Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

State v. Huttenbauer

Court of Appeals of Oregon

December 18, 2019

STATE OF OREGON, by and through its Business Development Department, Plaintiff-Appellant,
v.
Samuel HUTTENBAUER, Jr., an individual, Defendant-Respondent. Samuel HUTTENBAUER, Jr., an individual, Third Party Plaintiff,
v.
OREGON STATE UNIVERSITY and Robert McGorrin, Third Party Defendants.

          Argued and submitted May 17, 2019

          Marion County Circuit Court 17CV20969; Courtland Geyer, Judge.

          Christopher Page, Assistant Attorney General, argued the cause for appellant. Also on the briefs were Ellen F. Rosenblum, Attorney General, and Benjamin Gutman, Solicitor General.

          Shayna M. Rogers, argued the cause for respondent. Also on the brief were J. Michael Keane and Garrett Hemann Robertson PC.

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

         [301 Or.App. 333] Case Summary: Plaintiff appeals an order denying plaintiff's motion for summary judgment and granting defendant's motion for summary judgment. Plaintiff loaned money to defendant's company, and defendant guaranteed the loan in his personal capacity. Plaintiff brought this action to enforce that guaranty after the company defaulted on the loan. Defendant argued that the action to enforce the guaranty was time barred, and, alternatively, that the contract was avoidable, because defendant had been fraudulently induced to enter it. The trial court concluded that plaintiff's action was time barred because the guaranty was a negotiable instrument under ORS 73.0104, and therefore the claim to enforce the guaranty was subject to the limitation periods in ORS 73.0118, which had run. Held: The trial court erred in concluding that the guaranty was a negotiable instrument. A negotiable instrument must be, among other things, an unconditional promise to pay. The guaranty in this case was expressly conditioned on defendant's company defaulting on the loan. Because it was a conditional promise to pay, the guaranty was not a negotiable instrument and therefore the state's action to enforce the guaranty was not barred by the limitation periods in ORS 73.0118. Furthermore, there was no issue of material fact regarding defendant's fraud-in-the-inducement defense, and plaintiff was entitled to judgment on that defense as a matter of law. Therefore, the trial court erred in granting defendant's motion for summary judgment and in denying plaintiff's motion for summary judgment.

         [301 Or.App. 334] ARMSTRONG, P. J.

         Plaintiff, State of Oregon, through its Business Development Department, loaned money to defendant's company, High Pressure Research, LLC (HPR).[1] Defendant personally guaranteed the loan as the sole member of HPR. Plaintiff brought this action against defendant to enforce defendant's guaranty after HPR defaulted on the loan. The parties subsequently filed cross-motions for summary judgment. Defendant argued in his motion that the action was time barred, because the guaranty is a negotiable instrument under ORS 73.0104 and, therefore, plaintiffs claim to enforce the guaranty was subject to the limitation periods in ORS 73.0118, [2] which had run. The trial court granted defendant's motion after concluding that the guaranty was a negotiable instrument, that the ORS 73.0118 limitation periods applied to plaintiffs claim, and that plaintiffs action was therefore time barred. The court accordingly also denied plaintiffs motion for summary judgment and entered a judgment that dismissed plaintiffs guaranty claim.

         Plaintiff appeals the judgment of dismissal, assigning error to the trial court's rulings granting defendant's motion for summary judgment and denying plaintiffs motion. Plaintiff also appeals a subsequent supplemental judgment awarding defendant attorney fees and costs.

         Plaintiff contends that the trial court erroneously concluded that the guaranty is a negotiable instrument. As a matter of first impression, we agree with plaintiff that the guaranty is not a negotiable instrument as defined in ORS 73.0104 and is therefore not subject to the limitation periods in ORS 73.0118. We also conclude that the trial court erred in denying plaintiffs motion for summary judgment, because there was no dispute of material fact on plaintiffs [301 Or.App. 335] claim, and defendant failed to establish that there was a triable issue of fact on defendant's affirmative defense of fraud in the inducement. Consequently, plaintiff was entitled to judgment as a matter of law. Hence, we reverse and remand.

         The Business Development Department makes loans to start-ups, early-stage companies, and small businesses. See ORS 285B.O53. In 1998, plaintiff loaned $69, 500 to HPR to purchase equipment for HPR to use to preserve and package foods using high-pressure treatment. To document that loan, plaintiff and HPR executed a promissory note and a loan agreement. The loan agreement stated that the equipment would be stored at Oregon State University (OSU). Defendant signed both the promissory note and the loan agreement in his capacity as the chief financial officer of HPR. Under the terms of the promissory note and the loan agreement, HPR was to make 48 consecutive monthly payments beginning one month after the loan funds were disbursed and to pay any remaining balance on April 30, 2002. The promissory note specified that, in the event of default, "the entire unpaid principal balance of, and all unpaid accrued interest on, this Note may be declared to be immediately due and payable in the manner, upon the conditions and with the effect provided in the Loan Agreement."

         As a condition precedent to the disbursement of funds under the loan, the loan agreement required defendant to sign a "continuing, unconditional guaranty" of the HPR loan. Another clause in the loan agreement provided that "[n]o failure on the part of Lender to exercise, and no delay in exercising, any right, power, or privilege under this Agreement shall operate as a waiver thereof."

         As required by the loan agreement, defendant signed a guaranty agreement guarantying "payment of the existing and future indebtedness" of HPR to plaintiff. The guaranty expressly referenced the loan agreement in its recitals. The guaranty further stated:

"Guarantor guarantees prompt repayment when due of all amounts advanced in the past, or to be advanced in the future, by Creditor to Debtor, including but not limited to all amounts advanced or to be advanced under the Loan Agreement and the other Loan Documents. If [301 Or.App. 336] Debtor defaults in the payment of any such indebtedness, Guarantor will pay to Creditor or its order on demand, in any coin or currency that is legal tender in the United States at the time of payment, the amount(s) due.
"Guarantor also guarantees prompt and satisfactory performance by Debtor of all of the terms and conditions of the Note, Loan Agreement or other Loan Documents. If Debtor defaults in performance of its obligations under said Note, Loan Agreement or other Loan Documents, Guarantor shall pay to Creditor, in addition to the outstanding loan balance owed to Creditor by Debtor plus all unpaid accrued interest thereon, all damages, costs, and expenses that Creditor is entitled to recover from Debtor by reason of such default(s).
"Guarantor also shall pay to Creditor or its order on demand reasonable attorney fees and all costs and other expenses incurred by it in collecting the guaranteed indebtedness from Debtor or in enforcing this guaranty against Guarantor."

         The guaranty also included a clause stating that defendant would not be released from liability due to "[a]ny neglect, delay, omission, failure, or refusal of [plaintiff] to take or prosecute any action for the collection of the Note."

         HPR made no payments on the loan before the dissolution of HPR in 2002. Defendant, in his personal capacity, made payments to ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.