First Commerce of America, Inc. v. Nimbus Center Associates

Citations: 986 P.2d 556; 329 Or. 199; 1999 Ore. LEXIS 505Docket: CC C931118CV; CA A93182; SC S45921

Court: Oregon Supreme Court; July 29, 1999; Oregon; State Supreme Court

Original Court Document: View Document

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The case involves First Commerce of America, Inc. suing Nimbus Center Associates and associated defendants over a loan dispute. Nimbus Center Associates, which includes George H. Killian and Joseph W. Angel, petitioned for review after the Court of Appeals dismissed their appeal as moot. The Oregon Supreme Court allowed the petition for reconsideration and review, agreeing that Nimbus's claims were indeed moot. However, the court decided that the appropriate remedy was to vacate the previous judgment and dismiss the moot claims rather than merely affirm the dismissal. The case revolved around a loan of $2.5 million made to Nimbus by Benjamin Franklin Savings and Loan, which became insolvent, leading the Resolution Trust Corporation (RTC) to own the loan. RTC intended to auction the loan, and Nimbus believed it had an agreement with National Mortgage Company to purchase the loan at a discounted price, which did not materialize as National sold the loan to First Commerce, prompting First Commerce to seek recovery from Nimbus. Nimbus raised defenses and third-party claims against National based on their alleged agreement. The Supreme Court remanded the case to the circuit court with instructions to vacate the judgment regarding Nimbus's third-party claims and to dismiss those claims as moot.

Nimbus's affirmative defenses and third-party claims against National Mortgage Co. (NMC) allege negligence and breach of fiduciary duty. The relief sought includes a judgment against NMC equal to any amounts Nimbus or associated parties are required to pay to the plaintiff, along with interest. Nimbus's third-party claims are contingent on the outcome of First Commerce's claims against it. The circuit court dismissed these claims, but the dismissal was not final or appealable. Following a settlement between First Commerce and Nimbus, which resulted in a stipulated judgment of dismissal, Nimbus appealed the dismissal of its third-party claims against NMC.

The Court of Appeals ruled that third-party claims rely on primary claims and found the appeal moot due to the dismissal of the primary claims and lack of ongoing controversy between Nimbus and NMC. Nimbus filed a petition for reconsideration, seeking to supplement the record with evidence of its settlement with First Commerce, arguing that it incurred damages exceeding $900,000 due to NMC's actions. The Court of Appeals denied the petition for reconsideration but did not address the request to supplement the record.

In reviewing Nimbus's claims, the court posed several questions regarding the proper pleading of the claims as third-party claims, any potential waivers by NMC, the appropriateness of the mootness ruling, and the implications for refiling claims. The court allowed part of Nimbus's motion to supplement the record but denied the review. Nimbus subsequently sought clarification on how the court's order affects the appeal's disposition, which the court agreed requires clarification.

Nimbus sought to supplement the record with its settlement terms with First Commerce under ORS 19.365(4). The court permitted this request not under that statute, as it was deemed inapplicable; the statute addresses situations where the appeal record is incomplete or lacks material from the circuit court file. In this case, the settlement terms were not part of the circuit court record, nor were they lost or misfiled. The court referenced precedents illustrating that mootness can be established through evidence in the circuit court record or during the appeal process, but ORS 19.365(4) does not allow the appellate court to consider evidence outside the circuit court record if it was never included. The court emphasized that mootness affects justiciability, and a court's authority is limited to actual controversies. Although the event rendering Nimbus's third-party claims moot occurred while the case was still in the circuit court, the settlement terms were not included in the record. Consequently, the court exercised its inherent power to consider evidence of the settlement terms to determine if a justiciable controversy remained. This was supported by case law where courts have considered outside information to address issues related to mootness and justiciability.

In Strand Century v. Dallas, the court recognized that affidavits can provide information relevant to motions for dismissing appeals based on mootness. The court allowed Nimbus to supplement the record without submitting evidence of the settlement terms, as the parties agreed that Nimbus's payment to First Commerce exceeded $900,000, which affected the appeal's mootness. The court noted that Nimbus's third-party claims became moot when First Commerce's claims were dismissed. 

The court acknowledged inconsistencies in how it has disposed of moot judgments in past cases. In Oregon Republican Party v. State of Oregon, the court reversed a decision and instructed the Court of Appeals to dismiss the appeal after the relevant election occurred, which was deemed harmless. Conversely, in Kay, the court reversed a decision and instructed the lower court to vacate the judgment after the moot graduation ceremony. 

The court concluded that the preferred approach when a case becomes moot is to vacate both the Court of Appeals' decision and the circuit court judgment, distinguishing between reversal, which implies an incorrect decision on the merits, and vacation, which indicates that the merits should not have been decided due to mootness. The Court of Appeals dismissed Nimbus's appeal, leaving the judgment intact, which could preclude Nimbus from pursuing similar claims against National in future actions under principles of claim preclusion.

Nimbus's third-party claims against National became moot following the judgment on the primary claims, which prevents appellate review of the merits of the third-party claims' dismissal. The Court of Appeals should have vacated the judgment regarding the third-party claims and remanded the case to the circuit court with instructions to dismiss those claims as moot. The petition for reconsideration and the petition for review are granted. The Court of Appeals’ decision is vacated, and the case is remanded for proper dismissal of the third-party claims. 

ORCP 67 B states that in actions with multiple claims or parties, courts may issue a final judgment on fewer than all claims only with an express determination of no just reason for delay. Without such determination, any decisions on partial claims remain subject to revision until all claims are resolved. 

The court also allowed Nimbus to supplement the record regarding the settlement terms with First Commerce, assuming it would show Nimbus's liability exceeding $900,000, but denied the motion in part. 

ORS 19.365(4) permits appellate courts to correct or supplement records that are erroneous or incomplete if it affects the appeal's merits. 

If there is a dispute about the event's occurrence or nature, a factual record may be necessary, but in this case, the parties only dispute the event's legal significance. 

ORS 19.410(2) indicates that dismissing an appeal can affirm the judgment being appealed if directed by the appellate court.