MAT, Inc. v. Am. Tower Asset Sub, LLC
|03 June 2021
|312 Or.App. 7,493 P.3d 14
|Oregon Court of Appeals
|MAT, INC., an Oregon corporation, Plaintiff-Respondent, v. AMERICAN TOWER ASSET SUB, LLC, a Delaware limited liability company; and SpectraSite Communications, LLC, a Delaware limited liability company, Defendants-Appellants.
David B. Hennes, New York, argued the cause for appellants. On the briefs were Shannon R. Martinez, Jennifer C. Paul, Daniel S. Reynolds, and Saalfeld Griggs PC.
Brian R. Talcott, Portland, argued the cause for respondent. Also on the brief was Dunn Carney Allen Higgins & Tongue LLP.
Before Lagesen, Presiding Judge, and Egan, Chief Judge, and Powers, Judge.
Plaintiff MAT, Inc., owns the farmland on which defendants American Tower Asset Sub, LLC, and SpectraSite Communications, LLC,1 own and maintain a 900-foot tall television tower. MAT and defendants have a lease agreement that provides that MAT gets half of all revenue generated by any subtenants that use the tower. Upon discovering that defendants had not disclosed all rent-paying subtenants or given MAT its share of the revenue, MAT sued defendants for, among other things, breach of contract. Because the limitations period for contract actions is six years, and because MAT sued more than six years after the date of the breach, MAT argued that defendants fraudulently concealed the breach, thereby tolling the statute of limitations. The case went to jury trial, including on the fraudulent concealment issue, and the jury found that defendants had fraudulently concealed their breach and, ultimately, returned a verdict in favor of MAT.
On appeal, defendants raise 10 assignments of error. We write primarily to address the first, second, third, and ninth. Defendants’ first two assignments of error challenge the trial court's denial of their motion for a directed verdict on the issue of fraudulent concealment. Defendants’ third assignment of error challenges the court's jury instructions on fraudulent concealment. And defendants’ ninth assignment of error challenges, as a matter of law, the court's refusal to conduct an in camera review of communications that defendants believe might contain evidence that MAT, early on, knew or should have known that it had a cause of action against defendants. As explained below, we reject defendants’ first through third assignments of error. We nonetheless vacate and remand because the trial court did not apply the proper legal standard when it denied defendants’ request for in camera review and must do so now. We reject defendants’ other assignments of error without written discussion, except as briefly noted below.2
Although, as noted, defendants raise multiple assignments of error, and those different assignments of error implicate different standards of review, the primary challenges that we address are to the trial court's denial of defendants’ motion for a directed verdict on the statute of limitations issue. For that reason, in accordance with the applicable standard of review, we state the facts about the parties’ underlying dispute in the light most favorable to MAT, the nonmoving party. See Kelley v. Washington County , 303 Or. App. 20, 21-22, 463 P.3d 36 (2020).
The lease agreement for the land on which the television tower is situated was executed in 1981, around the time the tower was constructed. The landlord and tenant at the time (not parties to this appeal) contemplated that subtenants would lease space on the tower, and they agreed to equally share revenue generated from subtenant rent:
Around November 2001, defendants purchased the television tower from the tenant under the lease at the time, Paxson Communications of Portland-22, Inc. (Paxson). By then, ownership of the farmland (and, relatedly, the landlord's interest in the lease) had transferred from father to son, who formed MAT, Inc., to manage the lease. In conjunction with defendants’ purchase of the tower, MAT signed a Landlord Consent and Estoppel Certificate, consenting to the change in interest from Paxson to defendants and also consenting to Paxson's "continued use of certain portions of the tower and improvements on the Property." Defendants then assumed the lease agreement, becoming the tenant under it. Shortly thereafter, defendants and Paxson entered into a sublease agreement, which provided that defendants would lease space on the tower to Paxson in exchange for $6,000 monthly rent (to increase over time) beginning on January 1, 2002. MAT was unaware of this agreement and did not receive a share of the rent, which Paxson paid and defendants collected until 2009.
In May 2007, defendants requested MAT's consent to sublet space on the tower to a new subtenant, Churchill Communication, LLC (Churchill). MAT, through its attorney at that time, granted its consent but requested an accounting of all of the subleases on the tower. The request explained that "we still need a copy of the proposed lease and an accounting of all the leases at the site so that we can know what lease payments [MAT] should be receiving based upon the 50% revenue share provision in the lease and the addition of this new lease." On June 12, 2007, defendants refused the request, responding:
As a result of that review, defendants found that they owed MAT $17,101.53 in revenue from a different subtenant, Northwest TV. MAT again requested that defendants disclose their subtenant agreements, this time offering to sign a confidentiality and nonuse agreement. MAT's attorney explained:
Defendants again declined MAT's request. Ultimately, at defendants’ request, MAT signed a release agreement (the 2007 Release) to receive payment of its share of defendants’ revenue from Northwest TV. The release stated that it discharged defendants "from any and all claims, damages, causes of actions or suits of any kind or nature, relating to or arising from the gross revenue shares due to [MAT] from [defendants] from May 2005 to July 2007 and any consent which may have been required under the Lease." Churchill then took over Northwest TV's lease, and MAT received its share of Churchill's revenue from that point on.
In April 2008, MAT received a revenue share invoice listing Paxson as a tenant that had paid defendants $8,971.60 for "Tower Rent" for the month of March and indicating that none of that money would be paid to MAT. MAT did not notice at the time that the invoice identified Paxson as a revenue-paying tenant.
In November 2009, the Churchill revenue-share payments to MAT stopped, and MAT again requested that defendants provide it with detailed information on the tower's subtenants and rental revenue. Defendants responded that MAT had not been paid because Churchill had failed to make its payments. They also represented that Churchill was the only tenant on the tower at that time,3 and that, in defendants’ view, defendants were current on their revenue payments to MAT from May 2008 forward.
In August 2010, MAT again requested information on subtenants and the revenue generated by them. In defendants’ letter response, besides listing Churchill as the only active contract on the tower, they stated that Paxson "has also operated on the tower, but ceased transmission in June 2009." Defendants’ letter did not indicate that Paxson had paid rent to them from January 2001 to June 2009. Around this time, MAT turned down multiple requests from defendants to buy out its lease.
In December 2012, MAT finally became aware that Paxson and other subtenants had been paying defendants rent. MAT asked defendants about that and defendants took the position that Paxson's status as a former tenant meant that any revenue generated by Paxson's use of the tower did not have to be shared with MAT.
Unable to resolve the dispute without litigation, MAT filed this case on May 30, 2013, alleging claims for breach of contract and equitable accounting. The statute of limitations and, in particular, the point in time at which MAT knew or reasonably should have known that defendants were not sharing the Paxson revenues promptly became an issue.
Before trial, defendants requested that the court review in camera communications between MAT and its former attorney. Defendants believed that there could be evidence in the communications showing that MAT knew about Paxson, which would defeat MAT's claim that, based on tolling the statute of limitations, it had timely initiated its action. After MAT produced a privilege log of the communications, defendants requested "that the Court review in-camera everything identified in the privilege log to the extent there is a reference to Paxson or revenue-sharing or both items."...
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