Greenwood Products v. Greenwood Forest Products

Under ORCP 64(B)(4), a trial court may authorize a new trial based on newly discovered evidence only if the proffered evidence is (1) newly discovered; (2) material for the moving party; and (3) unable to have been discovered and produced at trial given the exercise of reasonable diligence of the moving party. In this context, “reasonable diligence” includes the party’s capacity to request a continuance in civil proceedings while pertinent evidence is developed in a concurrent criminal case, and questioning a witness until that witness invokes a privilege to not testify.

The Court reviewed whether the trial court erred in applying ORCP 64(B)(4) by denying Greenwood Forest Products’ (Defendant) motion for a new trial. Greenwood Products (Plaintiff) contracted to purchase Defendant’s business and inventory in installments over a two-year period. In an independent audit of the two businesses, a significant discrepancy was found in the purchase-and-sale receipts, and further discovered that Fahey—an employee serving as bookkeeper for Plaintiff and providing inventory-related services to Defendant—had embezzled at least $360,000 from Defendant. Criminal charges against Fahey and collateral lawsuits between Defendant and Plaintiff ensued. Before trial, both Plaintiff and Defendant deposed Fahey, who invoked his Fifth Amendment privilege in response to many questions. At trial, the court sealed the deposition transcript, and Defendant did not object. When Defendant called Fahey to testify, Fahey’s attorney interjected that Fahey intended to invoke his Fifth Amendment privilege—after a colloquy between the attorneys and the court, Defendant chose not to question Fahey. The jury awarded $819,731.68 to Plaintiff and $1,043,757.00 to Defendant on their counterclaim. Sixteen days later, Fahey was sentenced in the criminal action, and signed an affidavit that Defendant argued may have changed the outcome of the case. Based on that “new” evidence, Defendant moved for a new trial; the trial court denied the motion. On review, the Court reviewed the standard of an ORCP 64(B)(4) motion, and determined as a threshold issue that, because Defendant had failed to call Fahey to the stand, and had failed to request a continuance for after the conclusion of Fahey’s criminal trial, Defendant failed to act with “reasonable diligence” to procure the new evidence, and therefore, that evidence could not be used to form a basis for a motion for a new trial. The order of the trial court in denying Defendant’s motion for a new trial was affirmed, the case was remanded to the Court of Appeals.