A177019
Or. Ct. App.Aug 16, 2023Background
- Eastside Bend, owned by Gary Miller, sold a 76‑lot subdivision in three phases; Wolfston purchased phases 1–2 but failed to close phase 3 (23 lots) for lack of financing.
- Wolfston and Calaveras sued in arbitration claiming breach (specific performance or damages) and unjust enrichment; they also claimed Kelleher (real estate agent) intentionally interfered to enable his builder, Franklin Brothers, to take the phase‑3 work.
- At arbitration, Kelleher and Miller testified that Kelleher/Franklin Brothers had no involvement or agreement to build the phase‑3 lots at the time of the August 24, 2019 failed closing; the arbitrators rejected plaintiffs’ claims, finding Wolfston’s financing failure caused the missed closing.
- After the award, plaintiffs discovered City of Bend online permit records showing Franklin Brothers listed as the contractor on permit applications filed September 8, 2019, and moved for a new arbitration hearing alleging fraud, newly discovered evidence, and discovery violations; the panel denied the motion.
- Plaintiffs petitioned in circuit court to vacate the arbitration award under ORS 36.705(1)(a) (award procured by fraud or other undue means), arguing defendants withheld ordered discovery and then lied at arbitration; the trial court denied the petition, finding plaintiffs failed to prove possession/control of the permits at discovery or knowing perjury, and that any alleged fraud did not necessarily procure the award.
- The Court of Appeals affirmed, holding the trial court’s factual findings were supported by the record and that plaintiffs did not demonstrate the arbitrators’ decision was procured by fraud or other undue means.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the arbitration award must be vacated under ORS 36.705(1)(a) because respondents procured it by fraud or other undue means | Wolfston: respondents withheld ordered discovery (building permits) and then gave false testimony denying contractor status, constituting fraud that procured the award | Eastside/Kelleher: permit records were third‑party public records (City of Bend); defendants did not possess/control the permits when discovery was served and did not knowingly misrepresent; arbitrators considered the issue | Court: plaintiffs failed to prove defendants had possession/control of the permits or knowingly committed perjury; evidence was ambiguous; vacatur not required |
| Whether any alleged fraud or discovery violation procured the arbitrators’ award (causation) | Fraud tainted the arbitration result; arbitrators denied rehearing because they were misled | Respondents: arbitrators considered the proffered evidence and declined relief; plaintiffs cannot show the award was produced by fraud | Court: trial court permissibly found plaintiffs did not prove causation; arbitrators’ denial of a new hearing was relevant and not dispositive against trial court’s independent factfinding |
| Proper standard of appellate review (plaintiffs urged de novo review under federal law) | Plaintiffs urged de novo factual review akin to federal practice | Defendants: Oregon review applies; findings reviewed for any supporting evidence | Court: applied Oregon standards—appellate court reviews whether evidence supports trial court findings; plaintiffs did not show trial court was required to find fraud |
Key Cases Cited
- Vasquez‑Lopez v. Beneficial Oregon, Inc., 210 Or App 553 (Or. Ct. App. 2007) (discusses standard for proving fraud and review of factual findings)
- Couch Investments, LLC v. Peverieri, 359 Or 125 (Or. 2016) (appellate review asks whether any evidence supports trial court findings)
- State v. Johnson, 335 Or 511 (Or. 2003) (trial court findings binding on appeal unless evidence permits only one conclusion)
- Prime Properties, Inc. v. Leahy, 234 Or App 439 (Or. Ct. App. 2010) (same principle regarding deference to trial court factfinding)