Anderson v. Carden

Argued April 1, 1996, and submitted reversed and remanded further 5, 1997 proceedings March

C. Joe ANDERSON Morganstern, and David Plaintiffs, and BERKEY, Jack W. E.

Raymond Brady, Bonime, Anthony Cortese, M. E. J. Gimbol, Jensen, A. H. Douglas Jensen, C. Roland Stephen Klein, Ronald B. Michael Kirkpatrick, L. Moore, E. Noonan, Petersen,

William Michael J. E. Donald L. Policar, Holcolm, Rick James Ponti and Ronald E.

Appellants, v. CARDEN,

John J. CGKR Investment Steven Capital Corp., Cooper, David Personal Hackett, the Estate Representative of

Bruce A. Kamhoot X, and John Does I through

Defendants, and DuBOFF, Leonard Redden, Michael Redden & & McGaughey, Yergen Meyer, L. B. Hilderbrand,

Robert L. Vaught

Respondents. (Control)) (9105-02998; CA A75835 William GRAHAM, Appellant, v.

John J. CARDEN, CGKR Investment Steven Capital Corp., Cooper, Hackett, David Personal of the Estate Representative Bruce A. Kamhoot X, and John Does I through

Defendants, DuBOFF, Leonard Redden, Michael Redden & & McGaughey, Yergen Meyer, Hilderbrand,

Robert L. and B. L. Vaught Respondents. CA A75864)

(9105-03051; P2d 562 for cause With Stephens argued appellants. John W. Esler, Stephens on the was & Buckley. him briefs respon- cause for argued C. Arellano Joseph Redden Redden DuBoff, Michael and dents Leonard Kennedy, him on was King & With brief McGaughey. Zimmer. & Yergen R. the cause for & argued respondent

John Barker on the brief were B. Oslund and Margaret With him Meyer. Barker, & P.C. Bittner B. for cause L.

Gregory Lynch argued respondent P. were William J. Storie him on the brief Hilderbrand. With & Lynch. Lovlien Hurley Bryant and Holmes Robert L. respondent the brief R. Evans filed Steven Vaught. Landau, Judge, Judge, Presiding

Before Riggs, Senior Buttler, Judge.

LANDAU, J.

Buttler, J., S. dissenting.

LANDAU, J. this for securities fraud

Plaintiffs initiated action of their of limited interests partnership out arising purchase moved for on the summary judgment in 1983. Defendants1 statute of by three-year that the matter is governed ground that their timely Plaintiffs action was responded limitations. of which allows limitations, under a different statute brought of years discovery them to the action within two bring that, even if the replied defendants’ conduct. did not alternative statute of limitations applies, plaintiffs The trial discovery. their action within two years bring that this matter to a subject three-year court concluded and, on that entered ground, summary statute of limitations trial did not for defendants. The court expressly judgment that other We conclude arguments. address parties’ the matter to the statute of erred, subject trial court initiation of action within two limitations requiring con- the matter must be remanded for discovery and as to the timeliness parties’ arguments sideration of that statute of limitations. filing securities in a Plaintiffs allege they purchased that a number in 1983. They allege single private placement fact and omissions of mate- statements of material of untrue the sale of the secu- made in connection with rial facts were misstatements and nature of those alleged rities. The of this disposition appeal. is not pertinent omissions that defendants allege participated Plaintiffs other among preparing, in the sale of securities aided documen- supporting memorandum offering things, Plain- letter, tation, projections appraisals. a tax opinion the mis- the nature of first discovered allege they tiffs had no 1991 and that and omissions April statements time. facts before that reason to know of those 1 complaint the of the securities include sellers named in the The defendants materially in the sale. The non- allegedly participated or aided nonsellers who and Redden, McGaughey, DuBoff, & Redden Michael Leonard seller defendants only defendants Vaught Hilderbrand are Meyer, and B. L. Yergen Robert L. & only opinion, par we refer to those in this appeal. to “defendants” When we refer on ties, not sellers.

Plaintiffs the sellers allege violated ORS statute provides, 59.135. That in relevant part: any person, directly indirectly, “It is unlawful for in or with the of purchase any security connection or sale or the conduct of a securities for any person business or who any receives consideration from another person primarily advising for the other as person to the value of securities or sale, purchase through their or whether of issuance analyses reports or or otherwise:

“(1) any device, To employ scheme or artifice to defraud;

“(2) To make untrue statement of fact a material or necessary to omit to state material fact in order to make made, the statements in the of light the circumstances made, are not misleading; which “(3) To engage any act, practice or course of busi- operates ness operate which or would as a fraud or deceit upon anyperson[.]”

Plaintiffs further allege defendants participated and aided in the sale materially and are therefore liable under 59.115(3). That statute provides, again in part: relevant “[E]very person participates aids in sale jointly severally is also liable with and to the same [.]” extent as the seller moved on summary judgment of (1985),2

basis ORS which generally describes the statute of limitations for civil actions for damages based on violations securities Oregon laws: may “No action suit be commenced under this section years more than except three after sale an action for a commenced violation ORS be within years years three after the sale or two after the person bringing action discovered or should have discovered based, the facts on which the of ORS 59.135 is violation application discovery changing the The statute was amended in of ORS to actions “for limitation from actions “for violation 59.135” a violation (l)(b) 59.135.” The amendment became effective subsection this section or ORS purchased plaintiffs the securities that at issue this three after the Wilbur, 418, 419-20, 473 applicable. 256 Or P2d is not Nichols v. case therefore to later. Failure commence an action on a

whichever is an defense.” timely basis is affirmative rule that securities defendants, general to According to a statute of is three-year are limitations subject claims under ORS namely, brought to one actions subject exception, states a claim they argued, Plaintiffs’ complaint, 59.135. against for 59.135 but violating the sellers ORS against 59.115(3) violating only. defendants for ORS nonseller for of that statute not brought Because actions violations three-year of to the exceptions general one the two within concluded, the limitations, complaint of defendants statute time-barred. have, in an fact, brought argued

Plaintiffs of ORS 59.135.” “under this section for violation action the basis of their claim defen- According plaintiffs, 59.115(3) for hav- “is their alleged liability dants in the sale of securities in materially aided or ing participated (Emphasis original.) ORS 59.135.” violation of that, even if in the alternative argued of for violations ORS 59.135 brought for actions exception the undis- untimely, action still is because plaintiffs’ applies, plaintiffs demonstrates conclusively evidence puted the misstatements have known of knew or should than two years their action based more on which omissions the evidence disputed Plaintiffs complaint. filing before argument. to that as that the with defendants com- agreed

The trial court statute of filed, three-year because the untimely was plaint to the assign error plaintiffs On appeal, limitations applies. trial contend that court ruling. Defendants trial court’s event, be affirmed on the and, should correct was action com- timely was ground alternative statute of limitations. the alternative menced even under of the proper interpretation turns on The appeal applicable sets forth (1985), which statute in accor- construe the attempt We of limitations. to the text looking legislature, the intention dance with to its and, necessary, history if in its context the statute Bureau Labor and PGE v. aids. interpretive to other Industries, 317 Or 606, 610-12, 859 P2d 1143 The con text of the statute includes other statutes on the same gen eral and case law subject construing relevant statutes. Id. 59.115(6) (1985)

The text of ORS unambiguously a three-year establishes limitation period, to two subject exceptions, “[a]n action for violation of ORS 59.135.” whether action is Accordingly, plaintiffs’ to the alter- subject native limitation period two from discovery depends on whether theirs is action for violation of “[a]n ORS 59.135.” To answer question necessitates brief description the structure of the securities laws.

ORS 59.135, enacted in originally 1967, establishes that certain unlawful, conduct specifically as relevant case, this making untrue statements of material fact or omit- ting material information in connection with a sale of securi- ties. When the legislature statute, enacted the however, it did not any prescribe of that unlawful consequences conduct; there is no express provision for a civil right action for dam- in ORS 59.135. The ages civil for remedy violation of the secu- rities laws, including 59.135, was in ORS provided 59.115. As the Supreme Court in explained Held v. Product Manufacturing Company, 67, 69, Or 592 P2d 1005 (1979),

“[although [ORS this statute 59.135] makes it illegal ‘any person’ to defraud person another ‘in connection with purchase any or sale of security,’ pro- ORS 59.115 * * remedy vided a civil illegal activity for this Court’s.) (Emphasis Supreme

The relationship between ORS 59.135, which defines conduct, and ORS prohibited 59.115, which provides a civil remedy for that unlawful conduct, bears careful scru- because the tiny, two statutes are not identical. Said another the civil remedies way, by afforded ORS 59.115 are not nec- as essarily broad as the conduct prohibited described in ORS 59.135; some conduct that one prohibited by statute may not rise to a action under the give other. in damages Thus, Held, that, the court held ORS 59.135 although broadly pro- another hibited from in defrauding connection person with a sale of 59.115 securities, ORS did not a rem- provide seller to a who was defrauded a edy of securi- purchaser Held, ties. 286 Or at 71.

With that in mind, we turn to the of the scope rem- in ORS edy 59.115. That statute provided provides, rele- vant part: * * *

“(1) A person security who sells a is liable to a security purchaser person: if the “(a) security Oregon Sells in violation of the Securi- any condition, ties Law or of limitation or restriction imposed upon registration or Oregon license under the Law; Securities

“(b) security by Sells a means of an untrue statement of a material fact or an omission to state a material fact nec- essary made, in order to make the statements light made, circumstances not misleading (the buyer knowing omission), not of the untruth or not proof who does sustain the burden of that the person did know, and in the exercise of reasonable care could not known, have of the untruth or omission.

"* * ^[*] * * “(3) Every directly person indirectly controls a (1) section, every part- seller liable under subsection of this ner, liability limited company manager, including a mem- manager, seller, every ber who is a officer or director of such a similar or person occupying performing status similar functions, every person participates materially and who or jointly severally in the liable aids sale is also with and seller, to the same extent as the unless the nonseller sus- know, tains the burden of that the nonseller proof did not and, care, in the exercise of reasonable could not have known, of the existence of facts on which the liability is Any person based. held liable under this section shall be jointly severally entitled to contribution from those lia- that person.” ble with remedies both sellers and against

The statute thus creates 59.115(1) remedies the first provides nonsellers. ORS (a) Subsection of that section pro- of defendants. category a seller who a in vio- security “[s]ells vides a remedy against (b) Securities Law.” Subsection provides lation of the Oregon a seller sells remedy against by securities separate 59.115(3) means of untrue statements of material fact. ORS who, nonsellers remedy against other provides among or aid” in the unlawful sale. things, materially “participate It bears nonseller noting remedy against is not contingent on nonsellers’ violation of participants As law. we in Inc. v. any explained Computer Concepts, Brandt, 572, 137 Or 905 P2d 1177 App (1995), rev den 323 Or (1996), of the nonseller liability participant 59.115(3) on the of the predicated violation seller. The 59.115(3) nonseller becomes liable under ORS participant it because has “participated materially sale, aided” in the not because it has violated law. The statute affords such an affirmative defense in the persons event can they establish that did know, or could not reasonably have known facts on which liability is based. ORS 59.115(3). That what the imposes Court has Supreme recog- nized as “a substantial burden” on nonseller participants, but, as the court also observed, has “this legislative choice was deliberate.” Prince v. Brydon, 146, 150, 307 Or 764 P2d 59.115(3)

It also bears that ORS itself noting does not establish a standard of conduct violation of which result in an may action for its it damages. By terms, expands the class of liable from potentially persons whom damages may be obtained for a seller’s violation of the securities laws. Thus, it is incorrect say that one be sued for a “viola- 59.115(3); tion” of ORS one may be sued under ORS in a sale of securities that participating occurred viola- tion of one of the substantive provisions Oregon Secu- Laws, rities such as ORS 59.135.

In context, examine the statutory we nature of the action at issue in this case. Plaintiffs allege that, the sellers sold them securities means of misstatements and omissions of material facts contained in various trans- clearly action documents. That states a claim for the sellers’ then violation of ORS 59.135. Plaintiffs that defen- alleged dants aided in the sale of those participated the documentation in connection with securities by preparing the sale. There is no who doc question person prepares in connection a sale of securities is a person umentation with aids” in the sale under OR “participates who 59.115(3). See, Lucas, 555, 564, v. 128 Or Towery e.g., App documents). (1994) There is (attorney 876 P2d 814 preparing no that one who documentation prepares likewise question contains material misstatements and omissions is a connection with the directly indirectly, pur “person, has who, chase or sale of other any security” among things, act, or course of conduct “engage[d] practice * * * 59.135(3). fraud,” as a in violation of ORS operates 59.115(6) (1985), the general three-year Under ORS not to action for a vio- apply “[a]n statute of limitations does It is clear that have plaintiffs brought lation of ORS 59.135.” liable, have that defendants are They alleged such an action. of ORS It neces- 59.115(3), under ORS for violations 59.135. that their action is not to the follows, therefore, subject sarily and, instead, of limitations to subject three-year actions to be commenced within two requiring the exception the action is of the facts on which based. discovery avoid that straightforward attempt means of several arguments, of the statute application First, defendants argue we find persuasive. none of which that defendants violated ORS alleged have that plaintiffs therefore this not an 59.115(3), 59.135, and not with, 59.135.” To defen- begin of ORS “action for violation Plaintiffs have complaint. plaintiffs’ dants mischaracterize 59.115(3), “violated” ORS that defendants alleged not 59.115(3) noted, ORS is not a so. As we have appropriately a class of be “violated.” It describes simply statute that may found liable for violations be persons have an action case, brought laws. In this plaintiffs securities have alleged of ORS for violations That violations of ORS 59.135. are liable for those defendants to the exception provisions within squarely falls described in ORS limitation three-year general that violations of ORS Second, defendants argue securities, sellers only against can be enforced 59.135 or materially merely participated nonsellers who violations of ORS defendants, in the sale. According aided remedied an action under ORS only by 59.135 can be 59.115(3). 59.115(1) are at a loss to and not ORS Defendants textual for their and we are at support argument, any provide find as well. ORS 59.135 is not limited any certainly a loss to sellers; by “any to violations it violations plainly prohibits or in connection with the directly indirectly, purchase person, who defrauds another any security,” person. sale of 59.115(3) is not limited Likewise, ORS (Emphasis supplied.) to those sellers; liability to it extends sellers expressly aid in the unlawful participate nonsellers who sale of securities.

The of the limitation contained language provision (1985) 59.115(6) that in ORS further evidence provides of ORS 59.135 is not limited to actions against enforcement 59.115(1). ORS It that the to sellers under provides exception statute three-year of limitations to general applies “[a]n section,” this It is, action under ORS 59.115. does not as defendants would have us construe it say, say, to either under this “an action section seller” or “an action against 1 of under subsection this section.” in our argue language opinion 104,

Loewen v. 130 Or 882 P2d rev den Galligan, App (1994), 320 Or 493 to our of the statute of contrary reading in this limitations case. In defendants on a particular, rely sentence in that in which that the opinion we said particular 59.115(6) current version of ORS

“plainly provides that the statute of limitations afor viola- tion of subsection of ORS is three other than ORS 59.115(l)(b), years.” sentence, however,

Id. at 235. The refers to a later quoted this version of the statute than is case. More- applicable from which the sentence over, examination paragraph is extracted reveals that defendants incorrect plainly any event. an action sellers under against

Loewen involved 59.115(1)(b) control nonseller persons 59.115(3) of the securities for the sellers’ violation under ORS No one argued ORS 59.135. The action did not involve laws. of limitations two-year statute applicability to actions under ORS 59.135. At issue in that brought applies limitations three-year case was whether may setting the certification a class action. In out be tolled upon for issue, we background disposition quoted and then summarized it as follows: from subsection, provided as otherwise in this no “Except may be commenced under this more action or suit section the sale. action years than three after An under this section ** * (l)(b) a violation of subsection of this section years within three after the sale or two be commenced bringing the action or should person after the discovered based, on have discovered facts action is later. on Failure commence an action whichever timely an basis is affirmative defense. 59.115(6) provides

“The of that the plainly text ORS limitations any for a violation of of statute of subsection 59.115(l)(b), years.” ORS is three ORS other than in the is in the original opinion The ellipsis quotation Id. 59.115(6) ORS that language because the of we is significant, “or 59.135.” It is in Loewen was: ORS quotation left out the of limita- context that we summarized in that reference to ORS 59.135. Our discussion of tions, sans any can be understood limitations, therefore, statute of prop- actions other than for violation of only to have addressed erly ORS 59.135. finally allowing assert that ORS vaguely to contrary to enforced nonsellers against

59.135 be as revealed in the his- legislature legislative intentions 59.115(6) (1985). defendants, to According of ORS tory of attorney supported passage Portland testimony of a (1985) 59.115(6) legisla- assured the bill that became that would new statute of limitations committee that the tive of 59.135 affect “the for violations ORS would to actions apply From and similar fraud.” severe cases involving most intention legislative derive comments, defendants to actions sell- limitations extend new statute not persuaded. only. ers We with,

To defendant offers no for begin justification to the in this case. Under the inter- legislative history resort PGE, described in examination of methodology pretive legis- history lative in the face of appropriate only ambiguous PGE, 317 at 610-12. statutory language. Or Defendants have identified in the ambiguity statutory no language to this case. Even sake of applies assuming, argument, ambiguity exists, such defendants’ reliance on the legis- (1985) 59.115(6) lative of ORS history does not their support construction of the statute. aside the ana- proposed Setting lytical intent on the basis of problem ascribing legislative witnesses, the fact is that testimony nonlegislator witness on whose defendants testimony rely only said that:

“It only being changed important is also to note that the statute oflimitations is violation, type

for the most severe violation of ORS 59.135.”

Minutes, Committee, House Consumer and Business Affairs 28,1985, HB March Ex statement, F. From that defen- dants conclude the amendments were intended only to to sellers who violate apply ORS 59.135.

We have searched in vain for hint of suggestion that the amendments were intended to apply only. sellers Closer examination of that, defendants’ reveals arguments fact, they do not on rely any legislative history demonstrating such an intention. Instead, they assume that fraud commit- ted a seller is somehow more than by “severe” fraud commit- “merely securities, ted one who in the sale of participates” and, that, armed with that conclude because assumption, (1985) was intended to to “the most apply violation, severe” of securities it cannot types law have been intended to to less severe violations “mere apply by partici- The is not the pants.” argument only unsupported by legis- lative but also contradicted the history directly by language statutes, of the securities which that there is no dis- provide tinction between sellers and “mere in the sever- participants” 59.115(3) of violations of the law. ORS ity expressly provides that aids in a every person participates of the securities laws sale of securities conducted in violation extent and to the same as severally “is also liable jointly the seller.”

688

The dissent a different in adopts approach urging the as same result defendants. to the According dissent, although plaintiffs’ complaint describes conduct plainly that violates ORS we nevertheless should conclude that the statute of limitations that to “action applies viola [s] tion ORS of 59.135” does not apply. That because the con that duct in plaintiffs describe their also complaint falls 59.115(1)(b). under ORS The problem with the dissent’s rea is that it to requires us read the soning into statute qualifi cation that does not in the simply appear law. language The limitation discovery statute, its by terms, to “an applies action for 59.135,” not, violation as the dissent reads it, “an action for violation of ORS 59.135 other than one 59.115(1)(b).” under ORS We not brought do have the author to rewrite the words of the in ity statute the manner sug the gested by dissent. ORS 174.010. See also Fernandez v. (1995) Board 137 Or Parole, 247, 252, 904 P2d App 1071 (“we are constrained the reasonable construction of lan enacted”).3 that the guage legislature actually conclude, therefore, We that to exception statute general three-year of limitations in this applies case that, under (1985), claims plaintiffs’ must have been commenced within two from the date discovered should have discovered the facts upon their action is based. The trial court in erred a con- reaching in conclusion and in trary entering summary favor judgment of defendants on that basis. that argue alternatively the trial court’s summary judgment affirmed, should be

entry nonetheless, 3 footnote, that In the dissent insists later amendments to discovery expressly applying brought limitation to actions under ORS 59.115(1)(b) suggest earlier version the limitation was not intended to apply brought App argument, actions at that section. 146 Or 690 n The 2. however, necessarily follow; may likely does not amendments as be intended to See, clarify existing change e.g., Corp., law it. Boise as to Carroll v. Cascade 138 Or (1996) (“[n]ot App 610, 3, changes statutory 616 n language, 910 P2d 1111 all in material”). however, complains refusing The dissent to read into the stat proposes meaningless. qualification ute the it the amendment renders We do event, agree, argument language read but in that we into a statute meaningless precisely argument keep rendering from an amendment Shop Supreme rejected Comp. Cover v. Natl. on Court S-W Floor Council and, recently, Webb, Ins., 614, (1994), 631, more Or P2d 1 State v. 324 Or 392-93,927 P2d 79 because the record shows conclusively that plaintiffs discov- ered or should have discovered the violations on their which action is based more than two years before their action was commenced. we Although may affirm the trial court on different from grounds those relied on by the trial court, case, this the trial court’s order that it expressly provided did not consider whether claims should be plaintiffs’ barred for their failed to their having bring action timely under alternative limitation period. Under the circumstances, trial court should have the opportunity the first instance to evaluate the parties’ factual assertions.

Reversed and remanded for further proceedings. BUTTLER, J.,S. dissenting.

Because the majority misapplies rules of statu- tory construction, 59.115(l)(b) thereby rendering super- fluous, I dissent.

Plaintiffs’ first amended complaint alleged: “The securities that plaintiffs purchased were by sold means of the following untrue statements of material fact and omissions to state material necessary facts in order to make made, the statements in the light of the circum- stances under they made, were not misleading.” That allegation was followed a list of allegedly false state- ments and omissions and by allegations that the nonselling defendants materially aided or in the participated sale of the securities in the way The alleged. securities were sold in a private placement in 1983. Plaintiffs allege that did discover, and could not reasonably have discovered, the vio- lations 1991, until almost eight years later, when these actions were filed.

The nonselling defendants moved to dismiss plain- tiffs’ claims them on the that the ground action was not commenced within the time permitted by former ORS 59.115(5).1 Before it 1985, was amended in that subsection provided: action, 59.115(5); At to this the time relevant statute was numbered ORS 59.115(6).

it is now numbered ORS may

“No action be commenced under this section more than three after the sale.” In that subsection was amended to read:

“No action or suit be commenced under this section years than three after sale an except more action viola- may tion of ORS years which be commenced within three years person after the sale or two after the bringing the action discovered or should have discovered the facts on based, the violation of ORS 59.135 is whichever is an timely later. Failure to commence action on a basis is an affirmative 1985, 349, defense.” Or Laws ch 13.2 § trial court granted

The motion dismissed to the defendants. Plaintiffs did not nonselling as complaint Instead, filed their second amended they complaint, appeal. “the securities were sold in of ORS violation alleging in directly indirectly, 59.135 in that or connection with or sale of the securities or the conduct of a securities purchase * * *,” business followed the same allegations they made in their first amended On the complaint. nonselling motion, defendants’ was dismissed as to complaint 67(B), to ORCP from the plaintiffs appeal them. Pursuant the action those defendants. judgment dismissing 1987, again provide: In that subsection was amended to subsection, provided may “Except in this no after the or as otherwise action suit be years more than three An action commenced under this section sale. (1) (b) paragraph for a violation of of subsection of this sec- under this section tion or ORS 59.135 may years or be commenced within three after the sale two years person bringing the action discovered or should have after the discovered based, the facts on which the action is whichever later. Failure to commence timely 1987, 603, is an affirmative defense.” an action on a basis Or Laws ch §6. did not become effective until more than That amendment three after Therefore, case, plaintiffs purchased applicable the securities. it is not in this expired within which the action could have been filed had because the amendment became effective. Nichols time before Wilbur, v. Or 473 P2d 1022 However, necessary if that amendment would not have been the 1985 version brought the statute of limitations for actions of the statute extended ORS 59.115(l)(b) 59.115(l)(b). correct, majority vestigial If then ORS was and is a serving meaningful purpose. complaints alleging provision no All that defendant the defendant 59.115(l)(a), leaving would come under ORS violated ORS with no affirmative defense. Clearly, legislature provided that is what the not simply amendment that. intended. The 1987 confirms 59.115(5) to ORS only looks former majority

The (l)(a) is an action for vio- this concluding subsection 59.115(l)(a) 59.135(2). provides: of ORS lation * * * “(1) security is liable sells a person A person: if the purchaser

“(a) Oregon Securi- security in violation Sells a condition, limitation or restriction ties Law or of imposed upon Oregon license under registration * * Law; or Securities under that subsec- held liable clear that a seller be It is Securities security Oregon if he “sells a violation tion 59.135, among include ORS which, in would Law,” general, here, is that the sell- as allegation, sections.3 When other fact and omissions of a material ers made “untrue statements to make the state- in order necessary material facts state under which in the of the circumstances made, light ments action comes made, squarely misleading,” were would that conduct 59.115(l)(b), though even within 59.135(2). also be a violation of ORS to ORS attaches no majority significance The 59.115(l)(b) extended statute of limita- in that holding 59.115(5) is to this applicable ORS tions provided former that con- conduct would alleges case because the complaint 59.135(2). correct, If the is majority violation of ORS stitute a dis- should not have been the First Amended Complaint then that dis- did not from missed; however, appeal plaintiffs amended Instead, complaint, filed their second they missal. 59.135, a violated ORS that the conduct allegation adding conclusion. legal because the is event, majority wrong,

In any is ORS this action to maintain that permits plaintiffs that a 59.115(l)(b), provides person specifically if the person: to a purchaser a is liable security sells “(b) statement by means of an untrue security a Sells fact nec- to state a material fact or an omission of a material made, ofthe light to make the statements essary in order made, misleading they are not under which circumstances (failing securities); (selling unregistered 59.085 See, e.g. ORS 59.055 broker). (sale by purchaser; unlicensed ORS 59.165 copy prospectus to deliver

(the buyer knowing not omission), untruth or who does not sustain the burden not proof person did

know, and in the exercise of reasonable care could not known, have of the untruth or omission.”

In statute, our construing task is to discern the intent of the In legislature. so, we consider doing the context of the statutory provision, other including provisions same statute and other related statutes, including statutory mandates. PGE v. Bureau Labor & Industries, 317 Or 606, 859 P2d 1143 One of the statutory mandates, ORS “* * * 174.020, instructs when a general and particular are provision inconsistent, the latter is paramount to the for- mer. aSo intent particular shall control a general one that is 59.115(l)(a) inconsistent Here, with it.” is a general pro- vision permitting purchaser of securities to maintain an action a seller against for the violation of the Oregon Securi- Laws, ties which, on its face would include a violation of ORS 59.135, the criminal statute, for which no affirmative defense (l)(b) However, available. subsection provides a specific of ORS remedy independent 59.135 and the seller an permits affirmative defense, not available either ORS 59.115(l)(a) or ORS 59.135. Even if ORS 59.135 exist, did not the injured buyer would have a civil remedy under ORS 59.115(l)(b) for fraudulent but representations, not under (l)(a). subsection The specific provision prevails over the gen- eral v. provision. Colby Larson, 121, 208 Or 297 P2d 299 P2d 1076 (1956); ORS 174.020.

The majority that the recognizes remedy nonseller participants predicated on a violation seller, not on their violation of law. It any also recognizes under ORS the nonsellers become liable because they have “participated sale, aided” in the because have they law, violated afforded an affirmative defense if they can establish that they know, did not and could not reasonably known, have of the facts on which liability short, based. In ORS does not establish standard of conduct the violation of rise to an action for gives which it the class damages; expands held be liable for a seller’s violation. persons

693 its that a nonseller’s Notwithstanding recognition the on the sellers’ violation of securities liability depends fails to focus on basis for laws, majority plaintiffs’ sellers, claims it is for the vio- against stating only However, lation of the as the majority recog- securities laws. nizes, in the absence of ORS 59.115 have plaintiffs no basis nonsellers, for a claim the sellers or the even against though Here, the sellers violated ORS the criminal statute. 59.115(l)(b), claims fall plaintiffs’ within ORS squarely which is specific which sellers with an affir- provides mative defense not 59.115(l)(a), available under ORS is a The general controls, statute and the provision. specific statute limitations run has on claims. I believe that scheme is

Although statutory if there is unambiguous, we look to the ambiguity, legis- lative of the 1985 history amendment former 19.115(5), which extended the statute of limitations claims under ORS 59.115. That arising amendment was pro- Berne, posed by Gary a Portland who testified attorney, before House Consumer and Business Affairs Committee. He stated, in part: important

“It is also to note that the statute of limita only being tions is extended for the type most severe 59.135.[4] violation, a violation of ORS The statute of limi tations applies to violations of the registration requirements of the securities laws or a violation of ORS 59.115(l)(b) 59.127(l)(b)[5]is and ORS not being changed.” 6

No matter how characterize their plaintiffs claims, they fall under ORS 59.115(l)(b), and that was their claim their first amended That complaint. was complaint dismissed because the three-year of limitations had before the action commenced. expired They was no assign dismissal; error to that it correct. Instead, was filed their majority quotes only testimony, although The the first sentence of this it is the second sentence that is instructive. against purchasers ORS 59.127 authorizes sellers to maintain an action permits purchasers the same manner and for the same reasons as ORS 59.115 59.127(l)(b) counterpart maintain an action is the seller. ORS 59.115(l)(b). by any That which we call a rose other name would smell as sweet. amended in an effort make it appear

second complaint 59.115(l)(a). falls They right their claim under ORS were their time, but action was filed late. first too Because I affirm the would trial court’s dismissal of I action, dissent.

Case Details

Case Name: Anderson v. Carden

Court Name: Court of Appeals of Oregon

Date Published: Mar 5, 1997

Citation: 934 P.2d 562

Docket Number: 9105-02998; CA A75835 (Control); 9105-03051; CA A75864

Court Abbreviation: Or. Ct. App.