Case Name: EMMERT, Appellant, v. O'BRIEN et al, Respondents
Court: Oregon Court of Appeals
Jurisdiction: Oregon
Decision Date: 1985-03-20
Citations: 72 Or. App. 752
Docket Number: 82-0388C; CA A33809
Parties: EMMERT, Appellant, v. O’BRIEN et al, Respondents.
Judges: Before Buttler, Presiding Judge, Joseph, Chief Judge, and Rossman, Judge.
Reporter: Oregon Reports, Court of Appeals
Volume: 72
Pages: 752–759

Head Matter:
Submitted on record and briefs December 28, 1984,
reversed and remanded March 20, 1985
EMMERT, Appellant, v. O’BRIEN et al, Respondents.
(82-0388C; CA A33809)
697 P2d 222
Timothy J. Murphy and Gary M. Bullock, Portland, filed the briefs for appellant.
E. Andrew Jordan and Bolliger, Hamptom & Tarlow, Portland, filed the brief for respondents Kevin and Patricia O’Brien.
Joel E. Grayson, Portland, filed the brief for respondents Jerry Eastman and Professionals “100”, Inc.
Before Buttler, Presiding Judge, Joseph, Chief Judge, and Rossman, Judge.
ROSSMAN, J.
Buttler, P. J., dissenting.

Opinion:
ROSSMAN, J.
This is an action for damages for breach of contract against defendants O'Brien and for fraud and misrepresentation against the O'Briens and the other defendants arising out of an earnest money agreement for the sale of real property. On defendants' motions, plaintiffs third, fourth and fifth amended complaints were dismissed, the last without leave to amend, for failing to state a claim on which relief can be granted. ORCP 21A.(8). A previous attempt to appeal the orders granting those motions was dismissed for want of an appealable judgment. Emmert v. O'Brien, 70 Or App 180, 688 P2d 438 (1984). Judgment for defendants was then filed on October 29,1984, and from that judgment plaintiff appeals. It now is submitted for our consideration on the basis of the previous briefs and oral arguments.
The only issue presented by this appeal is whether plaintiffs third, fourth or fifth amended complaints stated a claim for relief; the facts alleged in the complaint are considered true for the purpose of deciding that issue. See Musgrave et ux v. Lucas et ux, 193 Or 401, 408, 238 P2d 780 (1951). Although the parties base their arguments on facts contained in the numerous affidavits and exhibits which are included in the record, we consider only the facts alleged in the complaints when reviewing an order granting a motion to dismiss for failure to state a claim. We conclude that plaintiff has stated a claim for relief and reverse.
The earnest money agreement and an addendum dated September 20, 1981, both incorporated by reference in the complaints, provide that, for $18,000, defendants O'Brien would convey a lot "buildable now for duplex" and "with no deed restrictions" to plaintiff. At that time, the lot was not "buildable now for duplex" and was encumbered by deed restrictions. On October 5,1981, the parties executed a second addendum, also incorporated by reference in the complaint, which provides, in part:
"II. Seller to obtain conditional use permit as required by city ordinance to use said lot as a duplex site. Upon city approval of site as a duplex lot, purchaser to pay balance of purchase price in the amount of $16,500."
A conditional use permit was approved by the city but only conditionally. Plaintiffs fourth amended complaint alleges that the quoted provision obligated defendant to meet those conditions and alleges further that:
"Defendants O'Brien refused to procure the site drainage plan required by the city, and thereafter, through their attorney, on or about January 13, 1982, directed the escrow company that was to close the transaction, to not close the transaction, and directed the City of Tigard to not allow plaintiff to assist in obtaining the site drainage plan so that the real property could in fact be used conditionally as duplex property."
The O'Briens argue that they did not promise to obtain the conditional use permit but, rather, that obtaining the permit was a condition precedent to the fulfillment of the contract. They point out that, as a matter of fact, they did obtain a permit but they claim that they had no obligation to meet the conditions attached by the city to that permit. Thus the issue, as framed by the parties, is whether obtaining the permit was a promise or a condition and, if a promise, whether the O'Briens' duty was performed by securing a conditional use permit that was subject to special conditions.
Defendants make much of the fact that the caption "Special Conditions" heads the space on the standard form agreement where a reference to the disputed provisions was written. It is elementary that printed captions do not control the handwritten expression of the parties' agreement, ORS 42.270, and, if we look to the language used, we do not find conditions being expressed. To the contrary, the first addendum, after a printed recitation stating "BUYER(S) AND SELLER(S) HEREBY AGREE TO THE FOLLOWING" reads:
"No other improvements are needed except half street and curbs on 104th only. Sewer, water & elec to be in street in front of property, no further extensions of utility are needed. Approval of elevations of building and site to be approved by building dept. No deed restrictions. (Note) Sales associate is related to purchaser. (Note) Add to earnest money dated 9/18/81 [sic] purchaser will receive a $500.00 cash discount at closing from seller for cashing seller out at closing. Both seller and purchaser have agreed to this."
Provisions in the second addendum include: "Seller agrees to allow purchaser to perform [excavation]" and "[u]pon execution of this document, purchaser to place 1000.00 in cash in escrow."
We do not think that those provisions describe conditions but, even if they do, plaintiffs fourth amended complaint states a claim for breach of contract. If, as alleged, the O'Briens promised to "obtain and perform any conditions necessary to a conditional use permit," then proof of their failure to do so would entitle plaintiff to damages for breach of contract. If, on the other hand, obtaining the permit was a condition precedent, then the O'Briens had an implied obligation to refrain from frustrating its occurrence, see generally Perkins v. Standard Oil Co., 235 Or 7, 16, 383 P2d 107, 383 P2d 1002 (1963), and may have had an affirmative obligation to use reasonable efforts to bring it about. See Western Hills v. Pfau, 265 Or 137, 142, 508 P2d 201 (1973); Anaheim Co. v. Holcombe, 246 Or 541, 547, 426 P2d 743 (1967). One party or the other had a duty to use reasonable efforts to satisfy the conditions of the conditional use permits; plaintiff alleges that it was the O'Briens' duty. Even assuming that it was plaintiff s duty to meet the conditions, the allegation that the O'Briens frustrated plaintiffs effort to do so, if true, is actionable. Perkins v. Standard Oil Co., supra. Accordingly, that part of the order dismissing plaintiffs fourth amended complaint alleging breach of contract by the O'Briens must be reversed.
Defendants challenge both the claims of misrepresentation and fraud primarily on three grounds. First, they contend that the alleged misrepresentations were not representations at all, but were conditions precedent included in the earnest money agreement solely for plaintiff s protection. Plaintiffs fifth amended complaint alleges:
"Plaintiff informed defendants O'Briens and/or Professionals '100' and Eastman that he intended to use the property as a duplex site and that that was the only reason he entered into the earnest money agreement.
"Defendants O'Briens and their agents, defendants Professionals and Eastman, represented to plaintiff, orally and in writing, the following:
"a) That the lot, which plaintiff was purchasing at the time the earnest money agreement was signed, was buildable for use as a duplex property;
"b) There was [sic] no deed restrictions which applied to the property,
"which representations Defendants knew or should have known to be false."
This allegation refers to both oral and written representations that the lot was buildable as a duplex and had no deed restrictions. Because the allegation is not limited to the language of the earnest money agreement, it matters not whether that language amounts to a representation of fact or only describes a condition. If there is actual fraud, liability for that fraud may not be avoided by the simple expedient of including in the contract as conditions precedent the very misrepresentations that induced the other to enter into the agreement in the first place.
Second, defendants contend that it is apparent from the face of the complaint that plaintiff was aware that the lot was not buildable as a duplex when the second addendum to the earnest money agreement was executed and, therefore, plaintiffs allegations of reliance, right to rely and ignorance of the falsity of the representations cannot be true. It is true that one may not reasonably rely on representations one knows to be false, but plaintiff alleged that he was induced to enter the original earnest money agreement by the misrepresentations before he was aware of their falsity. Defendants do not suggest that plaintiff waived his right to recover damages by agreeing to the second addendum after discovering the misrepresentation as to buildability or suggest any other reason why plaintiffs subsequent discovery of the truth should bar a claim for fraud for damages suffered before that discovery. In addition, plaintiff alleges that he did not discover the deed restrictions until some time after the second addendum was executed. The fact that the deed restrictions may have been a matter of record is no defense. See generally Heverly v. Kirkendall, 257 Or 232, 237, 478 P2d 381 (1970).
Finally, defendants contend that plaintiffs alleged damages were not caused by the misrepresentations. It does appear that some of the damages alleged are not related to the misrepresentations, and others are not artfully pled. Although we recognize that the deed restrictions may have frustrated plaintiffs plans for the property in any event, we think that he is entitled to have an opportunity to prove that he was damaged by being induced to enter the earnest money agreement, and we cannot say, as a matter of law, that none of the alleged damages was caused by the misrepresentations. Because plaintiffs fifth amended complaint alleged the elements necessary to state a claim for misrepresentation and fraud, at least with respect to the original earnest money agreement, it was error to dismiss those claims. See Chaney v. Fields Chevrolet, 264 Or 21, 27-28, 503 P2d 1239 (1972).
Reversed and remanded.
Defendants Eastman and Professionals "100", Inc., are not parties to the breach of contract claim.
Plaintiffs third and fourth amended complaints allege that "[t]he City of Tigard approved the Conditional Use Permit, subject to certain conditions ." The fifth amended complaint does not contain a breach of contract claim.