# Graydog Internet, Inc. v. Giller

> Oregon Supreme Court · November 30, 2017

URL: https://www.frixlaw.com/law-library/cases/4224910

## Case

- **Court:** Oregon Supreme Court
- **Decided:** November 30, 2017
- **Precedential status:** Published
- **Opinion:** Opinion
- **Cited by:** 0 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/4224910

## Opinion text

No. 61 November 30, 2017	177

IN THE SUPREME COURT OF THE
STATE OF OREGON

GRAYDOG INTERNET, INC.,
an Oregon corporation,
Respondent on Review,
v.
David GILLER,
Petitioner on Review.
David GILLER,
Petitioner on Review,
v.
Douglas WESTERVELT,
Respondent on Review.
(CC 130506470, CA A156539, SC S064346)

On review from the Court of Appeals.*
Argued and submitted May 11, 2017.
Colin M. Murphy, Southern Oregon Public Defenders,
Medford, argued the cause for the petitioner on review. Gary
M. Bullock, Gary M Bullock & Associates PC, Portland, filed
the briefs for the petitioner on review.
Susan Marmaduke, Harrang Long Gary Rudnick
PC, Portland, argued the cause and filed the brief for the
respondent on review. Also on the brief were Nathan Robert
Morales and C. Robert Steringer.
Before Balmer, Chief Justice, and Kistler, Walters, and
Nakamoto, Justices, and Armstrong, Judge of the Court of
Appeals, Justice pro tempore.**
BALMER, C. J.
______________
** Appeal from Multnomah County Circuit Court, Henry C. Breithaupt,
Judge pro tem. 279 Or App 722, 381 P3d 903 (2016)
**  Brewer, J., retired June 30, 2017, and did not participate in the decision
of this case. Landau, Flynn, and Duncan, JJ., did not participate in the consider-
ation or decision of this case.
178 Graydog Internet, Inc. v. Giller

The decision of the Court of Appeals is reversed. The
judgment of the circuit court is affirmed, and the case is
remanded to the circuit court for further proceedings.
Case Summary: A shareholder in a closely held corporation challenged the
corporation’s attempt to purchase all of the shareholder’s shares pursuant to a
provision of the Oregon Business Corporation Act, ORS 60.952(6). The trial court
ruled that, for purposes of the statute, a third-party complaint was not a “pro-
ceeding” and that the claims made in the third-party complaint were not qual-
ifying claims “under” ORS 60.952(1). The Court of Appeals reversed, allowing
the corporation to proceed to purchase the shareholder’s shares. Held: In the cir-
cumstances here, the shareholder’s third-party complaint was not a “proceeding
under [ORS 60.952(1)]” and therefore it did not trigger the corporation’s right to
elect to purchase the shareholder’s shares.
The decision of the Court of Appeals is reversed. The judgment of the cir-
cuit court is affirmed, and the case is remanded to the circuit court for further
proceedings.
Cite as 362 Or 177 (2017)	179

BALMER, C. J.
Under ORS 60.952(6), when a shareholder in a
closely held corporation files a certain type of proceeding,
the corporation or another shareholder may respond with
an election to purchase for fair value all of the shares of
the shareholder who filed the proceeding and proceed to
acquire those shares. This case presents the question of
when, if ever, the filing of a third-party complaint consti-
tutes the “filing of a proceeding under subsection (1)” of
that statute, such that the shareholder who filed the pro-
ceeding may be bought out by the corporation or another
shareholder. The corporation here, Graydog Internet, Inc.,
has only two shareholders: Westervelt, the company’s pres-
ident and majority shareholder, and Giller, an employee
and minority shareholder. Graydog initiated the underlying
case, at Westervelt’s direction, when it filed a declaratory
judgment action against Giller raising an issue regarding
his employment. As part of his response, Giller filed a third-
party complaint against Westervelt. Graydog then filed an
election to purchase Giller’s shares under ORS 60.952(6).
Giller objected, arguing that filing a third-party complaint
does not constitute the “filing of a proceeding” as that term
is used in ORS 60.952(6) and that the claims in the third-
party complaint were not “under [ORS 60.952(1)].” For those
reasons, Giller asserted, Graydog could not elect to purchase
his shares. We agree that ORS 60.952(6) does not apply to
Giller’s third-party complaint, and therefore reverse the
decision of the Court of Appeals.
I. FACTS
Westervelt and Giller founded Graydog in 1997.
Since incorporation, Westervelt has been the majority share-
holder and Giller has been the minority shareholder. Both
have been active in the management and operation of the
firm. Their cooperation was fruitful and the company grew.
Eventually, however, Westervelt and Giller dis-
agreed about aspects of their venture together. At some
point, Westervelt offered to buy out Giller, but Giller refused
to sell. A provision in a shareholder agreement among
Graydog, Westervelt, and Giller allowed Graydog to purchase
180 Graydog Internet, Inc. v. Giller

the shares of any shareholder who ceased to be employed by
Graydog. To that end, Westervelt directed Graydog to file a
declaratory judgment action against Giller seeking a dec-
laration of his status as an at-will employee and Graydog’s
right to terminate Giller’s employment.
Giller responded with an answer and counterclaims
against Graydog. He also filed a third-party complaint
against Westervelt personally. The third-party complaint
asserted claims for
“(1) a declaration that the ‘shareholder agreement is
void and unenforceable,’ (2) ‘breach of contract’ based on
Westervelt allegedly violating the corporate bylaws by
‘tak[ing] unilateral action in his personal capacity and for
his personal interests,’ and (3) ‘breach of [the] contractual
duty of good faith and fair dealing’ based on Westervelt
allegedly ‘having acted for the sole purpose of trying to
force [Giller] to unwillingly sell his shares to him.’ ”
Graydog Internet, Inc. v. Giller, 279 Or App 722, 725, 381 P3d
903 (2016) (first and second brackets in Graydog Internet,
Inc.). In support of those claims, Giller alleged:
“Westervelt loaned himself $20,000 from the company
without the board’s approval; Westervelt elected his wife
to the board of directors over Giller’s objection; Westervelt
threatened to force Giller to sell his shares if Giller did not
agree to do so voluntarily, and had an attorney prepare and
file Graydog’s complaint to terminate Giller’s employment
before the board of directors voted on the proposal. * * *
Giller alleges that Westervelt took all of those actions ‘for
his personal interests’ and harmed Giller as a result.”
Id. at 734.
In response to the third-party complaint, Graydog—
controlled by Westervelt—filed an election to purchase all of
Giller’s shares pursuant to ORS 60.952(6), setting up the
issue now before us.
Subsection (6) of ORS 60.952 applies when a share-
holder in a closely held corporation “fil[es]” a “proceeding
under subsection (1).” ORS 60.952(1) identifies the grounds
for liability that a shareholder in a closely held corporation
must “establish[ ]” before a court will grant certain relief
Cite as 362 Or 177 (2017)	181

against the corporation or another shareholder: that the
directors or shareholders are deadlocked; that the directors
have acted in an illegal, oppressive, or fraudulent manner;
or that waste has occurred.1 Once a shareholder establishes
liability, a court “may order one or more of the remedies
listed in subsection (2).” ORS 60.952(1). When a shareholder
files a proceeding under ORS 60.952(1), “the corporation or
one or more shareholders may elect to purchase all of the
shares owned by the shareholder who filed the proceeding
for their fair value.” ORS 60.952(6).2 That process—a defen-
dant corporation or a shareholder in the defendant corpora-
tion electing under ORS 60.952(6) to purchase the shares of
the shareholder who filed the proceeding—is referred to as
an “election.” As discussed below, as a result of the election
provision, when a shareholder files a proceeding under ORS
60.952(1), in addition to seeking damages or other relief
under ORS 60.952(2), the shareholder in effect makes an
offer to sell all of its shares, for fair value, to the corporation

1
ORS 60.952(1) provides:
“In a proceeding by a shareholder in a corporation that does not have
shares that are listed on a national securities exchange or that are regularly
traded in a market maintained by one or more members of a national or affil-
iated securities association, the circuit court may order one or more of the
remedies listed in subsection (2) of this section if it is established that:
“(a) The directors are deadlocked in the management of the corporate
affairs, the shareholders are unable to break the deadlock and irreparable
injury to the corporation is threatened or being suffered, or the business and
affairs of the corporation can no longer be conducted to the advantage of the
shareholders generally, because of the deadlock;
“(b)  The directors or those in control of the corporation have acted, are
acting or will act in a manner that is illegal, oppressive or fraudulent;
“(c)  The shareholders are deadlocked in voting power and have failed, for
a period that includes at least two consecutive annual meeting dates, to elect
successors to directors whose terms have expired; or
“(d)  The corporate assets are being misapplied or wasted.”
2
ORS 60.952(6) provides, in part:
“At any time within 90 days after the filing of a proceeding under subsec-
tion (1) of this section, or at such time determined by the court to be equita-
ble, the corporation or one or more shareholders may elect to purchase all of
the shares owned by the shareholder who filed the proceeding for their fair
value.”
The remainder of the provision details the procedures for the election, deter-
mination of the purchase price, involvement by the court, and related matters.
See ORS 60.952(6)(a) - (f) (setting out procedures and timelines for purchase of
shares).
182 Graydog Internet, Inc. v. Giller

or another shareholder, without resolving the merits of the
complaint or other proceeding that the shareholder filed.
We return to the facts of the case. After Graydog
filed an election, Giller objected to it. Graydog and Giller then
filed cross-motions for partial summary judgment contesting
the legality of Graydog’s election under ORS 60.952(6). The
parties disputed two issues under ORS 60.952(6): whether
filing a third-party complaint constituted the “filing” of a
“proceeding” and whether the claims in Giller’s third-party
complaint were actually “under” ORS 60.952(1). On the
first point, Giller asserted that the election procedure is
available only to the party defending against a proceeding
brought by another, and not to the party that initiated the
proceeding in the first place. He argued that it was Graydog
and Westervelt that had initiated the litigation and that
his answer, counterclaim, and third-party complaint were
simply defensive responses to Graydog’s complaint. Graydog
responded that “proceeding” in ORS 60.952(6) can mean an
“action or step that is part of a larger action” and, therefore,
that the third-party complaint filed by Giller was a “pro-
ceeding” that Giller had “filed.”
On the second issue, Giller argued that his third-
party complaint was not actually “under” ORS 60.952(1),
because he had not asserted a claim for relief from “illegal,
fraudulent or oppressive” conduct, the standards for liability
in ORS 60.952(1)(b), nor had he sought one of various equi-
table remedies identified in ORS 60.952(2). Rather, Giller
argued, he had simply responded to Graydog’s complaint
and asserted an appropriate contract-based claim against
the majority shareholder who controlled Graydog, seek-
ing money damages and a declaratory judgment. Graydog
replied that the true nature of Giller’s claim was revealed
by the conduct alleged in the complaint, which appeared to
show that Westervelt had acted in an oppressive and illegal
manner, although Giller did not use those words. Because
“illegal” and “oppressive” conduct creates liability under
ORS 60.952(1), Graydog asserted, Giller’s claims were actu-
ally “under” ORS 60.952(1).
After argument, the trial court entered a limited
judgment stating:
Cite as 362 Or 177 (2017)	183

“1.  ORS 60.952(6) does not apply to this case because
ORS 60.952(6) may be triggered only against one who com-
mences an action, not against a party who files counter-
claims or a third-party complaint.
“2.  ORS 60.952(6) does not apply to this case for the
further reason that the claims made by Mr. Giller are not
of the type described in ORS 60.952.”
Graydog and Westervelt appealed that judgment to the
Court of Appeals.
At the Court of Appeals, Graydog and Westervelt
challenged both conclusions of the trial court. They argued
that the text and context of ORS 60.952(6) indicate that
a party who files a third-party complaint has filed a “pro-
ceeding” for the purposes of the statute, citing a number of
Oregon cases suggesting that a “proceeding” can mean a
part of a lawsuit, such as a third-party complaint. They also
argued that Giller’s claims were the type of claims described
in ORS 60.952(1) that could trigger the right of the corpora-
tion or another shareholder to make an election under the
statute to purchase the filing shareholder’s shares.
Giller argued that filing a third-party complaint
was not the “filing of a proceeding” under the statute. He
contended that the legislative history indicates that the
legislature intended ORS 60.952(6) to be “a remedy, not a
weapon.” By allowing a majority shareholder to commence
litigation against a minority shareholder and then, after the
defendant has responded by answer, counterclaim, or third-
party complaint, use ORS 60.952(6) to buy out the latter, as
Giller asserted that Graydog and Westervelt were attempt-
ing to do here, ORS 60.952(6) would become a weapon for
majority shareholders seeking to oust minority or dissent-
ing shareholders. Giller also reprised his argument that
the claims in the third-party complaint were not the type
of claims described in ORS 60.952(1) that could trigger an
election.
The Court of Appeals agreed with Graydog and
Westervelt and reversed the trial court. The court first con-
sidered the meaning of the phrase “filing of a proceeding” as
used in ORS 60.952(6). The court noted that “proceeding” for
184 Graydog Internet, Inc. v. Giller

purposes of ORS chapter 60 is defined as “a civil, criminal,
administrative or investigatory action.” ORS 60.001(24). It
cited several cases where this court described “third-party
complaints as a separate civil action” from the cases in
which they were filed and concluded that filing a third-party
complaint was the “filing of a proceeding.” Graydog Internet,
Inc., 279 Or App at 729.
The court then considered whether the claims in
Giller’s third-party complaint were claims “under subsection
(1)” of ORS 60.952. To determine the “true nature” of Giller’s
claims, it applied a standard for determining the application
of the correct statute of limitations set out in Htaike v. Sein,
269 Or App 284, 344 P3d 527, rev den, 357 Or 595 (2015).
Graydog Internet, Inc., 279 Or App at 731. Under the Htaike
standard, whether a claim properly sounds in tort or con-
tract depends on the “legal source of the defendant’s liabil-
ity, the factual setting of the dispute, the injuries asserted
by the plaintiff, and the plaintiff’s claimed measure of dam-
ages.” Id. at 732. The Court of Appeals applied that stan-
dard and concluded that “the real character of at least some
of Giller’s third-party claims is a claim for oppression under
ORS 60.952(1).” Id. It reversed both conclusions of the trial
court, clearing the way for Graydog’s purchase of Giller’s
shares. Giller sought review in this court.3
II. ANALYSIS
The issue here is the circumstances in which the
filing of a pleading by a shareholder in a closely held cor-
poration constitutes the “filing of a proceeding under [ORS
60.952(1)]” such that the shareholder who files the pleading
may be bought out by the corporation or another shareholder
under ORS 60.952(6). We note at the outset that the text of
the statute does not clearly resolve that question. To repeat,
ORS 60.952(6) provides, in part:
“At any time within 90 days after the filing of a pro-
ceeding under subsection (1) of this section, or at such time
determined by the court to be equitable, the corporation or

3
As noted, both Graydog and Westervelt filed notices of appeal from the
trial court’s limited judgment. Their arguments are identical and, except where
necessary to refer to Westervelt separately, we refer to respondents on review as
“Graydog.”
Cite as 362 Or 177 (2017)	185

one or more shareholders may elect to purchase all of the
shares owned by the shareholder who filed the proceeding
for their fair value.”
As noted, subsection (1) imposes liability where the directors
or shareholders are deadlocked; the directors have acted in
an illegal, oppressive, or fraudulent manner; or waste has
occurred. If a shareholder establishes such conduct, a court
may order one or more remedies listed in ORS 60.952(2),
ranging from money damages to receivership to dissolution
of the corporation. To interpret ORS 60.952, we apply our
usual methodology to discern the intent of the legislature by
examining the text, context, and legislative history of the
statute. See State v. Gaines, 346 Or 160, 206 P3d 1042 (2009).
We begin by examining the text and context of the
terms “filing of a proceeding” and “proceeding under sub-
section (1),” to understand their meaning and to determine
whether either term conclusively excludes Giller’s third-
party complaint, such that Graydog’s election must fail.
After finding the text of both terms to be imprecise, and
case law to be relatively unhelpful, we turn to the legislative
history of ORS 60.952 and related academic commentary to
gain an understanding of the legislature’s intent in enacting
the statute. Based on that understanding, we conclude that
in the circumstances here, where Giller’s third-party com-
plaint did not contain the claims for relief or seek the equita-
ble remedies identified in ORS 60.952(1) and (2), and where
the procedural context of the third-party complaint demon-
strated that it was a defensive response to an attempted
squeeze-out by the majority shareholder, the legislature did
not intend to allow an election under ORS 60.952(6).
A.  Text and Context
1.  “Filing of a proceeding”
An initial textual dispute is whether the term “filing
of a proceeding” in ORS 60.952(6) can mean, among other
things, the filing of a third-party complaint, or whether
it is limited to the initial filing of a complaint by a share-
holder in a corporate dispute involving a closely held corpo-
ration. Giller asserts that his third-party complaint against
Westervelt was part of the same action as the declaratory
186 Graydog Internet, Inc. v. Giller

judgment action that Graydog filed against him and, thus,
that he did not “file” a “proceeding” for purposes of that pro-
vision. Graydog argues that a third-party complaint, bring-
ing new claims against a new party, is such a “proceeding.”
This is a threshold issue, because if Giller is correct that
filing a third-party complaint never can mean “filing a pro-
ceeding” for purposes of ORS 60.952(6), then Giller prevails.
We begin our interpretive exercise by looking to the legis-
lature’s definition of the word “proceeding” for purposes of
ORS chapter 60: “a civil, criminal, administrative or inves-
tigatory action.” ORS 60.001(24). That statutory definition,
however, is of limited value, because the ordinary legal
meaning of the word “action” is a “civil or criminal judicial
proceeding,” Black’s Law Dictionary 35 (10th ed 2009), ren-
dering the definition, as least as applicable here, circular
and generally unhelpful.
Dictionary meanings are more helpful in seeking
to understand other words in the key phrase “filing of a
proceeding,” and the operative words in that phrase have
several common meanings in the law. The verb “file” can
mean “[t]o commence a lawsuit,” as in “the seller threat-
ened to file against the buyer.” Black’s at 745. That definition
pairs with the definition of “proceeding” as “[t]he regular
and orderly procession of a lawsuit, including all acts and
events between the time of commencement and the entry
of judgment.” Id. at 1398. With those definitions, to “file a
proceeding” can mean to commence, or begin, a lawsuit. So
understood, the filing of a third-party complaint, as opposed
to filing the initial complaint in an action, would not con-
stitute the “filing of a proceeding.” But a “proceeding” can
also mean “[a]n act or a step that is part of a larger action,”
id. at 1398, and “file” can also mean the “deliver[y]” of a
“legal document” to a court, id. at 745. Under those defini-
tions, the “filing of a proceeding” could mean commencing
some discrete part of a single lawsuit. Particularly where, as
here, the third-party complaint asserts claims distinct from
those in the initial complaint and could have been filed as
a separate action apart from and in the absence of the ini-
tial complaint, it would unduly elevate form over substance
to conclude that filing a third-party complaint never can be
“filing of a proceeding” for purposes of ORS 60.952(6).
Cite as 362 Or 177 (2017)	187

It follows that the phrase “filing of a proceeding”
can be read either more broadly, to encompass the filing of
a third-party complaint in an existing civil action, or more
narrowly, to mean only the filing of an initial complaint
or other action. To further interpret ORS 60.952, we look
beyond the text to see if the legislature intended a particu-
lar meaning when it used the phrase in that statute.
The parties cite several decisions of this court as
context for the word “action,” which is part of the definition
of “proceeding” in ORS 60.001(24). See OR-OSHA v. CBI
Services, Inc., 356 Or 577, 593, 341 P3d 701 (2014) (noting
that case law existing at the time of a statute’s enactment
is part of the statutory context). Only one recent case actu-
ally interpreted the word “action” as part of its holding. In
Montara Owners Assn. v. La Noue Development, LLC, 357 Or
333, 353 P3d 563 (2015), we held that “first-party claims * * *
and third-party claims * * * are part of the same ‘action.’ ”
357 Or at 356.4 There, a homeowners association brought a
construction-defect action against a developer, who in turn
filed a third-party complaint against a subcontractor. The
first-party plaintiff and first-party defendant settled, leav-
ing only the third-party claim between the developer and
subcontractor to go to trial. Id. at 337. The developer sought
to present to the jury a claim for attorney fees as inciden-
tal damages, but the subcontractor argued that ORCP 68,
“govern[ing] the pleading, proof, and award of attorney fees
in all cases,” prescribed a different procedure for awarding
attorney fees. Id. at 355 (emphasis omitted; quoting ORCP
68 C(1)). ORCP 68 contains an exception to that procedure,
however, for fees that arose “prior to the action.” ORCP 68
C(1)(a). To resolve that dispute, this court had to determine
if the first-party action, which settled before trial, was part
of the same “action” as the third-party claims going to trial.
We examined ORCP 22 C(1), which, “in discussing third-
party practice, refers to both first- and third-party claims
as part of ‘the action,’ ” and concluded that first-party claims

4
Case law decided after the enactment of a statute may also be “persua-
sive” in interpreting the statute. OR-OSHA, 356 Or at 593. Here, Montara
Owners Assn. was decided while this case was under advisement at the Court of
Appeals—well after the enactment of ORS 60.952—but it is nonetheless poten-
tially relevant to our analysis.
188 Graydog Internet, Inc. v. Giller

and third-party claims are part of the same action. Montara
Owners Assn., 357 Or at 356-57. Giller analogizes this case
to Montara Owners Assn. and argues that his third-party
complaint is part of the same “action” as the first-party
complaint.
We think that Montara Owners Assn.’s relevance is
limited, however, because it interprets the word “action” as it
appears in the context of ORCP 68, not the Oregon Business
Corporation Act. Giller and Graydog also discuss a number
of other cases, some of which the Court of Appeals found
significant, that purport to bear on the meaning of the word
“action.” But the references to “action” are generally made
in passing, see, e.g., O’Connell, Goyak & Ball v. Silbernagel,
297 Or 207, 210, 681 P2d 1159 (1984), or the cases predate
our current civil rules and are not dispositive, see, e.g., Ryals
et ux. v. Smith et al., 202 Or 470, 275 P2d 853 (1954). To
the extent they are helpful at all, they support our initial
assessment that “file” and “proceeding” do not have unitary
definitions that unambiguously resolve this case. Instead,
those words have various meanings, depending on context.
Looking simply at the differing definitions of the words and
our cases interpreting them in other contexts, Giller has a
plausible argument that his third-party complaint was not
the “filing” of a “proceeding” under ORS 60.952(1) or (6) that
would trigger the buyout right, and Graydog has a plausi-
ble argument that a third-party complaint could constitute
such a proceeding.
2.  A proceeding “under subsection (1)”
The remedies in ORS 60.952(2) and the election to
purchase shares under ORS 60.952(6) are available only in
proceedings involving corporate control and not other issues,
like a shareholder’s slip and fall at the corporate office—
that is, proceedings “under subsection (1),” which we quoted
above. “Under” means “in accordance with,” Webster’s Third
New Int’l Dictionary 2487 (unabridged ed 2002), and in
this context has little substantive meaning independent of
the reference to “subsection (1).” Subsection (1) itself, how-
ever, is rich with meaning: it defines a closely held corpora-
tion; identifies particular circumstances in which a share-
holder may bring an action under the statute—including
Cite as 362 Or 177 (2017)	189

management or shareholder deadlock, corporate waste, or
illegal, fraudulent, or oppressive conduct by those in control
of the corporation; and empowers the court to order certain
remedies.
Several of the circumstances identified in subsec-
tion (1) are straightforward, such as whether “shareholders
are deadlocked in voting power and have failed, for a period
that includes at least two consecutive annual meeting dates,
to elect successors to directors whose terms have expired.”
ORS 60.952(1)(c). In this case, however, Graydog argues
that Giller’s third-party complaint triggers the election
provision because Giller seeks to “establish[ ]” that “[t]he
directors or those in control of the corporation have acted,
are acting or will act in a manner that is illegal, oppressive
or fraudulent.” ORS 60.952(1)(b). Graydog urges us to look
to the facts Giller alleges about Westervelt’s conduct—facts
that, Graydog asserts, establish “prototypical oppressive
conduct”—as revealing his claim to be actually a claim for
oppression.5 Giller responds by emphasizing that he inten-
tionally limited the claims he asserted and the remedies
he sought in his third-party complaint, such that it con-
tains straightforward breach of contract and declaratory
judgment claims that do not implicate traditional notions of
majority shareholder “oppression.”
We turn briefly to consider the distinguishing char-
acteristics of a claim for oppression. In Baker v. Commercial
Body Builders, 264 Or 614, 507 P2d 387 (1973), this court
repeated a widely quoted English definition of oppressive
conduct as
“burdensome, harsh and wrongful conduct; a lack of pro-
bity and fair dealing in the affairs of a company to the prej-
udice of some of its members; or a visual departure from
the standards of fair dealing, and a violation of fair play
on which every shareholder who entrusts his money to a
company is entitled to rely.”
Id. at 628-29. Put another way, conduct that violates
the majority shareholders’ fiduciary duty to a minority
5
Graydog does not argue that Giller has made a claim for “illegal” or
“fraudulent” conduct, and we do not address the meaning of those terms in ORS
60.952(1)(b).
190 Graydog Internet, Inc. v. Giller

shareholder in a close corporation is “likely to be oppressive.”
Naito v. Naito, 178 Or App 1, 20, 35 P3d 1068 (2001); accord
Baker, 264 Or at 629 (“ ‘[O]ppressive’ conduct by those in
control of a ‘close’ corporation as its majority stockholders is
closely related to * * * the fiduciary duty of a good faith and
fair dealing owed by them to its minority stockholders.”).
“The majority shareholder of a close corporation owes the
minority fiduciary duties of loyalty, good faith, fair dealing
and full disclosure.” Chiles v. Robertson, 94 Or App 604, 619,
767 P2d 903, modified on recons, 96 Or App 658, 774 P2d
500, rev den, 308 Or 592 (1989). Whether or not a party’s
specific conduct is oppressive, however, is a highly factual
matter. See Baker, 264 Or at 628 (“[G]eneral definitions of
‘oppressive’ conduct are of little value for application in a
specific case.”). The success of a claim depends on the facts
and circumstances of the majority’s conduct; for example,
the presence of a legitimate business reason for a decision
may affect whether certain conduct is oppressive. See, e.g.,
Cooke v. Fresh Express Foods Corp., 169 Or App 101, 113,
7 P3d 717 (2000) (considering “the business reasons that
defendants present for their actions”). As discussed in Baker
and elsewhere, the concept of oppressive conduct and fidu-
ciary duty eludes precise articulation. Baker, 264 Or at 628;
see also Chiles, 94 Or App at 619 (“[T]he heart of a corporate
fiduciary’s duty is an attitude, not a rule.”).
Another recurring issue in the litigation of oppres-
sion claims is the difficulty of fashioning a remedy that
responds to the majority shareholder’s misconduct but
does not harm corporate operations or shareholder value.
Reflecting the varied “facts of the case and the nature of the
problem involved” in claims of oppression, Baker, 264 Or at
631-32, Oregon cases have long required courts to carefully
tailor remedies for oppression claims. See, e.g., Browning v.
C & C Plywood Corp., 248 Or 574, 582, 434 P2d 339 (1968)
(denying plaintiff’s request for dissolution of corporation as
“untenable” and remanding case to trial court to “determine
what the precise relief should be”). Depending upon the cir-
cumstances, “dissolution [or] * * * other appropriate equita-
ble relief” may be proper. Baker, 264 Or at 631. The court in
Baker compiled a list of alternative equitable remedies for
oppression, id. at 631-33, which, as we will discuss below,
Cite as 362 Or 177 (2017)	191

formed the basis for the additional remedies enacted when
ORS 60.952 was amended in 2001. Both our earlier cases
and legal commentators establish that whether conduct by
controlling shareholders constitutes oppression will depend
on the relationship between the parties, the financial and
business context of the conduct, and the parties’ history of
dealings, among other things, and that, when oppression
is demonstrated, a court may impose a variety of equitable
remedies, up to and including dissolution of the corporation.
See Robert B. Thompson, 2 Close Corporations and LLCs:
Law and Practice § 9:35, 9-245 (3d ed 2017) (discussing vari-
ety of relief available in oppression cases).
We return to the question whether Giller’s third-
party complaint was actually a claim for oppression. The
task of determining whether a party’s labeling of a claim
actually reflects the true nature of the claim arises in sev-
eral contexts and lacks a definitive answer. As noted, the
Court of Appeals analyzed Giller’s claims using the stan-
dard from Htaike. It acknowledged, however, that the pur-
pose in Htaike—distinguishing contract claims from tort
claims to properly apply the statute of limitations—differs
from the proper application of ORS 60.952(6) and that tests
serving those functions “will [not] necessarily be identical.”
Graydog Internet, Inc., 279 Or App at 732 n 7. Htaike, in
turn, was based on Securities-Intermountain v. Sunset Fuel,
289 Or 243, 611 P2d 1158 (1980), which also concerned the
application of the statute of limitations to contract and tort
claims. In that case, this court analyzed the history of stat-
utes of limitation in Oregon, going back to the Deady Code,
and reviewed cases applying those statutes. Id. at 253. The
court concluded that the body of law that had developed to
determine the “real” character of an action in that context
was “the product of case-by-case development more than of
any single coherent theory.” Id. at 252.
Although Securities-Intermountain did not establish
a clear, easily applied test for determining the “true” nature
of a claim, it does provide support for Giller’s position that
courts generally should accept a party’s characterization of
the party’s own claims. Securities-Intermountain discussed
with approval earlier decisions by this court that
192 Graydog Internet, Inc. v. Giller

“took plaintiff’s pleading on its own terms * * * [and] did
not purport to look beyond a well-pleaded complaint so as
to impose upon plaintiff a contrary characterization of his
cause of action that would defeat it.”
289 Or at 254. And that statement is an application of the
longstanding rule that “the party who brings a suit is mas-
ter to decide what law he will rely upon.” The Fair v. Kohler
Die & Specialty Co., 228 US 22, 25, 33 S Ct 410, 57 L Ed 716
(1913) (Holmes, J.); see also Caterpillar Inc. v. Williams, 482
US 386, 392, 107 S Ct 2425, 96 L Ed 2d 318 (1987) (discuss-
ing federal “well-pleaded complaint rule,” which “provides
that federal jurisdiction exists only when a federal ques-
tion is presented on the face of plaintiff’s properly pleaded
complaint,” and which “makes the plaintiff master of the
claim; he or she may avoid federal jurisdiction by exclusive
reliance on state law”); Redwood Theaters, Inc. v. Festival
Enterprises, Inc., 908 F2d 477, 479-80 (9th Cir 1990) (apply-
ing well-pleaded complaint rule to remand antitrust com-
plaint to state court, despite potential nationwide effect
of litigation, and noting “plaintiffs’ prerogatives to choose
the forum and legal principles governing their complaints”
(emphasis added)).
Giller did not expressly invoke ORS 60.952(1)(b),
assert a breach of fiduciary duty, or make any claim of
“oppression” as a ground for his third-party complaint
against Westervelt. Indeed, he disclaimed any reliance on
that statute or any theory of oppression, and, under the
cases just discussed, his choice of legal theories is entitled
to some degree of deference. Nevertheless, given the absence
of a “single coherent theory” for determining the “true”
nature of a plaintiff’s claims, as well as the nebulous nature
of oppression claims generally, we turn to the context and
legislative history of ORS 60.952(1)(b) to see whether they
shed any light on the kind of claims the legislature intended
to be included within the term “oppressive” conduct under
ORS 60.952(1)(b).
B.  Context and Legislative History of ORS 60.952
Helpfully, the legislative history of ORS 60.952 con-
tains extended discussions of the legislature’s intentions in
enacting that statute. Senate Bill (SB) 116 (2001), codified
Cite as 362 Or 177 (2017)	193

as ORS 60.952, sought to improve the legal framework reg-
ulating closely held corporations by amending the Oregon
Business Corporation Act. Robert C. Art, Shareholder Rights
and Remedies in Close Corporations: Oppression, Fiduciary
Duties, and Reasonable Expectations, 28 J Corp L 371, 407
(2003).6 Therefore, in addition to examining the legislative
history materials, we refer to treatises and commentary
describing the problems that the statute was intended to
ameliorate.
1.  The minority shareholder in the close corporation
ORS 60.952 concerns court proceedings by share-
holders in closely held corporations—corporations that
“do[ ] not have shares that are listed on a national securi-
ties exchange or that are regularly traded.” ORS 60.952(1).
A distinguishing characteristic of closely held corpora-
tions is the vulnerability of their minority shareholders to
oppression and mistreatment by the shareholder majority,
such as by restricting the minority shareholder’s partici-
pation in corporate governance, limiting access to corpo-
rate assets, managing the corporation for the benefit of the
majority shareholder, or seeking to eliminate the minori-
ty’s ownership interest, usually without fair payment.
Thompson, 2 Close Corporations and LLCs § 9:2 at 9-8;
see also Audio Recording, Senate Committee on Business,
Labor and Economic Development, SB 116, Jan 15, 2001,
at 13:10 (statement of Robert Art); http://sos.oregon.gov/
archives /Pages /records /legislative-minutes-2001.aspx
(accessed Aug 16, 2017) [hereinafter Statement of Robert
Art] (explaining that majority oppression can prevent the
minority from “getting any income from the corporation or
having any voice and control”). Because shareholders in
close corporations, by definition, lack a ready market for
their shares, dissatisfied minority shareholders may be
unable to sell their shares “without suffering serious finan-
cial loss.” Thompson, 2 Close Corporations and LLCs § 9:2
at 9-5. And, often, minority shareholders in closely held

6
Professor Robert Art of Willamette University College of Law chaired the
task force that drafted ORS 60.952. Our understanding of the legislative history
of that statute draws on his article describing SB 116 and his testimony in sup-
port of it during the 2001 legislative session.
194 Graydog Internet, Inc. v. Giller

corporations are actively engaged in the business as direc-
tors, officers, or employees. That involvement in the firm
can make them more vulnerable to abuse by the share-
holder majority; it also means that shareholder disputes
can result in “serious harm” to the enterprise. Id. § 9:2 at
9-4, 9-6.
To protect minority shareholders, many states
have developed legislative and judicial remedies to respond
to shareholder oppression and other unfair treatment of
the noncontrolling shareholders. Id. § 9:2 at 9-8 to 9-10.
Historically, the only codified remedy for oppression or cor-
porate deadlock was the dissolution of the corporation and
distribution of its assets to the owners. See, e.g., ORS 60.661
(1987), amended by Or Laws 2001, ch 215, § 58 (setting out
only judicial dissolution as the statutory remedy for oppres-
sion). But courts and commentators have criticized disso-
lution as a “severe and harsh remedy.” Thompson, 2 Close
Corporations and LLCs § 9:43 at 9-295; see also Statement
of Robert Art at 15:06 (describing judicial dissolution as
“probably the worst solution for everyone”). Moreover, in
the absence of alternative statutory remedies, courts exer-
cised their equitable powers to fashion specific remedies to
address the corporate management and shareholder issues
in particular cases. See Baker, 264 Or at 631-33 (identifying
remedies “alternative to dissolution”); see also Thompson,
2 Close Corporations and LLCs § 9:35 at 9-245 (noting “judi-
cial willingness to provide alternative relief even if a statute
does not explicitly provide for alternative relief”).
Today, state statutes provide alternative reme-
dies to dissolution. Consistent with that trend, a “principal
change” contained in SB 116 was to specify additional rem-
edies, beyond dissolution, that would be available to share-
holders who could establish liability under ORS 60.952(1).
Art, 28 J Corp L at 409, 409 n 254 (noting that the addi-
tional remedies were consistent with the list of remedies in
Baker, 264 Or at 631-33). The new law instructed judges to
order dissolution of a corporation only when no other remedy
“is sufficient to resolve the matters in dispute,” ORS 60.952
(2)(m), and codified remedies previously available under
the court’s equitable powers to order changes in corporate
management, ORS 60.952(2)(c), (d), (f), (g), the conduct of
Cite as 362 Or 177 (2017)	195

the corporation’s business, ORS 60.952(2)(a), the documents
governing the corporation, ORS 60.952(2)(b), or the distri-
bution of the corporation’s assets, ORS 60.952(2)(i). The enu-
merated remedies also include a buyout—a court-ordered
sale for fair value of all shares belonging to the plaintiff
shareholder. See ORS 60.952(2)(k) (providing for court-
ordered sale of shares); see also Statement of Robert Art at
14:30 (describing a court-ordered sale as preferable to dis-
solution because a buyout “allows the business to continue,
[and] it gives fair value to the departing shareholder with
fair value being determined by the court”). A procedurally
different buyout—not one ordered by the court, but available
at the option of the corporation or another shareholder—is
the election provision set out in ORS 60.952(6) at issue here.
We return to that provision now.
2.  The election to purchase
Under Oregon law, as well as statutes in other states
regarding litigation involving closely held corporations, the
corporation or shareholders may to elect to purchase, for
“fair value,” the shares of a minority shareholder when the
minority shareholder seeks a judicial remedy for oppression.
Section 14.34 of the 1991 Model Business Corporations Act
(MBCA) illustrates that type of provision and provided the
model for Oregon’s statute.7 Art, 28 J Corp L at 414. Under
the MBCA, an election is available in a “proceeding under
section 14.30(2) to dissolve [a close corporation].” MBCA
§ 14.34 (emphasis added). In contrast, the Oregon statute
contains no such requirement that a party seek dissolution
to trigger an election. ORS 60.952(6) (allowing an election
in a “proceeding under subsection (1)”). Rather, the statu-
tory term “proceeding under subsection (1)” “refer[s] to a
proceeding * * * [that] may seek any of a long list of reme-
dies, of which dissolution is only one.” Art, 28 J Corp L at
414 n 294.

7
MBCA § 14.34(a) provides, in part:
“In a proceeding under section 14.30(2) to dissolve a [close corporation]
* * *, the corporation may elect or, if it fails to elect, one or more shareholders
may elect to purchase all shares owned by the petitioning shareholder at the
fair value of the shares. An election pursuant to this section shall be irrevo-
cable unless the court determines that it is equitable to set aside or modify
the election.”
196 Graydog Internet, Inc. v. Giller

The Oregon and MBCA election statutes share the
purposes of providing an incentive for shareholders to resolve
their disputes without resorting to a “proceeding under sub-
section (1)” and providing a shortcut to a remedy when litiga-
tion does arise. Reducing litigation between shareholders in
close corporations is desirable policy because it protects the
firm, its employees, and other stakeholders from the conse-
quences of extended litigation. See MBCA § 14.34 comment
(“[A] resort to litigation may result in an irreparable breach
of personal relationships among the shareholders of a close-
ly-held firm, making it impossible for them to continue in
business to their mutual advantage.”). Steve Naito, testify-
ing in support of SB 116, spoke about the costs, monetary
and otherwise, associated with litigating disputes between
shareholders in a close corporation:
“[T]hey are extremely expensive cases to litigate. They
take a substantial amount of time and money. And again
because it involves a lot of interpersonal issues it becomes
just like a personal divorce—a marital divorce. It raises
a lot of issues that no one ever wants to raise, especially
in a court of law and it effectively—or in many cases it
effectively—destroys the relationship of the parties going
forward.”
Audio Recording, Senate Committee on Business, Labor and
Economic Development, SB 116, Jan 15, 2001, at 25:41 (state-
ment of Steve Naito); http://sos.oregon.gov/archives/Pages/
records/legislative-minutes-2001.aspx (accessed Aug 16,
2017). The election provision in ORS 60.952(6) provides
a means of lessening the costs, including those related to
interpersonal disputes, associated with a litigated resolu-
tion to a shareholder dispute.
The election provision reduces the costs associated
with litigation in two ways. First, it discourages sharehold-
ers who wish to retain an interest in the firm from tak-
ing oppression claims to court, because only shareholders
willing to be bought out will file a proceeding “under” ORS
60.952(1). See Art, 28 J Corp L at 416 (“For the plaintiff
shareholder, filing a complaint, in effect, grants a ‘call’ to
the corporation and the other shareholders—an obligation
to sell, even if the plaintiff might prefer a different out-
come.”). Second, when such an oppression claim is brought,
Cite as 362 Or 177 (2017)	197

it allows a court to order the sale of all of a shareholder’s
shares before trial, even if there are unresolved issues of fact
that would prevent summary judgment.
However, a statutory election to purchase, such as
that in ORS 60.952(6), and other types of buyouts, have as
a “principal disadvantage” that a majority shareholder may
use them to “squeeze out a minority shareholder who wants
to remain in the business.” Thompson, 2 Close Corporations
and LLCs § 9:6 at 9-29. Providing a minority shareholder in
a close corporation with “fair value” for its shares may not
adequately compensate shareholders faced with a squeeze-
out, because shareholders in close corporations are more
than “mere lenders of capital with only an economic inter-
est in the corporation.” Robert B. Thompson, Squeeze-Out
Mergers and the “New” Appraisal Remedy, 62 Wash U L Rev
415, 433 (1984). Rather, shareholders in a close corporation
who are squeezed out “lose more than the proportionate value
of their shares” because, in addition to being an investment,
the corporation may be a place of employment and a primary
source of income and retirement benefits. Id.; see also Naito,
178 Or App 1 (illustrating ownership in a close corporation
as more than a financial investment). Moreover, valuation
of shares in a closely held corporation may be “very diffi-
cult.” Id. Nevertheless, buyouts can be an effective means of
resolving shareholder disputes and may be provided for in
a shareholder agreement, a firm’s articles of incorporation
or bylaws, state statutes, or as part of an ad hoc negotiated
settlement. See Thompson, 2 Close Corporations and LLCs
§ 9-6 at 9-30 (discussing buyout provision in the corporate
charter); id. § 9-37 at 9-256 (discussing judicially ordered
buyouts provided by statute). Unless those circumstances
are present, the minority shareholder in a close corporation
may continue to be an owner and decline offers to purchase
its shares.
Cubalevic v. Superior Court of Los Angeles County,
240 Cal App 2d 557, 49 Cal Rptr 698 (1966), is illustrative.
There, the court emphasized the right of a minority share-
holder to maintain ownership of its shares and construed
the California election buyout statute to be a narrow excep-
tion to that right. The plaintiff, a 50 percent shareholder,
filed a complaint alleging misconduct against corporate
198 Graydog Internet, Inc. v. Giller

officers and other shareholders. One of his claims sought to
dissolve the corporation under a state statute. Id. at 558, 49
Cal Rptr at 698. The defendants filed an election to purchase
the plaintiff’s shares as permitted under the statute when
a shareholder filed a claim seeking dissolution. Id. at 560,
49 Cal Rptr at 699. In response, the plaintiff dismissed his
claim to dissolve the corporation. Id. The trial court none-
theless allowed the defendants to proceed with their pur-
chase of the plaintiff’s shares. The appellate court reversed,
holding that the election to purchase could not proceed after
the claim for dissolution has been dismissed. It explained
that, outside of the election procedure permitted by statute
in certain narrow circumstances, controlling shareholders
in a corporation have no “independent right * * * to compel
the sale to them of the shares of stock of another.” Id. at 562,
49 Cal Rptr at 701. Cubalevic thus illustrates the court’s
protection of the minority shareholder’s right to refuse to
sell its shares in the context of the legislature’s creation of
an exception to that right.
The legislative history of ORS 60.952(6) shows that
the legislature intended to discourage litigation between
shareholders, with its potential for acrimony and harm to
the firm and others, by providing an incentive for sharehold-
ers to resolve their disputes in some way other than a “pro-
ceeding under subsection (1).” But it also recognized that
the solution is imperfect because a shareholder’s ownership
stake may represent more than a solely financial invest-
ment, and a shareholder subject to a court-ordered sale of
its shares for “fair value” may be incompletely compensated
for its loss.
C.  Discussion
With that understanding of the statute, its context,
and the legislative history, we return to the question here:
What kind of “proceeding” triggers the availability of an
election to purchase under ORS 60.952(6)? Put another way,
what allegations, claims, and remedies in a third-party com-
plaint would make it appropriate to characterize that com-
plaint as “a proceeding under subsection (1)”? We answer
that question by examining, first, the contents of Giller’s
third-party complaint and comparing it with the grounds
Cite as 362 Or 177 (2017)	199

for liability and the remedies that the legislature identified
in ORS 60.952. We then consider whether allowing Graydog
to elect to buy Giller’s shares based on Giller’s filing of the
third-party complaint is consistent with the legislature’s
intentions in adopting ORS 60.952, and the election provi-
sion in ORS 60.952(6) in particular.
As noted, Giller’s third-party complaint does not
explicitly claim oppressive conduct by Graydog or Westervelt,
nor does it purport to state a claim for relief on any of the
grounds identified in ORS 60.952(1)(a)-(d). Graydog argues,
however, that Giller’s factual allegations support a claim for
oppression, identifying specific allegations that, it asserts,
would state such a claim against Westervelt. Graydog is cor-
rect that some of Giller’s allegations could support a claim
for breach of fiduciary duty or oppression and that the par-
ties’ dispute involves shareholder disagreements and allega-
tions of improper conduct. But Giller limited his claims for
relief to breach of contract, breach of the contractual duty of
good faith and fair dealing, and a declaratory judgment.
Graydog does not explain how the presence of alle-
gations that could support a claim of oppression can change
the claims Giller did assert into claims that he, in fact,
intentionally did not assert. See Redwood Theaters, 908 F2d
at 470 (Plaintiffs have the “prerogative[ ] to choose * * * the
legal principles governing their complaints.”). The obser-
vation that certain factual allegations might also establish
claims for breach of fiduciary duty or other oppressive con-
duct does not necessarily mean that the “true substance” of
the third-party complaint is a claim for “oppression” or that
the third-party complaint is a “proceeding under subsection
(1),” a provision that does not mention breach of contract or
declaratory judgment claims.
Similarly, the remedies Giller seeks do not suggest
that his third-party complaint is the kind of claim for oppres-
sion “under subsection (1)” with which the legislature was
concerned. The legislative history discussed above shows
that in ORS 60.952(2), the legislature sought to codify rem-
edies for oppression that were previously available through
the court’s equitable powers. Here, Giller seeks money dam-
ages on his contract claims, and although damages are one
200 Graydog Internet, Inc. v. Giller

of the many remedies identified in ORS 60.952(2), they are,
of course, the paradigmatic remedy for contract claims and
are unlike the equitable remedies traditionally associated
with claims for oppression. Giller’s contract claim does not
seek changes in management, control, or corporate opera-
tions; dissolution; the issuance of distributions; or a forced
buyout. And although Giller seeks a declaration that the
shareholder agreement is void and unenforceable, he does
not otherwise ask the court to intervene in Graydog’s opera-
tions. The remedies Giller seeks suggest that his claims are
not the kind of shareholder litigation with which the legis-
lature was concerned when it identified the panoply of rem-
edies available for shareholder oppression. See Securities-
Intermountain, 289 Or at 260 (examining remedies sought
as one means to determine true nature of complaint: “the
scope of damages demanded may characterize a complaint
as founded in tort rather than in contract”).
As to his claim regarding the shareholder agree-
ment, Giller, as noted, sought relief under the Uniform
Declaratory Judgments Act, not under ORS 60.952(2).
Moreover, although ORS 60.952(2)(b) authorizes a court to
invalidate articles of incorporation and bylaws, it does not
mention shareholder agreements. It may be that, in some cir-
cumstances, a shareholder could seek to void a shareholder
agreement as a remedy for an oppression claim, but that is
not the grounds upon which Giller relied in his third-party
complaint. Westervelt, acting through Graydog, began this
litigation by seeking to squeeze-out Giller by virtue of the
shareholder agreement’s provision that only employees may
be shareholders. In that procedural setting, Giller’s declar-
atory judgment claim is more properly seen as a minority
shareholder’s defense against a squeeze-out attempt, which
is not a situation in which the legislature intended the elec-
tion to be available.
In sum, the third-party complaint contains claims
for breach of contract and a declaratory judgment, and it
does not cite ORS 60.952 or expressly allege any of the
grounds for liability found in ORS 60.952(1). Likewise,
except for the money damages, the third-party complaint
seeks remedies that are distinguishable from the various
equitable remedies allowed under ORS 60.952(2). Based on
Cite as 362 Or 177 (2017)	201

those facts, Giller’s third-party complaint does not appear to
be a proceeding “under” ORS 60.952(1).
That appearance is bolstered by the procedural pos-
ture of Giller’s third-party complaint. It is evident from the
legislative history that a purpose of the legislature in enact-
ing ORS 60.952(6) was to reduce litigation over the con-
trol and management of closely held corporations—that is,
“proceeding[s] under subsection (1)”—by discouraging par-
ties from initiating such litigation, and, in certain circum-
stances when such litigation has been initiated, allowing
the corporation or a shareholder to elect to buy the shares of
the “shareholder who filed the proceeding.”
In the context of this case, the legislature’s pur-
pose of discouraging litigation by providing an incentive for
prelitigation resolution of disputes would not be served by
allowing Graydog to file an election based on Giller’s third-
party complaint. A third-party complaint may be filed only
“[a]fter commencement of the action.” ORCP 22 C(1). Here,
the action was commenced by Graydog. Allowing Graydog
to file an election based on Giller’s third-party complaint
would benefit Graydog and Westervelt and thus provide
an incentive, rather than a disincentive, for future actors
in the position of Graydog and Westervelt to begin litiga-
tion against minority shareholders. Giller’s third-party
complaint against Westervelt did not join a person who was
previously uninterested, unaligned, or uninvolved in the lit-
igation. Rather, the personal animosity between Giller and
Westervelt was already apparent when Graydog filed the
declaratory judgment action. Giller’s third-party complaint
was essentially a response in kind to an existing proceeding,
initiated by Graydog (at the behest of Westervelt), rather
than the initiation of shareholder litigation in the first place.
State law governing close corporations has as
one purpose the protection of minority shareholders from
oppression and mistreatment by the majority shareholder.
That includes the protection of the right of a shareholder
to decline to sell its shares to the corporation or another
shareholder in the absence of some legal obligation to do so.
See Cubalevic, 240 Cal App 2d at 562, 49 Cal Rptr at 701
(“There is no independent right on the part of one or more
202 Graydog Internet, Inc. v. Giller

stockholders in a corporation to compel the sale to them
of the shares of stock of another.”); see also Thompson, 62
Wash U L Rev at 433 (“Shareholders who are squeezed out of
[close corporations] lose more than the proportionate value
of their shares.”). The election provision in ORS 60.952(6) is
an exception to that right, because it imposes an obligation
on a shareholder to sell its shares in certain circumstances.
Giller’s third-party complaint was filed in an exist-
ing dispute, it joined a party who was already intimately
involved in the litigation, and it contained contractual claims
and a claim under the Uniform Declaratory Judgments Act.
The third-party complaint sought a declaratory judgment
as a defense against a squeeze-out attempt of which the ini-
tial complaint was a part, and the third-party complaint’s
contractual claims sought money damages rather than the
equitable remedies typical of oppression claims. For those
reasons, we conclude that Giller’s third-party complaint
against Westervelt is not a “proceeding under subsection
(1),” and, therefore, it did not trigger the election provision of
ORS 60.952(6).
The decision of the Court of Appeals is reversed.
The judgment of the circuit court is affirmed, and the case
is remanded to the circuit court for further proceedings.

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/4224910. Public record. Not legal advice.