FILED: January 19, 2000
MARY ANN JEFFRIES and WILMA
JEFFRIES,
Appellants,
v.
DAVID B. MILLS and AARON J. BELL,
Respondents.
Appeal from Circuit Court, Lane County.
George J. Woodrich, Judge.
Argued and submitted July 21, 1998.
David V. Gilstrap argued the cause for appellants. With him on the briefs was Davis, Gilstrap, Hearn & Welty.
Thomas W. Brown argued the cause for respondent David B. Mills. With him on the brief were Cosgrave, Vergeer & Kester, LLP, Charles D. Carlson, and Brown, Roseta, Long, McConville, Kilcullen & Carlson.
William G. Wheatley argued the cause for respondent Aaron J. Bell. With him on the brief were Maureen A. DeFrank and Jaqua & Wheatley, P. C.
Before De Muniz, Presiding Judge, and Haselton and Linder, Judges.
LINDER, J.
Plaintiff Wilma Jeffries's appeal as to defendant Aaron Bell dismissed; summary judgment on count one of Mary Ann Jeffries's claim against defendant David Mills reversed; otherwise affirmed.
LINDER, J.
This is a legal malpractice action brought against two attorneys based on their failure to prevent the sale of stock in closely held family corporations. Plaintiff Mary Ann Jeffries first hired defendant-attorney David Mills to represent her in a bankruptcy matter. Mary Ann's judgment creditors offered to purchase Mary Ann's stock from the bankruptcy trustee and presented the proposal to the bankruptcy court for approval. Mills did not attend the hearing on the proposed sale or file objections on Mary Ann's behalf, and the bankruptcy court ordered the sale. Mary Ann subsequently hired defendant-attorney Aaron Bell to file a motion for relief from that order. That motion was denied. Later, Mary Ann brought this malpractice action against both Mills and Bell. Her mother-in-law, Wilma Jeffries, who also held stock in the family corporations, joined in the action and alleged negligence on the theory that the sale of Mary Ann's stock diminished the value of her own. The trial court entered summary judgment in favor of both defendants and against both plaintiffs.
Plaintiffs appeal, raising numerous assignments of error that call on us to resolve, inter alia, whether defendants owed a duty to Wilma, who was not their client; whether Mary Ann's claims against Mills were time-barred; and whether Mary Ann could establish causation with regard to her action against Bell. As we explain below, we hold that one of Mary Ann's counts against Mills was not time-barred. We therefore reverse entry of summary judgment as to that count. We dismiss Wilma's appeal of summary judgment entered in favor of Bell for lack of jurisdiction. In all other respects, we affirm.
Because this case was resolved on a motion for summary judgment, we follow the familiar standard of review set out in Jones v. General Motors Corp., 325 Or 404, 420, 939 P2d 608 (1997). That is, we view the summary judgment record in the light most favorable to plaintiffs, the nonmoving parties, to determine if a genuine issue of material fact exists and if defendants are entitled to judgment as a matter of law. Id. In this case, however, the parties dispute what records are properly before us on summary judgment. On appeal, plaintiffs assert that the affidavits they filed in response to Mills's motion for summary judgment created genuine issues of material fact precluding summary judgment. However, Mills challenged the competency of those affidavits below and urged the trial court to disregard them. Shortly thereafter, plaintiffs filed a motion for leave to file supplemental affidavits. They did not admit in that motion that the original affidavits were insufficient, but they did assert that the proffered supplemental affidavits were intended to correct any alleged insufficiencies. The trial court did not rule on Mills's challenge to the original affidavits and, as described below, ultimately denied plaintiffs' motion for leave to file supplemental affidavits. We cannot determine on this record whether the trial court actually considered the original affidavits in granting summary judgment. Before examining the record to determine whether defendants were entitled to summary judgment, we therefore must first determine what record is properly before us.
The dispute over plaintiffs' affidavits arose when, in response to Mills's
motion for summary judgment, plaintiffs submitted affidavits from Mary Ann and her
husband, Michael. Mills argued that the trial court should disregard those affidavits
because they failed to comply with ORCP 47 D. That rule provides that supporting and
opposing affidavits on summary judgment "shall be made on personal knowledge, shall
set forth such facts as would be admissible in evidence, and shall show affirmatively that
the affiant is competent to testify to the matters stated therein." (Emphasis added.) The
adequacy of the affidavits under ORCP 47 D is a legal question. German v. Murphy, 146
Or App 349, 353, 932 P2d 580 (1997).
Both Mary Ann's and Michael's affidavits consist of a series of one-sentence averments that merely incorporate specified paragraphs of the factual summary
in plaintiffs' memorandum in opposition to summary judgment. That summary is 16
pages in length. It consists of numbered paragraphs containing statements that frequently
blend factual allegations with legal conclusions. In incorporating paragraphs of the
factual summary, often several at a time, the affiants purport not to adopt the "legal
conclusions" in the summary, but they do not identify the particular statements they
consider to be the disavowed "legal conclusions." Likewise, in incorporating and
adopting statements of fact from the summary, purportedly based on each affiant's
personal knowledge, the affidavits do not identify the incorporated statements.(1)
The form and substance of the affidavits present other problems as well.
Because of their novel structure, the affidavits provide scant basis for understanding
whether or how the affiants had personal knowledge or are competent to testify regarding
several of the factual allegations.(2) See ORCP 47 D (affiant must "show affirmatively"
that he or she is "competent to testify to the matters stated therein"). Also, it is not
obvious that all of the facts incorporated into the affidavits constitute admissible
evidence. At a minimum, the process by which plaintiffs chose to place information into
the summary judgment record did not allow for Mills to test, and for the court to
determine, that the affidavits do. All in all, the form and substance of plaintiffs'
affidavits made it impossible for either the trial court or Mills to glean the relevant
averments from the 16-page summary and to determine if they complied with the
requirements of ORCP 47 D.(3) We therefore hold that the affidavits did not comply
sufficiently with the rule and should be disregarded along with the factual summary that
they purport to incorporate.(4)
There remains, however, plaintiffs' challenge to the trial court's denial of
their motion for leave to file supplemental affidavits, a matter for the trial court's
discretion. See ORCP 47 D (trial court "may permit affidavits to be supplemented or
opposed by depositions or further affidavits"). Mills urges that the trial court properly
refused the supplemental affidavits because they were not "supplemental" at all but
instead were a belated effort to shore up the deficiencies in plaintiffs' earlier affidavits.
The trial court might well have been on solid ground had it denied the motion on that
basis, assuming that plaintiffs previously had a reasonable opportunity to prepare and
submit materials in response to the motion for summary judgment. See Harris v.
Erickson, 48 Or App 655, 617 P2d 685 (1980). Here, however, the trial court ruled on a
different basis: it refused to accept the supplemental affidavits because they raised
allegations that fell outside of the scope of the complaint. The question, then, is whether
the trial court's exercise of discretion on that ground was permissible.
The settled rule is that, on a motion for summary judgment, affidavits may
raise issues that go beyond the pleadings if an amendment of a pleading to raise those
issues would be warranted. See, e.g., U.S. National Bank v. Miller, 74 Or App 405, 409,
703 P2d 246 (1985). In offering the supplemental affidavits, plaintiffs conceded that
they "clearly and certainly expand previous allegations relating to claims or defenses, and
in some regards even change the form or nature of the claims being made." The trial
court could not determine whether the filing of amended pleadings at that stage of the
proceedings, to add allegations that had not been identified previously by plaintiffs,
would be warranted. The trial court therefore advised plaintiffs that, before the court
would accept the supplement affidavits, plaintiffs first had to seek leave to amend their
complaint to include the new allegations, which would give the court the ability to decide
meaningfully if an amendment was warranted.(5) Despite the court's invitation, plaintiffs
never sought leave to amend their complaint. As a consequence, the request for leave to
file the supplemental affidavits was never revisited.
We cannot say that the trial court abused its discretion on this record. As
the trial court recognized, plaintiffs' entitlement to file supplemental affidavits raising
new issues depended on whether an amendment to their complaint was warranted.
Plaintiffs declined the opportunity to demonstrate that they would be entitled to amend
their complaint at that stage of the proceedings. Plaintiffs therefore are in no position to
complain about the trial court's ruling.
II. WILMA'S CLAIMS
Wilma joined in this action alleging that her stock in the family
corporations lost value because of the bankruptcy sale of Mary Ann's stock and that both
attorneys reasonably could have foreseen that harm. In moving for summary judgment,
defendants argued that they did not at any time act as Wilma's attorney and therefore did
not owe her a duty of care. The trial court agreed, and Wilma challenges the trial court's
ruling.
B. Wilma's claims against Bell
As a threshold matter, Bell argues that we do not have jurisdiction to
consider Wilma's appeal of the trial court's entry of summary judgment in his favor
because Wilma failed to name him as an adverse party in her original notice of appeal.
Bell was, however, served with the notice of appeal and was named as a party to the
action generally. The question presented by Bell's challenge, therefore, is whether the
failure to designate him as adverse was jurisdictional.
On June 30, 1997, the trial court entered summary judgment on Wilma's
claims against both Mills and Bell. Judgment had not yet been entered on Mary Ann's
claims. At Wilma's request, summary judgment on her claims was entered pursuant to
ORCP 67 B so that Wilma could pursue a separate appeal in the matter. Although the
judgment determined only Wilma's claims, a notice of appeal was filed listing both
Wilma and Mary Ann as the appellants. Only Mills, however, was listed as a respondent.
Bell was named but was not identified as a respondent. Specifically, the caption listed
Mills and Bell separately, identifying Mills as "Defendant-Respondent" and Bell as
"Defendant." In the section identifying "[t]he parties to the Appeal," only Mills was
named, and he was again identified as respondent. In the next section, which listed
information for the attorneys for the "respective parties," Mills's attorney was listed and
identified as "Attorney for Defendant-Respondent." Bell's attorney was listed and
identified as "Attorney for Defendant." Finally, in the section pertaining to certification
of mailing, the notice of appeal identified Mills's and Bell's attorneys as having been
served and, again, distinguished Mills's attorney as attorney for "Defendant-Respondent"
and Bell's attorney as attorney for "Defendant." Thus, the notice of appeal neither
designated Bell as a party to the appeal (as opposed to a party to the action generally) nor
as a respondent--i.e., an adverse party. Yet, at every possible point, the notice of appeal
did so designate Mills. Bell was not treated as a party to the appeal by our court, was not
served with confirmation from our court that the appeal had been filed, and was not
provided notice of any filing deadlines in the appeal. Approximately two months after
entry of Wilma's ORCP 67 B judgment, the trial court entered summary judgment against
Mary Ann on all claims against Bell and Mills. Rather than file a separate notice of
appeal as to Mary Ann, plaintiffs filed an amended notice of appeal that named both
Mills and Bell, in the caption and throughout the body of the notice, as respondents to
the appeal.
In analyzing the jurisdictional issue that Bell raises, the starting point is
ORS 19.270. That statute sets forth requirements for appellate court jurisdiction as
follows:
"(1) The Supreme Court or the Court of Appeals has jurisdiction of
the cause when the notice of appeal has been served and filed as provided
in ORS 19.240, 19.250 and 19.255. * * *
"* * * * *
"(2) The following requirements of ORS 19.240, 19.250 and 19.255 are
jurisdictional and may not be waived or extended:
"(a) Service of the notice of appeal on all parties identified in the notice of
appeal as adverse parties or, if the notice of appeal does not identify adverse
parties, on all parties who have appeared in the action, suit or proceeding, as
provided in ORS 19.240(2)(a), within time limits prescribed by ORS 19.255.
"(b) Filing of the original of the notice of appeal with the Court of Appeals
as provided in ORS 19.240(3), within the time limits prescribed by ORS 19.255.
"(3) After the Supreme Court or the Court of Appeals has acquired
jurisdiction of the cause, the omission of a party to perform any of the acts
required in connection with an appeal, or to perform such acts within the time
required, shall be cause for dismissal of the appeal. In the event of such omission,
the court, on motion of a party or on its own motion may dismiss the appeal."
(Emphasis added.)
ORS 19.270(2) is not an all-inclusive list of appellate court jurisdictional
requirements. As the Supreme Court has held, the statute was intended by the legislature
to clarify "the rules regarding which service and filing requirements
are jurisdictional."
Zacker v. North Tillamook County Hospital Dist., 312 Or 330, 336, 822 P2d 1143 (1991)
(emphasis added).(6) The required contents of a notice of appeal are set out in ORS
19.250. Particularly, ORS 19.250(1)(c) requires that a notice of appeal contain "notice to
all parties or their attorneys as have appeared in the action or proceedings * * *
designating who are the adverse parties to the appeal." (Emphasis added.)
In Stahl v. Krasowski, 281 Or 33, 573 P2d 309 (1978), the Oregon
Supreme Court examined whether only service and timely filing of a notice of appeal are
jurisdictional or whether defects in the contents of the notice may also determine the
court's jurisdiction. The court held that at least some defects in content are jurisdictional,
reasoning that the upshot of a contrary conclusion would be "that any document entitled
'notice of appeal' which was filed within the required time would be sufficient to give the
court jurisdiction whether it contained anything at all." Id. at 38. The court therefore
concluded that, although not all of the content requirements of ORS 19.250 are
jurisdictional, some are. For example, as recognized in Stahl, a description of the trial
court action being appealed is jurisdictional because of its importance in providing
essential notice of the appeal. Id. at 39. See also Zacker, 312 Or at 334 (in specifying
jurisdictional requirements for filing and service, legislature did not intend to overrule
Stahl).
The touchstones of appellate jurisdiction are minimally adequate notice and
timeliness in the filing of the notice of appeal. Consequently, we have declined to hold
that content defects in a notice of appeal are jurisdictional when the nature of the defect
is such that the party received adequate notice. For the notice to be "minimally
adequate," it must contain enough information reasonably to apprise the adverse parties
that an appeal is being taken from an appealable judgement. Smith and Koors, 149 Or
App 198, 201-03, 942 P2d 807 (1997); Kent v. Lindstedt, 138 Or App 316, 319, 908 P2d
833 (1995); Grant County Federal Credit Union v. Hatch, 98 Or App 1, 6 n 4, 777 P2d
1388, rev den 308 Or 592 (1989). In other words, if the parties with an interest in the
judgment receive reasonable notice that their rights in a particular judgment might be
affected, a content defect will not be jurisdictionally fatal.
Applying that test to the notice of appeal here, we hold that, under these
particular circumstances, the failure to designate Bell as an adverse party in the original
notice of appeal is jurisdictional. Here, the original notice of appeal went to pains to
identify Mills throughout as a "respondent" while designating Bell as only a "defendant."
See ORAP 2.05(1) (caption of notice of appeal shall name all parties completely using
their designations in the trial court (e.g., plaintiff, defendant) and designating the parties
to the appeal, as appropriate (e.g., appellant, respondent)). Bell reasonably could
conclude from the designations that he was not a party to the appeal because Wilma
would be challenging only the summary judgment as to the claims against Mills, not
summary judgment in Bell's favor. The defect is not meaningfully distinguishable from
the failure to designate the proper judgment from which the appeal is taken. Cf. Stahl,
281 Or at 39 (designation of that which is appealed from is jurisdictional). In either
situation, despite being served, the party receiving the notice of appeal is not reasonably
on notice that his or her rights in the judgment may be affected by the appeal.(7)
Bell was not added as a respondent to the notice of appeal until plaintiffs
filed an amended notice of appeal some two months after entry of judgment on Wilma's
claim against him. Because Bell was entitled to the concurrence of both adequate and
timely notice, the amended notice, which was filed more than 30 days after of entry of the
judgment being appealed, could not cure the jurisdictional defect. See Bourgeois v.
Grenfell, 72 Or App 415, 417, 695 P2d 974, rev den 299 Or 313 (1985) (where one
defendant was not named as an adverse party in the notice of appeal, appeal was not
perfected as to him; the remedy was to dismiss appeal as to that party only).(8)
Accordingly, we dismiss Wilma Jeffries's appeal as to the judgment entered
in favor of defendant Bell.
D. Wilma's claims against Mills
No similar defect is involved in Wilma's appeal of the summary judgment
entered against her on her claims against Mills. Consequently, as to those claims, we
must decide whether Mills owed Wilma a duty of care to protect her from economic
losses.
An attorney is liable for a third party's economic losses resulting from
actions taken within the scope of an attorney-client relationship with another only if the
third party first demonstrates the "existence of a special relationship in which the
defendant had some obligation to pursue the plaintiff's economic interests." Roberts v.
Fearey,, 162 Or App 546, 550, 986 P2d 690 (1999) (emphasis in original); see also Hale
v. Groce, 304 Or 281, 283-84, 744 P2d 1289 (1987). Wilma concedes that Mills did not
act as her attorney and, thus, that she was not in privity with him. She therefore casts her
claims as "common law negligence" actions, rather than actions for legal malpractice,
and argues that general foreseeability principles of Fazzolari should apply. See generally
Fazzolari v. Portland School Dist. No. 1J, 303 Or 1, 734 P2d 1326 (1987). Her
argument, however, is unavailing. In the context of an action asserting the existence of
an obligation to protect economic interests, Fazzolari's foreseeability analysis comes into
play only if a special relationship is first demonstrated. Roberts, 162 Or App at 550.
Wilma has not demonstrated a special relationship--i.e., privity or some other basis to
find that defendants had an obligation to pursue her economic interests. Accordingly, the
trial court properly granted Mills's motion for summary judgment on Wilma's claims.
III. MARY ANN'S CLAIMS
We turn to Mary Ann's claims. Mary Ann alleged two counts of
malpractice against Mills. The first count related to Mills's allegedly negligent
representation of Mary Ann before the hearing and his failure to prevent the bankruptcy
court from ordering the stock sale. In the second count, Mary Ann alleged malpractice
based on Mills's later failure to appeal or to move for reconsideration of the order. The
trial court ruled that Mary Ann's cause of action on her first count is time-barred because
the original complaint was not filed within the statute of limitations. As to the second
count, which plaintiff added to the original complaint by amendment, the trial court ruled
that it was time-barred because it did not relate back to the filing of the original
complaint. Mary Ann assigns error to both rulings. Mary Ann also assigns error to the
trial court's entry of summary judgment in favor of Bell. We discuss the claims against
each attorney in turn.
A. Mary Ann's claims against Mills
1. Count One: Representation before the bankruptcy court's ruling
The bankruptcy court approved the stock sale on June 29, 1993, following
a hearing. Mary Ann filed her malpractice complaint against Mills exactly two years
later, on June 29, 1995. In her complaint, she alleged, among other things, that Mills
failed to make reasonable efforts to dismiss the involuntary bankruptcy and failed to
prevent the bankruptcy court from ordering the stock sale. If Mary Ann's cause of action
accrued on or after June 29, 1993, then it was filed within the two-year statute of
limitations for legal malpractice. See ORS 12.110(1); U.S. Nat'l Bank v. Davies, 274 Or
663, 665-66, 548 P2d 966 (1976) (statute of limitations for legal malpractice is two
years). Mills argues, however, that it accrued before that date because all of the allegedly
negligent conduct occurred before the June 29 hearing and Mary Ann knew before then
that she was likely to lose her stock. Mills argues alternatively that, if Mary Ann's cause
of action as a whole is not barred by the statute of limitations, then some of the
allegations are individually time-barred.
A cause of action for legal malpractice must be brought within two years of
the date on which the action for the "injury" accrues. Id. The cause of action accrues
when the plaintiff suffers a legally cognizable harm and knew or should have known that
the damage was caused by the lawyer's acts or omissions. See Stevens v. Bispham, 316
Or 221, 227, 851 P2d 556 (1993) (quoting U.S. Nat'l Bank, 274 Or at 666-67, 670).
Mary Ann alleges that she was harmed by the stock sale. The bankruptcy court ruled on
the proposed stock sale on June 29, 1993, and ordered it to occur. Because of the nature
of the injury that Mary Ann alleges, we agree that June 29, 1993, was the first date upon
which a reasonable factfinder could conclude that Mary Ann actually suffered a legally
cognizable harm.(9) She may have had a basis to be concerned before that date that she
would lose her stock or otherwise not prevail in the bankruptcy proceeding. But until the
court's actual entry of an order to that effect, the injury could at most be contemplated as
a possibility. Her complaint was filed exactly two years after the trial court approved the
sale. Consequently, her cause of action is not barred by the statute of limitations.
Nor are any of the discrete specifications of negligence in Mary Ann's
complaint time-barred. Mills points in particular to Mary Ann's allegation that Mills was
negligent because he failed to succeed in obtaining a dismissal of the bankruptcy action
in 1992. An individual specification of negligence or other tortious conduct, although
set forth as part of a single cause of action, may be barred by the applicable statute of
limitations if it alleges a harm that would be separately actionable. See generally Davis
v. Bostick, 282 Or 667, 580 P2d 544 (1978). The specification that Mills asserts is
separately time-barred does not fall into that category, however. Here, Mary Ann alleges
a single harm--i.e., the court-ordered sale of the stock--that is a consequence of several
allegedly negligent acts and omissions; she does not allege a series of harms, any one or
several of which might have been actionable at the time that the individual acts or
omissions occurred. See id. at 673-74 (distinguishing separately actionable allegations
from continuous torts and from a tort based on a harm that is cumulative of a series of
acts). Thus, even as to the single specification based on Mills's failure to obtain a
dismissal of the bankruptcy action in 1992, the earliest that the claim accrued was June
29, 1993, when the bankruptcy court orally ordered the sale. That individual
specification therefore also is not time-barred. See Barnard v. Lannan, 112 Or App 625,
629, 829 P2d 723 (1992) (where alleged harm is due to outcome of case, legal
malpractice action does not run based on intermediate and nonfinal rulings of court).
Mills also asserts that he is entitled to summary judgment because, as to
count one of her complaint, Mary Ann cannot establish any of the elements of legal
malpractice. The trial court did not reach Mills's contentions in that regard because the
court concluded that Mary Ann's first count of negligence was time-barred. Mills renews
those arguments on appeal. See Capital Investments v. Lofgren, 81 Or App 93, 97, 724
P2d 862 (1986) (even if trial court's reason for granting summary judgment was
incorrect, we may affirm on other proper grounds). We conclude that none of Mills's
alternate arguments provides a basis for summary judgment on count one.
First, Mills challenges the adequacy of Mary Ann's allegations of
negligence to establish one or more of the elements of duty, breach, or causation. Mills
addresses, however, only seven of the eight allegations; he does not assert a deficiency in
the allegation that he was negligent in failing to obtain a dismissal of Mary Ann's
involuntary bankruptcy proceeding on the basis that it was improperly filed. Because
Mills does not controvert that allegation or argue its legal insufficiency, he is not entitled
to summary judgment on Mary Ann's first count of negligence. See Kutbi v. Thunderlion
Enterprises, 73 Or App 458, 464, 698 P2d 1044, rev den 299 Or 584 (1985).(10)
Mills also argues that, as a matter of law, Mary Ann did not suffer any
damages. Mills proffered evidence demonstrating that, by the time Mary Ann lost her
stock in the bankruptcy, all of the corporations' assets had been sold. Mills produced two
letters written by Mary Ann's attorney in this case, in which he acknowledged that the
"value of Mary Ann's stock, the equity value, at the time of [Mills's alleged] negligence
could be zero" and further admitted that Mary Ann would have difficulty proving
damages because the corporate liabilities assumed in the sale were equal to the assets of
the corporations. Mills contends that those admissions establish that, as a matter of law,
Mary Ann did not suffer any damages in losing her stock.
To prevail on that point, Mills would have had to produce the type of
evidence that would conclusively demonstrate that Mary Ann did not suffer any harm as
a result of the loss of her stock. See Preble v. Schwabe, Williamson & Wyatt, 128 Or
App 249, 252, 875 P2d 526 (1994). We disagree that the evidence that Mills produced
meets that exacting standard. The corporations' lack of assets may serve to demonstrate
that the value of the stock at the time of the sale was diminutive, but it does not establish
necessarily that the stock had absolutely no value. The value of stock in a closely held
corporation is not always the mirror image of the value of the corporation's assets. For
example, in the dissenting shareholder arena, "fair value" of stock in a closely held
corporation encompasses several factors: asset value, market value, and enterprise value
(earnings or investment value). See Columbia Management Co. v. Wyss, 94 Or App 195,
199, 765 P2d 207 (1988), rev den 307 Or 571 (1989) (discussing those factors in
determining "fair value" under Oregon's statutes allowing a dissenting shareholder of a
close corporation to obtain payment for shares); see also ORS 60.551(4) (defining "fair
value"); ORS 60.577(1) (providing for payment of "fair value" of stock to dissenting
shareholder). To conclude that Mary Ann did not suffer any damages, we would have to
be willing to infer that stock in a corporation with no assets has no value whatsoever to
anyone. That inference perhaps is a permissible one, but we do not agree that it is a
legally necessary one. Whether to draw that inference in a particular case, with reference
to stock in a particular corporation, should be left to a jury. Viewing the record in the
light most favorable to Mary Ann, we cannot conclude that the record on summary
judgment conclusively establishes that Mary Ann did not incur any damages. The trial
court erred in entering summary judgment on count one.
2. Count Two: Representation after the bankruptcy court's ruling
The next issue is whether the trial court correctly concluded that Mary
Ann's second count of negligence was time-barred. Mary Ann added count two in her
amended complaint, filed on August 28, 1996. In that count, she alleged negligence
based on assertions that Mills failed to appeal, to file a motion for reconsideration, and to
advise her to seek other counsel. All of the acts and omissions alleged in that count
occurred between June 29, 1993, and December of that same year, when Mills ceased
representing Mary Ann.(11) The trial court ruled that the second count did not relate back
to the date of the filing of the original complaint because it involved "discrete and new
matters of negligence." The court therefore determined that the count was time-barred.
We agree.
ORCP 23 C provides:
"Whenever the claim or defense asserted in the amended pleading
arose out of the conduct, transaction, or occurrence set forth or attempted to
be set forth in the original pleading, the amendment relates back to the date
of the original pleading."
The rule's concern is one of notice. Welch v. Bancorp Management Services, 296 Or
208, 221, 675 P2d 172 (1983), modified by 296 Or 713, 679 P2d 866 (1984). A newly
alleged cause of action may relate back to the filing of the original complaint if the
defendant would have been able to discern from the earlier pleading a potential for the
additional basis of liability. Evans v. Salem Hospital, 83 Or App 23, 32, 730 P2d 562
(1986), rev den 303 Or 331 (1987). Thus, the new claim must arise out of or directly
involve the occurrence that was originally alleged. Allison v. Kleinman, 126 Or App
298, 301, 868 P2d 764 (1994) (citing Caplener v. U.S. National Bank, 317 Or 506, 522,
857 P2d 830 (1993)).
Here, the first count alleged conduct that occurred before and on the date of
the bankruptcy hearing and that related to Mills's representation of Mary Ann in the
course of the bankruptcy proceedings. According to Mary Ann's complaint, after the
bankruptcy court entered its order, she negotiated with Mills to continue to represent her
and achieve a dismissal of the bankruptcy action through a possible appeal or
reconsideration of the bankruptcy court's order.(12) The second count is directed to acts
and omissions that Mills allegedly took pursuant to that further agreement.
In these particular circumstances, Mary Ann's second count of negligence
does not bear a sufficient relationship to the first. Mills's representation of Mary Ann in
the initial bankruptcy hearing involved judgments and professional choices that were
distinct and independent, both in substance and time, from those involved in her attempt
to determine how to respond legally to the bankruptcy court's unfavorable order. Mary
Ann's original complaint put Mills on notice that he was being sued for negligence based
on his allegedly inadequate representation in connection with his efforts to prevent the
bankruptcy court from ordering the sale of Mary Ann's stock. That claim did not give
Mills any inherent notice of or reason to assume that later acts or omissions concerning
appeal and reconsideration would likewise be charged as negligent. The second count
therefore does not relate back. See Caplener, 317 Or at 522-23 (new tort allegations
based on bank's efforts to secure repayment of initial advancements of a loan that it
eventually declined to make were insufficiently related to original tort allegations based
on bank's denial of loan). Consequently, August 28, 1996, the date on which the
amended complaint adding count two was filed, is the relevant filing date for purposes of
determining whether the second count falls within the statute of limitations.
The next question, then, is whether Mary Ann's cause of action on the
second count accrued more than two years before that date. Mary Ann alleged that all of
the acts and omissions in the second count occurred between September 1993 and
December 1993. Mary Ann urges us, nevertheless, to adopt May 20, 1996, as the accrual
date because that is when she allegedly learned that her stock was "irretrievably lost."
That accrual date, would save the second count from being time-barred. Mary Ann did
not raise that argument below, however. She argued only that her cause of action on
count two accrued on September 16, 1994, which was the date the bankruptcy court
denied the motion for relief from its order. She took the position below that, for
purposes of the second count, she "knew with certainty that Mills'[s] conduct had caused
actual harm" as of that date. On appeal, she abandons her September 16, 1994, accrual
theory and relies only on the May 20, 1996, date. We decline to consider her new
contention, especially when to do so would permit her to admit to the trial court that she
knew she was harmed as of September 16, 1994, and then inconsistently argue on appeal
that she did not know that she was harmed until almost two years later. Mary Ann does
not present any other argument upon which we could reverse the trial court's ruling. We
therefore hold that the trial court did not err in determining that the second count was
time-barred, and we affirm as to that count.
B. Mary Ann's claim against Bell
Mary Ann also assigns error to the trial court's entry of summary judgment
in favor of Bell, the attorney who represented her for purposes of filing a motion for
relief from the bankruptcy court's order. Bell replaced Mills as Mary Ann's attorney of
record in March 1994. He filed a motion for relief from the bankruptcy court's order on
July 28, 1994, more than one year after the order was entered. The bankruptcy court
denied that motion both because it was filed late and because it did not set forth adequate
grounds for relief. In her malpractice claim against Bell, Mary Ann alleged that, but for
Bell's untimely filing of the motion, she would not have lost her stock. Bell moved for
summary judgment, arguing that Mary Ann could not prove the "causation" element of
her claim because the bankruptcy court would have denied the motion even if it had been
timely filed. The trial court, in granting summary judgment, agreed. On appeal, Mary
Ann argues that the causation issue in this case presents a question of fact for a jury's
resolution and, consequently, that the trial court erred.
To show causation in a legal malpractice action, a plaintiff must
demonstrate that she would have obtained a more favorable result in the earlier action if
the attorney had not been negligent. Chocktoot v. Smith, 280 Or 567, 570, 571 P2d 1255
(1977). When the "more favorable result" depends on how a factfinder would have
resolved the case but for the attorney's negligence, causation is a factual issue in the
malpractice case. When, however, the attorney's alleged negligence involved the
handling of a legal matter decided by the court, causation is to be resolved as a legal
question. Id. at 571-73. An attorney's failure to file a motion in a timely matter is a
classic example of the latter: "The legal consequences of an attorney's failure, in the
earlier case, to present a timely pleading or motion or to take an appeal are matters for
argument, not proof." Id. at 573. Thus, the "question what decision should have
followed in the earlier case if the defendant attorneys had taken proper legal steps is a
question of law for the court." Id. at 575.
Mary Ann nevertheless asserts that a factual issue was presented in this
case. In support of that position, she argues on appeal, as she did below, that "if the
bankruptcy court had reached the [motion for relief] on the merits, then that court could
not have arrived at any decision until both the true value of the stock and the true amount
of the purchase price paid * * * had been determined upon evidence." Similarly, she
points us to other alleged factual disputes that, she asserts, a jury would have to decide to
determine whether the bankruptcy court would have ruled in her favor if "Bell had timely
filed the motion and been allowed to present all available evidence on the merits at a
hearing."
The problem with Mary Ann's argument is that it does not address the
criteria for granting relief from the bankruptcy order. Her argument assumes that merely
filing a motion for relief--any motion for relief--within one year would ensure
reconsideration of whether the bankruptcy court should have ordered the sale of the
stock. That assumption is wrong. A motion for relief, even if timely filed, must provide
some extraordinary basis for granting relief from the order. Merely asserting that there is
a factual basis to conclude that the order is erroneous is not enough. Under the relevant
federal rule, proper grounds include: mistake, inadvertence, surprise, or excusable
neglect; newly discovered evidence; fraud or misrepresentation on the opposing party's
part; or other reason justifying relief from operation of the judgment. FRCP 60(b).(13)
Significantly, Mary Ann does not argue that, as a matter of law, Bell's
motion for relief would have been adequate under FRCP 60(b) had it been timely filed.
Rather, as she expressly asserts, the disputed factual issues on which she relies to avoid
summary judgment relate to "the merits" of whether a sale should have been ordered by
the bankruptcy court. She has done nothing on appeal to demonstrate that there was a
factual issue with regard to the adequacy of Bell's motion or the judgments he made
regarding the motion's substance--e.g., whether Bell somehow failed to make an
argument under FRCP 60(b) that would otherwise have warranted the allowance of the
motion. Consequently, Mary Ann's arguments provide no basis to disturb the trial court's
conclusion that, even if Bell's motion for reconsideration had been timely filed, it would
have been denied. Summary judgment in favor of Bell was therefore proper.
Plaintiff Wilma Jeffries's appeal as to defendant Aaron Bell dismissed;
summary judgment on count one of Mary Ann Jeffries's claim against defendant David
Mills reversed; otherwise affirmed.
1. For example, at one point Mary Ann's affidavit incorporates "[p]aragraphs 12,
13 and 14, except for the legal conclusions therein."
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2. For example, one paragraph of the factual summary incorporated into Mary
Ann's affidavit consists largely of legal and factual assertions about Mills's knowledge
and awareness of certain facts regarding the bankruptcy proceeding.
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3. Compare McDonough v. Jones, 48 Or App 785, 791-92, 617 P2d 948 (1980),
rev den 290 Or 519 (1981) (disregarding affidavits that were not based on personal
knowledge) and Spectra Novae, Ltd. v. Waker Associates, Inc., 140 Or App 54, 59, 914
P2d 693 (1996) (affidavits consisting of legal conclusions are not sufficient to defeat
summary judgment motion) with Sisters of St. Joseph v. Wyllie, 120 Or App 474, 478,
852 P2d 941 (1993) (one inadmissible allegation in an affidavit did not render the entire
affidavit inadequate as a matter of law).
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4. We express no opinion as to whether, under other circumstances, an affidavit
can satisfy ORCP 47 D if, instead of setting forth affirmative factual statements, it
incorporates portions of other materials, such as the memorandum in support of or in
opposition to the motion. It is enough to observe that, here, the affidavits were so
defective in form that they could not meaningfully be tested against the requirements of
the rule.
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5. Specifically, the court ruled that plaintiffs should request leave to file a
second amended complaint, which would provide a basis for filing the affidavits "in
some connection with that, with new allegations." Plaintiffs' counsel then asked for a
time frame for filing an amended complaint and asked whether the trial court was giving
plaintiffs leave to amend their complaint. The trial court reiterated that plaintiffs first
should determine if they wanted to amend their complaint and, if so, in what way. The
trial court was inviting counsel then to move for leave to amend the complaint and to
provide the court with "statutory reasons and grounds to do so." Then, if plaintiffs had
filed that motion together with a proposed amended complaint, the trial court would have
what it needed to consider whether an amendment was warranted and whether the
supplemental affidavits should be allowed.
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6. ORS 19.250 and 19.270 were renumbered in 1997 from ORS 19.029 and
19.033, respectively. Several of the cases we cite in our discussion refer to the former
numbers. To avoid confusion, we refer only to the renumbered versions of the statutes in
our discussion of those cases.
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7. We emphasize that the notice problem exists in this case because of the
specific designation of Mills as a party respondent, and no similar designation of Bell as
adverse. ORS 19.270(2) provides that, when the notice of appeal does not designate any
of the parties as adverse, then all parties must be timely served. In effect, in the absence
of a special designation of adversity, all of the parties are deemed to be adverse.
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8. Street v. Gibson, 60 Or App 768, 771, 655 P2d 604 (1982), aff'd 295 Or 112,
663 P2d 769 (1983), is distinguishable. There, we allowed the appellants to amend a
notice of appeal naming only one appellant and, by the amendment, to add a second
appellant to the case. We concluded that the error did not prejudice the respondent.
Street differs from this case because, there, the respondent was named as an adverse party
and, therefore, was on notice that his rights in the judgment might be affected by the
appeal. The only change achieved by allowing the amendment was that an additional
person would be challenging the same judgment. Here, Bell's prejudice is real: He
received inadequate notice that an appeal had been taken by which his rights in the
judgment were placed at risk.
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9. The trial court seems correctly to have determined the accrual date to be the
date that the bankruptcy court ordered the sale of the stock. The trial court concluded
that the cause of action was time-barred apparently because it mistakenly believed that
the original complaint was filed on July 5, 1995. That was incorrect. All parties agree
that the original complaint was filed on June 29, 1995.
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10. Mills does not argue that he is entitled to partial summary judgment with
respect to any of the portions of count one. See Stevens v. Horton, 161 Or App 454, 460,
984 P2d 868 (1999) (a plaintiff may seek partial summary judgment with respect to an
element of negligence).
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11. Mary Ann alleges that Mills ceased representing her in December 1993. Mills did not officially withdraw as counsel until March 2, 1994. The order authorizing that withdrawal, however, was not part of the record on Mills's motion.
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12. Mary Ann alleged that "Mills verbally promised * * * that if she would continue to allow him to represent her and would continue to pay for his services as her attorney, that he would accomplish restoring her stock ownership * * * and promptly obtain dismissal of the involuntary Chapter 7 bankruptcy." Those allegations were made in a separate breach of contract claim, which Mary Ann later voluntarily dismissed. Although Mary Ann is not necessarily bound by the admissions in the dismissed claim, they are evidence of the fact admitted. See Yates v. Large, 284 Or 217, 223, 585 P2d 697 (1978) (admissions in superseded pleadings are not binding judicial admissions but are evidence).
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13. With some exceptions that are inapplicable here, FRCP 60(b) applies to bankruptcy proceedings. FRBP 9024. That rule provides, in part:
"On motion and upon such terms as are just, the court may relieve a party or a party's legal representative from a final judgment, order, or proceeding for the following reasons: (1) mistake, inadvertence, surprise, or excusable neglect; (2) newly discovered evidence which by due diligence could not have been discovered in time to move for a new trial under Rule 59(b); (3) fraud * * *, misrepresentation, or other misconduct of an adverse party; (4) the judgment is void; (5) the judgment has been satisfied, released, or discharged, or a prior judgment upon which it is based has been reversed or otherwise vacated, or it is no longer equitable that the judgment should have prospective application; or (6) any other reason justifying relief from the operation of the judgment. The motion shall be made within a reasonable time, and for reasons (1), (2), and (3) not more than one year after the judgment, order, or proceeding was entered or taken."
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