Ram Technical Serv. Inc. v. Koresko

• Jurisdiction: Oregon
• Court: Oregon Court of Appeals
• Writing for the Court: Before HASELTON, Presiding Judge, and BREWER, Chief Judge, and ROSENBLUM, Judge.
• Citation: Ram Technical Serv. Inc. v. Koresko, 240 Or.App. 620, 247 P.3d 1251 (Or. App. 2011)
• Decision Date: 16 February 2011
• Docket Number: CV04100199; A130143.
• Parties: RAM TECHNICAL SERVICES, INC., an Oregon corporation; Charles Stalnaker; and Susan Stalnaker, Plaintiffs–Appellants Cross–Respondents,v.John J. KORESKO; Ram Technical Services Voluntary Employees' Beneficiary Association; Regional Employers' Assurance Leagues Voluntary Employees' Beneficiary Association; and Pennmont Benefit Services, Inc., a Pennsylvania corporation, Defendants–Respondents Cross–Appellants,andGreat Southern Life Insurance Company, a Texas corporation; The Corben Educational Services, Inc., an Oregon corporation; and Thomas W. Crosswhite, Defendants–Respondents.

240 Or.App. 620

247 P.3d 1251

RAM TECHNICAL SERVICES, INC., an Oregon corporation; Charles Stalnaker; and Susan Stalnaker, Plaintiffs–Appellants Cross–Respondents,

v.John J. KORESKO; Ram Technical Services Voluntary Employees' Beneficiary Association; Regional Employers' Assurance Leagues Voluntary Employees' Beneficiary Association; and Pennmont Benefit Services, Inc., a Pennsylvania corporation, Defendants–Respondents Cross–Appellants,andGreat Southern Life Insurance Company, a Texas corporation; The Corben Educational Services, Inc., an Oregon corporation; and Thomas W. Crosswhite, Defendants–Respondents.

CV04100199; A130143.

Court of Appeals of Oregon.

Submitted on Remand Sept. 28, 2009.Decided Feb. 16, 2011.

Karla Alderman, Arden J. Olson, Craig J. Capon, and Harrang Long Gary Rudnick P.C. for appellants-cross-respondents.Scott J. Kaplan, Charles F. Adams, and Stoel Rives LLP for respondents-cross-appellants.R. Daniel Lindahl, Lisa E. Lear, and Bullivant Houser Bailey PC, and Andrew C. Hanan and Conrad O'Brien Gellman & Rohn, Pennsylvania, for respondent Great Southern Life Insurance Company.Lee Wyatt and LA Wyatt, LLC, for respondents The Corben Educational Services, Inc., and Thomas W. Crosswhite.Before HASELTON, Presiding Judge, and BREWER, Chief Judge, and ROSENBLUM, Judge.

HASELTON, P.J.

This case is on remand from the Oregon Supreme Court, which reversed our prior decision and remanded the case to us for further proceedings concerning several cross-assignments of error that we had no occasion to address in light of our disposition. Ram Technical Services, Inc. v. Koresko, 215 Or.App. 449, 171 P.3d 374 (2007) ( Ram I ), adh'd to as clarified on recons., 217 Or.App. 463, 177 P.3d 10 (2008) ( Ram II ), rev'd, 346 Or. 215, 208 P.3d 950 (2009) ( Ram III ). The issues on remand concern the trial court's denial of various motions to dismiss under ORCP 21. Specifically, we must determine whether the trial court erred in denying various defendants' ¹ motions to dismiss (1) under ORCP 21 A(8) for failure to state a claim; (2) under ORCP 21 A(9) on statute of limitations grounds; and (3) under ORCP 21 A(3) because “an earlier action already was pending in Pennsylvania.” Further, we must determine whether the trial court erred in denying a motion to dismiss defendant Koresko under ORCP 21 A(2) on the ground that it lacked personal jurisdiction over him in light of the “fiduciary shield doctrine.” As explained below, we conclude that the trial court did not err in denying the motions. Accordingly, in light of the Supreme Court's decision in Ram III and our rejection of the Corben and Crosswhite defendants' and the VEBA defendants' cross-assignments of error, we reverse and remand on appeal and dismiss the cross-appeal as moot.

I. THE FACTS AND PROCEDURAL HISTORY

The facts and procedural history of this case are complex. For that reason and to provide context, we begin with a general overview of the undisputed procedural facts. To the extent that resolution of the issues on remand requires that we augment those facts, we do so in the context of addressing the parties' contentions.

In July 2003, plaintiffs filed an action against defendants in the United States District Court for the District of Oregon. In their complaint in that action,

“plaintiffs pleaded, inter alia, claims for ‘rescission’ and ‘constructive trust’ based on purported misrepresentations that induced plaintiffs, in 2000, to establish a ‘voluntary employee benefits association’ (VEBA) benefit plan for employees of plaintiff Ram Technical Services, Inc., and to purchase life insurance policies as a means of funding the VEBA plan. In particular, plaintiffs alleged that they had been told by certain defendants that they would not be required to make annual contributions to sustain the plan; however, by no later than June 11, 2002, plaintiffs first learned that those representations were false and that they were, in fact, required to make annual payments.”

Ram I, 215 Or.App. at 452–53, 171 P.3d 374. Pursuant to 29 U.S.C. section 1132(a)(3) of the Employee Retirement Income Security Act (ERISA), plaintiffs sought either rescission of their agreement or imposition of a constructive trust on payments that they had made to defendants. Defendants moved to dismiss plaintiffs' complaint for failure to state a claim under ERISA, and the district court granted their motion, noting that “an action to rescind an employee benefit plan because of fraud in the inducement arises, if at all, under state law.” Ram III, 346 Or. at 219, 208 P.3d 950.

In April 2004, while the federal litigation was still pending, two of the VEBA defendants filed a complaint against plaintiffs as well as defendant Great Southern in Pennsylvania state court (the Pennsylvania action). In general, those VEBA defendants raised, inter alia, fraud and negligent misrepresentation claims against Great Southern and the Corben and Crosswhite defendants based on alleged statements concerning the operation, benefits, and tax consequences of the benefit plan and a claim to rescind the underlying insurance policies.

Then, in October 2004, also during the pendency of the federal action (and during the pendency of the Pennsylvania action), plaintiffs filed this action in Clackamas County Circuit Court. In their complaint, plaintiffs

“alleged claims of fraud and ‘constructive trust’ that were based on the same circumstances [that gave rise to the federal action], specifically, defendants' alleged misrepresentations and plaintiffs' alleged detrimental reliance on those representations, which were the bases of plaintiffs' claims in the federal litigation. Indeed, the allegations of the parties' conduct were a virtual ‘cut-and-paste’ of the parallel, operative allegations in the federal court complaint * * *.” ²

Ram I, 215 Or.App. at 454, 171 P.3d 374.

The Corben and Crosswhite defendants filed various motions to dismiss the case pursuant to ORCP 21. As pertinent to the issues on remand, the Corben and Crosswhite defendants contended that this case should be dismissed for failure to state a claim pursuant to ORCP 21 A(8) on the ground that the dismissal of the federal action “was on the merits and has a res judicata effect against all claims plaintiffs raised or could have raised” in that action. Alternatively, the Corben and Crosswhite defendants contended that, because plaintiffs filed this case in October 2004—more than two years after they knew of the alleged misrepresentations—plaintiffs' fraud claim was barred by the two-year statute of limitations and the trial court should have dismissed it pursuant to ORCP 21 A(9).

The VEBA defendants also filed various motions to dismiss pursuant to ORCP 21. Two of those motions command the bulk of our consideration on remand. See 240 Or.App. at 629–40, 247 P.3d at 1256–62.

First, the VEBA defendants moved to dismiss this case under ORCP 21 A(3) because the Pennsylvania action was pending. Specifically, they contended that the court should dismiss plaintiffs' claims in this case because the Pennsylvania action “will necessarily adjudicate the claims” whether or not plaintiffs assert a counterclaim in that action. (Emphasis in original.) In response, plaintiffs asserted that, under basic preclusion principles, “[b]ecause there are no compulsory counterclaims in Pennsylvania, and because plaintiffs have not sought any affirmative relief in Pennsylvania, the pending action in Pennsylvania does not preclude this action,” ³ and, accordingly, the court should not dismiss it.

Second, the VEBA defendants moved to dismiss defendant Koresko under ORCP 21 A(2) on the ground that the court lacked personal jurisdiction over him in light of the “fiduciary shield doctrine.” ⁴ They urged the trial court to adopt that doctrine and explained that, because “the fiduciary shield doctrine provides protection to Mr. Koresko, who was acting in his capacity for [defendant] Penn–Mont[,]” plaintiffs' “claims against him should be dismissed for lack of personal jurisdiction.” Plaintiffs responded that the court should not adopt the “fiduciary shield doctrine” but that, even if it did, the doctrine would not apply under the circumstances of this case because the evidence submitted in opposition to the VEBA defendants' motions supported the allegations in their complaint and demonstrated that “Koresko acted at least in part on behalf of himself” rather than “solely in his capacity as counsel for and agent for Penn Mont[.]”

Ultimately, the trial court, without elaboration, denied the various defendants' motions to dismiss under ORCP 21.

Thereafter, defendants moved for summary judgment, arguing that claim preclusion and the statute of limitations provided complete defenses to plaintiffs' claims. The gravamen of defendants' claim preclusion argument was that plaintiffs' common-law fraud claim could have been brought by way of supplemental jurisdiction in the federal litigation and that no recognized exception to claim preclusion applied in these circumstances. Ram I, 215 Or.App. at 455, 171 P.3d 374. The trial court granted summary judgment on both grounds and entered judgment in defendants' favor.

Plaintiffs appealed, challenging the dismissal on summary judgment of their common-law fraud claim against defendants as being barred by claim preclusion arising from the determination of prior federal litigation between the parties. In Ram I, we held that, because plaintiffs could have raised their common-law claims in their prior federal litigation with defendants, they were precluded from litigating those claims in state court. That holding was essentially predicated on our understanding that “broadened [federal] supplemental jurisdiction rules not only allow[ed] plaintiffs to litigate both state and federal issues at once in federal court, but they also compel[led] plaintiffs to assert all of their transactionally related claims in a single federal forum—or risk losing...