Vandevender v. Thierolf

• Decision Date: 07 February 2001
• Citation: 172 Or. App. 331,18 P.3d 473
• Parties: Jesse VANDEVENDER, Sr., and Nannie R. Vandevender, Appellants, v. Richard B. THIEROLF, Jr., Respondent.
• Court: Oregon Court of Appeals

18 P.3d 473

172 Or. App. 331

Jesse VANDEVENDER, Sr., and Nannie R. Vandevender, Appellants, v. Richard B. THIEROLF, Jr., Respondent.

(95-4229-L-2; CA A104903)

Court of Appeals of Oregon.

Argued and Submitted April 21, 2000.

Decided February 7, 2001.

George W. Kelly, Eugene, argued the cause and filed the briefs for appellants.

Robert L. Cowling, Medford, argued the cause for respondent. With him on the brief were Benjamin M. Bloom and Hornecker, Cowling, Hassen & Heysell.

Before EDMONDS, Presiding Judge, and ARMSTRONG and KISTLER,¹ Judges.

KISTLER, J.

Plaintiffs brought this legal malpractice action against defendant, an attorney who had represented them in a livestock dispute. The trial court entered a directed verdict in defendant's favor. We affirm.

Because this case arises on defendant's motion for directed verdict, we set out the evidence in the light most favorable to plaintiffs. Metropolitan Property & Casualty v. Harper, 168 Or.App. 358, 367, 7 P.3d 541 (2000). Plaintiffs raised cattle in Jackson County. In December 1992, plaintiffs took out a loan from the United States National Bank so that they could increase their herd. To get the loan, plaintiffs granted the bank a security interest in their "farm products, livestock, equipment, accounts, contract rights, chattel paper, general intangibles and inventory[.]"² In 1994, plaintiffs needed additional money and restructured their loan with the bank. On October 24, 1994, the bank gave them a $140,000 short-term loan that came due on May 5, 1995. In addition to the property used to secure the first loan, plaintiffs gave the bank a deed of trust conveying their interest in certain real property (the Stewart Avenue property).

In the early 1990s, plaintiffs had hired P.J. Burgess to help with their cattle business. While he was working for plaintiffs, Burgess borrowed approximately $30,000 from them. In 1993, Burgess left plaintiffs' employment in Jackson County to start his own cattle operation in Prineville. Burgess suggested that he take plaintiffs' cattle to Prineville and work out what he owed them by taking care of their cattle. Plaintiffs understood that Burgess would credit what he owed them against any obligations they incurred as a result of Burgess's care of their cattle.

Problems arose after Burgess took plaintiffs' cattle to Prineville. According to plaintiffs, Burgess sold part of plaintiffs' herd and kept the proceeds. Plaintiffs asked for an accounting, but Burgess ignored them. In November 1994, Burgess sent plaintiffs a bill for approximately $35,000 for taking care of the cattle. Plaintiffs disputed Burgess's bill. Not only did they believe that he had charged them too much, but they concluded that he had not given them a credit on their bill for everything he owed them. Plaintiffs did not pay the bill, and Burgess filed a notice of intent to foreclose. The notice stated that on January 2, 1995, plaintiffs' cattle would be sold at a foreclosure sale to satisfy Burgess's agricultural services lien in the amount of $35,417.85 plus interest and to recover the cost of caring for the cattle until the date of the foreclosure sale.³

Approximately one month before the scheduled foreclosure sale, plaintiffs' son met with defendant. He asked defendant if plaintiffs could get an injunction to stop the sale. According to plaintiffs' son, defendant said "no." Plaintiffs then tried to settle their dispute with Burgess. After consulting with plaintiffs, defendant sent Burgess's lawyer a letter stating that plaintiffs would pay Burgess $9,000 to settle the matter. Later, plaintiffs offered to pay Burgess $25,000 to settle. Burgess did not accept either offer. In December 1994, the bank told plaintiffs that Burgess's lien violated plaintiffs' loan agreement with the bank. The bank demanded that plaintiffs either post the amount of Burgess's lien or a bond to protect the bank in the event that the cattle were sold.

Relying on defendant's advice, plaintiffs filed a petition for bankruptcy under Chapter 13 of the bankruptcy code. See 11 U.S.C. § 1301 et seq. After the bankruptcy petition was filed, the case was referred to mediation. Mediation proved unsuccessful, but afterwards plaintiffs, the bank, and Burgess engaged in several weeks of settlement discussions. Defendant recommended that plaintiffs enter into a proposed settlement with the bank and Burgess.⁴ The proposed settlement required plaintiffs to surrender their cattle to the bank along with a pickup truck and a trailer. The bank would sell Burgess the cattle for $50,000 and reduce plaintiffs' debt to the bank to $55,000. The bank agreed to release its security interest in all of plaintiffs' property except for its interest in the Stewart Avenue property. Finally, Burgess would forgive plaintiffs' debt to him, and they would dismiss their bankruptcy petition.

Plaintiffs signed the settlement agreement, which defendant told them was only a preliminary agreement. Later, plaintiffs told defendant that they had received an offer to buy their candy store for $100,000 and wanted to get out of the settlement. Defendant said that he could not help them do that and that, if they wanted to get out of the settlement, he could not continue to represent them. Plaintiffs then brought this action alleging that defendant had been negligent in representing them and that they had been damaged as a result. Plaintiffs' seventh amended complaint contains 11 specifications of negligence. Among other things, plaintiffs alleged that defendant had been negligent "[i]n filing a [C]hapter 13 bankruptcy rather than an action directly attacking Burgess['s] claimed `feed lien'" in state court.

At the close of plaintiffs' case, defendant moved for a directed verdict because plaintiffs had failed to prove damages. Defendant argued that plaintiffs had failed to prove that they would have achieved a better outcome if defendant had not been negligent. After hearing defendant's argument, the trial court asked plaintiffs, "What is the evidence of what the outcome would have been that's in the record?" Plaintiffs responded by focusing on a single specification of negligence— whether defendant erred in recommending that they file a bankruptcy petition instead of "directly attacking Burgess['s] claimed `feed lien'" in state court. They explained that their expert, Owen McCullen, had "said that, had they not filed the [Chapter] 13, they should have been able to hold on to the herd; that's what this case is about."

Defendant acknowledged that McCullen made that statement on direct examination but argued that he withdrew it on cross-examination. According to defendant, McCullen had testified on cross-examination that he could not say that plaintiffs would not have lost their herd if they had sought to enjoin the foreclosure sale in state court. Plaintiffs replied that McCullen's testimony on cross-examination was susceptible to two interpretations, and the trial court denied defendant's motion.

After all the evidence had been submitted, defendant renewed his motion for a directed verdict.⁵ He argued that there was no evidence that the outcome would have been different if he had not been negligent. The following colloquy occurred:

"THE COURT: Didn't [plaintiffs' expert] testify that they should have been able to hold on to the herd?

"[DEFENDANT'S ATTORNEY]: He said that on direct examination, and I believe he withdrew it on cross-examination.

"* * * * *

"[PLAINTIFF'S ATTORNEY]: I think he did address it himself; he said that they would have held on to the herd had they gone to state court, which is what they should have done.

"THE COURT: And if we had to say, `Tell me what it is they would have gotten, the plaintiffs would have gotten, had there not been negligence or malpractice in this case,' you would say that what they would have gotten is they would have held on to the herd?

"[PLAINTIFF'S ATTORNEY]: Yes, and got the value of the herd. That's what the case is about; that's what it's always been about."

Plaintiffs' malpractice claim, as their attorney twice explained it to the court, turned on their expert's testimony that plaintiffs would have been better off if they had gone to state court and opposed the foreclosure sale instead of filing for bankruptcy. Plaintiffs identified no other evidence or theory in response to the trial court's questions. Because the expert's testimony had been transcribed by that time, the court reviewed the transcript before ruling on defendant's motion. The next day, the court announced on the record that it had told the parties that it was granting defendant's motion for a directed verdict. The court added:

"I will indicate that I have advised [plaintiffs' counsel] that, if he made a motion pursuant to Rule 63B, that I would submit the case to the jury. He has consulted with his clients and has decided not to make the motion to submit the case to the jury, and so we will not."

On appeal, plaintiffs argue that the court erred in directing a verdict because there was evidence in the record from which the jury could have found that defendant's negligence damaged them. They also argue that the court erred in excluding evidence that would have advanced their case. Defendant responds that we need not consider plaintiffs' arguments because plaintiffs gave up any right to challenge the court's rulings when they declined its invitation to submit their case to the jury. Alternatively, defendant argues that the trial court's directed verdict and evidentiary rulings were correct. Because we agree with defendant that the rulings were correct, we need not decide whether plaintiffs' decision not to submit the case to the jury waived any objection that plaintiffs might have to the court's rulings.

We begin with the trial court's ruling granting defendant's motion for a directed verdict. In order to prove a claim for legal malpractice, plaintiffs had to establish that "defendant's representation...