Case Title: Graydog Internet, Inc. v. Giller

Citation: 

Docket Number: S064346

State: oregon

Court: Oregon Supreme Court

Date: 2017-11-30T00:00:00Z

Document:
No. 61	
November 30, 2017	
177
IN THE SUPREME COURT OF THE 
STATE OF OREGON
GRAYDOG INTERNET, INC.,
an Oregon corporation,
Respondent on Review,
v.
David GILLER,
Petitioner on Review.
David GILLER,
Petitioner on Review,
v.
Douglas WESTERVELT,
Respondent on Review.
(CC 130506470, CA A156539, SC S064346)
On review from the Court of Appeals.*
Argued and submitted May 11, 2017.
Colin M. Murphy, Southern Oregon Public Defenders, 
Medford, argued the cause for the petitioner on review. Gary 
M. Bullock, Gary M Bullock & Associates PC, Portland, filed 
the briefs for the petitioner on review.
Susan Marmaduke, Harrang Long Gary Rudnick 
PC, Portland, argued the cause and filed the brief for the 
respondent on review. Also on the brief were Nathan Robert 
Morales and C. Robert Steringer.
Before Balmer, Chief Justice, and Kistler, Walters, and 
Nakamoto, Justices, and Armstrong, Judge of the Court of 
Appeals, Justice pro tempore.**
BALMER, C. J.
______________
	
**  Appeal from Multnomah County Circuit Court, Henry C. Breithaupt, 
Judge pro tem. 279 Or App 722, 381 P3d 903 (2016)
	
**  Brewer, J., retired June 30, 2017, and did not participate in the decision 
of this case. Landau, Flynn, and Duncan, JJ., did not participate in the consider-
ation or decision of this case.
178	
Graydog Internet, Inc. v. Giller
The decision of the Court of Appeals is reversed. The 
judgment of the circuit court is affirmed, and the case is 
remanded to the circuit court for further proceedings.
Case Summary: A shareholder in a closely held corporation challenged the 
corporation’s attempt to purchase all of the shareholder’s shares pursuant to a 
provision of the Oregon Business Corporation Act, ORS 60.952(6). The trial court 
ruled that, for purposes of the statute, a third-party complaint was not a “pro-
ceeding” and that the claims made in the third-party complaint were not qual-
ifying claims “under” ORS 60.952(1). The Court of Appeals reversed, allowing 
the corporation to proceed to purchase the shareholder’s shares. Held: In the cir-
cumstances here, the shareholder’s third-party complaint was not a “proceeding 
under [ORS 60.952(1)]” and therefore it did not trigger the corporation’s right to 
elect to purchase the shareholder’s shares.
The decision of the Court of Appeals is reversed. The judgment of the cir-
cuit court is affirmed, and the case is remanded to the circuit court for further 
proceedings.
Cite as 362 Or 177 (2017)	
179
	
BALMER, C. J.
	
Under ORS 60.952(6), when a shareholder in a 
closely held corporation files a certain type of proceeding, 
the corporation or another shareholder may respond with 
an election to purchase for fair value all of the shares of 
the shareholder who filed the proceeding and proceed to 
acquire those shares. This case presents the question of 
when, if ever, the filing of a third-party complaint consti-
tutes the “filing of a proceeding under subsection (1)” of 
that statute, such that the shareholder who filed the pro-
ceeding may be bought out by the corporation or another 
shareholder. The corporation here, Graydog Internet, Inc., 
has only two shareholders: Westervelt, the company’s pres-
ident and majority shareholder, and Giller, an employee 
and minority shareholder. Graydog initiated the underlying 
case, at Westervelt’s direction, when it filed a declaratory 
judgment action against Giller raising an issue regarding 
his employment. As part of his response, Giller filed a third-
party complaint against Westervelt. Graydog then filed an 
election to purchase Giller’s shares under ORS 60.952(6). 
Giller objected, arguing that filing a third-party complaint 
does not constitute the “filing of a proceeding” as that term 
is used in ORS 60.952(6) and that the claims in the third-
party complaint were not “under [ORS 60.952(1)].” For those 
reasons, Giller asserted, Graydog could not elect to purchase 
his shares. We agree that ORS 60.952(6) does not apply to 
Giller’s third-party complaint, and therefore reverse the 
decision of the Court of Appeals.
I.  FACTS
	
Westervelt and Giller founded Graydog in 1997. 
Since incorporation, Westervelt has been the majority share-
holder and Giller has been the minority shareholder. Both 
have been active in the management and operation of the 
firm. Their cooperation was fruitful and the company grew.
	
Eventually, however, Westervelt and Giller dis-
agreed about aspects of their venture together. At some 
point, Westervelt offered to buy out Giller, but Giller refused 
to sell. A provision in a shareholder agreement among 
Graydog, Westervelt, and Giller allowed Graydog to purchase 
180	
Graydog Internet, Inc. v. Giller
the shares of any shareholder who ceased to be employed by 
Graydog. To that end, Westervelt directed Graydog to file a 
declaratory judgment action against Giller seeking a dec-
laration of his status as an at-will employee and Graydog’s 
right to terminate Giller’s employment.
	
Giller responded with an answer and counterclaims 
against Graydog. He also filed a third-party complaint 
against Westervelt personally. The third-party complaint 
asserted claims for
“(1) a declaration that the ‘shareholder agreement is 
void and unenforceable,’ (2) ‘breach of contract’ based on 
Westervelt allegedly violating the corporate bylaws by 
‘tak[ing] unilateral action in his personal capacity and for 
his personal interests,’ and (3) ‘breach of [the] contractual 
duty of good faith and fair dealing’ based on Westervelt 
allegedly ‘having acted for the sole purpose of trying to 
force [Giller] to unwillingly sell his shares to him.’ 
”
Graydog Internet, Inc. v. Giller, 279 Or App 722, 725, 381 P3d 
903 (2016) (first and second brackets in Graydog Internet, 
Inc.). In support of those claims, Giller alleged:
“Westervelt loaned himself $20,000 from the company 
without the board’s approval; Westervelt elected his wife 
to the board of directors over Giller’s objection; Westervelt 
threatened to force Giller to sell his shares if Giller did not 
agree to do so voluntarily, and had an attorney prepare and 
file Graydog’s complaint to terminate Giller’s employment 
before the board of directors voted on the proposal. * 
* 
* 
Giller alleges that Westervelt took all of those actions ‘for 
his personal interests’ and harmed Giller as a result.”
Id. at 734.
	
In response to the third-party complaint, Graydog—
controlled by Westervelt—filed an election to purchase all of 
Giller’s shares pursuant to ORS 60.952(6), setting up the 
issue now before us.
	
Subsection (6) of ORS 60.952 applies when a share-
holder in a closely held corporation “fil[es]” a “proceeding 
under subsection (1).” ORS 60.952(1) identifies the grounds 
for liability that a shareholder in a closely held corporation 
must “establish[ 
]” before a court will grant certain relief 
Cite as 362 Or 177 (2017)	
181
against the corporation or another shareholder: that the 
directors or shareholders are deadlocked; that the directors 
have acted in an illegal, oppressive, or fraudulent manner; 
or that waste has occurred.1 Once a shareholder establishes 
liability, a court “may order one or more of the remedies 
listed in subsection (2).” ORS 60.952(1). When a shareholder 
files a proceeding under ORS 60.952(1), “the corporation or 
one or more shareholders may elect to purchase all of the 
shares owned by the shareholder who filed the proceeding 
for their fair value.” ORS 60.952(6).2 That process—a defen-
dant corporation or a shareholder in the defendant corpora-
tion electing under ORS 60.952(6) to purchase the shares of 
the shareholder who filed the proceeding—is referred to as 
an “election.” As discussed below, as a result of the election 
provision, when a shareholder files a proceeding under ORS 
60.952(1), in addition to seeking damages or other relief 
under ORS 60.952(2), the shareholder in effect makes an 
offer to sell all of its shares, for fair value, to the corporation 
	
1  ORS 60.952(1) provides:
	
“In a proceeding by a shareholder in a corporation that does not have 
shares that are listed on a national securities exchange or that are regularly 
traded in a market maintained by one or more members of a national or affil-
iated securities association, the circuit court may order one or more of the 
remedies listed in subsection (2) of this section if it is established that:
	
“(a)  The directors are deadlocked in the management of the corporate 
affairs, the shareholders are unable to break the deadlock and irreparable 
injury to the corporation is threatened or being suffered, or the business and 
affairs of the corporation can no longer be conducted to the advantage of the 
shareholders generally, because of the deadlock;
	
“(b)  The directors or those in control of the corporation have acted, are 
acting or will act in a manner that is illegal, oppressive or fraudulent;
	
“(c)  The shareholders are deadlocked in voting power and have failed, for 
a period that includes at least two consecutive annual meeting dates, to elect 
successors to directors whose terms have expired; or
	
“(d)  The corporate assets are being misapplied or wasted.”
	
2  ORS 60.952(6) provides, in part:
	
“At any time within 90 days after the filing of a proceeding under subsec-
tion (1) of this section, or at such time determined by the court to be equita-
ble, the corporation or one or more shareholders may elect to purchase all of 
the shares owned by the shareholder who filed the proceeding for their fair 
value.”
The remainder of the provision details the procedures for the election, deter-
mination of the purchase price, involvement by the court, and related matters. 
See ORS 60.952(6)(a) - (f) (setting out procedures and timelines for purchase of 
shares).
182	
Graydog Internet, Inc. v. Giller
or another shareholder, without resolving the merits of the 
complaint or other proceeding that the shareholder filed.
	
We return to the facts of the case. After Graydog 
filed an election, Giller objected to it. Graydog and Giller then 
filed cross-motions for partial summary judgment contesting 
the legality of Graydog’s election under ORS 60.952(6). The 
parties disputed two issues under ORS 60.952(6): whether 
filing a third-party complaint constituted the “filing” of a 
“proceeding” and whether the claims in Giller’s third-party 
complaint were actually “under” ORS 60.952(1). On the 
first point, Giller asserted that the election procedure is 
available only to the party defending against a proceeding 
brought by another, and not to the party that initiated the 
proceeding in the first place. He argued that it was Graydog 
and Westervelt that had initiated the litigation and that 
his answer, counterclaim, and third-party complaint were 
simply defensive responses to Graydog’s complaint. Graydog 
responded that “proceeding” in ORS 60.952(6) can mean an 
“action or step that is part of a larger action” and, therefore, 
that the third-party complaint filed by Giller was a “pro-
ceeding” that Giller had “filed.”
	
On the second issue, Giller argued that his third-
party complaint was not actually “under” ORS 60.952(1), 
because he had not asserted a claim for relief from “illegal, 
fraudulent or oppressive” conduct, the standards for liability 
in ORS 60.952(1)(b), nor had he sought one of various equi-
table remedies identified in ORS 60.952(2). Rather, Giller 
argued, he had simply responded to Graydog’s complaint 
and asserted an appropriate contract-based claim against 
the majority shareholder who controlled Graydog, seek-
ing money damages and a declaratory judgment. Graydog 
replied that the true nature of Giller’s claim was revealed 
by the conduct alleged in the complaint, which appeared to 
show that Westervelt had acted in an oppressive and illegal 
manner, although Giller did not use those words. Because 
“illegal” and “oppressive” conduct creates liability under 
ORS 60.952(1), Graydog asserted, Giller’s claims were actu-
ally “under” ORS 60.952(1).
	
After argument, the trial court entered a limited 
judgment stating:
Cite as 362 Or 177 (2017)	
183
	
“1.  ORS 60.952(6) does not apply to this case because 
ORS 60.952(6) may be triggered only against one who com-
mences an action, not against a party who files counter-
claims or a third-party complaint.
	
“2.  ORS 60.952(6) does not apply to this case for the 
further reason that the claims made by Mr. Giller are not 
of the type described in ORS 60.952.”
Graydog and Westervelt appealed that judgment to the 
Court of Appeals.
	
At the Court of Appeals, Graydog and Westervelt 
challenged both conclusions of the trial court. They argued 
that the text and context of ORS 60.952(6) indicate that 
a party who files a third-party complaint has filed a “pro-
ceeding” for the purposes of the statute, citing a number of 
Oregon cases suggesting that a “proceeding” can mean a 
part of a lawsuit, such as a third-party complaint. They also 
argued that Giller’s claims were the type of claims described 
in ORS 60.952(1) that could trigger the right of the corpora-
tion or another shareholder to make an election under the 
statute to purchase the filing shareholder’s shares.
	
Giller argued that filing a third-party complaint 
was not the “filing of a proceeding” under the statute. He 
contended that the legislative history indicates that the 
legislature intended ORS 60.952(6) to be “a remedy, not a 
weapon.” By allowing a majority shareholder to commence 
litigation against a minority shareholder and then, after the 
defendant has responded by answer, counterclaim, or third-
party complaint, use ORS 60.952(6) to buy out the latter, as 
Giller asserted that Graydog and Westervelt were attempt-
ing to do here, ORS 60.952(6) would become a weapon for 
majority shareholders seeking to oust minority or dissent-
ing shareholders. Giller also reprised his argument that 
the claims in the third-party complaint were not the type 
of claims described in ORS 60.952(1) that could trigger an 
election.
	
The Court of Appeals agreed with Graydog and 
Westervelt and reversed the trial court. The court first con-
sidered the meaning of the phrase “filing of a proceeding” as 
used in ORS 60.952(6). The court noted that “proceeding” for 
184	
Graydog Internet, Inc. v. Giller
purposes of ORS chapter 60 is defined as “a civil, criminal, 
administrative or investigatory action.” ORS 60.001(24). It 
cited several cases where this court described “third-party 
complaints as a separate civil action” from the cases in 
which they were filed and concluded that filing a third-party 
complaint was the “filing of a proceeding.” Graydog Internet, 
Inc., 279 Or App at 729.
	
The court then considered whether the claims in 
Giller’s third-party complaint were claims “under subsection 
(1)” of ORS 60.952. To determine the “true nature” of Giller’s 
claims, it applied a standard for determining the application 
of the correct statute of limitations set out in Htaike v. Sein, 
269 Or App 284, 344 P3d 527, rev den, 357 Or 595 (2015). 
Graydog Internet, Inc., 279 Or App at 731. Under the Htaike 
standard, whether a claim properly sounds in tort or con-
tract depends on the “legal source of the defendant’s liabil-
ity, the factual setting of the dispute, the injuries asserted 
by the plaintiff, and the plaintiff’s claimed measure of dam-
ages.” Id. at 732. The Court of Appeals applied that stan-
dard and concluded that “the real character of at least some 
of Giller’s third-party claims is a claim for oppression under 
ORS 60.952(1).” Id. It reversed both conclusions of the trial 
court, clearing the way for Graydog’s purchase of Giller’s 
shares. Giller sought review in this court.3
II.  ANALYSIS
	
The issue here is the circumstances in which the 
filing of a pleading by a shareholder in a closely held cor-
poration constitutes the “filing of a proceeding under [ORS 
60.952(1)]” such that the shareholder who files the pleading 
may be bought out by the corporation or another shareholder 
under ORS 60.952(6). We note at the outset that the text of 
the statute does not clearly resolve that question. To repeat, 
ORS 60.952(6) provides, in part:
	
“At any time within 90 days after the filing of a pro-
ceeding under subsection (1) of this section, or at such time 
determined by the court to be equitable, the corporation or 
	
3  As noted, both Graydog and Westervelt filed notices of appeal from the 
trial court’s limited judgment. Their arguments are identical and, except where 
necessary to refer to Westervelt separately, we refer to respondents on review as 
“Graydog.” 
Cite as 362 Or 177 (2017)	
185
one or more shareholders may elect to purchase all of the 
shares owned by the shareholder who filed the proceeding 
for their fair value.”
As noted, subsection (1) imposes liability where the directors 
or shareholders are deadlocked; the directors have acted in 
an illegal, oppressive, or fraudulent manner; or waste has 
occurred. If a shareholder establishes such conduct, a court 
may order one or more remedies listed in ORS 60.952(2), 
ranging from money damages to receivership to dissolution 
of the corporation. To interpret ORS 60.952, we apply our 
usual methodology to discern the intent of the legislature by 
examining the text, context, and legislative history of the 
statute. See State v. Gaines, 346 Or 160, 206 P3d 1042 (2009).
	
We begin by examining the text and context of the 
terms “filing of a proceeding” and “proceeding under sub-
section (1),” to understand their meaning and to determine 
whether either term conclusively excludes Giller’s third-
party complaint, such that Graydog’s election must fail. 
After finding the text of both terms to be imprecise, and 
case law to be relatively unhelpful, we turn to the legislative 
history of ORS 60.952 and related academic commentary to 
gain an understanding of the legislature’s intent in enacting 
the statute. Based on that understanding, we conclude that 
in the circumstances here, where Giller’s third-party com-
plaint did not contain the claims for relief or seek the equita-
ble remedies identified in ORS 60.952(1) and (2), and where 
the procedural context of the third-party complaint demon-
strated that it was a defensive response to an attempted 
squeeze-out by the majority shareholder, the legislature did 
not intend to allow an election under ORS 60.952(6).
A.  Text and Context
1.  “Filing of a proceeding”
	
An initial textual dispute is whether the term “filing 
of a proceeding” in ORS 60.952(6) can mean, among other 
things, the filing of a third-party complaint, or whether 
it is limited to the initial filing of a complaint by a share-
holder in a corporate dispute involving a closely held corpo-
ration. Giller asserts that his third-party complaint against 
Westervelt was part of the same action as the declaratory 
186	
Graydog Internet, Inc. v. Giller
judgment action that Graydog filed against him and, thus, 
that he did not “file” a “proceeding” for purposes of that pro-
vision. Graydog argues that a third-party complaint, bring-
ing new claims against a new party, is such a “proceeding.” 
This is a threshold issue, because if Giller is correct that 
filing a third-party complaint never can mean “filing a pro-
ceeding” for purposes of ORS 60.952(6), then Giller prevails. 
We begin our interpretive exercise by looking to the legis-
lature’s definition of the word “proceeding” for purposes of 
ORS chapter 60: “a civil, criminal, administrative or inves-
tigatory action.” ORS 60.001(24). That statutory definition, 
however, is of limited value, because the ordinary legal 
meaning of the word “action” is a “civil or criminal judicial 
proceeding,” Black’s Law Dictionary 35 (10th ed 2009), ren-
dering the definition, as least as applicable here, circular 
and generally unhelpful.
	
Dictionary meanings are more helpful in seeking 
to understand other words in the key phrase “filing of a 
proceeding,” and the operative words in that phrase have 
several common meanings in the law. The verb “file” can 
mean “[t]o commence a lawsuit,” as in “the seller threat-
ened to file against the buyer.” Black’s at 745. That definition 
pairs with the definition of “proceeding” as “[t]he regular 
and orderly procession of a lawsuit, including all acts and 
events between the time of commencement and the entry 
of judgment.” Id. at 1398. With those definitions, to “file a 
proceeding” can mean to commence, or begin, a lawsuit. So 
understood, the filing of a third-party complaint, as opposed 
to filing the initial complaint in an action, would not con-
stitute the “filing of a proceeding.” But a “proceeding” can 
also mean “[a]n act or a step that is part of a larger action,” 
id. at 1398, and “file” can also mean the “deliver[y]” of a 
“legal document” to a court, id. at 745. Under those defini-
tions, the “filing of a proceeding” could mean commencing 
some discrete part of a single lawsuit. Particularly where, as 
here, the third-party complaint asserts claims distinct from 
those in the initial complaint and could have been filed as 
a separate action apart from and in the absence of the ini-
tial complaint, it would unduly elevate form over substance 
to conclude that filing a third-party complaint never can be 
“filing of a proceeding” for purposes of ORS 60.952(6).
Cite as 362 Or 177 (2017)	
187
	
It follows that the phrase “filing of a proceeding” 
can be read either more broadly, to encompass the filing of 
a third-party complaint in an existing civil action, or more 
narrowly, to mean only the filing of an initial complaint 
or other action. To further interpret ORS 60.952, we look 
beyond the text to see if the legislature intended a particu-
lar meaning when it used the phrase in that statute.
	
The parties cite several decisions of this court as 
context for the word “action,” which is part of the definition 
of “proceeding” in ORS 60.001(24). See OR-OSHA v. CBI 
Services, Inc., 356 Or 577, 593, 341 P3d 701 (2014) (noting 
that case law existing at the time of a statute’s enactment 
is part of the statutory context). Only one recent case actu-
ally interpreted the word “action” as part of its holding. In 
Montara Owners Assn. v. La Noue Development, LLC, 357 Or 
333, 353 P3d 563 (2015), we held that “first-party claims * 
* 
* 
and third-party claims * 
* 
* are part of the same ‘action.’ 
” 
357 Or at 356.4 There, a homeowners association brought a 
construction-defect action against a developer, who in turn 
filed a third-party complaint against a subcontractor. The 
first-party plaintiff and first-party defendant settled, leav-
ing only the third-party claim between the developer and 
subcontractor to go to trial. Id. at 337. The developer sought 
to present to the jury a claim for attorney fees as inciden-
tal damages, but the subcontractor argued that ORCP 68, 
“govern[ing] the pleading, proof, and award of attorney fees 
in all cases,” prescribed a different procedure for awarding 
attorney fees. Id. at 355 (emphasis omitted; quoting ORCP 
68 C(1)). ORCP 68 contains an exception to that procedure, 
however, for fees that arose “prior to the action.” ORCP 68 
C(1)(a). To resolve that dispute, this court had to determine 
if the first-party action, which settled before trial, was part 
of the same “action” as the third-party claims going to trial. 
We examined ORCP 22 C(1), which, “in discussing third-
party practice, refers to both first- and third-party claims 
as part of ‘the action,’ 
” and concluded that first-party claims 
	
4  Case law decided after the enactment of a statute may also be “persua-
sive” in interpreting the statute. OR-OSHA, 356 Or at 593. Here, Montara 
Owners Assn. was decided while this case was under advisement at the Court of 
Appeals—well after the enactment of ORS 60.952—but it is nonetheless poten-
tially relevant to our analysis.
188	
Graydog Internet, Inc. v. Giller
and third-party claims are part of the same action. Montara 
Owners Assn., 357 Or at 356-57. Giller analogizes this case 
to Montara Owners Assn. and argues that his third-party 
complaint is part of the same “action” as the first-party 
complaint.
	
We think that Montara Owners Assn.’s relevance is 
limited, however, because it interprets the word “action” as it 
appears in the context of ORCP 68, not the Oregon Business 
Corporation Act. Giller and Graydog also discuss a number 
of other cases, some of which the Court of Appeals found 
significant, that purport to bear on the meaning of the word 
“action.” But the references to “action” are generally made 
in passing, see, e.g., O’Connell, Goyak & Ball v. Silbernagel, 
297 Or 207, 210, 681 P2d 1159 (1984), or the cases predate 
our current civil rules and are not dispositive, see, e.g., Ryals 
et ux. v. Smith et al., 202 Or 470, 275 P2d 853 (1954). To 
the extent they are helpful at all, they support our initial 
assessment that “file” and “proceeding” do not have unitary 
definitions that unambiguously resolve this case. Instead, 
those words have various meanings, depending on context. 
Looking simply at the differing definitions of the words and 
our cases interpreting them in other contexts, Giller has a 
plausible argument that his third-party complaint was not 
the “filing” of a “proceeding” under ORS 60.952(1) or (6) that 
would trigger the buyout right, and Graydog has a plausi-
ble argument that a third-party complaint could constitute 
such a proceeding.
2.  A proceeding “under subsection (1)”
	
The remedies in ORS 60.952(2) and the election to 
purchase shares under ORS 60.952(6) are available only in 
proceedings involving corporate control and not other issues, 
like a shareholder’s slip and fall at the corporate office—
that is, proceedings “under subsection (1),” which we quoted 
above. “Under” means “in accordance with,” Webster’s Third 
New Int’l Dictionary 2487 (unabridged ed 2002), and in 
this context has little substantive meaning independent of 
the reference to “subsection (1).” Subsection (1) itself, how-
ever, is rich with meaning: it defines a closely held corpora-
tion; identifies particular circumstances in which a share-
holder may bring an action under the statute—including 
Cite as 362 Or 177 (2017)	
189
management or shareholder deadlock, corporate waste, or 
illegal, fraudulent, or oppressive conduct by those in control 
of the corporation; and empowers the court to order certain 
remedies.
	
Several of the circumstances identified in subsec-
tion (1) are straightforward, such as whether “shareholders 
are deadlocked in voting power and have failed, for a period 
that includes at least two consecutive annual meeting dates, 
to elect successors to directors whose terms have expired.” 
ORS 60.952(1)(c). In this case, however, Graydog argues 
that Giller’s third-party complaint triggers the election 
provision because Giller seeks to “establish[ 
]” that “[t]he 
directors or those in control of the corporation have acted, 
are acting or will act in a manner that is illegal, oppressive 
or fraudulent.” ORS 60.952(1)(b). Graydog urges us to look 
to the facts Giller alleges about Westervelt’s conduct—facts 
that, Graydog asserts, establish “prototypical oppressive 
conduct”—as revealing his claim to be actually a claim for 
oppression.5 Giller responds by emphasizing that he inten-
tionally limited the claims he asserted and the remedies 
he sought in his third-party complaint, such that it con-
tains straightforward breach of contract and declaratory 
judgment claims that do not implicate traditional notions of 
majority shareholder “oppression.”
	
We turn briefly to consider the distinguishing char-
acteristics of a claim for oppression. In Baker v. Commercial 
Body Builders, 264 Or 614, 507 P2d 387 (1973), this court 
repeated a widely quoted English definition of oppressive 
conduct as
“burdensome, harsh and wrongful conduct; a lack of pro-
bity and fair dealing in the affairs of a company to the prej-
udice of some of its members; or a visual departure from 
the standards of fair dealing, and a violation of fair play 
on which every shareholder who entrusts his money to a 
company is entitled to rely.”
Id. at 628-29. Put another way, conduct that violates 
the majority shareholders’ fiduciary duty to a minority 
	
5  Graydog does not argue that Giller has made a claim for “illegal” or 
“fraudulent” conduct, and we do not address the meaning of those terms in ORS 
60.952(1)(b).
190	
Graydog Internet, Inc. v. Giller
shareholder in a close corporation is “likely to be oppressive.” 
Naito v. Naito, 178 Or App 1, 20, 35 P3d 1068 (2001); accord 
Baker, 264 Or at 629 (“ 
‘[O]ppressive’ conduct by those in 
control of a ‘close’ corporation as its majority stockholders is 
closely related to * 
* 
* the fiduciary duty of a good faith and 
fair dealing owed by them to its minority stockholders.”). 
“The majority shareholder of a close corporation owes the 
minority fiduciary duties of loyalty, good faith, fair dealing 
and full disclosure.” Chiles v. Robertson, 94 Or App 604, 619, 
767 P2d 903, modified on recons, 96 Or App 658, 774 P2d 
500, rev den, 308 Or 592 (1989). Whether or not a party’s 
specific conduct is oppressive, however, is a highly factual 
matter. See Baker, 264 Or at 628 (“[G]eneral definitions of 
‘oppressive’ conduct are of little value for application in a 
specific case.”). The success of a claim depends on the facts 
and circumstances of the majority’s conduct; for example, 
the presence of a legitimate business reason for a decision 
may affect whether certain conduct is oppressive. See, e.g., 
Cooke v. Fresh Express Foods Corp., 169 Or App 101, 113, 
7 P3d 717 (2000) (considering “the business reasons that 
defendants present for their actions”). As discussed in Baker 
and elsewhere, the concept of oppressive conduct and fidu-
ciary duty eludes precise articulation. Baker, 264 Or at 628; 
see also Chiles, 94 Or App at 619 (“[T]he heart of a corporate 
fiduciary’s duty is an attitude, not a rule.”).
	
Another recurring issue in the litigation of oppres-
sion claims is the difficulty of fashioning a remedy that 
responds to the majority shareholder’s misconduct but 
does not harm corporate operations or shareholder value. 
Reflecting the varied “facts of the case and the nature of the 
problem involved” in claims of oppression, Baker, 264 Or at 
631-32, Oregon cases have long required courts to carefully 
tailor remedies for oppression claims. See, e.g., Browning v. 
C & C Plywood Corp., 248 Or 574, 582, 434 P2d 339 (1968) 
(denying plaintiff’s request for dissolution of corporation as 
“untenable” and remanding case to trial court to “determine 
what the precise relief should be”). Depending upon the cir-
cumstances, “dissolution [or] * 
* 
* other appropriate equita-
ble relief” may be proper. Baker, 264 Or at 631. The court in 
Baker compiled a list of alternative equitable remedies for 
oppression, id. at 631-33, which, as we will discuss below, 
Cite as 362 Or 177 (2017)	
191
formed the basis for the additional remedies enacted when 
ORS 60.952 was amended in 2001. Both our earlier cases 
and legal commentators establish that whether conduct by 
controlling shareholders constitutes oppression will depend 
on the relationship between the parties, the financial and 
business context of the conduct, and the parties’ history of 
dealings, among other things, and that, when oppression 
is demonstrated, a court may impose a variety of equitable 
remedies, up to and including dissolution of the corporation. 
See Robert B. Thompson, 2 Close Corporations and LLCs: 
Law and Practice § 9:35, 9-245 (3d ed 2017) (discussing vari-
ety of relief available in oppression cases).
	
We return to the question whether Giller’s third-
party complaint was actually a claim for oppression. The 
task of determining whether a party’s labeling of a claim 
actually reflects the true nature of the claim arises in sev-
eral contexts and lacks a definitive answer. As noted, the 
Court of Appeals analyzed Giller’s claims using the stan-
dard from Htaike. It acknowledged, however, that the pur-
pose in Htaike—distinguishing contract claims from tort 
claims to properly apply the statute of limitations—differs 
from the proper application of ORS 60.952(6) and that tests 
serving those functions “will [not] necessarily be identical.” 
Graydog Internet, Inc., 279 Or App at 732 n  7. Htaike, in 
turn, was based on Securities-Intermountain v. Sunset Fuel, 
289 Or 243, 611 P2d 1158 (1980), which also concerned the 
application of the statute of limitations to contract and tort 
claims. In that case, this court analyzed the history of stat-
utes of limitation in Oregon, going back to the Deady Code, 
and reviewed cases applying those statutes. Id. at 253. The 
court concluded that the body of law that had developed to 
determine the “real” character of an action in that context 
was “the product of case-by-case development more than of 
any single coherent theory.” Id. at 252.
	
Although Securities-Intermountain did not establish 
a clear, easily applied test for determining the “true” nature 
of a claim, it does provide support for Giller’s position that 
courts generally should accept a party’s characterization of 
the party’s own claims. Securities-Intermountain discussed 
with approval earlier decisions by this court that
192	
Graydog Internet, Inc. v. Giller
“took plaintiff’s pleading on its own terms * 
* 
* [and] did 
not purport to look beyond a well-pleaded complaint so as 
to impose upon plaintiff a contrary characterization of his 
cause of action that would defeat it.”
289 Or at 254. And that statement is an application of the 
longstanding rule that “the party who brings a suit is mas-
ter to decide what law he will rely upon.” The Fair v. Kohler 
Die & Specialty Co., 228 US 22, 25, 33 S Ct 410, 57 L Ed 716 
(1913) (Holmes, J.); see also Caterpillar Inc. v. Williams, 482 
US 386, 392, 107 S Ct 2425, 96 L Ed 2d 318 (1987) (discuss-
ing federal “well-pleaded complaint rule,” which “provides 
that federal jurisdiction exists only when a federal ques-
tion is presented on the face of plaintiff’s properly pleaded 
complaint,” and which “makes the plaintiff master of the 
claim; he or she may avoid federal jurisdiction by exclusive 
reliance on state law”); Redwood Theaters, Inc. v. Festival 
Enterprises, Inc., 908 F2d 477, 479-80 (9th Cir 1990) (apply-
ing well-pleaded complaint rule to remand antitrust com-
plaint to state court, despite potential nationwide effect 
of litigation, and noting “plaintiffs’ prerogatives to choose 
the forum and legal principles governing their complaints” 
(emphasis added)).
	
Giller did not expressly invoke ORS 60.952(1)(b), 
assert a breach of fiduciary duty, or make any claim of 
“oppression” as a ground for his third-party complaint 
against Westervelt. Indeed, he disclaimed any reliance on 
that statute or any theory of oppression, and, under the 
cases just discussed, his choice of legal theories is entitled 
to some degree of deference. Nevertheless, given the absence 
of a “single coherent theory” for determining the “true” 
nature of a plaintiff’s claims, as well as the nebulous nature 
of oppression claims generally, we turn to the context and 
legislative history of ORS 60.952(1)(b) to see whether they 
shed any light on the kind of claims the legislature intended 
to be included within the term “oppressive” conduct under 
ORS 60.952(1)(b).
B.  Context and Legislative History of ORS 60.952
	
Helpfully, the legislative history of ORS 60.952 con-
tains extended discussions of the legislature’s intentions in 
enacting that statute. Senate Bill (SB) 116 (2001), codified 
Cite as 362 Or 177 (2017)	
193
as ORS 60.952, sought to improve the legal framework reg-
ulating closely held corporations by amending the Oregon 
Business Corporation Act. Robert C. Art, Shareholder Rights 
and Remedies in Close Corporations: Oppression, Fiduciary 
Duties, and Reasonable Expectations, 28 J Corp L 371, 407 
(2003).6 Therefore, in addition to examining the legislative 
history materials, we refer to treatises and commentary 
describing the problems that the statute was intended to 
ameliorate.
1.  The minority shareholder in the close corporation
	
ORS 60.952 concerns court proceedings by share-
holders in closely held corporations—corporations that 
“do[ 
] not have shares that are listed on a national securi-
ties exchange or that are regularly traded.” ORS 60.952(1). 
A distinguishing characteristic of closely held corpora-
tions is the vulnerability of their minority shareholders to 
oppression and mistreatment by the shareholder majority, 
such as by restricting the minority shareholder’s partici-
pation in corporate governance, limiting access to corpo-
rate assets, managing the corporation for the benefit of the 
majority shareholder, or seeking to eliminate the minori-
ty’s ownership interest, usually without fair payment. 
Thompson, 2 Close Corporations and LLCs §  9:2 at 9-8; 
see also Audio Recording, Senate Committee on Business, 
Labor and Economic Development, SB 116, Jan 15, 2001, 
at 13:10 (statement of Robert Art); http://sos.oregon.gov/
archives/Pages/records/legislative-minutes-2001.aspx 
(accessed Aug 16, 2017) [hereinafter Statement of Robert 
Art] (explaining that majority oppression can prevent the 
minority from “getting any income from the corporation or 
having any voice and control”). Because shareholders in 
close corporations, by definition, lack a ready market for 
their shares, dissatisfied minority shareholders may be 
unable to sell their shares “without suffering serious finan-
cial loss.” Thompson, 2 Close Corporations and LLCs § 9:2 
at 9-5. And, often, minority shareholders in closely held 
	
6  Professor Robert Art of Willamette University College of Law chaired the 
task force that drafted ORS 60.952. Our understanding of the legislative history 
of that statute draws on his article describing SB 116 and his testimony in sup-
port of it during the 2001 legislative session.
194	
Graydog Internet, Inc. v. Giller
corporations are actively engaged in the business as direc-
tors, officers, or employees. That involvement in the firm 
can make them more vulnerable to abuse by the share-
holder majority; it also means that shareholder disputes 
can result in “serious harm” to the enterprise. Id. § 9:2 at 
9-4, 9-6.
	
To protect minority shareholders, many states 
have developed legislative and judicial remedies to respond 
to shareholder oppression and other unfair treatment of 
the noncontrolling shareholders. Id. §  9:2 at 9-8 to 9-10. 
Historically, the only codified remedy for oppression or cor-
porate deadlock was the dissolution of the corporation and 
distribution of its assets to the owners. See, e.g., ORS 60.661 
(1987), amended by Or Laws 2001, ch 215, § 58 (setting out 
only judicial dissolution as the statutory remedy for oppres-
sion). But courts and commentators have criticized disso-
lution as a “severe and harsh remedy.” Thompson, 2 Close 
Corporations and LLCs § 9:43 at 9-295; see also Statement 
of Robert Art at 15:06 (describing judicial dissolution as 
“probably the worst solution for everyone”). Moreover, in 
the absence of alternative statutory remedies, courts exer-
cised their equitable powers to fashion specific remedies to 
address the corporate management and shareholder issues 
in particular cases. See Baker, 264 Or at 631-33 (identifying 
remedies “alternative to dissolution”); see also Thompson, 
2 Close Corporations and LLCs § 9:35 at 9-245 (noting “judi-
cial willingness to provide alternative relief even if a statute 
does not explicitly provide for alternative relief”).
	
Today, state statutes provide alternative reme-
dies to dissolution. Consistent with that trend, a “principal 
change” contained in SB 116 was to specify additional rem-
edies, beyond dissolution, that would be available to share-
holders who could establish liability under ORS 60.952(1). 
Art, 28 J Corp L at 409, 409 n 254 (noting that the addi-
tional remedies were consistent with the list of remedies in 
Baker, 264 Or at 631-33). The new law instructed judges to 
order dissolution of a corporation only when no other remedy 
“is sufficient to resolve the matters in dispute,” ORS 60.952 
(2)(m), and codified remedies previously available under 
the court’s equitable powers to order changes in corporate 
management, ORS 60.952(2)(c), (d), (f), (g), the conduct of 
Cite as 362 Or 177 (2017)	
195
the corporation’s business, ORS 60.952(2)(a), the documents 
governing the corporation, ORS 60.952(2)(b), or the distri-
bution of the corporation’s assets, ORS 60.952(2)(i). The enu-
merated remedies also include a buyout—a court-ordered 
sale for fair value of all shares belonging to the plaintiff 
shareholder. See ORS 60.952(2)(k) (providing for court-
ordered sale of shares); see also Statement of Robert Art at 
14:30 (describing a court-ordered sale as preferable to dis-
solution because a buyout “allows the business to continue, 
[and] it gives fair value to the departing shareholder with 
fair value being determined by the court”). A procedurally 
different buyout—not one ordered by the court, but available 
at the option of the corporation or another shareholder—is 
the election provision set out in ORS 60.952(6) at issue here. 
We return to that provision now.
2.  The election to purchase
	
Under Oregon law, as well as statutes in other states 
regarding litigation involving closely held corporations, the 
corporation or shareholders may to elect to purchase, for 
“fair value,” the shares of a minority shareholder when the 
minority shareholder seeks a judicial remedy for oppression. 
Section 14.34 of the 1991 Model Business Corporations Act 
(MBCA) illustrates that type of provision and provided the 
model for Oregon’s statute.7 Art, 28 J Corp L at 414. Under 
the MBCA, an election is available in a “proceeding under 
section 14.30(2) to dissolve [a close corporation].” MBCA 
§ 14.34 (emphasis added). In contrast, the Oregon statute 
contains no such requirement that a party seek dissolution 
to trigger an election. ORS 60.952(6) (allowing an election 
in a “proceeding under subsection (1)”). Rather, the statu-
tory term “proceeding under subsection (1)” “refer[s] to a 
proceeding * 
* 
* [that] may seek any of a long list of reme-
dies, of which dissolution is only one.” Art, 28 J Corp L at 
414 n 294.
	
7  MBCA § 14.34(a) provides, in part:
	
“In a proceeding under section 14.30(2) to dissolve a [close corporation] 
* 
* 
*, the corporation may elect or, if it fails to elect, one or more shareholders 
may elect to purchase all shares owned by the petitioning shareholder at the 
fair value of the shares. An election pursuant to this section shall be irrevo-
cable unless the court determines that it is equitable to set aside or modify 
the election.”
196	
Graydog Internet, Inc. v. Giller
	
The Oregon and MBCA election statutes share the 
purposes of providing an incentive for shareholders to resolve 
their disputes without resorting to a “proceeding under sub-
section (1)” and providing a shortcut to a remedy when litiga-
tion does arise. Reducing litigation between shareholders in 
close corporations is desirable policy because it protects the 
firm, its employees, and other stakeholders from the conse-
quences of extended litigation. See MBCA § 14.34 comment 
(“[A] resort to litigation may result in an irreparable breach 
of personal relationships among the shareholders of a close-
ly-held firm, making it impossible for them to continue in 
business to their mutual advantage.”). Steve Naito, testify-
ing in support of SB 116, spoke about the costs, monetary 
and otherwise, associated with litigating disputes between 
shareholders in a close corporation:
“[T]hey are extremely expensive cases to litigate. They 
take a substantial amount of time and money. And again 
because it involves a lot of interpersonal issues it becomes 
just like a personal divorce—a marital divorce. It raises 
a lot of issues that no one ever wants to raise, especially 
in a court of law and it effectively—or in many cases it 
effectively—destroys the relationship of the parties going 
forward.”
Audio Recording, Senate Committee on Business, Labor and 
Economic Development, SB 116, Jan 15, 2001, at 25:41 (state-
ment of Steve Naito); http://sos.oregon.gov/archives/Pages/
records/legislative-minutes-2001.aspx (accessed Aug 16, 
2017). The election provision in ORS 60.952(6) provides 
a means of lessening the costs, including those related to 
interpersonal disputes, associated with a litigated resolu-
tion to a shareholder dispute.
	
The election provision reduces the costs associated 
with litigation in two ways. First, it discourages sharehold-
ers who wish to retain an interest in the firm from tak-
ing oppression claims to court, because only shareholders 
willing to be bought out will file a proceeding “under” ORS 
60.952(1). See Art, 28 J Corp L at 416 (“For the plaintiff 
shareholder, filing a complaint, in effect, grants a ‘call’ to 
the corporation and the other shareholders—an obligation 
to sell, even if the plaintiff might prefer a different out-
come.”). Second, when such an oppression claim is brought, 
Cite as 362 Or 177 (2017)	
197
it allows a court to order the sale of all of a shareholder’s 
shares before trial, even if there are unresolved issues of fact 
that would prevent summary judgment.
	
However, a statutory election to purchase, such as 
that in ORS 60.952(6), and other types of buyouts, have as 
a “principal disadvantage” that a majority shareholder may 
use them to “squeeze out a minority shareholder who wants 
to remain in the business.” Thompson, 2 Close Corporations 
and LLCs § 9:6 at 9-29. Providing a minority shareholder in 
a close corporation with “fair value” for its shares may not 
adequately compensate shareholders faced with a squeeze-
out, because shareholders in close corporations are more 
than “mere lenders of capital with only an economic inter-
est in the corporation.” Robert B. Thompson, Squeeze-Out 
Mergers and the “New” Appraisal Remedy, 62 Wash U L Rev 
415, 433 (1984). Rather, shareholders in a close corporation 
who are squeezed out “lose more than the proportionate value 
of their shares” because, in addition to being an investment, 
the corporation may be a place of employment and a primary 
source of income and retirement benefits. Id.; see also Naito, 
178 Or App 1 (illustrating ownership in a close corporation 
as more than a financial investment). Moreover, valuation 
of shares in a closely held corporation may be “very diffi-
cult.” Id. Nevertheless, buyouts can be an effective means of 
resolving shareholder disputes and may be provided for in 
a shareholder agreement, a firm’s articles of incorporation 
or bylaws, state statutes, or as part of an ad hoc negotiated 
settlement. See Thompson, 2 Close Corporations and LLCs 
§ 9-6 at 9-30 (discussing buyout provision in the corporate 
charter); id. § 9-37 at 9-256 (discussing judicially ordered 
buyouts provided by statute). Unless those circumstances 
are present, the minority shareholder in a close corporation 
may continue to be an owner and decline offers to purchase 
its shares.
	
Cubalevic v. Superior Court of Los Angeles County, 
240 Cal App 2d 557, 49 Cal Rptr 698 (1966), is illustrative. 
There, the court emphasized the right of a minority share-
holder to maintain ownership of its shares and construed 
the California election buyout statute to be a narrow excep-
tion to that right. The plaintiff, a 50 percent shareholder, 
filed a complaint alleging misconduct against corporate 
198	
Graydog Internet, Inc. v. Giller
officers and other shareholders. One of his claims sought to 
dissolve the corporation under a state statute. Id. at 558, 49 
Cal Rptr at 698. The defendants filed an election to purchase 
the plaintiff’s shares as permitted under the statute when 
a shareholder filed a claim seeking dissolution. Id. at 560, 
49 Cal Rptr at 699. In response, the plaintiff dismissed his 
claim to dissolve the corporation. Id. The trial court none-
theless allowed the defendants to proceed with their pur-
chase of the plaintiff’s shares. The appellate court reversed, 
holding that the election to purchase could not proceed after 
the claim for dissolution has been dismissed. It explained 
that, outside of the election procedure permitted by statute 
in certain narrow circumstances, controlling shareholders 
in a corporation have no “independent right * 
* 
* to compel 
the sale to them of the shares of stock of another.” Id. at 562, 
49 Cal Rptr at 701. Cubalevic thus illustrates the court’s 
protection of the minority shareholder’s right to refuse to 
sell its shares in the context of the legislature’s creation of 
an exception to that right.
	
The legislative history of ORS 60.952(6) shows that 
the legislature intended to discourage litigation between 
shareholders, with its potential for acrimony and harm to 
the firm and others, by providing an incentive for sharehold-
ers to resolve their disputes in some way other than a “pro-
ceeding under subsection (1).” But it also recognized that 
the solution is imperfect because a shareholder’s ownership 
stake may represent more than a solely financial invest-
ment, and a shareholder subject to a court-ordered sale of 
its shares for “fair value” may be incompletely compensated 
for its loss.
C.  Discussion
	
With that understanding of the statute, its context, 
and the legislative history, we return to the question here: 
What kind of “proceeding” triggers the availability of an 
election to purchase under ORS 60.952(6)? Put another way, 
what allegations, claims, and remedies in a third-party com-
plaint would make it appropriate to characterize that com-
plaint as “a proceeding under subsection (1)”? We answer 
that question by examining, first, the contents of Giller’s 
third-party complaint and comparing it with the grounds 
Cite as 362 Or 177 (2017)	
199
for liability and the remedies that the legislature identified 
in ORS 60.952. We then consider whether allowing Graydog 
to elect to buy Giller’s shares based on Giller’s filing of the 
third-party complaint is consistent with the legislature’s 
intentions in adopting ORS 60.952, and the election provi-
sion in ORS 60.952(6) in particular.
	
As noted, Giller’s third-party complaint does not 
explicitly claim oppressive conduct by Graydog or Westervelt, 
nor does it purport to state a claim for relief on any of the 
grounds identified in ORS 60.952(1)(a)-(d).  Graydog argues, 
however, that Giller’s factual allegations support a claim for 
oppression, identifying specific allegations that, it asserts, 
would state such a claim against Westervelt. Graydog is cor-
rect that some of Giller’s allegations could support a claim 
for breach of fiduciary duty or oppression and that the par-
ties’ dispute involves shareholder disagreements and allega-
tions of improper conduct. But Giller limited his claims for 
relief to breach of contract, breach of the contractual duty of 
good faith and fair dealing, and a declaratory judgment.
	
Graydog does not explain how the presence of alle-
gations that could support a claim of oppression can change 
the claims Giller did assert into claims that he, in fact, 
intentionally did not assert. See Redwood Theaters, 908 F2d 
at 470 (Plaintiffs have the “prerogative[ 
] to choose * 
* 
* the 
legal principles governing their complaints.”). The obser-
vation that certain factual allegations might also establish 
claims for breach of fiduciary duty or other oppressive con-
duct does not necessarily mean that the “true substance” of 
the third-party complaint is a claim for “oppression” or that 
the third-party complaint is a “proceeding under subsection 
(1),” a provision that does not mention breach of contract or 
declaratory judgment claims.
	
Similarly, the remedies Giller seeks do not suggest 
that his third-party complaint is the kind of claim for oppres-
sion “under subsection (1)” with which the legislature was 
concerned. The legislative history discussed above shows 
that in ORS 60.952(2), the legislature sought to codify rem-
edies for oppression that were previously available through 
the court’s equitable powers. Here, Giller seeks money dam-
ages on his contract claims, and although damages are one 
200	
Graydog Internet, Inc. v. Giller
of the many remedies identified in ORS 60.952(2), they are, 
of course, the paradigmatic remedy for contract claims and 
are unlike the equitable remedies traditionally associated 
with claims for oppression. Giller’s contract claim does not 
seek changes in management, control, or corporate opera-
tions; dissolution; the issuance of distributions; or a forced 
buyout. And although Giller seeks a declaration that the 
shareholder agreement is void and unenforceable, he does 
not otherwise ask the court to intervene in Graydog’s opera-
tions. The remedies Giller seeks suggest that his claims are 
not the kind of shareholder litigation with which the legis-
lature was concerned when it identified the panoply of rem-
edies available for shareholder oppression. See Securities-
Intermountain, 289 Or at 260 (examining remedies sought 
as one means to determine true nature of complaint: “the 
scope of damages demanded may characterize a complaint 
as founded in tort rather than in contract”).
	
As to his claim regarding the shareholder agree-
ment, Giller, as noted, sought relief under the Uniform 
Declaratory Judgments Act, not under ORS 60.952(2). 
Moreover, although ORS 60.952(2)(b) authorizes a court to 
invalidate articles of incorporation and bylaws, it does not 
mention shareholder agreements. It may be that, in some cir-
cumstances, a shareholder could seek to void a shareholder 
agreement as a remedy for an oppression claim, but that is 
not the grounds upon which Giller relied in his third-party 
complaint. Westervelt, acting through Graydog, began this 
litigation by seeking to squeeze-out Giller by virtue of the 
shareholder agreement’s provision that only employees may 
be shareholders. In that procedural setting, Giller’s declar-
atory judgment claim is more properly seen as a minority 
shareholder’s defense against a squeeze-out attempt, which 
is not a situation in which the legislature intended the elec-
tion to be available.
	
In sum, the third-party complaint contains claims 
for breach of contract and a declaratory judgment, and it 
does not cite ORS 60.952 or expressly allege any of the 
grounds for liability found in ORS 60.952(1). Likewise, 
except for the money damages, the third-party complaint 
seeks remedies that are distinguishable from the various 
equitable remedies allowed under ORS 60.952(2). Based on 
Cite as 362 Or 177 (2017)	
201
those facts, Giller’s third-party complaint does not appear to 
be a proceeding “under” ORS 60.952(1).
	
That appearance is bolstered by the procedural pos-
ture of Giller’s third-party complaint. It is evident from the 
legislative history that a purpose of the legislature in enact-
ing ORS 60.952(6) was to reduce litigation over the con-
trol and management of closely held corporations—that is, 
“proceeding[s] under subsection (1)”—by discouraging par-
ties from initiating such litigation, and, in certain circum-
stances when such litigation has been initiated, allowing 
the corporation or a shareholder to elect to buy the shares of 
the “shareholder who filed the proceeding.”
	
In the context of this case, the legislature’s pur-
pose of discouraging litigation by providing an incentive for 
prelitigation resolution of disputes would not be served by 
allowing Graydog to file an election based on Giller’s third-
party complaint. A third-party complaint may be filed only 
“[a]fter commencement of the action.” ORCP 22 C(1). Here, 
the action was commenced by Graydog. Allowing Graydog 
to file an election based on Giller’s third-party complaint 
would benefit Graydog and Westervelt and thus provide 
an incentive, rather than a disincentive, for future actors 
in the position of Graydog and Westervelt to begin litiga-
tion against minority shareholders. Giller’s third-party 
complaint against Westervelt did not join a person who was 
previously uninterested, unaligned, or uninvolved in the lit-
igation. Rather, the personal animosity between Giller and 
Westervelt was already apparent when Graydog filed the 
declaratory judgment action. Giller’s third-party complaint 
was essentially a response in kind to an existing proceeding, 
initiated by Graydog (at the behest of Westervelt), rather 
than the initiation of shareholder litigation in the first place.
	
State law governing close corporations has as 
one purpose the protection of minority shareholders from 
oppression and mistreatment by the majority shareholder. 
That includes the protection of the right of a shareholder 
to decline to sell its shares to the corporation or another 
shareholder in the absence of some legal obligation to do so. 
See Cubalevic, 240 Cal App 2d at 562, 49 Cal Rptr at 701 
(“There is no independent right on the part of one or more 
202	
Graydog Internet, Inc. v. Giller
stockholders in a corporation to compel the sale to them 
of the shares of stock of another.”); see also Thompson, 62 
Wash U L Rev at 433 (“Shareholders who are squeezed out of 
[close corporations] lose more than the proportionate value 
of their shares.”). The election provision in ORS 60.952(6) is 
an exception to that right, because it imposes an obligation 
on a shareholder to sell its shares in certain circumstances.
	
Giller’s third-party complaint was filed in an exist-
ing dispute, it joined a party who was already intimately 
involved in the litigation, and it contained contractual claims 
and a claim under the Uniform Declaratory Judgments Act. 
The third-party complaint sought a declaratory judgment 
as a defense against a squeeze-out attempt of which the ini-
tial complaint was a part, and the third-party complaint’s 
contractual claims sought money damages rather than the 
equitable remedies typical of oppression claims. For those 
reasons, we conclude that Giller’s third-party complaint 
against Westervelt is not a “proceeding under subsection 
(1),” and, therefore, it did not trigger the election provision of 
ORS 60.952(6).
	
The decision of the Court of Appeals is reversed. 
The judgment of the circuit court is affirmed, and the case 
is remanded to the circuit court for further proceedings.