Court Opinion

ID: 8127179
Source: CourtListenerOpinion
Date Created: 2022-09-09 15:59:56.870269+00
Date Added: 2024-06-11T16:39:17.221956
License: Public Domain

ARMSTRONG, P. J.,
concurring.
I agree with the majority that plaintiffs are entitled to a new trial on their negligence claim because the verdict form misled the jury regarding its consideration of damages, and I concur in the majority’s ultimate disposition of the case. However, I write separately because, although I agree with the majority that the trial court erred in dismissing plaintiffs’ specification of negligence on defendants’ failure to timely assert an oppression or “squeeze-out” claim in the underlying litigation involving Sunrise Partners LLC (Sunrise), I disagree with the reasoning by which the majority reaches its conclusion.
In concluding that the trial court erred in dismissing plaintiffs’ specification of negligence that defendants failed to timely assert an oppression claim in the underlying litigation, the majority relies on the proposition that, “even if * * * we or the Supreme Court [were] at some point to hold that an equitable claim for oppression in the LLC context is not cognizable in Oregon, defendants still could have breached their duty of care by failing to assert a col-orable claim of oppression earlier in the Sunrise litigation.” 262 Or App at 682. In other words, the majority concludes that, because an equitable claim for oppression was “color-able,” and there was an evidentiary basis for such a claim, it is immaterial whether such a claim is, in fact, cognizable in Oregon, and the trial court thus erred in dismissing plaintiffs’ negligence specification related to that claim.
I have several concerns with the majority’s approach. First, it does not reflect the theory on which the issue was presented to the trial court or, indeed, argued to us on appeal. As the majority sets out, the trial court dismissed plaintiffs’ specification of negligence regarding defendants’ failure to assert a timely oppression claim based on the court’s conclusion that plaintiffs could not prevail on that specification, *700because oppression was not a legally viable claim. 262 Or App at 681. Thus, the parties and the court below understood the issue to reduce to whether liability for oppression (and a demand for a compulsory buyout) by a minority member is available in the context of an LLC and thus would have been available to plaintiff Rowlett against the other Sunrise members such that defendants could be negligent for having failed to timely assert the claim. The parties continue to square off over that question on appeal. The majority, however, entirely reframes the dispositive question, which reflects the sort of creative reimagining that we normally do not countenance. See State v. Branstetter, 181 Or App 57, 62 n 3, 45 P3d 137, rev den, 334 Or 632 (2002) (“[A]lthough it is axiomatic that we may affirm on grounds not argued to the trial court, there is no authority for the proposition that, without invoking ‘plain error,’ we can reverse the trial court on grounds not argued to it. Much less is there any authority that we can reverse on grounds not argued to us” (Emphasis in original; internal quotation marks and citation omitted.)). It also results in the unsettling proposition that a party may be held liable for malpractice for failing to assert a claim that is not, in fact, cognizable.
That said, I agree with the majority that we must reverse the trial court’s dismissal of that specification of negligence. I do so because I am persuaded that an oppression claim is viable in this context, notwithstanding that Oregon’s Limited Liability Act (the LLC Act) and, particularly, the statute governing dissolution of LLCs, ORS 63.661, does not contain express authority for such a claim.
I note first that the LLC Act itself does not specifically foreclose the availability of equitable remedies in the event of oppression of an LLC member. Moreover, although it does not speak to that point precisely, the legislative history of the LLC Act indicates that the legislature did not understand the LLC Act to be the exclusive and all-encompassing statement of the rights and liabilities of limited-liability companies. Rather, the legislature apparently understood that the LLC Act would be informed by both preexisting common-law principles and future judicial development. See 262 Or App at 683-85. And, at the time of the LLC Act’s enactment, the Oregon Supreme Court had held, in the *701context of a closely held corporation, that equitable remedies were available to a minority shareholder for oppressive conduct by majority shareholders in violation of their fiduciary duties, notwithstanding that, at the time, the only statutory relief available for that conduct was judicial dissolution. Baker v. Commercial Body Builders, 264 Or 614, 629, 631-33, 507 P2d 387 (1973) (citing former ORS 57.595 (1965), repealed by Or Laws 1987, ch 52, § 181); see also Delaney v. Georgia-Pacific Corp., 278 Or 305, 310, 325, 564 P2d 277 (1977) (allowing equitable relief of buyout of plaintiffs’ stock as equitable remedy for violation of fiduciary duty of joint venturer).
In light of that history and context, defendants’ only argument for a contrary understanding — viz., because the statute governing dissolution of corporations, ORS 60.661, expressly includes “oppressive conduct” as a basis for dissolution, see ORS 60.661(2)(b), the legislature must have purposefully omitted that authority from ORS 63.661 when enacting the LLC Act — carries little weight. The two statutory schemes were not enacted at the same time; nor am I aware of anything in the legislative history of the LLC Act to indicate that the legislature had in mind the provisions governing dissolution of public corporations when contemplating its enactment of ORS 63.661. Thus, the interpretive principle that the legislature’s inclusion of a provision in one statute, while omitting it from another, suggests that the omission was purposeful, see City of Mosier v. Hood River Sand, 206 Or App 292, 309, 136 P3d 1160 (2006) (so stating), is not particularly persuasive here. In short, I am satisfied that, in enacting the LLC Act, the legislature did not intend to foreclose the availability of an equitable oppression or squeeze-out claim, resulting in a demand for a compulsory buyout or dissolution, by a minority member of an LLC. For that reason — and not the theory constructed by the majority — I would conclude that the trial court erred in dismissing plaintiffs’ specification that defendants were negligent in not timely asserting such a claim.
I agree with the remainder of the majority’s disposition of the issues.