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Rathgeber v. James Hemenway8/15/2001
Argued and submitted May 2, 2001.
Judgment for economic damages, for violation of Unlawful Trade Practices Act, and award of attorney fees reversed; otherwise affirmed.
Defendants appeal from a judgment on a jury verdict for plaintiffs in this action for breach of fiduciary duties and violation of the Unfair Trade Practices Act UTPA, ORS 646.605 to ORS 646.652. The action arose in connection with a real estate transaction in which defendants represented plaintiffs as buyers' agents. Defendants contend that the trial court erred in denying motions to strike plaintiffs' claim for emotional distress damages and for a directed verdict on plaintiffs' UTPA claim. We review for errors of law, GPL Treatment, Ltd. v. Louisiana-Pacific Corp., 323 Or 116, 118, 914 P2d 682 (1996), and reverse and remand.
We state the facts in the light most favorable to plaintiffs. Woodbury v. CH2M Hill, Inc., 173 Or App 171, 176, 21 P3d 153 (2001). In the summer of 1997, plaintiffs Tom and Karen Rathgeber decided to move from Portland to rural Lane County. Plaintiffs began to search for property, and they hired William Zobel, an associate of Hemenway Realtors, to act as their agent. Zobel told plaintiffs that he was experienced with transactions involving rural residential properties. Plaintiffs described to Zobel characteristics of the property they wanted, instructing him that, if the purchase price were near the top of their price range, they wanted property that would not need repairs. As required by ORS 696.820, Zobel provided to plaintiffs a form entitled "DISCLOSURE REGARDING AGENCY RELATIONSHIPS," which provided, in part:
"A buyer's agent has the affirmative obligations [under ORS 696.810]:
"(1) To the buyer: The fiduciary duties of loyalty, obedience, disclosure, confidentiality, reasonable care and diligence, and accounting in dealing with the buyer.
"(2) To the buyer and to the seller: Honest dealing and disclosure."
Tom Rathgeber signed the disclosure form on behalf of plaintiffs, and Zobel signed for defendants.
Zobel showed plaintiffs about 50 properties, and plaintiffs made offers to purchase four of those properties, one of which was accepted by the owners. Because Tom Rathgeber had started working in Lane County and the sellers had already vacated the property, the sellers allowed plaintiffs to take possession before closing. The day before closing, plaintiffs discovered a variety of problems in the house, including a sloped living room floor, loose light-switch covers, missing shelves, and trash lying around the property. Plaintiffs contacted Zobel, who stated that the problems were "going to be an easy fix" and pressed plaintiffs to proceed with closing. After an inspection revealed serious structural problems with the residence, plaintiffs froze the purchase funds they had placed in escrow. The sellers brought an action against plaintiffs for specific performance, and the parties eventually settled that litigation.
Plaintiffs then filed this action alleging that defendants had breached the fiduciary duties listed in ORS 696.810(2). In their complaint, plaintiffs alleged that, as a direct result of those breaches, plaintiffs suffered non-economic damages for
" motional distress incident to the uprooting of their children and themselves from the security of a home of their own, and incident to the threat of being forced to complete the purchase of a house unfit for occupancy * * *." Plaintiffs also alleged that defendants "violated the provisions of the [UTPA] by willfully representing to plaintiffs that their services as buyers' agents had qualities of competence and diligence that they d
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