Newman v. Tualatin Development Co., Inc.

• Citation: 287 Or. 47,597 P.2d 800
• Decision Date: 12 July 1979
• Docket Number: No. 37-142,37-142
• Parties: Arthur NEWMAN, Edwin Mittelstadt, Henry Marchion, Francis Wallace and Richard Dent, Respondents/Cross-Appellants, v. TUALATIN DEVELOPMENT CO., INC., Appellant/Cross-Respondent. ; SC 25528.
• Court: Supreme Court of Oregon

Page 800

597 P.2d 800

287 Or. 47

Arthur NEWMAN, Edwin Mittelstadt, Henry Marchion, Francis

Wallace and Richard Dent, Respondents/Cross-Appellants, v. TUALATIN DEVELOPMENT CO., INC., Appellant/Cross-Respondent.

No. 37-142; SC 25528.

Supreme Court of Oregon, Department 2.

Argued and Submitted Dec. 6, 1978.

Decided July 12, 1979.

[287 Or. 48-A] Edward J. Murphy, Jr. of Wheelock, Niehaus, Hanna & Murphy, Portland, argued the cause for appellant/cross-respondent. On the briefs was Dennis H. Quade, Portland.

Robert W. O'Connor, Tigard, argued the cause and filed the briefs for respondents/cross-appellants.

Willard E. Fox, of Allen, Stortz, Barlow, Fox & Susee, Salem, filed the brief amicus curiae on behalf of Oregon State Home Builders Ass'n.

Before DENECKE, C. J., and TONGUE, BRYSON, ^* and LINDE, JJ.

DENECKE, Chief Justice.

The defendant appeals from an order certifying this proceeding as a class action. Plaintiffs are purchasers of townhouses built and sold by the defendant. The plaintiffs alleged that galvanized water pipes installed by defendant in connection with the construction of the townhouses were deteriorating. They sought damages on the basis of expressed and implied warranties and negligence. We affirm the certification of the proceeding as a class action.

ORS 13.220 is entitled, "Requirement for class action; when maintainable." It provides, in part:

"(1) One or more members of a class may sue or be sued as representative parties on behalf of all only if:

"(a) The class is no numerous that joinder of all members is impracticable; and * * * ."

Defendant contends requirement (a) was not satisfied.

The Oregon statute is identical to Rule 23(a)(1), as amended, of the Federal Rules of Civil Procedure. The wording of the original Federal Rule 23 assists in understanding the Oregon statute. Rule 23 originally spoke in terms of persons "so numerous as to make it impracticable to bring them all before the court." The Federal Rule was changed and joinder was used as in the Oregon statute. The Oregon statute and present federal rule do not use joinder in the technical sense; that is, in the sense of what parties and causes of action can be joined together in one lawsuit. The statute and rule assume the parties can all be plaintiffs in the one lawsuit, but permit class actions instead of multiple-party actions when as a matter of efficient judicial administration it is impracticable to have the multiple parties all before the court.

Several factors determine practicability. The number of parties is the most persuasive factor when the numbers are large. Ten thousand parties, obviously, would be impracticable to process through a lawsuit.

Defendant argues that the numbers involved here are small because the evidence is that only "several" owners have been damaged. That assertion is misleading. The trial court found, and the evidence supports its finding, that at least 125 townhouse owners had to replace the galvanized pipe. This is evidence that these owners were damaged because of the deterioration of the pipe. There will be a substantial number of claimants.

After reviewing the decisions, one author states, "but the plaintiff whose class numbers in the 25 to 30 range should have a reasonable chance of success on the basis of number alone." 1 Newberg, Class Actions, 174 (1977). The numbers alone in this case support the trial court's finding of impracticability.

ORS 13.220 also provides that a class action is maintainable when "(c) The claims or defenses of the representative parties are typical of the claims or defenses of the class." Defendant contends this requirement has not been satisfied. Under the identical Federal Rule that test has been, "a plaintiff's claim is typical if it arises from the same event or practice or course of conduct that gives rise to the claims of members and his or her claims are based on the same legal theory." 1 Newberg, Supra, at 174. We adopt this test for the Oregon statute.

The claims of all plaintiffs arise from defendant's sale of townhouses in the same location with a combination of copper and galvanized pipe which plaintiffs contend is particularly susceptible to deterioration due to electrolysis. All plaintiffs are pursuing the same legal theories. On these bases we conclude that the claims of the named plaintiffs are typical of the class.

One of the considerations prescribed by statute for determining whether a class action should be denied is, "(a)fter a preliminary hearing or otherwise, the determination by the court that the probability of sustaining the claim or defense is minimal." ORS 13.220(2)(c)(F). Defendant contends plaintiffs' chances of success are minimal because the contract between the purchasers and defendant provided for the installation of the combination of copper and galvanized pipe and plaintiffs had an opportunity to inspect the property before purchase and construction.

This is not an appropriate time to determine whether plaintiffs are entitled to prevail. However, from the evidence considered and the state of the law, plaintiffs' chances of prevailing do not appear so minimal that they should be precluded from proceeding as a class action.

In reviewing the trial court's determination that a proceeding shall or shall not be conducted as a class action, it must be remembered that this is largely a decision of judicial administration; that is, how the trial shall proceed. In making such decisions the trial court is customarily granted wide latitude.

The federal courts of appeal have granted federal district judges that latitude in determining whether the proceeding can be conducted as a class action:

"The determination of whether an action can be maintained as a class action, and particularly whether a class action is the 'superior' method of resolving the controversy, is one which is peculiarly within the discretion of the trial judge." Becker v. Schenley Industries, Inc., 557 F.2d 346, 348 (2d Cir. 1977).

We also grant the trial courts wide latitude in this regard. The order of the trial court certifying this proceeding as a class action is affirmed.

The trial court ruled that the townhouse owners who purchased their property from someone other than defendant were not proper members of the class. Plaintiffs cross-appeal from this ruling.

The action was brought against these nonprivity owners on the theories of implied warranty and negligence. By its holding, the trial court necessarily ruled that the nonprivity owners could not prevail on either theory. We hold the nonprivity owners can prevail if they can prove the defendant was negligent. If the plaintiffs prevail on that theory whether they can also prevail on the theory of implied warranty becomes moot.

In American Insurers v. Bessonette, 235 Or. 507, 384 P.2d 223, 385 P.2d 759 (1963), the tenant of a warehouse constructed for the warehouse owner by defendants brought an action for damages for warehoused groceries which were damaged because of the defendant's negligence in constructing the warehouse. The defendant "claimed that even though the privity of contract doctrine may not apply to manufacturers and the like, it should apply to building contractors." In response the court held: "We think such a distinction cannot be justified." 235 Or. at 509, 384 P.2d at 224.

In State ex rel. Western Seed v. Campbell, 250 Or. 262, 442 P.2d 215, Cert. den. 393 U.S. 1093, 89 S.Ct. 862, 21 L.Ed.2d 784 (1969), we held a nonprivity buyer of personal property...