Gillett v. Tucker

“Expressions of opinion may be considered misrepresentations of fact where the parties are 'on unequal footing and do not have equal knowledge or means of knowledge.’” Frank v. Fitz Enterprises, Inc., 106 Or App 183, 186, 806 P2d 720 (1991).

Plaintiff-Respondents entered a lease agreement with a purchase option for two apartment buildings owned by Defendant-Petitioners. Per the agreement, Petitioners retained responsibility for “major maintenance and repair” of the property, while Respondents managed the buildings and paid “rent” to Petitioners. The lease provided Respondents an option to purchase the property after three years, if they were not in default under the terms of the lease. After ten years, Respondents returned the property to Petitioners without exercising their purchase option, and Petitioners subsequently sold the property to a third property. After the sale, Respondents raised three causes of action: breach of contract, fraud in the inducement, and unjust enrichment. At trial, the court held in favor of Respondents’ claims, resulting in both a monetary award and supplemental judgment for prevailing party fees.

On appeal, Petitioner challenged the judgment for each of the three causes and the supplemental judgment.

Because the contract precluded the purchase option if Respondents were in default under the lease or “upon any termination of this lease,” the court found that purchase option did not survive the termination of the lease. Further, because Respondents turned the property back over to Petitioners and ceased paying rent, the lease terminated at that time as a matter of law. Accordingly, Petitioners did not breach the lease when they sold the properties to a third party.

However, the court also found that the record contained sufficient evidence that Petitioners failed to make necessary roof and parking lot repairs–a breach of their lease agreement. The court further held that there was no fraud in the inducement because a joint conversation prior to the execution of the lease wherein the parties noted that it was a “good deal for everyone” was merely opinion and thus not actionable misrepresentation.

Next, the court held that the trial court erred when it found Petitioners had been unjustly enriched because when a valid contract defines the obligations of parties, it displaces related inquiry into unjust enrichment.

Finally, the court found that the trial court did not err when it concluded that Petitioners had breached their contract by failing to make “major repairs.” Because the court was unable to determine the amount of the award, if any, that resulted from their failure to make major repairs, the money judgment was reversed and remanded.

General judgments reversed; otherwise affirmed. Supplemental judgment reversed and remanded.