Opinion ID: 1121421
Heading Depth: 1
Heading Rank: 1

Heading: the individual partners' contract claims

Text: The parties agree that this court's decision in Johnston v. The Oregon Bank, supra , is on point as to whether the individual partners stated contract claims against Bank. Plaintiffs argue in particular that the Court of Appeals' resolution of the case at hand is irreconcilable with its earlier view of the Johnston case as expressed in Van Petten v. The Oregon Bank, 42 Or.App. 367, 600 P.2d 507, rev. den. 288 Or. 173 (1979). In Johnston, the plaintiff, an individual, was the principal shareholder in a corporation. The corporation, in turn, was a general partner of the Van Petten Lumber Company, a partnership. [11] The plaintiff guaranteed a loan made by the defendant bank to the partnership and later claimed that the defendant's disposal of certain loan collateral in a commercially unreasonable manner effected a release from the guaranty. Johnston v. The Oregon Bank, supra, 285 Or. at 425, 591 P.2d 746. In Johnston, as in the present case, one of the claims for damages was that the defendant bank's actions drove the partnership into bankruptcy. The plaintiff claimed damages based on injury to his credit and business standing, destroyed value of his interest in the partnership, lost wages that he would have drawn from the partnership, legal expenses, and liability on guaranties made to other creditors of the partnership. Id. at 426, 591 P.2d 746. This court held that the bank did not have an obligation to the plaintiff, stating: The damages would have occurred to plaintiff just the same in the absence of any guaranty. The damage to plaintiff resulted from plaintiff's interest in the lumber company as well as his contractual relations with other creditors and from the lumber company's bankruptcy and inability to pay its obligations, which bankruptcy was, in turn, caused by the bank's breach of its agreement with the lumber company. Plaintiff's injury either was derivative through his interest in the lumber company or was the result of business relations with others for the lumber company's benefit. It was not the result of his guaranty to the bank. Id. at 427, 591 P.2d 746. The Johnston court, however, also indicated its approval of the statement that a guaranty of a loan to a corporation can be the basis for a personal cause of action against the lender, but only under circumstances different from the present case. Id. at 428 n. 1, 591 P.2d 746. Relying on that footnote, the Court of Appeals in Van Petten concluded that the plaintiff corporation that guaranteed a loan to the partnership did state a claim against the bank under the particular facts of that case. Van Petten v. The Oregon Bank, supra, 42 Or.App. at 372-73, 600 P.2d 507. In this case, plaintiffs argue that the individual partners are more akin to the corporation in Van Petten than to the shareholder in Johnston and that they have stated contract claims. We do not find it necessary to determine whether Van Petten was correctly decided in order to resolve the present case. From the above-quoted passage in Johnston, it is apparent that the key issue is not whether the claim is by a corporation, a shareholder, or a partner, but whether the claimed damages were derivative of, rather than distinct from, a breach of the agreement with the borrowing corporation or partnership. See Weiss v. Northwest Accept. Corp., 274 Or. 343, 350, 546 P.2d 1065 (1976) (shareholder who guaranteed loan stated no claim against the defendant corporation where injury suffered by shareholder was the same as that suffered by other creditors of the corporation). As noted, the trial court gave plaintiffs an opportunity to plead damages independent from the damages to the partnership, but later granted Bank's ORCP 21 A(8) motion to dismiss the claims of the individuals, holding: Plaintiff alleges U.S. Bank breached [the loan agreement] and caused the partnership to become bankrupt which, as usually happens, also adversely affected the general partners individually.     The Court finds the individual Plaintiffs' damages are derivative of the damages to the partnership   . We agree with the trial court's conclusion that the damages alleged by the individuals are derivative of the damages to the partnership. Those damages were the result of plaintiffs' interest in the partnership. According to the ORCP 67 B judgment, the effect of the trial court's ruling was to substitute the partnership for the individual plaintiffs as the real party in interest in the contract claims from the fourth amended complaint. The partnership is the real party in interest in this case and no individual partner has any separate legally cognizable interest. Therefore, the viability of the contract claims is unaffected, because they were asserted only by the partnership in the fifth amended complaint. Consequently, the next issue to be considered is whether the damages asserted by the partnership should be limited to $451,000.