Windmill Inns of America, Inc. v. Cauvin

567

Argued and submitted January 29, affirmed October 2, 2019

WINDMILL INNS OF AMERICA, INC.,

an Oregon corporation,

Plaintiff-Appellant,

v.

Jean Robert H. CAUVIN,

aka John Cauvin, an individual, and

Melinda Cauvin, an individual,

Defendants-Respondents.

Klamath County Circuit Court

1304655CV; A164868

450 P3d 1013

Plaintiff appeals limited judgments dismissing its claims on summary judg-

ment. Plaintiff asserted claims for (1) specific performance of an employment

agreement to compel the sale of stock at the contract price, (2) breach of contract

for failure to convey the stock, (3) breach of contract for violating a restriction

on the transfer or assignment of shares, (4) fraudulent misrepresentation, and

(5) negligent misrepresentation. On appeal, plaintiff raises five assignments of

error challenging the dismissal of each claim respectively. Held: As to the first

two assignments of error, the employment agreement did not waive defendants’

statutory rights, as dissenting shareholders, to be paid the “fair value” of their

shares. ORS 60.554. The third assignment of error was not properly raised; and

the fourth and fifth claims were not commenced within the statute of limitations.

Affirmed.

Benjamin M. Bloom, Judge.

Richard N. Sieving argued the cause for appellant. Also

on the briefs were Michelle K. McClure and The Sieving

Law Firm, A.P.C.

Erik J. Glatte argued the cause for respondents. Also on

the brief were Huycke O’Connor Jarvis, LLP; and Robert A.

Royal and Tiffany & Bosco, P.A.

Before Lagesen, Presiding Judge, and DeVore, Judge, and

James, Judge.

DeVORE, J.

Affirmed.

568 Windmill Inns of America, Inc. v. Cauvin

DeVORE, J.

Asserting five assignments of error, plaintiff Windmill

Inns of America, Inc. (Windmill) appeals from limited judg-

ments following orders on summary judgment to dismiss its

five claims against defendants Cauvin. As to the first two

assignments and claims, we determine that an employment

agreement did not waive the Cauvins’ rights to be paid, under

Oregon statute, the “fair value” of their shares as dissenting

shareholders rather than to be paid a lesser, contract value

under the employment agreement. We do not reach the mer-

its of the third assignment as to the third claim, because the

factual and legal questions about application of the statute

of limitations were not properly raised on appeal. As to the

fourth and fifth assignments, we conclude that Windmill

failed to bring its fourth and fifth claims for fraud and neg-

ligent misrepresentation within the time limited by statute.

Windmill also appeals from a limited judgment awarding

the Cauvins’ attorney fees and costs. We affirm the limited

judgments on the claims for the reasons that follow, and we

affirm the limited judgment on attorney fees and costs with-

out written discussion.1

I. FACTS

Because the issues are presented on several cross-

motions for summary judgment, the record consists of docu-

ments submitted on all the motions. WSB Investments, LLC

v. Pronghorn Devel. Co., LLC, 269 Or App 342, 355, 344 P3d

548 (2015). We view the evidence in the light most favorable

to the nonmoving party and draw all reasonable inferences

in that party’s favor. Id. at 354-55. We review the rulings on

the Cauvins’ motions to determine whether they are enti-

tled to judgment as a matter of law. Bergeron v. Aero Sales,

Inc., 205 Or App 257, 261, 134 P3d 964, rev den, 341 Or 548

(2006).2

1

Melinda Cauvin moved to dismiss plaintiff’s appeal of the limited judg-

ment on claims against her. The Appellate Commissioner denied the motion, and

Melinda renews the motion here. We deny the motion for the same reasons as

explained by the Appellate Commissioner in his order.

2

Windmill urges this court to take de novo review because it sought equita-

ble relief in its claim for specific performance. Such review would be inappropri-

ate. The issues presented are not an occasion on which to reexamine findings of

fact or to find facts anew on the record. Rather, when reviewing the trial court’s

Cite as 299 Or App 567 (2019) 569

Although many things are disputed, the dispositive

facts are not. Windmill is an Oregon corporation that owned

and operated hotels in Oregon and Arizona. In December

1989, Windmill continued the employment of defendant

John Cauvin as its president and chief executive officer

under terms of a written agreement. With that agreement,

he received 190 shares of Windmill’s stock. The agreement

provided that his shares could not be “sold, transferred,

assigned, or otherwise disposed of” except by sale back to

Windmill at the greater of $1,132 or a formula involving an

increase in book value. The agreement further provided:

“If Cauvin dies, retires, or if this Agreement is termi-

nated for any reason, Cauvin agrees to sell, and [Windmill]

agrees to purchase, all of Cauvin’s [Windmill] stock upon

the terms and conditions described above.”

At the time, codefendant Melinda Cauvin was John Cauvin’s

wife. He, not she, signed the agreement.

In 2000, the Cauvins separated, and an Arizona

court dissolved their marriage.3 The Arizona court regarded

the stock as property of a 15-year marriage, and the resulting

dissolution decree awarded Melinda what became 90 shares

of Windmill stock. In order to accomplish that property divi-

sion, John provided the marital settlement agreement to a

key principal in Windmill, Wendt, its corporate secretary

and president of its controlling shareholder, Jeld-Wen, Inc.

(Jeld-Wen). In late June 2000, John received Windmill’s esti-

mate of the value of his shares. Windmill did not then object

to the disposition of shares to Melinda despite its knowledge

of the ordered transfer.

From 2001 to early 2013, Windmill retained Melinda

as its outside legal counsel. In 2007, Windmill declined her

rulings on cross-motions for summary judgment, we review for errors of law. See

Wieck v. Hostetter, 274 Or App 457, 468 n 3, 362 P3d 254 (2015) (“Neither [the trial

nor appellate] court, when considering whether a party is entitled to judgment as

a matter of law at the summary-judgment stage of the case, is permitted to make

factual findings or weigh the evidence, regardless of whether the underlying

claim or requested relief is equitable in nature. See Brown v. Guard Publishing

Co., 267 Or App 552, 562, 341 P3d 145 (2014) (explaining that the court does not

apply de novo review in the context of a motion for summary judgment) * * *.”

(Citation omitted.)).

3

For convenience, we refer to the defendants by their first names, rather

than their last name, as do the Cauvins in their briefing.

570 Windmill Inns of America, Inc. v. Cauvin

initial request to redeem her stock, but, in January and

February 2009, Windmill cooperated in redeeming 50 of her

90 shares at a price of $25,853 per share.4 She retained 40

shares.

In December 2012, Windmill sent the Cauvins a

notice of a special meeting of shareholders concerning the

proposed liquidation of Windmill’s assets. John and Melinda

each gave notice of their rights as dissenting shareholders

and demanded payment of the fair value of their shares

under Oregon statutes. In March 2013, Windmill notified

them of a special meeting of shareholders for the sale of its

Ashland property. Again, the Cauvins gave notices of their

rights as dissenting shareholders. Thereafter, in late April

2013, Windmill terminated the employment of John and

Melinda, and, based on the termination of John’s employ-

ment, Windmill demanded the return of the Cauvin stock

according to the terms and price set by the 1989 agreement.

They refused to do so on those terms.

II. LITIGATION

In June 2013, Windmill filed this action against

the Cauvins, asserting: (1) a claim against both Cauvins

for specific performance of the agreement to compel their

sale of stock to Windmill at the contract price; (2) a claim

against both Cauvins for breach of the agreement for failure

to transfer the shares to Windmill; (3) a claim against John

for his transfer of 90 shares to Melinda in 2000 in viola-

tion of the restriction on transfer or assignment of shares;

(4) a claim against both Cauvins for fraudulent misrepre-

sentation at the time of Melinda’s redemption of 50 shares

in 2009 by concealment from Windmill of the contract value

of shares and demand for payment at a greater value; and

(5) a negligent misrepresentation claim against both Cauvins

for the same transaction.

In an early set of cross-motions for summary judg-

ment, the trial court granted the Cauvins’ motion in part,

ruling that Windmill’s fourth and fifth claims, commenced

in 2013, were not commenced within two years of the

2009 share redemption as ORS 12.110(1) requires for tort

4

The price was determined by Jeld-Wen’s accounting department.

Cite as 299 Or App 567 (2019) 571

claims.5 In a later set of cross-motions for summary judg-

ment, the trial court granted the Cauvins’ motions, ruling

that the 1989 agreement did not waive the Cauvins’ statu-

tory right to dissent and receive fair value; that the Cauvins

asserted dissenter rights before Windmill terminated John

and asserted contract terms; and that Windmill had not com-

menced the third claim within six years of the 2000 transfer

or assignment of shares, as ORS 12.080 requires for con-

tract claims.6 The trial court entered limited judgments for

the Cauvins, dismissing all Windmill’s claims and leaving

for later determination the Cauvins’ counterclaims for the

fair value of their shares.7 Thereafter, the trial court held

several hearings on the Cauvins’ petitions for attorney fees

and costs and eventually entered a limited judgment on the

petitions in their favor against Windmill for $861,206.05.8

5

In relevant part, ORS 12.110(1) provides:

“An action for * * * any injury to the person or rights of another, not aris-

ing on contract, and not especially enumerated in this chapter, shall be com-

menced within two years * * *.”

6

In relevant part, ORS 12.080 provides:

“An action upon a contract or liability, express or implied, excepting those

mentioned in ORS 12.070, 12.110 and 12.135 and except as otherwise pro-

vided in ORS 72.7250;

“* * * * *

“shall be commenced within six years.”

7

The trial court entered limited judgments on April 24, 2017, and again on

May 17, 2017. The earlier limited judgment was based on summary judgment

rulings that favored both defendants; the later limited judgment was based on

prior rulings as well as Melinda’s argument that she was not a party to the 1989

agreement.

8

As noted, we affirm the appeal of the limited judgment on attorney fees

without discussion. We do so on the merits, rather than as a matter of appel-

late jurisdiction. See Emmert Industrial Corp. v. Douglass, 130 Or App 267, 269,

881 P2d 827, rev den, 320 Or 325 (1994) (we are required to consider matters of

appellate jurisdiction on our own motion). The limited judgment on attorney fees

was entered pursuant to the change, effective January 1, 2016, adopting ORCP

68 C(5)(b)(ii), which permits entry of a limited judgment for attorney fees after

a preceding limited judgment on the merits. Council on Court Procedures, 2013-

2015 Biennium History Materials, Dec 6, 2014, Minutes 15-16, 19, http://councilon-

courtprocedures.org (accessed Sept 25, 2019); Council on Court Procedures, 2013-

2015 Biennium History Materials, Dec 6, 2014, Staff Comments to Amendments

to Oregon Rules of Civil Procedures 15, http://counciloncourtprocedures.org

(accessed Sept 25, 2019) (amendment authorizes the court to exercise discretion

to award attorney fees or costs in a limited judgment after a preceding limited

judgment affecting fewer than all the parties or claims). That change avoids the

previous difficulty with a supplemental judgment for attorney fees without a pre-

ceding general judgment. See Hooker Creek v. Central Oregon Land Development,

572 Windmill Inns of America, Inc. v. Cauvin

On appeal, Windmill challenges the dismissal of

each claim. As to the first two claims, Windmill argues that

John waived dissenters’ rights to fair value by accepting the

restrictive terms of the 1989 agreement. Windmill argues

that Melinda is bound to those terms because she helped

her former husband negotiate and she had knowledge of

the agreement. As to the third claim, Windmill argues in

its opening brief that, because John transferred 90 of his

shares to Melinda in 2000 pursuant to a marital settlement

agreement, he voluntarily transferred shares in violation of

the restriction in the 1989 agreement. In its opening brief,

Windmill did not address the issue involving the statute of

limitations. In its reply brief, Windmill shifted arguments,

asserting that John’s transfer of shares did not occur until

2009—within the limitation period for a contract claim. On

the fourth and fifth claims, Windmill argues that its rep-

resentative in the 2009 negotiations was unaware of the

contract’s limit on stock value, such that it did not discover

Melinda’s alleged concealment of contract value and misrep-

resentation about entitlement to a greater value. We address

those arguments in turn.

III. DISSENTERS’ RIGHTS PRESERVED

At the time of the 1989 agreement, the particular

statutes on which we rely were the same as they are today.

In relevant part, ORS 60.167(1) provided:

“The articles of incorporation, bylaws, agreements

among shareholders or agreements between shareholders

and the corporation may impose restrictions on the trans-

fer or registration of transfer of shares of the corporation.”9

279 Or App 117, 123, 380 P3d 304 (2016) (trial court lacks authority to enter a

supplemental judgment for fees without a preceding general judgment); Eagle-

Air Estates Homeowners Assn., Inc. v. Haphey, 272 Or App 651, 653, 354 P3d 766

(2015), rev den, 359 Or 166 (2016) (same); White v. Vogt, 258 Or App 130, 144, 308

P3d 356 (2013) (same); Interstate Roofing, Inc. v. Springville Corp., 217 Or App

412, 426-27, 177 P3d 1, adh’d to as modified on recons, 220 Or App 671, 188 P3d

359, adh’d to as modified on recons, 224 Or App 94, 197 P3d 27 (2008), aff’d in part

and rev’d in part on other grounds, 347 Or 144, 218 P3d 113 (2009) (same).

9

Although not relevant to the parties on these facts, ORS 60.167(2) provides:

“A restriction on the transfer or registration of transfer of shares is

valid and enforceable against the holder or a transferee of the holder if the

restriction is authorized by this section and its existence is noted conspicu-

ously on the front or back of the certificate or is contained in the information

Cite as 299 Or App 567 (2019) 573

A restriction like that in the 1989 agreement would be unre-

markable. Oregon statutes allow such restrictions but also

provide safeguards for dissenting shareholders. First, ORS

60.534(1) provides:

“A corporation may sell, lease, exchange or otherwise

dispose of all or substantially all of its property, with or

without the goodwill, other than in the usual and regular

course of business, on the terms and conditions and for the

consideration determined by the corporation’s board of

directors, if the board of directors proposes and its share-

holders approve the proposed transaction.”

(Emphasis added.) In order for a transaction to be autho-

rized, among other things, the shareholders must vote to

approve the transaction and, before that occurs, the corpo-

ration must notify each shareholder of the proposed share-

holders’ meeting. ORS 60.534(2)(b). The notice must advise

that the purpose of the meeting is to consider the sale, lease,

exchange, or other disposition of all or substantially all of

the corporation’s property. ORS 60.534(4). In relevant part,

ORS 60.554(1) provides:

“[A] shareholder is entitled to dissent from, and obtain

payment of the fair value of the shareholder’s shares in the

event of, any of the following corporate acts:

“* * * * *

“(c) Consummation of a sale or exchange of all or sub-

stantially all of the property of the corporation other than

in the usual and regular course of business, if the share-

holder is entitled to vote on the sale or exchange, including

a sale in dissolution * * *.”

In this case, no one disputes that the circumstances were

“other than in the usual and regular course of business,”

and, appropriately, Windmill gave notice to the Cauvins of

their rights as potential dissenting shareholders. The cen-

tral issue, then, is whether the general terms of the 1989

agreement served to waive the statutory rights afforded

statement required by ORS 60.164 (2). Unless so noted, a restriction is not

enforceable against a person who has no knowledge of the restriction.”

The stock certificates did not bear language reflecting the restriction on transfer-

ability. As a signator to the 1989 agreement, John is understood to have knowl-

edge of the restriction.

574 Windmill Inns of America, Inc. v. Cauvin

by ORS 60.554 to receive “fair value of the shareholder’s

shares.”

In Windmill’s view, the Cauvins’ demands that the

corporation repurchase their shares falls within the broad

terms of the agreement’s restrictive clause, which provides

for the sale of their shares to Windmill “at any time.” As

noted, Paragraph 2.2 of that agreement provides, in part,

“Cauvin agrees that [Windmill] stock may not be sold,

transferred, assigned or otherwise disposed of unless by

sale to [Windmill] and that notice of this restriction shall

be placed on his stock certificate. At any time, Cauvin may

offer to sell any amount of his [Windmill] stock back to

[Windmill]. [Windmill] agrees to purchase any share of

[Windmill] stock offered by Cauvin for the greater of the

following two [contract] amounts * * *.”

Windmill argues that this provision applies, because

Windmill terminated John’s employment, as contemplated

in the following language:

“If Cauvin dies, retires, or if this Agreement is terminated

for any reason, Cauvin agrees to sell, and [Windmill]

agrees to purchase, all of Cauvin’s [Windmill] stock upon

the terms and conditions described above.”

Windmill insists that those provisions control and should

be understood to waive the Cauvins’ rights as dissenting

shareholders. The Cauvins’ response is twofold: (1) They

did not waive their statutory rights, and (2) they invoked

those rights in December 2012 and early April 2013, before

Windmill terminated John in late April 2013.

As a preliminary matter, we note that we review

this case, involving an agreement reached in 1989, without

considerating current ORS 60.265, which addresses share-

holder agreements that are contrary to other provisions of

ORS chapter 60. That statute was adopted in 1993. Or Laws

1993, ch 403, § 12. Presumably, an agreement denying dis-

senters’ rights could be an agreement that is contrary to

ORS chapter 60.10 We find it to be unnecessary to resolve the

10

Among other things, today’s ORS 60.265(2) would require the written con-

sent of all shareholders to an agreement inconsistent with ORS chapter 60 and

Cite as 299 Or App 567 (2019) 575

application of today’s ORS 60.265 to this case—a case made

unique by an agreement predating adoption of the statute—

because we conclude that this agreement does not waive dis-

senters’ rights.

Generally, Windmill is correct that a statutory right

can be waived, but “[t]o make out a case of waiver of a legal

right there must be a clear, unequivocal, and decisive act

of the party showing such a purpose or acts amounting to

an estoppel on his part.” DK Investment Co. v. Inter-Pacific

Development Co., 195 Or App 256, 263, 97 P3d 675 (2004)

(quoting McMillan v. Montgomery et al., 121 Or 28, 32-33,

253 P 879 (1927) (brackets in DK Investment Co.)). To better

understand, we look to an application of that statement.

The Oregon Supreme Court addressed the subject

of waiver of statutory rights in a case involving collective

bargaining agreements where, like here, the statutes gov-

ern the rights and duties of the parties. In Assn. of Oregon

Corrections Emp. v. State of Oregon, 353 Or 170, 295 P3d 38

(2013), the Department of Corrections changed employees’

scheduled days off and shift times without first engaging

in collective bargaining. The department contended that its

agreement with the employee union expressly permitted its

unilateral action to “set the work schedules.” Id. at 172-73.

Therefore, the department concluded that the employees

had waived their right to bargain over schedules. The Court

of Appeals agreed, but the Supreme Court did not. Quoting

the cautionary words from another decision, our Supreme

Court recited:

“ ‘[W]e will not infer from a general contractual provision

that the parties intended to waive a statutorily protected

right unless the undertaking is ‘explicitly stated.’ More

succinctly, the waiver must be clear and unmistakable.’ ”

could be valid only for 10 years unless otherwise provided. Defendants argue

that Windmill’s controlling shareholder, Jeld-Wen, did not itself sign the 1989

agreement and that the agreement is more than 10 years old. Windmill argues

that ORS 60.265 cannot apply to this 1989 agreement, because that statute was

adopted in 1993. Windmill contends that, because no such statute existed in 1989,

nothing prohibits an agreement restricting the value and transfer of shares, even

under circumstances that trigger dissenters’ rights. Taking the opposite view,

the Cauvins argue that the absence of a provision like ORS 60.265 in 1989 means

that nothing permits an agreement restricting the value and transfer of shares

contrary to dissenters’ rights.

576 Windmill Inns of America, Inc. v. Cauvin

Id. at 179 (quoting Metropolitan Edison Co. v. NLRB, 460 US

693, 708, 103 S Ct 1467, 75 L Ed 2d 387 (1983)). Summarizing

the law, the court recounted:

“The general rule in Oregon is that, although waivers

of constitutional and statutory rights may be expressed

through contract terms, those terms must clearly indicate

an intention to renounce a known privilege or power. Under

Oregon law, a waiver is the intentional relinquishment of a

known right. To make out a case of waiver of a legal right

there must be a clear, unequivocal, and decisive act of a

party showing such a purpose.”

Id. at 183 (internal citations and quotation marks omitted).

The court concluded that the Employment Relations Board

did not err in rejecting the department’s waiver defense. Id.

Given that standard for waiver of a statutory right,

we conclude that the 1989 agreement did not clearly and

unequivocally express a waiver of the statutory right to dis-

sent and to receive fair value of shares in the circumstance

in which a dissenter’s rights are triggered. Our conclusion

is consistent with the conclusions of other courts in similar

cases. See, e.g., In re 75,629 Shares of Common Stock of Trapp

Family Lodge, Inc., 169 Vt 82, 91-92, 725 A2d 927, 934-35

(1999) (shareholder agreement for book value did not apply

to a fair value determination of dissenters’ rights because

the agreement did not so provide); Hansen v. 75 Ranch Co.,

288 Mont 310, 318, 957 P2d 32, 37 (1998) (stockholders’

agreement did not contemplate a fundamental change in

the corporation and did not waive dissenters’ rights under

statute); Matter of Pace Photographers (Rosen), 71 NY2d 737,

747, 525 NE2d 713 (1988) (in the absence of explicit terms,

a shareholders’ agreement does not control a shareholder’s

statutory right to fair value). Even in the ordinary terms of

waiver, the agreement does not reflect an intentional relin-

quishment of a known right. The price-restrictive language

in the agreement contemplates situations in which John

might voluntarily choose to sell his shares in the ordinary

course of events or in which he (or his estate) is compelled

to sell his shares when John dies, retires, or is terminated.

Here, before his termination, Windmill proposed disposition

of its assets and recognized the rights of dissenting share-

holders by sending the notice required by ORS 60.534(2)(b);

Cite as 299 Or App 567 (2019) 577

and, before his termination, the Cauvins duly invoked their

dissenters’ rights under Oregon law. See In re Dissolution

of Penepent Corp., Inc., 96 NY2d 186, 192-93, 750 NE2d 47,

50-51 (2001) (shareholder’s election to be paid statutory fair

value occurred before the buy-out provision in the share-

holder agreement became enforceable). Because no waiver

occurred, the trial court did not err in granting summary

judgment to the Cauvins and dismissing Windmill’s first

two claims.

IV. THIRD CLAIM PROBLEMS

In its third assignment of error, Windmill chal-

lenges the dismissal of its third claim. The trial court dis-

missed the third claim because Windmill failed to bring the

claim within six years as required by ORS 12.080.11 The

third claim alleged that, when John transferred 90 shares

to Melinda in 2000, he breached the restriction against

conveying stock to anyone other than Windmill. We do not

reach the merits of Windmill’s third assignment for proce-

dural reasons.

Windmill’s opening brief and assignment of error

on the third claim did not effectively raise the limitations

issue. Windmill assigned error, asserting:

“The trial court committed reversible error in grant-

ing summary judgment on Appellant’s breach of contract

claims against Respondent John Cauvin because the

Employment Agreement expressly prohibited the transfer

or assignment of Mr. Cauvin’s shares in Windmill.”

In its argument, Windmill asserted that a “disputed issue of

material fact exists as to whether John Cauvin breached his

Employment Agreement by transferring his Windmill stock

to Melinda Cauvin.” (Emphasis added.) In its opening brief,

Windmill did not argue that there was a dispute of mate-

rial fact as to when John transferred his shares to Melinda.

Instead, Windmill repeatedly stated in its opening brief

11

That ruling was unrelated to the trial court’s ruling on the first two

claims. Windmill argues that the “trial court’s analysis on the enforceability of

the Employment Agreement infected its summary judgment rulings” on the first

three claims. Unlike the first two claims, however, the third claim did not involve

a conflict between the contract’s price and a dissenter’s right to fair value.

578 Windmill Inns of America, Inc. v. Cauvin

that the transfer occurred in 2000.12 Windmill’s statement

of fact was consistent with its allegation in its third claim

that “in breach of his Employment Agreement, Mr. Cauvin

transferred ninety (90) shares of stock to Ms. Cauvin

on August 25, 2000.” (Emphasis added.) In other words,

Windmill’s opening brief only argued that, because the facts

permitted the conclusion that a breach occurred, the claim

should not have been dismissed on summary judgment.

Windmill did not argue that the breach occurred within the

limitation period.

In response, the Cauvins observed that Windmill

had not actually disputed the trial court’s ruling that

Windmill’s allegation of a breach, occurring with the trans-

fer in 2000, was outside the six-year limitation period of

ORS 12.080. In its reply brief, Windmill argued for the first

time on appeal that the transfer did not occur until 2009

when Melinda redeemed 50 shares—which would bring the

complaint within the six-year limitation period. In support,

Windmill referred to the Cauvins’ answer and to Melinda’s

references to “formal transfer” of shares in Windmill’s records

in 2009.

We recognize that Windmill did make such an argu-

ment in the trial court. We also recognize that, in the trial

court, John had replied that the effective transfer of shares

occurred in 2000 with the dissolution decree, that events in

2009 were only the “formal issuance” of certificates for pur-

poses of the corporate books, and that the formal issuance of

certificates to Melinda was not required.13

12

Windmill argued in its opening brief:

“On August 25, 2000, when John Cauvin’s stock was transferred to

Melinda Cauvin, the Cauvins were aware Paragraph 2.2 of the Employment

Agreement restricted the transfer of the Windmill stock.”

(Emphasis added.) Likewise, Windmill argued in its opening brief:

“Prior to transferring shares to Melinda Cauvin in 2000, John Cauvin and

Melinda Cauvin negotiated the terms of his 1989 Employment Agreement

and subsequent amendments.”

(Emphasis added.)

13

John relied on ORS 60.161(1), which provided:

“Shares may be but are not required to be represented by certificates.

Unless this chapter or another statute expressly provides otherwise, the

rights and obligations of shareholders are identical whether or not their

shares are represented by certificates.”

Cite as 299 Or App 567 (2019) 579

Those issues, however, are not properly presented on

appeal, because it was only in its reply brief that Windmill

raised factual and legal questions about when an interest in

the stock was transferred—that is, when breach occurred.

As a consequence, the limitations issue was not developed,

because the Cauvins did not have the chance to respond on

appeal. In short, Windmill did not properly assign error to

the trial court’s ruling on the application of the statute of

limitations to the third claim. See ORAP 5.45 (assignments

of error are required in all opening briefs of appellants; they

must identify the ruling challenged; and no matter claimed

as error will be considered on appeal unless it is properly

assigned in the opening brief); Ailes v. Portland Meadows,

Inc., 312 Or 376, 380-82, 823 P2d 956 (1991) (unless plain

error, appellate court will not review new issue raised in

reply brief).

Although this court has discretion to consider a

claim of error that is raised for the first time in a reply brief,

our general rule is that we decline to do so. See Clinical

Research Institute v. Kemper Ins. Co., 191 Or App 595,

608-09, 84 P3d 147 (2004) (a separate theory advanced in a

reply brief simply comes too late). Windmill has not supplied

any reasons to depart from that general rule in this case.

V. UNTIMELY TORT CLAIMS

In its fourth and fifth assignments, Windmill con-

tends that the trial court erred in dismissing the claims for

fraud and negligent misrepresentation based on the statute

of limitations, ORS 12.110(1). Windmill argues that, at the

time Melinda redeemed 50 shares in 2009, it had not discov-

ered her concealment of the contract price of shares and her

misrepresentation that she was entitled to a greater value.

Windmill argues that the “Windmill representative * * *

lacked actual knowledge that the stock value was limited by

contract.” (Emphasis in original.) For that particular state-

ment, Windmill provides no reference to the record.14 The

trial court had found, “Plaintiff has presented no affidavit

by a representative or principal of the corporation stating

when it became aware of the alleged fraud.”

14

Instead, Windmill refers to Melinda’s deposition testimony that she did not

bring up the 1989 agreement in her discussions with Windmill in 2009.

580 Windmill Inns of America, Inc. v. Cauvin

The record does show that Windmill’s key represen-

tative, Wendt—its corporate secretary and president of its

controlling shareholder—had signed the 1989 agreement

with John and had drafted the handwritten 2009 agreement

with Melinda. Windmill’s controlling shareholder, Jeld-Wen,

kept the original 1989 agreement in its possession.

On that record, where Windmill claims ignorance

of its own agreement, we agree with the trial court that

Windmill failed to offer evidence to permit a reasonable infer-

ence that it did not know the contract price. In other words,

it did not offer evidence to create a genuine issue of mate-

rial fact in response to the Cauvins’ evidence that Windmill

reasonably should have discovered fraudulent concealment

or negligent misrepresentation, if any, in 2009 at the time

it agreed to pay Melinda more than the contract price for

50 shares of stock. See Forest Grove Brick v. Strickland, 277

Or 81, 85-86, 559 P2d 502 (1977) (discovery is objective,

not subjective, and involves imputed or constructive knowl-

edge); State Farm Fire v. Sevier, 272 Or 278, 288, 537 P2d 88

(1975) (a corporation is charged with knowledge of facts that

its agents learn within the scope of their employment); see

also Greene v. Legacy Emanuel Hospital, 335 Or 115, 123, 60

P3d 535 (2002) (the statutory period begins to run when the

plaintiff, exercising reasonable care, should have discovered

the injury, including learning facts that an inquiry would

have disclosed); Padrick v. Lyons, 277 Or App 455, 467-68,

372 P3d 528, rev den, 360 Or 26 (2016) (principals knew or

in the exercise of reasonable care, should have known facts

that would have made a reasonable person aware of claim).

The trial court did not err in granting the Cauvins’ motions

for summary judgment to dismiss Windmill’s tort claims.

VI. CONCLUSION

In sum, we conclude that the trial court did not

err in granting summary judgment dismissing Windmill’s

claims and enforcing the Cauvins’ rights as dissenting

shareholders to be paid the “fair value” of their shares under

ORS 60.554(1). We do not review Windmill’s challenge to the

trial court’s ruling that its third claim is barred by ORS

12.080. And, we conclude that the trial court did not err in

dismissing Windmill’s tort claims as barred by ORS 12.110.

Cite as 299 Or App 567 (2019) 581

We affirm the limited judgments on the claims and the lim-

ited judgment on attorney fees and costs.

Affirmed.