Bob Godfrey Pontiac, Inc. v. Roloff

• Jurisdiction: Oregon
• Parties: BOB GODFREY PONTIAC, INC., an Oregon corporation, Petitioner, v. Larry ROLOFF and Douglas Melevin, Respondents. ; CA 16378; SC 27340.
• Citation: 291 Or. 318,630 P.2d 840
• Docket Number: Nos. 78-5902,s. 78-5902
• Court: Oregon Supreme Court
• Decision Date: 08 July 1981

Page 840

630 P.2d 840

291 Or. 318

BOB GODFREY PONTIAC, INC., an Oregon corporation, Petitioner, v.Larry ROLOFF and Douglas Melevin, Respondents.

Nos. 78-5902; CA 16378; SC 27340.

Supreme Court of Oregon.

Argued and Submitted March 3, 1981.

Decided July 8, 1981.

Richard C. Houghton, Eugene, argued the cause and filed the briefs for petitioner.

William G. Wheatley, Eugene, argued the cause for respondents.With him on the brief was Jaqua & Wheatley, P. C., Eugene.

Before DENECKE, C. J., and TONGUE, LENT, LINDE, PETERSON and TANZER, JJ.

TONGUE, Justice.

This is an action for damages against two attorneys alleging violations of their duties as attorneys as provided by ORS 9.460, which states that:

"An attorney shall:

" * * *

"(4) Employ, for the purpose of maintaining the causes confided to him, such means only as are consistent with truth, and never seek to mislead the court or jury by any artifice or false statement of law or fact; * * *."

A previous action had been brought by plaintiff, an automobile dealer, who had sued the purchaser of a used car for the balance of the purchase price.The purchaser, represented by these two attorneys, filed in that action a counterclaim for damages against the dealer alleging, among other things, that the dealer had impliedly warranted the merchantable quality and fitness of the used car; that the car was defective in various aspects, and that the dealer had refused to repair the defects at no cost to the purchaser.

After prevailing in that action, the dealer brought this action against the two attorneys.Its second amended complaint alleged, among other things:

"IV.That during the course of the proceedings of said lawsuit, DefendantsLarry Roloff and Douglas Melevin used means that were not consistent with the truth and sought to mislead the Court and jury by artifice and false statements of fact in the following particulars:

"A.By intentionally falsely alleging in the pleadings that Plaintiff had sold the automobile to DefendantRuth Mellen with warranties.

"B.By intentionally falsely alleging in the pleadings that Plaintiff had failed and refused to repair alleged defects in the automobile purchased by Ruth Mellen from Plaintiff at no cost to Ruth Mellen.

"C.By allowing Ruth Mellen to give false sworn testimony to the effect that Plaintiff had never offered to repair her automobile if it were defective at no charge to her.

"D.By seeking to exclude testimony and evidence from the Court and jury as to Plaintiff's offers to fix DefendantRuth Mellen's automobile at no cost to her if the automobile purchased were defective.

"V.As a direct and proximate result of DefendantsLarry Roloff and Douglas Melevin's conduct, as alleged hereinabove, Plaintiff was required to defend against Ruth Mellen's action against Plaintiff, and Plaintiff's reputation was damaged in the amount of $25,000.00, and Plaintiff incurred attorney's fees, not recoverable in Ruth Mellen's action against Plaintiff, in the amount of $3,311.55."

Defendants' (the two lawyers)demurrer to that complaint upon the ground that it failed to state a cause of action was sustained.Plaintiff then filed a third amended complaint, with somewhat different allegations, to which defendants filed an unsuccessful demurrer, an answer, and a motion for summary judgment, which was allowed.¹

Plaintiff then appealed to the Court of Appeals from the resulting adverse judgment and assigned as error the sustaining of defendants' demurrer to its second amended complaint.In that appeal plaintiff contended that:

"Intentional violations of the statutory duties of an attorney as set out in ORS 9.460 should give rise to a claim for relief by a party damaged as a consequence."

In support of that contention plaintiff cited, among other cases and authorities, the decision by this court in O'Toole v. Franklin, 279 Or. 513, 569 P.2d 561(1977).

The Court of Appeals affirmed the trial court by an opinion in which that court said:

"Of course, the Supreme Court's statement in O'Toole is dictum, not binding precedent.In view of the potential ramifications of a rule such as plaintiff here seeks, we believe that the Supreme Court, if squarely faced with the problem, would follow the weight of authority in other jurisdictions to the effect that a statute or rule setting forth the duties of an attorney toward clients or the public does not create a new and separate tort action."48 Or.App. 601, 605, 617 P.2d 672(1980).

We granted plaintiff's petition for review to consider this question.

1.Our decision in O'Toole v. Franklin.

O'Toole v. Franklin, supra, was an action by a doctor against attorneys and their client, charging both malicious prosecution of a medical malpractice action and also negligence by the attorneys in failing, among other things, to properly investigate the claim of malpractice before filing that action.The complaint by the doctor sought $50,000 for damage to his professional reputation and for "emotional disturbance and anguish."The appeal in that case was also from a judgment following an order sustaining a demurrer to that complaint.

In affirming the trial court, this court held that in the action for malicious prosecution the demurrer was properly sustained because there was no "special injury," upon application of the rule that "special injury" is required in such cases, and that " '(s)pecial injury' in (the) procedural sense excludes the kind of secondary consequences that are a common and often unavoidable burden on defendants in 'all similar causes,' "279 Or. at 517, 569 P.2d 561, citingBuck v. Gale, 271 Or. 90, 92, 530 P.2d 1248(1975).Although recognizing (279 Or. at 520, 569 P.2d 561) that "(t)his court is not unprepared to reconsider an old common law rule,"we refused to abandon the "special injury" rule, as proposed by plaintiffs, noting (at 521, 569 P.2d 561) that "the legislative process is not inappropriate, given adequate time and preparation, for studying and resolving the competing and the common interests at stake in private law," as had been done on such subjects as comparative negligence, assumption of risk, and no-fault automobile insurance.

This court also held in O'Toole(at 522, 569 P.2d 561) that plaintiff's complaint did not state a cause of action for negligence because it would be incongruous to allow recovery of damages other than for "special injury" in an action based upon "mere carelessness" while denying such recovery in an action for malicious pursuit of an unfounded civil action.

The court then noted (at 522-23, 569 P.2d 561) that in support of his cause of action for negligence the plaintiff in that case relied upon the duties imposed by ORS 9.460(3) and (7) to protect members of the public.² In rejecting violation of the provisions of that statute as the basis for a negligence action, this court said (at 523-24, 569 P.2d 561):

"It is true that the duties expressed in these provisions of the Oregon State Bar act run to members of the public beyond an attorney's clients.In the present case, the complaint did not in fact allege that defendants were motivated by the 'passion or interest' proscribed by subsection (7), but the allegation quoted above does appear to invoke subsection (3).Taken by itself, it asserts a violation of that subsection by pursuit of an action known to be wrongful and unjust.If it stood alone, it would appear to go beyond negligence to allege a deliberate breach of a duty imposed by statute to protect members of the public against the precise kind of injury of which plaintiffs complain.

"Violations of duties of this kind often do give rise to private rights of action independent of the common law.* * * And of course, the professional duties imposed by ORS 9.460 bind attorneys independently of any 'special injury' to anyone.However, in the present case the allegation of the attorneys' knowledge was pleaded expressly as a specification of negligence, not as an intentional and deliberate breach of a statutory duty to plaintiffs."(Emphasis added)

In considering the applicability of these statements in O'Toole to this case, it is significant to note that the plaintiff in that case did not contend, as in this case, that this court should "create" a new and independent cause of action for damages against attorneys for breach of duties imposed by ORS 9.460.Instead, the contention by the plaintiff in that case was that for the purposes of a common law action for negligence, the violation of a duty imposed by statute"constitutes negligence as a matter of law," as in Stachniewicz v. Mar-Cam Corporation, 259 Or. 583, 586, 488 P.2d 436(1971), the only case cited by plaintiff in O'Toole in support of its contention based upon ORS 9.460.³ This distinction is discussed below.

Aside from the importance of this distinction, the parties in O'Toole did not brief or argue the question presented in this case, i. e., whether violation of any of the duties stated by ORS 9.460 gives rise to a new and independent cause of action.Of equal importance, our statement in O'Toole that "violations of duties of this kind often do give rise to private rights of action independent of the common law," was qualified, not absolute.For these reasons, we do not regard that statement in O'Toole as decisive upon the question presented for decision in this case.

2.Civil liability based upon violation of a statutory duty.

It should be noted at the outset, although by no means controlling in our analysis of the problem presented for decision in this case, that this court has authority under ORS 9.480 to disbar, suspend or reprimand attorneys for violations of ORS 9.460, and under ORS 9.490 to discipline attorneys for violations of the Code of Professional Responsibility adopted by this court and which in DR 7-102 covers essentially the same concerns as expressed in ORS 9.460(4), and that this court has exercised authority granted under those...