MAT, Inc. v. American Tower Asset Sub, LLC ( 2021 )

7
Argued and submitted November 5, 2019, vacated and remanded for the trial
court to determine whether to conduct in camera review June 3, 2021
MAT, INC.,
an Oregon corporation,
Plaintiff-Respondent,
v.
AMERICAN TOWER ASSET SUB, LLC,
a Delaware limited liability company; and
Spectrasite Communications, LLC,
a Delaware limited liability company,
Defendants-Appellants.
Marion County Circuit Court
13C16383; A163930
493 P3d 14
Plaintiff MAT, Inc. owns the farmland on which defendants own and main-
tain a television tower. MAT and defendants have a lease agreement that pro-
vides that MAT gets half of all revenue generated by any subtenants that use the
tower. Upon discovering that defendants had not disclosed all rent-paying sub-
tenants or given MAT its share of the revenue, MAT sued defendants for breach
of contract. MAT sued outside of the statute of limitations but argued that the
statute tolled because defendants fraudulently concealed the breach. Before trial,
defendants requested in camera review of documents relating to revenue from
certain subtenants. The trial court denied that request, relying on MAT’s repre-
sentation that an in camera review would not reveal any material, unprivileged
information. The case went to a jury trial, and the jury returned a verdict in favor
of MAT. Defendants appeal, assigning error to, among other things, (1) the trial
court’s denial of defendants’ motion for directed verdict on the issue of fraudulent
concealment, (2) the court’s jury instructions on fraudulent concealment, and
(3) the court’s refusal to conduct an in camera review. Held: The trial court erred
in refusing to conduct an in camera review. After defendants made the thresh-
old showing that review might reveal material, unprivileged information, the
court was required to apply the proper factors in determining whether to conduct
review. The court did not err in denying defendants’ motion for directed verdict,
because the evidence adduced at trial was sufficient for the jury to find fraud-
ulent concealment, and the court’s jury instructions on fraudulent concealment
were correct statements of the law.
Vacated and remanded for the trial court to determine whether to conduct in
camera review.
Courtland Geyer, Judge.
David B. Hennes, New York, argued the cause for appel-
lants. On the briefs were Shannon R. Martinez, Jennifer C.
Paul, Daniel S. Reynolds, and Saalfeld Griggs PC.
8 MAT, Inc. v. American Tower Asset Sub, LLC
Brian R. Talcott argued the cause for respondent. Also on
the brief was Dunn Carney Allen Higgins & Tongue LLP.
Before Lagesen, Presiding Judge, and Egan, Chief Judge,
and Powers, Judge.
LAGESEN, P. J.
Vacated and remanded for the trial court to determine
whether to conduct in camera review.
Cite as 312 Or App 7 (2021) 9
LAGESEN, P. J.
Plaintiff MAT, Inc., owns the farmland on which
defendants American Tower Asset Sub, LLC, and SpectraSite
Communications, LLC,1 own and maintain a 900-foot tall
television tower. MAT and defendants have a lease agree-
ment that provides that MAT gets half of all revenue gener-
ated by any subtenants that use the tower. Upon discovering
that defendants had not disclosed all rent-paying subtenants
or given MAT its share of the revenue, MAT sued defendants
for, among other things, breach of contract. Because the lim-
itations period for contract actions is six years, and because
MAT sued more than six years after the date of the breach,
MAT argued that defendants fraudulently concealed the
breach, thereby tolling the statute of limitations. The case
went to jury trial, including on the fraudulent concealment
issue, and the jury found that defendants had fraudulently
concealed their breach and, ultimately, returned a verdict in
favor of MAT.
On appeal, defendants raise 10 assignments of
error. We write primarily to address the first, second,
third, and ninth. Defendants’ first two assignments of
error challenge the trial court’s denial of their motion for
a directed verdict on the issue of fraudulent concealment.
Defendants’ third assignment of error challenges the court’s
jury instructions on fraudulent concealment. And defen-
dants’ ninth assignment of error challenges, as a matter of
law, the court’s refusal to conduct an in camera review of
communications that defendants believe might contain evi-
dence that MAT, early on, knew or should have known that
it had a cause of action against defendants. As explained
below, we reject defendants’ first through third assignments
of error. We nonetheless vacate and remand because the
trial court did not apply the proper legal standard when
it denied defendants’ request for in camera review and
must do so now. We reject defendants’ other assignments
1
Ownership of the tower changed from SpectraSite to American Tower in
a merger during the relevant time frame, but the jury found in favor of MAT
against both defendants, so the change in ownership is largely irrelevant for pur-
poses of the issues presented on appeal. We therefore refer to SpectraSite and
American Tower collectively as “defendants” for ease of reading.
10 MAT, Inc. v. American Tower Asset Sub, LLC
of error without written discussion, except as briefly noted
below.2
I. FACTS
Although, as noted, defendants raise multiple assign-
ments of error, and those different assignments of error
implicate different standards of review, the primary chal-
lenges that we address are to the trial court’s denial of
defendants’ motion for a directed verdict on the statute of
limitations issue. For that reason, in accordance with the
applicable standard of review, we state the facts about the
parties’ underlying dispute in the light most favorable to
MAT, the nonmoving party. See Kelley v. Washington County,
303 Or App 20, 21-22, 463 P3d 36 (2020).
The lease agreement for the land on which the tele-
vision tower is situated was executed in 1981, around the
time the tower was constructed. The landlord and tenant
at the time (not parties to this appeal) contemplated that
subtenants would lease space on the tower, and they agreed
to equally share revenue generated from subtenant rent:
“Tenant may not assign or sublet this lease without the
written approval of Landlord, which approval shall not be
unreasonably withheld. In the event Tenant sublets the
tower or otherwise allows other broadcasters to use the
improvements on the premises, Landlord and Tenant shall
share equally the gross revenue from said use.”
Around November 2001, defendants purchased the
television tower from the tenant under the lease at the time,
Paxson Communications of Portland-22, Inc. (Paxson). By
then, ownership of the farmland (and, relatedly, the land-
lord’s interest in the lease) had transferred from father to
son, who formed MAT, Inc., to manage the lease. In conjunc-
tion with defendants’ purchase of the tower, MAT signed a
2
In the fifth assignment of error, defendants contend that the trial court
erred when it concluded that there was sufficient evidence to reject defendants’
defenses to MAT’s related equitable claim for an accounting. In the sixth assign-
ment of error, defendants contend that the trial court erred when it concluded
that there was sufficient evidence to reject defendant’s contention that the
accounting claim was barred by a claims release that MAT had signed. We reject
these assignments of error for largely the same reasons that we reject the first
three assignments of error.
Cite as 312 Or App 7 (2021) 11
Landlord Consent and Estoppel Certificate, consenting to
the change in interest from Paxson to defendants and also
consenting to Paxson’s “continued use of certain portions of
the tower and improvements on the Property.” Defendants
then assumed the lease agreement, becoming the tenant
under it. Shortly thereafter, defendants and Paxson entered
into a sublease agreement, which provided that defendants
would lease space on the tower to Paxson in exchange for
$6,000 monthly rent (to increase over time) beginning on
January 1, 2002. MAT was unaware of this agreement and
did not receive a share of the rent, which Paxson paid and
defendants collected until 2009.
In May 2007, defendants requested MAT’s consent
to sublet space on the tower to a new subtenant, Churchill
Communication, LLC (Churchill). MAT, through its attor-
ney at that time, granted its consent but requested an
accounting of all of the subleases on the tower. The request
explained that “we still need a copy of the proposed lease
and an accounting of all the leases at the site so that we can
know what lease payments [MAT] should be receiving based
upon the 50% revenue share provision in the lease and the
addition of this new lease.” On June 12, 2007, defendants
refused the request, responding:
“American Tower does not release tenant license agree-
ments as they are proprietary documents which is why we
provide in writing the tenant rental amounts.
“I am having our finance team look at the tower history
and it appears that American Tower may owe additional
revenue for a tenant that may have been placed on the
tower by SpectraSite, but I am waiting for confirmation
of the amounts and then I will forward a Release and
Settlement Agreement that we would need to execute prior
to payment. I should have all the information finalized and
the document ready for your review by the end of the week.”
As a result of that review, defendants found that
they owed MAT $17,101.53 in revenue from a different sub-
tenant, Northwest TV. MAT again requested that defen-
dants disclose their subtenant agreements, this time offer-
ing to sign a confidentiality and nonuse agreement. MAT’s
attorney explained:
12 MAT, Inc. v. American Tower Asset Sub, LLC
“I understand that you have asserted that the licensee
agreements are proprietary. However, as the landowner
entitled to contractual payments of 50% of ‘gross revenues’,
we cannot make an informed decision on how much your
company owes my client without looking at the applica-
ble agreements. If you need a confidentiality and nonuse
agreement, we will sign one.”
Defendants again declined MAT’s request. Ulti-
mately, at defendants’ request, MAT signed a release agree-
ment (the 2007 Release) to receive payment of its share of
defendants’ revenue from Northwest TV. The release stated
that it discharged defendants “from any and all claims,
damages, causes of actions or suits of any kind or nature,
relating to or arising from the gross revenue shares due to
[MAT] from [defendants] from May 2005 to July 2007 and
any consent which may have been required under the Lease.”
Churchill then took over Northwest TV’s lease, and MAT
received its share of Churchill’s revenue from that point
on.
In April 2008, MAT received a revenue share
invoice listing Paxson as a tenant that had paid defendants
$8,971.60 for “Tower Rent” for the month of March and indi-
cating that none of that money would be paid to MAT. MAT
did not notice at the time that the invoice identified Paxson
as a revenue-paying tenant.
In November 2009, the Churchill revenue-share
payments to MAT stopped, and MAT again requested that
defendants provide it with detailed information on the tow-
er’s subtenants and rental revenue. Defendants responded
that MAT had not been paid because Churchill had failed
to make its payments. They also represented that Churchill
was the only tenant on the tower at that time,3 and that, in
defendants’ view, defendants were current on their revenue
payments to MAT from May 2008 forward.
In August 2010, MAT again requested information
on subtenants and the revenue generated by them. In defen-
dants’ letter response, besides listing Churchill as the only
3
Defendants may have believed that Churchill was the only tenant at that
time, though a different tenant, Slater Communications, may have been operat-
ing on the tower without a contract at the time.
Cite as 312 Or App 7 (2021) 13
active contract on the tower, they stated that Paxson “has
also operated on the tower, but ceased transmission in June
2009.” Defendants’ letter did not indicate that Paxson had
paid rent to them from January 2001 to June 2009. Around
this time, MAT turned down multiple requests from defen-
dants to buy out its lease.
In December 2012, MAT finally became aware that
Paxson and other subtenants had been paying defendants
rent. MAT asked defendants about that and defendants took
the position that Paxson’s status as a former tenant meant
that any revenue generated by Paxson’s use of the tower did
not have to be shared with MAT.
Unable to resolve the dispute without litigation,
MAT filed this case on May 30, 2013, alleging claims for
breach of contract and equitable accounting. The statute of
limitations and, in particular, the point in time at which
MAT knew or reasonably should have known that defen-
dants were not sharing the Paxson revenues promptly
became an issue.
Before trial, defendants requested that the court
review in camera communications between MAT and its
former attorney. Defendants believed that there could be
evidence in the communications showing that MAT knew
about Paxson, which would defeat MAT’s claim that, based
on tolling the statute of limitations, it had timely initiated
its action. After MAT produced a privilege log of the com-
munications, defendants requested “that the Court review
in-camera everything identified in the privilege log to the
extent there is a reference to Paxson or revenue-sharing
or both items.” MAT, through counsel, responded that it
had reviewed the documents and determined that “there
are no documents which bear on this issue.” Although the
court concluded that there had been “an implied, limited
waiver of the attorney-client privilege because [MAT] put
at issue in this proceeding whether [MAT] knew or should
have known that Defendants were receiving rent or revenue
from Paxson,” it denied in camera review of the privilege log
based on MAT’s representations that none of the documents
were relevant. The court explained:
14 MAT, Inc. v. American Tower Asset Sub, LLC
“I can think of only one case where the representation of no
responsive documents exist was not enough * * *. So counsel
has made that representation in letter, has repeated it here
in court on the record, and given that we are looking at
what appears to be either work product or attorney/client
communications, I don’t see enough to require production
beyond what has been done in creating the privilege log.”
The case proceeded to a jury trial and, at the close
of MAT’s case, defendants moved for directed verdict. They
argued that MAT’s claims arising out of Paxson’s rent were
barred in part by the six-year statute of limitations on
breach of contract claims, and that MAT had failed to pres-
ent sufficient evidence of fraudulent concealment so as to
toll the statute of limitations. Defendants also argued that
MAT’s claims were barred in part by the 2007 Release that
MAT had signed. The court denied the motion.
The jury returned a verdict in favor of MAT. It spe-
cifically concluded that (1) defendants breached an obliga-
tion to share revenue from Paxson, (2) before May 30, 2007,
defendants had the intent to deceive MAT and affirmatively
acted to do so, (3) MAT and defendants were in a special
relationship that required defendants to disclose that they
were receiving revenue from Paxson, and (4) MAT did not, by
signing the 2007 Release, release its claims to receive reve-
nue shares from Paxson from May 2005 through July 2007.
The jury found further that MAT was entitled to $347,155.84
in damages, and the court, in its general judgment, awarded
that amount, as well as $311,164.16 in prejudgment interest
and $5,197.50 for MAT’s accounting claim.
Defendants appealed. They challenge, among other
things, (1) the trial court’s denial of their motion for a
directed verdict on statute-of-limitations grounds; (2) the
court’s denial of their motion for a direct verdict based on
the 2007 Release; (3) the court’s jury instruction on fraud-
ulent concealment; and (4) the court’s denial of their request
for in camera review.
II. ANALYSIS
A. Statute of Limitations
We start with defendants’ contention that the trial
court erred by denying their motion for directed verdict on
Cite as 312 Or App 7 (2021) 15
statute-of-limitations grounds. At issue in particular is the
sufficiency of the evidence supporting the jury’s determina-
tion that defendants fraudulently concealed from MAT their
failure to share subtenant rent. If the evidence is sufficient
to support the jury’s determination that defendants con-
cealed their breach of the lease agreement such that MAT
should not have reasonably known of the breach until at least
May 30, 2007—six years prior to MAT suing defendants—
then the statute of limitations tolled and MAT’s claim for
breach of contract was timely.
We review for legal error the denial of a motion for
directed verdict, considering the evidence in the light most
favorable to the nonmoving party. Chang v. Chun, 305 Or
App 144, 158, 470 P3d 410 (2020). On review of a denial of
a motion for directed verdict based on the statute of lim-
itations, “We will not set aside a verdict unless we can say
affirmatively that there is no evidence from which the jury
could have found the facts necessary to support the verdict.”
McLean v. Charles Ellis Realty, Inc., 189 Or App 417, 419, 76
P3d 661 (2003), rev den, 337 Or 34 (2004).
The statute of limitations on a claim for breach
of contract is six years, and it begins to run at the time of
contract breach. See ORS 12.080; Waxman v. Waxman &
Associates, Inc., 224 Or App 499, 512, 198 P3d 445 (2008)
(“[I]t is well settled that a contract claim accrues on breach.”).
The limitations period is tolled, however, if the breaching
party fraudulently conceals the breach from the nonbreach-
ing party:
“ ‘[F]raudulent concealment of a cause of action from the
one in whom it resides by the one against whom it lies con-
stitutes an implied exception to the statute of limitations,
postponing the commencement of the running of the stat-
ute until discovery or reasonable opportunity of discovery of
the fact by the owner of the cause of action. Under this rule,
one who wrongfully conceals material facts and thereby
prevents discovery of his wrong or of the fact that a cause
of action has accrued against him is not permitted to assert
the statute of limitations as a bar to an action against him,
thus taking advantage of his own wrong, until the expi-
ration of the full statutory period from the time when the
16 MAT, Inc. v. American Tower Asset Sub, LLC
facts were discovered or should, with reasonable diligence,
have been discovered.’ ”
Chaney v. Fields Chevrolet, 264 Or 21, 26-27, 503 P2d 1239(1972) (adopting and quoting L. S. Tellier, Comment Note,
What Constitutes Concealment Which Will Prevent Running
of Statute of Limitations, 173 ALR 576, 578 (1948)). Said
another way, a party claiming tolling based on fraudulent
concealment must show that (1) the breaching party fraud-
ulently concealed the fact of their breach and (2) notwith-
standing reasonable diligence on the part of the nonbreach-
ing party, the breaching party’s wrongful conduct prevented
the discovery of the breach. Id.; see also Forest Grove Brick v.
Strickland, 277 Or 81, 559 P2d 502 (1977). As we understand
the case law, fraudulent concealment for tolling purposes is
essentially the same as common-law fraud. See Chaney, 264
Or at 26-27; Fehl v. Horst, 256 Or 518, 524, 474 P2d 525(1970). When tolling applies, the statute of limitations runs
from the date that the nonbreaching party discovered the
breach or, with the exercise of reasonable diligence, should
have discovered the breach. Chaney, 264 Or at 27.
On appeal, defendants argue both that (1) under a
correct understanding of what constitutes fraudulent con-
cealment, the evidence is insufficient to support a finding
that they fraudulently concealed their breach and (2) even if
the evidence would support a finding of fraudulent conceal-
ment, the evidence is insufficient to support a finding that
MAT did not know, and should not, with the exercise of rea-
sonable diligence, have known, of the breach before May 30,
2007. We consider those arguments in turn.
1. Fraudulent concealment
Defendants argue that, because they were not in
a special or fiduciary relationship with MAT, they had no
duty to disclose to MAT the fact of the breach. That means,
to prove fraudulent concealment, MAT had to prove that
defendants actively concealed the breach with the intent to
defraud MAT and, in defendants’ view, MAT’s evidence is
legally insufficient to do that. In response, MAT argues both
that (1) the parties were in the type of special relationship
that gave rise to an obligation to disclose the breach and
(2) regardless, the evidence supports a finding that MAT
Cite as 312 Or App 7 (2021) 17
engaged in the type of conduct constituting active conceal-
ment with an intent to deceive. We agree with MAT that
the record supports a finding of active concealment with an
intent to deceive, so we do not address whether the parties’
relationship gave rise to a duty to disclose. See Caldwell v.
Pop’s Homes, Inc., 54 Or App 104, 113, 634 P2d 471 (1981)
(“Where fraud is based on actual concealment, as opposed to
simple nondisclosure, a duty to speak is not required.”); see
also Paul v. Kelley, 42 Or App 61, 65, 599 P2d 1236 (1979)
(noting that the Restatement (Second) of Torts sections 550,
551 (1977) provide that “nondisclosure is actionable where
there is a duty to speak, but notes no such duty requirement
where there has been an active concealment”).
Active or actual concealment means:
“Any words or acts which create a false impression cover-
ing up the truth, or which remove an opportunity that might
otherwise have led to the discovery of a material fact as by
floating a ship to conceal the defects in her bottom, sending
one who is in search of information in a direction where it
cannot be obtained, or even a false denial of knowledge by
one in possession of the facts are classed as misrepresenta-
tions, no less than a verbal assurance that the fact is not
true.”
Caldwell, 54 Or App at 113 (referring to William L. Prosser,
Law of Torts § 106, at 695 (4th ed 1971) (internal omissions
and quotation marks omitted; emphases added)). Active con-
cealment with an intent to deceive may be inferred from
half-truths: “ ‘Fraud may be predicated upon an equivocal,
evasive or misleading answer calculated to convey a false
impression even though it may be literally true as far as it
goes.’ ” Package Containers v. Director’s, 270 Or 845, 852, 530
P2d 40 (1974) (quoting Sheets v. B & B Personnel Systems,
257 Or 135, 145, 475 P2d 968 (1970)); see also Krause v.
Eugene Dodge, Inc., 265 Or 486, 505, 509 P2d 1199 (1973)
(“[B]ecause a half truth is sometimes the worst kind of a
lie, one who makes a representation to the purchaser of a
product in the nature of a half-truth thereupon assumes the
affirmative obligation to make a full and fair disclosure of
the whole truth, even though he would have had no such
obligation had he not undertaken to state such a half-truth.”
(Internal quotation marks and citations omitted.)).
18 MAT, Inc. v. American Tower Asset Sub, LLC
Given its factual similarity to the present case,
the decision in Package Containers illustrates how conduct
like defendants’ is sufficient to allow a jury to conclude that
defendants fraudulently concealed their breach. There, the
plaintiff entered into an agreement with the defendants to
lease a portion of the defendants’ property. 270 Or at 847.
The agreement required the plaintiff to pay the defendants
“for all water consumed” by the plaintiff. Id. Two other ten-
ants were later added to other portions of the same property,
also with lease agreements requiring them to pay for the
water that they consumed. But because the plaintiff’s water
charges were based on a meter reading from the main water
line (rather than the submeter readings used to calculate the
water use of the other two tenants), without informing the
plaintiff, the defendants charged the plaintiff for all three
tenants’ water use, while simultaneously collecting the indi-
vidual amounts owed from the other tenants without credit-
ing the plaintiff’s account for those amounts. Id. at 847-48.
The same year that the third tenant was added to
the property, the plaintiff requested a credit on its water
charges. Id. The defendants denied the request but allowed
a temporary “discount,” explaining, “ ‘[W]e feel that perhaps
you have had an excessive loss [due] to the leakage in the
street.’ ” Id. at 848. Although the defendants granted the
plaintiff a temporary discount based on the ostensible leak-
age, they still did not disclose that they were charging the
plaintiff for the water used by all the tenants, while also
charging the other tenants for the amounts that they used.
Id. at 847-49. Over seven years after the plaintiff’s request
for a water charge credit, it received a particularly excessive
water bill, conducted an investigation, discovered the sub-
meters, and discovered that the defendants had been over-
charging it for water for over a decade. Id. at 848-49.
The plaintiff brought an action against the defen-
dants for fraudulent conduct, and the jury found in favor of the
plaintiff. On appeal to the Supreme Court,4 the defendants
4
When Package Containers was published in 1974, appeals of civil cases such
as this one went directly to the Supreme Court. At the time, this court had appel-
late jurisdiction over primarily criminal, domestic relations, and state agency
cases. See ORS 2.510(2) (1973). The legislature expanded the Court of Appeals’
jurisdiction in 1977. See Or Laws 1977, ch 158, § 2; ORS 2.516 (1977).
Cite as 312 Or App 7 (2021) 19
challenged the sufficiency of the evidence of fraud. Id. at
849-50. The plaintiff responded
“that defendants had a duty to disclose the true facts to
plaintiff, particularly after plaintiff’s letter of November 18,
1965; that defendants, in their letter of March 30, 1966,
concealed the true facts as to [the other tenants’] use of
water and blamed it on a leakage; that there is substantial
evidence to support the jury verdict which found fraudulent
conduct on the part of defendants.”
Id. at 849. The court agreed with the plaintiff. As quoted
above, it explained that “[f]raud may be predicated upon an
equivocal, evasive or misleading answer calculated to con-
vey a false impression even though it may be literally true
as far as it goes.” Id. at 852 (internal quotation marks omit-
ted). It concluded that, on the facts presented, the jury could
have found that the defendants had an obligation to disclose
that they were overcharging the plaintiff and had fraudu-
lently concealed that information:
“The jury could have found from the evidence that defen-
dants, notwithstanding their obligation and opportunity to
disclose, never informed plaintiff of the circumstances and
accepted water payments from all of the tenants and con-
cealed this information from the plaintiff * * *.”
Id. at 853.
This case is not materially distinguishable from
Package Containers. Viewing the record in the light most
favorable to MAT, defendants began collecting subtenant
rent from Paxson around January 2002 and did not disclose
that fact until April 2008, when it sent an invoice listing
Paxson as a rent-paying subtenant. Within that span of
years, MAT repeatedly requested that defendants provide it
a list of subtenants and the rent that those subtenants were
paying so that it could determine whether it was getting paid
the correct amount in revenue shares. Not only were those
requests repeatedly denied, they were met with responses
that did not disclose the full truth about what rents defen-
dants were collecting, a demand to sign a release of all claims
in order to get paid a partial amount of the rent owed, and,
later, buyout offers. As was the case in Package Containers,
all of this, when viewed in the light most favorable to MAT’s
20 MAT, Inc. v. American Tower Asset Sub, LLC
claim of fraudulent concealment, would allow a factfinder to
find that defendants intentionally concealed from MAT the
amounts owed from the Paxson rent.
2. Knew or should have known cause of action
Defendants also argue that the evidence is not suf-
ficient to support a finding that MAT did not know, or could
not, in the exercise of reasonable diligence, have known of
the breach. We disagree.
First, to the extent defendants argue that the evi-
dence is insufficient to support a finding that MAT did not,
in fact, know of the breach, we reject that argument without
discussion.
Second, on the evidence presented, a reasonable
jury could have determined that MAT could not, in the exer-
cise of reasonable diligence, have discovered the breach. As
the Supreme Court has explained, this standard is not a
rigid one:
“The concept of due diligence is not imprisoned within
the frame of a rigid standard; it is protean in application. A
fraud which is flagrant and widely publicized may require
the defrauded party to make immediate inquiry. On the
other hand, one artfully concealed or convincingly prac-
ticed upon its victim may justify much greater inactivity.
The presence of a fiduciary relationship or evidence of
fraudulent concealment bears heavily on the issue of due
diligence.”
Forest Grove Brick, 277 Or at 86 (internal quotation marks
omitted). Because of this, the standard is one that usu-
ally presents a jury question, rather than a question to
be resolved as a matter of law, provided there is evidence
presented that would allow a jury to find in the plaintiff’s
favor on the point. See id. at 87 (“ ‘It usually is not feasible
to resolve on motion for summary judgment cases involving
questions such as when knowledge is discoverable by rea-
sonable diligence of plaintiff and concealment by the defen-
dants.’ ” (Quoting Hoeflich v. William S. Merrell Co., 288 F
Supp 659, 662 (ED Pa 1968).)); see also McCraw v. Stapp, 82
Or App 79, 84-86, 727 P2d 160 (1986) (in view of the defen-
dant’s alleged false representations, it was a fact issue for
Cite as 312 Or App 7 (2021) 21
the jury when plaintiffs could have, in the exercise of rea-
sonable diligence, discovered their claims).
Here, defendants contend that MAT should have
known about their breach of the lease agreement through
MAT’s “negotiation of the Estoppel Certificate, or the 2007
Release, or the most basic due diligence.” Regarding the
estoppel certificate, defendants point to the portion of the
agreement allowing the “continued use of certain portions
of the tower and improvements on the Property by [Paxson]
or an affiliate of [Paxson]” as evidence precluding the con-
clusion that MAT could not have known, in the exercise of
reasonable diligence, that Paxson would be paying rent to
defendants as a subtenant. We disagree that the evidence
eliminates any jury question on the point, in view of the
evidence of defendants’ fraudulent concealment and the
Supreme Court’s recognition that “evidence of fraudulent
concealment bears heavily on the issue of due diligence.”
Forest Grove Brick, 277 Or at 86. We reach the same con-
clusion with respect to the 2007 Release for the same
reason.
B. 2007 Release as Basis for Motion for Directed Verdict
Our previous analysis of the evidence of defendants’
fraudulent concealment largely disposes of defendants’ sec-
ond assignment of error, which, as mentioned, challenges the
trial court’s decision to leave to the jury the issue of whether
the 2007 Release that MAT had signed precluded recovery
for all unpaid subtenant rent generated from May 2005 to
July 2007. The trial court concluded that it was a jury ques-
tion whether the release barred MAT’s claim for subtenant
rent during that period, because of the evidence that would
support a finding that defendants engaged in fraudulent con-
duct (actively concealing the rents owed from Paxson) that
induced MAT to sign the release. As explained, the evidence
would support a finding that defendants engaged in fraud-
ulent concealment of the facts about the Paxson rent due (in
particular, through only partially disclosing the amount of
subtenant rent due without providing a full accounting of
all tenants). That same evidence would also support a find-
ing that that fraud induced MAT to sign the release. We
reject defendants’ second assignment of error.
22 MAT, Inc. v. American Tower Asset Sub, LLC
C. Jury Instructions on Fraudulent Concealment
Defendants third assign error to the trial court’s
jury instructions on fraudulent concealment. We review
whether the trial court erred in instructing the jury for
legal error. State v. Morales, 307 Or App 280, 287, 476 P3d
965 (2020).
Defendants contend that the following two instruc-
tions regarding half-truths and concealment improperly
omit a legally required need for a special relationship
between the parties:
“A person who makes a representation in the nature of
a half-truth, assumes the affirmative obligation to make a
full and fair disclosure of the whole truth. The failure to
make a full and fair disclosure of the whole truth may be a
false representation.
“* * * * *
“A person may make a false representation of a mate-
rial matter by concealing the truth. A false representa-
tion by concealment occurs when a person, by any word or
act, conceals a material matter either by creating a false
impression covering up the truth, or by removing an oppor-
tunity that might otherwise have led to the discovery of the
truth.”
We conclude that both of those instructions are correct state-
ments of the law, and neither improperly omitted a need for
a special relationship.
Beginning with the second instruction quoted
above, that instruction closely tracks with our articulation
of active concealment in Caldwell, which defines fraudulent
concealment as “[a]ny words or acts which create a false
impression covering up the truth, * * * or which remove an
opportunity that might otherwise have led to the discovery
of a material fact.” 54 Or App at 113. That route to finding
fraudulent concealment does not require first finding that
there was a special relationship or duty to disclose between
the parties. Accordingly, the trial court was correct not to
include requirements for those findings in its instructions.
As for the instruction on half-truths, as previ-
ously explained, half-truths give rise to an affirmative
Cite as 312 Or App 7 (2021) 23
obligation to disclose the whole truth regardless of the par-
ties’ relationship:
“[B]ecause a half truth is sometimes the worst kind of a
lie, one who makes a representation to the purchaser of a
product in the nature of a half-truth thereupon assumes
the affirmative obligation to make a full and fair disclo-
sure of the whole truth, even though he would have had
no such obligation had he not undertaken to state such a
half-truth.”
Krause, 265 Or at 505 (internal quotation marks and cita-
tions omitted). Similarly, as the Supreme Court has con-
cisely explained,
“[a] partial and fragmentary disclosure accompanied by
wil[l]ful concealment of material and qualifying facts is not
a true statement and is often as much a fraud as an actual
representation.
“The foregoing principles are of general application, and
to apply them it is not necessary to establish a confidential
relationship.”
Heise et ux v. Pilot Rock Lbr. Co., 222 Or 78, 92, 352 P2d
1072 (1960) (internal quotation marks omitted). The court’s
instruction on half-truths correctly stated the law.
Defendants additionally argue that the fact that
the jury found both a special relationship and active con-
cealment (despite the jury verdict form’s instruction that the
jury should only make an affirmative finding on one of the
two) shows that the jury was confused by the court’s failure
to include the special relationship requirement in its articu-
lation of the challenged jury instructions. That argument is
not well developed and, in all events, does not demonstrate
that the instructions incorrectly stated the law by omitting
a requirement of a special relationship.
D. In Camera Review
Finally, we address defendants’ ninth assignment
of error. Defendants contend that the trial court erred as a
matter of law in declining to conduct an in camera review.
They argue that they made the required threshold show-
ing that a review of the privilege log might yield unprivi-
leged evidence and that the court erred in relying on MAT’s
24 MAT, Inc. v. American Tower Asset Sub, LLC
representation that none of the documents related to MAT’s
knowledge of undisclosed subtenants. We agree.
In determining whether to conduct an in camera
review of material that might contain admissible informa-
tion along with privileged information, the trial court must
engage in a two-step process. First, the court must “deter-
mine whether the party seeking the review has ‘produced
evidence sufficient to support a reasonable belief that in
camera review might yield’ relevant unprivileged evidence.”
State v. Bray, 281 Or App 584, 616, 383 P3d 883 (2016), aff’d,
363 Or 226, 422 P3d 250 (2018) (quoting Frease v. Glazer,
330 Or 364, 373, 4 P3d 56 (2000)). We review that determi-
nation for legal error. Id. If the court determines that the
party seeking review has produced such evidence, the court
must then make the second determination of whether to
conduct in camera review. In doing so, it must consider “the
facts and circumstances of the particular case, the volume
of materials at issue, the relative importance of information
sought, and whether such information might be available
from non-privileged sources.” State v. Lammi, 281 Or App
96, 98-99, 380 P3d 1257, rev den, 360 Or 697 (2016) (citing
United States v. Zolin, 491 US 554, 572, 109 S Ct 2619, 105
L Ed 2d 469 (1989), adopted in Frease, 330 Or at 372). We
review that determination for abuse of discretion. Id. at 99
n 1.
We conclude that defendants made a threshold show-
ing that in camera review might yield unprivileged evidence
and that the trial court therefore legally erred. Defendants
made that showing by demonstrating that many of the com-
munications with MAT’s former attorney concerned Paxson
or revenue sharing or both. For example, defendants pointed
out such a document involving “correspondence regarding
the consent and estoppel agreement” on the privilege log,
citing that document as “exactly one of the operative docu-
ments that is of concern to the Court with respect to what
was known or should [have] been known at that time with
respect to Paxson and revenue.” Multiple other entries in
the log were labeled as communications or work product con-
cerning both Paxson and revenue sharing. In the context of
the court’s determination that MAT had waived attorney-
client privilege with respect to communications suggesting
Cite as 312 Or App 7 (2021) 25
that MAT knew or should have known that Paxson was a
rent-paying subtenant—a determination that MAT does
not challenge on appeal—it is reasonable to think that a
review of MAT’s correspondence concerning Paxson and rev-
enue sharing “might yield relevant unprivileged evidence.”
Bray, 281 Or App at 616 (internal quotation marks omitted;
emphasis added).
As for the trial court’s reliance on MAT’s representa-
tions that it had reviewed the documents and found nothing
of importance, MAT cites no case (and we are aware of none)
that supports the proposition that such a representation
from an opposing party is sufficient to defeat a prima facie
showing that it is reasonable to believe that review might
yield material unprivileged evidence. Cf. Zolin, 491 US at
572 (party must support claim that in camera review may
reveal unprivileged evidence with “a showing of a factual
basis adequate to support a good faith belief by a reason-
able person,” and that showing “need not be a stringent one”
(internal quotation marks omitted)); Lammi, 281 Or App at
98-99 (burden on party seeking in camera review to make
a threshold showing); see also In Re Grand Jury Subpoena
92-1(SJ), 31 F3d 826, 829-30 (9th Cir 1994) (“[T]he first
step of the analysis should focus only on evidence presented
by the party seeking in camera review.”). Indeed, to con-
clude so would undercut the purpose of in camera review—
having a neutral third party noninvasively review privi-
leged or sensitive information in such a way that facilitates
fair litigation and trust in the adjudicative process.
We therefore conclude that the trial court erred
in determining that defendants did not make the thresh-
old showing for in camera review. Because the court did not
reach the second question of whether to exercise its discre-
tion to conduct in camera review, we vacate the judgment
and remand for the court to apply the Zolin factors and
make that determination.5 If the court, upon weighing the
5
We note that we do not understand the trial court to have found that defen-
dants made the threshold showing for in camera review and then rejected defen-
dants’ request under the second Zolin prong. But, to the extent that the record
allows for that possibility, the court did not apply the Zolin factors in making its
decision. Thus, whether a first prong or second prong case, either way, remand is
required for the court to correctly exercise its discretion.
26 MAT, Inc. v. American Tower Asset Sub, LLC
relevant factors, declines to conduct an in camera review, or
it conducts review and concludes that the documents do not
contain material evidence, then defendants are not entitled
to a new trial. If the court conducts review and discovers
material evidence that MAT knew or should have known
of Paxson’s revenue, then defendants are entitled to a new
trial.
Vacated and remanded for the trial court to deter-
mine whether to conduct in camera review.