Hayden Corp. v. Glacier Park Co.

896 P.2d 604, 134 Or. App. 604, 1995 Ore. App. LEXIS 819
CourtCourt of Appeals of Oregon
DecidedMay 31, 1995
Docket9309-05667; CA A84751
StatusPublished

This text of 896 P.2d 604 (Hayden Corp. v. Glacier Park Co.) is published on Counsel Stack Legal Research, covering Court of Appeals of Oregon primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Hayden Corp. v. Glacier Park Co., 896 P.2d 604, 134 Or. App. 604, 1995 Ore. App. LEXIS 819 (Or. Ct. App. 1995).

Opinion

HASELTON, J.

Plaintiff, Hayden Corporation, appeals from a judgment, following the granting of summary judgment against its claims for fraud and breach of contract, and from a related supplemental judgment for attorney fees and costs. We reverse and remand.

In August 1988, plaintiff and defendant Glacier Park Riverpoint Company,1 entered into ajoint venture agreement to develop a 41-acre parcel of property called Riverpoint I in Spokane, Washington.2 Under the terms of the agreement, defendant contributed the real property, which was then recorded in the name of the joint venture, plaintiff managed the project, and the parties generally shared development costs. The agreement also required defendant to pay the real property’s Local Improvement District (LID) assessment, which constituted a lien on the property until paid. Plaintiff paid defendant $150,000 “in consideration for the payment and satisfaction by [defendant] of the [LID assessment].” Rather than paying the LID assessment in a lump sum, defendant elected, with plaintiffs knowledge, to pay it in installments. Initially, the City of Spokane sent the LID assessment bills to plaintiff, who then forwarded them to defendant, but later the city billed defendant directly.

In 1992, the parties had a falling out, which they resolved by entering into a written “Assignment of Interest in Partnership,” in which defendant agreed to assign to plaintiff its “venture interest”3 in the joint venture. In paragraph 1 of that agreement, defendant represented and warranted that,

“to the best of [defendant’s] knowledge after reasonable inquiry, there are no outstanding liens or claims against the [607]*607Venture Interest (other than the Joint Venture Debt or other Joint Venture Obligations) [,]”4

In paragraph 5.3, plaintiff also released defendant from

“any and all claims, demands, actions, causes of action, debts, contracts, liabilities, agreements, or losses of any type, whether known or unknown, fixed or contingent, with respect to the obligations, acts, or omissions of [defendant] occurring prior to the date of this agreement and relating to or arising out of their respective involvement with the Joint Venture^] ”

At the time the parties executed the assignment agreement, the unpaid balance on the LID assessment exceeded $200,000. The joint venture’s real property was, in turn, subject to a lien in that amount. After the assignment, defendant began forwarding the LID assessment bills to plaintiff for payment. Plaintiff demanded that defendant make the payments, and, when defendant refused, plaintiff brought this action.

Plaintiff alleged that defendant both breached the original joint venture agreement by not continuing to make the LID assessment payments and committed fraud by misrepresenting “that there were no liens or claims against the property commonly known as Riverpoint I” and by ‘ ‘failing to disclose that [defendant] failed to pay the LID assessment.” Defendant moved for summary judgment, arguing that the release in paragraph 5.3 of the assignment agreement barred plaintiffs contract claim. With respect to the fraud claim, defendant argued that it had made no representations as to liens on the real property and had no duty to disclose the outstanding LID assessment balance. The trial court, without elaboration, granted defendant’s motion for summary judgment and entered a judgment dismissing plaintiff’s claims. Subsequently, the court entered a supplemental judgment awarding defendant $40,686.07 in contractually based prevailing party attorney fees and costs. Plaintiff appealed from the judgment and filed an amended notice of appeal from the supplemental judgment.

[608]*608We turn to plaintiffs fraud claim. The propriety of summary judgment against that claim depends principally on the disposition of two subsidiary issues: (1) Was defendant’s warranty in paragraph 1 of the assignment agreement an actionable representation that, to the best of defendant’s knowledge, there were no claims against defendant’s interest in the partnership real property? (2) If so, was there, at least, a disputed factual issue regarding the reasonableness of plaintiffs reliance on that representation?5

With respect to the first issue, plaintiff argues that, under both Washington law6 and the assignment agreement, defendant’s “venture interest” included defendant’s interest in the partnership’s real property. Thus, plaintiff reasons, defendant’s warranty that its venture interest was unencumbered was a representation that its interest in partnership real property was not subject to liens or claims. Plaintiff asserts that that representation was false in that the LID lien against the partnership’s real property necessarily constituted a claim against defendant’s interest in that property.

Defendant counters that plaintiff reads the warranty too broadly and that it pertains, instead, only to liens or claims against defendant’s individual interest in partnership income and surplus. Defendant asserts that its reading accords with what it contends was the warranty’s purpose — to give plaintiff assurance “that [defendant] had not assigned its joint venture interest to its bank, or sold its interest or otherwise assigned or pledged the income from it.” Defendant finally asserts that, in all events,

“[t]here is simply no way that an encumbrance on [defendant’s] partnership interest could have included a lien or claim on the real property owned by the partnership. * * * [Defendant’s] rights in the real property could not have been encumbered by virtue of a claim or lien against [defendant’s] partnership interest.”

[609]*609We agree with plaintiff that defendant’s construction cannot be squared with either the warranty’s plain language or with Washington partnership law. Defendant acknowledges that it intended to transfer its entire bundle of property rights in the joint venture to plaintiff. That intent is evident in the parties’ definition of “venture interest” — defendant’s “entire right, title and interest” in the joint venture. See n 3 above. Under Washington partnership law, a partner’s property rights in a partnership include

“(1) his rights in specific partnership property, (2) his interest in the partnership, and (3) his right to participate in the management.” RCW 25.04.240. (Emphasis supplied.)

Thus, defendant’s warranty, which expressly referred to its “venture interest,” included not only its right to profits and surplus,7 but also its rights in specific partnership property. Any lien against partnership real property concomitantly encumbered, and represented a claim against, defendant’s joint venture interest in such property. RCW 25.04.250(1) and (2)(c) provides, in part:

“(1) A partner is co-owner with his partners of specific partnership property holding as a tenant in partnership.
“(2) The incidents of this tenancy are such that:
% sj:

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Cite This Page — Counsel Stack

Bluebook (online)
896 P.2d 604, 134 Or. App. 604, 1995 Ore. App. LEXIS 819, Counsel Stack Legal Research, https://law.counselstack.com/opinion/hayden-corp-v-glacier-park-co-orctapp-1995.