Fitzgerald v. Rogue Agrisource LLC ( 2024 )

No. 459 July 3, 2024 555
IN THE COURT OF APPEALS OF THE
STATE OF OREGON
Michael E. FITZGERALD,
Receiver-Appellant,
and
MYTIE LLC,
a California limited liability company,
and PHIL NIES,
Plaintiffs-Counter Defendants-Respondents,
v.
ROGUE AGRISOURCE LLC,
an Oregon limited liability company,
Defendant-Cross Defendant-Respondent,
and
TH SERVICES,
an Oregon limited liability company,
Defendant-Cross Claimant/Counter Claimant-Respondent.
Jackson County Circuit Court
20CV18978; A181356
Benjamin M. Bloom, Judge.
Argued and submitted June 3, 2024.
Ruth A. Casby argued the cause for appellant. Also on
the briefs were Janet M. Schroer and Hart Wagner LLP.
Christian E. Hearn argued the cause for respondents
Mytie LLC and Phil Nies. Also on the brief was Davis Hearn
Anderson & Selvig, PC.
No appearance for respondents Rogue Agrisource LLC
and TH Services.
Before Tookey, Presiding Judge, Egan, Judge, and Kamins,
Judge.
EGAN, J.
Affirmed.
556 Fitzgerald v. Rogue Agrisource LLC
Cite as 333 Or App 555 (2024) 557
EGAN, J.
Appellant Fitzgerald was appointed as the receiver
in a receivership proceeding brought by plaintiffs. The trial
court dismissed the receivership proceeding after the par-
ties stipulated that they no longer wished to pursue the
matter. Fitzgerald filed a motion seeking relief from the
dismissal under ORCP 71 A and ORCP 71 B(1)(a), and he
appeals a judgment of the trial court denying his motion.
Fitzgerald contends that the trial court committed a “cleri-
cal mistake,” as described in ORCP 71 A, in dismissing the
receivership proceeding without first formally terminating
the receivership under the Oregon Receivership Code (ORC),
ORS 37.010 to 37.410, and ORCP 80 G. He further contends
that the mistake provides a basis for relief under ORCP 71
B(1)(a), as a “mistake, inadvertence, surprise or excusable
neglect.” Fitzgerald seeks reinstatement of the proceeding
so that the receivership can be properly terminated and he
can be paid compensation and reimbursement for his costs.
We note as a preliminary matter that relief under
ORCP 71 is available to “parties,”1 and that it is not clear
that Fitzgerald, who was not a party to the receivership pro-
ceeding, is a person who may seek relief from the judgment
under ORCP 71.2 We conclude, however, that we need not
resolve that issue to resolve the appeal. That is because we
conclude that the trial court did not abuse its discretion in
rejecting Fitzgerald’s motion for relief from the judgment;
we therefore affirm.
The background facts are undisputed. In 2019,
Rogue Agrisource, LLC (the Company) started as a business
in Medford, Oregon, growing, harvesting, and selling hemp
products. Plaintiffs Mytie LLC and Phil Nies, members
of the Company, loaned the Company $1 million, taking a
security interest in the Company’s primary asset—the hemp
harvest. Steven Day, also a Company member, managed the
1
ORCP 71 B(1) provides that, “On motion and upon such terms as are just,
the court may relieve a party or such party’s legal representative from a judg-
ment.” (Emphasis added.)
2
ORS 37.030(15) defines a receiver as “a person appointed by the court as the
court’s agent, and subject to the court’s direction, to take possession of, manage
or dispose of property.”
558 Fitzgerald v. Rogue Agrisource LLC
Company business. Day also owned a separate company, TH
Services, LLC, which leased space to the Company and pro-
vided other services.
The Company’s 2020 hemp harvest fell short and
was insufficient to meet the Company’s financial obliga-
tions, and the Company became insolvent. The Company’s
only remaining asset was approximately 65,000 pounds of
hemp flower, which was stored in a warehouse leased by TH
Services, LLC, to which Day had sole access. Plaintiffs, the
Company’s primary creditors, became distrustful of Day’s
management.
TH Services, LLC, filed a complaint in the Jackson
County Circuit Court, asserting a first priority possessory
lien over the hemp, arising from the Company’s unpaid rent
at the warehouse, plant sales, and processing and transport
of the hemp biomass.
Plaintiffs initiated this separate proceeding, nam-
ing the Company as defendant and seeking the appointment
of a receiver to liquidate the assets of the Company. A receiv-
ership is “the process by which a court appoints a person to
take charge of property during the pendency of an action
or upon a judgment or order entered therein and to man-
age or dispose of the property as the court may direct.” ORS
37.020. Under the ORC, the court may appoint a receiver on
the motion of any party or on the court’s own motion, if the
property “is attached by a creditor,” and “is of a perishable
nature or is otherwise in danger of waste, impairment or
destruction[.]” ORS 37.060(1)(e). Plaintiffs alleged that the
remaining hemp was deteriorating in value, and that the
members and creditors were “in dispute over the division
of proceeds from sale of the hemp and over the validity,
amount, and priority of certain liens.” Plaintiffs requested
the appointment of a receiver to “take possession and con-
trol of [the Company’s] assets, liquidate such assets, and dis-
tribute the proceeds to [the Company’s] creditors.”
The court granted plaintiffs’ motion for the appoint-
ment of a receiver, appointing Fitzgerald as receiver to
supervise the liquidation of the Company’s assets. The
court’s order appointing Fitzgerald, proposed by plaintiffs,
Cite as 333 Or App 555 (2024) 559
provided that the receiver “shall be compensated at the rate
of $250 per hour, plus out of pocket expenses, plus such other
amounts as allowed by the court;” and that all members of
the Company “shall, consistent with ORS 37.150, assist and
cooperate fully with the receiver in the administration of
the estate and the discharge of receiver’s duties[.]” The order
stated that, pending the receivership, the action by TH
Services, LLC, against the Company would be stayed pur-
suant to ORS 37.220(1)(a). TH Services, LLC, intervened as
a defendant in the receivership proceeding and voluntarily
dismissed its separate Jackson County Circuit Court action.
Fitzgerald filed periodic reports of receivership
activities with the court in accordance with the ORC,
including statements of his fees and expenses. Fitzgerald
advanced personal funds in an attempt to secure and mar-
ket the hemp. Fitzgerald sent the hemp to a processor in
Colorado who, Fitzgerald asserts, “effectively stole[ ]” the
hemp.
The Company itself, which was a named defendant,
never appeared in the receivership proceeding. In 2021,
without notice to Fitzgerald or TH Services, LLC, the court
entered a 28-day notice of dismissal and a limited judgment
dismissing the Company. The court subsequently set aside
that judgment on plaintiffs’ motion under ORCP 71, and the
matter was reinstated.
In a report of November 2021, Fitzgerald item-
ized and sought reimbursement for receivership fees and
expenses, including compensation, attorney fees and costs,
consultant fees, and out-of-pocket expenses.
The matter was set for trial on January 11, 2022,
but by stipulation of the parties—plaintiffs and TH Services,
LLC—the trial was cancelled, because defendants—the
Company and TH Services, LLC—were insolvent. Because
the trial was cancelled rather than postponed, the court, on
its own motion, sent a notice to the parties on January 25,
2022, that it intended to dismiss the action pursuant to
ORCP 54 B(3) (dismissal for want of prosecution). The par-
ties did not object, because the Company had no assets to be
preserved by the receivership. The court entered a general
560 Fitzgerald v. Rogue Agrisource LLC
judgment of dismissal on February 25, 2022, which, in prac-
tical effect, terminated the receivership.
The court did not send Fitzgerald or his attorney
notice of the intended dismissal or the judgment. It was not
until July 2022, that Fitzgerald learned of the dismissal of
the proceeding. After learning of the dismissal, Fitzgerald’s
attorney attempted to negotiate with plaintiffs for payment
of Fitzgerald’s outstanding fees and expenses, and sent a
demand for $176,970.31, which plaintiffs ignored.
In December 2022, Fitzgerald filed a motion to set
aside the February 2022 judgment of dismissal, asserting
that it had been entered either as the result of a “clerical
mistake,” ORCP 71 A, or as the result of “mistake, inad-
vertence, surprise, or excusable neglect.” ORCP 71 B(1).
Fitzgerald also contended that the judgment of dismissal
was in violation of Oregon law, which requires that termi-
nation of a receivership be carried out pursuant to ORS
137.410 and ORCP 80.
Plaintiffs responded that Fitzgerald is not a party
to the receivership and that it is unclear that he even has
standing to seek relief from the judgment. Plaintiffs further
contended that there is no basis for continuing the litigation,
as the collateral for their loan to the Company no longer
exists, and they have not personally guaranteed payment of
Fitzgerald’s fees. Plaintiffs further argued that Fitzgerald’s
motion to set aside the judgment was untimely, Fitzgerald
having received notice of the judgment in July 2022 and not
sought relief until December 2022. The trial court agreed
with plaintiffs that the motion was untimely and denied it
for that reason.
On appeal, in a single assignment, Fitzgerald
asserts:
“The trial court erred in denying Receiver’s motion to
set aside the judgment of dismissal that was incorrectly
entered by administrative action without a court order
wrapping up and terminating the receivership.”
Fitzgerald’s primary argument is that, under the ORC, a
receivership may be terminated only pursuant to ORS
Cite as 333 Or App 555 (2024) 561
37.410(5) and ORCP 80 G.3 He contends that the February
2022 judgment of dismissal, entered without notice to him,
was legal error, constituting a “clerical mistake” under
ORCP 71 A, or a basis for relief as “mistake, inadvertence,
surprise or excusable neglect” under ORCP 71 B(1). In light
of that error, and the prejudice to Fitzgerald as a result of
not being compensated for his expenses and fees, Fitzgerald
asserts that the failure to grant his motion to set aside the
judgment was an abuse of discretion.
We first address and reject Fitzgerald’s contention
that he has established a “clerical mistake” by the trial
court in dismissing the receivership proceeding. ORCP 71 A
provides:
“Clerical mistakes in judgments, orders, or other parts
of the record and errors therein arising from oversight or
omission may be corrected by the court at any time on its
own motion or on the motion of any party and after such
notice to all parties who have appeared, if any, as the court
orders.”
The rule gives the court authority to “correct” its “clerical
mistakes.” We have previously addressed the meaning of a
“clerical mistake,” for purposes of ORCP 71 A. See Yarbrough
v. Viewcrest Investments, LLC, 299 Or App 143, 158, 449 P3d
902, rev den, 364 Or 535 (2019) (A clerical error is a type of
mistake or omission mechanical in nature which is appar-
ent on the record and which does not involve a legal decision
or judgment by an attorney.); Ramis Crew Corrigan v. Stoelk,
193 Or App 700, 707, 92 P3d 154 (2004) (A clerical mistake
is a mistake or omission that is not a “ ‘deliberate result of
3
ORS 37.410(5) provides:
“Upon motion of any interested person, or upon the court’s own motion,
the court may discharge the receiver and terminate the court’s administra-
tion of the property over which the receiver was appointed.”
ORCP 80 G provides:
“A receivership may be terminated only upon motion served with at least
10 days’ notice upon all parties who have appeared in the proceeding. The
court may require that a final account and report be filed and served, and may
provide for the filing of written objections to such account within a specified
time. At the hearing on the motion to terminate, the court shall hear all objec-
tions to the final account and shall take such evidence as is appropriate, and
shall make such orders as are just concerning the termination of the receiver-
ship, including all necessary orders on the fees and costs of the receivership.”
562 Fitzgerald v. Rogue Agrisource LLC
judicial reasoning and determination, regardless of whether
it was made by the clerk, by counsel or by the judge.’ ”
(Quoting Hopkins and Hopkins, 102 Or App 655, 658-59, 796
P2d 660 (1990), rev den, 311 Or 87 (1991)). We have said that
a “clerical mistake” that is subject to correction under ORCP
71 A is not an error that involves the exercise of legal rea-
soning; rather, it “is the kind of mistake in a judgment that
causes the judgment, through oversight or omission, not to
reflect what occurred in the proceeding that led to the judg-
ment.” McClure v. Lebenbaum, 181 Or App 268, 274, 45 P3d
1038 (2002).
Here, it may be that the trial court should have
formally terminated the receivership before dismissing the
proceeding and that its failure to do so was legal error. But
the trial court’s dismissal of the proceeding under ORCP 54
B(3) for want of prosecution, based on the parties’ stipula-
tion not to pursue it, was not the type of error that consti-
tutes a “clerical mistake,”—an oversight or omission—as we
have construed that term in our case law. We conclude that
ORCP 71 A provides no authority for a “correction” by the
trial court in the form of a reinstatement of the proceeding.
We further conclude that Fitzgerald has not estab-
lished a basis for relief under ORCP 71 B(1)(a). That subsec-
tion gives discretion to the trial court to grant relief from
a judgment based on “mistake, inadvertence, surprise, or
excusable neglect.” The rule provides that “[t]he motion
shall be made within a reasonable time, and for reasons (a),
(b), and (c) not more than one year after receipt of notice by
the moving party of the judgment.”
The trial court determined that Fitzgerald’s request
for relief, filed five months after learning of the dismissal,
was untimely. We review that ruling for an abuse of dis-
cretion, Lovejoy Specialty Hospital v. Advocates for Life, 121
Or App 160, 169, 855 P2d 159, rev den, 318 Or 97 (1993)
(reviewing trial court ruling on untimeliness under ORCP
71 B for abuse of discretion), liberally construing ORCP 71
B(1)(a) so as to avoid depriving a party of their day in court,
Wagar v. Prudential Ins. Co., 276 Or 827, 833, 556 P2d 658(1976), and viewing the facts in the light most favorable to
Fitzgerald. See Terlyuk v. Krasnogorov, 237 Or App 546, 553,
Cite as 333 Or App 555 (2024) 563
240 P3d 740 (2010), rev den, 349 Or 603 (2011) (construing
“excusable neglect” as a basis for relief from a default judg-
ment under ORCP 71 B(1)(a)).
As noted, Fitzgerald learned of the trial court’s dis-
missal in July 2022 and sought relief from the judgment in
December 2022. In addition to that duration of five months,
the facts that bear on the trial court’s ruling and the exer-
cise of its discretion in determining whether Fitzgerald
sought relief within a “reasonable time” are Fitzgerald’s rea-
sons for the delay in seeking relief. Fitzgerald’s only expla-
nation for the delay is that, after learning of the dismissal in
July 2022, he reasonably attempted to recover his fees and
expenses from plaintiffs outside of litigation, and that “five
months is not an unreasonable amount of time to attempt
to resolve a dispute before seeking relief from the court.” He
notes that ORCP 71 B(1)(a) itself sets one year from notice
as the outside limit for seeking relief and that he was well
within that period.
Viewing the facts in the light most favorable to
Fitzgerald, we agree that it was reasonable for him to pur-
sue his claims for compensation and reimbursement extra-
judicially. But apart from that excuse and his own view of
what constitutes a reasonable time for seeking relief from
a judgment, Fitzgerald gave no explanation. For exam-
ple, he did not explain to the trial court why he could not
have sought judicial relief simultaneously with attempt-
ing to negotiate with plaintiffs, or why, having received no
response from plaintiffs, he could not have more expedi-
tiously sought judicial relief. See Lovejoy Specialty Hospital,
121 Or App at 169 (affirming denial of relief under ORCP 71
B(1)(a) where delay of 10 months was due to filing an appeal
without simultaneously seeking relief in the trial court).
In reviewing for an abuse of discretion the trial
court’s ruling dismissing Fitzgerald’s motion as untimely,
our role is not to second guess the trial court’s reasoning
or its conclusion; our role is simply to assess whether the
trial court’s ruling was among the legally permissible alter-
natives. See State v. Boauod, 302 Or App 67, 73, 459 P3d
903 (2020) (In evaluating a trial court’s discretionary rul-
ing, “our role is to assess whether the court’s decision falls
564 Fitzgerald v. Rogue Agrisource LLC
within the range of legally permissible choices”). Without
deciding any questions bearing on Fitzgerald’s standing to
seek relief, we conclude that, absent an explanation from
Fitzgerald for why relief from the judgment could not have
been requested sooner, it was within the range of legally
permissible outcomes for the court to conclude that the
request for relief was not filed within a reasonable time. We
therefore conclude that the trial court did not abuse its dis-
cretion in denying Fitzgerald’s request for relief.
Affirmed.