UNITED STATES DISTRICT COURT

DISTRICT OF OREGON

PORTLAND DIVISION

GARY J. SCHULZ, an individual and

THE ESTATE OF DONALD R. GARRIS,

Plaintiffs,

v.

 

VISIONARY PROPERTIES, INC., a

Delaware corporation and HVHC, INC., a

Delaware corporation,

Defendants.

Civ. No. 3:14-cv-01129-AC

OPINION AND

ORDER

VISIONARY PROPERTIES, INC., a

Delaware corporation and HVHC, INC., a

Delaware corporation, 

Counterclaim Plaintiffs,

v.

GARY J. SCHULZ, an individual and

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THE ESTATE OF DONALD R. GARRIS,

Counterclaim Defendants.

___________________________________

ACOSTA, Magistrate Judge:

Introduction

Plaintiffs Gary J. Schulz (“Schulz”), and the Estate of Donald R. Garris (“Garris Estate”)

(collectively “Plaintiffs”), filed this action against Visionary Properties, Inc. (“Visionary”), and

HVHC, Inc., (“HVHC”) (collectively “Defendants”), alleging breach of contract, intentional

interference with economic relations, and breach of the duty of good faith and fair dealing. Currently

before the court is Defendants’ motion for summary judgment on all of Plaintiffs’ claims.

The court finds Plaintiffs did not present admissible evidence of an oral agreement by

Defendant to continue its relationship with Plaintiffs, Defendants did not breach its contractual

agreement with Schulz, Defendants’ alleged breach of its contract with Donald R. Garris (“Garris”)

defeats Garris’s claim for breach of the duty of good faith and fair dealing, and HVHC is not a party

to Garris’s contract with Visionary. Accordingly, Defendants’ motion for summary judgment is

denied with regard to the alleged breach of the express terms of the contract between Visionary and

Garris, and granted in all other respects.1

Preliminary Procedural Matters

The evidence presented in support of or in opposition to a motion for summary judgment

must be based on personal knowledge, properly authenticated, and admissible under the Federal

Rules of Evidence. FED. R. CIV. P. 56(c) (2015). The court must determine what evidence is

1The parties have consented to jurisdiction bymagistrate judge in accordance with 28 U.S.C.

§ 636(c)(1).

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admissible, relevant, and substantive. FED. R. EVID. 104 (2015). A party filing a motion for

summary judgment will generally support that motion with affidavits or declarations. Rule 56

requires that the affidavits or declarations “be made on personal knowledge, set out facts that would

be admissible in evidence, and show that the affiant or declarant is competent to testify on the

matters stated.” FED. R. CIV. P. 56(c)(4). In ruling on a motion for summary judgment, the court

will consider the admissibility of the proffered evidence’s contents, not its form. Fraser v. Goodale,

342 F.3d 1032, 1036 (9th Cir. 2003) (“At the summary judgment stage, we do not focus on the

admissibility of the evidence’s form. We instead focus on the admissibility of its content.”); Celotex

Corp. v. Catrett, 477 U.S. 317, 324 (1986) (“We do not mean that the nonmoving party must

produce evidence in a form that would be admissible at trial in order to avoid summary judgment.”). 

In their replyin support of the motion for summaryjudgment, Defendants object to numerous

exhibits and portions of declaration testimony offered by Plaintiffs to support their summary

judgment opposition. In response, Plaintiffs assert their evidence is based on personal knowledge,

falls under applicable hearsay exceptions, and is properly authenticated. 

I. Kevin Brague Declaration

A. Declaration Objections

Kevin Brague (“Brague”) is Plaintiffs’ attorney. Defendants object to Paragraph 6

2

of

Brague’s declaration in which he represents a “former employee and executive of Defendants is

willing to testify against Defendants but cannot due to a separation or settlement agreement absent

a subpoena.” (Brague Decl. ¶ 6.) Paragraph 6 then summarizes the testimony the former employee

2Plaintiffs and Defendants both cite to Paragraph 16 of the Brague declaration. However,

Brague’s declaration contains only six paragraphs. 

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would have provided. Defendants argue Paragraph 6 is hearsay, and hearsay within hearsay. 

Hearsay is defined as an out-of-court statement offered in evidence to prove the truth of the

matter asserted. FED.R.EVID. 801 (2015). Hearsay is admissible only if it qualifies as an exception

to the general hearsay rule. The Ninth Circuit has generally applied the limitations found in the

hearsay rule, set forth in Rule 802 of the Federal Rules of Evidence, to evidence offered by parties

at the summary judgment stage. Orr v. Bank of America, 285 F.3d 764, 778 (9th Cir. 2002); Beyenne

v. Coleman Sec. Services, Inc., 854 F.2d 1179, 1182 (9th Cir. 1988). When a statement is hearsay

within hearsay, or double hearsay, each statement must qualify under some exemption or exception

to the hearsay rule. FED.R.EVID. 805 (2015); United States v. Arteaga, 117 F.3d 388, 396 n.12 (9th

Cir. 1997). 

Brague’s declaration contains out-of-court statements offered for the truth of the matter

asserted. Brague identifies various facts the former employee of Defendants is willing to testify to

at trial. For example, the declaration states the former employee would testify “during the time Drs.

Garris and Schulz were subleasing optometrists, it was understood that their annual leases would be

renewed absent good cause, gross misconduct, or flagrant abuse of company policies.” (Brague

Decl. ¶ 6(c).) Plaintiffs are clearly offering the testimony to support their position that the annual

leases were wrongfully terminated. Accordingly, the statement is being offered for the truth of the

matter asserted and is hearsay.

Plaintiffs argue the former employee’s testimony is admissible under Rule 804 either as a

statement against the former employee’s interest or a statement offered against the interests of 

Defendants, who wrongfully caused the former employee’s unavailability. Rule 804 provides an

exception to the hearsay rule if the declarant is unavailable at trial and the hearsay statements were:

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1) given at a prior trial, hearing or deposition; 2) under belief of impending death; 3) against the

declarant’s proprietary or pecuniary interest; 4) concerning personal or family history; or 5) offered

against the party that wrongfully and intentionally caused the declarant’s unavailability. FED. R.

EVID. 804 (2015). The statements offered by Plaintiffs are not against the former employee’s

interest, but against Defendants’ interest. Accordingly, the statements do not qualify as a statement

against interest.

Additionally, while Plaintiffs contend the former employee is unavailable as a result of the

restriction in the separation agreement, Plaintiffs had the ability to obtain such testimony through

subpoena despite the discovery stay entered by the court on December 1, 2015. The minute order

discussing the stay directed Plaintiffs to provide defense counsel with a comprehensive list of

discovery deemed necessary to respond to the pending motion for summary judgment. In the event

Defendants disputed the necessity of the discovery, the parties were to advise the court of such

disagreement. The court specifically stayed all other discovery pending a ruling on Defendants’

summary judgment motion. Plaintiffs apparently did not advise Defendants of their need to

subpoena the former employee, and the parties definitely did not advise the court of such need. 

Plaintiffs had the right, and the opportunity, to subpoena and depose the former employee under both

the separation agreement and the court’s stay of discovery. Plaintiffs’ failure to subpoena the former

employee, not Defendants’ actions, made the former employee unavailable. Furthermore, Plaintiffs

have failed to establish Defendants acted wrongfully, and with the intent to make the former

employee unavailable as a witness in this matter. Rule 804(b)(6) does not apply to the former

employee’s statements. 

Plaintiffs also argue the former employee’s testimony falls under the residual exception of

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Rule 807. A hearsay statement is not excluded by the rule against hearsay even if the statement is

not specifically covered by a hearsay exception in Rule 803 or 804 if: 1) the statement has equivalent

circumstantial guarantees of trustworthiness; 2) the statement is offered as evidence of a material

fact; 3) the statement is more probative on the point for which it is offered than any other evidence

that the proponent can obtain through reasonable efforts; and 4) admitting the statement will best

serve the purposes of these rules and the interests of justice. FED.R.EVID. 807 (2015). The residual

exception to hearsay is typically reserved for exceptional circumstances. U.S. v. Bonds, 608 F.3d

495, 500 (9th Cir. 2010). The former employee’s testimony does not fall under the residual

exception because a witnesses availability only by subpoena is not an exceptional circumstance. In

addition, Plaintiffs were given the opportunity to identify discovery necessary to respond to

Defendants’ motion for summaryjudgment and could have subpoenaed the former employee despite

the discovery stay.

Finally, Plaintiffs argue the former employee’s statements are admissible because the

statements show the former employee’s state of mind. Under Rule 803(3), the hearsay rule does not

exclude a statement of the declarant’s then existing state of mind. However, Rule 803(3) does not

allow an exclusion for a statement of memory or belief to prove the fact remembered or believed,

unless it relates to the validity of the declarant’s final will and testament. FED. R. EVID. 803(3)

(2015). For example, a defendant’s attempt to introduce a recording showing her then-existing state

of mind refuting the intent requirement of a criminal charge was hearsay. U.S. v. Sayakhom 186 F.3d

928, 937 (9th Cir. 1999). (“Sayakhom’s attempt to introduce statements of her belief (that she was

not violating the law) to prove the fact believed (that she was acting in good-faith) is improper.”).

The statements by the former employee found in Paragraph 6 of Brague’s declaration are

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inadmissible hearsay which do not fall under any of the hearsay exceptions and are, therefore,

inadmissible. The court is mindful of its obligation to consider the admissibility of the contents of

the evidence, not the form. While the former employee could be subpoenaed to testify at trial,

eliminating the hearsay concerns currently existing, the court is reluctant to consider hearsay

statements at the summary judgment stage based on the possibility the original declarant could be

made available at trial. If such were the rule, virtually all hearsay statements would be admissible

in the summary judgment context, thereby eliminating any viable hearsay objections. The court is

convinced this was not the intent of the “form over content” distinction, especiallyin instances where

the “unavailable witness” would have been available to the party merely by filing a subpoena. 

Defendants’ hearsay objections to Paragraph 6 of the Brague declaration are sustained. 

B. Exhibit Objections

Defendants object to Exhibits 21 and 22 of the Brague Declaration. Brague offers Exhibit

21, identified only as an excerpt from Vision Monday, to demonstrate how substantial Defendants’

companies are in the eye-care-services industry and to show Defendants’ gross sales for the 2012

fiscal year. Defendants argue the excerpt is hearsay and not authenticated. The excerpt is hearsay

because it is an out-of-court statement offered for the truth of the matter asserted. 

Plaintiffs assert Vision Monday is a self-authenticating trade magazine. Brague describes

Vision Monday as a “trade magazine.” However, Brague’s description is merely conclusory,

providing no details on the size of the subscription base or evidence the magazine is well-known and

relied on by the public. Brague has failed to properly authenticate Exhibit 21. Defendants’

objections to the exhibit are sustained.

Exhibit 22 is the docket report for Case No. C140528PE, In the Matter of Donald Russell

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Garris. Defendants argue the docket report is hearsay and not authenticated. The docket report was

generated by the Oregon Judicial Information Network (“OJIN”), a computer system that serves as

the case register for every state court in Oregon. Miller v. Baldwin 176 Or. App. 500, 518 (2001)

(Armstrong, J. dissenting). The OJIN report is an appropriate source of facts capable of being

judicially noticed under Federal Rule of Evidence 201. Christy v. Schrunk, No. CV05-1580-HU,

2006 WL 1515549, at n.6 (D. Or. May 31, 2006). Defendants’ objections to Exhibit 22 are

overruled.

II. . Gary Schulz Declaration

A. Declaration Objections

Defendants objects to various statements made in the Schulz Declaration based on hearsay,

lack of personal knowledge, and the absence of a proper foundation. The Ninth Circuit requires

affidavits offered in support of summary judgment be based on personal knowledge. Bliesner v. The

Commc’n Workers of America, 464 F.3d 910, 915 (9th Cir. 2006). Federal Rules of Evidence 602

provides that “[a] witness may testify to a matter only if evidence is introduced sufficient to support

a finding that the witness has personal knowledge of the matter.” The evidence establishing personal

knowledge of the matter may consist of the witness’s own testimony. Id. 

Defendants object to Paragraphs 12, 13, and 15 of the Schulz Declaration. In Paragraph 12,

Schulz states he “was aware of several doctors buying and selling their practices which were

subleased under Defendants’ companies. These sales and purchases of practices were done with the

knowledge and consent of Defendants.” (Schulz Decl. ¶ 12.) Schulz has personal knowledge of his

own attempts to purchase a practice. However, Schulz does not provide any information on his

personal knowledge of other doctors buying and selling practices. To the extent Schulz is describing

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information he obtained from other doctors, the statement is hearsayand is inadmissible for purposes

of this motion. The statement is being offered to establish Defendants’ pattern of practice, not

Schulz’s state of mind. Additionally, Schulz has no personal knowledge with regard to information

known by Defendants or if such sales were completed with Defendants’ consent. Defendants’

objections to Paragraph 12 are sustained. 

In Paragraph 13, Schulz states “doctors would not hire me after speaking with Visionworks

representatives” implying Defendants prevented Schulz from being hired. (Schulz Decl. ¶ 13.) 

Again, Schulz does not offer evidence establishing he has personal knowledge that Defendants’

representatives told the doctors to not hire him. To the extent Schulz obtained information from

other doctors, the statements made by the other doctors would qualify as hearsay and would not be

admissible. Again, the statement is being offered to establish Defendants’s pattern of practice, not

Schulz’s state of mind. Defendants’ objections to Paragraph 13 are sustained.

Finally, Defendants object to Paragraph 15 of the declaration, in which Schulz represents

“Defendants, and their predecessors, would then return the fully executed Sublease Agreements to

me.” (Schulz Decl. ¶ 15.) Schulz has personal knowledge of receiving his sublease agreement from

Defendants and their predecessors each year, returning a completed renewal form for his sublease

agreement to Defendants, and Defendants returning a fully executed sublease agreement to him. 

Paragraph 15 of Schulz’s declaration is based on personal knowledge and is therefore admissible in

these summary judgment proceedings. Defendants’ objections to Paragraph 15 are overruled.

B. Exhibit Objections

Defendants also object to many of the Exhibits attached to the Schulz declaration. 

Defendants object to Exhibits 1, 2, 3, 4, 5, 6, 8, 17, and 19, arguing the exhibits contain hearsay and

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are not authenticated. Authentication is a “condition precedent to admissibility” which is satisfied

by “evidence sufficient to support a finding that the matter in question is what its proponent claims.” 

FED. R. EVID. 901(a) (2015). In a summary judgment motion, documents authenticated through

personal knowledge must be “attached to a [declaration]that meets the requirements of [FED.R.CIV.

P.] 56[(c)] and the [declarant] must be a person through whom the Exhibits could be admitted into

evidence.” Canada v. Blain’s Helicopters, Inc., 831 F.2d 920, 925 (9th Cir. 1987).

Exhibit 1 consists of a July13, 1990 letter Schulz received from Robert Ponzetti (“Ponzetti”),

President of Eye Care Centers of America, Inc. (“Eye Care Centers”), discussing the contents of a

letter from Robb Haskins, Assistant Attorney General of Oregon, which was attached. Eye Care

Centers is the predecessor to Defendants. (Schulz Decl. ¶ 5.) In the attached letter, Haskins

expresses concerns that Eye Care Centers, doing business as Binyon’s Optical (“Binyon’s”), owned

and operated optometric offices in the state of Oregon without the required license, which Oregon

issues only to individuals. (Schulz Decl. Ex 1 at 3-4.) Ponzetti advised Schulz of Haskin’s opinion

that the “employment of a licensed optometrist to conduct an optometric practice for a corporation

(other than a professional corporation) violates the laws of the State of Oregon.” (Schulz Decl. Ex

1 at 1.) Ponzetti also informed Schulz that Eye Care Centers was “exploring the possibility of

restructuring its relationship with all optometrists in Oregon should such a restructuring be found

to be advisable and/or required.” (Schulz Decl. Ex. 1 at 1.)

To lay the foundation for receipt of a document in evidence, the party offering the exhibit

must provide the “testimony of a witness with personal knowledge of the facts who attests to the

identity and due execution of the document and, where appropriate, its delivery.” United States v.

Dribble, 429 F.2d 598, 602 (9th Cir. 1970). Here, Schulz has personal knowledge of the letter and

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attachment he received in 1990. (Schulz Decl. ¶ 3.)

Defendants also object to Exhibit 1 claiming the content of the letter is hearsay. Plaintiffs

argue the letter is not hearsay because the letter is an opposing party’s statement. Rule 801, which

identifies exclusions from the hearsay rule, provides that statements by a party opponent offered

against the opponent party are excluded from the hearsay rule. FED.R. EVID. 801(d)(2). To qualify

as a statement by a party opponent under Rule 801(d)(2), the statement must be: (1) the party’s own

statement, in either an individual or a representative capacity; (2) one which the party has manifested

an adoption or belief in its truth; or (3) made by a person authorized by the party to make a statement

concerning the subject, by the party’s agent or servant concerning a matter within the scope of the

agency or employment during the existence of the relationship, or by a coconspirator of a party

during the course in furtherance of the conspiracy. FED. R. EVID. 801(d)(2). 

The letter is a statement by a person authorized by the party to make a statement concerning

the subject. Ponzetti was President of Eye Care Centers at the time he authored the letter, and thus,

qualifies as a person authorized to make a statement concerning the restructuring of optometrists in

Oregon for Eye Care Centers. As Eye Care Centers was Defendants predecessor, Ponzetti’s letter

qualifies as an opposing party’s statement and is not hearsay. The attached letter from Haskins

provides the impetus for the restructuring and is not being offered for the truth of the contents, but

for the state of mind of Ponzetti. Exhibit 1 is admissible. Defendants’ objections are overruled.

Next, Defendants object to Exhibit 2, the Binyon’s Doctor and Supervisor’s Handbook

(“Handbook”). The Handbook consists of various tips and procedures on how to run a successful

optometry practice. J. R. Lacey (“Lacey”), Vice President of Professional Services for Eye Care

Centers, provided hundreds of pages of information to optometrists. The Handbook contains various

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manuals, forms, and procedures from Lacey and Defendants. The Handbook is a statement by a

party-opponent because Laceyis authorized byDefendants to send the Handbook toSchulz and other

optometrists. Schulz has personal knowledge of the Handbook and can testify to receiving the

Handbook and supplements to the Handbook. In addition, Exhibit 2 is properly characterized as a

business record and falls within the Rule 803(6) exception to the hearsay rule. Evidence falls under

the business records hearsay exception when the record was: (1) made or transmitted by an

individual with personal knowledge; (2) created contemporaneously to the events discussed therein;

(3) kept in the course of a regularly conducted business activity; and (4) accompanied by supporting

testimony. Clark v. City of L.A., 650 F.2d 1033, 1036-37 (9th Cir. 1981); FED. R. EVID. 803(6)

(2015). Therefore, Exhibit 2 is admissible. Defendants’ objections to Exhibit 2 are overruled.

Defendants also object to Exhibits 3 and 4, which are copies of pages obtained from the SEC

Info website identified byPlaintiffs as certificates of incorporation. Defendants argue Exhibits 3 and

4 are hearsay and not properly authenticated. Plaintiffs contend the certificates fall under the

business records hearsay exception. Plaintiffs do not meet the fourth factor of the Rule 803(6)

exception, which requires supporting testimony. Plaintiffs submitted printouts from a website but 

have not presented any testimony to authenticate the printouts.

Additionally, Plaintiffs argue the certificates of incorporation fall under the public records

hearsay exception. Under Rule 803(8), evidence falls under the public records exception if the

record sets out: “(1) the office’s activities; (2) a matter observed while under a legal duty to report,

but not including, in a criminal case, a matter observed by law-enforcement personnel; or (3) in a

civil case or against the government in a criminal case, factual findings from a legally authorized

investigation” and the opponent does not establish a lack of trustworthiness. FED. R. EVID. 803(8)

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(2015). Exhibits 3 and 4 are printouts from the website SEC Info, which is not affiliated with or

endorsed by the Securities and Exchange Commission. Exhibits 3 and 4 do not fall under the public

records exception, or any other hearsay exception, and are therefore not admissible. Defendants’

objections are overruled.

Next, Defendants object to Exhibits 5 and 6, claiming they are not properlyauthenticated and

are hearsay. Exhibit 5 is an update to the human resources section of the Handbook provided by to

Schulz by Lacey.

3 Exhibit 6 is a bulletin sent by Mary Gary (“Gary”), Eye Care Centers’ Manager

of Professional Services, notifying all Eye Care Centers optometrists of the chance to purchase

equipment utilizing Eye Care Centers’ buying power. As with previous exhibits, Exhibits 5 and 6

are properly authenticated and are not hearsay. The exhibits were provided by managers of

Defendants, who appear to be authorized to send the updated section of the Handbook and the

bulletin, and are admissible as a statement by a party opponent or a business record. Defendants’

objections are sustained. 

Exhibit 8 is a copy of the 2012-2013 sublease for Schulz’s optometry practice. Exhibit 8 is

properlyauthenticated because Schulz has personal knowledge of the sublease agreement: it was sent

to him personally and he had received this type of agreement on an annual basis since 1990. The

sublease agreement is not hearsay because it is a business record. The sublease agreement is also

not hearsay because Gary, as manager of Defendants, was authorized to send sublease agreements

to optometrists like Schulz. Thus, it is a statement by a party opponent. Exhibit 8 is admissible. 

Defendants’ objections are overruled.

Defendants object to Exhibits 17 and 19, arguing hearsayand lack of authentication. Exhibit

3Lacey is identified in Exhibit 5as the Chairman of the Doctor Advisory Panel.

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17 consists of emails from 2009 between Schulz, Gary, and Karen Villanueva (“Villanueva”), Eye

Care Centers’ Director of Marketing, Creative Services, discussing a toll free number for Binyon’s

stores in the Portland area. These emails have been properly authenticated because Schulz has

personal knowledge of sending and receiving these emails from Gary and Villanueva. In addition,

the emails are excluded from hearsay because it is an opposing party’s statement. At the time of the

emails, Gary and Villanueva were authorized by Defendants to answer optometrist’s questions and

were acting within the scope of their employment. Therefore, the emails are not hearsay and are

admissible. Defendants’ objections are overruled.

Finally, Exhibit 19 is another email communication in 2013 between Schulz and an agent of

Defendants, specifically, Gaylyn Rockwood (“Rockwood”), Visionary’s Manager of Professional

Services. Rockwood’s email provides Schulz a form which served as an application to purchase

Garris’s practice. The email is authenticated because Schulz has personal knowledge of the email

exchange, and the email is not hearsay because Rockwood’s correspondence is an opposing party’s

statement excluded from hearsay. Exhibit 19 is admissible. Defendants’ objections are overruled. 

II. Justine Garris Declaration

A. Declaration Objections

Justine Garris (“Justine”), Garris’s daughter, worked for Garris beginning in 2003 and was

office manager for his optometry practice from 2008 to 2013. (J. Garris Decl. ¶ 3.) Defendants

object to many of the statements made in Justine’s declaration, arguing Justine lacks personal

knowledge and the statements are hearsay. 

In Paragraph 4 of Justine’s declaration, Justine claims she was told by Defendant’s District/

Territory Manager Michael Constancio (“Constancio”), that Garris’s sublease agreement would be

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renewed and the office had nothing to worry about. (J. Garris Decl. ¶ 4.) Justine appears to have

personal knowledge of the event because she was the office manager of Garris’s practice during the

time and would likely have interactions with Defendants’ managers in this capacity. In addition, the

statements made by Constancio are not considered hearsay because the statements qualify as an

opposing party’s statement. Constancio’s position as District/TerritoryManager would give him the

authority and discretion to discuss sublease agreements with optometrists. The statement is

admissible because Justine has personal knowledge of the statement and the statement byConstancio

is not hearsay because the statement is an opposing party’s statement. Defendants’ objections are

overruled. 

Next, Defendants argue the statement that “[i]n August 2013, Dr. Garris attempted to sell his

practice to Dr. Schulz, which Defendants would not allow” in Paragraph 5 is hearsay and Justine

lacks personal knowledge. (J. Garris Decl. ¶ 5.) As office manager, Justine would have personal

knowledge of Garris’s attempt to sell his practice to Schulz. However, Justine does not have

personal knowledge of Defendants’ decision-making process with regard to Garris’s desire to sell

his practice. Justine does not provide any other evidence that Defendants disallowed Garris to sell

his practice. The specific statement that “Defendants would not allow” Garris to sell his practice is

conclusory, hearsay and not admissible. Defendants’ objections are sustained.

Defendants also object to Paragraph 10 of Justine’s declaration. In Paragraph 10, Justine

states Defendants did not provide Garris with thirty days’ written notice of the cancellation of his

sublease agreement. (J. Garris Decl. ¶ 10.) Justine also reports Defendants provided less than seven

days for Garris to vacate the premises. Justine has personal knowledge of this situation because, as

office manager, she would be aware when the sublease agreement was cancelled and when Garris’s

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practice needed to vacate the premises. Defendants’ objections are overruled.

Defendants object to the first sentence in Paragraph 11 of Justine’s declaration, in which she

claims “Defendant HVHC regularly monitored, interacted, provided clinical practice advice, and

management to Plaintiffs.” (J. Garris Decl. ¶ 11.) Defendants argue Justine lacks personal

knowledge and the statement is hearsay. Justine was office manager for Garris’s practice from

2008-2013 and would have personal knowledge of anymaterials, letters, or forms sent byDefendants

to Garris’s office. Any items received by Garris and his practice from Defendants would not be

hearsay because the handbooks and guides would be opposing party statements, or business records,

or both. Justine would also be able to provide direct testimony admissible at trial pertaining to

Defendants’ interactions with herself and Dr. Garris. Paragraph 11 of Justine’s declaration is

admissible. Defendants’ objections are overruled.

Next, Defendants object to Paragraph 12 of Justine’s declaration. Justine states

“District/Territory Manager Lori Kerr told myself and Dr. Garris that he needed to do better on

recalls and taking care of walk-in patients and linked that performance to the renewal of the Sublease

Agreement.” (J. Garris Decl. ¶ 12.) Justine indicates she was personally told and witnessed Garris

be given instructions on doing better for recalls and walk-in patients by Lori Kerr (“Kerr”)

establishing personal knowledge. In addition, Paragraph 12 is not hearsay because the statement is

excepted under Rule 801(d) as a opposing party’s statement. Kerr, as District/Territory Manager,

would be authorized to speak for Defendants and inform optometrists about Defendant’s concerns. 

The statement is not hearsay and is therefore admissible. Defendants’ objections are overruled.

Finally, Defendants object to Paragraph 13 of Justine’s declaration. In Paragraph 13, Justine

represents Constancio told Garris to walk his patients out to retail sales people and hand them off

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and that failure to do so might result in non-renewal of Garris’s sublease. (J. Garris Decl. ¶ 13.) As

previously mentioned, Constancio is a District/Territory Manager and likely has authority to inform

optometrists about their duties, such as walking patients out and handing them off to retail sales

people. Accordingly, the statements are those of a party opponent and not hearsay. To the extent

Justine has personal knowledge of interactions between Garris and District/Territory Managers, the

content of Paragraph 13 is admissible. Defendants’ objections are overruled.

B. Exhibit Objections

Defendants argue many of the exhibits attached to Justine’s declaration are not properly

authenticated and are hearsay. First, Defendants object to Exhibit 9, which is an email between

Justine and Joe Neron (“Neron”), another optometrist who subleases from Defendants, discussing

how to sell an optometry practice. Exhibit 9 is properly authenticated because Justine has personal

knowledge of the email between her and Neron. However, Exhibit 9 is hearsay because the email

is an out-of-court statement offered for the truth of the matter asserted. Exhibit 9 is inadmissible. 

Defendants’ objections are sustained.

Next, Defendants object to Exhibit 10. Exhibit 10 is email correspondence between Justine

and Neron in which Justine seeks Neron’s assistance in finding optometrists to cover Garris’s

practice. While Exhibit 10 is properly authenticated because Justine has personal knowledge as the

author of the email to Neron, the statements made by Neron in his response are hearsay and

inadmissible for the purposes of this motion. Defendants’ objections are sustained.

Defendants also object to Exhibit 15. Exhibit 15 is an email sent by Dr. Florian Safner,

HVHC’s Vice President of Professional Services (“Safner”), to Garris providing the “2

nd Quarter

Insights”, expressing an desire to keep Garris connected with Defendants, and seeking stories to

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share with the company. This email is properly authenticated based on Justine’s personal

knowledge, as office manager, of emails sent to Garris’s practice. Exhibit 15 is not hearsay because

it is an opposing party’s statement byan authorized representative of Defendants. Safner, as the Vice

President of Professional Services, would be authorized to send emails discussing Defendants

financial performance and desire to continue a relationship with Garris. Exhibit 15 is admissible.4

Defendants’ objections are overruled.

Finally, Defendants object to Exhibit 16. Exhibit 16 consists of a letter and sublease

agreement sent from Rockwood to Garris covering the period of June 1, 2013, to May 31, 2014. 

Defendants argue Exhibit 16 is not authenticated, and the letter and sublease agreement are hearsay. 

Exhibit 16 is properly authenticated because Justine would have access to this letter as the office

manager for Garris’s practice at the time. In addition, Exhibit 16 is not hearsay because the letter

and sublease agreement are both a business record and an opposing party’s statement made by a

person authorized to make a statement on the matter. Rockwood was the Manager of Professional

Services at the time and had the authority to send sublease renewals to optometrists. In addition, Jeff

Smith (“Smith”), Medical Director of Visionary, initialed and signed the sublease agreement. 

Exhibit 16 is admissible and Defendants’ objections overruled. 

IV. Stephanie Garris Declaration

A. Declaration Objections

Defendants also raise objections to many of the statements found in the declaration of

4Plaintiffs move to strike Defendants’ additional objection to Exhibit 15. Defendants 

objected to both an Exhibit 15 email and an Exhibit 15 letter. The only Exhibit 15 is an email and

as previously discussed is admissible. Plaintiffs’ request to strike Defendants’ additional objection

to Exhibit 15 is granted. 

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Case 3:14-cv-01129-AC Document 48 Filed 12/01/15 Page 18 of 46
Stephanie Garris (“Mrs. Garris”). Mrs. Garris was the wife of Garris, the Corporate Secretary for

Donald R. Garris, O.D., P.C., and is the Personal Representative for the Garris Estate. (S. Garris

Decl. ¶ 3.) Defendants’ various objections assert Mrs. Garris lacks personal knowledge and her

statements are hearsay. 

First, Defendants object to Paragraph 4 which states: “[i]n May 2013, District/Territory

Manager Michael Constancio confirmed that the Sublease Agreement for the Lloyd Center Mall

location would be renewed, that Garris had nothing to worry about, and that everything was fine.” 

(S. Garris Decl. ¶ 3.) Unlike Justine, who as office manager of her father’s practice clearly was

involved in the day-to-day operations of the practice, nothing in the record supports a similar

inference for Mrs. Garris. The representations in her declaration imply she acquired her knowledge

as Dr. Garris’s wife rather than as Corporate Secretary or from some other corporate role. To the

extent Mrs. Garris obtained the information solely through her husband, she lacks personal

knowledge. Defendants’ objections are sustained.

Defendants also object to Paragraph 5 in which Mrs. Garris claims “Defendants would not

allow” Garris to sell his practice to Schulz. (S. Garris Decl. ¶ 5.) Defendants argue Mrs. Garris

lacks personal knowledge and the statement is hearsay. Once again, nothing in the declaration

illustrates how Mrs. Garris had personal knowledge of Defendants’ actions in blocking Garris from

selling his practice. The statement lacks foundation and is inadmissible. Defendants’ objections are

sustained.

Next, Defendants object to Paragraph 8 which states: “Defendant HVHC, by and through its

Vice President Dr. Florian Safner, responded directly to me on behalf of HVHC and all of its

affiliated companies.” (S. Garris Decl. ¶ 8.) Again, Defendants argue this statement by Mrs. Garris

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Case 3:14-cv-01129-AC Document 48 Filed 12/01/15 Page 19 of 46
is hearsay and she lacks personal knowledge. Mrs. Garris has personal knowledge because she

personally received the letter from Safner. In addition, this statement is not hearsay because Safner

is a party authorized by Defendants to make statements concerning subleases. Safner’s statements

are an opposing party’s statement and are, therefore, not hearsay. Defendants’ objections are

overruled. 

Defendants also object to Paragraph 9 which states: “Dr. Garris was not in default of his

sublease agreement and was operating his practice in accordance with Defendants’ policies and

practices.” (S. Garris Decl. ¶ 9.) Again, Defendants argue Mrs. Garris lacks personal knowledge

and the statement is hearsay. Mrs. Garris was the Corporate Secretary for Donald R. Garris, O.D.,

P.C. and stated she is knowledgeable about Garris’s optometry practice. (S. Garris Decl. ¶ 3.) 

However, Mrs. Garris provides no foundation to establish her personal knowledge with regard to

Garris’s practice activities. Paragraph 9 of Mrs. Garris’s declaration is inadmissible. Defendants’

objections are sustained. 

Defendants object to Mrs. Garris’s statement that “[n]iether Dr. Garris , nor myself as

Corporate Secretary, provided any written notice to Defendants to mutually cancel his sublease . .

.” found in Paragraph 10. (S. Garris Decl. ¶ 10.) Mrs. Garris would have personal knowledge of her

own actions with regard to cancellation of the sublease agreement. However, Mrs. Garris does not

specify how she knows Garris did not provide written notice of such cancellation. To the extent 

Garris told Mrs. Garris of his actions, it would be hearsay and would not fall under any hearsay

exceptions. Accordingly, Paragraph 10 is admissible only with regard to Mrs. Garris’s actions. 

Defendants’ objections are sustained in part.

Finally, Defendants object to Paragraph 12 which states “Defendants advertised and

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Case 3:14-cv-01129-AC Document 48 Filed 12/01/15 Page 20 of 46
promoted their company brands, and Garris was a direct beneficiary of, and a required participant,

in those advertisements.” (S. Garris Decl. ¶ 12.) Mrs. Garris, as Corporate Secretary of Garris’s

practice, would likely have access to the Handbooks and other materials Defendants sent to

optometrists. Accordingly, it is reasonable Mrs. Garris would have personal knowledge of the

requirements and recommendations Defendants gave to their optometrists. In addition, the materials

sent by Defendants would not be hearsay because it would be an opposing party’s statement. This

statement is admissible. Defendants’ objections are overruled.

B. Exhibit Objections

In addition to objecting to various statements in Mrs. Garris’s declaration, Defendants argue

Exhibits 12, 13, and 18 lack proper authentication and are hearsay. Exhibit 12 consists of an email

sent byGarris to Constancio expressing his concerns regarding his sublease termination. Mrs. Garris

claimed she “knew and read the email Dr. Garris wrote to Michael Constancio concerning the refusal

of Defendants to allow the sale of his practice to Dr. Schulz.” (S. Garris Decl. ¶ 6.) Mrs. Garris’s

declaration shows her personal knowledge of the email in Exhibit 12. Exhibit 12 is properly

authenticated. However, Exhibit 12 is hearsay that does not fall under a hearsay exception. 

Plaintiffs argue Garris’s email would fall under Rule 803(3) exception for then-existing mental,

emotional, or physical conditions. The Rule 803(3) hearsay exception does “not include a statement

of memory or belief to prove the fact remembered or believed unless it relates to the validity or terms

of the declarant’s will.” FED.R.EVID.803(3). In Exhibit 12, Garris discusses his feelings of distress

and how he would have acted differently if he knew other facts. The statements made in the email

by Garris are statements of memory and belief that do not relate to his will. Exhibit 12 is hearsay

and does not fall under any applicable exceptions, and thus is inadmissible. Defendants’ objections

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Case 3:14-cv-01129-AC Document 48 Filed 12/01/15 Page 21 of 46
are overruled. 

Defendants also object to Exhibit 13 – an email sent by Mrs. Garris to Rockwood raising

various concerns she had regarding Garris’s sublease termination and Defendants’ intent. Mrs.

Garris personally wrote this email and has personal knowledge of the information in Exhibit 13. In

the email, Mrs. Garris generally refers to the statements and feelings of her family members, of

Schulz’s impressions of contacts with Defendants regarding his desire to purchase Garris’s practice,

and representations, comments, and assurances made by Defendants. Defendants’ statements are

statements of a party opponent and are not hearsay. However, Mrs. Garris’s recounting of statements

made by her relatives and Schulz are hearsay. For the purposes of this motion, the court will

consider only the statements of Mrs. Garris and Defendants found in Exhibit 13. Defendants’

objections are sustained in part.

Finally, Defendants object to Exhibit 18, the original 1991 sublease agreement between

Defendants’ predecessors and Garris. Exhibit 18 is not hearsay because the sublease agreement is

an opposing party’s statement and a business record. The sublease agreement discusses the

responsibilities of each party and is signed by an Eye Care Centers representative and Garris. Robert

Gross (“Gross”), then Senior Vice President of Operations for Eye Care Centers, was authorized by

Defendants to enter into sublease agreements with optometrists. Exhibit 18 is not hearsay and is

therefore admissible. Defendants’ objections are overruled.

V. Mary Gary Declaration

The final evidentiary objections Defendants raise are to statements made in Gary’s

declaration. Defendants argue Gary, former Manager of Professional Services for Defendants, lacks

personal knowledge and the statements are hearsay. First, Defendants object to Paragraph 4 which

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Case 3:14-cv-01129-AC Document 48 Filed 12/01/15 Page 22 of 46
states “the decision to not renew a subleasing doctor’s lease was made by HVHC/Visionworks of

America, Inc.” (GaryDecl. ¶ 4.) Gary has personal knowledge of Defendants’ decisions with regard

to the renewal of subleases for doctors as a manager for Visionary who sent sublease renewals to

Schulz and other optometrists. To the extent Gary is relying on her experience, and not statements

from others, the statement is not hearsay. Paragraph 4 is admissible. Defendants’ objections are

overruled.

Next, Defendants object to Paragraph 6 of Gary’s declaration which states “Visionary

Properties, Inc., HVHC, and its related entities, including Visionworks of America, Inc., knew that

subleasing optometrists bought and sold their practices.” (Gary Decl. ¶ 6.) Once again, Garywould

have personal knowledge of Defendants’ experience with, and involvement in, optometrists buying

and selling practices. Gary, as Manager of Professional Services, would be aware of changes in

optometrists practices. The statement is not hearsay because Gary can testify regarding her

understanding of the procedures optometrists utilized to buy or sell practices with Defendants’

knowledge. Defendants’ objections are overruled. 

Finally, Defendants object to Paragraph 7 which states “HVHC and its related entities,

including Visionworks of America, Inc., employed District or Territory Managers who supervised

the retail operations of Visionworks stores and would check in on subleasing optometrists.” (Gary

Decl. ¶ 7.) Garyhas personal knowledge of Defendants’ employment of District/TerritoryManagers

and their supervisory responsibilities with regard to the retail operations of Defendants’ stores. 

Accordingly, to the extent Gary is testifying to her own knowledge of the procedures created by

Defendants for District/ TerritoryManagers to oversee optometrists, the statement is not hearsayand

is admissible. Defendants’ objections are overruled. 

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Case 3:14-cv-01129-AC Document 48 Filed 12/01/15 Page 23 of 46
Background

Plaintiffs are optometrists who, prior to 1990, were employees of Eye Care Centers working

in Binyon’s retail eyewear stores. (Schulz Decl. ¶¶ 3, 4.) In a letter dated May 29, 1990, the Oregon

Department of Justice advised Eye Care Centers the State licenses only individuals to practice

optometry, thereby preventing Eye Care Centers from hiring optometrists to provide optometric

services to the public at Binyon’s stores. (Schulz Decl. Ex. 1 at 3-4.) The letter explained:

a licensed optometrist can contract with an unlicensed person, including a

corporation, to manage the licensed optometrist’s accounting, collection, advertising

or other businessmatters of the optometrist’s business. However, an optometrist may

not contract with an unlicensed business to perform optometric services for the

unlicensed business. 

(Schulz Decl. Ex. 1 at 3-4.) Ponzetti forwarded the letter to Schulz in July 1990, advising him Eye

Care Centers were researchingan alternative to the existing relationship with optometristsinOregon,

if such was found to be necessary. (Schulz Decl. Ex. 1 at 1.) Subsequently, Eye Care Centers

directed its optometrists to form professional corporations and transitioned them from employees

to tenants leasing space from Eye Care Centers in Binyon’s stores. (Schulz Decl. ¶¶ 3-5.)

After 1990, Eye Care Centers “continued to direct and control the practice management,

personnel management, accounting, business principals, marketing, patient management, supply

ordering, and other facets” of the new optometric practices. (Schulz Decl. ¶ 4; J. Garris Decl. ¶ 11.) 

Eye Care Centers set up pricing with vendors. For example, in January 1998, Eye Care Centers

provided information on a direct purchase program with a medical equipment vendor which offered

lower prices to subleasing optometrists on specific products and service agreements purchased from

the vendor. (Schulz Decl. ¶ 7; Ex. 6.) Eye Care Centers regularly updated the Handbook provided

to its optometrists. For example, in July 1995, Eye Care Centers forwarded a chapter covering

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Case 3:14-cv-01129-AC Document 48 Filed 12/01/15 Page 24 of 46
“Hiring, Orientation, and Performance Appraisal suggested for the practicing optometrist’s office”

to all subleasing optometrists for inclusion in the human resources section of the Practice

Management Manual. (Schulz Decl. ¶ 7; Ex. 5.) Eye Care Centers employed District and Territory

Managers, who supervised the retail portion of Binyon’s stores, obtained information about the

optometrists from the store managers and, on occasion, provided direction to optometrists. (Schulz

Decl. ¶ 8; GaryDecl. ¶ 7.) For example, Kerr told Garris he needed to improve on recalls and taking

care of walk-in patients while Constancio directed Garris to personally hand his patients off to the

retail salespeople. (J. Garris Decl. ¶¶ 12, 13.) Both advised Garris his response to these admonitions

may affect the renewal of his sublease. (J. Garris. Decl. ¶¶ 12, 13.) Finally, Eye Care Centers

required optometrists to name Eye Care Centers as an additional insured on commercial liability

policies, provide monthly reports on the number of patients and gross sales, and participate in its

advertisement and promotion of Defendants optometry services. (Schulz Decl. ¶¶ 7, 14; S. Garris

Decl. ¶ 12.)

In the fall of 1997, optometrists no longer subleased space from Eye Care Centers but, rather,

a related entity known as Visionary. (Schulz Decl. ¶ 6.) Visionary is a subsidiary of Visionworks

of America, Inc. (“Visionworks”), which is, in turn, a subsidiary of HVHC. ((Schulz Decl. ¶ 6;

Enterline Decl. ¶ 4.) HVHC, a subsidiary of Highmark Inc., is a holding company incorporated in

Delaware and headquartered in Texas. (Enterline Decl. ¶¶ 2, 3.) HVHC, which engages in only

limited operations, has never conducted operations, or had employees or offices, in Oregon or

Washington. (Enterline Decl. ¶¶ 3, 5, 6.) HVHC was not a party to the sublease agreements

between Visionary and Schulz or Donald R. Garris, O.D., P.C. (“Garris PC.”). (Enterline Decl. ¶¶

7-9; Latham-Rockwood Decl. Exs. 1, 2.) 

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Case 3:14-cv-01129-AC Document 48 Filed 12/01/15 Page 25 of 46
I. Schulz Sublease

From 1990 to April 1, 2011, Eye Care Centers, and then Visionary, renewed Schulz’s

sublease annually. (Schulz Decl. ¶ 9.) On April 1, 2011, Schulz and Visionary again entered into

a sublease agreement for premises located in the Columbia Tech Center in Vancouver, Washington,

where Schulz operated his optometry practice, for the one-year period from April 1, 2011, to March

31, 2012 (the “Schulz Sublease”). (Latham-Rockwood Decl. ¶ 2.) The Schulz Sublease was for a

defined one-year term and did not contain language regarding renewal. (Latham-Rockwood Decl.

Ex. 1 at 1; Gary Decl. ¶ 5.)

The Schulz Sublease limited Schulz’s use of the premises exclusively to “the practice of

optometry, which practice shall not include . . . the direct or indirect selling of eyeglass frames, or

sunglasses, or eyeglass lenses at the Subleased Premises,” but allowed Schulz, to the extent

permitted by law, to fit and sell contact lenses and supplies. (Latham-Rockwood Decl. Ex. 1 at 1.) 

Additionally, the Schulz Sublease required Schulz to make fixed monthly rental payments on or

before the first of each month and provide a monthly statement, on a form provided by Visionary,

of examinations performed and gross sales received by Schulz per day on or before the tenth of each

month. (Latham-Rockwood Decl. Ex. 1 at 4.) “Gross Sales” was defined as:

the entire amount of the sales price or fee charged, whether for cash or otherwise, of

all sales of merchandise, services, contact lens service agreements or insurance, and

other receipts whatsoever of all business conducted in and from the Subleased

Premises, including any fees paid to Sublessee for consulting services, and refractive

surgery co-management services, mail or telephone orders received or filled at the

Subleased Premises, deposits not refunded to purchasers, and sales to employees. 

(Latham-Rockwood Decl. Ex. 1 at 4.)5

5

It appears the monthly report was required to allow Visionary the ability to confirm the

accuracy of rental payments based on a percentage of gross sales. While not necessarily applicable

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Case 3:14-cv-01129-AC Document 48 Filed 12/01/15 Page 26 of 46
The Schulz Sublease also contained the following provisions:

Section 7.5. Relationship of Parties. Nothing herein contained shall be

deemed or construed by the parties hereto, nor by any third party, as creating the

relationship of principal and agent or of partnership or of joint venture between the

parties hereto, or as creating any relationship between the parties hereto other than

the relationship of Sublessor and Sublessee. 

* * *

Section 7.13. Limitations of Damages. SUBLESSEE AND SUBLESSOR

MUTUALLY AGREE THAT THEY SHALL NOT BE LIABLE TO THE

OTHER FOR CONSEQUENTIAL, INDIRECT, INCIDENTAL, SPECIAL,

PUNITIVE, OR ANY OTHER NON-DIRECT DAMAGES INCLUDING,

WITHOUT LIMITATION, LOST PROFITS OR FUTURE REVENUES,

COST OF CAPITAL, LOSS OF BUSINESS REPUTATION OR

OPPORTUNITY OR ANY CLAIM OR DEMAND AGAINST THE OTHER

PARTY BY ANY THIRD PARTY, HOWEVER CAUSED, WHETHER

UNDER THEORY OF CONTRACT, TORT (INCLUDING NEGLIGENCE),

STATUTE OR OTHERWISE, EVEN IF THE PARTY HAS BEEN ADVISED

ON THE POSSIBILITY OF SUCH DAMAGES. SUBLESSOR’S LIABILITY

UNDER THIS SUBLEASE OR OTHERWISE ARISING OUT OF THIS

SUBLEASE REGARDLESS OF THE FORM OF ACTION, WHETHER

UNDER THEORY OF CONTRACT, TORT (INCLUDING NEGLIGENCE),

STATUTEOROTHERWISE, SHALL NOT EXCEED AN AMOUNT EQUAL

TO THE TOTAL AMOUNT PAID OR PAYABLE BY SUBLESSEE TO

SUBLESSOR UNDER THIS SUBLEASE. THE PARTIES’ ENTIRE

LIABILITY FOR ANY CLAIMS BY THE OTHER PARTY, REGARDLESS

OF THE BASIS, IS SET FORTH IN THIS SECTION.

* * *

Section 7.15. Governing Law. This Sublease shall be construed pursuant to

the laws of the state in which the Subleased Premises are located.

* * *

Section 7.18. Prior Agreements Superseded. This Sublease constitutes the

sole and only agreement of the parties hereto and supersedes any prior

understandings or written or oral agreements between the parties with respect to the

to rent due under the Schulz Sublease, Schulz was still obligated to provide the monthly reports to

Visionary.

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Case 3:14-cv-01129-AC Document 48 Filed 12/01/15 Page 27 of 46
subject matter within.

* * *

Section 7.19. No Amendment. This Sublease may not be amended or

otherwise changed except by an agreement in writing signed by the Sublessor and

Sublessee.

(Latham-Rockwood Decl. Exs. 1 at 7-9.) Schulz represents Defendants inserted the limitation of

damages clause in the ordinary course of business without providing notice or an explanation of the

change. (Schulz Decl. ¶ 15.) Schulz did not have an opportunity to negotiate the terms of the

sublease agreement but was expected to execute the sublease agreement on a “take-it-or-leave-it

basis.” (Schulz Decl. ¶ 15.)

On January 16, 2012, Gary forwarded to Schulz copies of a new sublease, to commence on

April 1, 2012, along with a supply of the “Doctor’s Monthly Sales Forms,” mailing labels for rent

payments, a prescription pad, and business card re-order forms. (Schulz Decl. Ex. 8.) Gary asked

Schulz to examine the documents, confirm the equipment listed, initial and signed the documents

where appropriate, and return all copies to her within two weeks of receipt, along with copies of 

insurance certificates verifying the existence of Professional Liability and Comprehensive General

Liability coverage, and Schulz’s current optometric license renewal certificate. Gary advised that

on receipt of properly executed documents, she would submit them to Dr. Smith and, upon

execution, return a fully executed original to Schulz. (Schulz Decl. Ex. 8 at 1.) The parties did not

enter into a new sublease agreement upon the termination of the Schulz Sublease. (LathamRockwood Decl. ¶ 3.) HVHC and Visionworks generally made the decision to not renew an

optometrist’s sublease. (Gary Decl. ¶ 4.)

/ / / / /

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Case 3:14-cv-01129-AC Document 48 Filed 12/01/15 Page 28 of 46
II. Garris Sublease 

In May 2013, Constancio advised Justine that Garris PC’s sublease for a location in Lloyd

Center Mall, Portland, Oregon, where Garris operated his optometry practice, would be renewed,

Garris PC had nothing to worry about, and everything was fine. (J. Garris Decl. ¶ 4.) Shortly

thereafter, Garris PC and Visionary entered into a sublease agreement for the Lloyd Center premises

for the one-year period from June 1, 2013, to May 31, 2014 (the “Garris Sublease”). (LathamRockwood Decl. ¶ 6.) The Garris Sublease contained terms virtually identical to those in the Schulz

Sublease6 with the exception of the following language, which was found only in the Garris

Sublease: “Notwithstanding any provision to the contrary, this sublease is specifically cancelable

for any reason by either party giving thirty (30) days written notice to such effect to the other party

at the address specified herein.” (Latham-Rockwood Decl. Ex. 2.)

In earlyAugust, 2013, Justine informed Rockwood of Garris’s cancer diagnosis and resulting

inability to continue his optometry practice. (Latham-Rockwood Decl. ¶ 7.) Rockwood represents 

Justine requested early termination of the Garris Sublease at this time and that Visionary agreed to

waive the monthly rental payment and thirty-day notice of termination obligations under the Garris

Sublease. (Latham-Rockwood Decl. ¶¶ 7, 8.) Justine denies this, stating she communicated to

Visionary a desire to sell Garris’s practice to another optometrist. (J. Garris Decl. ¶ 5.) To this end,

Justine attempted to find a possible buyer and sought information and advice from Dr. Heron, who

had recently purchased a Visionwork’s optometry practice. (J. Garris Decl. ¶ 5.) Visionary was

aware subleasing optometrists bought and sold their practices, which sale did not include the

6The Garris Sublease did not have language referencing a sublessee’s obligation to pay rent

based on a percent of gross sales.

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Case 3:14-cv-01129-AC Document 48 Filed 12/01/15 Page 29 of 46
premises or the equipment located thereon. (Gary Decl. ¶ 6.)

Schulz expressed to Visionary an interest in assuming the Garris Sublease. In mid-August

2013, Schulz completed a Sublease Agreement – General Information Form and forwarded the

completed form, and a copy of his resume, to Rockwood for presentation to the Sublease

Management Committee for approval. (Schulz Decl. ¶ 13; Ex. 19.) Visionary never acted on

Schulz’s request. (Schulz Decl. ¶ 13.) 

Justine continued to look for optometrists to fill in for Garris while he received cancer

treatments. (J. Garris. ¶ 6.) In a letter dated October 23, 2013, Rockwood advised Garris PC that

Visionary had found a new subtenant for the Lloyd Center Mall premises and Garris PC was released

from the Garris Sublease effective November 1, 2013. (Latham-Rockwood Decl. ¶ 10.) The

October 23, 2013 letter read: 

After conversations with your family members over the last eight weeks, we

understand that you desire to terminate the above-captioned Sublease Agreement due

to health-related issues. Visionary Properties, Inc., agreed to waive your monthly

rent payments until we found a new sublessee, at which time we would relinquish

you from your obligations to the Sublease Agreement. 

This letter is to inform you that Visionary Properties, Inc. will be entering a new

Sublease Agreement effective November 1, 2013[,] with another optometrist. 

Accordingly, please make arrangements to remove all personal belongings from the

subleased premises by the end of the day on November 10, 2013. Michael

Constancio, the Territory Director in the State of Oregon, acting on behalf of

Visionary Properties, Inc., will be contacting you to arrange a mutually convenient

time to meet with you, or a representative of your practice, to conduct a final walk

through of the premises.

Thank you for your many years of subleasing partnership, which has truly been

appreciated. We wish you and your family all the best.

(Latham-Rockwood Decl. Ex. 3.) Garris PC did not pay rent for August, September, or October

2013. (Latham-Rockwood Decl. ¶ 9.)

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Case 3:14-cv-01129-AC Document 48 Filed 12/01/15 Page 30 of 46
On November 3, 2012, Mrs. Garris emailed various members of Visionary’s management

expressing dissatisfaction with Visionary’s handling of the termination of the Garris Sublease and 

the short two-weeks notice to remove Garris’s personal items. (S. Garris. Ex. 13.) Mrs. Garris

complained about a comment made by Constancio – that November 1 would be the happiest day

of Garris’s life – describing it as both insensitive and unprofessional. (S. Garris. Ex. 13.) Safner

responded with the following letter dated November 13, 2013:

I would like to take this opportunity to response on behalf of Visionworks, and its

affiliated companies, to your email of November 3. First, I am very sorry about the

health problems confronting your husband. I can understand your concern over the

situation. As reflected in Gaylyn’s letter of October 23, we had been in touch with

your daughters regarding the sublease between Visionary Properties and your

husband. From our perspective, we clearly understood that we had reached an

agreement with your daughters under which Visionary Properties waived the rent

payments while we looked for a new tenant. When we found a suitable tenant, we

sent our letter providing official notice that your husband was being released from

the sublease. I apologize if there was a misunderstanding, but we believe our action

was consistent with this agreement.

I understand that much of your husband’s property has been removed, but that some

items remain. Some property is in the doctor’s office and some property has been

temporarily stored with our permission in a break room in our retail store. Please

ensure that these items are removed by November 30.

Thank you for your cooperation. 

(S. Garris. Ex. 14.)

Legal Standards

Summary judgment is appropriate where the “movant shows that there is no genuine dispute

as to any material fact and the movant is entitled to judgment as a matter of law.” FED. R. CIV. P.

56(a) (2013). Summary judgment is not proper if material factual issues exist for trial. Warren v.

City of Carlsbad, 58 F.3d 439, 441 (9th Cir. 1995). 

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Case 3:14-cv-01129-AC Document 48 Filed 12/01/15 Page 31 of 46
The moving party has the burden of establishing the absence of a genuine issue of material

fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). If the moving party shows the absence of

a genuine issue of material fact, the nonmoving partymust go beyond the pleadings and identify facts

which show a genuine issue for trial. Id. at 324. A nonmoving party cannot defeat summary

judgment by relying on the allegations in the complaint, or with unsupported conjecture or

conclusory statements. Hernandez v. Spacelabs Medical, Inc., 343 F.3d 1107, 1112 (9th Cir. 2003). 

Thus, summary judgment should be entered against “a party who fails to make a showing sufficient

to establish the existence of an element essential to that party’s case, and on which that party will

bear the burden of proof at trial.” Celotex, 477 U.S. at 322.

The court must view the evidence in the light most favorable to the nonmoving party. Bell

v. Cameron Meadows Land Co., 669 F.2d 1278, 1284 (9th Cir. 1982). All reasonable doubt as to

the existence of a genuine issue of fact should be resolved against the moving party. Hector v.

Wiens, 533 F.2d 429, 432 (9th Cir. 1976). Where different ultimate inferences may be drawn,

summary judgment is inappropriate. Sankovich v. Life Ins. Co. of North America, 638 F.2d 136, 140

(9th Cir. 1981).

However, deference to the nonmoving party has limits. A party asserting that a fact cannot

be true or is genuinely disputed must support the assertion with admissible evidence. FED. R. CIV.

P. 56(c) (2013). The “mere existence of a scintilla of evidence in support of the [party’s] position

[is] insufficient.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986). Therefore, where “the

record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there

is no genuine issue for trial.” Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574,

587 (1986) (internal quotations marks omitted).

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Case 3:14-cv-01129-AC Document 48 Filed 12/01/15 Page 32 of 46
Discussion

I. Breach of Contract

A. Schulz

Defendants move for summary judgment on Schulz’s breach of contract claim arguing the

only contract between the parties was the Schulz Sublease which, by its terms, terminated on March

31, 2012. Schulz does not argue Defendants breached the terms of the Schulz Sublease but, rather,

breached a contract created by Defendants’ representations to Schulz and his reliance thereon. 

In Washington,7

“[a] breach of contract is actionable only if the contract imposes a duty, the

duty is breached, and the breach proximately causes damage to the claimant.” Nw. Indep. Forest

Mfrs. Vv. Dep’t of Labor and Indus., 78 Wash. App. 707, 712 (1995). A valid contract requires a

meeting of the mind on essential terms, which is determined by the objective manifestations of the

parties. Evan & Son, Inc. v. City of Yakima, 136 Wash App 471, 475-76 (2006); Hearst Comm’ns,

Inc. v. Seattle Times Co., 154 Wash. 2d 493, 503 (2005). When the parties have entered into a

written agreement setting forth their duties, parol or “extrinsic” evidence is considered only where

the written agreement does not express all terms agreed upon, and only to the extent such additional

terms are not inconsistent with the written terms. Emrich v. Connell, 105 Wash. 2d 551, 556 (1986).

Schulz alleges in the complaint Defendants created a contract with him when they convinced

him to relocate to Washington in March 2009 based on promises of patient recommendations and

bookings in exchange for continued good performance, and upon representations he would continue

in the Washington store absent a reasonable basis or good cause to terminate the relationship. Schulz

7As the premises covered by the Schulz Sublease is in Washington, Washington law governs 

claims relating to the Schulz Sublease, according to the express provisions of the Schulz Sublease.

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provided no evidence establishing Defendants made any such promises or representations. Schulz

may not rely on unsupported allegations in his complaint to defeat a summary judgment motion. 

In the opposition briefing, Schulz asserts Defendants’ provision of operating manuals,

reporting requirements, supplier and vendor relationships, and managerial oversight establish a

course of conduct which modified the terms of the Schulz Sublease. These general actions provide 

no evidence of an agreement to renew the Schulz Sublease made in, or even implied from, Schulz’s 

relationship with Defendants, and Schulz has failed to reference specific evidence ofsuch agreement. 

Furthermore, the Schulz Sublease specifically provides it supercedes any prior understandings or

agreements between the parties and any modifications must be made in writing.

Schulz has failed to offer evidence of the existence of an oral contract between himself and

Defendants or of conduct modifying the Schulz Sublease. The Schulz Sublease terminated on March

31, 2012, and did not create obligate Defendants to renew the sublease. Defendants are entitled to

summary judgment on Schulz’s claim for breach of contract. 

B. Garris

Defendants seek summaryjudgment on Garris’s breach of contract claim, asserting the Garris

Sublease was terminated by mutual agreement, no obligation existed to assist Garris in selling his

practice, and Garris lacks standing to enforce the Garris Sublease, as the Garris Sublease was

between Visionary and Garris PC, not Garris individually. Garris contends Defendants’ conduct

created a contract to renew the Garris Sublease indefinitely, which it breached when it termed the

Garris Sublease in November 2013. Garris also argues Defendants breached the terms of the

Sublease Agreement by failing to provide thirty days’ notice of the termination or provide assistance

in finding a buyer for Garris’s practice. Finally, Garris asserts the administrative dissolution of

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Garris PC before the filing of the action and the substitution of Mrs. Garris, in her capacity as

personal representative, for Garris in this action resolves the standing issues. 

1. Standing 

The Garris Sublease was, indeed, executed by Garris PC and Visionary. Garris represents 

in his opposition briefingGarris PC was administratively dissolved on March 21, 2014.8 Garris died

intestate on September 14, 2014, the state court appointed Mrs. Garris personal representative for

Garris’s estate on December 22, 2014, and this court granted Mrs. Garris’s motion for substitution

of the Estate of Donald R. Garris for Donald R. Garris as plaintiff on May 1, 2015. (Pls.’ Mot. for

Substitution at 2-3.)

Garris PC was a professional corporation, incorporated under OR. REV. STAT. 58.005-

58.300. In the absence of a conflict, professional corporations are also subject to the provisions of

the Oregon Business Corporation Act (the “Act”). OR. REV. STAT. 58.045 (2013). The Act gives

corporations the right “to sue and be sued and complain and defend in its corporate name.” OR.

REV. STAT. 60.077(2)(a) (2013). The Secretaryof State mayadministrativelydissolve a corporation

if the corporation fails to pay required fees, file an annual report, is without a registered agent, fails

to provide current information on its registered agent, or the period of duration as stated in the

articles of incorporation expires, and the corporation fails to cure the defect after reasonable notice. 

OR. REV. STAT. 60.647 (2013). Upon dissolution, the corporation’s corporative existence continues

solely for the purpose of winding up and liquidating the corporation’s affairs, including distribution

of the corporation’s assets to its shareholders. OR. REV. STAT. 60.637, 60.651(3) (2013). The

8The court acknowledges Garris’s representation is not supported by evidence. However, the

court takes judicial notice of the records of the State of Oregon confirming Garris PC was

administratively dissolved on March 21, 2014.

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dissolution of a corporation does not “[p]revent commencement of a proceeding by or against the

corporation in the corporation’s corporate name.” OR. REV. STAT. 60.637(2)(e) (2013).

A shareholder of a dissolved corporation who has received corporate assets has standing to

assert claims for such assets once the corporation ceases to exist. Coto Settlement v. Eisenberg, 593

F.3d 1031, 1031-32 (9th Cir. 2010). Relevant statutes generally determine when a dissolved

corporation ceases to exist. Id. at 1037 (in Nevada, two-years; in Delaware, until certificate of

cancellation is filed in Delaware; in Montana, five years after publication of notice). The Oregon

statutes do not provide a specific rule for when a dissolved corporation loses its corporate identity. 

Rather, they allow an administratively dissolved corporation to maintain its corporate status for the

limited purpose of winding up and liquidating the corporation’s business and notifying claimants. 

OR. REV. STAT. 60.651(3). Implied in the Oregon statutes is that once these tasks are completed,

the corporation ceases to exist.

This action was filed on July 16, 2014, nearly four months after Garris PC was

administratively dissolved. Based on the evidence before the court, it is reasonable to assume the

winding up of Garris PC’s affairs occurred within that four months. Garris PC operated out of a

subleased space using equipment primarily provided by Defendants, thus leaving few assets to be

distributed. Garris PC had not been active since August 2013, when Garris became ill. Thus, Garris

PC adequate time to pay all creditors before the administrative dissolution. While the court does not

have evidence of the manner in which the assets were distributed, it is undeniable that Garris, as the

holder ofthe professionallicense and a required shareholder of the professional corporation, received

/ / / / /

/ / / / /

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some, if not all, of Garris PC’s remaining assets.9 Garris PC’s right to enforce the terms of the

Garris Sublease, and any damages resulting therefrom, was a corporate asset distributable to its

shareholders. See City of Klamath Falls v. Bell, 7 Or. App. 330, 341-42 (1972)(sole shareholders

of dissolved corporation entitled to corporate asset of possibility of reverter of land). Accordingly,

Garris had the right, and standing, to pursue an action for breach of the Garris Sublease Agreement. 

Upon his death, that right passed to Garris’s estate and Mrs. Garris, as the personal representative

of his estate, may pursue that right. Defendants’ motion to dismiss Garris’s claim for breach of the

Sublease Agreement for lack of standing is denied.

2. Oral Contract

Like Schulz, Garris argues hislong-termrelationshipwithDefendants established Defendants

would continue such relationship in the absence of good cause or malfeasance. The termination of

the Garris Sublease allegedly violated this agreement. To recover on a claim for breach of contract,

Oregon10courts require the existence of a contract, the performance of the terms of the contract by

the plaintiff, the failure of defendant to perform its contractual obligations, and resulting damages. 

Slover v. Oregon State Bd. of Clinical Social Workers, 144 Or. App. 565, 570 (1996). Where a

written contract exists, the Oregon courts consider extrinsic evidence, such as evidence of the

circumstances and conduct of the parties during the life of the agreement, only when the written

contract provisions are ambiguous. Harris v. Warren Family Props., LLC, 207 Or. App. 732, 738

(2006). 

9This assumption is supported by the representation in Garris’s opposition brief that Garris

was the sole shareholder of Garris PC.

10As the premises covered by the Garris Sublease is in Oregon, Oregon law governs claims

relating to the Garris Sublease, according to the express provisions of the Garris Sublease.

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Like Schulz, Garris has failed to offer evidence of any representation or promise by

Defendants to Garris based solely on their relationship or course of conduct. Garris’s reliance on

a promise to assist in the sale of his practice based on Defendants’ knowledge of purchases and sales

of other optometrists is equally misplaced. Garris fails to present evidence Defendants assisted in,

or even had knowledge of, such activity. Justine stated she told Rockwood she was trying to find

a buyer for Garris’s practice. She did not indicate she requested, or that Defendants offered,

assistance in finding such buyer. 

Garris also relies on a statement made by Constancio in May 2013 that the sublease would

be renewed, Garris PC had nothing to worry about, and everything was fine. The sublease was, in

fact, renewed in June 2013 as promised. Constancio did not represent the sublease would be

renewed every year in the absence of good cause or malfeasance. To the contrary, Garris was

advised on at least two occasions his performance could affect Defendants’ renewal of his sublease,

clearly putting Garris on notice the renewal of his sublease was not guaranteed. Additionally,

Garris’s concern about the renewal of his lease in May 2013 is evidence he was aware he was not

assured of a continuing relationship with Defendants. Garris has failed to present any evidence of

an enforceable agreement other than the Garris Sublease.

3. Garris Sublease

The Garris Sublease specifically allows either party to cancel the Garris Sublease for any

reason with thirty days’ written notice. Defendants contend they terminated the Garris Sublease in

November 2013 at the request, or at least with the consent, of Garris. Garris presents evidence he

never requested, or agreed to, the termination of the Garris Sublease but, rather, sought Defendants’

assistance in finding a buyer for Garris’s practice, creating a genuine issue of fact on whether the

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Garris Sublease was terminated bymutual consent. This genuine issue of fact is fatal to Defendants’

motion for summary judgment on Plaintiffs’ breach of contract claim based on the termination of

the Garris Sublease before the end of its one-year term.

Additionally, while Defendants represent they agreed to waive Garris’s obligation to provide

thirty days’ written notice of his desire to terminate the Garris Sublease, there is no evidence, or even

suggestion, Garris waived Defendants’ obligation to provide such notice. Defendants provided

written notice of its intent to terminate the Garris Sublease in a letter dated October 23, 2013. 

Assuming Garris received the notice on October 28, 2013, three business days after it was mailed,

Defendants’ termination of the Garris Sublease was effective November 27, 2013, under the terms

of the Garris Sublease. Defendants’ termination of the Garris Sublease, effective November 1, 2013,

was premature by twenty-seven days and, in the absence of mutual agreement to terminate the Garris

Sublease, appears to be a breach of the terms of the lease. Defendants are not entitled to summary

judgment on Garris’s claim for breach of the Garris Sublease.

II. Intentional Interference with Economic Relations

Plaintiffs allege Defendants intentionally and improperly interfered in their relationship with

their customers by terminating their respective sublease agreements based on their age and illness. 

They additionally allege interference in Schulz’s, and others’ attempts to purchase Garris’s practice. 

Defendants argue they were within their legal rights to not renew or terminate the subleases and

Plaintiffs have failed to establish the requisite improper purpose or means element of a intentional

interference with economic relations claim (“Interference Claim”).

A. Schulz

The prima facie elements of an Interference Claim in Washington are: 

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(1) the existence of a valid contractual relationship or business expectancy; (2) that

defendants had knowledge of that relationship; (3) an intentional interference

inducing or causing a breach or termination of the relationship or expectancy; (4) that

defendants interfered for an improper purpose or used improper means; and (6)

resultant damage.

Leingang v. Pierce Cnty. Med. Bureau, Inc., 131 Wash.2d 133, 157 (1997). The exercise, in good

faith, of one’s legal interest is not improper interference. Schmerer v. Darcy, 80 Wash. App. 499, 

502 (1996) (citing RESTATEMENT (SECOND) OF TORTS § 733 (1997)).

Defendants had the legal right to not renew the Schulz Sublease and to decline Schulz’s

attempts to assume the Garris Sublease. Consequently, Defendants did not act with improper means

in doing so. While Schulz alleges Defendants acted with the improper purpose age discrimination,

he has presented no evidence to support this allegation, such as statements from Defendants that they

intended to get rid of all of the older optometrists or evidence Defendants replaced Schulz with a

substantially younger optometrist. 

In his opposition briefing, Schulz argues for the first time HVHC interfered in his contractual

relationship with Visionary by directing Visionary to not renew the Schulz Sublease. Visionary’s

contractual relationship with Schulz ended on March 31, 2012, with the scheduled termination of

the Schulz Sublease. Visionary was under no obligation to continue its relationship with Schulz. 

Consequently, any direction from HVHC to Visionary to not renew the sublease may have prevented

Schulz from entering into a new contractual relationship with Visionary, but did not affect any

relationship in existence at that time. HVHC had the legal right to recommend, or direct, Visionary

to not renew the Schulz Sublease and Schulz failed to present evidence supporting his claim the

recommendation was based on Schulz’s age. Defendants are entitled to summary judgment on

Schulz’s Interference Claim. 

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B. Garrris

To state an Interference Claim under Oregon law, a plaintiff must allege:

(1) the existence of a professional or business relationship; (2) intentional

interference with that relationship; (3) by a third party; (4) accomplished through

improper means or for an improper purpose; (5) a causal effect between the

interference and damage to the economic relations; and (6) damages.

Nw. Natural Gas Co. v. Chase Gardens, Inc., 328 Or. 487, 497 (1999). The interference must be

wrongful “bysome measure beyond the fact of the interference itself. Defendant’s liabilitymayarise

from improper motives or from the use of improper means. They may be wrongful by reason of a

statute or other regulation, or a recognized rule of common law, or perhaps an established standard

of a trade or profession.” Top Serv. Body Shop v. Allstate Ins. Co., 283 Or. 201, 209 (1978). As a

matter of law, enforcement of a contractual right will not support an Interference Claim. Uptown

Heights Assocs. Ltd. P’ship v. Seafirst Corp., 320 Or. 651-52 (1995) (“When a party invokes an

express contractual remedy in circumstances specified in the written contract – conduct that reflects,

by definition, the reasonable expectations of the parties – that party cannot be liable for intentional

interference with economic relations based solely on that party’s reason for invoking the express

contractual remedy.”)

Defendants had the right to terminate the Garris Sublease with thirty days notice. 

Defendants’ failure to give Garris the requisite notice arguably satisfies the requirement of improper

means. However, at the time the Garris Sublease was terminated, Garris was looking for an

optometrist to buy his practice and clearly had made the decision to not continue his relationships

with his patients. Consequently, Defendants’ failure to give proper notice either did not interfere

with Garris’s relationship with his patients or did not result in any damage. 

As noted above, Defendants had the legal right to refuse to allow Schulz to assume Garris’s

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Sublease. Garris has failed to present evidence any other optometrist expressed an interest in

purchasing Garris’s practice or that Defendants refused to allow such purchase. Defendants are

entitled to summary judgment on Garris’s Interference Claim as well. 

III. Implied Duty of Good Faith and Fair Dealing

Plaintiffs allege they performed all of their obligations under their agreements with

Defendants, while Defendants breached their promises, representations, and inducements to

Plaintiffs by terminating the respective subleases without cause and blocking the sale of Garris’s

practice to Schulz. Plaintiffs again rely on alleged oral agreements separate from the subleases. The

court has found Plaintiffs failed to present evidence such agreements exist. Consequently, Plaintiffs’

claim for breach of the duty of good faith and fair dealing must be considered only with regard to

the Schulz and Garris Subleases.

A. Schulz

Washington law recognizes an implied duty of good faith and fair dealing in every contract

which allows the parties to reap the full benefits of performance by ensuring cooperation. Badgett

v. Sec. State. Bank, 116 Wash. 2d 563, 569 (1991). The implied duty is not “free-floating” but

“exists only in relation to performance of a specific contract term.” Id. at 570. If there is no breach

of a specific term in the contract, there is no breach of the duty of good faith and fair dealing. Id. 

In other words, “[i]f there is no contractual duty, there is nothing that must be performed in good

faith.” Rekhter v. Dep’t of Soc. & Health Servs., 180 Wash. 2d 102, 113 (2014). A party does not

breach the duty of good faith by simply standing on its contractual rights. Badgett, 116 Wash. 2d

at 570.

The Schulz Sublease expired by its terms on March 31, 2012. It did not obligate Defendants

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to enter into a new sublease. To the extent Schulz’s duty of good faith and fair dealing is based on

the terms of the Schulz Sublease, there was no breach of the contract so there can be no breach of

the duty. Defendants are entitled to summary judgment on Schulz’s claim for breach of the duty of

good faith and fair dealing.

B. Garris

The implied, contractual duty of good faith and fair dealing is a well-recognized part of

Oregon common law. Best v. United States Nat’l Bank of Oregon, 303 Or. 557, 561 (1987). This

duty requires that the parties to a contract not act in a way that destroys or injures the rights of the

other, Perkins v. Standard Oil Co, 235 Or. 7, 16 (1963), or that frustrates or defeats the object of the

contract. Warnock v. Bonneville Gen. Agency, Inc., 271 Or. 634, 639 (1975). The contractual good

faith doctrine “emphasizes faithfulness to an agreed common purpose” and is designed to “effectuate

the reasonable contractual expectations of the parties.” Best, 303 Or. at 562-3 (citations omitted.) 

But, “it is only the objectively reasonable expectations of parties that will be examined in

determining whether the obligation of good faith has been met.” Tolbert v. First Nat’l Bank of

Oregon, 312 Or. 485, 494 (1991)(footnote omitted). “The obligation of good faith does not vary the

substantive terms of the bargain . . . , nor does it provide a remedy for an unpleasantly motivated act

that is expressly permitted by contract . . . .” United States Nat’l Bank of Oregon v. Boge, 311 Or.

550, 567 (1995). The duty of good faith is implied “only if the parties have not agreed to an express

term that governs the issue.” Oregon Univ. Sys. v. Oregon Pub. Employees Union, 185 Or. App.

506, 511 (2002).

The Garris Sublease explicitly provides either partymay terminate it with thirty days’ notice. 

Assuming Garris did not consent to the termination of the Garris Sublease; there is a question of fact

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whether Defendants breached the terms of the Garris Sublease by providing less than thirty days’

notice. The parties agreed to express terms covering the parties’ mutual right to terminate the Garris

Sublease, thereby preventing application of a good faith duty to such termination. Defendants are

entitled to summary judgment on Garris’s claim for breach of the duty of good faith and fair dealing.

IV. Limitation of Liability Provision

The only claim to survive Defendants’ motion for summary judgment is Garris’s claim for

breach of the Garris Sublease. Garris seeks general damages in the amount of $800,000 on this

claim. Section 7.13 limits damages recoverable under the Garris Sublease, regardless of the theory

of recovery, to an amount not exceeding the total amount paid or payable by Garris to Defendants

pursuant to the Garris Sublease. Defendants assert Garris is, at the most, entitled to recover the

$9,000 paid in rent for the months of June and July 2013. As this amount does not meet the $75,000

minimum required for diversity jurisdiction, Defendants contend this court lacks jurisdiction over

this action. Garris argues the limitation of damages provision is unconscionable and unenforceable. 

Federal district courts are empowered to hear only those cases that are within the judicial

power conferred by the United States Constitution and those that fall within the area of jurisdiction

granted byCongress. Richardson v. United States, 943 F.2d 1107, 1112-13 (9th Cir. 1991). Original

jurisdiction must be based either on a claim involving the Constitution, laws, or treaties of the United

States, or on diversity of citizenship, which applies to suits totaling more than $75,000 in

controversy between citizens of different states. 28 U.S.C. §§ 1331, 1332 (2015).

Where, as here, the plaintiff files the action in federal court, “the amount in controversy is

determined from the face of the pleadings” when the action is commenced. Crum v. Circus Circus

Enters., 231 F.3d 1129, 1131 (9th Cir. 2000). The courts apply a “legal certainty” standard when

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considering whether the plaintiff has, in good faith, alleged damages that exceed the jurisdictional

amount. Id. Under the “legal certainty standard,” it must be obvious upon the face of the complaint

that the suit cannot involve the necessary amount. Geographic Expeditions, Inc. v. Estate of Lhotka,

599 F.3d 1102, 1106 (9th Cir. 2010) St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283,

292 (1938). Once the court has diversity jurisdiction, subsequent events generally do not affect that 

jurisdiction. The “long standing principle” of St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S.

283 (1938), establishes that:

[a] defect in diversity jurisdiction exists, if at all, only when a case is filed in federal

court or removed to federal court from state court. If a jurisdictional defect in

existence when a suit is filed remains uncured, then any judgment in the case must

be vacated and the case must be dismissed. But events occurring subsequent to the

filing or removal of a case – whether one party changes its residence, thereby

destroying complete diversity, or the amount in controversy drops below the

jurisdictional amount – are not “defects” in the court’s jurisdiction; these subsequent

events do not affect a federal court’s diversity jurisdiction at all.

Grinnell Mutual Reinsurance Co. v. Shierk, 121 F.3d 1144, 1117 (7th Cir. 1997) (discussing the

compatibility of Caterpillar Inc. v. Lewis, 519 U.S. 61 (1996), with St. Paul.). 

Plaintiffs did not allege specific damage amounts in their original complaint but sought

damages in amounts to be proven at trial for loss of income, livelihood, standing in the community,

employment opportunities, depletion of savings and retirement accounts, stress, anxiety, and

emotional distress. Plaintiffs did allege annual salaries at the time of termination of their respective

subleases of $85,000 for Schulz and $80,000 for Garris. Assuming, at a minimum, Defendants

wrongfully refused to renew the Schulz Sublease for another one-year term, Schulz’s lost income

claim based on the allegations of the complaint would be valued at $85,000, satisfying the $75,000

amount in controversy at the time the complaint was filed. The amount in controversy was more

definitively satisfied when a month later, and before Defendants filed their answer, Plaintiffs

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amended their complaint to allege damages on the breach of contract claims of $425,000 for Schulz

and $800,000 for Garris.

The requirements for diversity jurisdiction were satisfied when Plaintiffs commenced this

action. A subsequent decrease in the amount in controversy below the $75,000 minimum would

have no effect on this court’s jurisdiction. Even if the court were to find the limitation of liability

clause limited Garris’s damages to $9,000, subject matter jurisdiction still would exist. Defendants’

motion for summary judgment based on the limitation of damages provision is denied.

V. HVHC as Defendant

The sole remaining claim is Garris’s claim for breach of the Garris Sublease. HVHC was

not a party to the Garris Sublease, had no obligations under the Garris Sublease, and is not liable for

Visionary’s alleged breach of the Sublease. Defendants’ motion for dismissal of HVHC from this

action is granted.

Conclusion

Defendants’ motion (19) for summary judgment is DENIED with regard to Garris’s claim

for breach of the Garris Sublease and GRANTED in all other respects.

DATED this 1st day of December, 2015.

 /s/ John V. Acosta 

 JOHN V. ACOSTA

United States Magistrate Judge 

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