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O'Kain v. Landress

Court of Appeals of Oregon

September 18, 2019

Alan N. O'KAIN; Victoria E. O'Kain; Cambridge Land Company, LLC; and Cambridge Land Company, II, LLC, Plaintiffs-Appellants,
v.
Sanford LANDRESS; Greene & Markley PC, an Oregon professional corporation; and Charles Markley, Defendants-Respondents.

          Argued and submitted December 12, 2017

          Clackamas County Circuit Court CV15090658 Michael C. Wetzel, Judge.

          Margaret H. Leek Leiberan argued the cause and fled the briefs for appellants.

          Nena Cook argued the cause for respondents. Also on the brief were Lori Irish Bauman and Ater Wynne LLP.

          Before Hadlock, Presiding Judge, and Egan, Chief Judge, and Mooney, Judge. [*]

         [299 Or.App. 418] Case Summary: Plaintiffs, two limited liability corporations and two individual plaintiffs, appeal from a judgment of the trial court dismissing with prejudice their legal malpractice claim against defendant attorneys and their law firm. Plaintiffs' claim arose out of advice defendants gave about the need to file for bankruptcy in advance of a state court's appointment of receivers to manage the corporate properties in foreclosure proceedings. Defendants moved for summary judgment on the grounds that plaintiffs' damages caused by the appointment of receivers were not reasonably foreseeable and that the individual plaintiffs were not defendants' clients. The individual plaintiffs moved for partial summary judgment on the ground that they were defendants' clients as a matter of law. The trial court granted defendants' motion and denied plaintiffs' motion. Plaintiffs assign error to both rulings. Held: The trial court erred in granting defendants' motion for summary judgment, because the evidence in the record on summary judgment gives rise to a genuine issue of material fact as to whether plaintiffs' damages resulting from the appointment of receivers were reasonably foreseeable to defendants. The record on summary judgment also creates a genuine issue of material fact that precludes summary judgment for defendants on the ground that defendants did not represent the individual plaintiffs. Those same facts require the conclusion that there was a genuine issue of material fact that precludes summary judgment for plaintiffs on plaintiffs' motion for partial summary judgment.

         Reversed and remanded.

         [299 Or.App. 419] EGAN, C. J.

         Plaintiffs Alan and Victoria O'Kain (the individual plaintiffs), Cambridge Land Company, LLC (Cambridge), and Cambridge Land Company II, LLC (Stoneridge) (together the LLC Plaintiffs), appeal from a judgment of the trial court dismissing with prejudice their legal malpractice claim against defendants Sanford Landress, Charles Markley, and their law firm, Greene & Markley. Plaintiffs assign error to the trial court's granting of defendants' motion for summary judgment on the claim and the trial court's denial of plaintiffs' motions for partial summary judgment on the issue whether defendants represented the individual plaintiffs as well as the LLC Plaintiffs. We conclude that the trial court did not err in rejecting the individual plaintiffs' motion for partial summary judgment, but erred in granting defendants' motion and therefore reverse.

         On review of cross-motions for summary judgment, we view the record for each motion in the light most favorable to the party opposing it to determine whether there is a genuine issue of material fact and, if not, whether either party is entitled to judgment as a matter of law. ORCP 47 C; Yartzoffv. Democrat-Herald Publishing Co., 281 Or. 651, 655, 576 P.2d 356 (1978); Vision Realty, Inc. v. Kohler, 214 Or.App. 220, 222, 164 P.3d 330 (2007).

         The LLC Plaintiffs were in the business of owning and managing the Stonebridge and Cambridge apartments in Salem, Oregon. The LLC Plaintiffs had defaulted on their loans and were subject to a foreclosure action in Marion County Circuit Court. The lender, Fannie Mae, sought the appointment of a receiver, and the court set a hearing date of September 27, 2013.

         Plaintiff Alan O'Kain is an attorney licensed to practice law in California. He was the person in control of both LLC Plaintiffs. Alan and his revocable living trust were the primary investors in Cambridge and the sole investors in Stonebridge.[1] Alan did not want to lose management of the properties, and he believed that the filing of [299 Or.App. 420] Chapter 11 bankruptcy on behalf of each LLC would stay the foreclosure proceeding and prevent the appointment of a receiver so that he could retain management and control of the properties, to allow him to preserve his existing and future equity. See 11 U.S.C. § 362(d) (providing for automatic stay of judicial proceedings upon filing of petition for bankruptcy).

         Alan is married to plaintiff Victoria O'Kain, who is an inactive member of the Oregon State Bar and a former associate attorney with Greene & Markley. Victoria O'Kain does not have a direct financial interest in or formal control of the LLC Plaintiffs.[2] Defendants are a law firm and attorney members of the firm who have extensive experience in insolvency law.

         In her declaration in opposition to defendants' motion for summary judgment and in support of plaintiffs' motion for partial summary judgment, Victoria O'Kain averred that she chose to consult defendants for advice about preserving the equity and managerial control of Stoneridge and Cambridge. In their declarations, the individual plaintiffs averred that defendant Markley had represented them on multiple occasions in the past and that, prior to meeting in person with defendants, plaintiffs had several telephone conversations with defendants in which they discussed their concern that a receiver appointed by the Marion County Circuit Court would represent only Fannie Mae's creditor interest in the properties and would not manage the properties so as to preserve Alan's equity.

         On September 25, 2013, two days before the scheduled hearing on the appointment of a receiver in the foreclosure action, the individual plaintiffs met with defendants Markley and Landress at the Greene & Markley firm. Plaintiffs' legal counsel in the foreclosure proceeding also attended. In their declarations, the individual plaintiffs stated that, at the September 25 meeting, defendant Landress advised plaintiffs not to worry about the appointment of a receiver in the foreclosure proceedings. He told them that, even if the state court appointed receivers, the [299 Or.App. 421] Bankruptcy Court in a later Chapter 11 bankruptcy proceeding would remove the receiver and return managerial control to Alan as the debtor in possession. Plaintiffs stated in their declarations that defendants advised plaintiffs to have their foreclosure counsel attend the receivership hearing before filing for Chapter 11 bankruptcy. Defendants also advised Alan not to restructure his personal investment interest in the LLCs before filing a Chapter 11 bankruptcy. The individual plaintiffs stated in their declarations that they believed at the September 25 meeting that defendants were representing them personally as well as the LLC Plaintiffs and were giving them advice on how to protect Alan's interest in the properties. Defendants did not tell plaintiffs at the September 25 meeting that they were representing only the LLC Plaintiffs. Alan relied on defendants' advice and did not have the LLC Plaintiffs file for Chapter 11 bankruptcy in advance of the receivership hearing.

         After the September 25 meeting, Alan signed a "retainer contract" providing that Green & Markley was retained "to represent [the LLC Plaintiffs] as legal counsel for research and advice concerning ...


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