Adelsperger v. Elkside Development LLCAdelsperger v. Elkside Development LLC
Argued and submitted January 10; judgment on elder financial abuse claim reversed and remanded, otherwise affirmed November 30, 2022
Ron ADELSPERGER; Sally Adelsperger; Walter Arnold; Sandy Arnold; Larry Brewer; Marilyn Brewer; James Brown; Lonna Brown; Bill Burgess; Jane Burgess; Shirley Calkins; Jerry Christensen, aka Gerald Christenson; Cindy Christensen, aka Cynthia Evans-Christenson; Russell Cobb; Norma Cobb; Ron Ellis; Sallie Ellis; Amy Flickenger Pierpoint, aka Amy Flickenger-Pierpoint; Glen Pierpoint; Mike Fredrickson; Tresea Fredrickson; David Fulcer; Sarah Fulcer; Jack Gibson; Sharon Sue Gibson, aka Sue Gibson; Mary Gray; Rudolph Hanna; Brenda Hanna; Gerald Hastings, aka Jerry Hastings; Shirley House; Michael Huntley; Gloria Huntley; Rodney Hyde, aka Rod Hyde; Patricia Hyde; Johnnie Issacs, aka Johnnie Isaacs; Rowina Issacs, aka Rowena Isaacs; Don Johnson, aka Donald Johnson; Linda Johnson; Robert Kasmar; Linda Kasmar; Kraig Knutson; Barbara Knutson; Tom Kuntz; Brenda Kuntz; Richard Mathis; Linda Mathis; Gary McCord; Marie McCord; David McReynolds; Joseph Moore; Geraldine Moore; Adam Morgan; Vicky Morgan, aka Victoria Morgan; Thomas Noel; William Oar; Donald Partridge, aka Don Partridge; Lucille Partridge, aka Lucy Partridge; Craig Pedersen; Cheryl Pedersen; David Smith; Carol Smith; William Thomas, aka Bill Thomas; Jackie Thomas; Fred Waidtlow; Linda Waidtlow; Gary Wayman; Charlotte Wayman; David Weberg; Jeanne Weberg; Forrest Wheeler; and Jane Wheeler, Plaintiffs-Respondents,
v.
ELKSIDE DEVELOPMENT LLC, Successor in Interest to Osprey Point RV Park, LLC et al., Defendants, and BARNETT RESORTS, LLC, an Oregon Limited Liability Company, dba Osprey Point RV Resort, Defendant-Appellant.
Coos County Circuit Court 19CV14756; A174291
523 P3d 142
Plaintiffs, many of whom are aged 65 years or older, entered into membership camping contracts with a campground operator between 1999 and 2017. After the original campground operator sold the campground to defendant, defendant notified plaintiffs that it would not honor the contracts with the prior owner. Plaintiffs sued for breach of contract and elder financial abuse. The jury found for plaintiffs on both claims. On appeal of the resulting judgment, defendant argues that, as to each claim, the trial court erred in denying a directed verdict, because the evidence was legally insufficient to support a verdict in plaintiffs’ favor. Held: The trial court did not err in denying a directed verdict on the breach of contract claim, on this record and given the arguments made. However, the court erred in denying a directed verdict on the elder abuse claim, as the evidence was legally insufficient to establish either of the pleaded theories of elder abuse.
Judgment on elder financial abuse claim reversed and remanded; otherwise affirmed.
Andrew E. Combs, Judge.
Alicia M. Wilson argued the cause for appellant. Also on the briefs was Frohnmayer, Deatherage, Jam Ieson, Moore, Armosino & McGovern, P.C.
Dan G. McKinney argued the cause for respondents. Also on the brief was DC Law.
Before Tookey, Presiding Judge, and Aoyagi, Judge, and Armstrong, Senior Judge.
AOYAGI, J.
Judgment on elder financial abuse claim reversed and remanded; otherwise affirmed.
AOYAGI,
This case involves a dispute over membership camping contracts. For nearly 20 years, Elkside Development, LLC (Elkside) owned and operated the Osprey Point RV Resort in Lakeside. Elkside sold memberships as part of its business model. In exchange for payment of an initial fee and annual dues, members received free use of the campground for a significant portion of the year and other benefits. In April 2017, Elkside sold the property to defendant Barnett Resorts, LLC. Two months later, defendant gave notice to all members—including plaintiffs—that it would not honor Elkside‘s membership contracts. That led to the filing of this action. Plaintiffs are 71 people who, collectively, were party to 39 membership contracts with Elkside. Fifty-six of the plaintiffs are aged 65 years or older. As relevant here, a jury found that, in failing to honor the contracts, defendant committed breach of contract, for which the jury awarded $500,000 in damages, and elder financial abuse under
Defendant appeals the resulting judgment, raising four assignments of error. First, defendant challenges the denial of its motion for summary judgment on the breach of contract claim. We conclude that that ruling is unreviewable. Second, defendant challenges the denial of its motion for a directed verdict on the breach of contract claim. We reject that claim of error and, accordingly, affirm the judgment as to the breach of contract claim. Third, defendant challenges the denial of its motion for a directed verdict on the elder financial abuse claim. We agree that the trial court erred in that regard and, accordingly, reverse and remand for dismissal of the elder financial abuse claim. Fourth, defendant challenges
I. FACTS
In reviewing the denial of a motion for a directed verdict, we consider the evidence and all reasonable inferences from that evidence in the light most favorable to the non-moving party, which in this case was plaintiffs. York v. Bailey, 159 Or App 341, 349, 976 P2d 1181, rev den, 329 Or 287 (1999). We state the facts accordingly.
From 1999 until April 2017, Elkside operated the Osprey Point RV Resort on real property that it owned in Lakeside.1 As part of its business model, Elkside sold camping memberships, which were effectuated through membership contracts. People paid an initial fee to purchase a membership (such as $5,900) and annual dues to maintain the membership (such as $325 per year). As members, they were entitled to use the campground for free for a significant portion of the year (such as 265 days), including free utilities, and at a reduced rate for the rest of the year. They also received other on-site benefits at a reduced cost. The contracts generally provided for “lifetime” memberships and transfer rights.
Plaintiffs purchased their memberships between 1999 and 2016, entering into a total of 39 membership contracts with Elkside. Those 39 contracts vary in their details but are generally as described above. The contracts do not address what will happen in the event that the property is sold.2
Around 2005, Elkside began trying to sell the property, and it was on the market for most of the next 12 years. From the beginning, it was important to Mike Smalley—one of the members of Elkside—to try to sell the property to someone who would honor the existing campground memberships, and several possible buyers dropped out over the years because of the membership contracts. The property was initially listed at $5.9 million. Elkside later reduced the price to $3.3 million, then to $2.65 million in 2012, then to $1.995 million in 2013.
On April 28, 2017, defendant—an LLC whose members are Chris and Stefani Barnett—purchased the real property from Elkside, along with certain personal property and the business name, for $1.995 million. The closing documents did not list the membership contracts as an encumbrance or otherwise mention them. The executed bill of sale provided that the property was “free and clear of and from all encumbrances, security interests, liens, mortgages and claims whatsoever.” Defendant was aware of the membership contracts, however, when it purchased the property. Before closing, defendant had requested a list of active memberships, reviewed copies of some or all of the membership contracts, and begun talking to people about whether the contracts would be binding on defendant if it purchased the property. Defendant also was aware that Smalley wanted the contracts to be honored after the sale; for example, in an email to Chris Barnett on February 26, 2017, attaching the “requested info on members,” Smalley had stated, “I believe that honoring the remaining contracts is worth the effort. It is an income and will not create negative reviews around the industry.”
There is conflicting evidence as to whether, at the time of closing, defendant intended to honor Elkside‘s membership contracts. In any event, there is no evidence that defendant
On May 14, 2017, defendant sent a letter to people who had “purchased a Membership prior to the new ownership.” The letter explained that defendant was not accepting any new memberships and announced “some immediate changes that will be in effect” relating to memberships. In describing those changes, the letter at least implied that defendant intended to honor the existing membership contracts, albeit perhaps on their narrowest terms, while disavowing any “verbal or handshake agreements” with the previous owner.4 Only 10 days later, however, on May 24, defendant sent an email to its staff that instructed them not to accept any new reservations from people who bought memberships from the previous owner, explaining that an attorney was reviewing the contracts and that it would be “too confusing for the resort to conduct business as usual” while that happened. The email went on to state that, if anyone with a membership asked what to do, “please kindly tell them they cannot stay for Free and must pay regular resort prices.” The email then reiterated that all future reservations should be booked at the current season rates, that “[a]nyone can still stay at the resort but only under regular rates,” and that “there are no special fees or free stays until further notice.”
On June 20, 2017, defendant sent a letter to everyone with a membership contract. The upshot of the letter was that defendant would not be honoring the contracts. Defendant explained that it was the new owner, that it had purchased the resort but not the contracts, that defendant had “started fresh as a regular RV Park with nightly stays,” and that defendant did not consider it financially feasible to honor memberships that were purchased from the previous owner. Plaintiffs identify June 20, 2017, as the date on which the contracts were breached.
In April 2019, two years after defendant purchased the property, plaintiffs filed this action, asserting claims against Elkside, defendant, Chris Barnett, and Stefani Barnett. Plaintiffs obtained a default judgment against Elkside, which was not appealed and is not at issue. Plaintiffs’ claims against the Barnetts individually were dismissed on summary judgment and are the subject of a separate appeal. See Adelsperger v. Elkside Development LLC, 317 Or App 666, 504 P3d 1, rev allowed, 370 Or 56 (2022). As for plaintiffs’ claims against defendant, three claims went to the jury and are the subject of this appeal: breach of contract, elder financial abuse under
The parties stipulated to certain facts, including that none of the plaintiffs had entered into a contract with defendant, that defendant had not received membership dues from any of the plaintiffs, and that all of the plaintiffs were “monetarily damaged” by their contracts not being honored “to the extent that membership dues were less than the fair market value of the services received.”
At the close of plaintiffs’ case-in-chief, defendant moved for directed verdicts on all three claims. The trial court denied the motion.
Ultimately, the jury found for plaintiffs on all three claims submitted to it. On breach of contract, the jury found that plaintiffs’ membership contracts were binding on defendant, presumably as covenants running with the land given how the jury was instructed; that defendant had breached those contracts; and that such breach had resulted in $500,000 in damages. On elder financial abuse under
II. BREACH OF CONTRACT CLAIM
Defendant‘s first two assignments of error pertain to the breach of contract claim. Defendant argues that the trial court erred, first, by denying defendant‘s motion for summary judgment and, second, by denying defendant‘s motion for a directed verdict.
We do not address the first assignment of error. “[A]n order denying summary judgment is not reviewable following a full trial on the merits, unless the motion rests on ‘purely legal contentions’ that do not require the establishment of any predicate facts.” York, 159 Or App at 345. “[T]he denial of a motion for summary judgment that is based on facts, even undisputed facts, is not reviewable.” Staten v. Steel, 222 Or App 17, 26, 191 P3d 778 (2008), rev den, 345 Or 618 (2009); see also Farnsworth v. Meadowland Ranches, Inc., 321 Or App 814, 819-20, 519 P3d 153 (2022) (emphasizing the difference between the summary judgment standard and reviewability). Because defendant‘s summary judgment motion “turned on the significance of adjudicative facts (albeit, facts that defendant asserted to be undisputed),” York, 159 Or App at 346, the trial court‘s ruling denying that motion is unreviewable on appeal.
As for the second assignment of error, considering the particular arguments made to the trial court and on appeal, we conclude that the trial court did not err in denying defendant‘s motion for a directed verdict.
In their complaint, plaintiffs alleged that, when defendant purchased the campground from Elkside in April 2017, defendant, as “successor” to Elkside, “became obligated to honor the membership camping contracts,” while Elkside‘s own obligations to honor the contracts also remained in force. With respect to the breach of contract claim, plaintiffs alleged that Elkside, as the original contracting party, had breached the contracts either “by assigning its obligations” to defendant without plaintiffs’ permission or “by divesting itself of the resort such that it can no longer perform” its contractual obligations. Plaintiffs alleged that defendant, “if found to be successor in interest to [Elkside], was also obligated to honor the membership camping contracts and by refusing to do so breached the membership camping contracts between Plaintiffs and [Elkside].”
It is fair to say that the complaint is unclear as to what legal theory or theories plaintiffs were relying on to assert that defendant was liable on Elkside‘s contracts. “[M]erely to say that a party has succeeded to a predecessor‘s interest in land does not say enough to explain why the successor should somehow be bound by a predecessor‘s agreement.” Sander v. Nicholson, 306 Or App 167, 185, 473 P3d 1113, rev den, 367 Or 290 (2020). The only theory that the complaint actually mentions is assignment—a theory that was abandoned, in that no evidence of assignment was offered at summary judgment or trial. Additional theories were raised, however, during the pretrial summary judgment proceedings. Without getting into unnecessary detail, the record suggests that, by the time trial began, there were two theories on the table as to how defendant could be liable on Elkside‘s contracts, despite not having assumed them voluntarily. In defendant‘s view, it would be
When the trial court denied defendant‘s directed verdict motion, it made clear that it viewed the evidence as sufficient to allow a finding that the contracts ran with the land as a matter of common law. Specifically, when defendant argued that Elkside‘s noncompliance with
The trial court was unpersuaded. It considered the evidence sufficient to go to the jury on a common law theory.5 As for defendant‘s pleading argument, the court explained that when there is evidence to support a theory not originally pleaded, “the pleadings can conform to the evidence.” Because of how the issue developed below, the exact amendments made to the complaint to conform to the evidence are unclear, so we necessarily can only assume that they were consistent with how the court ultimately submitted the case to the jury.6
On appeal, as in the trial court, defendant emphasizes that the complaint did not mention equitable servitudes (or covenants running with the land). That is certainly true. However, the trial court viewed the evidence as sufficient to support such a theory and treated the complaint as having been implicitly amended to conform to the evidence. See
improper in these circumstances. Defendant argued only that the existing pleadings did not raise the matter. The issue also is not properly before us on appeal, because defendant has assigned error only to the ruling on the motion for a directed verdict. It has not assigned error to the denial of any objection to allowing implicit amendment, to admitting the underlying evidence,
It therefore would be improper for us to consider, as a basis for potential reversal of the judgment, the propriety of the trial court treating plaintiffs’ complaint as having been amended to conform to the evidence. Accordingly, we proceed with the understanding that the complaint was implicitly amended to assert an equitable servitude or a covenant running with the land, as the basis by which the membership contracts (or at least some parts of them) became binding on defendant when it purchased the land. With that understanding, we cannot conclude that the trial court erred in denying a directed verdict on the breach of contract claim. In moving for a directed verdict, defendant did not make any substantive argument to the trial court as to why the evidence was insufficient to prove an equitable servitude (or a covenant running with the land), asserting only that it was “not what [plaintiffs] pled.” On appeal, defendant has similarly focused on the alleged pleading defect, rather than the evidence. The only time that it addresses the evidence is in its reply brief. For example, as to whether the membership contracts directly touch and concern the land, in its reply brief, defendant points for the first time to a provision in the contracts that would have allowed Elkside to transfer the memberships to “a substitute property in the same general area” that was as or more desirable for camping and outdoor recreation. Those belated arguments raise interesting issues, but they were not raised in the trial court in arguing the directed verdict motion, or in the opening brief on appeal. See Clinical Research Institute v. Kemper Ins. Co., 191 Or App 595, 609, 84 P3d 147 (2004) (regarding new theories raised in a reply brief).
In sum, on this record and given the arguments that were made, we reject the second assignment of error, challenging the court‘s denial of a directed verdict on the breach of contract claim. Our conclusion as to the common law theory obviates the need to address defendant‘s arguments under
III. ELDER FINANCIAL ABUSE CLAIM
Defendant‘s third assignment of error pertains to the claim for elder financial abuse asserted by the 56 plaintiffs who are aged 65 years or older.
“(a) When a person wrongfully takes or appropriates money or property of a vulnerable person, without regard to whether the person taking or appropriating the money or property has a fiduciary relationship with the vulnerable person.
“(b) When a vulnerable person requests that another person transfer to the vulnerable person any money or property that the other person holds or controls and that belongs to or is held in express trust, constructive trust or resulting trust for the vulnerable person, and the other person, without good cause, either continues to hold the money or property or fails to take reasonable steps to make the money or property readily available to the vulnerable person when:
“(A) The ownership or control of the money or property was acquired in whole or in part by the other person or someone acting in concert with the other person from the vulnerable person; and
“(B) The other person acts in bad faith, or knew or should have known of the right of the vulnerable person to have the money or property transferred as requested or otherwise made available to the vulnerable person.”
A “vulnerable person” includes any person aged 65 years or older.
In their complaint, the subset of plaintiffs aged 65 years or older alleged that defendant had acquired ownership of the resort and taken over the responsibility to honor the membership camping contracts and, thereby, “acquired a property right of the Elderly Plaintiffs (
At the close of plaintiffs’ case-in-chief, defendant moved for a directed verdict on the elder financial abuse claim, citing Bates v. Bankers Life and Casualty Co., 362 Or 337, 408 P3d 1081 (2018), for the proposition that a contract dispute does not give rise to liability for elder financial abuse.
In ruling on the motion, the court described the legal standard and summarized plaintiffs’ evidence. The court stated that it “didn‘t really see” any evidence of wrongful conduct, noting that “it‘s not against Oregon law for a business person to decide that they want to cancel a contract with a vulnerable person.” The court also voiced concern that “[i]f you start making that the law, no person would want to *** have contracts with people who are over the age of 65, because every time they get into a squabble with them, they‘re going to get sued for treble damages.” Ultimately, however, the court concluded that there was enough to go to the jury, on the theory that defendant deprived plaintiffs of their property insofar as plaintiffs had common law rights running with the land, arising from their membership contracts, and were being excluded from the campground.
Defendant assigns error to that ruling, arguing that the evidence was legally insufficient to support a verdict under either
A. ORS 124.110(1)(b)
We begin with
The elderly plaintiffs in Bates contended that their payment of insurance premiums to the defendant insurance company constituted a transfer of money or property and that, when the defendant failed to pay policy benefits in bad faith, it was not only a breach of the insurance contract but also a refusal to return their money or property and thus elder financial abuse under
The Supreme Court rejected that argument and answered “no” to the certified question. Id. at 340. The court explained that a claim for elder financial abuse under
The elderly plaintiffs’ position in Bates that the defendant violated
Although a contractual right to receive benefits “might be considered ‘property’ in the broadest sense of the word,” the first element of
because “the money or property” that the plaintiffs had given to the defendant—insurance premiums—was not the same “money or property” that they had requested from defendant—the benefits to which they were entitled under their contracts. Id. at 347. Even if it was “wrongful” for the defendant to fail to pay benefits under the contract terms, it was not a violation of
Applying Bates, we reach the same conclusion here, i.e., that the first element for liability under
ORS 124.110(1)(a)
We next consider
To be considered improper, a party‘s means “must be independently wrongful by reason of statutory or common law, beyond the mere fact of the injury complained of.” Church, 190 Or App at 119; see also Ride PDX v. Tee & B, LLC, 322 Or App 165, 168, 519 P3d 870 (2022) (“If liability is based on the use of improper means, then the means must violate some objective, identifiable standard, such as a statute or other regulation, or a recognized rule of common law, or, perhaps, an established standard of a trade or profession.” (Internal quotation marks omitted.)). “Improper means, for example, include violence, threats, intimidation, deceit, misrepresentation, bribery, unfounded litigation, defamation and disparaging falsehood.” Church, 190 Or App at 119 (internal quotation marks omitted); see also Bates, 362 Or at 344 (referring to “fraud, conversion, or theft” as wrongful means of acquiring a vulnerable person‘s money or property); Allen v. Hall, 328 Or 276, 286, 974 P2d 199 (1999) (making fraudulent misrepresentations to an elderly person‘s attorney and care providers to prevent execution of a new will would qualify as using improper means to interfere with a prospective inheritance).
In the trial court, plaintiffs did not identify any “improper means” that they were claiming defendant used to take or appropriate plaintiffs’ property. On appeal, plaintiffs’ only argument as to improper means is “conversion“—that defendant converted plaintiffs’ “lifetime right to occupy specific portions of the resort property” to defendant‘s own use. That theory is untenable, because conversion relates only to chattels. See Hemstreet v. Spears, 282 Or 439, 444, 579 P2d 229, appeal dismissed, 439 US 948 (1978) (“[C]onversion is an intentional exercise of dominion or control over a chattel which so seriously interferes with the right of another to control it that the actor may justly be required to pay the other the full value of the chattel.“); Black‘s Law Dictionary 268 (9th ed 2009) (defining “chattel” as “[m]ovable or transferable property; personal property; esp. a physical object capable of manual delivery and not the subject matter of real property“); see also Rapacki v. Chase Home Fin. LLC, 797 F Supp 2d 1085, 1092 (D Or 2011) (citing Hemstreet and Black‘s Law Dictionary and concluding that real property subject to a trust deed was not a chattel and, accordingly, plaintiff‘s claim could not be “construed as a claim for conversion“).
As for improper motive, we have never addressed improper motive in the specific context of
For example, a defendant acting “with the sole design of injuring [the plaintiff] and destroying his business” would have an improper motive. Top Service Body Shop, 283 Or at 201-11. Conversely, a defendant acting in “pursuit of its own business purposes as it saw them” would not have an improper motive. Id. at 212; see also Eusterman v. Northwest Permanente, P.C., 204 Or App 224, 238, 129 P3d 213, rev den, 341 Or 579 (2006)
Here, defendant notified plaintiffs on June 20, 2017, that it would no longer honor the membership contracts. Even assuming arguendo that not honoring the contracts would qualify as a taking or appropriation of plaintiffs’ money or property—an issue that we need not decide—plaintiffs have not pointed to any evidence in support of their assertion that defendant had an “improper purpose” in deciding not to honor the contracts, i.e., that defendant‘s intent was specifically to injure plaintiffs as such. As the trial court noted in discussing the directed verdict motion, the evidence was that defendant decided not to honor the contracts based on Chris Barnett‘s conclusion that they were not valid or binding on defendant. Defendant acting in its own business interests, based on its own understanding of its legal obligations, is not an improper motive for refusing to honor contracts. It put defendant at risk of a breach of contract claim if plaintiffs took a different view, but it is not a viable basis for an elder financial abuse claim under
In sum, on this record, plaintiffs failed to prove elder financial abuse under
Judgment on elder financial abuse claim reversed and remanded; otherwise affirmed.