342 P.3d 1075
Or. Ct. App.2015Background
- Vukanovich (plaintiff), a developer, lost a 43-acre parcel to Umpqua Bank after defaulting on a loan; he hoped to reacquire it. Kine (defendant), a broker/developer, expressed independent interest and then agreed with Vukanovich to pursue a joint purchase via a written “Letter of Understanding.”
- The Letter of Understanding allocated costs, profits (50/50), management duties, confidentiality, and contemplated forming an LLC as purchaser; the parties submitted joint offers in December 2009 with purchaser listed as “Larry Kine Properties, LLC.”
- The bank countered to $1.6 million with a December 30, 2009 closing. On December 28, Kine told Vukanovich his group needed an extension and then, by January, repudiated the joint venture and later pursued purchase with partners Evans and Kingsley.
- Vukanovich shared confidential project and bond information with Kine under the joint venture; Kine used project documentation later to pursue enforcement of bonds and to support a separate offer. Umpqua eventually sold to Kine’s group for $1.2 million.
- Litigation: Vukanovich sued Kine and Kine Properties for breach of contract (including implied covenant), fraud, and intentional interference. A jury found for plaintiff and awarded damages; the trial court entered JNOV for defendants and alternatively found unclean hands and estoppel barred recovery. On appeal, the court reinstated the jury verdict on breach of contract only.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether JNOV was improper on breach of contract (including implied covenant) | Kine breached the Letter and implied covenant by refusing to close Dec 2009 deal, lying about reasons, and using confidential info to cut out Mark, causing loss of joint ownership/profits | After January termination, both parties were free to pursue the property separately; later conduct cannot be breach; plaintiff’s damages speculative | Reversed JNOV on contract claim — sufficient evidence that Kine breached in Dec 2009 and damaged Vukanovich; jury verdict reinstated for $686,000 |
| Whether JNOV was improper on fraud (misrepresentation and justifiable reliance/damages) | Vukanovich relied on Kine’s January statement that Kine was "out" and delayed/made a low offer, causing damages | Plaintiff unreasonably relied; as an experienced developer he should have protected his interests; no proof bank would have accepted his earlier offer | Affirmed JNOV on fraud — reliance was unjustified and damages speculative |
| Whether JNOV was improper on intentional interference (against Kine Properties) | Kine Properties’ submission of the offer in its name interfered with the parties’ contract | No specific counter-identified evidence showed interference sufficient to defeat JNOV | Affirmed JNOV on intentional interference — appellant failed to identify evidence on appeal |
| Whether equitable defenses (unclean hands, estoppel) bar recovery on contract claim | Plaintiff’s post-termination efforts to buy the property were justified (mitigation) and do not constitute misconduct or a false representation | Both parties pursued purchase after contract ended; trial court found that post-termination conduct supported unclean hands/estoppel | Reversed trial court on defenses — the court erred: plaintiff’s post-termination attempt to buy did not constitute unclean hands or estoppel and did not bar the contract recovery |
Key Cases Cited
- Jacobs v. Tidewater Barge Lines, 277 Or 809 (standard for reviewing JNOV)
- Northwest Natural Gas Co. v. Chase Gardens, 333 Or 304 (scope of appellate review from JNOV)
- Bennett v. Farmers Ins. Co., 332 Or 138 (reinstating jury verdict unless no evidence supports it)
- Cocchiara v. Lithia Motors, Inc., 353 Or 282 (elements of fraud: justifiable reliance and damages)
- Murphy v. Allstate Ins. Co., 251 Or App 316 (analysis of justifiable reliance)
- Operb v. Simat, Helliesen & Eichner, 191 Or App 408 (reliance evaluated under totality of circumstances)
- Gregory v. Novak, 121 Or App 651 (reasonable precautions to protect interests)
- Coy v. Starling, 53 Or App 76 (reliance precautions)
- Burgdorf v. Weston, 259 Or App 755 (unclean hands doctrine overview)
- North Pacific Lumber Co. v. Oliver, 286 Or 639 (limits on unclean hands; serious misconduct required)
- Day v. Advanced M&D Sales, Inc., 336 Or 511 (elements of equitable estoppel)
- Morrow v. Red Shield Ins. Co., 212 Or App 653 (implied covenant of good faith and fair dealing)
- Bales v. SAIF, 294 Or 224 (characterization of directed verdict/JNOV and review standard)
- McKinley v. Weidner, 73 Or App 396 (discussion of unclean hands vs. in pari delicto)