372 P.3d 528
Or. Ct. App.2016Background
- Summit Accomodators, a qualified intermediary for IRC §1031 exchanges, diverted client exchange funds through an entity called Inland to finance principals’ personal investments, causing multi‑million dollar shortfalls by 2008.
- Kevin Keillor and his firm provided discrete transactional legal work for Summit and its principals from 1995–2001 (not as general counsel); he drafted exchange contracts that required deposits in financial institutions and advised Inland was not a financial institution.
- After Keillor left (2001), diversion of funds escalated; Lane Lyons (successor counsel) warned principals in an October 17, 2006 memorandum that the Inland practice posed fraud/fiduciary risks; principals continued the practice and Summit filed Chapter 11 in December 2008.
- Bankruptcy trustee Kevin Padrick (liquidating trustee) sued Keillor and his firm in 2010 in two capacities: (1) as Summit’s successor in interest — alleging breach of fiduciary duty and malpractice; and (2) as assignee of 2008 clients — alleging defendants aided and abetted principals’ torts causing loss between May–Nov 2008.
- The trial court granted defendants summary judgment, holding (a) Summit’s direct breach claim was time‑barred (statute of limitations), and (b) the assignee’s aid‑and‑abet claim failed because there was no evidence of concerted action or the requisite substantial assistance in 2008; plaintiff appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Summit’s direct breach‑of‑fiduciary‑duty claim is time‑barred under ORS 12.110(1) (discovery rule) | Summit (via trustee) argued defects were not reasonably discoverable until later and suit was timely under bankruptcy tolling (11 U.S.C. §108(a)) | Keillor argued Summit’s principals knew or should have known of legally cognizable harm by Oct 18, 2006 (Lyons’ memo), so the two‑year limitations ran before the §108(a) window | Held: Claim time‑barred — as a matter of law Summit knew or should have known by Oct 18, 2006; summary judgment affirmed on statute of limitations ground |
| Whether Keillor’s knowledge of prior diversions creates triable issue of fact for direct claims (knowledge/conflict) | Padrick: circumstantial evidence supports an inference Keillor knew funds were being misused and that his advice created conflicts — triable issue | Keillor: his work was limited and transactional; he did not know Inland’s funds were used for nonexchange purposes | Held: Court found the knowledge question close but ultimately unnecessary to decide because statute of limitations disposed of the direct claim |
| Whether defendants are jointly liable to 2008 clients under Restatement §876 (aid and abet: concerted action or substantial assistance) | Padrick: Keillor’s prior advice and alleged knowledge substantially assisted or encouraged principals, making him jointly liable for 2008 losses | Keillor: his work ended in 2001; no concerted plan or active, contemporary participation in 2008 torts; any prior advice was too remote to be substantial assistance | Held: Aid‑and‑abet claim fails — no evidence of concerted action and the inference that 1995–2001 advice substantially assisted torts committed in 2008 is too speculative; summary judgment affirmed |
| Whether attorney‑client relationship or attorney immunity (Reynolds) bars joint liability | Padrick: professional‑role evidence shows advice furthered torts and may overcome immunity | Keillor: alleged acts were within scope of lawyer‑client representation and thus immune under Reynolds | Held: Court affirmed summary judgment on substantial‑assistance grounds and did not reach immunity issue; immunity discussed as an alternative ground but unnecessary |
Key Cases Cited
- Jones v. Gen. Motors Corp., 325 Or 404 (summary judgment standard for reviewing record on appeal)
- Gaston v. Parsons, 318 Or 247 (discovery rule: injury requires knowledge of harm, causation, and tortious conduct)
- T. R. v. Boy Scouts of Am., 344 Or 282 (when discovery is a question of law susceptible to judgment)
- Granewich v. Harding, 329 Or 47 (Oregon recognizes Restatement §876 principles for aider/abettor liability)
- Reynolds v. Schrock, 341 Or 338 (attorney‑client relationship may limit third‑party liability / immunity discussion)
- McKinley v. Weidner, 73 Or App 396 (doctrine of in pari delicto as a defense)