Title: Howard Houston v. John Hunting Whittier Conflict of laws; Oregon statutes

State: idaho

Issuer: Idaho Supreme Court (civil)

Document:

IN THE SUPREME COURT OF THE STATE OF IDAHO 
 
Docket No. 35287-2008 
 
HOWARD HOUSTON, 
 
Plaintiff-Respondent, 
 
v. 
 
JOHN HUNTING WHITTIER, 
 
Defendant-Appellant. 
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Boise, June 2009 Term 
 
2009 Opinion No.  102 
 
Filed: August 21, 2009 
 
Stephen W. Kenyon, Clerk 
 
 
 
Appeal from the District Court of the Fifth Judicial District of the State of Idaho, 
in and for Blaine County.  The Hon. Robert J. Elgee, District Judge. 
 
The judgment of the district court is affirmed. 
 
Elam & Burke, P.A., Boise, for appellant.  Jeffrey A. Thomson argued. 
 
Ned Williamson, Hailey, and The Banks Law Office, P.C., Portland, Oregon, for 
respondent.  Robert S. Banks, Jr., argued. 
 
 
 
EISMANN, Chief Justice. 
 
This is an appeal from a judgment on causes of action based upon Oregon statutes.  We 
hold that the most significant relationship test applicable to a conflict of laws issue does not 
apply and that the district court did not err in allowing recovery based upon the Oregon statutes.  
We also hold that the district court did not err in granting summary judgment on those claims.  
We affirm the judgment of the district court, but do not award attorney fees on appeal. 
I.  FACTS AND PROCEDURAL HISTORY 
 
From February 2003 through the Fall of 2005, John Hunting Whittier (Defendant) was a 
general partner in Wood River Partners, L.P. (Wood River), a limited partnership, and the 
managing member of Wood River Associates, LLC, a limited liability company that was the 
general partner of Wood River.  Wood River was a hedge fund with an office in Ketchum, Idaho. 
 
Howard Houston (Plaintiff) was a resident of Oregon.  In latter 2004, Plaintiff and his 
employee Peter Shames received documents in Oregon soliciting an investment in Wood River.  
 
2 
Based upon Defendant‟s representations, Plaintiff made eight monthly investments in Wood 
River totaling $2,750,000 during the period from February through September 2005. 
 
In late September 2005, the United States Securities and Exchange Commission (SEC) 
began an investigation of Defendant and Wood River.  It later filed a lawsuit against Defendant 
and the Wood River entities in federal district court in New York.  In October, Defendant and the 
Wood River entities consented to a preliminary injunction enjoining them from violating federal 
securities laws, freezing their assets, ordering an accounting, preserving evidence, and 
appointing a receiver from the Wood River entities. 
 
On August 30, 2006, Plaintiff filed this action against Defendant and a law firm.  The 
claims against the law firm were later dismissed with prejudice.  The complaint alleged five 
causes of action against Defendant, the first two of which alleged violations of Oregon law.  
Defendant answered, asserting his Fifth Amendment right to remain silent. 
 
On February 1, 2007, Defendant was indicted in federal court in New York for four 
counts of securities fraud.  On May 30, 2007, he pled guilty to three of the counts, all of which 
related to his conduct in managing Wood River. 
 
On October 30, 2007, Plaintiff moved for partial summary judgment on the first two 
counts of the complaint alleging violations of Oregon law.  The motion was based upon a 
declaration of Plaintiff‟s counsel and Plaintiff‟s affidavit.  In response, Defendant contended that 
only Idaho law, not Oregon law, should apply to this case.  To counter that argument, Plaintiff 
submitted the declaration of his employee Shames.  In that declaration, Shames stated that the 
initial solicitation to invest in Wood River had been received by him in Oregon for consideration 
by Plaintiff; that Wood River representatives sent additional information to Plaintiff via Shames 
in Oregon; that Plaintiff was also in Oregon at those times; and that when Plaintiff decided to 
make the eight investments in Wood River, Shames wired the money from Oregon to Wood 
River‟s bank in Idaho.  Defendant moved to strike Shame‟s declaration because it did not 
constitute an affidavit.  The declaration lacked a jurat, which is necessary in order for it to 
constitute an affidavit.  Grandview State Bank v. Torrance, 38 Idaho 388, 393, 221 P. 145, 146 
(1923).  Plaintiff responded by filing an affidavit of Shames that was identical to his declaration, 
except that it included the required jurat and notary seal. 
 
The motion for partial summary judgment was argued on January 28, 2008.  Defendant 
moved to strike the Shames affidavit and Plaintiff‟s reply memorandum on the ground that they 
 
3 
were untimely.  He also objected to statements in the Shames affidavit on the ground that they 
were hearsay.  The district court refused to strike the Shames affidavit or the reply memorandum, 
but it gave Defendant fourteen days to file an affidavit in response to the Shames affidavit.  The 
parties argued some issues raised on the motion for partial summary judgment, and continued the 
hearing to consider the application of Oregon law. 
 
On February 1, 2008, the district court entered an order setting forth the material facts 
that were not in dispute and stating that if Oregon law applied Plaintiff would be entitled to 
summary judgment on his first and second claims for relief.  The parties argued the applicability 
of Oregon law on February 27, 2008.  At the conclusion of that argument, the court stated that 
Oregon law would apply to the first two claims for relief and that summary judgment was 
appropriate.  The court also gave Defendant additional time to raise any objections to the amount 
Plaintiff claimed was owing. 
 
On March 19, 2008, the court entered an order holding that Plaintiff was entitled to the 
entry of judgment against Defendant on the first two counts of the complaint.  Based upon that 
holding, the court also granted Plaintiff‟s motion to dismiss the remaining counts of the 
complaint.  Final judgment was entered on that date, and Defendant timely appealed. 
 
II.  ISSUES ON APPEAL 
1.  Did the district court err in permitting the late filing of the Shames affidavit and the reply 
memorandum. 
2.  Did the district court err in failing to strike portions of the Shames affidavit on the ground that 
they were inadmissible hearsay? 
3.  Did the district court err in applying collateral estoppel based upon Defendant‟s guilty plea in 
the federal prosecution? 
4.  Did the district court err in holding that Plaintiff could assert claims based upon Oregon law? 
5.  Did the district court err in entering a judgment for damages? 
6.  Is Plaintiff entitled to an award of attorney fees on appeal? 
 
III.  ANALYSIS 
A.  Did the District Court Err in Permitting the Late Filing of the Shames Affidavit and the 
Reply Memorandum? 
 
4 
 
Plaintiff served his motion for partial summary judgment on October 30, 2007.  He based 
the motion on his own affidavit and upon the declaration of his attorney to which were attached 
various documents including a copy of the stipulated order in the SEC action against Defendant, 
a copy of the federal indictment filed against Defendant, and a copy of the transcript of 
Defendant‟s guilty plea in the federal criminal action.   The hearing on the motion for summary 
judgment was scheduled for January 28, 2008.  The motion sought partial summary judgment on 
the first two claims in Plaintiff‟s complaint, which alleged Oregon statutory causes of action.  
 
On January 14, 2008, Plaintiff received Defendant‟s response asserting that Oregon law 
did not apply to this action.  To counter that argument, Plaintiff served the declaration of Shames 
setting forth facts regarding the application of Oregon law.  The declaration and Plaintiff‟s reply 
memorandum were served by Federal Express overnight delivery so that they were received by 
Defendant five days before the hearing.  Defendant promptly filed a motion to strike the Shames 
declaration on the ground that it was not an affidavit because it lacked a jurat.  On the day of the 
hearing, Plaintiff provided Defendant with a copy of the Shames affidavit, which was identical to 
the Shames declaration except that it included the required jurat and notary signature. 
 
The district court refused to strike the Shames affidavit as being served untimely, but 
stated that it would give Defendant time to file an affidavit to rebut it and would set a time for re-
argument if necessary.  The court asked Defendant‟s counsel how much time he would need to 
submit an affidavit responding to the Shames affidavit.  Defendant‟s counsel answered, “Your 
Honor, I think that‟s all a very practical way to approach all this, so I think 14 days to the extent 
that I find it necessary to respond would be sufficient.”  Because Defendant‟s counsel agreed to 
the procedure suggested by the district court, he cannot challenge that procedure on appeal.  
Vega v. Neibaur, 127 Idaho 606, 608, 903 P.2d 1303, 1305 (1995) (where a party agrees to the 
manner in which his rights will be submitted for determination in the trial court, he cannot 
complain on appeal that such procedure was erroneous). 
  
Defendant also contends that the district court erred in failing to strike Plaintiff‟s reply 
memorandum.  Rule 56(c) of the Idaho Rules of Civil Procedure requires that the party moving 
for summary judgment serve a reply brief “not less than 7 days before the date of the hearing.”  
Defendant asserts that the reply memorandum was “served on Whittier by Federal Express 
overnight mail on January 22, 2008, and therefore [was] not received by Whittier until January 
23, 2008.”  Thus, Defendants asserts that the reply memorandum should be stricken because it 
 
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was served one day late.1  In denying the motion to strike, the district court stated the practical 
effect of the motion to strike, “[I]f I strike it, it‟s really the Court saying, well, I don‟t want to 
know what the law is or let‟s ignore the filing of the reply brief and have counsel stand here for 
an hour or two and read it to me.”  The issue of the applicability of Oregon law was argued 
almost one month later on February 27, 2008.  Defendant has not argued any prejudice from the 
late service of the memorandum.  “The court at every stage of the proceeding must disregard any 
error or defect in the proceeding which does not affect the substantial rights of the parties.”  
I.R.C.P. 61.  Absent any prejudice, we need not address whether the district court abused its 
discretion in refusing to strike the reply memorandum on the ground that it was served one day 
late.  Vendelin v. Costco Wholesale Corp., 140 Idaho 416, 426, 95 P.3d 34, 44 (2004). 
 
B.  Did the District Court Err in Failing to Strike Portions of the Shames Affidavit on the 
Ground that They Were Inadmissible Hearsay? 
 
Defendant objected to certain statements in the Shames affidavit on the ground that they 
were inadmissible hearsay.  The portions of the Shames affidavit at issue are paragraphs 2 and 3 
which are as follows: 
 
2. I have reviewed the Affidavit of Howard Houston in Support of 
Plaintiff‟s Motion for Partial Summary Judgment, and know the facts stated there 
regarding his purchase of the Wood River Partners investment to be accurate.  I 
was the one who received the original solicitation of the Wood River investment 
on Mr. Houston‟s behalf.  The original solicitation for Mr. Houston to invest in 
Wood River was directed to me in Hood River, Oregon, in November or 
December, 2004, for forwarding to Mr. Houston.  Wood River representatives 
then sent Mr. Houston additional information about Wood River, and directed 
those communications to me in Oregon.  Mr. Houston was also in Oregon during 
those times. 
 
3. Mr. Houston made eight different installment investments in Wood 
River, as described in his Affidavit.  I know this because I participated with him 
in the decisions to make the investments, and I was responsible for sending the 
funds to Wood River to purchase each of those investments on Mr. Houston‟s 
behalf.  In each instance, Mr. Houston agreed or offered to make the investment 
from Oregon.  I arranged for Mr. Houston‟s money to be wired from a bank in 
                                                 
1 Rule 5(b) of the Idaho Rules of Civil Procedure states, “Service by mail is complete upon mailing.”  Defendant 
does not contend that service by “Federal Express overnight mail” is not “service by mail,” and so we need not 
address that issue. 
 
 
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Oregon to Wood River‟s Bank in Idaho.  Also in each instance, confirmation of 
Mr. Houston‟s purchases were directed from Wood River to me in Oregon. 
 
 
With respect to Paragraph 2, Defendant argues, “Specifically, paragraph 2 of the Shames 
declaration/affidavit purports to be based upon Peter Shames‟ review of the Affidavit of Howard 
Houston in support of Plaintiff‟s Motion for Partial Summary Judgment.”  Contrary to 
Defendant‟s assertion, Shames does not state that the source of his information is Plaintiff‟s 
affidavit.  Rather, he states that he read Plaintiff‟s affidavit and “know[s] the facts stated there 
regarding his purchase of the Wood River Partners investment to be accurate.” 
 
With respect to Paragraph 3, Defendant argues, “Similarly, the first sentence of paragraph 
3 of the Shames declaration/affidavit states, „Mr. Houston made eight different installment 
investments in Wood River, as described in his affidavit.‟”  (Emphasis added by Defendant.)  
Again, Shames is not stating that his source of information is Plaintiff‟s affidavit.  Rather, he is 
stating that Plaintiff‟s recitation of the installment payments in his affidavit is accurate. 
 
Finally, Defendant challenges the third sentence in Paragraph 3 which states, “In each 
instance, Mr. Houston agreed or offered to make the investment from Oregon.”  Again, this 
statement is not hearsay.  In context, it is merely a statement as to where Plaintiff was when he 
told Shames to send in the payments.  The district court did not err in failing to strike these 
portions of the Shames affidavit. 
 
C.  Did the District Court Err in Applying Collateral Estoppel Based Upon Defendant’s 
Guilty Plea in the Federal Prosecution? 
 
Plaintiff argued in support of the motion for summary judgment that collateral estoppel 
could be applied to hold that Defendant‟s statements made when pleading guilty in the federal 
prosecution established liability in this case.  Defendant contends on appeal that the district court 
erred in applying collateral estoppel as requested by Plaintiff. 
 
The record does not reflect that the district court applied the doctrine of collateral 
estoppel in this case.  It did not mention collateral estoppel in its order granting partial summary 
judgment.2  Plaintiff‟s affidavit provided all of the facts necessary to support the motion for 
partial summary judgment. 
                                                 
2 In its order on the motion for partial summary judgment, the district court wrote as follows: 
 
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During the argument on the motion, the district court repeatedly stated that the 
admissions made by Defendant while pleading guilty in the federal criminal case were important.  
Those statements were admissible in connection with the motion for partial summary judgment.  
Absent a record showing that the district court applied collateral estoppel, we need not address 
this assignment of error. 
 
D.  Did the District Court Err in Holding that Plaintiff Could Assert Claims Based upon 
Oregon Law? 
 
Defendant argues that the district court erred in applying Oregon law in this case.  
According to Defendant, under the “most significant relationship test” adopted by this Court to 
resolve conflicts of law, the district court should have applied the law of Idaho. 
 
“[T]his Court has opted in favor of applying the most significant relationship test set forth 
in the Restatement (Second) of Conflict of Laws.”  Seubert Excavators, Inc. v. Anderson 
Logging Co., 126 Idaho 648, 651, 889 P.2d 82, 85 (1995).  We have applied that test in both tort 
                                                                                                                                                             
 
6.  With regard to Plaintiffs Motion for Partial Summary Judgment, the court makes the 
following findings pursuant to Rule 56(d): 
a.  Plaintiff purchased interests in the securities called Wood River Partners, LP on the 
following dates and in the following amounts: 
 
February 2005 
 
 
 
$250,000 
March, 2005 
 
 
 
$250,000 
April, 2005 
 
 
 
$500,000 
May, 2005 
 
 
 
$250,000 
June, 2005 
 
 
 
$250,000 
July, 2005 
 
 
 
$500,000 
August, 2005 
 
 
 
$250,000 
September, 2005  
 
 
$500,000 
 
TOTAL  
 
 
 
$2,750,000 
 
b.  The sale to plaintiff of his interests in Wood River was made by means of untrue 
statements of material fact and omissions to state material facts necessary in order to make the 
statements made, in light of the circumstances under which they were made, not misleading. 
Plaintiff was unaware of the untrue statements and omissions when he made his purchases. 
c.  During all time periods relevant to this case, defendant John Whittier was a managing 
partner, director and/or officer of Wood River Partners, LP. 
d.  If the Court determines that the Oregon Securities Laws apply to the sales to plaintiff, 
then plaintiff is entitled to summary judgment against defendant John H. Whittier on plaintiff‟s 
first and second claims for relief, for violations of ORS 59.135(2) and ORS 59.115(1 )(b), both 
of which make it unlawful to sell securities by means of untrue statements of material fact and 
omissions to state material facts. 
 
 
8 
and contract actions, although the applicable contracts differ between those two types of actions.  
Id. at 651-52, 889 P.2d at 85-86.  Thus, we have said that “the logical first step . . . is to 
determine whether this dispute is contractual in nature or whether it is based in tort.”  Id. at 652, 
889 P.2d at 86.  In this case, the first two claims alleged in Plaintiff‟s complaint were neither 
contractual in nature nor based in tort.  They were causes of action created by statute. 
 
 In the first claim, Plaintiff sought to recover based upon ORS 59.135 and 59.137.  ORS 
59.135 declares it unlawful to engage in certain conduct in connection with the purchase or sale 
of a security, or the conduct of a securities business, or the giving of certain advice regarding 
securities for compensation.3  Plaintiff alleged that Defendant, in connection with the purchase or 
sale of securities to Plaintiff, had made misrepresentations and omissions which violated 
subsections (1), (2), and (3) of the statute.  ORS 59.137 establishes the damages that can be 
recovered for a violation of ORS 59.135, provides an affirmative defense, creates joint and 
several liability and the right of contribution, permits the awarding of attorney fees, and sets 
forth the statute of limitations for filing the action.4  
                                                 
3 ORS 59.135 provides: 
 
 
59.135 Fraud and deceit with respect to securities or securities business.  It is 
unlawful for any person, directly or indirectly, in connection with the purchase or sale of any 
security or the conduct of a securities business or for any person who receives any consideration 
from another person primarily for advising the other person as to the value of securities or their 
purchase or sale, whether through the issuance of analyses or reports or otherwise: 
 
(1) To employ any device, scheme or artifice to defraud; 
 
(2) To make any untrue statement of a material fact or to omit to state a material fact 
necessary in order to make the statements made, in the light of the circumstances under which they 
are made, not misleading; 
 
(3) To engage in any act, practice or course of business which operates or would operate 
as a fraud or deceit upon any person; or 
 
(4) To make or file, or cause to be made or filed, to or with the Director of the 
Department of Consumer and Business Services any statement, report or document which is 
known to be false in any material respect or matter. 
 
4  ORS 59.137 provides: 
 
59.137 Liability in connection with violation of ORS 59.135; damages; defense; 
attorney fees; limitations on proceeding.  (1) Any person who violates or materially aids in a 
violation of ORS 59.135 (1), (2) or (3) is liable to any purchaser or seller of the security for the 
actual damages caused by the violation, including the amount of any commission, fee or other 
remuneration paid, together with interest at the rate specified in ORS 82.010 for judgments for the 
payment of money, unless the person who materially aids in the violation sustains the burden of 
proof that the person did not know and, in the exercise of reasonable care, could not have known 
of the existence of the facts on which the liability is based. 
 
(2) Any person who directly or indirectly controls a person liable under subsection (1) of 
this section and every partner, limited liability company manager, including a member who is a 
 
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In his second claim, Plaintiff sought to recover based upon ORS 59.115, which defines 
the liability of persons for the sale of, or the successful solicitation to sell, securities in specified 
circumstances, establishes the damages recoverable, creates joint and several liability and the 
right of contribution, permits the awarding of attorney fees, and sets forth the statute of 
limitations for filing the action.5  In the second claim of his complaint, Plaintiff alleged that he 
was entitled to recover against Defendant pursuant to subsection (1)(b) of this statute. 
                                                                                                                                                             
manager, officer or director or a person occupying a status or performing functions of a person 
liable under subsection (1) of this section, is jointly and severally liable to the same extent as a 
person liable under subsection (1) of this section, unless the person who may be liable under this 
subsection sustains the burden of proof that the person did not know and, in the exercise of 
reasonable care, could not have known of the existence of the facts on which the liability is based. 
 
(3) Any person held liable under this section is entitled to contribution from those persons 
jointly and severally liable with that person. 
 
(4) Except as provided in subsection (5) of this section, the court may award reasonable 
attorney fees to the prevailing party in an action under this section. 
 
(5) The court may not award attorney fees to a prevailing defendant under the provisions 
of subsection (4) of this section if the action under this section is maintained as a class action 
pursuant to ORCP 32. 
 
(6) An action or suit may be commenced under this section within the later of: 
 
(a) Three years after the date of the purchase or sale of a security to which the action or 
suit relates; or 
 
(b) Two years after the person bringing the action or suit discovered or should have 
discovered the facts on which the action or suit is based. 
 
(7) Failure to commence an action or suit under this section on a timely basis is an 
affirmative defense. 
5  ORS 59.115 provides: 
 
59.115 Liability in connection with sale or successful solicitation of sale of securities; 
recovery by purchaser; limitations on proceeding; attorney fees.   (1) A person is liable as 
provided in subsection (2) of this section to a purchaser of a security if the person: 
 
(a) Sells or successfully solicits the sale of a security, other than a federal covered 
security, in violation of the Oregon Securities Law or of any condition, limitation or restriction 
imposed upon a registration or license under the Oregon Securities Law; or 
 
(b) Sells or successfully solicits the sale of a security in violation of ORS 59.135 (1) or 
(3) or by means of an untrue statement of a material fact or an omission to state a material fact 
necessary in order to make the statements made, in light of the circumstances under which they are 
made, not misleading (the buyer not knowing of the untruth or omission), and who does not 
sustain the burden of proof that the person did not know, and in the exercise of reasonable care 
could not have known, of the untruth or omission. 
 
(2) The purchaser may recover: 
 
(a) Upon tender of the security, the consideration paid for the security, and interest from 
the date of payment equal to the greater of the rate of interest specified in ORS 82.010 for 
judgments for the payment of money or the rate provided in the security if the security is an 
interest-bearing obligation, less any amount received on the security; or 
 
(b) If the purchaser no longer owns the security, damages in the amount that would be 
recoverable upon a tender, less the value of the security when the purchaser disposed of it and less 
interest on such value at the rate of interest specified in ORS 82.010 for judgments for the 
payment of money from the date of disposition. 
 
(3) Every person who directly or indirectly controls a seller liable under subsection (1) of 
this section, every partner, limited liability company manager, including a member who is a 
 
10 
 
Because these two causes of action are created by statute, the issue is not choice of law.  
Rather, it is whether there is a reason not to permit Plaintiff to enforce these Oregon statutory 
causes of action in Idaho.  “On the one hand is the strong unifying principle embodied in the Full 
Faith and Credit Clause looking toward maximum enforcement in each state of the obligations or 
rights created or recognized by the statutes of sister states.”  Hughes v. Fetter, 341 U.S. 609, 612 
(1951).  On the other is the public policy of the forum.  Id.  In this case, allowing Plaintiff to 
pursue these Oregon statutory causes of action in an Idaho court would not conflict with the 
public policy of this state.  The substantive provisions of Idaho Code §§ 30-14-501, 30-14-502, 
and 30-14-509 are virtually identical.  Therefore, the district court did not err in entertaining 
these causes of action. 
                                                                                                                                                             
manager, officer or director of such seller, every person occupying a similar status or performing 
similar functions, and every person who participates or materially aids in the sale is also liable 
jointly and severally with and to the same extent as the seller, unless the nonseller sustains the 
burden of proof that the nonseller did not know, and, in the exercise of reasonable care, could not 
have known, of the existence of facts on which the liability is based. Any person held liable under 
this section shall be entitled to contribution from those jointly and severally liable with that 
person. 
 
(4) Notwithstanding the provisions of subsection (3) of this section, a person whose sole 
function in connection with the sale of a security is to provide ministerial functions of escrow, 
custody or deposit services in accordance with applicable law is liable only if the person 
participates or materially aids in the sale and the purchaser sustains the burden of proof that the 
person knew of the existence of facts on which liability is based or that the person‟s failure to 
know of the existence of such facts was the result of the person‟s recklessness or gross negligence. 
 
(5) Any tender specified in this section may be made at any time before entry of 
judgment. 
 
(6) Except as otherwise provided in this subsection, no action or suit may be commenced 
under this section more than three years after the sale.  An action under this section for a violation 
of subsection (1)(b) of this section or ORS 59.135 may be commenced within three years after the 
sale or two years after the person bringing the action discovered or should have discovered the 
facts on which the action is based, whichever is later.  Failure to commence an action on a timely 
basis is an affirmative defense. 
 
(7) An action may not be commenced under this section solely because an offer was 
made prior to registration of the securities. 
 
(8) Any person having a right of action against a broker-dealer, state investment adviser 
or against a salesperson or investment adviser representative acting within the course and scope or 
apparent course and scope of authority of the salesperson or investment adviser representative, 
under this section shall have a right of action under the bond or irrevocable letter of credit 
provided in ORS 59.175. 
 
(9) Subsection (4) of this section shall not limit the liability of any person: 
 
(a) For conduct other than in the circumstances described in subsection (4) of this section; 
or 
 
(b) Under any other law, including any other provisions of the Oregon Securities Law. 
 
(10) Except as provided in subsection (11) of this section, the court may award 
reasonable attorney fees to the prevailing party in an action under this section. 
 
11 
 
E.  Did the District Court Err in Entering a Judgment for Damages? 
 
Defendant contends that the district court erred in entering a judgment for damages 
because Plaintiff moved for summary judgment only on the issue of liability, not damages.  In 
his motion for partial summary judgment, Plaintiff stated that he “hereby moves this court for 
summary judgment on the First and Second Claims against Defendant.”  In the prayer of his 
complaint, Plaintiff asked to recover against Defendant on his first claim for relief “all damages 
permitted by ORS 59.137, including the amount he invested, $2,750,000, plus interest at 9% per 
annum from the time of each cash contribution to his Wood River investment until paid.”  He 
asked to recover against Defendant on his second claim for relief “all damages permitted by ORS 
59.115(2), including the amount he invested, $2,750,000, plus interest at 9% per annum from the 
time of each cash contribution to his Wood River investment until paid, plus reasonable attorney 
fees pursuant to ORS 59.115(10).”  In his affidavit submitted in support of his motion for 
summary judgment, Plaintiff averred as follows: 
 
6.  I made the following investments into Wood River by wiring funds in 
the amounts indicated to Wood River‟s bank account at the First Bank of Idaho in 
Ketchum, Idaho. 
February 2005  
 
$250,000 
March 2005   
 
$250,000 
April 2005  
 
 
$500,000 
May 2005  
 
 
$250,000 
June 2005  
 
 
$250,000 
July 2005  
 
 
$500,000 
August 2005   
 
$250,000 
September 2005  
 
$500,000 
My total investment in Wood River was $2,750,000.00.  I received confirmations 
from Wood River that it had received each of the investments that are listed 
above. 
 
 
Plaintiff‟s memorandum in support of his motion for partial summary judgment included 
a “Statement of Undisputed Facts.”  That Statement contained the above list of payments and a 
declaration that Plaintiff‟s “total cash investment in Wood River was $2,750,000.”  In the 
argument portion of the memorandum, Plaintiff wrote:  “Plaintiff invested $2,750,000 in Wood 
                                                                                                                                                             
 
(11) The court may not award attorney fees to a prevailing defendant under the provisions of 
subsection (10) of this section if the action under this section is maintained as a class action pursuant to 
ORCP 32. 
 
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River after receiving documents containing those statements, and progress reports indicating that 
Wood River was following its stated investment”; “The representations made in the Offering 
Statement and Confidential Summary were false”; and “Based on those facts, plaintiff is entitled 
to summary judgment on his first and second claims for relief.”  Nowhere in his motion or 
supporting documents did Plaintiff state that he was limiting his motion for partial summary 
judgment to the issue of liability. 
 
On February 18, 2008, Plaintiff submitted a proposed judgment to the district court and 
opposing counsel.  At the continued hearing on Plaintiff‟s motion for partial summary judgment 
held on February 27, 2008, the court and Defendant‟s counsel discussed Defendant‟s motion to 
vacate the hearing because of communication difficulties caused by Defendant‟s incarceration.  
The district court stated that Defendant‟s counsel‟s primary concern seemed to be that he wanted 
to discuss with his client the amount of the judgment, and Defendant‟s counsel agreed.  The 
conversation was as follows: 
 
THE COURT:  And that you want to be able to do that, but –  And I‟ll 
listen to any comments you want to make, and tell me if I‟m wrong. 
 
It seems that your ability to communicate should not affect the question of 
whether Oregon law applies.  That was not a decision – or that was not an issue 
that there was to be further testimony or evidence on.  It was just to be briefed 
after the last summary judgment hearing, and I have briefs from both counsel. 
 
It seems to me that your primary issue is that you want to be able to 
communicate with him about amounts that might be owing and whether the 
amounts Mr. Banks set forth in his affidavit – and because Mr. Banks is saying, 
“Judge, this isn‟t contested as to the amounts we paid to Mr. Whittier, so we want 
a judgment for these amounts.” 
 
That you want to be able to communicate with your client about those 
things before the court – if I did determine Oregon law applies, before there‟s any 
judgment entered.  Is that a fair statement? 
 
MR. THOMSON:  Judge, I think that‟s a very fair statement.  I think the 
only – the primary reason I want to speak to my client is related to the judgment.  
Mr. Banks has proposed that the judgment be dealt with at today‟s hearing, and I 
would like to have additional time with respect to that issue should you determine 
that Oregon law applies.  (Emphasis added.) 
 
 
After ruling that Oregon law applied and Plaintiff was entitled to summary judgment, the 
district court stated, “Now, I‟ll give you time, Mr. Thomson, to confer with your client as far as 
raising those issues, the amount of the judgment, those things.”  Defendant‟s counsel did not 
respond by asserting that the motion for summary judgment was limited to the issue of liability.  
Instead, he stated that he thought he could talk by telephone with his client on March 4, 2008, 
 
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and would like until March 12, 2008, to file “whatever additional information we may need to 
file.”  After the hearing, Defendant did not submit any affidavit or sworn testimony challenging 
the amount of the judgment.  On March 12, 2008, Defendant filed an objection to the proposed 
judgment raising for the first time the argument that the motion for summary judgment only 
addressed the issue of liability. 
The record does not support the argument that Plaintiff moved for partial summary 
judgment only on the issue of liability.  It likewise does not support the contention that when 
responding to the motion, Defendant thought Plaintiff had only moved for partial summary 
judgment on the issue of liability. 
Defendant also argues that under Oregon law Plaintiff could not obtain a judgment for 
damages without first returning the securities to the seller.  A person who violates ORS 59.115 
may recover, “[u]pon tender of the security, the consideration paid for the security, and interest . 
. ., less any amount received on the security.”  ORS 59.115(2)(a).  The tender must be made 
before entry of judgment.  ORS 59.115(5).  Defendant contends that a tender requires delivery of 
the securities.  The statute does not define “tender,” and we have not been cited to any appellate 
decision in Oregon defining that term in the context of ORS 59.115. 
 
The Oregon Supreme Court‟s common law definition of “tender” is “an offer of payment 
that is coupled either with no conditions or only with conditions upon which the tendering party 
has a right to insist.”  Fresk v. Kraemer, 99 P.3d 282, 287 (Or. 2004).  In support of that 
statement, the Fresk court cited Comstock Mfg. Co. v. Schiffmann, 234 P. 293 (Or. 1925).  The 
Comstock case quoted from Anderson v. Wallowa Nat’l Bank, 198 P. 560, 565 (1921), that 
tender, in connection with an executory contract, “is not an absolute, unconditional offer to do or 
transfer anything at all events, but it is in its nature conditional only, and dependent on, and to be 
performed only in case of, the readiness of the other party to perform his part of the agreement.”  
234 P. at 296. 
 
In Fresk, the court addressed the meaning of “tender” under a statute that permitted a 
prevailing plaintiff to recover attorney fees unless, prior to commencement of the action, the 
defendant tendered to the plaintiff an amount not less than the damages ultimately awarded to the 
plaintiff.  Prior to the commencement of the action, the defendant had offered to pay more than 
the plaintiff recovered, but the offer was conditioned upon the plaintiff releasing defendant from 
further liability for plaintiff‟s negligence claim.  The plaintiff contended that the offer did not 
 
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constitute a tender because it was conditioned upon the release.  The Oregon Supreme Court 
stated that its common law meaning of the word “tender” was “an offer that is coupled with no 
conditions or only conditions for which the tendering party has a right to insist.”  99 P.3d at 287.  
The court then held “that defendant was entitled to insist upon a release from further liability for 
plaintiff‟s negligence claim as a condition to payment,” 99 P.3d at 288, and that “defendant‟s 
condition of release from further liability for plaintiff‟s negligence claim, without more, did not 
prevent his prelitigation payment offer from qualifying as an effective „tender,‟” 99 P.3d at 289. 
 
Applying the meaning of “tender” in Fresk, Comstock, and Anderson, tender of securities 
would not require delivery of the securities.  It would simply be an offer to deliver the securities 
in exchange for the consideration paid plus interest.  As Defendant argues, “Houston‟s cause of 
action under ORS 59.115(2)(a) is an action for rescissionary damages.”  Under Oregon law, 
when a purchaser of property is entitled to rescission because of misrepresentations made by the 
seller, “the property is to be exchanged for the return of payments made on the purchase price.”  
Farnsworth v. Feller, 471 P.2d 792, 797 n.4 (1970).  Plaintiff did not purchase the securities with 
a judgment against Defendant; he purchased them with cash.  He is therefore entitled to 
exchange the securities for the return of that cash, not just for a judgment in the amount of his 
payments. 
 
 In arguing that “tender” requires delivery of the securities, Defendant relies upon two 
sentences in an opinion of the Oregon Court of Appeals in which it stated, “[I]f defendants 
prevail on their counterclaim alleging plaintiffs‟ violation of the Oregon Securities Law, they 
must tender their shares to T. Prentice in order to recover the consideration paid for them.  ORS 
59.115(2).  If that occurs, T. Prentice will reacquire stock in the corporation in the course of this 
litigation.”  Metal Tech Corp. v. Metal Teckniques Co., Inc., 703 P.2d 237, 242 (Or.Ct. App. 
1985). 
 
The issue being addressed in Metal Tech was the trial court‟s dismissal of plaintiff T. 
Prentice‟s shareholder derivative claim against Metal Teckniques Co., Inc., on the ground that he 
did not have standing.  The issues to be tried had been bifurcated, and the counterclaim for 
rescission of the sale of assets by Metal Tech Corp. to Metal Teckniques was tried first.  That 
sale was rescinded because of plaintiffs‟ misrepresentations.  As part of that sale, T. Prentice, the 
owner of Metal Tech, had acquired 1,250 shares of stock in Metal Teckniques.  The rescission 
deprived him of the stock and therefore standing to bring a shareholder‟s derivative action.  The 
 
15 
individual defendants had also counterclaimed against T. Prentice alleging that they had 
purchased stock in Metal Teckniques and that he was liable under ORS 59.115 for selling 
securities by means of material misrepresentations.  The trial court had granted summary 
judgment in favor of the defendants on that counterclaim.  The appellate court reversed the grant 
of summary judgment and remanded that claim for trial.  If the defendants prevailed on that 
counterclaim, they would have to tender the stock to T. Prentice.  Therefore, the appellate court 
instructed the trial court that any decision on T. Prentice‟s shareholder‟s derivative action must 
await resolution of the securities law violation counterclaim because T. Prentice may again be a 
shareholder. 
 
It was in that context that the appellate court wrote, “[I]f defendants prevail on their 
counterclaim alleging plaintiffs‟ violation of the Oregon Securities Law, they must tender their 
shares to T. Prentice in order to recover the consideration paid for them.  ORS 59.115(2).  If that 
occurs, T. Prentice will reacquire stock in the corporation in the course of this litigation.”  The 
key phrase is, “If that occurs.”  Plaintiff reads “that” to refer to the tender, so it would mean if 
the tender occurs, T. Prentice would reacquire the stock.  Based upon that reading, Plaintiff 
argues that a tender under ORS 59.115(2) requires delivery of the stock.  That reading, however, 
is not consistent with Oregon law as set forth above.  It would be consistent with Oregon law, 
however, if “that” refers to the phrase “in order to recover the consideration paid.”  If that 
(recovery of the consideration paid) occurs, then T. Prentice would reacquire the stock.  The 
tender could be conditioned upon return of the consideration paid. 
 
In his reply brief, Defendant also raises additional challenges to the sufficiency of 
Plaintiff‟s tender.  By letter to Defendant‟s counsel dated March 3, 2008, Plaintiff‟s counsel 
wrote, “We are tendering to you Howard Houston‟s rights, title and interest in the Wood River 
Partners LP securities, which we will deliver upon receipt of payment by your client or others of 
the full amount of the principal and interest stated in the proposed judgment.”  In his reply brief, 
Defendant argues, “It must be noted that this letter in no way tenders the securities themselves as 
required by the plain wording of Oregon law.  It merely tenders Houston‟s right, title, and 
interest in those securities.”  There is no indication that Defendant raised that objection in the 
district court.  This Court will not consider issues raised for the first time on appeal, Parsons v. 
Mutual of Enumclaw Ins. Co., 143 Idaho 743, 746, 152 P.3d 614, 617 (2007),  nor will this Court 
 
16 
address an issue raised for the first time on appeal in the reply brief, Suitts v. Nix, 141 Idaho 706, 
708, 117 P.3d 120, 122 (2005). 
 
We need not base our decision upon how we believe the Oregon courts would interpret 
the term “tender” in ORS 59.115.  The district court did not base its grant of summary judgment 
solely upon that statute.  It also held that Plaintiff was entitled to recover under ORS 59.135 and 
ORS 59.137.  A person who violates ORS 59.135 is liable “for the actual damages caused by the 
violation, including the amount of any commission, fee or other remuneration paid, together with 
interest at the rate specified in ORS 82.010 for judgments for the payment of money.”  ORS 
59.137.  That statute does not require any tender of the security before obtaining a judgment. 
Defendant has not challenged on appeal his liability under ORS 59.135, nor has he 
contended that the damages awarded are not consistent with the recovery permitted by ORS 
59.137.  Therefore, even if Plaintiff was not entitled to a judgment under ORS 59.115 due to the 
lack of what Defendant contends constitutes a tender of the securities, Plaintiff would still be 
entitled to the same judgment under ORS 59.135 and 59.137. 
 
 
F.  Is Plaintiff Entitled to an Award of Attorney Fees on Appeal? 
 
Plaintiff seeks an award of attorney fees on appeal pursuant to ORS 59.115(10) and Idaho 
Code §§ 12-120 and 12-121.  We will address each of these statutes separately. 
ORS 59.115(10) provides, insofar as is relevant, that “the court may award reasonable 
attorney fees to the prevailing party in an action under this section.”  We have previously held 
that a statute providing for the discretionary award of attorney fees is remedial and procedural 
and does not affect the substantive claim for relief, Jensen v. Shank, 99 Idaho 565, 566-67, 585 
P.2d 1276, 1277-78 (1978), while a statute providing for a mandatory award of attorney fees to 
the prevailing party is substantive and not merely remedial or procedural, Griggs v. Nash, 116 
Idaho 228, 235, 775 P.2d 120, 127 (1989).  ORS 59.115(10) provides for the discretionary 
awarding of attorney fees and is therefore a matter of procedure and not part of Plaintiff‟s 
substantive claim.  “[T]he lex loci controls the substantive rights of the parties, that is, all matters 
going to the basis of the right itself, while the lex fori controls procedural and remedial matters.”  
16 Am.Jur.2d Conflict of Laws § 6 (1998).  ORS 59.115(10) being a matter of procedure, it does 
not apply in this action. 
 
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Defendant also seeks an award of attorney fees under Idaho Code § 12-120(3) on the 
ground that this is an action to recover in a commercial transaction.  A commercial transaction is 
defined as “all transactions except transactions for personal or household purposes.”  I.C. § 12-
120(3).  Defendant has not pointed to anything in the record indicating that action is within the 
statutory definition of a commercial transaction. 
Finally, Defendant seeks an award of attorney fees under Idaho Code § 12-121.  
“Attorney fees can be awarded on appeal under Idaho Code § 12-121 only if the appeal was 
brought or defended frivolously, unreasonably, or without foundation.  If there is a legitimate 
issue presented by the appeal, attorney fees cannot be awarded under this statute.”  Joyce 
Livestock Co. v. United States, 144 Idaho 1, 20, 156 P.3d 502, 521 (2007).  This appeal presented 
a legitimate issue as to whether a choice of law analysis applied because we had not previously 
decided that issue in connection the enforcement in this state of a foreign statutory claim.  
Therefore, we decline to award attorney fees pursuant to Idaho Code § 12-121. 
 
IV.  CONCLUSION 
 
We affirm the judgment of the district court.  We award costs on appeal, but not attorney 
fees, to the respondent. 
 
 
Justices BURDICK, W. JONES, Justice Pro Tem TROUT, and Justice Pro Tem 
KIDWELL, CONCUR.