Stachlowski v. 1000 Broadway Bldg. Ltd. P'ship
| Decision Date | 01 July 2020 |
| Docket Number | A164678 |
| Citation | 305 Or.App. 174,470 P.3d 376 |
| Parties | Gary STACHLOWSKI, in his capacity AS TRUSTEE OF the: THOMAS P. MOYER IRREVOCABLE TRUST for the Benefit of Ashley Thrift, the Thomas P. Moyer Irrevocable Trust for the Benefit of Michael Thrift, the Thomas P. Moyer Irrevocable Trust for the Benefit of Ian Moyer, and the Thomas P. Moyer Irrevocable Trust for the Benefit of Patrick Moyer, Plaintiff-Respondent, v. 1000 BROADWAY BUILDING LIMITED PARTNERSHIP, an Oregon limited partnership, Defendant-Respondent, and First Republic Bank, a California corporation, dba First Republic Trust Company, Defendant-Appellant. |
| Court | Oregon Court of Appeals |
Matthew J. Kalmanson, Portland, argued the cause for appellant. Also on the brief were Janet M. Schroer and Hart Wagner LLP.
Bruce H. Cahn, Portland, argued the cause for respondent Gary Stachlowski. Also on the brief were Brad T. Summers and Lane Powell PC.
No appearance for respondent 1000 Broadway Building Limited Partnership.
Before Armstrong, Presiding Judge, and Tookey, Judge, and Shorr, Judge.
This appeal involves a dispute over fees assessed by First Republic Bank (First Republic), the trustee to the Thomas P. Moyer Revocable Living Trust (TPM Living Trust), when managing the 1000 Broadway Building, a downtown Portland building that was developed by the late Thomas P. Moyer Sr. The 1000 Broadway Building is not an asset of the TPM Living Trust, but the TPM Living Trust is a remote owner of a small percentage interest in the 1000 Broadway Building and effectively controls the management of the 1000 Broadway Building. The management and ownership structure of the 1000 Broadway Building is quite complex and will be discussed in greater detail below. For the purpose of this introduction, it is sufficient to note that plaintiff is the trustee of a number of trusts that own a minority interest as limited partners in the 1000 Broadway Building Limited Partnership (1000 Broadway Building LP), which, in turn, owns the 1000 Broadway Building.
Plaintiff filed a derivative action on behalf of 1000 Broadway Building LP against defendant First Republic for, among other claims, conversion, money had and received, and unjust enrichment. Plaintiff alleged that First Republic had wrongfully exacted trustee fees and attorney fees from the limited partnership.1 During the litigation, plaintiff indicated that it was prepared to seek summary judgment and requested permission from the trial court to file its summary judgment documents under seal. At the same time, taking the position that the court was not the proper forum for this dispute, First Republic filed a petition to compel arbitration. 1000 Broadway Building LP subsequently joined in that petition and filed a reply brief in support of First Republic's petition to compel arbitration. The trial court denied First Republic's petition on the merits, determined that 1000 Broadway Building LP's subsequent joinder was both limited to procedural issues and now moot, and struck 1000 Broadway Building LP's reply brief. 1000 Broadway Building LP, but not First Republic, then filed an interlocutory appeal of that order.2 While that appeal was pending, the court proceeded with considering plaintiff's motion for summary judgment and ultimately granted plaintiff summary judgment on its conversion claim against First Republic.3
First Republic now appeals that summary judgment ruling, asserting that (1) the trial court lacked jurisdiction to rule on plaintiff's summary judgment motion while 1000 Broadway Building LP's interlocutory appeal was pending and (2) the court erred when it granted plaintiff's motion for summary judgment. For the reasons explained below, we conclude that the court had jurisdiction to proceed to summary judgment, but the court erred when it granted summary judgment to plaintiff on its conversion claim against First Republic, because there are disputed issues of fact to be resolved by the factfinder. Accordingly, we reverse and remand.
We begin with a more detailed explanation of the ownership structure of the 1000 Broadway Building, which we have previously described as "labyrinthine." Hawkins v. 1000 Limited Partnership , 282 Or. App. 735, 738, 388 P.3d 347 (2016), rev. den. , 361 Or. 543, 397 P.3d 32 (2017). We explain that complex structure as best we can in the text below, but the reader may also benefit by considering the flow chart from plaintiff's complaint that is attached as an appendix to this opinion. The basic structure of the various related entities is undisputed.4
The 1000 Broadway Building is owned by 1000 Broadway Building LP. Eleven trusts established for the benefit of Thomas Moyer Sr.’s grandchildren collectively hold a 50 percent interest (or 4.55 percent each) in 1000 Broadway Building LP as limited partners.
The trustee of four of those trusts is the plaintiff in this case. A company called 1000 Limited Partnership (1000 LP) is the general partner of 1000 Broadway Building LP and holds the remaining 50 percent interest in it.
Under 1000 Broadway Building LP's partnership agreement, 1000 LP, as the general partner, has all "rights, power and authority to manage the business and affairs of the Partnership." In accordance with that agreement, 1000 LP is authorized to "enter into agreements to manage, maintain, lease and otherwise deal with Partnership property" and to "delegate duties and responsibilities * * * necessary for the proper operation and management of the business of the Partnership," which includes management and maintenance of the 1000 Broadway Building. By contrast, the limited partners—the grandchildren's trusts—are not entitled to "take part in, nor interfere in any manner with, the management, control, conduct or operation of [1000 Broadway Building LP]."
Four trusts established on behalf of Thomas Moyer Sr.’s children collectively hold a 99 percent interest in 1000 LP as limited partners. The remaining one percent interest in 1000 LP is held by its general partner, 1000, Inc., an Oregon corporation. Under 1000 LP's partnership agreement, 1000, Inc. has sole authority to manage the affairs of the partnership to the exclusion of the limited partners.
1000, Inc., in turn, is wholly owned by the TPM Living Trust. First Republic, the primary defendant in plaintiff's derivative suit, was named successor trustee of the TPM Living Trust in 2007. First Republic became trustee in 2010, at which point First Republic became responsible for administering the TPM Living Trust.
Following the flow chart up from the 1000 Broadway Building at the bottom to the TPM Living Trust at the top (or vice versa from top to bottom), the upshot is that the TPM Living Trust, and First Republic through its trustee role, effectively manages the 1000 Broadway Building. This is true despite the fact that the TPM Living Trust is a very remote and limited owner (through other entities) of the 1000 Broadway Building LP partnership that owns the building.
In October 2010, First Republic and Vanessa Sturgeon (Moyer Sr.’s granddaughter, acting as his attorney-in-fact) agreed that First Republic would be compensated for its services as trustee to the TPM Living Trust at a rate of .35 percent of the trust's assets for the first two years, followed by a .20 percent fee in subsequent years. The initial .35 percent fee was set to expire as of July 30, 2012.
In April 2012, First Republic and Sturgeon (again acting for Moyer Sr.) renegotiated some of the terms of the fee by decreasing the fee gradually from .35 percent to .275 percent beginning on August 1, 2012, and for the next two years before dropping to the originally negotiated end point of .20 percent.
At the same time in April 2012, 1000 LP, acting as the general partner for 1000 Broadway Building LP and 1000, Inc., entered into a property management agreement (PMA) by which 1000, Inc. would manage the 1000 Broadway Building. 1000, Inc. agreed to provide both property management and asset management services. As a practical matter, the 1000 Broadway Building requires substantial property and asset management services. Property management services include repairs, purchasing supplies, and collecting rents from tenants. Asset management services include managing finances and budgets, hiring consultants, preparing reports and market analyses, prosecuting and settling any claims related to the asset, hiring agents including attorneys and brokers, and other related responsibilities.
Under the PMA, 1000 Broadway Building LP appointed 1000, Inc. as the exclusive agent for property management services, in exchange for three percent of the 1000 Broadway Building's gross monthly revenues, and for asset management services, in exchange for .35 percent of the building's value. 1000, Inc. provided those services under the control and supervision of First Republic.5
First Republic instructed 1000 Broadway Building LP to directly pay First Republic for the asset management services it provided through 1000, Inc. under the PMA. To that end, First Republic periodically instructed 1000, Inc. to issue checks in 1000 Broadway Building LP's name to First Republic. In certain communications between First Republic and 1000, Inc., First Republic provided invoices and referred to payment by 1000 Broadway Building LP of "trustee's fees" or "trustee's fees attributable to the management of the 1000 [Broadway Building]." That payment model was made possible by the ownership structure described above—1000, Inc. is the general partner of 1000 LP, which is the general partner of 1000 Broadway Building LP. First Republic retained an outside accountant to advise it on how to source its fees.
Plaintiff's derivative lawsuit alleged that First Republic had converted funds from 1000 Broadway...
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