Kaseberg v. Davis Wright Tremaine, LLC

• Jurisdiction: Oregon
• Parties: Darell KASEBERG, Petitioner on Review, v. DAVIS WRIGHT TREMAINE, LLP, a Washington limited liability partnership, Respondent on Review.
• Citation: 265 P.3d 777,351 Or. 270
• Docket Number: (CC 071113766; CA A141824; SC S059154).
• Court: Oregon Supreme Court
• Decision Date: 10 November 2011

265 P.3d 777

351 Or. 270

Darell KASEBERG, Petitioner on Review,

v.DAVIS WRIGHT TREMAINE, LLP, a Washington limitedliability partnership, Respondent on Review.

(CC 071113766; CA A141824; SC S059154).

Supreme Court of Oregon, En Banc.

Argued and Submitted Sept. 21, 2011.Decided Nov. 10, 2011.

On review from the Court of Appeals.^*Paul R. Rundle, The Rundle Law Firm, Vancouver, Washington, argued the cause for petitioner on review.Daniel Lindahl, Lindahl Law Firm, PC, Portland, argued the cause and filed the petition for petitioner on review.With him on the petition was Paul Rundle.

Xin Xu, Kennedy, Watts, Arellano & Ricks LLP, Portland, argued the cause and filed the brief for respondent on review.

Michael A. Greene, Portland, argued the cause for petitioner on review and filed a brief for amicus curiaeOregon Trial Lawyers Association.WALTERS, J.

In this legal malpractice case, we apply the “discovery rule” and decide that the trial court erred in concluding, on defendant's motion for summary judgment, that plaintiff's claim was time-barred.

We state the facts adduced by the parties on summary judgment in the light most favorable to plaintiff, the nonmoving party.Hampton Tree Farms, Inc. v. Jewett,320 Or. 599, 613, 892 P.2d 683(1995).In 2000, plaintiff, a farmer for over 30 years, was, and had been, farming two properties—Grass Valley Ranch, which he owned, and Antelope Ranch, which he leased to farm.Other farmers, the Wheelers, agreed to loan plaintiff needed capital.To secure repayment of the loan, plaintiff agreed to deed the Grass Valley Ranch to the Wheelers, and the Wheelers agreed to lease the Grass Valley Ranch back to plaintiff and to grant him an option to purchase upon repayment.To secure payment of the lease obligations, the Wheelers placed a lien against the proceeds of the sale of crops grown on the Grass Valley and the Antelope ranches.

After the Wheelers had made at least partial advances and plaintiff had deeded the Grass Valley Ranch to them, disagreements arose.The Wheelers claimed that plaintiff was in arrears on repayments and plaintiff claimed that the Wheelers had failed to advance promised funds necessary to the success of the venture.In 2001, plaintiff filed for bankruptcy, and the parties also disagreed about the effect of that proceeding on their contractual obligations and plaintiff's option to repurchase the Grass Valley Ranch.The Wheelers brought two actions against plaintiff—one for breach of contract, the other to evict plaintiff from the Grass Valley Ranch.Plaintiff hired a lawyer, Iain Levie, then employed with defendant, to represent him in the lawsuits.

When the eviction trial began on January 30, 2002, both parties had an incentive to resolve their disputes.Plaintiff wanted to continue to farm the Antelope Ranch and to plant wheat on that property in the coming 2002 season.Plaintiff had planted barley there in the 2001 season, but he wanted to substitute wheat in the 2002 season because the government-backed insurance coverage for wheat planted that year was higher than that for barley.To obtain the higher insurance benefit, however, plaintiff was required to plant the wheat by February 15, 2002.(The planting deadline for government-backed insurance for barley was March 15, 2002.)Plaintiff had received confirmation from his bank that it was ready to advance the necessary funds, but the loan was contingent on removal of the Wheelers' crop lien.Plaintiff wanted the Wheelers to release their lien in time to enable him to obtain the funds and plant wheat on the Antelope Ranch property before the February 15 deadline.The Wheelers had a similar incentive to reach an agreement with plaintiff.The Wheelers wanted to plant wheat on the Grass Valley Ranch, and, if they could obtain immediate possession of that property, they too could meet the February 15 deadline and be assured of maximum insurance benefits.

Before, and on the day of, the eviction trial, plaintiff told Levie that he would be willing to give up his right to repurchase the Grass Valley Ranch if the Wheelers would remove their crop lien in time for plaintiff to meet the February 15 planting deadline.During the lunch break, Levie met with the Wheelers' lawyer and they negotiated an oral settlement agreement that they subsequently reported to the court and recited on the record.Plaintiff was not present at that meeting.As recited, the agreement gave the Grass Valley Ranch to the Wheelers and permitted plaintiff to farm the Antelope Ranch.The agreement required plaintiff to (1) relinquish any interest or claim of interest in, and surrender possession of, the Grass Valley Ranch; (2) disclose by February 11, 2002, all government payments and other funds that he received from crop sales from 2000 through January 30, 2002; (3) immediately endorse and deliver to the Wheelers the crop insurance proceeds for 2000 and 2001; and (4) remove his possessions from the two residences on Grass Valley Ranch by February 28, 2002 and within 45 days after the settlement, respectively.The agreement further provided that a judgment of restitution would issue.In exchange, the Wheelers agreed to dismiss their breach of contract action and to “execute whatever documents [were] necessary to remove all liens from the Antelope property, with respect to any future * * * farming activities.”The Wheelers also agreed that they would not “do anything through their own actions which would interfere with [plaintiff's] ability to continue ranching activities anywhere other than * * * the Grass Valley property.”The court asked the parties whether they stipulated to the agreement as recited and they indicated that they did.At that time, Mr. Wheeler understood that plaintiff intended to plant wheat on the Antelope Ranch before the February 15 deadline, that plaintiff needed financing to do so, and that plaintiff could not get that financing until the Wheelers removed or subordinated their crop lien.

In the days and weeks following the January 30 agreement, plaintiff learned, and informed Levie, that the Wheelers had not removed the crop lien.Levie responded that the Wheelers were in breach of the settlement agreement.On February 15, 2002, the Wheelers still had not removed the crop lien, and plaintiff was unable to timely plant wheat on the Antelope Ranch as he had intended.

On February 24, 2002, the parties entered into an eight-page written settlement agreement.The agreement provided that it was “effective January 30, 2002,” and contained the following recital:

“The parties have agreed to settle the claims arising out of the FED Action and the Contract Action.The terms of the parties' settlement were placed on the record before the court on January 30, 2002.”

One of the terms of the written settlement agreement provided:

“7.2 Subject to [plaintiff's] performance of his obligations hereunder and the terms of this Agreement, Wheelers shall have no interest or right to claim any interest in any crop proceeds or any government support payments due with respect to the Antelope Property for crops grown during 2002 or thereafter, and Wheelers shall on request execute such documents as may be necessary to release such lien claims of record.Wheelers agree not to initiate any public comments about [plaintiff] which would demean his reputation.However, Wheelers shall be entitled to fully answer all questions put to them about their relationship with [plaintiff].”

Some time in March 2002, the Wheelers subordinated the crop lien, permitting plaintiff to obtain a bank loan and to plant barley in time to meet the later government insurance deadline applicable to barley.However, because full insurance coverage for barley was less than that for wheat, plaintiff was aware that he could suffer a monetary loss.

In February, March, April, and May 2002, plaintiff talked with Levie about what recourse he had as a result of the Wheelers' untimely action.Levie told plaintiff that plaintiff had a “great case” against the Wheelers.In March 2002 and thereafter, Levie said that he would represent plaintiff against the Wheelers and encouraged plaintiff to believe that he would prevail in that litigation.Levie did not suggest to plaintiff that Levie had been negligent in any regard or that his representation had contributed to plaintiff's damages.It did not occur to plaintiff that Levie was in any way responsible for those damages and, in fact, Levie's statements about the Wheelers' liability had the opposite effect—plaintiff was optimistic about recovering his anticipated losses from the Wheelers and understood that he would have six years to do so.Levie told plaintiff that the applicable statute of limitations—the limitations period for breach of contract—was six years.

Sometime later, plaintiff learned that Levie was no longer employed by defendant.At that time, plaintiff again had discussions with Levie about pursuing the Wheelers for breach of contract.Levie did not change his prior position or advice.Eventually, however, Levie suggested that plaintiff hire a different lawyer to file a claim against the Wheelers.Plaintiff was referred to a new lawyer, who met with him in approximately late November or early December 2006.After several weeks of investigation by that lawyer, plaintiff learned that “such a claim may not be or may no longer be viable based on some problems that appeared to be related to [his representation by defendant].”That was the first time that it occurred to plaintiff that anyone other than the Wheelers could be responsible and liable for his damages.

Plaintiff filed this action against defendant on November 19, 2007.Plaintiff alleged that defendant, through Levie's acts or omissions, was negligent in the negotiation and expression of the oral settlement agreement.¹In alleging defendant's negligence, plaintiff used a defined phrase, “the Missing Term,” to mean

“any term requiring that...