709 P.2d 246 (Or.App. 1985), A8303, Roach v. Mead

Docket Nº:A8303-01681; CA A32821.
Citation:709 P.2d 246, 76 Or.App. 83
Party Name:William ROACH, Respondent--Cross-Appellant, v. Kenneth E. MEAD, dba Berentson & Mead, Defendant-Cross-Respondent, David J. Berentson, dba Berentson & Mead, Appellants--Cross-Respondents.
Case Date:October 30, 1985
Court:Court of Appeals of Oregon
 
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Page 246

709 P.2d 246 (Or.App. 1985)

76 Or.App. 83

William ROACH, Respondent--Cross-Appellant,

v.

Kenneth E. MEAD, dba Berentson & Mead, Defendant-Cross-Respondent,

David J. Berentson, dba Berentson & Mead,

Appellants--Cross-Respondents.

A8303-01681; CA A32821.

Court of Appeals of Oregon.

October 30, 1985

Argued and Submitted Sept. 16, 1985.

Reconsideration Denied Dec. 20, 1985.

Page 247

[76 Or.App. 84] Emil R. Berg, Portland, argued the cause for appellant--cross-respondent David J. Berentson. With him on briefs was Hallmark, Griffith & Keating, Portland.

Stephen R. Frank, Portland, argued the cause for respondent--cross-appellant. On brief were Paul R. Duden and Tooze, Marshall, Shenker, Holloway & Duden, Portland.

No appearance for appellant--cross-respondent Kenneth E. Mead.

Before GILLETTE, P.J., and VAN HOOMISSEN and YOUNG, JJ.

[76 Or.App. 85] GILLETTE, Presiding Judge.

In this legal malpractice case, defendant Berentson (defendant), a lawyer, appeals a judgment holding him vicariously liable for common law negligence and for a violation of the Unlawful Trade Practices Act (UTPA) by defendant Mead, his former law partner. Plaintiff cross-appeals the trial court's action in striking his claims under the Oregon Securities Law. We reverse as to the UTPA claim and otherwise affirm.

Defendant and Mead became partners in 1979 and were so at all relevant times. Each had previously practiced separately; plaintiff had been a client of Mead's. After the formation of the partnership, plaintiff continued to rely primarily on Mead for legal services, except that defendant completed his 1980 and 1981 tax returns. In June, 1980, plaintiff sold a business and asked Mead's advice on how to invest $20,000 of the proceeds. Mead ultimately suggested that plaintiff loan him the money, promising to pay interest at 15 percent a year and to repay the principal within two years. He claimed to have a large amount of money coming to him before that time. Some months later Mead borrowed another $1,500, claiming to be in temporary financial trouble but still expecting some big money. Mead never paid anything on either loan and was eventually discharged from them in bankruptcy proceedings. 1 Although Mead is a named defendant in this case, the only real issue is whether defendant is liable as a partner for Mead's actions.

Although defendant argues otherwise, plaintiff's negligence claim is based on Mead's failure to give plaintiff adequate legal advice. There is expert and other testimony from which the jury could have found that plaintiff relied on Mead for legal advice concerning the loan, that a lawyer seeking a loan from a client would be negligent if the lawyer did not tell the client to get independent legal advice and that a lawyer advising a client about this particular loan would seek to secure it and would warn the client of the risks involved in providing a usurious interest rate. The jury thus could have [76 Or.App. 86] found that Mead was negligent in his role as plaintiff's attorney.

Page 248

Defendant offered to stipulate to Mead's negligence and assigns as error the admission of testimony describing and explaining that negligence. The testimony, defendant claims, smeared him with guilt by association with Mead and directed the jury's attention away from the primary issue, which was whether Mead acted in his capacity as a partner. The evidence was relevant. Defendant's primary defense was that the loan was a private business transaction between plaintiff and Mead and was not part of the business of the legal partnership. The challenged evidence tended to rebut that defense by showing that Mead was negligent as a lawyer. That Mead's negligence was in giving or failing to give legal advice was relevant to whether he acted within the scope of the partnership's business. The jury apparently understood the distinction; it awarded plaintiff damages for the $20,000 loan but not for the later $1,500 one, on which the evidence indicated that plaintiff did not seek Mead's advice.

Defendant also attacks the court's denial of his motion for directed verdict on the negligence claim. He argued to the trial court that the loans were simply personal transactions between plaintiff and Mead and were outside the scope of the partnership between defendant and Mead. However, as already noted, the evidence would support a finding that plaintiff relied on Mead for legal advice concerning the loan. 2 It would also support a...

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