Vukanovich v. Kine

Decision Date12 February 2020
Docket NumberA161984
Citation302 Or.App. 264,461 P.3d 223
Parties Mark VUKANOVICH, an individual, Plaintiff-Appellant, v. Larry KINE, an individual; and Larry Kine Properties, LLC, Defendants-Respondents, and Stonecrest Properties, LLC, an Oregon limited liability company; Alan Evans, an individual; and Charles Kingsley, an individual, Defendants.
CourtOregon Court of Appeals

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

Helen C. Tompkins, Lake Oswego, argued the cause for respondents. On the brief were Craig R. Berne and Harris Berne Christensen LLP.

Before Armstrong, Presiding Judge, and Shorr, Judge, and Sercombe, Senior Judge.

SHORR, J.

This appeal is the latest development in a long history of litigation arising out of a failed housing development in Eugene. Our most recent opinions concerned an agreement between plaintiff Vukanovich and defendant Kine1 to work together to purchase a parcel of real property from Umpqua Bank (Umpqua or the bank), and we remanded the case to the trial court for further proceedings on defendant’s equitable defenses to plaintiff’s claim that defendant breached that agreement. Vukanovich v. Kine , 268 Or. App. 623, 342 P.3d 1075 ( Vukanovich II ), adh’d to as modified on recons , 271 Or. App. 133, 349 P.3d 567 (2015) ( Vukanovich III ).2 On remand, the trial court ruled in favor of defendant on the defenses of equitable estoppel and unclean hands. Plaintiff now appeals, raising four assignments of error.

First, plaintiff assigns error to the trial court’s findings of fact that, in plaintiff’s view, impermissibly contradict the jury’s findings of fact. Second, plaintiff assigns error to the trial court’s use of an "any evidence" standard when making factual findings. Third, plaintiff assigns error to specific factual findings made by the court, arguing that there is not any evidence in the record to support them. Lastly, plaintiff assigns error to the court’s legal conclusions on the equitable defenses, arguing that, even if we accept the court’s findings as supported by evidence, those findings did not meet the elements of the defenses as a matter of law. For the reasons that follow, we affirm.

This case has a long and complicated factual background. In Vukanovich II , we provided a thorough summary of the historical facts, and our standard of review in that case compelled us to state the disputed facts in the light most favorable to plaintiff. 268 Or. App. at 626 n. 3, 342 P.3d 1075. In this appeal, however, we do not view the facts in such a light.

Instead, because plaintiff challenges the trial court’s rulings and findings of fact on the equitable defenses, we review the court’s legal conclusions for legal error and its factual findings to determine whether the findings are supported by any evidence in the record. Id. at 633, 342 P.3d 1075. Therefore, we quote below the relevant facts as they were presented in Vukanovich II in order to provide a full context for this factually complicated case. To the extent that factual disputes exist or conflict with those facts that were found by the trial court on remand, we note those disputed facts in the relevant section of the analysis below.

"Plaintiff is a real estate developer with several decades of varying experience in the industry. In spring 2007, he purchased a 43-acre parcel of land in Eugene, Oregon (the city), with a $4.629 million loan from Umpqua. Plaintiff intended to divide the parcel into 102 residential lots and construct the infrastructure needed for a residential development. He planned to sell the lots in two phases: 40 lots in Phase 1 and 62 lots in Phase 2. To meet city requirements, plaintiff purchased two bonds to ensure the construction of the infrastructure for the lots. Plaintiff and his wife personally guaranteed the bonds.
"The Phase 1 lots were ready for sale in late 2007, but they did not sell as planned. By early 2009, plaintiff was struggling to make payments to Umpqua, and the bank initiated foreclosure proceedings. Plaintiff attempted to negotiate with the bank in order to retain the property and, among other things, offered to pay $2.25 million to the bank in exchange for the property and a release from the loan obligation. Those negotiations failed, and, in August of that year, the bank accepted a deed-in-lieu-of-foreclosure and fully released plaintiff from his loan obligations. Plaintiff nevertheless remained hopeful that he might reacquire the property in the future.
"Defendant, who is a real estate broker and developer, first met plaintiff while plaintiff was still in negotiations with the bank. Defendant was representing four or five clients who wanted to purchase lots from plaintiff, but the bank refused to release any lots for sale at the prices offered by defendant. Notwithstanding the failed transactions, defendant’s interest in the property was piqued, and he attempted to purchase it from the bank after the bank obtained the deed-in-lieu-of-foreclosure from plaintiff.
Defendant offered $1.43 million for the property, but the bank rejected that offer, stating that it would accept no less than $2 million.
"Defendant later told plaintiff about his attempt to purchase the property. Plaintiff was not ‘real pleased’ to learn that defendant was attempting to acquire the property, which plaintiff still viewed as his own, and ‘felt like the worst thing for us to do was to start creating a competition.’ Plaintiff and defendant then agreed to work together to purchase the property, and[, on September 29, 2009,] they executed a written ‘Letter of Understanding’ reflecting that agreement. It provided [in relevant part]:
" ‘Larry Kine and Mark Vukanovich are working in conjunction to purchase property in Eugene, Oregon, known as Moon Mountain Subdivision from Umpqua Bank.
" ‘Mark Vukanovich is the original developer of the project and has signed a deed in lieu to Umpqua Bank ... said deed is in the process of being recorded.
" ‘Larry and Mark are responsible for bringing in 50% of the dollars needed to purchase the property from Umpqua Bank including costs associated with Bonding, Erosion Control and City Fees. It is anticipated that the land will be purchased for $1,750,000 and the associated costs will be $90,000 for a total investment of $1,840,000.
" ‘* * * * *.’
"* * * * *
"A month after entering into their agreement, the parties made their first joint offer to the bank, in the amount of $1.51 million. Although plaintiff and defendant worked together on that offer, defendant extended the offer to the bank, and the proposed sales agreement identified the purchaser as ‘Larry Kine Properties, LLC.’ Umpqua rejected that offer.
"While the parties were putting together their offers, plaintiff shared a substantial amount of information with defendant that plaintiff would not have shared absent their agreement to jointly purchase the property. Among other things, plaintiff and defendant discussed plaintiff’s bonds. At one point, defendant suggested to plaintiff that they tap the bonds to pay for the Phase 2 infrastructure and that, ‘if the bond company comes after plaintiff, he could file for bankruptcy.’ Plaintiff told defendant ‘that’s not an option for me financially or ethically.’ Defendant nonetheless continued to explore the potential use of the bonds, discussing the possibility with his other investment partners, Evans and Kingsley. Defendant wanted the city to enforce the bonds ‘to build out infrastructure on Phase 2.’ He further recognized that ‘it would be very difficult’ to accomplish that plan if he remained partners with plaintiff, in light of the fact that the bond company could go after plaintiff for any expenditures it was required to make on the bond.
"In early December 2009, the parties made a second joint offer on the property, proposing to purchase it from the bank for $1.71 million. The parties again submitted the offer through defendant and designated ‘Larry Kine Properties, LLC as the proposed purchaser. The bank countered with an addendum, which lowered the price to $1.6 million, but specified that the property would be sold ‘as is’ and the deal must close by December 30, 2009. Plaintiff and defendant accepted, agreeing to the terms proposed by the bank.
"*** On December 28, two days before the transaction was scheduled to close, defendant told plaintiff that he and his group were not ready to close the deal and would have to request a 30-day extension. In fact, at that time, defendant intended to terminate his partnership with plaintiff and was working with Evans and Kingsley to purchase the property without plaintiff’s involvement, so that defendant could pursue the use of the bonds to pay for the Phase 2 infrastructure. In early January 2010, defendant left a voicemail for plaintiff, requesting that plaintiff provide him more information about the bonds and other details about plaintiff’s dealing with the bank, ostensibly for the purpose of ‘making the parties’ offer back to the bank.’ Shortly thereafter, on January 12, 2010, the parties spoke again. At that time, defendant told plaintiff both that he no longer wanted to pursue the transaction with plaintiff and that he was not interested in purchasing the property at all[.]
"* * * * *
"After defendant ended their partnership, plaintiff remained committed to purchasing the property. * * * Meanwhile, defendant, along with Evans and Kingsley, continued to work on their plan to acquire the property and use the bonds to finance the Phase 2 infrastructure. *** [D]efendant made a $1.6 million offer on the property. During the same time period, defendant or his investment partners were exerting pressure on the city to enforce the bonds.
"Shortly after defendant made his offer to purchase the property, plaintiff independently offered to purchase the property, first for $1.1 million and then for $1.25 million. *** Umpqua ultimately agreed to sell the property to defendant for $1.2 million,
...

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