affirming trial court decision finding that a “transfer of assets” was a “fraudulent transfer under ORS 95.230(1)(a)” and thus that a debt, which had been reduced to judgment, had to be enforced
How later courts described this case
- affirming trial court decision finding that a “transfer of assets” was a “fraudulent transfer under ORS 95.230(1)(a)” and thus that a debt, which had been reduced to judgment, had to be enforced
- “Cross-motions for summary judgment are evaluated separately under [the] same standard.”
- first citing Williams, 351 Or. at 379–80; and then citing Yogman, 325 Or. at 361
- explaining the effect of an addendum that “modifies” preexisting terms “substantially”
Written by the judges who cited it.
The opinion
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF OREGON
RONALD TRIBBLE, Case No. 6:20-cv-00181-IM
Plaintiff, OPINION AND ORDER DENYING
DEFENDANT ROTO GRIT’S
v. MOTION FOR SUMMARY
JUDGMENT AND DENYING
SURFACE PREPARATION SYSTEMS PLAINTIFF’S MOTION FOR
INC., a Minnesota corporation, SURFACE PARTIAL SUMMARY JUDGMENT
LLC, a Nevada entity, SURFACE
WORLDWIDE LLC, a Nevada entity,
SURFACE HOLDINGS LLC, a Nevada
entity, RONALD BENSON, an individual,
DLS FACTORY CONSULTING LLC, and
ROTO GRIT LLC, a Wisconsin LLC,
Defendants.
PAGE 1 – OPINION AND ORDER DENYING DEFENDANT ROTO GRIT’S MOTION FOR
SURFACE PREPARATION SYSTEMS
INC., a Minnesota corporation, SURFACE
LLC, a Nevada entity, SURFACE
WORLDWIDE LLC, a Nevada entity,
SURFACE HOLDINGS LLC, a Nevada
entity, RONALD BENSON, an individual,
and ROTO GRIT LLC, a Wisconsin LLC,
Counter Claimants,
v.
RONALD TRIBBLE,
Counter Defendant.
DLS FACTORY CONSULTING LLC,
Cross Claimant,
v.
SURFACE PREPARATION SYSTEMS
INC., a Minnesota corporation, SURFACE
LLC, a Nevada entity, SURFACE
WORLDWIDE LLC, a Nevada entity,
SURFACE HOLDINGS LLC, a Nevada
entity, RONALD BENSON, an individual,
and ROTO GRIT LLC, a Wisconsin LLC,
Cross Defendants.
DLS FACTORY CONSULTING LLC,
Counter Claimant,
v.
RONALD TRIBBLE,
Counter Defendant.
PAGE 2 – OPINION AND ORDER DENYING DEFENDANT ROTO GRIT’S MOTION FOR
Natalie C. Scott, Scott Law Group LLP, P.O. Box 70422, Springfield, OR 97475. Bruce C.
Moore, Bruce C. Moore, PC, P.O. Box 11833, Eugene, OR 97440. Attorneys for Plaintiff and
Counter Defendant Ronald Tribble.
Michael B. Merchant, Britta E. Warren, and Matthew D. Colley, Black Helterline, LLP, 805 SW
Broadway, Suite 1900, Portland, OR 97205-3359. William S. Woodward, von Briesen & Roper,
s.c., 300 N. Broadway, Ste 2b, Green Bay, WI 54303. Attorneys for Defendants, Cross
Defendants, and Counter Claimants Surface Preparation Systems Inc., Surface LLC, Surface
Worldwide LLC, Surface Holdings LLC, and Roto Grit LLC.
Bradley S. Copeland, Arnold Gallagher PC, 800 Willamette Street, Suite 800, Eugene, OR
97401. Attorney for Defendant, Cross Defendant, and Counter Claimant Ronald Benson.
Donald J. Churnside, Hershner Hunter, LLP, 675 Oak Street, Suite 400, Eugene, OR 97401.
Attorney for Defendant, Counter Claimant, and Cross Claimant DLS Factory Consulting LLC.
IMMERGUT, District Judge.
This matter concerns a dispute over nine contracts and an accusation of fraud. The
dispute began with three parties: Plaintiff Ron Tribble, Defendant Ron Benson, and the
companies Benson operated on his own, Defendants Surface LLC, Surface Preparation Systems,
Surface Worldwide, and Surface Holdings.1 (When referring to both Defendant Benson and the
Surface entities, this Court will call them the “Benson-Surface Defendants.”) Between October
2016 and March 2019, Plaintiff and the Benson-Surface Defendants entered into nine
agreements—all of which, except the last, were drafted without attorneys. Under the agreements,
Plaintiff agreed to fund the Benson-Surface Defendants’ efforts to develop a “grit dryer,” a
machine that could accelerate the process for drying steel grit. As collateral, Plaintiff received a
security interest in, among other things, the Benson-Surface Defendants’ patents (collectively,
“Surface Assets”), and Plaintiff perfected his security through UCC filings in three states. During
1 Defendant Benson and the Surface Defendants are represented by separate counsel here,
but when the contracts were drafted, Defendant Benson was President of all four Surface entities
and entered into agreements on their behalf.
PAGE 3 – OPINION AND ORDER DENYING DEFENDANT ROTO GRIT’S MOTION FOR
this period, the Benson-Surface Defendants also gave security in the same collateral to another
investor, Defendant DLS Factory Consulting (“DLS”), which perfected its interests after Plaintiff
perfected his.
Then, in December 2019, the Benson-Surface Defendants sold the Surface Assets to
Defendant Roto Grit LLC. As part of the agreement, Defendant Roto Grit agreed to pay $50,000
to Plaintiff to release his interests in the collateral. Roto Grit argued that this would suffice under
a release clause contained in the nine contracts. Plaintiff refused the payment, however, arguing
that the provision Roto Grit invoked had been superseded. In Plaintiff’s view, moreover,
Defendant Roto Grit’s acquisition of the Benson-Surface Defendants’ assets was fraudulent.
These issues—how to interpret the nine contracts and whether Defendant Roto Grit and
the Benson-Surface Defendants engaged in fraud—are now before this Court. As to his security
interest, Plaintiff has made eight claims (which this Court numbers as Plaintiff does in his
Second Amended Complaint): (1) breach of contract against the Benson-Surface Defendants and
Roto Grit; (2) foreclosure of security interest against the Benson-Surface Defendants and
Defendants Roto Grit and DLS; (3) breach of fiduciary duty against Defendant Benson; (4)
negligent misrepresentation against Defendant Benson; (5) claim and delivery against the
Benson-Surface Defendants and Defendant Roto Grit; (6) declaratory relief against Defendants
Benson and Roto Grit; (7) constructive trust against Defendant Roto Grit; and (9) conversion
against Defendant Roto Grit. Second Amended Complaint (“SAC”), ECF 95 ¶¶ 29–69, 75–78.
Further, under Claim (8), Plaintiff has levied two counts of fraudulent transfer against the
Benson-Surface Defendants and Roto Grit: actual fraud and constructive fraud. Id. ¶¶ 70–74.
The Benson-Surface Defendants and Defendant Roto Grit have responded with three
nearly identical counterclaims against Plaintiff: (1) breach of contract/interference with
PAGE 4 – OPINION AND ORDER DENYING DEFENDANT ROTO GRIT’S MOTION FOR
contractual relations; (2) declaratory relief; and (3) injunctive relief.2 See Roto Grit’s Answer to
SAC, ECF 97 ¶¶ 82–92; Benson’s Answer to SAC, ECF 96 ¶¶ 79–87; Surface’s Answer to SAC,
ECF 101 ¶¶ 83–91.
Defendant DLS has filed its own cross- and counterclaims: (1) breach of
contract/foreclosure against Plaintiff, the Benson-Surface Defendants, and Defendant Roto Grit;
(2) fraudulent conveyance against the Benson-Surface Defendants and Defendant Roto Grit;3
and (3) successor liability against the Benson-Surface Defendants and Defendant Roto Grit. See
DLS’s Answer to SAC, ECF 98 ¶¶ 78–103.
In this Opinion, this Court resolves Plaintiff’s and Defendant Roto Grit’s cross-motions
for summary judgment. Plaintiff has sought partial summary judgment on his first, second, fifth,
and sixth claims and every Defendants’ counterclaims; he has not sought summary judgment on
his fraud claims or claims solely against Defendant Benson.4 See Plaintiff’s Corrected Motion
for Partial Summary Judgment (“Pl.’s MPSJ”), ECF 127. For its part, Defendant Roto Grit has
sought summary judgment on all of Plaintiff’s claims except the breach of fiduciary duty and
negligent misrepresentation claims solely against Defendant Benson. See Defendant Roto Grit’s
Motion for Summary Judgment (“Roto Grit’s MSJ”), ECF 122. In sum, both Parties ask this
2 Earlier in this case, Defendant Roto Grit and the Benson-Surface Defendants filed third-
party counterclaims against Defendant DLS, but they did not do so in their latest answers to
Plaintiff’s Second Amended Complaint. See Lacey v. Maricopa County, 693 F.3d 896, 928 (9th
Cir. 2012) (en banc) (“[F]or any claims voluntarily dismissed, we will consider those claims to
be waived if not repled.”).
3 Defendant DLS’s Answer mislabels this claim as going against Plaintiff, but Plaintiff
did not participate in the sale of the Surface Assets to Roto Grit.
4 Though this matters not to this Court’s disposition, Plaintiff has limited how much of
his first and sixth claims he would like resolved on summary judgment. Plaintiff’s Reply Brief,
ECF 135 at 3 (seeking only to resolve “non-payment breach and related damages”).
PAGE 5 – OPINION AND ORDER DENYING DEFENDANT ROTO GRIT’S MOTION FOR
Court to resolve their obligations under the nine contracts, and Defendant Roto Grit asks this
Court to resolve Plaintiff’s fraud claims against him.
This Court DENIES both Defendant Roto Grit’s Motion for Summary Judgment and
Plaintiff’s Motion for Partial Summary Judgment. There are genuine disputes of fact over the
fraudulent transfer counts, so this Court denies summary judgment as to them. Because there are
issues of material fact as to whether the December 2019 transaction between the Benson-Surface
Defendants and Defendant Roto Grit was fraudulent and voidable, there are necessarily issues of
material fact over whether the December 2019 transaction could validly release Plaintiff’s
security interest in the Surface Assets. Therefore, at the summary judgment stage, this Court
cannot resolve whether Plaintiff continues to retain a valid security interest in the Surface Assets
under the nine agreements. Finally, this Court concludes that Defendant Roto Grit can be held
liable for the Benson-Surface Defendants’ alleged breach of the nine agreements, though how
much liability Defendant Roto Grit has assumed must ultimately be determined at trial. In sum,
all claims, counterclaims, and crossclaims must be resolved at trial.
BACKGROUND
A. The Nine Agreements Between Plaintiff and the Benson-Surface Defendants
1. On October 11, 2016, Plaintiff and Defendant Benson (as President of Surface
Preparation Systems) entered an agreement titled “Stage II Grit Dryer Loan Agreement,” ECF
125, Ex. 2 at 1. The Stage II Agreement provided that Plaintiff was to lend $300,000 to
Defendant Benson to “fund the manufacturing of the grit dryer and purchase of a
motorhome/trailer.” Id. The loan was to be “repaid from rental revenue from a first GD1K-T
SURFACE grit dryer,” with interest paid at “10% per annum from the date of [the] agreement to
the date the loan [was] paid back in full.” Id. The Stage II Agreement also listed “Security” for
PAGE 6 – OPINION AND ORDER DENYING DEFENDANT ROTO GRIT’S MOTION FOR
Plaintiff. Id. at 2. That security included: a “UCC-1 Security Agreement filing in any applicable
state on one SURFACE Worldwide GD1K-T grit dryer including all parts and final product as it
is being built”; a “UCC-1 Security Agreement filing in any applicable state on a motorhome and
trailer combination” registered to a corporation owned solely by Defendant Benson; a “right to
rent and/or sell the grit dryer in collaboration with DLS Factory Consulting, LLC if” the
principal was not paid back within a specified period; and a “license under all applicable
intellectual property, including patents, trademarks, and copyrights.” Id. The Stage II Agreement
listed Defendant DLS as second in priority and Plaintiff as third. Id. Plaintiff was to receive 1.5%
of any “Net Exit Sale Compensation.” Id. at 3.
2. A month later, on November 25, 2016, Plaintiff and Defendant Benson (as
President of Surface Worldwide) entered into another, one-page agreement. See ECF 125, Ex. 3.
This document “acknowledge[d] the existence” of the Stage II Agreement and that Plaintiff had
thus far furnished $150,000 of the promised $300,000 to Defendant Benson. Id. Under this
second agreement, Plaintiff would “immediately wire” $75,000 to Defendant Surface LLC to
buy parts for the roto grit dryer. Id. This agreement also confirmed that Plaintiff had a security
interest in two vehicles, a 2005 Kenworth and a 1994 Wildside Trailer. Id.
3. Next, on March 14, 2017, Plaintiff and Defendant Benson (as President of Surface
LLC) entered a third agreement titled “Surface, LLC Investment Amended Agreement,” ECF
125, Ex. 4 at 1. The Amended Agreement “acknowledge[d] the existence of the” Stage II
Agreement and that Plaintiff had disbursed $225,000 to Defendant Benson. Id. Plaintiff agreed to
provide the remaining $75,000 promised in the Stage II Agreement. Id. Plaintiff also agreed to
lend another $50,000 to Defendant Benson “for the completion of the Grit Dryer.” Id. Plaintiff
and Defendant Benson agreed that the Stage II Agreement “describe[d] the security interests for
PAGE 7 – OPINION AND ORDER DENYING DEFENDANT ROTO GRIT’S MOTION FOR
this combined loan” of $350,000. Id. Plaintiff’s share of “Net Exit Sale Compensation” increased
from 1.5% to 1.75%. Id.
4. That same day, Plaintiff and Defendant Benson (as President of Surface LLC)
agreed to an Addendum to the Amended Agreement, ECF 125, Ex. 4 at 3.5 The Addendum
expressly did “not alter [the] structure” of the prior loan agreements. Id. It provided that: “[T]he
amount of . . . distribution of Net Sale Proceeds or any other liquidating distribution to Member
Ronald Tribble shall not be less than seven hundred fifty thousand dollars ($750,000).” Id.
5. Two months later, on May 16, 2017, Plaintiff and Defendant Benson (as President
of Surface LLC) entered into a fifth agreement titled “Continuation for Funding of Surface
LLC,” (“Continuation Agreement”), ECF 125, Ex. 5 at 1. The Continuation Agreement
“acknowledge[d] and accept[ed] all prior agreements signed by Ron Benson[,] President of
Surface LLC[,] and Ron Tribble[,] the Lender Investor.” Id. The Continuation Agreement also
acknowledged that Plaintiff had disbursed $300,000 up to that point and that “[a]ll stipulations,
requirements and security interests remain in place from prior agreements.” Id. Plaintiff agreed
to open a $100,000 line of credit at 12% interest to Surface LLC so that it could “pay bills that
are directly related to the development and construction of the first Surface Roto Grit Dryer.” Id.
And the Continuation Agreement established a board “consisting of Ron Tribble, David Stickle
[the owner of Defendant DLS], Gary Solomon and Ron Benson.”6 Id. Finally, “[t]he minimum
5 Plaintiff views the March 2017 Amended Agreement and Addendum as a single legal
document, which explains why Plaintiff says there were eight agreements total. Pl.’s MPSJ, ECF
127 at 11 n.3.
6 Gary Solomon was a patent attorney for the Surface Defendants who now works for
Defendant Roto Grit following Roto Grit’s acquisition of the Surface Assets. See Deposition of
Gary Solomon (“Solomon Depo.”), ECF 126, Ex. 28 at 2–3 (14:7–16, 18:22–25).
PAGE 8 – OPINION AND ORDER DENYING DEFENDANT ROTO GRIT’S MOTION FOR
guaranteed payment upon sale of the company [was] increased from $750,000.00 to
$1,000,000.00,” id. at 2, and “[t]he percentage of Surface LLC owned by Ron Tribble [was]
increased from 1.5% to 2.5%,” id. at 1.
6. Four months later, on September 24, 2017, Plaintiff and Defendant Benson (as
President of Surface LLC) entered into their sixth agreement: “Surface LLC Amended
Agreement for Additional Funding” (“Additional Funding Agreement”), ECF 125, Ex. 6 at 1.
The Additional Funding Agreement observed that “[a]s of August 28, 2017, the full $100,000
[credit] ha[d] been dispersed.” Id. Plaintiff agreed to lend another $100,000 at 10% interest to
Defendant Benson “to complete the first Surface Roto Grit Dryer.” Id. at 2. The combined
$500,000 loan and the interest accrued would be due to Plaintiff by June 1, 2018. Id. The
Additional Funding Agreement acknowledged the prior Stage II Agreement. Id. at 1–2. The
Additional Funding Agreement also provided that “a new UCC-1 Security Agreement filing
[would] be made for the second Surface Roto Grit Dryer when complete, unless Ron Tribble has
been paid in full under each of the loan agreements prior to completion of the second dryer,” id.
at 1. Plaintiff’s share of “Net Exit Sale Compensation” increased from 2.5% “to a greater
percentage in proportion to whatever funds are drawn up to the $100,000 based on a $20,000,000
valuation of Net Exit Sale Proceeds.” Id. at 2. Finally, the Additional Funding Agreement stated:
“The Minimum Guaranteed Distribution (MGD) from either Net Exit Sale Proceeds or any other
liquidation event will be increased from $1,250,000.00 to $2,000,000.00.” Id. at 3.
7. On March 9, 2018, Plaintiff and Defendant Benson (as President of Surface LLC)
entered into another agreement titled “Addendum to Continuation for Funding of Surface LLC”
(“Continuation Addendum”), ECF 125, Ex. 7 at 1. The Continuation Addendum included the
following provision, which is at the heart of this case:
PAGE 9 – OPINION AND ORDER DENYING DEFENDANT ROTO GRIT’S MOTION FOR
LIQUIDATION EVENT PRIOR TO COMPLETION OF
SURFACE ROTO GRIT DRYER #1
In the event that the company is liquidated prior to completion of
the Surface Roto Grit Dryer #1, sale value of the intellectual
property shall be initially paid to Ron Tribble up to the $50,000
amount. Remaining sale value of the intellectual property shall be
distributed proportionally to the investors.
Id. (This Court will refer to this paragraph as the “Liquidation Clause.”) The Continuation
Addendum listed an “Intellectual Property Schedule”—describing three trademarks, three
patents, two patent applications, and various “Know-How”—in which Plaintiff had a security
interest. Id. at 2.
8. About a year later, on February 19, 2019, Plaintiff and Defendant Benson (as
President of Surface LLC) agreed to a “Term Sheet Restructuring of Tribble Surface
Agreement,” ECF 125, Ex. 8 at 1. The Term Sheet states that Surface LLC’s then “valuation
[was] $20 [million] based on future earnings.” Id. The Term Sheet provided for the creation of a
board overseeing Surface LLC, with the board “made up of” Ron Tribble, Ron Benson, and
David Stickle. Id. The Term Sheet also converted Plaintiff’s loans into “6% of the net exit sale
proceeds of” Surface LLC, but expressly reserved that “IP, patents, know how etc. that is held as
security for loan to continue as security for investment.” Id. at 2. The Term Sheet includes the
following key provision (what this Court will refer to as the “Release Clause”):
The IP, patents, know how, etc. to be released at the point in time
that Surface has applied for a commercial loan and the Bank is
requiring it for collateral or until a commercial loan is secured.
Id. at 2. The Term Sheet provided that it “supersede[d] all previous agreements.” Id. at 3.
9. On March 19, 2019, Plaintiff and Defendant Benson (as President of Surface
LLC, Surface Holdings, Surface Worldwide, and Surface Preparation Systems) entered their
final agreement titled “Loan Agreement Modification,” ECF 125, Ex. 1 at 1. “The Parties
PAGE 10 – OPINION AND ORDER DENYING DEFENDANT ROTO GRIT’S MOTION FOR
agree[d] that no prior documents or agreements have been superseded.” Id. “Notwithstanding
any provision of any such prior agreement or document and except as expressly modified
herein,” the Modification continued, “all terms of such prior documents or agreements continue
in full force and effect.” Id. Defendant Benson’s deadline for paying back the loans was
“extended to April 18, 2019.” Id. The Parties agreed to the “exclusive jurisdiction of the courts in
Oregon.” Id. at 2. The Modification affirmed Plaintiff’s security interest in:
[A]ny and all Grit Dryers and all parts and product of any such
Grit Dryer as it is being built (and specific Grit Dryers upon
completion of additional machines per Addendums), the
motorhome currently registered in Montana, a trailer registered to
Borrowers, and general intangibles, including the right to rent or
sell the grit dryer and all intellectual property including US Patent
8,920,210, US Patent 9,058,707, US Patent 9,592,587, Patent
Applications 20170297169 and 20160016289 regarding systems
and methods pertaining to drying grit used for abrasive blasting
and managing and maintaining abrasive blasting machines, know-
how in CAD drawings for the Roto Grit Dryer # 1 and trademarks
for SURF ACE, Roto Grit Dryer, and Fast-Pass.
Id. Then, from March 19 to 22, 2019, Plaintiff filed UCC-1 financing statements in Iowa,
Nevada, and Minnesota, as well as an assignment with the U.S. Patent Office.7 ECF 125, Ex. 9.
B. Events Leading to the Formation of Defendant Roto Grit
Defendant did not pay back the loan on April 18, 2019. Deposition of Ron Benson
(“Benson Depo.”), ECF 126, Ex. 27 at 19 (151:7–18). Four days later, Plaintiff sent a default
notice to the Benson-Surface Defendants demanding payment or the tender of collateral. ECF
125, Ex. 10. Thereafter, Plaintiff, Defendant Benson, and Attorney Solomon devoted several
7 Defendant DLS filed its own UCC-1 financing statements in Iowa, Minnesota, and
Nevada on October 24, 2019. See ECF 98, Ex. D.
PAGE 11 – OPINION AND ORDER DENYING DEFENDANT ROTO GRIT’S MOTION FOR
months to securing another third-party investor. Declaration of Ron Tribble (“Tribble Decl.”),
ECF 125 ¶ 14.
While these discussions were happening, in May 2019, Defendant Benson and Attorney
Solomon began talking to an investor named Dale Roberts without informing Plaintiff.8 Benson
Depo., ECF 133, Ex. 33 at 6 (105:10–12). There is a dearth of clear evidence on what precisely
occurred between May and August 2019.9 On August 30, 2019, Defendant Benson assigned all
of the patents to the roto grit dryer to Defendant Surface Holdings LLC. ECF 126, Ex. 15. All
this was done without Plaintiff’s knowledge. Tribble Decl., ECF 125 ¶ 15; Second Declaration of
Ron Tribble (“Second Tribble Decl.”), ECF 132 ¶ 5. Emails show that Defendant Benson and
Attorney Solomon were in contact with Mr. Roberts and his attorney William Woodward in
August 2019, discussing the amount owed to Plaintiff by Defendant Benson. ECF 126, Ex. 16 at
1. But it was not until September 2019 that Attorney Solomon first told Plaintiff that Mr. Roberts
and his investor group, SI Group, had an interest in investing in the roto grit dryer.10 Second
Tribble Decl., ECF 132 ¶ 5.
Next, negotiations began between Plaintiff, Defendant Benson, Attorney Solomon,
Attorney Woodward (who is Roto Grit’s counsel here), Mr. Roberts, and SI Group. ECF 126,
Ex. 17. These parties ostensibly contemplated a new Surface Holdings LLC entity (not to be
8 Mr. Roberts and his investor group SI Group are not parties here.
9 Some evidence shows that on May 27, 2019, the Benson-Surface Defendants executed a
promissory note with Mr. Roberts lending $10,000 to Defendant Benson in his capacity as
President of Surface Holdings. ECF 133, Ex. 30 at 1. This promissory note refers to a preexisting
“Investment Agreement.” Id. Yet other promissory notes seemingly refer to this promissory note
as the September 30, 2019 promissory note. See ECF 140, Ex. 22 at 3–4.
10 Plaintiff states in his Motion for Partial Summary Judgment that he did not learn of
Dale Roberts until October 2019, Pl.’s MPSJ, ECF 127 at 14, but his declarations contradict this.
PAGE 12 – OPINION AND ORDER DENYING DEFENDANT ROTO GRIT’S MOTION FOR
confused with the existing one) in which SI Group would be a member alongside Plaintiff,
Defendant Benson, and Defendant DLS. ECF 126, Ex. 18. These negotiations ultimately failed.
While those negotiations were ongoing, Defendant Benson and Mr. Roberts, through
Attorney Woodward, continued to discuss a deal without Plaintiff’s involvement. See, e.g., ECF
133, Ex. 32. On October 23, 2019, Defendant Benson sent an email to Attorney Woodward titled
“Contacting Tribble,” in which Defendant Benson wrote he was “very thankful [Attorney
Woodward and Mr. Roberts] now understand the pain and cost [Plaintiff Tribble] has inflicted on
the whole team. We look forward to hearing the strategy you feel makes the most sense to rid us
of him.” ECF 140, Ex. 18. Then, on November 7, 2019, Defendant Benson emailed Attorney
Woodward about having additional assets concerning “steel grit recycling machines” combined
with the Surface Assets held by Surface Holdings, LLC and told Attorney Woodward to
“determine,” with Attorney Solomon, “how best to legally handle this asset sale/purchase.” ECF
140, Ex. 19 at 1–2. Attorney Woodward responded: “Are you saying that Holdings needs to pay
something to Surface Preparation for these assets? If so, how much?” Id. at 1.11 Less than a
month later, on November 20, 2019, SI Group (through Mr. Roberts) and Defendant Benson
signed a “Letter of Intent . . . [for SI] to acquire substantially all of the assets of Surface
Holdings, LLC, a Nevada limited liability company.” ECF 126, Ex. 19 at 1. Plaintiff did not
know about this letter of intent nor about these backdoor negotiations until discovery. Tribble
Decl., ECF 125 ¶ 16. On November 20, 2019, Mr. Roberts loaned another $73,000 to Defendant
Benson in his capacity as President of Surface Holdings. ECF 133, Ex. 30 at 2. Two days later,
Plaintiff’s counsel issued a final demand for payment in full to Defendant Benson. ECF 125, Ex.
11 Although the two emails attached as exhibits to ECF 140 were not discussed in the
Parties’ summary judgment briefing, this Court may consider them. Fed. R. Civ. P. 56(c)(3).
PAGE 13 – OPINION AND ORDER DENYING DEFENDANT ROTO GRIT’S MOTION FOR
11. On the same day, Mr. Roberts registered a new entity, Defendant Roto Grit LLC, in the State
of Wisconsin, ECF 126, Ex. 20. Plaintiff did not know about Defendant Roto Grit until late
December 2019. Tribble Decl., ECF 125 ¶ 18.
On December 4, 2019, Mr. Roberts loaned Defendant Benson, in his capacity as
President of Surface Holdings, another $15,000. ECF 133, Ex. 30 at 3. The next day, Attorney
Solomon sent an email demanding that Plaintiff release his lien in the Surface LLC assets. ECF
126, Ex. 21 at 4. Attorney Solomon attached a letter from Associated Bank opening a line of
credit to Surface Holdings, LLC, which listed Mr. Roberts as a guarantor. Id. at 6–8. Attorney
Solomon argued that because the loan was secured through a “1st lien on all business assets of
Surface Holdings, LLC”—i.e., the intellectual property and vehicles—Plaintiff’s security interest
was terminated under the February 19, 2019 Term Sheet. Id. at 4, 6–8. Plaintiff has not released
its security interest and has never heard from Associated Bank. Tribble Decl., ECF 125 ¶ 17.
On December 6, 2023, Plaintiff began this suit against the Benson-Surface Defendants in
Lane County Circuit Court, Oregon. ECF 126, Ex. 22.
On December 18, 2019—twelve days after Plaintiff began this case in Oregon state
court—Defendant Benson (as President of Surface LLC, Surface Holdings, and Surface
Worldwide) executed an Asset Purchase Agreement with Defendant Roto Grit. See Asset
Purchase Agreement (“APA”), ECF 125, Ex. 12. Under the APA, Defendant Roto Grit bought
“all of [the Benson-Surface Defendants’] right, title and interest in the assets set forth on
Schedule 1.01 of the disclosure schedules,” id. § 1.01, which in turn includes the intellectual
property in which Plaintiff had a security interest, id. at 20. The APA also set aside $50,000 for
payment to Plaintiff in exchange for the termination of his interest in the intellectual property:
[Roto Grit] shall pay [$50,000] . . . to [the Benson-Surface
Defendants] at the Closing . . . to be paid to Ronald Tribble in
PAGE 14 – OPINION AND ORDER DENYING DEFENDANT ROTO GRIT’S MOTION FOR
accordance with the terms of the Addendum to Continuation for
Funding of Surface, LLC-May 16, 2017 which provides: “In the
event that [the] company is liquidated prior to completion of the
Surface Roto Grit Dryer #1, sale value of the intellectual property
shall be initially paid to Ron Tribble up to $50,000 amount.
Remaining sale value of the intellectual property shall be
distributed proportionately to the investors.”
Id. § 1.04. The APA assumed up to $650,000 of the Benson-Surface Defendants’ liabilities to
Plaintiff. Id. § 1.03. The APA permitted Defendant Benson to retain his “personal property not
contributed to or used by any Surface entity.” Id. at 2, 22.
Neither Plaintiff nor Defendant DLS were informed about the sale of the Surface Assets
to Defendant Roto Grit—despite that both Plaintiff and DLS were board members of Surface
LLC.12 See Tribble Decl., ECF 125 ¶¶ 18–19; Solomon Depo., ECF 126, Ex. 28 at 9 (87:14–17);
Benson Depo., ECF 126, Ex. 27 at 6–7 (38:23–39:1). As is undisputed, Plaintiff has refused the
$50,000 and refused to release his UCC-1s.
Plaintiff alleges that Defendant Benson owes him $826,820.00 (as well as interest),
Tribble Decl., ECF 125 ¶ 21. The Benson-Surface Defendants have not “pa[id] any sum towards
the amounts owed.” Benson Depo., ECF 126, Ex. 27 at 19 (151:10–12). Defendant Benson is a
fifteen percent minority shareholder in Defendant Roto Grit, was the inaugural President of
Defendant Roto Grit, and has continued to develop the roto grit dryer. See Benson Depo., ECF
126, Ex. 27 at 9, 17 (75:7–11, 141:14–16); Deposition of Dale Roberts (“Roberts Depo.”), ECF
126, Ex. 29 at 2 (14:15–23); ECF 126, Ex. 25 at 64–65. Defendant Benson stated at oral
argument that he owned more equity in Defendant Roto Grit at the time the APA went into
effect. ECF 150. Attorney Solomon does patent work for Defendant Roto Grit. Solomon Depo.,
12 To be sure, all Parties agree that no formal operating agreement delineating the
privileges and responsibilities of the Board under the nine agreements ever went into effect.
PAGE 15 – OPINION AND ORDER DENYING DEFENDANT ROTO GRIT’S MOTION FOR
ECF 126, Ex. 28 at 2–3 (14:7–16, 18:22–25). Defendants Surface Preparation Systems and
Surface LLC remain active today, according to Defendant Benson. See Declaration of Ronald
Benson (“Benson Decl.”), ECF 130-1 ¶¶ 2–3.
C. Procedural Background
This case was removed to the United States District Court for the District of Oregon on
January 31, 2020 and initially assigned to the Honorable Ann Aiken. Notice of Removal, ECF 1.
At first, Plaintiff did not name Roto Grit as a Defendant, but eventually did in his First Amended
Complaint. ECF 13.
Defendants filed several motions to dismiss, primarily arguing that the U.S. District
Court for the District of Oregon lacked jurisdiction over Defendant Roto Grit. Opinion and Order
Denying Motions to Dismiss (“MTD Op.”), ECF 61 at 11 (Aiken, J.); see ECF 21, 24, 35, 36.
Defendants asserted that Defendant Roto Grit was not bound to the forum selection clause
contained in the Parties’ final agreement from March 2019. MTD Op., ECF 61 at 11. During the
sixteen months that the motions to dismiss and a subsequent motion to certify interlocutory
appeal were pending before Judge Aiken, no discovery was exchanged between the Parties. See
ECF 27, 29, 44, 49, 51, 53, 54, 59; see also ECF 146 at 9–10.
Judge Aiken ultimately denied the motions to dismiss. Judge Aiken held that Defendant
Roto Grit “made itself ‘part of the larger contractual relationship’ existing between Plaintiff and
the Benson-Surface Defendants.” MTD Op., ECF 61 at 14. The court concluded that: the APA
transferred the assets of the Benson-Surface Defendants to Defendant Roto Grit; Roto Grit made
plain in the APA that it understood the terms of the nine agreements and was aware of Plaintiff’s
suit against the Benson-Surface Defendants; Roto Grit, alongside Defendant Benson, is using the
assets it acquired to continue development of the dryer that Plaintiff originally funded; and in the
PAGE 16 – OPINION AND ORDER DENYING DEFENDANT ROTO GRIT’S MOTION FOR
APA, Roto Grit essentially assumed the debts that the Benson-Surface Defendants owed to
Plaintiff. Id. Defendant Roto Grit requested that Judge Aiken certify an interlocutory appeal and
issue a stay pending appeal, ECF 64, but Judge Aiken denied this request. ECF 68.
Plaintiff and Defendant Roto Grit have had several discovery disputes stemming from
Defendant’s refusal to produce certain documents. On September 28, 2022, Judge Aiken again
ordered Defendant Roto Grit to produce relevant documents to Plaintiff. ECF 93. Next, on
March 29, 2023, Plaintiff moved to compel Defendant Roto Grit to produce further relevant
documents, ECF 109, and on the record in a June 5, 2023 hearing, Judge Aiken granted, denied,
and reserved various portions of the Motion to Compel, ECF 117. Defendant Roto Grit failed to
comply with Judge Aiken’s ruling, however, prompting Plaintiff to move to enforce Judge
Aiken’s ruling on June 27, 2023, ECF 120.
This matter was reassigned from Judge Aiken to this Court on June 21, 2023. ECF 119.
After this Court received the case, Plaintiff filed the Motion to Enforce, and Plaintiff and
Defendant Roto Grit filed their cross-motions for summary judgment. The Motions to Compel
and Enforce were still pending when the summary judgment briefing was completed. Consistent
with Judge Aiken’s prior rulings, this Court largely granted Plaintiff’s discovery motions on the
record at a September 13, 2023 hearing. ECF 136. This Court also ordered Plaintiff, with
Defendants’ cooperation, to submit a draft order for this Court to issue. Id. This Court entered
the written order on September 18, 2023, which ordered Defendant Roto Grit to produce
unprivileged emails, financial documents substantiating tax returns, and copies of documents
reflecting payment to third parties, including Attorney Solomon. ECF 137. At the same time, this
Court reserved ruling on any sanctions against Defendant Roto Grit with leave for Plaintiff to
PAGE 17 – OPINION AND ORDER DENYING DEFENDANT ROTO GRIT’S MOTION FOR
renew. ECF 136. Plaintiff filed a Motion for Sanctions against Defendant Roto Grit on
November 9, 2023. Plaintiff’s Sanctions Motion, ECF 139.
This Court has ruled on the Motion for Sanctions, awarding $9,473.00 in attorney’s fees
and costs to Plaintiff. ECF 151. This Court now rules on Plaintiff’s and Defendant Roto Grit’s
cross-motions for summary judgment.
LEGAL STANDARDS
A party is entitled to summary judgment if the “movant shows that there is no genuine
dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R.
Civ. P. 56(a). The moving party has the burden of establishing the absence of a genuine dispute
of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). The court must view the
evidence in the light most favorable to the non-movant and draw all reasonable inferences in the
non-movant’s favor. Clicks Billiards, Inc. v. Sixshooters, Inc., 251 F.3d 1252, 1257 (9th Cir.
2001). Although “[c]redibility determinations, the weighing of the evidence, and the drawing of
legitimate inferences from the facts are jury functions, not those of a judge . . . ruling on a
motion for summary judgment,” the “mere existence of a scintilla of evidence in support of the
[non-movant’s] position [is] insufficient.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252,
255 (1986). “Where the record taken as a whole could not lead a rational trier of fact to find for
the non-moving party, there is no genuine issue for trial.” Matsushita Elec. Indus. Co. v. Zenith
Radio Corp., 475 U.S. 574, 587 (1986) (citation and quotation marks omitted).
When parties file cross-motions for summary judgment, the court “evaluate[s] each
motion separately, giving the nonmoving party in each instance the benefit of all reasonable
inferences.” A.C.L.U. of Nev. v. City of Las Vegas, 466 F.3d 784, 790–91 (9th Cir. 2006)
(quotation marks and citation omitted); see also Pintos v. Pac. Creditors Ass’n, 605 F.3d 665,
PAGE 18 – OPINION AND ORDER DENYING DEFENDANT ROTO GRIT’S MOTION FOR
674 (9th Cir. 2010) (“Cross-motions for summary judgment are evaluated separately under [the]
same standard.”). In evaluating the motions, “the court must consider each party’s evidence,
regardless under which motion the evidence is offered.” Las Vegas Sands, LLC v. Nehme, 632
F.3d 526, 532 (9th Cir. 2011) (citation omitted).
“Where the non-moving party bears the burden of proof at trial, the moving party need
only prove that there is an absence of evidence to support the non-moving party’s case.” In re
Oracle Corp. Sec. Litig., 627 F.3d 376, 387 (9th Cir. 2010) (citation omitted). The non-moving
party then bears the burden of designating “specific facts demonstrating the existence of genuine
issues for trial.” Id. (citation omitted). “This burden is not a light one.” Id. The Supreme Court
has directed that in such a situation, the non-moving party must do more than raise a
“metaphysical doubt” as to the material facts at issue. Matsushita Elec. Indus. Co., 475 U.S. at
586.
DISCUSSION
This Opinion proceeds as follows. Part A denies summary judgment to Defendant Roto
Grit on Plaintiff’s fraudulent transfer claim because there are disputed issues of material fact as
to key elements of that claim. Part B denies summary judgment to both Defendant Roto Grit and
Plaintiff as to the breach-of-contract-related claims and counterclaims because there are genuine
issues of material fact as to whether the Liquidation Clause was triggered. Further, the Release
Clause is inapplicable here because the agreement containing the Clause was signed by a party
(Defendant Surface LLC) other than the one that attempted to trigger it (Defendant Surface
Holdings). Part C holds that Defendant Roto Grit assumed at least $650,000 in liability for the
Benson-Surface Defendants’ alleged breach of the nine agreements. In short, this Court denies in
full both Plaintiff’s and Defendant Roto Grit’s motions for summary judgment.
PAGE 19 – OPINION AND ORDER DENYING DEFENDANT ROTO GRIT’S MOTION FOR
A. The Fraud Counts
In his Complaint, Plaintiff’s eighth claim of fraudulent transfer under the Uniform
Fraudulent Transfer Act (“UFTA”), O.R.S. 95.200–310, accuses Defendants Roto Grit and the
Benson-Surface Defendants of actual fraud and constructive fraud. SAC, ECF 95 ¶¶ 70–74. The
UFTA “permits a creditor to collect a debt when the debtor has tried to strip itself of assets that
the creditor could have applied for that purpose.” Jakobitz v. Iron Horse Bus. Servs., LLC, 208
Or. App. 515, 522 (2006).13 Defendant Roto Grit maintains that Plaintiff lacks evidence to prove
his fraudulent transfer counts at trial. Roto Grit’s MSJ, ECF 122 at 31–36. Plaintiff has
responded by identifying relevant evidence uncovered during discovery. Pl.’s Resp., ECF 131 at
24–27.
This Court agrees with Plaintiff that there are genuine issues of material fact that must be
resolved at trial. The sections below address each fraud count in turn.
1. There Are Disputed Issues of Material Fact as to Whether Defendant Roto Grit
Committed Actual Fraud
Under O.R.S. 95.230(1)(a), “[a] transfer made or obligation incurred by a debtor is
fraudulent as to a creditor, whether the creditor’s claim arose before or after the transfer was
made or the obligation was incurred, if the debtor made the transfer or incurred the
obligation . . . [w]ith actual intent to hinder, delay, or defraud any creditor of the debtor.” To
prove “actual intent,” Plaintiff must present evidence on whether:
(a) The transfer or obligation was to an insider;
(b) The debtor had retained possession or control of the
property transferred after the transfer;
13 On January 1, 2024, revisions to the UFTA will go into effect, and the statute will be
renamed the Voidable Transactions Act. See 2023 Or. Laws. Ch. 83.
PAGE 20 – OPINION AND ORDER DENYING DEFENDANT ROTO GRIT’S MOTION FOR
(c) The transfer or obligation was disclosed or concealed;
(d) Before the transfer was made or obligation was incurred,
the debtor was sued or threatened with suit;
(e) The transfer was of substantially all the debtor’s assets;
(f) The debtor had absconded;
(g) The debtor had removed or concealed assets;
(h) The value of the consideration received by the debtor was
reasonably equivalent to the value of the asset transferred
or the amount of the obligation incurred;
(i) The debtor was insolvent or became insolvent shortly after
the transfer was made or the obligation was incurred;
(j) The transfer had occurred shortly before or shortly after a
substantial debt was incurred; and
(k) The debtor had transferred the essential assets of the
business to a lienor who had transferred the assets to an
insider of the debtor.
O.R.S. 95.230(2). These factors are not exclusive. Id.
Defendant Roto Grit argues that it is entitled to summary judgment because (i) Plaintiff
was paid $50,000 to release his interest in the Surface Assets, (ii) Roto Grit provided $700,000
($50,000 to Plaintiff and the assumption of $650,000 in debt) in consideration for the Surface
Assets, and (iii) there were negotiations between Dale Roberts and Plaintiff before the creation
of Roto Grit. Roto Grit’s MSJ, ECF 122 at 31–35.
As Plaintiff points out, however, the record contains other evidence, unrebutted by
Defendant, that could prove Defendant’s actual intent to commit fraud. Organized according to
the relevant O.R.S. 95.230(2) factors, and viewed in the light most favorable to the non-movant
Plaintiff, the allegations are:
PAGE 21 – OPINION AND ORDER DENYING DEFENDANT ROTO GRIT’S MOTION FOR
First, (a) the transfer or obligation was to an insider, and (b) the debtor had retained
possession or control of the property transferred. Defendant Benson was the inaugural President
of Defendant Roto Grit, continues to work on the roto grit dryer, and holds equity in Defendant
Roto Grit under an incentive agreement. See Benson Depo., ECF 126, Ex. 27 at 9, 17 (75:7–11.
141:14–16); Roberts Depo., Ex. 29 at 2 (14:15–23); ECF 126, Ex. 25 at 64–65; ECF 126, Ex. 26;
see also O.R.S. 95.200(7)(a)(D) (defining an “insider” as “[a] corporation of which the debtor is
a director, officer or person in control,” if the debtor is an individual).
Second, (c) the transfer or obligation was disclosed or concealed. From May to
September 2019, Defendant Benson, Attorney Solomon, Attorney Woodward, and Mr. Roberts
discussed the potential transfer of the Surface Assets, negotiated a $10,000 loan from Mr.
Roberts to Defendant Benson, and formed an “Investor Agreement”—all without Plaintiff’s
knowledge. See supra at 12 & n.9. And even after Plaintiff learned of Mr. Roberts, negotiations
continued without Plaintiff. See supra at 13–15. Defendant Benson (as President of Surface
Holdings) acquired a loan from Associated Bank with Mr. Roberts as his guarantor and an
additional $88,000 in loans directly from Mr. Roberts—again, all without Plaintiff’s knowledge.
Nor did Plaintiff know about the creation of Roto Grit (which was established in November
2019) until late December 2019.
Third, (g) the debtor had removed or concealed assets. Defendant Benson first
transferred all of the grit dryer IP from Surface LLC to Surface Holdings in August 2019. ECF
126, Ex. 15. Then, in early November 2019, Defendant Benson discussed further transferring
assets from Surface Preparation Systems to Surface Holdings. See supra at 13. And then in late
November 2019, Defendant Benson acquired a loan from Associated Bank, which was secured
by the roto grit dryer intellectual property. None of this was done with Plaintiff’s knowledge.
PAGE 22 – OPINION AND ORDER DENYING DEFENDANT ROTO GRIT’S MOTION FOR
Fourth, (d) before the transfer was made or obligation was incurred, the debtor was sued
or threatened with suit, and (j) the transfer had occurred shortly before or shortly after a
substantial debt was incurred. The Benson-Surface Defendants were sued just twelve days
before Defendant Roto Grit acquired all of the Surface Assets. See supra at 14. Defendant
Benson had been in default to Plaintiff since April 2019. Benson Depo, ECF 126, Ex. 27 at 19
(151:7–18).
Fifth, (e) the transfer was of substantially all the debtor’s assets. Defendant Roto Grit
acquired most of the Benson-Surface Defenants’ assets, most notably the IP. (Though, to be
certain, how many of the assets the Surface Defendants still retain and whether the Surface
Defendants continue to do business in good standing is an open question, see infra at 32).
Sixth, (f) the debtor had absconded. Defendant Benson avoided service from Plaintiff by
moving his motorhome. See ECF 132 ¶ 2. Indeed, Defendant Benson openly showed animosity
toward Plaintiff, stating, “I hate and distrust Tribble,” ECF 133, Ex. 32 at 42, and telling
Attorney Woodward that he “look[ed] forward to hearing the strategy you [Attorney Woodward]
feel makes the most sense to rid us of him [Plaintiff Tribble],” ECF 140, Ex. 18.
Seventh, (i) the debtor was insolvent or became insolvent shortly after the transfer was
made or the obligation was incurred. In April 2019, Defendant Benson defaulted on his
approximately $600,000 debt to Plaintiff and, soon after in May 2019, began talking to Mr.
Roberts. See supra at 11–12. Thus, the negotiations leading to the Roto Grit APA began after
Defendant Benson was effectively insolvent.
Defendant Roto Grit does not meaningfully contest the veracity of this evidence; rather, it
notes that some allegations must be fleshed out through credibility findings by the jury, a point
with which this Court agrees. See ECF 146 at 34. As a result, there are substantial disputes of
PAGE 23 – OPINION AND ORDER DENYING DEFENDANT ROTO GRIT’S MOTION FOR
material fact on Defendants’ actual intent in entering the APA. This Court therefore denies
Defendant Roto Grit’s Motion for Summary Judgment as to Plaintiff’s count of Actual Fraud.
See Nissan Fire & Marine Ins. Co. v. Fritz Cos., 210 F.3d 1099, 1103 (9th Cir. 2000) (“[I]f the
nonmoving party produces enough evidence to create a genuine issue of material fact, the
nonmoving party defeats the motion.” (citation omitted)).
2. There Are Disputed Issues of Material Fact as to Whether Defendant Roto Grit
Committed Constructive Fraud
For Plaintiff to prove “Constructive Fraud,” he must show by a preponderance of
evidence that Defendant Benson entered the APA “[w]ithout receiving a reasonably equivalent
value in exchange for the transfer . . . , and . . . (A) [w]as engaged or was about to engage in a
business or a transaction for which the remaining assets . . . were unreasonably small in relation
to the business or transaction; or (B) [i]ntended to incur, or believed or reasonably should have
believed that [he] would incur, debts beyond [his] ability to pay as they become due.” O.R.S.
95.230(1)(b).
There is a genuine dispute of material fact as to whether Defendant Benson received a
“reasonably equivalent value” in the APA for the Surface Assets. To start, Defendant Roto Grit
contends that $700,000 is reasonably equivalent to the value of the Surface Assets, see Roto
Grit’s MSJ, ECF 122 at 36. But the nine agreements value the Surface Assets as being worth
$20,000,000, ECF 125, Ex. 8 at 1–2, Defendant Benson has testified that, after the APA, Mr.
Roberts valued Roto Grit “in the range of $5.5 million,” ECF 133, Ex. 33 at 12 (188:5–14),
Plaintiff believes the Surface Assets to be worth “well in excess of $1 million,” ECF 132 ¶ 4, and
SI Group has contributed over $1 million to Defendant Roto Grit, according to Defendant Roto
Grit’s counsel at oral argument. Doubtless, the value of the Surface Assets is a significant
dispute of material fact.
PAGE 24 – OPINION AND ORDER DENYING DEFENDANT ROTO GRIT’S MOTION FOR
* * *
In total, there are disputed issues of material fact for Plaintiff’s fraud counts. A trial
ruling in Plaintiff’s favor on the fraud counts could result in the “[a]voidance of the” APA “to
the extent necessary to satisfy” Plaintiff’s alleged claim. O.R.S. 95.260(1)(a).
B. The Breach-of-Contract-Related Claims
For the Parties’ array of breach-of-contract-related claims, Plaintiff’s and Defendant Roto
Grit’s cross-motions largely boil down to two disputes of contract interpretation: whether the
Liquidation and Release Clauses remain valid, and, if so, whether the conditions listed in those
Clauses have been met here. Oregon substantive law governs these questions, as this matter falls
under this Court’s diversity jurisdiction. See Conrad v. Ace Prop. & Cas. Ins. Co., 532 F.3d
1000, 1004 (9th Cir. 2008).
In Oregon, courts follow three steps to interpret contracts, with an eye toward capturing
“the mutual intent of the parties as it existed at the time of contracting.” Pauma Band of Luiseno
Mission Indians of Pauma & Yuima Rsrv. v. California, 813 F.3d 1155, 1165 (9th Cir. 2015)
(citations and emphasis omitted); see Yogman v. Parrott, 325 Or. 358, 361 (1997) (Graber, J.).
To start, the court must determine, as a matter of law, whether the disputed provision is
ambiguous. Yogman, 325 Or. at 361 (consulting dictionaries to interpret contractual terms). A
contractual provision is ambiguous if it can “reasonably be given more than one plausible
interpretation.” Williams v. RJ Reynolds Tobacco Co., 351 Or. 368, 379 (2011) (citation
omitted). “The court must, if possible, construe the contract so as to give effect to all of its
provisions.” Id. (citation omitted). And the court cannot “insert what has been omitted” nor
“omit what has been inserted.” O.R.S. 42.230; see Yogman, 325 Or. at 361. If the provision’s
meaning is “clear from the text and context of the contract,” then the court “applies the
PAGE 25 – OPINION AND ORDER DENYING DEFENDANT ROTO GRIT’S MOTION FOR
contractual term to the facts.” Ross Dress for Less, Inc. v. Makarios-Oregon, LLC, 210 F. Supp.
3d 1259, 1263 (D. Or. 2016) (first citing Williams, 351 Or. at 379–80; and then citing Yogman,
325 Or. at 361). If the provision is ambiguous, however, then the court must consider extrinsic
evidence of the contracting parties’ intent and construe the contract in accord with that intent.
Yogman, 325 Or. at 363–64. If the contract is still ambiguous after an examination of relevant
extrinsic evidence, then as a last resort the court applies maxims of construction. Id. at 364–65.
Applying these principles, this Court holds that: the Release and Liquidation Clauses
remain in force, the Release Clause was not triggered, and there are disputed issues of material
fact as to whether the Liquidation Clause was triggered. This Court therefore denies both
Plaintiff and Defendant Roto Grit’s Motions for Summary Judgment. The sections below
(1) interpret and apply the contracts and then (2) rule on the summary judgment motions.
1. Interpreting and Applying the Contracts
a. The Liquidation and Release Clauses Were Not Superseded
Plaintiff begins with a threshold argument, contending that the last of the nine
agreements, March 2019 Loan Modification Agreement (which was signed by Plaintiff and
Defendant Benson as the President of all four Surface Defendants), superseded the Liquidation
and Release Clauses. Pl.’s MPSJ, ECF 127 at 23–25. Defendant Roto Grit responds that the
Modification Agreement had no such effect. Roto Grit’s Response to Plaintiff’s MPSJ (“Roto
Grit’s Resp.”), ECF 129 at 10, 13. The key provision states:
Obligors; Effectiveness of Prior Agreements. The parties hereby
agree that Surface Preparation Systems, Inc.; Surface, LLC;
Surface Worldwide, LLC; Surface Holdings, LLC; and Ronald
Benson are jointly and severally liable to pay all sums due to
Lender under the Loan Agreement and Addendums. The Parties
agree that no prior documents or agreements have been
superseded. Notwithstanding any provision of any such prior
agreement or document and except as expressly modified herein,
PAGE 26 – OPINION AND ORDER DENYING DEFENDANT ROTO GRIT’S MOTION FOR
all terms of such prior documents or agreements continue in full
force and effect.
ECF 125, Ex. 1 at 1 (underlining added).
This Court agrees with Defendant’s reading. The underlined portion sets forth two rules.
First, it establishes a baseline: “all terms” contained in “prior documents or agreements continue
in full force and effect.” Then, it establishes a carve-out to this baseline: past agreements do not
“continue in force and effect” if they are “expressly modified” in the March 2019 Loan
Modification Agreement.
The key word here is “expressly,” which means that a message must be “[c]learly and
unmistakably communicated; stated with directness and clarity.” Express, Black’s Law
Dictionary (11th ed. 2019) (“Black’s”); see also Express, adj., adv. & noun, Oxford English
Dictionary (3d ed.) (“Of a meaning, rule, etc.: clearly and unambiguously stated; explicit. Of
written or spoken language: formulated in clear and distinct terms; unmistakable in meaning.”).
Under the terms of the Loan Modification Agreement, a past agreement can be superseded only
if there is an unmistakable modification of that past agreement’s terms.
No such term can be found in the Loan Modification Agreement with regard to the
Release and Liquidation Clauses. Plaintiff argues that the Loan Modification Agreement
“expressly modified” the Liquidation and Release Clauses because the Agreement “affirm[s] [the
Benson-Surface Defendants’] continuing grant of a security interest to Lender” in the Surface
Assets and also “authorize[s]” Plaintiff to “take any and all action to maintain, perfect, preserve,
and protect [his] security interest.” Pl.’s MPSJ, ECF 127 at 23 (citing ECF 125., Ex. 1 at 2).
Nothing in the quoted text, however, refers to a release of the security interest. Cf. Express,
Black’s (listing “Implied” as an antonym). The March 2019 Loan Modification agreement thus
PAGE 27 – OPINION AND ORDER DENYING DEFENDANT ROTO GRIT’S MOTION FOR
does not supersede the Release and Liquidation Clauses.14 This Court now interprets and applies
the two clauses in turn.
b. The Release Clause Was Not Triggered
The Release Clause, contained in the February 2019 Term Sheet, states:
The IP, patents, know how, etc. to be released at the point in time
that Surface has applied for a commercial loan and the Bank is
requiring it for collateral or until a commercial loan is secured.
ECF 125, Ex. 8 at 2 (emphasis added).
The Parties offer several arguments focusing on the meaning of “until a commercial loan
is secured.” Defendant Roto Grit posits that because Surface Holdings, LLC received a $100,000
line of credit from Associated Bank, the Benson-Surface Defendants “secured” a “commercial
loan” triggering the Release Clause. Roto Grit’s MSJ, ECF 122 at 21. Plaintiff counters that, to
trigger the Release Clause, Associated Bank must have “secured” the loan by “contact[ing]
Plaintiff to demand release of his security interest.” Pl.’s MPSJ, ECF 127 at 24.
What both Parties miss, however, is that the Release Clause could not have been
triggered here because Surface LLC—not any other Surface entity—needed to secure the loan to
trigger the Clause. Three pieces of textual evidence confirm this. First, the Term Sheet was
signed by Defendant Benson solely as the President of Surface LLC, not as a representative of
any other Surface entity. ECF 125, Ex. 8 at 3. Second, the final agreement between Plaintiff and
Defendants Benson-Surface describes the Term Sheet as “signed by Surface, LLC and Lender.”
ECF 125, Ex. 1 at 1. And third, Defendant Benson knew how to sign deals representing the other
14 Plaintiff shared this understanding of the Liquidation Clause in an email he wrote in
March 2019. See ECF 129-1, Ex. A at 1.
PAGE 28 – OPINION AND ORDER DENYING DEFENDANT ROTO GRIT’S MOTION FOR
Surface entities, see supra at 6–11—that he signed as Surface LLC unequivocally signals that the
Parties intended Surface LLC to be bound to the Release Clause.
The $100,000 line of credit from Associated Bank was pursued exclusively by Surface
Holdings, LLC—not, as required, by Surface LLC. ECF 126, Ex. 21 at 6 (letter from Associated
Bank). Accordingly, the Release Clause was not triggered here.
c. There Are Genuine Issues of Material Fact Concerning Whether the
Liquidation Clause Was Triggered
i. The Meaning of the Liquidation Clause
The Liquidation Clause provides:
LIQUIDATION EVENT PRIOR TO COMPLETION OF
SURFACE ROTO GRIT DRYER #1
In the event that the company is liquidated prior to completion of
the Surface Roto Grit Dryer #1, sale value of the intellectual
property shall be initially paid to Ron Tribble up to the $50,000
amount. Remaining sale value of the intellectual property shall be
distributed proportionally to the investors.
ECF 125, Ex. 7 at 1.15 Plaintiff and Defendant Roto Grit disagree as to the meaning of the terms
“liquidated” and “liquidation event.” In Plaintiff’s view, the term “‘liquidating event’ as that
phrase is commonly understood,” requires “advertising and [the] sale of assets to the highest
bidder.” Pl.’s MPSJ, ECF 127 at 25; Plaintiff’s Response to Defendant Roto Grit’s MSJ (“Pl.’s
Resp.”), ECF 131 at 17. Defendant Roto Grit counters that the term’s meaning is not so narrow
and encompasses any situation in which a company sells “everything” and has “no material
15 This Court recognizes that an earlier agreement states “[t]he Minimum Guaranteed
Distribution . . . from . . . any . . . liquidation event will be . . . $2,000,000.00,” ECF 125, Ex. 6 at
3, but the Liquidation Clause was added as part of an addendum to that agreement, ECF 125, Ex.
7. Because the Liquidation Clause modifies the minimum payment to Plaintiff from $2,000,000
to $50,000, it supersedes the earlier provision. See City of Oregon City v. Clackamas County, 96
Or. App. 651, 655–56 (1989) (explaining the effect of an addendum that “modifies” preexisting
terms “substantially”).
PAGE 29 – OPINION AND ORDER DENYING DEFENDANT ROTO GRIT’S MOTION FOR
business assets left to sell or transfer.” Roto Grit’s Resp., ECF 129 at 14; Benson Response to
Pl.’s MPSJ (“Benson Resp.”), ECF 130 at 25 (similar).
Defendant Roto Grit’s reading is more consistent with the ordinary meaning of
liquidation. As a leading treatise explains, “[t]he term ‘liquidation’ has a fairly defined legal
meaning. . . . It means the winding up of [a corporation’s] business and affairs, including the
collection of assets, the settlement of liabilities, the disposition of its properties, and the
distribution of its remaining property among the shareholders according to their interests.” 16A
Fletcher Cyc. Corp. § 7968; see Liquidate, Black’s (similar). Contrary to Plaintiff’s
understanding, this definition does not require an open auction. As commonly understood,
moreover, liquidation entails paying off preexisting debts—i.e., the debts secured by security
interests in the corporation’s assets. See Claimant ID 100081155 v. BP Expl. & Prod., Inc., 920
F.3d 925, 931 (5th Cir. 2019) (citing dictionary definitions and summarizing that “[t]hese
dictionaries . . . suggest that the prevailing meaning of ‘liquidation’ is sale of assets to pay off
debts”); Liquidate, Merriam-Webster, https://www.merriam-webster.com/dictionary/liquidate
(last updated Dec. 12, 2023) (“[T]o . . . apportion assets toward discharging the indebtedness
of.”). Thus, those interests were to be released, and their corresponding debts discharged, at the
time of liquidation.
Plaintiff resists this last point, arguing that the “liquidation event” described in the
Liquidation Clause does not necessarily require the release of its interests in the Surface Assets,
but this assertion is unpersuasive. Plaintiff points to the passage preceding the Liquidation
Clause, which states that “[t]his Addendum Agreement including the security interest in the
intellectual property shall be terminated without recourse upon completion of the build, test, and
functional readiness for demonstration and lease of the Surface Roto Grit Dryer #1.” ECF 125,
PAGE 30 – OPINION AND ORDER DENYING DEFENDANT ROTO GRIT’S MOTION FOR
Ex. 7 at 1. According to Plaintiff, this provision shows that “[t]he parties knew how to provide
for a lien release had they intended to do so.” Pl.’s Resp., ECF 131 at 16. But Plaintiff identifies
no rule of contract interpretation that an unambiguous term’s meaning must change because the
parties used more specific language elsewhere in the contract. Cf. Van v. Fox, 278 Or. 439, 446
(1977) (“[N]either party should be allowed to avoid his contractual duties merely because the
language which was utilized to express the agreement is less specific and complete than that
which a careful lawyer would ordinarily employ.”). Accordingly, this Court abides by the plain
meaning of “liquidation.”16
ii. Application of the Liquidation Clause
Defendant Roto Grit contends that the December 2019 APA triggered the Liquidation
Clause because it provided Plaintiff $50,000 to release his security interests in the Surface
Assets. For two independent reasons, though, this Court holds that there are genuine disputes of
material fact that preclude a ruling on summary judgment.
First, as explained above, there are genuine issues of material fact as to whether that
Agreement is avoidable as a fraudulent transfer. Supra at 20–25. Thus, there are necessarily
genuine issues of material fact as to whether the Agreement was a valid transfer of assets
sufficient to trigger the Liquidation Clause. Cf. Restatement (Second) of Contracts § 311, cmt. i
(Am. Law Inst. Oct. 2023 update) (“A release of the promisor may be a fraud on the beneficiary
or on other creditors of the promisee if the promisee is insolvent and the release is made without
fair consideration, or if the release is made with actual intent to hinder, delay or defraud
16 Per the terms of the nine agreements, it matters not whether Plaintiff was a lender or
investor because even though Plaintiff seemingly converted his loans to Defendants Benson-
Surface into an “investment,” the agreements make clear: “IP, patents, know how etc. that is held
as security for loan to continue as security for investment.” ECF 125, Ex. 8 at 2.
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creditors. In that event, even though the beneficiary has not assented or relied, the release is not
effective except to the extent that the promisor has innocently given consideration for it.”
(citations omitted)); Restatement (First) of Contracts § 143, cmt. b (Am. Law Inst. Oct. 2023
update) (“If there is an actual intent on the part of the promisee to defraud, the promisor can
claim no advantage from a release or rescission unless he gave value therefor and was ignorant
of the promisee’s wrongful intent.”); Norris v. R &T Mfg., LLC, 265 Or. App. 672, 681 (2014)
(affirming trial court decision finding that a “transfer of assets” was a “fraudulent transfer under
ORS 95.230(1)(a)” and thus that a debt, which had been reduced to judgment, had to be
enforced); Lachapelle v. Kim, Case No. 15-cv-02195-JSC, 2015 WL 5461542, at *5 (N.D. Cal.
Sept. 16, 2015) (“California’s Uniform Fraudulent Transfer Act . . . provides that a transfer may
be deemed invalid if a debtor transfers property with ‘the actual intent to hinder, delay, or
defraud any creditor of the debtor.’” (quoting Cal. Civ. Code. § 3439.04(a)(1))).
Second, the status of the Surface Defendants—the entities that would have needed to
liquidate—is a point of considerable confusion. At oral argument, counsel for Defendants
Benson, Surface, and Roto Grit could not agree as to whether some of the Surface Defendants
remain corporate entities in good standing; Defendant Benson’s counsel stated that they do,
consistent with his client’s declaration, see Benson Decl., ECF 130-1 ¶¶ 2–3, yet the Surface
Defendants’ counsel stated that they do not. Cf. Tyree Oil, Inc. v. Bureau of Lab. & Indus., 168
Or. App. 278, 283 (2000) (holding that there was no consolidation or merger of entities when
they remained legally distinct). And there is no clear evidence on the record about the current
status of those entities and what assets they continue to own after the APA. For these reasons,
too, there are genuine issues of material fact as to the Surface Defendants’ current status that are
relevant to whether the Liquidation Clause has been triggered.
PAGE 32 – OPINION AND ORDER DENYING DEFENDANT ROTO GRIT’S MOTION FOR
* * *
In sum, the Release Clause has not been triggered, and as to whether the Liquidation
Clause has been, there are disputed issues of material fact precluding summary judgment.
2. This Court Denies Summary Judgment to Plaintiff and Defendant Roto Grit
From this conclusion, this Court holds that both Defendant Roto Grit’s Motion for
Summary Judgment and Plaintiff’s corresponding Motion for Partial Summary Judgment must
be denied. This Court addresses the relevant claims and counterclaims in turn.
a. Plaintiff’s Claims
Except those directed solely against Defendant Benson, Defendant Roto Grit has sought
summary judgment on all of Plaintiff’s claims: (1) breach of contract against the Benson-Surface
Defendants and Defendant Roto Grit; (2) foreclosure of security interest against the Benson-
Surface Defendants and Defendants Roto Grit and DLS; (5) claim and delivery against the
Benson-Surface Defendants and Defendant Roto Grit; (6) declaratory relief against Defendants
Benson and Roto Grit; (7) constructive trust against Defendant Roto Grit; and (9) conversion
against Defendant Roto Grit. For his part, Plaintiff has sought summary judgment on an
overlapping set of his claims: (1) breach of contract against the Benson-Surface Defendants and
Defendant Roto Grit; (2) foreclosure of security interest against the Benson-Surface Defendants
and Defendants Roto Grit, and DLS; (5) claim and delivery against the Benson-Surface
Defendants and Defendant Roto Grit; and (6) declaratory relief against Defendants Benson and
Roto Grit. See also supra at 5 n.4.
As Plaintiff’s Second Amended Complaint makes clear, all of these claims hinge on
Plaintiff having a valid security interest in the Surface Assets. See SAC, ECF 95 ¶¶ 31–32, 35,
52, 56–57, 65, 76. Yet as explained above, there is a dispute of material fact over whether
PAGE 33 – OPINION AND ORDER DENYING DEFENDANT ROTO GRIT’S MOTION FOR
Defendant Roto Grit and the Benson-Surface Defendants triggered the conditions to release
Plaintiff’s security interest in the Surface Assets. Accordingly, this Court must deny both
Defendant Roto Grit’s and Plaintiff’s cross-motions for summary judgment on these claims
because, at this time, this Court cannot determine Plaintiff’s rights under the nine agreements.
b. Defendants’ Counterclaims
This Court further denies Plaintiff’s motion for summary judgment as to Defendant Roto
Grit and the Benson-Surface Defendants’ counterclaims against Plaintiff for breach of contract
and declaratory and injunctive relief. Pl.’s MPSJ, ECF 124 at 8, 20. Because it is disputed
whether Plaintiff has any valid security interests under the nine agreements, at this posture,
Plaintiff cannot negate Defendants’ allegations that Plaintiff has breached the nine agreements by
refusing to release his UCC-1s in the Surface Assets. See Roto Grit’s MSJ, ECF 122 at 21.
c. Defendant DLS’s Counterclaim for Foreclosure
Plaintiff also moved for summary judgment on Defendant DLS’s Counterclaim for
Foreclosure on the ground that Plaintiff has a superior security interest to DLS in the Surface
Assets. Pl.’s MPSJ, ECF 127 at 31. Defendant DLS did not file a response brief. Nonetheless,
because it is disputed as a matter of fact whether Plaintiff has any interests in the Surface Assets
under the nine agreements, this Court must deny Plaintiff’s motion. See Henry v. Gill Indus.,
Inc., 983 F.2d 943, 950 (9th Cir. 1993) (explaining that even if a party does not respond to an
adverse motion for summary judgment, the court must still deny the motion if “the movant has
failed to meet its burden of demonstrating the absence of triable issues”).
C. Defendant Roto Grit Is Liable for at Least $650,000 of the Benson-Surface Defendants’
Alleged Breach of the Nine Agreements
Under Oregon law, when “one corporation sells or otherwise transfers all of its assets to
another corporation, the latter is not liable for the debts and liabilities of the transferor.”
PAGE 34 – OPINION AND ORDER DENYING DEFENDANT ROTO GRIT’S MOTION FOR
Gonzalez v. Standard Tools & Equip. Co., 270 Or. App. 394, 397 (2015) (citation omitted).
There are four exceptions, however, under which the purchasing corporation becomes liable for
the debts and liabilities of the selling corporation:
(1) Where the purchaser expressly or impliedly agrees to assume
such debts; (2) where the transaction amounts to a consolidation or
merger of the corporations; (3) where the purchasing corporation is
merely a continuation of the selling corporation; and (4) where the
transaction is entered into fraudulently in order to escape liability
for such debts.
Id. (citation and internal quotation marks omitted).
Defendant Roto Grit essentially concedes that it can be found liable up to $650,000 for
any alleged breach of contract by the Benson-Surface Defendants. In Defendant Roto Grit’s
words, it “has only assumed the liabilities to Plaintiff under very specific circumstances, i.e., (1)
where a Court enters an order determining the Benson-Surface Defendants are liable to Plaintiff;
and (2) where such an order would not cause the total liabilities assumed by Roto Grit to exceed
$650,000.00.” Defendant Roto Grit’s Reply Brief, ECF 134 at 7.
That said, at this procedural posture, the $650,000 cap is a floor, not a ceiling, for
liabilities. As discussed above, there are disputed issues of fact as to whether there was a merger
or consolidation of Defendant Roto Grit and the Surface Defendants, whether Defendant Roto
Grit is merely continuing the Surface Defendants’ business, and whether the APA was entered
into fraudulently. See Schmoll v. aCandS, Inc., 703 F. Supp. 868, 872–74 (D. Or. 1988)
(discussing and applying the fraudulent transaction exception to the general rule of successor
liability), aff’d, 977 F.2d 499 (9th Cir. 1992); Giant Mfg. Co. v. Bikee Corp., No. Civ. 02–6222–
TC, 2004 WL 1698056, at *5–6 (D. Or. July 28, 2004) (discussing the continuation exception).
Should the jury find in Plaintiff’s favor on any of these issues and decide to award more than
PAGE 35 – OPINION AND ORDER DENYING DEFENDANT ROTO GRIT’S MOTION FOR
$650,000 to Plaintiff, Defendant Roto Grit could be responsible for more than the $650,000
liability it expressly assumed.
CONCLUSION
This Court DENIES Defendant Roto Gnt’s Motion for Summary Judgment and DENIES
Plaintiff's Motion for Partial Summary Judgment. All claims, counterclaims, and crossclaims
must be resolved at trial. For the Parties’ convenience, this Court lists these claims below:
1 | Breach of contract against Defendants Benson-Surface and Roto Grit
Foreclosure of security interest against Defendants Benson-Surface, Roto Grit, and DLS
Breach of fiduciary duty against Defendant Benson
Negligent misrepresentation against Defendant Benson
Claim and delivery against Defendants Benson-Surface and Roto Grit
| 6 | Declaratory relief against Defendants Benson and Roto Grit
Constructive trust against Defendant Roto Grit
Actual fraud and constructive fraud against Defendants Benson-Surface and Roto Grit
| 9 | Conversion against Defendant Roto Grit
| Breach of contract/interference with contractual relations
Declaratory relief
Injunctive relief
Breach of contract/foreclosure against Plaintiff and Defendants Benson-Surface and
Roto Grit
Fraudulent conveyance against Defendants Benson-Surface and Roto Grit
Successor liability against Defendants Roto Grit and Benson-Surface
IT IS SO ORDERED.
DATED this 21st day of December, 2023.
/s/ Karin J. Immergut
Karin J. Immergut
United States District Judge
PAGE 36 — OPINION AND ORDER DENYING DEFENDANT ROTO GRIT’S MOTION FOR
SUMMARY JUDGMENT AND PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT