liability company may be organized under the laws of the state of Oregon."[2] The operating agreement does not [296 Or.App 343] specify any procedures for borrowing money that will be used for CPP's business operations.

         In early 2011, plaintiff met with Bogart, a member-manager and CPP's registered agent, and proposed to extend a line of credit to CPP Bogart accepted the loan on behalf of CPP and borrowed $48, 800 over the next six months. In a declaration submitted to the trial court, Bogart averred that the loan was "needed for and used in the operation of CPP's pawn shop." Based on the summary judgment record, plaintiff and Bogart did not memorialize the loan agreement in a written contract, but evidence of the loan was furnished to CPP's tax preparer. Undisputed evidence in the summary judgment record shows that Bogart did not consult with CPP's other member-managers regarding the loan, and the other member-managers only learned of the loan when plaintiff brought this action against CPP to recover the balance due.

         Plaintiff brought the underlying lawsuit when CPP failed to repay the loan.[3] CPP argued that it was not bound by the loan agreement between Bogart and plaintiff. In its motion for summary judgment, CPP maintained that the debt owed to plaintiff was not incurred in the ordinary course of business-because, as CPP put it, pawnbrokers are "in the business of loaning money-not being debtors"- nor was the loan approved by a majority of the member-managers. During the summary judgment hearing, CPP took the position that a loan from a bank or other "standard lender" would ...


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