Court Opinion

ID: 9793904
Source: CourtListenerOpinion
Date Created: 2023-08-31 02:55:02.45142+00
Date Added: 2024-06-11T08:06:45.466249
License: Public Domain

RIGGS, J.,
dissenting.
I believe defendant was entitled to a directed verdict on plaintiffs’ breach of contract claim. In its effort to uphold an untenable jury verdict, the majority opinion ignores pertinent cases and basic principles of contract law. It upholds the verdict with a theory of recovery that was never asserted by the plaintiffs. It also permits plaintiffs to transform equitable estoppel into a cause of action for money damages. The opinion has potential to mislead bench and bar.
Plaintiffs proceeded to trial on the theory that the bank agreed to an oral modification of the loan agreement and that the bank breached the loan agreement as modified. The modification theory failed as a matter of law, because there was no consideration, but was nevertheless submitted to the jury. The jury returned a general verdict. According to the majority:
“The jury returned a verdict in plaintiffs’ favor, and it could have done so without finding a contract modification. It could have found that plaintiffs had fully performed under the contract, or to the extent that they did not fully perform, that their performance was excused because defendant, through its conduct and the conduct of its predecessor, ‘waived’ its right to strictly enforce the terms of the contract.” 130 Or App at 74- 75.
For the reasons set out below, we cannot uphold the jury verdict for either of the reasons that the majority proposes.
*79The jury could not have found that plaintiffs fully performed under the original loan agreement, because plaintiffs did not assert that theory in their pleadings, at trial or on appeal. It is not our role to invent new theories of recovery for parties. Even assuming that an appellate court can invent a new theory of recovery for plaintiffs, that theory is not supported by the record. Plaintiffs’ own accountant testified that, in April, 1989, when the bank rejected plaintiffs’ tender of $430, plaintiffs were $827 in arrears. The majority’s assertion that the jury could have found that plaintiffs were current under the terms of the original agreement must be rejected.
The majority also asserts that the jury could have found that defendant breached the contract when it enforced the time-essence clause it had “waived.” As we explained in Daly v. Fitch, 70 Or App 18, 687 P2d 1124 (1984), “estoppel” is a more accurate term.
“The parties speak in terms of ‘waiver’ of the time-essence clause. Most of the relevant cases do also. Several cases suggest that estoppel is a more appropriate concept. Waiver refers to the intentional relinquishment of a known right, claim or privilege. Estoppel is an equitable principal that precludes someone from exercising a right to another’s detriment if the right holder, through words or conduct, has led the other to believe that the right would not be exercised. The effect of accepting late payments on a seller’s right to exercise atime-essence clause is usually more properly put in terms of estoppel rather than waiver.” 70 Or App at 21 n 2. (Citations omitted.)
Estoppel is an equitable defense, and can be used to prevent foreclosure. It is not a cause of action. Howell v. Oregonian Publishing Co., 82 Or App 241, 247, 728 P2d 106 (1986), mod 85 Or App 84, 735 P2d 659, rev den 303 Or 699, 740 P2d 1212 (1987). Abercrombie v. Hayden Corp., 122 Or App 355, 858 P2d 152 (1993), rev allowed 318 Or 325 (1994), is not to the contrary. In Abercrombie, the plaintiffs gave new consideration for the modification of a contract. They used estoppel and waiver to defend their modification theory from the defendant’s attacks.
In contrast to Abercrombie, the majority opinion in this case effectively treats “waiver,” actually estoppel, as a *80cause of action. According to the majority, the bank enforced a provision it waived and, even though there was no consideration to support the waiver and no rebanee on the waiver, the enforcement of the waived provision was nevertheless a breach of contract for which money damages are available. That theory of recovery is an unprecedented departure from previous case law, and we should reject it.
Defendant was entitled to a directed verdict because no theory permits us to uphold the jury verdict in favor of plaintiffs’ breach of contract claim.
I respectfuby dissent.