Rowden v. Hogan Woods, LLC
| Decision Date | 30 September 2020 |
| Docket Number | A165292 |
| Citation | 306 Or.App. 658,476 P.3d 485 |
| Parties | Darin ROWDEN; Natalie Rowden, individually and as guardian ad litem on behalf of her minor children Terra Rowden, Myka Rowden, and Hans Rowden; and Hailey Rowden, Plaintiffs-Appellants, v. HOGAN WOODS, LLC, an Oregon limited liability company; James P. McNutt; Robert E. McNutt ; Michael W. McNutt; and The Ronald E. McNutt Family Trust, Defendants-Respondents. |
| Court | Oregon Court of Appeals |
Adam S. Heder, Lake Oswego, argued the cause for appellants. Also on the briefs was Roger K. Harris.
Lori K. DeDobbelaere argued the cause for respondents. Also on the brief was Heinson & DeDobbelaere LLC.
Before Lagesen, Presiding Judge, and DeVore, Judge, and James, Judge.
Plaintiffs Darin and Natalie Rowden worked as property managers at apartments owned by defendant Hogan Woods, LLC, and they lived on site with their four children, also plaintiffs in this case. All of the plaintiffs experienced health issues that they attributed to mold in the apartments, and Darin and Natalie filed occupational disease claims, which the Workers’ Compensation Board rejected on the ground that neither of them proved the "existence of an occupational disease related to claimant's alleged work exposure." Thereafter, plaintiffs brought this civil action against Hogan Woods, LLC, and its members and their family trust, alleging various claims arising out of the mold issues. The trial court granted summary judgment on claims against Hogan Woods, LLC, largely on the ground that the decision of the Workers’ Compensation Board had preclusive effect, and it further concluded that efforts to pierce the corporate veil of Hogan Woods, LLC, and hold its members and the trust liable were not ripe because there was not yet a judgment against the company.
Plaintiffs now appeal, arguing that the trial court erred in giving the board's decision such sweeping effect and in dismissing claims against the members and the trust as unripe. For the reasons explained below, we conclude that the trial court erred in giving preclusive effect to the board's decision and in dismissing the claims against the company's members and the trust as premature. We therefore reverse and remand for further proceedings.
Because this appeal arises from the trial court's grant of summary judgment, we state the historical facts in the light most favorable to plaintiffs, the nonmoving party. Jones v. General Motors Corp. , 325 Or. 404, 408, 939 P.2d 608 (1997).
In 1998, Darin and Natalie Rowden were hired as on-site managers of the Hogan Woods Apartments. At that time, the apartment complex was owned and operated by defendants James P. McNutt, Robert E. McNutt, Michael McNutt, and the Ronald E. McNutt Family Trust (collectively, "the McNutt family" or "McNutt defendants"). In 1999, the McNutt family transferred the apartments to Hogan Woods, LLC.
Initially, Darin and Natalie were employed by a third-party property manager, but, beginning in 2005, they became employees of Hogan Woods, LLC. Their employment duties included everything associated with managing and leasing apartments, such as getting units ready for rental, showing units and filling out leasing paperwork, managing maintenance, and handling payroll, accounts payable, rent collection, and deposits. They had an office at the apartment complex and, as part of their compensation package, they lived rent free with their four children in one of the apartments, Unit 112.
After moving into that unit, Darin developed allergies, skin rashes, and bronchitis
, and he noticed mold in the apartment. Between 2006 and 2007, Natalie experienced fatigue, headaches, and other symptoms. She likewise observed mold in the apartment and made some efforts to remove it, including cleaning, painting, and using a dehumidifier, but the mold returned.
In February 2014, Darin and Natalie informed defendants that they could no longer live at Hogan Woods because of recurring mold problems there. The Rowden family then moved out of Unit 112 to an off-site residence, but for several months Darin and Natalie continued to work in the office. Hogan Woods, LLC, reimbursed the Rowdens for the cost of temporary motel housing and then signed a lease on their behalf with another entity to meet its "compensation package" obligations as Darin and Natalie continued to manage the Hogan Woods Apartments from the off-site residence. In July 2014, Darin and Natalie informed defendants that their doctor had advised them not to return to Hogan Woods or come in contact with anything from Hogan Woods, including mail and rent checks. A few months later, on November 8, 2014, Michael McNutt, the managing member of Hogan Woods, LLC, sent Darin and Natalie a letter terminating their employment.
That same month, Darin and Natalie filed workers’ compensation claims for an occupational disease based on "toxic exposure" during their employment for Hogan Woods, LLC. Sedgwick Claims Management Services denied the claims, and Darin and Natalie requested hearings before an administrative law judge (ALJ). The ALJ upheld the denials and Darin and Natalie then appealed those decisions to the Workers’ Compensation Board.
The board issued its final order as to Natalie in July 2016 and as to Darin in August 2016. Those orders, which we later discuss in greater detail, affirmed the ALJ's orders. With regard to Natalie, the board ultimately concluded that the record before it did not "persuasively establish that claimant's apartment was ‘severely water damaged’ or that there were ‘elevated levels’ of trichothecenes (mycotoxins) in the apartment," and, therefore, that "the record does not persuasively establish the existence of an occupational disease related to claimant's alleged work exposure to trichothecenes/mycotoxins." With regard to Darin, the board similarly concluded that it was "not persuaded that this record establishes the existence of an occupational disease related to claimant's alleged work exposure to mold/mycotoxins." Neither Darin nor Natalie sought judicial review of the board's orders.
Meanwhile, plaintiffs filed this civil action in April 2015 against Hogan Woods, LLC, and against the McNutt family on the ground that the McNutt family had used Hogan Woods, LLC, as their alter ego without regard to corporate form.1 Specifically, Darin and Natalie alleged claims against all defendants based on the Employer Liability Act (ELA), the Oregon Safe Employment Act (OSEA), Oregon's Residential Landlord Tenant Act (RLTA), wrongful discharge, unlawful employment discrimination, and breach of contract; and, along with their four children, they alleged negligence, conversion, and trespass-to-chattels claims against defendants.
In May 2016, Hogan Woods, LLC, sold its only asset, the Hogan Woods Apartments, and distributed the sale proceeds to its members, the McNutt family. Plaintiffs then amended their complaint to add a claim that the distribution of proceeds violated the Uniform Fraudulent Transfer Act (UFTA), ORS 95.200 to 95.310.
Thereafter, defendants filed motions for summary judgment against the claims on various grounds, and the McNutt family filed an additional motion directed at plaintiffs’ veil-piercing theory. As relevant to this appeal, defendants argued that the Workers’ Compensation Board had determined that plaintiffs had not suffered a toxic exposure at the apartments—a determination that was entitled to preclusive effect and prevented them from proving the opposite in a civil action; that the RLTA claim failed as a matter of law because Darin and Natalie fell within a statutory exception for "[o]ccupancy by an employee of a landlord whose right to occupancy is conditional upon employment in and about the premises," ORS 90.110(7) ; and that their work as managers of the Hogan Woods Apartments was not "inherently dangerous" for purposes of imposing liability under the ELA. With regard to the veil-piercing theory, the McNutt defendants argued that there was no evidence that they had engaged in improper and deceitful behavior that would justify the "extraordinary remedy" of piercing the corporate veil of Hogan Woods, LLC.
At the outset of the hearing on the various motions, the court sua sponte raised concerns that the veil-piercing theory was premature because plaintiffs had not obtained a judgment against the company that it was unable to satisfy. The parties then turned to the other bases for defendants’ motions, including whether the Workers’ Compensation Board's decision was preclusive. Among other things, plaintiffs argued that the standard applied by the board, which turned on causation under a "major contributing cause" standard, was different from whether they could establish toxic exposure for purposes of their civil claims.
After the hearing, the trial court issued a letter opinion in which it ruled almost entirely in favor of defendants. The court granted "summary judgment to defendants on all claims and parts of claims that depend on a finding that plaintiffs were injured by exposure to mycotoxins, because the Workers’ Compensation Board found that plaintiffs Darin and Natalie Rowden were not exposed to them and that finding is preclusive." (Emphasis in original.) The court explained that "[t]he Rowden children are precluded too," because they were in privity with their parents.
With regard to the UFTA claim and veil-piercing theory, the court did not reach the parties’ arguments. Instead, as it had signaled during the hearing, the court was of the view that they were not justiciable "because they depend on plaintiffs holding an uncollectible judgment against the defendant company on one or more of the claims, and plaintiffs don't hold a judgment now." The court stated that its dismissal of those claims, on the basis of ripeness, was without prejudice.
After the court's ruling on the summary judgment motions, plaintiffs moved to amend their complaint to omit...
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