Gibson v. Bankofier

• Citation: 365 P.3d 568,275 Or.App. 257
• Decision Date: 09 December 2015
• Docket Number: A153425.,110201781
• Parties: Patricia N. GIBSON, in her capacity as successor Trustee to the Veryl G. Gibson Trust, Plaintiff–Appellant, v. Sharon BANKOFIER, an individual; Duane Bankofier, an individual; and Oregon Realty Company, an Oregon corporation, Defendants–Respondents, and Chicago Title Insurance Company; and Equity Advantage, Inc., Defendants.
• Court: Court of Appeals of Oregon

275 Or.App. 257

365 P.3d 568

Patricia N. GIBSON, in her capacity as successor Trustee to the Veryl G. Gibson Trust, Plaintiff–Appellant,

v. Sharon BANKOFIER, an individual; Duane Bankofier, an individual; and Oregon Realty Company, an Oregon corporation, Defendants–Respondents,andChicago Title Insurance Company; and Equity Advantage, Inc., Defendants.

110201781

A153425.

Court of Appeals of Oregon.

Argued and Submitted Oct. 7, 2014.

Decided Dec. 9, 2015.

Darian A. Stanford, Portland, argued the cause for appellant. With him on the brief was Slinde Nelson Stanford.

Brian R. Talcott, Portland, argued the cause for respondents Sharon Bankofier and Duane Bankofier. With him on the brief was Dunn Carney Allen Higgins & Tongue LLP.

Janet M. Schroer, Portland, argued the cause for respondent Oregon Realty Company. With her on the brief were Marjorie A. Speirs and Hart Wagner LLP.

Before SERCOMBE, Presiding Judge, and HADLOCK, Judge, and TOOKEY, Judge.

SERCOMBE, P.J.

Plaintiff succeeded her mother, Veryl G. Gibson (Gibson), as trustee of a trust for the benefit of Gibson and her family. Defendants Sharon Bankofier, a real estate agent, and Oregon Realty Company (ORC), a realty company, facilitated the purchase of real property interests by the trust when Gibson was the trustee. Several of those investments failed. After Gibson became incompetent, plaintiff, as the successor trustee, brought an action against defendants. Plaintiff claimed that defendants were liable for the trust's economic losses because their conduct constituted financial abuse under ORS 124.100(2) and because they were negligent in their obligations to advise Gibson and the trust about the soundness of the real estate investments.¹

The trial court granted defendants' motion for summary judgment and dismissed plaintiff's claims.² The trial court concluded that there was no claim under ORS 124.100(2), because there was no evidence in the summary judgment record that defendants wrongfully took or appropriated Gibson's money or property under ORS 124.110(1)(a). The court further concluded that the negligence claim did not lie, because plaintiff failed to establish that ORC's relationship to the trust made it accountable for the trust's economic losses and because the claim against Bankofier was untimely filed. On appeal, we conclude that there was no proof that defendant acted wrongfully when Bankofier helped facilitate the purchase of real estate interests. We also conclude that, to the extent that Gibson authorized Bankofier to manage the investment of the sale proceeds, plaintiff failed to establish that Bankofier breached any duty that arose out of that relationship. Accordingly, we affirm.

Summary judgment is appropriate when "the pleadings, depositions, affidavits, declarations and admissions on file show that there is no genuine issue as to any material fact and that the moving party is entitled to prevail as a matter of law." ORCP 47 C. 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." Id. The following material facts are undisputed and establish the appropriateness of summary judgment in favor of defendants.

At its heart, this case concerns the relationship between Bankofier and Gibson. Gibson and Bankofier first met decades ago when Gibson, who worked as an Avon representative, knocked on Bankofier's door and tried to sell her Avon products. Bankofier turned her down because Bankofier's mother was also an Avon representative, and Bankofier wanted to continue to purchase products from her own mother. Eventually, Bankofier's mother retired as an Avon representative and Bankofier began ordering products through Gibson. Bankofier and Gibson became friends.

In 1990, Gibson and her husband created the Gibson Family Trust. The trust property included their residence and the surrounding land. Gibson's husband passed away in 1991 leaving Gibson as the sole trustee. In late 2005, two real estate agents contacted Gibson and asked if she would be interested in selling her property. The agents were acting on behalf of a developer who was looking to purchase several properties in the neighborhood.

After talking with the agents, Gibson called Bankofier, who had worked as a licensed real estate agent for ORC since 1987 under an independent contractor agreement. Gibson explained what had happened, and asked Bankofier to act as her real estate agent. Bankofier agreed. Gibson signed a seller's broker agreement, and Bankofier worked on a deal with the developer's agent, David Hill.

That deal fell through, however, and Gibson did not sell the trust property in 2005.

In January 2006, Gibson met with an attorney who had been recommended by Bankofier. The attorney helped Gibson to create a new trust, the Veryl G. Gibson Trust, and to transfer into it all of the assets held in the Gibson Family Trust. The trust provided that, on Gibson's death, her three daughters would inherit the entire estate.

In 2007, Hill communicated to Bankofier that someone had inquired about purchasing Gibson's property. Bankofier called Gibson, who expressed interest in a sale; Gibson hoped that selling the property would provide income for herself and her family. Gibson knew that one of her friends had recently sold her home and avoided paying capital gains taxes by using the proceeds from the sale to purchase rental properties. Gibson asked Bankofier if she could arrange a similar transaction.

Under 26 USC section 1031, a person who wishes to sell real property may avoid the immediate tax consequences of that sale by, in essence, exchanging the original property for a replacement property of like kind. In order to qualify for a "1031 exchange," a replacement property must be identified within 45 days of the sale of the original property and purchased within 180 days of that sale. 26 USC § 1031(a)(3). Gibson's friend had completed a 1031 exchange by purchasing rental property with the proceeds from the sale of her home.

Bankofier believed that a 1031 exchange would be a good option for Gibson, but she also told Gibson that purchasing rental properties would not be a good idea—Bankofier knew that Gibson did not have any experience managing rentals. Bankofier was familiar with a different type of investment property, tenant in common properties (TICs), which can also be used as replacement properties in 1031 exchanges. A TIC is an investment property that is owned in common by several different owners. Bankofier first learned that TICs can be used as replacement properties in a 1031 exchange at a training meeting at ORC. She had assisted previous clients with TIC purchases. In January and March of 2007, Bankofier took Gibson to two seminars about TIC investments. Those seminars were hosted by American Investment Exchange (AIE) and Spectrus, both firms that sell ownership interests in TICs.

Meanwhile, Hill prepared documents to complete the sale of the trust property. The deal was structured so that the home would be sold separately from the surrounding property. With respect to the sale of the home, the parties agreed that they would enter into a lease-back arrangement so that Gibson could remain in the home after it was sold. The proceeds from the sale of the surrounding acreage would be used to purchase investment property in order to complete the 1031 exchange. Gibson reviewed the sale and lease documents with her attorney, Beck. In an April 23, 2007, letter to Gibson, Beck wrote:

"As we discussed on April 17, 2007, I have reviewed the sale agreement and the lease and believe that both documents are straight forward and appear appropriate to complete the sale transaction and the lifetime lease back to you of the residence portion of the property. I also discussed the agreement and lease in depth with your friend and real estate broker, Sharon Bankofier, earlier that same day. I understand that Sharon will be working with you and that you will also be consulting with your CPA or tax advisor on the tax implications of the sale and are also exploring alternate investments of the sale proceeds to reduce your tax burden based on the sale."

By the middle of May 2007, Gibson had decided that she wanted to use the proceeds from the sale of the home to invest in TICs. On June 7, 2007, Bankofier and Gibson entered into a real estate buyer's agreement. That agreement provided that Bankofier would use her "best efforts to locate and bring to [Gibson's] attention Property of Interest." Bankofier also agreed to "help prepare and present offers on behalf of [Gibson] and negotiate for acceptance of such offers in accordance with Buyer's instructions." The agreement also stated that Bankofier "shall not be expected to render specialized professional services to Buyer such as detailed property inspection, land use or title analysis, tax advice, environmental risk evaluation or legal services. Buyer shall be expected to engage and pay for such professional services separately."

Bankofier contacted various TIC sponsors, including AIE, to gather information about their offerings. Bankofier wrote in an email to AIE, "I am a real estate broker and have a client that has a $1,250,000 property closing within the next month. One million will be used in a 1031 exchange and we are only looking at TICs." Bankofier also asked whether AIE paid a referral fee. Referral fees are paid by the sponsors of TICs to the real estate agents whose clients purchase TIC interests. The fees are paid by the seller of the TIC property and do not affect the purchase price. AIE did pay such fees. Bankofier testified that, when the sponsors that Bankofier contacted sent her information, typically in the form of marketing brochures, she forwarded that information to Gibson.

Bankofier set up a meeting on June 21, 2007,...