Opinion ID: 835945
Heading Depth: 1
Heading Rank: 3

Heading: unlawful trade practices act claim

Text: Plaintiffs alleged that defendants willfully represented to them that defendants' services as buyer's agents had qualities of competence and diligence that [the services] did not have. According to plaintiffs, when Zobel told them that he would act as a buyer's agent on their behalf and gave them the disclosure form listing the fiduciary duties of a buyer's agent, he represented to them that he would fulfill that fiduciary duty competently and diligently. Plaintiffs assert that Zobel pressured them to close on the purchase of the property in spite of problems with the property and plaintiffs' concerns about it, and that he otherwise failed to act competently and diligently, as summarized above. Plaintiffs argue that defendants violated the UTPA by willfully representing that their services would have the qualities of diligence and competence of a buyer's agent when the services did not, in fact, have those qualities. Defendants respond, first, that ORS 646.612(1) prevents the statutory disclosure form from providing the basis for an action under the UTPA because that statute provides that the UTPA does not apply to [c]onduct in compliance with    a statute administered by a federal, state or local governmental agency. According to defendants, because ORS 696.820 (1997) required them to provide plaintiffs with the disclosure form, its contents cannot support a UTPA claim. Second, defendants argue that, even if ORS 646.612(1) does not prevent the statutory disclosure form from providing the basis for a UTPA claim, plaintiffs failed to introduce any evidence that defendants willfully made any misrepresentations about the qualities of the services that they provided plaintiffs. According to defendants, the only evidence of wrongdoing in this case is evidence that Zobel breached his fiduciary duty as a buyer's agent. [3] Defendants contend that evidence that Zobel breached a duty that he owed to plaintiffs cannot, standing alone, support a UTPA claim. The provision of the UTPA at issue here is ORS 646.608(1)(e), which provides, in part: A person engages in an unlawful practice when in the course of the person's business, vocation or occupation the person does any of the following:      (e) Represents that    services have    qualities that they do not have or that a person has a    qualification    that the person does not have. To prevail on a claim under that paragraph, a plaintiff must prove that a defendant willfully represented that the defendant had qualifications that the defendant did not have or that the defendant's services had qualities that those services did not have. As noted above, plaintiffs assert that the actionable representations in this case were (1) Zobel's statement that he would act as plaintiffs' buyer's agent, and (2) the statutory disclosure form. For the reasons discussed below, we conclude that the trial court erred in denying defendants' motion for a directed verdict and submitting the UTPA claim to the jury. First, we address defendants' argument that ORS 646.612(1) prevents the statutory disclosure form from providing the basis for a UTPA claim under ORS 646.608. The Court of Appeals agreed with defendants on that issue. Rathgeber, 176 Or.App. at 141, 30 P.3d 1200. Plaintiffs and amici curiae State of Oregon, Oregon Consumer League, and Oregon Trial Lawyers Association argue that the Court of Appeals misconstrued that statute. As noted, that statute provides that [c]onduct in compliance with    a [state] statute cannot violate ORS 646.608. Plaintiffs and amici argue that, although ORS 696.820 (1997) required defendants to provide plaintiffs with the disclosure form, the act of providing the form is not the conduct that plaintiffs allege violated the UTPA. Instead, the UTPA violation that plaintiffs alleged is based on the representation that Zobel would fulfill certain fiduciary duties identified on the statutory disclosure form and Zobel's subsequent failure to do so. That conduct, plaintiffs assert, would permit the inference that Zobel never intended to provide services with the qualities that he represented that those services would have. We agree with plaintiffs and amici that ORS 646.612(1) does not bar plaintiffs' claim. No statute required Zobel to breach his fiduciary duty to plaintiffs or to act in any manner that was inconsistent with that duty. The conduct that plaintiffs contend gives rise to this cause of action, therefore, was not [c]onduct in compliance with    a [state] statute[,] and ORS 646.612(1) does not preclude plaintiffs from relying on the statutory disclosure form to support their UTPA claim. We now turn to the question whether the trial court erred in denying defendants' motion for a directed verdict. At the outset, we note that [t]his court reviews the denial of motion for a directed verdict for any evidence to support the verdict in plaintiff's favor.    This court cannot set aside a jury's verdict unless there was no evidence from which the jury could have found the facts necessary to establish the elements of plaintiff's cause of action. Woodbury v. CH2M Hill, Inc., 335 Or. 154, 159, 61 P.3d 918 (2003). Like a trial court considering a motion for a directed verdict, we do not weigh the evidence but, rather, consider all the evidence, including reasonable inferences drawn therefrom, in the light most favorable to the party opposing the motion. Bolt v. Influence, Inc., 333 Or. 572, 578, 43 P.3d 425 (2002). If plaintiffs' evidence, including the reasonable inferences that can be drawn from that evidence, would permit a jury to find facts establishing the required elements of plaintiffs' UTPA claim, then we must affirm the verdict. We now consider the elements of plaintiffs' UTPA claim and the evidence adduced to support them. As noted, ORS 646.608(1)(e) makes unlawful a representation that services have    qualities    or that a person has a    qualification that they do not, in fact, have. The Court of Appeals analyzed plaintiffs' claim as though it were based on an alleged representation that Zobel had a qualification that, in fact, he did not have. Rathgeber, 176 Or.App. at 140, 30 P.3d 1200. However, the allegations in the amended complaint, the jury instructions, and the judge's colloquy with counsel regarding defendants' motion for a directed verdict all demonstrate that plaintiffs' claim was based on defendants' alleged representation that defendants' services had qualities that they did not have. The jury instruction on that issue stated: To recover, the plaintiffs must prove the following three elements by a preponderance of the evidence concerning their claim of unlawful trade practice:      Second, that the defendants willfully engaged in the unlawful practice, in that the defendants violated the [UTPA] by willfully representing to plaintiffs that defendants' services as buyer's agents had qualities of competency and diligence that they did not have. (Emphasis added.) The amended complaint alleged that defendants violated the provisions of the [UTPA] by willfully representing to plaintiffs that their services as buyer's agents had qualities of competence and diligence that they did not have.  (Emphasis added.) We conclude that the record reflects that the trial court sent the allegation to the jury as that allegation was presented in plaintiffs' amended complaint. As noted, plaintiffs argue that the statutory disclosure form and Zobel's agreement to act as plaintiffs' buyer's agent, by implying that Zobel would act in compliance with his fiduciary duty as a buyer's agent, represented to plaintiffs that defendants' services had qualities of competence and diligence that those services did not have. [4] An actionable representation under the UTPA may be express or implied. See ORS 646.608(2) (A representation under [646.608(1) ] may be any manifestation of any assertion by words or conduct, including, but not limited to, a failure to disclose a fact.). Plaintiffs' complaint thus provided a basis for them to introduce evidence that the defendants' representations violated the UTPA. Plaintiffs argue that they presented evidence at trial that the services Zobel provided to them lacked the qualities of competence and diligence. The problem with plaintiffs' argument is that defendants' representations violated the UTPA only if, at the time that they were made, defendants knew or should have known that their services did not have the qualities defendants represented them to have. ORS 646.638(1) establishes a party's right to bring an action for damages for a UTPA violation: [A]ny person who suffers any ascertainable loss of money or property, real or personal, as a result of willful use or employment by another person of a method, act or practice declared unlawful by ORS 646.608 or 646.648, may bring an individual action in an appropriate court to recover actual damages or $200, whichever is greater. (Emphasis added.) Thus, a private party who seeks to recover damages for a UTPA violation must plead and prove a willful violation of the statute by the defendant. A willful violation occurs when the person committing the violation knew or should have known that the conduct of the person was a violation. ORS 646.605(10). [5] Here, however, plaintiffs acknowledged that they had not submitted evidence that, at the time of Zobel's agreement to act as plaintiffs' buyer's agent, he knew or should have known that he would not perform his duties as a buyer's agent competently and diligently. That is, plaintiffs introduced evidence that Zobel breached his fiduciary duty by failing to provide services that had the qualities of competence and diligence, but they introduced no evidence that he knew or should have known that he would do so at the time that he made representations to plaintiffs regarding the qualities of his services. Amicus State of Oregon argues that the evidence of defendants' breach of fiduciary duty shows conduct so far out of compliance with that duty that the jury could infer that, at the time that Zobel represented that he would act as plaintiffs' buyer's agent and would provide the attendant quality of services, he did not intend to provide services of that quality. The state further argues that a single act of misconduct can be sufficient to support the finding of a UTPA violation. We agree that a single act of misconduct, in certain circumstances, can be sufficient to support a finding that an actor did not intend to act in compliance with a promise made. However, plaintiffs in this case twice acknowledged to the jury that the misconduct here would not support the conclusion that Zobel knew or should have known that he would breach his fiduciary duty at the time of the representations alleged in this case. [6] Given those acknowledgments, plaintiffs were not entitled to have the jury consider their claim of a willful violation of the UTPA. For the foregoing reasons, we conclude that plaintiffs failed to establish that Zobel willfully made a representation that would allow them to recover damages under the UTPA. The trial court, therefore, erred in denying defendants' motion for a directed verdict on plaintiffs' UTPA claim. Because we conclude that plaintiffs cannot succeed in their UTPA claim, we do not address the question whether emotional distress damages are recoverable under that statute. The trial court's award of attorney fees was based on the judgment for a violation of the UTPA. Because we conclude that plaintiffs failed to prove such a violation, we also affirm the Court of Appeals' reversal of the award of attorney fees to plaintiffs.