Court Opinion

ID: 9585968
Source: CourtListenerOpinion
Date Created: 2023-08-21 23:05:45.558516+00
Date Added: 2024-06-11T17:24:17.742400
License: Public Domain

*136EDMONDS J.,
concurring.
Although I agree with the majority’s result, I write separately to respond more fully to defendant’s argument. This matter came before the trial court on the motion of the state of Oregon on behalf of the Oregon State Lottery for summary judgment pursuant to ORCP 47 C. The state argued in support of its motion and argues to us that because it issued on February 11, 1992, an administrative order terminating its obligations under the parties’ lease agreement, plaintiffs recourse is only under the other than a contested case procedure of the Administrative Procedures Act (APA), ORS 183.484. In support of that argument, one of the propositions argued by the state to the trial court and to us is that no contractual relationship ever existed between the parties. The trial court allowed the motion, characterizing the issue as whether it was without “subject matter jurisdiction because plaintiff [had] failed to file a petition for APA review within the time required by law.”
The jurisdiction of the trial court was invoked by plaintiffs complaint alleging a claim for breach of contract against the agency. Once properly invoked, subject matter jurisdiction does not depend on the existence of a sustainable claim or by the evidence subsequently adduced. Dippold v. Cathlamet Timber Co., 98 Or 183, 192, 193 P 909 (1920). Plaintiffs right to sue defendant is found in ORS 30.320.1 That statute provides a waiver of the state’s sovereign immunity and a statutory remedy for breaches of contracts by state agencies made within the scope of their authority. See Harsh Investment Corp. v. State Housing Division, 88 Or App 151, 155, 744 P2d 588 (1987). When the trial court ruled that it was deprived of subject matter jurisdiction because it viewed plaintiffs claim as being subject to the APA, it erred.
However, that error is harmless if the agency is entitled to summary judgment on the record before the trial court. The state asserts that it did not enter into a contractual relationship with plaintiff, and therefore, plaintiff has no *137right to sue it under ORS 30.320. It argues that the exhibits that it introduced into the summary judgment record demonstrate that plaintiffs claim is not based on a contractual relationship, because the existence of the lease agreement was subject to a condition precedent that never occurred. Therefore, it follows that in the absence of any contractual relationship between the parties, the trial court properly entered judgment dismissing plaintiff s claim, assuming that plaintiff also failed to file a petition under the APA as required by law. I understand the majority to hold that all plaintiff had to do to defeat the agency’s summary judgment motion was to allege a claim in contract. I disagree. Plaintiffs right to sue is contingent on the existence of a contractual relationship, and the agency challenges that right through the summary judgment procedure. Because the issue is framed pursuant to ORCP 47, the proper inquiry is whether there is any genuine issue as to a material fact and whether defendant is entitled to judgment as a matter of law. That inquiry requires the focus to be on the summary judgment evidentiary record rather than on plaintiffs allegations in its complaint. Specifically, is the existence of the lease agreement subject to a condition precedent, i.e., the completion of a security investigation favorable to plaintiff, or is that condition a condition subsequent that discharges the future obligations of the parties to perform after performance of the agreement has begun?
The motion before the trial court was supported by the submission of four exhibits including the document entitled “Video Lottery Terminal Lease Agreement.” That agreement provides, in part:
“3.0 TERM OF AGREEMENT
“3.1 This Agreement shall commence on the date it is fully executed by the parties, and it shall continue for five consecutive one-year periods from the start-up date, with an option to terminate at the end of each such year. Notwithstanding the date of execution, this Agreement shall not become effective until the performance bond required in paragraph 4.4 has been posted by the Contractor.
“3.2 If, at the time of execution of this Agreement by the parties, the security investigation conducted by the Lottery has not been completed, the following conditions apply to this Agreement:
*138“a. This Agreement is not binding upon the parties until the security investigation demonstrates the absence of prohibited criminal activity;
“b. Contractor shall comply with the implementation schedule and assume all risk that it will not pass the security check with regard to criminal activity;
“c. If Contractor fails to pass the security investigation, Contractor shall remove its terminals at no cost to the Lottery and receive no compensation from the Lottery for its prior compliance with the implementation schedule.
“d. If Contractor passes the security investigation, this Agreement shall become binding upon the parties and shall be given retroactive effect.”
Also included in the record is the letter of February 11,1992, in which the agency repudiated the lease agreement.2
Contrary to the agency’s argument, the terms of the lease agreement create a genuine issue of material fact about whether the parties intended that a completed security investigation be a condition precedent to the existence of the agreement or a condition subsequent that could discharge the obligations of the parties under the contract after performance had begun. According to the agreement, the agreement commences on the date of execution. In paragraph 3.1, the agreement clearly establishes a condition precedent regarding the requirement of a performance bond. In contrast, the purported requirement of a security investigation before the agreement becomes effective is not clear. Paragraph 3.2 contemplates performance by plaintiff before the security investigation is completed and says that if plaintiff passes the investigation, the agreement shall be given “retroactive” effect.
*139In the light of those terms, one reasonable interpretation of the agreement and the intentions of the parties is that plaintiff could be held in breach of the lease agreement before the security investigation was complete. Therefore, plaintiff has an enforceable obligation to begin the manufacture of the equipment without awaiting the completion of the investigation. In a reciprocal sense, the state could be liable for a breach if the contract was in existence on February 11.
When a contract is subject to differing plausible interpretations, and extrinsic evidence about the parties’ intent is controverted, summary judgment is precluded. Jones v. Jaquith, 44 Or App 727, 731, 606 P2d 1179 (1980). It follows that the state’s argument that the APA governs plaintiffs claim exclusively is wrong.
My quarrel with the majority’s reasoning is that it does not go far enough.3 It is correct when it holds that plaintiff has pleaded a claim based on contract, and that the agency cannot defeat plaintiffs claim for breach of contract under ORS 30.320 by the mere issuance of an administrative order repudiating its contractual obligations. However, plaintiffs pleading does not preclude a successful summary judgment motion by the agency demonstrating that, in fact, there was no contractual relationship created because a condition precedent to that relationship never occurred. For this reason, I concur in the majority’s result, but not with its reasoning.

 ORS 30.320 provides:
‘ ‘A suit or action may be maintained against * * * the State of Oregon by and through and in the name of the appropriate state agency upon a contract made by * * * such agency and within the scope of its authority * * *.”

 The letter stated, in part,
“This is written notice that the state is hereby terminating its conditional contract with [plaintiff!, effective immediately, pursuant to 27.1(e) of the agreement.”
Paragraph 27.1(e) of the lease provides that if plaintiff “jeopardizes the integrity, security, honesty, or fairness of the Lottery,” the agency may terminate the “contract” without “prejudice to any obligations or liabilities of either party already accrued prior to such termination.”

 The majority opinion states, in part,
“We agree with plaintiff that the claim it is asserting is one for breach of contract, and that the trial court erred in holding that it did not have jurisdiction over the action. Plaintiffs complaint alleges that it entered into an agreement with defendant, that defendant breached that agreement, and that plaintiff suffered damages as a result of the breach. That pleading states a claim for breach of contract. * * *
“The essence of the claim that plaintiff is asserting is breach of an existing contract. Any assertion that the written document defeats the allegation of a binding agreement goes to the merits of the contract claim, not to whether the cause of the action that is being asserted is for breach of contract. If the document shows on its face that any agreement between the parties was subject to a contract precedent and the pleading alleges that that condition never occurred, defendant has a complete defense to the contract action. The fact that a contract claim may be subject to a complete defense does not make the claim any less one for breach of contract * * 136 OrApp at 129-30. (Emphasis in original; footnote omitted.)