James WOLFSTON, an individual, and Calaveras II, LLC, an Oregon limited liability company, Plaintiffs-Appellants, v. EASTSIDE BEND, LLC, an Oregon limited liability company, Defendant-Respondent. EASTSIDE BEND, LLC, an Oregon limited liability company, and Darrin Kelleher, an individual, Petitioners-Respondents, v. James WOLFSTON, an individual, and Calaveras II, LLC, an Oregon limited liability company, Respondents-Appellants.
No. 414; 19CV54546; A177019
IN THE COURT OF APPEALS OF THE STATE OF OREGON
August 16, 2023
327 Or App 456 (2023)
Walter Randolph Miller, Jr., Judge.
Michael W. Peterkin argued the cause for appellants. Also on the briefs were Peterkin Burgess and Janet M. Schroer and Hart Wagner.
Christopher J. Manfredi argued the cause for respondents. Also on the brief were Martin E. Hansen and Francis Hansen & Martin LLP.
Before Shorr, Presiding Judge, and Lagesen, Chief Judge, and Mooney, Judge.
Affirmed.
Plaintiffs James Wolfston and Calaveras II, LLC (Calaveras) appeal from a general judgment in favor of defendants Eastside Bend, LLC (Eastside) and Darrin Kelleher1 that was entered after the trial court denied plaintiffs’ petition to vacate an arbitration award in favor of defendants and, instead, confirmed the arbitration award. In two assignments of error, which plaintiffs combine in one argument, plaintiffs contend that the trial court erred in denying their petition to vacate the arbitration award under
We summarize the material facts. Defendant Eastside is a real estate development company wholly owned by Gary Miller. Eastside owned a platted subdivision in Bend, Oregon with 76 lots and initially intended to develop townhomes on the lots. However, Eastside executed a real estate sale agreement selling the undeveloped property to another company, Canterra. Eastside later approved the assignment of that sale agreement to plaintiff Wolfston.
The sale agreement contemplated the purchase occurring in three phases and required Wolfston to make closing payments at each phase of the development as he
As the closing date for the third and final phase approached, Wolfston had issues obtaining a loan to fund the completion of that phase before the agreed upon closing date of August 24, 2019. He again sought an extension on the closing date from Miller. Miller either failed to respond or, after the phase three closing date, rejected the extension requests. Ultimately, Wolfston did not secure funding to close on phase three and did not purchase the 23 lots allocated to that phase.
Plaintiffs Wolfston and Calaveras then brought four arbitration claims against Eastside for failing to deliver the 23 phase three lots. Those claims essentially alleged a breach of contract and sought either specific performance or damages, or, in the alternative, a claim for unjust enrichment. The arbitrators rejected each of those claims, rejecting many of them because it concluded that the failure to close was due to Wolfston‘s inability to get a loan or make the necessary payment before the phase three closing date.
Plaintiffs also brought an arbitration claim against Eastside‘s real estate agent, Kelleher, claiming that Kelleher interfered with plaintiffs’ business relations with Eastside for Kelleher‘s own personal gain. That claim essentially alleged that Kelleher was not acting as an honest real estate broker at the time of the sale of the development. It alleged that Kelleher had sabotaged the closing of phase three because he wanted to construct buildings on the phase three lots for his own benefit in his capacity as a builder through his construction company, Franklin Brothers. Plaintiffs alleged that, after the failed closing on phase three, Kelleher and Franklin Brothers became the builder of the units and Franklin Brothers was listed as the contractor of record at the design review stage of the development.
Kelleher testified at the arbitration hearing in July 2020 that, while he worked as both a real estate agent and contractor during his career, he was only interested
The arbitration panel issued its decision on October 7, 2020, rejecting all of plaintiffs’ claims. That included plaintiffs’ claims against Kelleher for his alleged intentional interference with plaintiffs’ contractual relationship with Eastside. Among other things, the arbitration panel concluded that, at the time of the failed late August 2019 closing, Kelleher “did not have a present interest in the project, and that his company was not the contractor for the construction of the townhomes on the remaining 23 lots.” (Emphasis added.) The panel also stated that “Kelleher presented credible testimony that he was not the contractor on the project after Phase III did not close.”
In early January 2021, after the arbitration decision, a contractor for Wolfston was looking at a new online construction permit portal that the City of Bend had created. He discovered that, according to the online portal, Kelleher‘s company, Franklin Brothers, was listed as the contractor for the 23 phase three lots in building permit applications filed on September 8, 2019, a few weeks after the failed closing date. Plaintiffs then asked the arbitration panel for a new hearing on the grounds of “fraud, newly discovered evidence and contempt of discovery order.” They maintained that Kelleher and Miller had (1) failed to produce requested and ordered discovery and then (2) falsely claimed at the arbitration hearing that Kelleher was not the contractor on
For their part, Kelleher and Miller noted that the purported new evidence was in fact from a third party, the City of Bend, and was therefore not controlled by defendants or inaccessible to plaintiffs. They noted that Miller, and not Kelleher or Franklin Brothers, had paid for the building permits. They also argued that plaintiffs themselves had presented evidence during the arbitration proceeding that Eastside and Franklin Brothers were working together on building out the 23 lots in October 2019, which meant that the purported “new” evidence was not a particular surprise. The arbitration panel then rejected plaintiffs’ request for a new hearing, simply concluding that “[t]he motion is denied.”
Plaintiffs then petitioned to vacate the arbitration award in the circuit court pursuant to
Plaintiffs contended, much as they had previously argued to the arbitration panel in seeking a new hearing, that defendants obtained the arbitration award by their fraudulent testimony and by other undue means, including the violation of an arbitration discovery order and the failure to produce relevant discovery. The trial court denied the petition to vacate, finding that “[m]ovant did not meet its burden to show that the award was procured by fraud or other undue means.” It found that while it was clear that “the alleged permits [filed by Franklin Brothers] existed at the time they were requested” in discovery, plaintiffs had not met their burden to show that the Eastside or Kelleher “possessed or controlled the permits when requested or prior to the [arbitration] trial.” Further, it found that the above
Plaintiffs appeal that decision. Before briefly addressing the merits, we turn to the standard of review, which largely drives the result here. Plaintiffs claim that, under federal law, we should undertake de novo review of the facts that occurred during and right after the arbitration proceeding. But we question how federal law could apply to the standard of review here—plaintiffs have not provided us with any authority that provides that federal law or the Federal Arbitration Act preempt our state court appellate review standards for issues arising under Oregon‘s Uniform Arbitration Act. Plaintiffs also misstate the type of de novo review generally applied in the federal court. Federal courts use the term ”de novo review” to describe the review of a trial court‘s legal conclusions for errors of law—the same type of review we apply to those rulings, albeit under a different name. See Vasquez-Lopez v. Beneficial Oregon, Inc., 210 Or App 553, 582, 152 P3d 940 (2007) (stating that we review legal issues “for errors of law—what the federal courts call ’de novo’ review“).
Applying Oregon law, we “review the trial court‘s findings to determine whether there is any evidence to support them.” Couch Investments, LLC v. Peverieri, 359 Or 125, 135, 371 P3d 1202 (2016). Further, we note that the burden of persuasion was on plaintiffs in the trial court to demonstrate that defendants engaged in fraud or other undue means that procured the arbitration award. Therefore, plaintiffs must demonstrate that the trial court was required to find or, in other words, could only find based on the evidence that defendants engaged in fraud or other undue means. See State v. Johnson, 335 Or 511, 523, 73 P3d 282 (2003) (noting that appellate courts are bound by a trial court‘s findings,
We understand plaintiffs to argue that the trial court was required to infer from the facts that defendants’ arbitration testimony was fraudulent and that they had intentionally withheld relevant documents during the arbitration. That is, plaintiffs challenge the court‘s factual findings and the inferences it drew from the evidence. Applying the foregoing standard and reviewing the record, we are not convinced that the trial court was required to find that defendants engaged in fraud or other undue means.2 On this record, the trial court could reasonably determine that plaintiffs had not proved that defendants had possession or control of the building permit applications when the discovery order and discovery requests were issued during the arbitration proceeding. The trial court could also reasonably determine that plaintiffs had not proved that defendants fraudulently testified when they claimed that, at least around the time of the failed closing on August 24, 2019, Kelleher did not intend to be and was not the builder of any lots. Some of the evidence on precisely when Kelleher may have become a builder for the phase three lots was ambiguous or related to dates occurring after the failed phase three closing. A reasonable finder of fact certainly could find otherwise based on the evidence, but the trial court was not required by the evidence to find fraud or other undue means.3
Affirmed.
SHORR, P. J.