Adelsperger v. Elkside Dev. LLC

322 Or.App. 809

523 P.3d 142

Ron ADELSPERGER; Sally Adelsperger; Walter Arnold; Sandy Arnold; Larry Brewer; Marilyn Brewer; James Brown ; Lonna Brown; Bill Burgess; Jane Burgess ; Shirley Calkins; Jerry Christensen, aka Gerald Christenson; Cindy Christensen, aka Cynthia Evans-Christenson; Russell Cobb; Norma Cobb; Ron Ellis; Sallie Ellis; Amy Flickenger Pierpoint, aka Amy Flickenger-Pierpoint; Glen Pierpoint; Mike Fredrickson; Tresea Fredrickson; David Fulcer ; Sarah Fulcer; Jack Gibson; Sharon Sue Gibson, aka Sue Gibson ; Mary Gray; Rudolph Hanna ; Brenda Hanna; Gerald Hastings, aka Jerry Hastings; Shirley House; Michael Huntley; Gloria Huntley; Rodney Hyde, aka Rod Hyde; Patricia Hyde; Johnnie Issacs, aka Johnnie Isaacs; Rowina Issacs, aka Rowena Isaacs; Don Johnson, aka Donald Johnson; Linda Johnson ; Robert Kasmar; Linda Kasmar; Kraig Knutson; Barbara Knutson ; Tom Kuntz ; Brenda Kuntz ; Richard Mathis; Linda Mathis; Gary McCord; Marie McCord; David McReynolds; Joseph Moore; Geraldine Moore; Adam Morgan; Vicky Morgan, aka Victoria Morgan; Thomas Noel; William Oar; Donald Partridge, aka Don Partridge; Lucille Partridge, aka Lucy Partridge; Craig Pedersen ; Cheryl Pedersen; David Smith; Carol Smith; William Thomas, aka Bill Thomas; Jackie Thomas; Fred Waidtlow; Linda Waidtlow; Gary Wayman; Charlotte Wayman; David Weberg; Jeanne Weberg; Forrest Wheeler ; and Jane Wheeler, Plaintiffs-Respondents,

v. ELKSIDE DEVELOPMENT LLC, Successor in Interest to Osprey Point RV Park, LLC et al., Defendants,andBarnett Resorts, LLC, an Oregon Limited Liability Company, dba Osprey Point RV Resort, Defendant-Appellant.

A174291

Court of Appeals of Oregon.

Argued and Submitted January 10, 2022.

November 30, 2022

Alicia M. Wilson argued the cause for appellant. Also on the briefs was Frohnmayer, Deatherage, Jam Ieson, Moore, Armosino & McGovern, P.C.

Dan G. McKinney argued the cause for respondents. Also on the brief was DC Law.

Before Tookey, Presiding Judge, and Aoyagi, Judge, and Armstrong, Senior Judge.

AOYAGI, J.

This case involves a dispute over membership camping contracts. For nearly 20 years, Elkside Development, LLC (Elkside) owned and operated the Osprey Point RV Resort in Lakeside. Elkside sold memberships as part of its business model. In exchange for payment of an initial fee and annual dues, members received free use of the campground for a significant portion of the year and other benefits. In April 2017, Elkside sold the property to defendant Barnett Resorts, LLC. Two months later, defendant gave notice to all members—including plaintiffs—that it would not honor Elkside's membership contracts. That led to the filing of this action. Plaintiffs are 71 people who, collectively, were party to 39 membership contracts with Elkside. Fifty-six of the plaintiffs are aged 65 years or older. As relevant here, a jury found that, in failing to honor the contracts, defendant committed breach of contract, for which the jury awarded $500,000 in damages, and elder financial abuse under ORS 124.100, for which the jury awarded $900,000 in damages, which was automatically trebled to $2.7 million.

Defendant appeals the resulting judgment, raising four assignments of error. First, defendant challenges the denial of its motion for summary judgment on the breach of contract claim. We conclude that ruling is unreviewable. Second, defendant challenges the denial of its motion for a directed verdict on the breach of contract claim. We reject that claim of error and, accordingly, affirm the judgment as to the breach of contract claim. Third, defendant challenges the denial of its motion for a directed verdict on the elder financial abuse claim. We agree that the trial court erred in that regard and, accordingly, reverse and remand for dismissal of the elder financial abuse claim. Fourth, defendant challenges the denial of its motion for a directed verdict on a claim for intentional interference with economic relations (IIER), which was pleaded in the alternative to the claim for breach of contract. Our resolution of the second assignment of error obviates the need to address the fourth assignment of error.

I. FACTS

In reviewing the denial of a motion for a directed verdict, we consider the evidence and all reasonable inferences from that evidence in the light most favorable to the nonmoving party, which in this case was plaintiffs. York v. Bailey , 159 Or App 341, 349, 976 P.2d 1181, rev. den , 329 Or. 287, 994 P.2d 122 (1999). We state the facts accordingly.

From 1999 until April 2017, Elkside operated the Osprey Point RV Resort on real property that it owned in Lakeside.¹ As part of its business model, Elkside sold camping memberships, which were effectuated through membership contracts. People paid an initial fee to purchase a membership (such as $5,900) and annual dues to maintain the membership (such as $325 per year). As members, they were entitled to use the campground for free for a significant portion of the year (such as 265 days), including free utilities, and at a reduced rate for the rest of the year. They also received other on-site benefits at a reduced cost. The contracts generally provided for "lifetime" memberships and transfer rights.

Plaintiffs purchased their memberships between 1999 and 2016, entering into a total of 39 membership contracts with Elkside. Those 39 contracts vary in their details but are generally as described above. The contracts do not address what will happen in the event that the property is sold.²

Around 2005, Elkside began trying to sell the property, and it was on the market for most of the next 12 years. From the beginning, it was important to Mike Smalley—one of the members of Elkside—to try to sell the property to someone who would honor the existing campground memberships, and several possible buyers dropped out over the years because of the membership contracts. The property was initially listed at $5.9 million. Elkside later reduced the price to $3.3 million, then to $2.65 million in 2012, then to $1.995 million in 2013.

On April 28, 2017, defendant—an LLC whose members are Chris and Stefani Barnett—purchased the real property from Elkside, along with certain personal property and the business name, for $1.995 million. The closing documents did not list the membership contracts as an encumbrance or otherwise mention them. The executed bill of sale provided that the property was "free and clear of and from all encumbrances, security interests, liens, mortgages and claims whatsoever." Defendant was aware of the membership contracts, however, when it purchased the property. Before closing, defendant had requested a list of active memberships, reviewed copies of some or all of the membership contracts, and begun talking to people about whether the contracts would be binding on defendant if it purchased the property. Defendant also was aware that Smalley wanted the contracts to be honored after the sale; for example, in an email to Chris Barnett on February 26, 2017, attaching the "requested info on members," Smalley had stated, "I believe that honoring the remaining contracts is worth the effort. It is an income and will not create negative reviews around the industry."

There is conflicting evidence as to whether, at the time of closing, defendant intended to honor Elkside's membership contracts. In any event, there is no evidence that defendant ever promised or otherwise represented to Elkside that it would honor the contracts.³

On May 14, 2017, defendant sent a letter to people who had "purchased a Membership prior to the new ownership." The letter explained that defendant was not accepting any new memberships and announced "some immediate changes that will be in effect" relating to memberships. In describing those changes, the letter at least implied that defendant intended to honor the existing membership contracts, albeit perhaps on their narrowest terms, while disavowing any "verbal or handshake agreements" with the previous owner.⁴ Only 10 days later, however, on May 24, defendant sent an email to its staff that instructed them not to accept any new reservations from people who bought memberships from the previous owner, explaining that an attorney was reviewing the contracts and that it would be "too confusing for the resort to conduct business as usual" while that happened. The email went on to state that, if anyone with a membership asked what to do, "please kindly tell them they cannot stay for Free and must pay regular resort prices." The email then reiterated that all future reservations should be booked at the current season rates, that "[a]nyone can still stay at the resort but only under regular rates," and that "there are no special fees or free stays until further notice."

On June 20, 2017, defendant sent a letter to everyone with a membership contract. The upshot of the letter was that defendant would not be honoring the contracts. Defendant explained that it was the new owner, that it had purchased the resort but not the contracts, that defendant had "started fresh as a regular RV Park with nightly stays," and that defendant did not consider it financially feasible to honor memberships that were purchased from the previous owner. Plaintiffs identify June 20, 2017, as the date on which the contracts were breached.

In April 2019, two years after defendant purchased the property, plaintiffs filed this action, asserting claims against Elkside, defendant, Chris Barnett, and Stefani Barnett. Plaintiffs obtained a default judgment against Elkside, which was not appealed and is not at issue. Plaintiffs’ claims against the Barnetts individually were dismissed on summary judgment and are the subject of a separate appeal. See Adelsperger v. Elkside Development LLC , 317 Or App 666, 504 P.3d 1, rev. allowed , 370 Or. 56, 512 P.3d 811 (2022). As for plaintiffs’ claims against defendant, three claims went to the jury and are the subject of this appeal: breach of contract, elder financial abuse...