Granewich v. Harding
| Decision Date | 17 September 1997 |
| Citation | 150 Or.App. 34,945 P.2d 1067 |
| Court | Oregon Court of Appeals |
| Parties | William R. GRANEWICH, II, Appellant, v. Ben HARDING; Jeannie Alexander-Hergert; Founders Funding Group, Inc., an Oregon Corporation, Defendants, and Michael J. Farrell; and Martin, Bischoff, Templeton, Langslet & Hoffman, a partnership, Respondents. 9401-00097; CA A88174. |
James A. Cartwright, Portland, argued the cause and filed the briefs for appellant.
Thomas W. Brown, Portland, argued the cause for respondents. With him on the brief were Wendy M. Margolis and Cosgrave, Vergeer & Kester, L.L.P.
Plaintiff, a minority director/shareholder in defendant corporation, sued the corporation, the corporation's majority directors/shareholders Harding and Alexander-Hergert and the corporation's attorneys for breach of fiduciary duties. Plaintiff appeals from an order dismissing his complaint against defendant attorneys for failure to state ultimate facts sufficient to constitute a claim. 1 ORCP 21 A(8). We affirm.
Because this case comes to us on appeal from a judgment of dismissal pursuant to ORCP 21 A(8), we accept all well-pleaded allegations of the complaint as true and give plaintiff the benefit of all favorable inferences that could be drawn from the facts alleged. Stringer v. Car Data Systems, Inc., 314 Or. 576, 584, 841 P.2d 1183 (1992). Plaintiff's complaint, insofar as the issues on appeal are concerned, is labeled "Breach of Fiduciary Duties." It alleges that plaintiff, along with Harding and Alexander-Hergert, each owned one-third of the shares of stock in the corporation. Each shareholder held one of the three positions on the board of directors, each served as a corporate officer, and each was an employee of the corporation.
On May 5, 1993, Harding and Alexander-Hergert informed plaintiff that he had been removed from the board of directors and relieved of his duties as secretary of the corporation. Also, the corporation terminated his employment. Plaintiff objected to these actions on the grounds that he had not received notice of any shareholders' or directors' meetings and that his position as director was protected by the cumulative voting requirements of the corporation's bylaws. Harding and Alexander-Hergert then employed defendant attorneys to represent the corporation in the dispute with plaintiff. According to the complaint, defendant attorneys sent letters to plaintiff containing false statements of fact about his termination as a member of the board of directors and as an officer and "assisted" and furnished "legal advice" to Harding and Alexander-Hergert in their efforts to remove plaintiff from his corporate positions by amending the corporate bylaws to remove the cumulative voting provision, removing plaintiff as a director, and issuing shares of treasury stock to the majority shareholders. That issuance reduced plaintiff's interest in the corporation from one-third to under ten percent. In sum, plaintiff alleges that Harding and Alexander-Hergert's actions effectively "squeezed" him out of the corporation.
Plaintiff's arguments on appeal contain components that raise three possible theories of liability: (1) that defendant-attorneys, as corporate counsel, are "directly" liable to plaintiff for breach of their own fiduciary duties to him as a director; (2) that they "conspired" with Harding and Alexander-Hergert to breach fiduciary duties that Harding and Alexander-Hergert owed to plaintiff as a minority shareholder; and (3) that defendant attorneys knowingly aided and abetted Harding and Alexander-Hergert in the breaches of their fiduciary duties to plaintiff. We address each theory separately in the light of the allegations in the complaint to determine if it constitutes a legally cognizable claim.
Plaintiff's theory of direct liability is dependent on the existence of a fiduciary duty between defendant attorneys and plaintiff. Shareholders of a corporation who act as directors or officers wear more than one hat. They are representatives of the corporation in addition to their personal ownership interest. The Supreme Court held in In re Banks, 283 Or. 459, 469, 584 P.2d 284 (1978), that, generally, an attorney hired by a corporation to furnish services to the corporation owes a duty of loyalty to the corporation and not to its officers, directors and shareholders in their personal capacity. 2 In this case, plaintiff, a minority shareholder, does not allege that defendant attorneys were hired to represent him regarding his personal interests. Rather, he alleges that they were "employed * * * to provide legal services to [the corporation.]" Consequently, in the absence of an attorney-client relationship, there is no fiduciary duty owed to plaintiff in his personal capacity as a shareholder by defendant attorneys that could give rise to an action for breach of a fiduciary duty.
The remaining theories present the issue of whether defendant attorneys can be held liable for the tort of breach of a fiduciary duty for their role in rendering legal advice and assistance to the other defendants even though defendant attorneys owed no personal fiduciary duty to plaintiff. According to the allegations in the complaint, defendant attorneys had no direct contact with plaintiff except to write the letters informing him of his status as a director and officer. Although plaintiff alleges that they intended that he rely on the information in the letters, there is no allegation that he did so. In fact, he alleges that he subsequently objected to the efforts of Harding and Alexander-Hergert to remove him, and he does not allege that he was defrauded by defendant attorneys. Thus, the gravamen of plaintiff's complaint for breach of a fiduciary duty against defendant attorneys is that they gave legal advice and assistance to Harding and Alexander-Hergert after their initial action to remove plaintiff from the corporation, and it is those specific allegations that frame our holdings in this opinion. 3
In general, a lawyer can be held liable for acting in concert with a client to commit a tort, even though the lawyer does not commit the tort personally. For instance, in Clausen v. Carstens, 83 Or.App. 112, 730 P.2d 604 (1986), we held that a complaint stated a claim for trespass against lawyers who had represented their client in a dissolution of marriage proceeding and had acted with their client to cause a receiver to take legal custody of the plaintiffs' businesses. We said, "[d]efendants need not have trespassed personally if they caused the receiver to do so." 83 Or.App. at 115, 730 P.2d 604.
Another general rule is that tort liability is predicated on the breach of a duty owed to the plaintiff that the law implies, and in the absence of such a duty there can be no liability. Zumwalt v. Lindland, 239 Or. 26, 396 P.2d 205 (1964). The application of that rule is expressed in our holding in Clausen. Every person has a legal duty not to trespass on the property of another, just as everyone has a duty not to subject others to a reasonably foreseeable risk of harm. When the defendant attorneys in Clausen acted in concert with their client to cause a trespass, joint liability for the trespass ensued.
This case differs from cases like Clausen because of the nature of plaintiff's tort theory. The breach of a fiduciary duty is based on the breach of a duty that the law implies from a fiduciary relationship. Georgetown Realty v. The Home Ins. Co., 313 Or. 97, n. 7, 831 P.2d 7 (1991). In this case, a fiduciary relationship does not exist between plaintiff and defendant attorneys. To reiterate: the issue then is whether defendant attorneys could be held liable on the facts alleged in the complaint under a form of joint liability (conspiracy or aiding and abetting) for a tort that they otherwise could not commit against plaintiff. 4
Under Oregon law, a civil conspiracy is not an independent tort. Rather, it is a theory of mutual agency under which the acts of each of the conspirators are imputed to the other members for purposes of tort liability. The joint liability that arises from the acts of others is predicated on an agreement or meeting of the minds to accomplish an unlawful purpose, or a purpose not in itself unlawful by unlawful means, that results in an injury to another. Bonds v. Landers, 279 Or. 169, 174-75, 566 P.2d 513 (1977). Thus, in the absence of a statutory violation, a conspiracy is not tortious unless the underlying act itself is tortious. See Bliss v. Southern Pacific Co. et al, 212 Or. 634, 642, 321 P.2d 324 (1958) (). Thus, any discussion about conspiracy must engage with the elements of the underlying tort.
When the theory of civil conspiracy is superimposed over the tort of breach of a fiduciary duty, the law imputes the acts performed by each conspirator pursuant to their agreement to the other conspirators. Here, the complaint alleges facts from which it can be inferred that Harding and Alexander-Hergert breached their fiduciary duties to plaintiff. The theory of conspiracy serves to impute their actions to defendant attorneys. However, when that occurs, it is of no legal import insofar as defendant attorneys are concerned because they owed no fiduciary duty to plaintiff. Our prior case law illustrates the principle.
In Bergman v. Holden, 122 Or.App. 257, 857 P.2d 217 (1993), the issue was whether the defendant could be held liable for logs obtained as a result of a trespass on the plaintiff's property by another. The evidence was that the defendant knew that some of the logs that he hauled from a landing adjacent to the plaintiff's property belonged to the plaintiff but that he did not know that the logs had been...
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