529 P.3d 230
Or.2023Background
- Elkside Development LLC operated Osprey Point RV Resort and sold campground "membership" contracts to customers; Barnett Resorts, LLC (controlled by Chris and Stefani Barnett) bought the resort in April 2017.
- After the purchase, the Barnetts sent a letter refusing to honor the existing membership contracts; 71 plaintiffs (holding 39 contracts) sued Barnett Resorts LLC and the Barnetts individually.
- Plaintiffs pleaded multiple claims; the principal ones on appeal were (1) breach of contract, (2) intentional interference with contract, and (3) statutory elder abuse (most contract-holders were over 65).
- At summary judgment the trial court granted judgment for the Barnetts individually, relying on ORS 63.165 (LLC member/manager immunity); claims against Barnett Resorts LLC survived and proceeded to verdict in a related appeal.
- The Oregon Supreme Court reviewed whether ORS 63.165 bars individual liability for the Barnetts on the three claims and remanded for further proceedings on some issues.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether ORS 63.165 bars an elder-abuse claim against LLC member-managers who "permitted" corporate abuse under ORS 124.100(2) | Plaintiffs: ORS 63.165 should not shield individual member-managers from direct liability when they permitted the LLC to commit elder abuse. | Barnetts: ORS 63.165 immunizes members/managers from personal liability for LLC obligations, so individual claims (including elder abuse) fail. | Court: ORS 124.100(2) imposes direct liability on persons who permit abuse; ORS 63.165 does not bar an elder-abuse claim against member-managers in these circumstances—summary judgment for the Barnetts on this claim was erroneous (reversed). |
| Whether plaintiffs can maintain a breach-of-contract claim against the Barnetts individually | Plaintiffs: Barnetts’ conduct effectively deprived plaintiffs of contract rights; individual liability is permitted. | Barnetts: They are not parties to the membership contracts and lack privity; ORS 63.165 bars personal liability for LLC obligations. | Court: Barnetts are not in privity and cannot be sued individually for breach of Elkside’s contracts; ORS 63.165 bars the breach claim as to the individuals—summary judgment affirmed. |
| Whether ORS 63.165 bars an intentional-interference-with-contract claim against member-managers | Plaintiffs: The interference claim survives because the Barnetts may have acted for individual motives (not merely as agents of the LLC). | Barnetts: ORS 63.165 prevents personal liability where actions were corporate; no evidence of improper means or individual motive. | Court: Whether individuals acted for personal motives (thus exposing them to liability) raises triable issues of agency/motive; the trial court erred to grant summary judgment solely on ORS 63.165—claim survives and remand is required. |
| Standard for reviewing summary judgment and scope of issues | Plaintiffs: Court should consider factual issues raised by motion and opposed evidence. | Defendants: Summary judgment proper where ORS 63.165 provides immunity. | Court: Affirmed that the nonmoving party must produce evidence on issues raised by the motion (ORCP 47); the trial court limited its inquiry to ORS 63.165 and therefore erred on some claims. |
Key Cases Cited
- Cortez v. Nacco Materials Handling Group, 356 Or 254 (2014) (interpreting ORS 63.165 to permit individual liability for acts a member/manager would be liable for in an individual capacity)
- Kinzua Resources v. DEQ, 366 Or 674 (2020) (individuals controlling an operation may be directly liable under statutory schemes despite LLC immunity)
- McGanty v. Staudenraus, 321 Or 532 (1995) (elements required to plead intentional interference with economic or contractual relations)
- Wampler v. Palmerton, 250 Or 65 (1968) (standards for when corporate officers may be individually liable for inducing a corporation to breach contracts)
- Two Two v. Fujitec America, Inc., 355 Or 319 (2014) (summary judgment burden under ORCP 47)
- State v. Gaines, 346 Or 160 (2009) (statutory interpretation focuses on text and context)