Vertopoulos v. Siskiyou Silicates, Inc.

• Citation: 177 Or. App. 597,34 P.3d 704
• Parties: Stefanos VERTOPOULOS and Nicholas D. Nicklos, Appellants-Cross-Respondents, v. SISKIYOU SILICATES, INC., an Oregon corporation, and R.A.M. Exploration, Inc., an Oregon corporation, Respondents, and Raymond A. Huckaba and Lee Meyer, Respondents-Cross-Appellants, and Markey L. James, Defendant.
• Decision Date: 31 October 2001
• Court: Court of Appeals of Oregon

34 P.3d 704

177 Or. App. 597

Stefanos VERTOPOULOS and Nicholas D. Nicklos, Appellants-Cross-Respondents, v. SISKIYOU SILICATES, INC., an Oregon corporation, and R.A.M. Exploration, Inc., an Oregon corporation, Respondents, and Raymond A. Huckaba and Lee Meyer, Respondents-Cross-Appellants, and Markey L. James, Defendant.

9710-07751; A106573.

Court of Appeals of Oregon.

Argued and Submitted March 2, 2001.

Decided October 31, 2001.

Michael J. Morris, Portland, argued the cause and filed the brief for appellants-cross-respondents.

Jonathan M. Radmacher, Portland, argued the cause for respondents and respondents-cross-appellants. On the briefs were Christine Coers-Mitchell and McEwen Gisvold Rankin Carter & Streinz.

Before EDMONDS, Presiding Judge, and HASELTON and KISTLER, Judges.

KISTLER, J.

Plaintiffs sold land to defendants, who intended to operate a mine on it. Defendants began mining the land but also began harvesting timber. Plaintiffs brought this action against defendants, alleging that they had cut the timber in violation of two land sale agreements. Defendants moved for summary judgment because the written land sale agreements did not prohibit them from cutting timber. The trial court granted defendants' motion and awarded them some but not all of the attorney fees they sought. Plaintiffs have appealed, and defendants have cross-appealed. We affirm on both the appeal and the cross-appeal.

Because this case arises on defendants' summary judgment motion, we state the facts in the light most favorable to plaintiffs. See Olson v. F & D Publishing Co., Inc., 160 Or.App. 582, 584, 982 P.2d 556 (1999)

. Plaintiffs owned 40 acres of land in Siskiyou County, California. In 1992, plaintiffs leased the mining and surface rights on the property to Custom Trading, Inc. According to plaintiffs, the lease prevented Custom Trading from removing or harvesting timber without first satisfying certain conditions.

In 1993, defendants Raymond Huckaba and Lee Meyer, the principals of defendant Siskiyou Silicates, Inc., began discussions with plaintiffs about buying plaintiffs' land and mineral rights. During those talks, Siskiyou orally agreed to assume the conditions of Custom Trading's lease. Siskiyou also orally agreed that the timber would serve as security for the purchase price; no timber would be cut until the purchase price was paid.

On June 14 and 15, 1993, plaintiffs and Siskiyou signed two "letters of intent." Each letter recites that it is "an understanding of an agreement" reached between the parties. The June 14, 1993, letter recites that Siskiyou agreed to buy the surface and mineral rights on 35 acres and the mineral rights on five of the 40 acres for $140,000. The June 15, 1993, letter recites that Siskiyou agreed to buy 35 acres of the land for $140,000.¹ Each letter states that Siskiyou will pay $20,000 of the purchase price by the closing date and that the balance will be paid in monthly installments over a seven-year period. Neither letter prohibits Siskiyou from cutting any trees or refers to the timber in any way. Three months later, on September 17, 1993, Siskiyou gave plaintiffs a note for $120,000 and a deed of trust to secure the note.

Immediately after signing the letters of intent, Siskiyou took possession of the property and began mining and timber harvesting operations. It failed, however, to make the payments that it owed. When confronted with that fact, Siskiyou sought to defer payment until March 1, 1994. In response, plaintiffs asked defendants Huckaba and Markey James to sign a note dated November 1, 1993, in which Huckaba and James would agree to pay $93,595 over a three-year period.

Sometime after February 3, 1994, plaintiffs signed a letter of intent that purports to memorialize a February 3, 1994, agreement among plaintiffs, Huckaba, and James. That letter recites that plaintiffs had agreed to sell the mineral rights to Siskiyou Silicates and that Huckaba and James had agreed to "assume the rights of the agreement of Siskiyou Silicates" in return for making certain payments to plaintiffs and for signing and delivering the November 1, 1993, note to plaintiffs. The record does not show that either Huckaba or James signed the February 3, 1994, letter of intent, although a signed copy of the November 1, 1993, note is attached to the partially signed letter of intent.

It appears that the February 1994 sale to Huckaba and James was never completed; instead, Huckaba and James formed a new corporation, R.A.M. Exploration, Inc., which agreed in May 1994 to assume Siskiyou's obligations under the June 1993 letters of intent. In his affidavit, plaintiff Stefanos Vertopoulos states that a letter of understanding was prepared on May 17, 1994.² The record also reflects that, on May 17, 1994, defendant R.A.M. signed, and defendants Huckaba and James personally guaranteed, a note to plaintiffs for $140,000. The May 17, 1994, note was secured by a deed of trust.

In 1997, plaintiffs sued defendants for breach of contract. They alleged that Siskiyou had entered into a land sale agreement on June 15, 1993, that permitted defendants to remove minerals but "prohibited [them] from removing any standing timber until the full purchase price was paid." Plaintiffs also alleged, and defendants admitted, that R.A.M. entered into a land sale agreement on May 17, 1994, in which it agreed to purchase the Siskiyou County property. Plaintiffs claimed that defendants had removed standing timber in violation of both agreements.

Defendants moved for summary judgment because none of the documents surrounding the land sale agreements contained a promise not to cut timber.³ Defendants reasoned that the statute of frauds barred plaintiffs from enforcing any oral promise that defendants had allegedly made as part of the land sale agreement. Plaintiffs responded, among other things, that defendants had partly performed and that that was sufficient to take the case out of the statute of frauds. Alternatively, they argued that their "equity was so great" that it would be unconscionable to apply the statute of frauds. The trial court granted defendants' summary judgment motion and later awarded only defendant Huckaba attorney fees.

Plaintiffs' first two assignments of error are directed at the trial court's ruling granting defendants' summary judgment motion.⁴ Most of the issues that plaintiffs raise on appeal in support of those assignments of error were not raised below, and the issues that they did preserve below provide no basis for saying that the trial court erred in granting defendants' summary judgment motion. See Miller v. Salem Merchant Patrol, Inc., 165 Or.App. 266, 272-73, 995 P.2d 1206 (2000)

. We accordingly affirm the trial court's summary judgment ruling without further discussion.

Plaintiffs' third assignment of error is directed at the trial court's award of attorney fees to defendant Huckaba. Huckaba responds that plaintiffs brought an action on the 1994 land sale agreement and that the 1994 "land sale agreement" consists of the May 1994 letter of understanding, the grantors' deed, the 1994 note, and the 1994 trust deed. More specifically, Huckaba observes that the note that R.A.M. gave plaintiffs authorizes an award of fees "[i]f action be instituted on this note."⁵ Huckaba also relies on two provisions of the 1994 trust deed as the basis for recovering fees against plaintiffs.

We start with the choice of law. As noted above, the parties agree that California law governs their rights under the contract. See n 5 above. It follows that California law also governs defendant Huckaba's right to recover fees under the contract. See Gorman v. Boyer, 274 Or. 467, 470, 547 P.2d 123 (1976)

; Seattle-First National Bank v. Schriber, 51 Or.App. 441, 448, 625 P.2d 1370 (1981). Huckaba's fee claim raises three issues. The first is whether the note and trust deed are separate from or part of the "land sale agreement" on which plaintiffs brought this action. On that point, the California courts have explained that "it is the general rule that several papers relating to the same subject matter and executed as parts of substantially one transaction, are to be construed together as one contract." Nevin v. Salk, 45 Cal.App.3d 331, 338, 119 Cal.Rptr. 370 (1975). In Nevin, the court considered a similar issue to the one that plaintiffs raise here-whether to allow an award of attorney fees based on a provision in one instrument when the sale agreement contained no fee provision. The court reasoned:

"Inasmuch as the provisions of the notes and the security instruments were incorporated in the agreement, and made a part thereof, and inasmuch as the sale involved one piece of property * * *, the trial court properly concluded all the instruments formed a single contract and the fact the agreement itself contained no provision for payment of fees in the event of a lawsuit is of no consequence."

Id. The court also explained: "The documents need not be executed contemporaneously; it is a question of fact as to whether several writings comprise one transaction." In this case, the May 17, 1994, land sale agreement, note, and trust deed were all entered into on the same day. The trial court could, and implicitly did, find in ruling on defendants' fee petition that the various instruments formed one contract. See id.; Ball v. Gladden, 250 Or. 485, 487, 443 P.2d 621 (1968)

.

Even though the various documents formed a single contract, the next question is whether the fee provision in the note was limited to an action to collect on the note or whether it applied to any action on the contract. On that point, subsection 1717(a) of the California Civil Code provides:

"In any action on a contract, where the contract specifically provides that attorney's fees and costs, which are incurred to enforce that contract, shall be awarded either to one of the parties or to the prevailing party, then the party who is determined to be the

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