Judd v. Gunderson et al

Filing 15

ORDER: Defendants' Motion to Dismiss 13 is GRANTED. Plaintiff's First Claim is DISMISSED with prejudice. Plaintiff's Second Claim is DISMISSED with prejudice as to Plaintiff's claim for quantum meruit and with l eave to amend as to Plaintiff's claim for fraud. Plaintiff is directed to file an amended complaint within thirty (30) days of the date of this Order. Failure to file an amended complaint within the time provieded will result in dismissal of this action. See formal ORDER. Signed on 3/30/2016 by Judge Ann L. Aiken. (rh)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF OREGON
MEDFORD DIVISION

Civ. No. 1: 15-cv-OO 137-AA

TAYLOR JUDD,

ORDER

Plaintiff,

v.
GARY C. GUNDERSON; SHEILA R.
GUNDERSON,
Defendants.

AIKEN, District Judge.
This matter comes before the Court on Defendants' Motion to Dismiss. ECF Dkt. # 13.
Plaintiff has not responded to Defendants' Motion and the time for doing so has now passed. For
the reasons set fo1ih below, Defendants' Motion is GRANTED.

Background
On December 21, 2005, the parties entered into an agreement by which Defendants
agreed to purchase a 1997 Silver Crest Triplewide for $122,000, "or the remaining balance that
is owed to Chase Manhattan Bank, which is the cunent security interest holder." Am. Comp!.,
Ex. B. The agreement provided that "[t]he Triplewide shall be transferred to purchase[r] upon

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payoff of said loan when purchaser herein refinances the prope1ty or the due date of the cmTent
installment note executed by the purchasers, no later than December, 2006." Id

Plaintiff

alleges that Defendants have an ongoing duty to pay Plaintiff the amount of $122,000 at 7.5%
interest from December 21, 2005, and that Defendants have not done so.
On January 25, 2006, Defendants entered into a second agreement by which Defendants
promised to pay Plaintiff $500,000 at 7.5% interest.

"Principal balance, accrued interest and

any applicable costs all due and payable on or before January 25, 2009." Am. Comp!., Ex. A.
Plaintiff alleges that Defendants still owe $361, 128 in principal, plus 7.5% interest accruing from
January 25, 2009.

Legal Standard
Where the plaintiff "fail[s] to state a claim upon which relief can be granted," the comt
must dismiss the action. Fed. R. Civ. P. 12(b)(6). Under Rule 12(b)(6), a complaint is construed
in favor of the plaintiff and its factual allegations are taken as true. Daniels-Hall v. Nat'! Educ.

Ass 'n, 629 F.3d 992, 998 (9th Cir. 2010). "[F]or a complaint to survive a motion to dismiss, the
non-conclusory 'factual content,' and reasonable inferences from that content, must be plausibly
suggestive of a claim entitling the plaintiff to relief." lvfoss v. US. Secret Serv., 572 F.3d 962,
969 (9th Cir. 2009) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). "A claim has facial
plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct alleged."

Iqbal, 556 U.S. at 678.

"[O]nce a claim has been stated adequately, it may be suppmted by showing any set of facts
consistent with the allegations in the complaint." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 563
(2007). "[G]enerally the scope of review on a motion to dismiss for failure to state a claim is
limited to the [c]omplaint[.]" Daniels-Hall, 629 F.3d at 998.

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Discussion
Defendants move to dismiss this action, arguing that Plaintiffs action to enforce the
debts is time barred. Plaintiff has not filed a response to Defendants' motion to dismiss and the
time for doing so has now passed.

I.

Action on Unpaid Notes
Plaintiffs first claim seeks to enforce the unpaid notes attached as Exhibits A and B to

Plaintiffs Amended Complaint. Exhibit A, identified as "Installment Note Interest Only," was
signed by Defendants on January 25, 2006. 1 Exhibit A provides that:
[Defendants] promise to pay to the order of Taylor Judd, an estate in fee simple
[sic], the sum of Five Hundred Thousand and 00/l 00 ($500,000.00) with interest
thereon at the rate of 7.5 per centper annum from January 30, 2006 until paid,
payable in monthly interest only installments; the first payment to be made on
January 25, 2008 and a like payment on the same day each month thereafter until
the whole sum of principal and interest has been paid in full or otherwise
indicated herein.... Principal balance, accrued interest and any applicable costs
all due and payable on or before January 25, 2009. 2
The Amended Complaint alleges that Defendants still owe $361,128, plus interest
accruing at 7.5% from January 25, 2009 on the note attached as Exhibit A.
Exhibit B, identified as "Additional Agreement between Buyer/Seller," was signed by the
pmiies on December 21, 2005. 3 Exhibit B provides:
The undersigned parties hereby agree and understand that in addition to the
purchase of the prope1iy located at 1205 Carpenter Hill Medford, Oregon. [sic]
Purchaser herein agrees to purchase the 1997 Silver Crest Triplewide that is
currently located at the above address for the amount of $122,000.00 or the
remaining balance that is owed to Chase Manhattan Bank, which is the cunent
security interest holder. The Triplewide shall be transfened to purchase [sic]
upon payoff of said loan when purchaser herein refinances the prope1iy or the due
1
2

It does not appear that Plaintiff signed the note attached as Exhibit A, although he is named in it.
Exhibit A does not clearly express why Defendants promised to pay $500,000 to Plaintiff at 7 .5% interest. It is not

clear \Vhat, if anything, \Vas given in consideration for this pro1nise.
3

It is not clear what other agreement Exhibit B is meant to supplement. The Amended Complaint seems to suggest
that it is an addition to Exhibit A, but Exhibit A was signed more than a month after Exhibit B. From the text of
Exhibit B, it appears that there was some earlier agreement between the pm1ies involving the sale of real prope11y.

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date of the current installment note executed by the purchasers, no later than
December, 2006. 4
The Amended Complaint alleges that Plaintiffs owe the entire sum of $122,000, plus
7 .5% interest accruing from December 21, 2005. As a preliminary matter, I note that Exhibit B
contains no reference to a 7 .5% interest rate.
"A federal court sitting in diversity applies the substantive law of the state, including the
state's statute of limitations." Albano v. Shea Homes Ltd. P'ship, 634 F.3d 524, 530 (9th Cir.
2011). Oregon law provides that "an action to enforce the obligation of a party to a note payable
at a definite time must be commenced within six years after the due date or dates stated in the
note." ORS 73.0118(1).
For Exhibit A, the plain terms of the note indicate that the entire sum is due no later than
January 25, 2009. Pursuant to ORS 73.0118(1), an action to enforce such a note must have been
commenced within six years of that date. Plaintiff filed the original complaint in this case on
January 26, 2009, more than six years after the due date stated in the note. An action to enforce
the note attached as Exhibit A is therefore time-ban:ed.
As for the note attached as Exhibit B, the te1ms of that note appear to require that the
payment be made "no later than December, 2006." Plaintiff commenced this action on January
26, 2009, more than six years after the due date stated in the note. An action to enforce the note
attached as Exhibit B is therefore time-barred.

4

It is unclear what precisely was intended by the language of Exhibit B. It appears that Plaintiff had a loan with
Chase Manhattan Bank, which was secured by the Triplewide, but the language indicates that Defendants were to
refinance some other loan before the transfer of the Triplewide was to occur. Exhibit B also references a "cunent
installment note" between the parties, but the only other note in the record is Exhibit A, which was signed more than
thirty days later. For the purposes of this motion, I will assume that Exhibit Bis a promissmy note for the sum of
$122,000.

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II.

Quantum il'Ieruit/Fraud
Plaintiffs second claim for relief alleges that Defendants fraudulently induced Plaintiff to

enter into the notes, with no intention or ability to repay Plaintiff and that Defendants have been
unjustly emiched. Defendants move to dismiss this claim on the basis that it is likewise timeban-ed. Plaintiff has not responded to Defendants' motion and the time for responding has now
passed.
The terms of the notes at issue are set forth above. Repayment of Exhibit B was to be
complete no later than December 2006. Repayment of Exhibit A was to be complete no later
than January 25, 2009. Defendants did not satisfy either note. The Amended Complaint alleges
that "[ o]n numerous occasions during the six years prior to the filing of this complaint, plaintiff
has demanded from defendants payment of the value of the services rendered but defendants
have failed and refused and continue to fail and refuse to pay such sums to plaintiff[.]"
I tum first to Plaintiffs quantum meruit claim. "A claim for quantum meruit is a quasicontractual claim." Sajeport, Inc. v. Equip. Roundup & }.ffg., Inc., 184 Or. App. 690, 706
(2002). "The elements of the claim are a benefit conferred, awareness by the recipient that a
benefit has been received, and judicial recognition that, under the circumstances, it would be
unjust to allow retention of the benefit without requiring the recipient to pay for it." Id. A
quantum merzlit or quasi-contract claim "soun.ds in contract," and has the same six-year statute of
limitations as an express contract claim. Jaqua v. Nike, Inc., 125 Or. App. 294, 297-99 (1993).
As I have previously detennined that Plaintiffs contract claims are time-ban-ed, I conclude that
any claim under a theory of quantum meruit is similarly time-baned.

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I turn then to Plaintiffs claim for fraud. Under Oregon law, an action for fraud or deceit
must be commenced within two years and this limitation "shall be deemed to commence only
from the discovery of the fraud or deceit." ORS 12.110(1).
Defendant argues that the claim should have accrued on the due date of the notes, but
Plaintiff need not assume that simply by defaulting on the loan Defendants were engaged in
fraud or deceit. Although the Amended Complaint alleges that Plaintiff has made repeated
demands for payment over the course of the six years that passed between the due date and the
commencement of this action, it is not clear from the Amended Complaint when, precisely,
Plaintiff learned of the alleged fraud or deceit. Without more precise pleading, I cannot say with
certainty whether Plaintiff's claim for fraud is time-barred.
Nor is Plaintiffs fraud claim free of other defects. Plaintiff has not adequately pied the
elements of a claim for fraud. See Webb v. Clark, 274 Or. 387, 391 (1976). Although these
defects justify dismissal, I conclude that Plaintiff should be given the oppo1iunity to amend his
claim for fraud.

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Conclusion

Defendants' Motion to Dismiss, ECF Dkt. # 13, is GRANTED. Plaintiff's First Claim is
DISMISSED with prejudice.

Plaintiff's Second Claim is DISMISSED with prejudice as to

Plaintiffs claim for quantum meiuif and with leave to amend as to Plaintiffs claim for fraud.
Plaintiff is directed to file an amended complaint within thirty (30) days of the date of this Order.
Failure to file an amended complaint within the time provided will result in dismissal of this
action.
It is SO ORDERED and DATED this

ANN AIKEN
District Judge

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X:l~ day of March 2016.