Evergreen West Business Center, LLC v. Emmert

790 February 13, 2014 No. 10
IN THE SUPREME COURT OF THE
STATE OF OREGON
EVERGREEN WEST BUSINESS CENTER, LLC,
an Oregon limited liability company,
Petitioner on Review,
v.
Terry W. EMMERT,
Respondent on Review,
and
PREMIER WEST BANK,
Impartial.
(CC CV07020348; CA A146301; SC S061049 (Control))
EVERGREEN WEST BUSINESS CENTER, LLC,
an Oregon limited liability company,
Respondent on Review,
v.
Terry W. EMMERT,
Petitioner on Review,
and
PREMIER WEST BANK,
Impartial.
(SC S061158)
En Banc
On review from the Court of Appeals.*
Argued and submitted November 4, 2013.
John M. Berman, Tigard, argued the cause for petitioner
on review/respondent on review Evergreen West Business
Center, LLC. With him on the briefs was J. Rion Bourgeois.
Hollis K. McMilan, Portland, argued the cause and filed
the briefs for petitioner on review/respondent on review
Terry W. Emmert.
______________
*  Appeal from Clackamas County Circuit Court, Jeffrey S. Jones, Judge. 254
Or App 361, 296 P3d 545 (2012).
Cite as 354 Or 790 (2014) 791
Cody Hoesly, Larkins Vacura LLP, Portland, and Phil
Goldsmith, Law Office of Phil Goldsmith, Portland, filed
a brief on behalf of amicus curiae Oregon Trial Lawyers
Association.
BREWER, J.
The decision of the Court of Appeals is reversed and the
case is remanded to that court for consideration, in light of
this decision, of the parties’ remaining assignments of error.
Plaintiff, a limited liability company, brought this action for breach of fidu-
ciary duty, seeking in separate claims alternative forms of relief: damages and
a constructive trust on property that defendant, a member of plaintiff, had
acquired. The jury found in plaintiff’s favor and awarded plaintiff actual dam-
ages of $1 and punitive damages of $600,000. After the jury returned its verdict,
defendant filed a motion to reduce the punitive damages award. The trial court
granted that motion, reduced the punitive damages award to $4, and offered
plaintiff the choice between a money judgment for $5 and a constructive trust.
Plaintiff elected the equitable remedy and the court entered a judgment granting
plaintiff a constructive trust.
Defendant appealed, arguing that plaintiff was not entitled to a constructive
trust, or, in the alternative, that the value of that trust should not exceed $1.
Plaintiff also appealed, challenging the trial court’s reduction of the punitive
damages award. The Court of Appeals reversed the award of a constructive trust.
Held: the trial court had properly allowed the plaintiff in this case to elect the
equitable remedy of constructive trust. Although the jury properly determined
plaintiff’s damages in this case, the jury’s damage finding did not foreclose equi-
table relief because the trial court did not adopt it, and that finding was not
necessary to plaintiff’s constructive trust claim. Furthermore, the constructive
trust remedy was not identical to the damage award because plaintiff sought a
sale of the disputed property. And, finally, the Court explained, plaintiff—not
defendant—was entitled to elect its preferred remedy before the entry of final
judgment.
The decision of the Court of Appeals is reversed and the case is remanded
to that court for consideration, in light of this decision, of the parties’ remaining
assignments of error.
792 Evergreen West Business Center, LLC v. Emmert
BREWER, J.
For centuries, the choice between legal and equita-
ble remedies in civil actions has been informed by the shib-
boleth that equitable relief ordinarily is not available when
the claimant has an adequate legal remedy. See, e.g., Norton
v. Elwert, 29 Or 583, 587, 41 P. 921 (1895) (stating principle).
This case, which involves alternative legal and equitable
claims for damages and a constructive trust on real prop-
erty that arose from the same breach of fiduciary duty, pro-
vides an opportunity to reexamine the foundations of that
principle. The primary issue on review is whether plaintiff’s
election of the equitable constructive trust remedy was fore-
closed by a jury determination that plaintiff’s damages for
the breach of fiduciary duty were $1. For the reasons set out
below, we conclude that the trial court properly permitted
plaintiff to elect its equitable remedy.
We state the facts in the light most favorable to
plaintiff, the prevailing party at trial. Liles v. Damon Corp.,
345 Or 420, 423, 198 P3d 926 (2008). Plaintiff is a limited
liability company that looked to defendant, who was one
of its members, to save its property from foreclosure by a
lender. Defendant did save the property from foreclosure
by purchasing the loan and associated encumbrance for his
own benefit for $613,979.49. Defendant then foreclosed on
the property himself, bought it at a foreclosure sale with
a maximum credit bid, and then encumbered the property
with a $900,000 loan from a different lender.
Plaintiff brought this action for breach of fiduciary
duty, seeking in separate claims alternative forms of relief:
either damages or a constructive trust on the property that
defendant acquired. Plaintiff alleged in both claims that the
property was worth $1,390,000 when defendant acquired it for
himself. In its claim for a constructive trust, plaintiff alleged:
“[Defendant] obtained title to [the disputed] real prop-
erty by fraud and breach of his fiduciary duty to plaintiff
and the other members of plaintiff and by taking an oppor-
tunity that belonged to plaintiff.
“The court should declare that defendant holds title to
said real property in trust for plaintiff and said members.
Cite as 354 Or 790 (2014) 793
“The affairs of plaintiff should be wound up, said real
property sold for the benefit of plaintiff and the proceeds
distributed first to creditors and then to members as their
interests may appear.”
Plaintiff’s claim for damages was identical in sub-
stance to the constructive trust claim except that, instead
of equitable relief, plaintiff sought actual damages in the
sum of $800,000, and, in addition, punitive damages. In
the prayer of its complaint, plaintiff requested the following
relief:
“Pursuant to its [constructive trust claim,] that the
court declare that defendant holds said real property in a
constructive trust for plaintiff, that the affairs of plaintiff
be wound up and said property sold and that the proceeds
by disbursed to pay plaintiff’s creditors, and any remaining
sum to be distributed to plaintiff’s members or
“In the alternative and in the event no constructive
trust is ordered, then for damages equal to the difference
between the fair market value of said real property and the
price paid for it by [defendant] together with any punitive
damages that maybe awarded against him[.]”
At plaintiff’s request, the trial court instructed the
jury on the damage claim that, if defendant “breached a
fiduciary duty owed to plaintiff,” plaintiff “is entitled to any
profits made by [defendant] as a result of the breach.” The
jury found in plaintiff’s favor and awarded plaintiff actual
damages of $1 and punitive damages of $600,000.
After the jury returned its verdict, defendant filed
a motion to reduce the punitive damages award. The trial
court granted that motion, reduced the punitive damages
award to $4, and offered plaintiff the choice between a money
judgment for $5 or a constructive trust. The court reasoned
that a constructive trust was available to plaintiff, but that
an award of equitable relief could not support a punitive
damages award. Faced with the choice between a $5 award
and the imposition of a constructive trust, plaintiff elected
the latter remedy. The court then entered a judgment “that
[plaintiff] is granted a constructive trust of the [p]roperty”
and that the
794 Evergreen West Business Center, LLC v. Emmert
“[p]roperty shall be sold by [plaintiff]. From the proceeds
[plaintiff] shall repay to [defendant] the first $613,979.49.
[Defendant] shall be responsible for paying any obligations
for which [defendant] has pledged the [p]roperty. To the
extent [defendant] does not do so, and proceeds from the
sale of the [p]roperty are used to pay [defendant’s] debt in
excess of $613,979.49, [plaintiff] shall be entitled to a sup-
plemental judgment for any such sums.”
Defendant appealed, arguing that plaintiff was
not entitled to a constructive trust, or, in the alternative,
that the value of that trust should not exceed $1. Plaintiff
also appealed, challenging the trial court’s reduction of the
punitive damages award. The Court of Appeals agreed with
defendant on the constructive trust issue and agreed with
plaintiff on the punitive damages issue. Evergreen West
Business Center, LLC v. Emmert, 254 Or App 361, 296 P3d
545 (2012). This court allowed review of both parties’ peti-
tions for review. For the reasons set out below, we conclude
that plaintiff was entitled to elect the constructive trust
remedy. Moreover, because we uphold plaintiff’s election of
its equitable remedy, the jury verdict, including the punitive
damages award, must be vacated; it follows that defendant’s
cross-appeal is moot. Accordingly, we reverse the decision of
the Court of Appeals and remand to that court for consid-
eration, in light of this decision, of the parties’ remaining
assignments of error.
Because it drives our overall analysis, we begin
with plaintiff’s challenge to the Court of Appeals’ reversal
of the constructive trust award. Before that court, defen-
dant argued that the jury’s verdict determined that the
“unjust benefit” to defendant was $1 and, for that rea-
son, the trial court lacked authority to impose a construc-
tive trust that would allow plaintiff to recover more than
that amount. Plaintiff, for its part, argued that defendant
was unjustly enriched far more than the $1 jury verdict,
because he “received property worth $1,390,000 by paying
only $613,979.49 as a result of his breach of fiduciary duty.”
Moreover, plaintiff argued, the constructive trust remedy
and damages remedy serve different purposes: “The con-
structive trust is imposed to give [plaintiff] back its prop-
erty, not so that [plaintiff] can obtain a dollar.”
Cite as 354 Or 790 (2014) 795
As noted, the Court of Appeals agreed with defen-
dant. In reversing the constructive trust award, the court
explained:
“In the abstract, we agree with [plaintiff’s] contention
that damages might be an inadequate remedy where an
agent’s breach of fiduciary duty has divested his principal
of real property. However, that is not true here, given how
this case was tried to the jury. As set out above, [plaintiff]
did not seek damages in the amount of its own loss from
[defendant’s] actions; rather, [plaintiff] sought damages
measured by [defendant’s] gain. The jury was instructed, at
[plaintiff’s] request, that ‘the non-breaching party is enti-
tled to any profits made by the breaching party as a result
of the breach.’ [Plaintiff] offered evidence that the property
was worth more than $1.3 million at the time of the foreclo-
sure sale and that [defendant], by breaching his fiduciary
duties to [plaintiff], had obtained that property for approx-
imately $600,000. During closing arguments, [plaintiff’s]
counsel emphasized that evidence and told the jury that
[defendant] had therefore profited ‘overnight’ more than
$700,000. [Plaintiff] asked the jury to award that amount—
that is, the profit that [defendant] obtained—to [plaintiff].
“For whatever reason, the jury returned an award of
damages in the amount of $1. It was only after the jury
awarded nominal damages on that claim that [plaintiff]
requested that the court rule on its alternative request for
a constructive trust. Given that posture, we agree with
[defendant] that the constructive trust imposed by the
court was not a permissible equitable remedy.”
Evergreen West, 254 Or App at 372-73 (emphasis omitted).
The Court of Appeals further explained that “[e]quitable
remedies are not for the purpose of correcting disappoint-
ing jury verdicts or remedying a failure of proof.” Id. at 373.
Relying on its own case law, the court reasoned that “there
is a difference between a jury verdict that is inadequate as a
matter of law and one that is inadequate as a matter of fact.”
Id. (emphasis in original). In this case, the court stated,
“[plaintiff] has not seriously contended that [defendant] was
unjustly enriched in a way that could not have been valued
for or compensated by a damages award in this case. Rather,
the contention is that the jury, as a matter of fact, did not
actually award damages in accordance with the evidence.”
Id. at 375 (emphasis in original).
796 Evergreen West Business Center, LLC v. Emmert
The court acknowledged that “real property is
unique,” but stated that plaintiff “has never suggested that
the property should have been conveyed back to it; from the
beginning, [plaintiff] has asked that the property be sold for
its benefit. We also appreciate that the valuation of the prop-
erty has changed over time, but that alone does not render
damages an inadequate remedy.” Id. at n 1. Thus, the court
concluded:
“Under the circumstances—that is, where the jury is
presented with evidence of a damages claim that would
wholly compensate the nonbreaching party—the equita-
ble remedy of a constructive trust is not available simply
because the jury returns a lesser verdict than requested.”
Id. at 375.
On review, plaintiff asserts that the Court of
Appeals was mistaken in concluding that its legal remedy
was adequate. According to plaintiff and amicus Oregon
Trial Lawyers Association (OTLA), (1) the availability of
damages is not a bar to the award of a constructive trust;
(2) the election among remedies for breach of fiduciary duty
belongs to the claimant alone; and (3) plaintiff was entitled
to make that election at any time before entry of judgment.
Defendant replies that (1) plaintiff’s damage claim was “an
action at law” and therefore appropriately tried to a jury;
(2) proof of unjust enrichment is an essential element in
showing entitlement to a constructive trust; (3) the jury’s
verdict provided the definitive measure of plaintiff’s unjust
enrichment damages, so “[t]he court [was] bound by the
jury’s findings”; and (4) therefore, at most, plaintiff was
entitled to a constructive trust to secure payment of the
$1 damage award that the jury made.
To place the parties’ arguments in their proper
context, we first consider the nature of plaintiff’s claims
and the extent of their interrelationship. As pleaded, plain-
tiff’s claim for damages was based on the doctrine of unjust
enrichment, in that it sought a recovery “equal to the differ-
ence between the fair market value of said real property and
the price paid for it by [defendant].” That theory focused on
the unjust benefit that defendant derived, rather than the
loss that plaintiff suffered. See Porter Const. Co. v. Berry,
Cite as 354 Or 790 (2014) 797
136 Or 80, 91, 298 P. 179 (1931). Similarly, the doctrine of
unjust enrichment governed plaintiff’s claim for a construc-
tive trust. See Tupper v. Roan, 349 Or 211, 219, 243 P3d
50 (2010); Barnes v. Eastern and Western Lbr. Co., 205 Or
553, 597, 287 P2d 929 (1955). Money relief and constructive
trusts are parallel means at law and equity, respectively,
of preventing unjust enrichment and forcing restitution to
the plaintiff of something which in equity and good con-
science did not belong to the defendant. Derenco, Inc. v. Benj.
Franklin Federal Sav and Loan Ass’n, 281 Or 533, 559, 577
P2d 477 (1978). In short, both claims depended on plaintiff’s
entitlement to restitution for unjust enrichment based on
defendant’s breach of the same fiduciary duty.
The concept of constructive trust does not stand on
its own as a substantive claim, but exists solely as an equi-
table remedy, available to divest an individual who has been
unjustly enriched of property that he or she “ought not, in
equity and good conscience, hold and enjoy.” Marston v. Myers
et ux., 217 Or 498, 509, 342 P2d 1111 (1959). It is proper to
use a constructive trust when there is some specific property
identified as belonging to the plaintiff, but when no specific
identifiable property is at issue and only a money judgment
is requested, only the legal remedy is available. Id. However,
as discussed, the rationale of the two remedies is identi-
cal. Id. If a pleader is unsure which theory can be estab-
lished at trial, ORCP 16 C authorizes inconsistent claims or
defenses, alternative statements of fact, and separate claims
or defenses, “regardless of consistency and whether based
upon legal or equitable grounds or upon both.” Davis v. Tyee
Industries, Inc., 295 Or 467, 479 n 9, 668 P2d 1186 (1983).
In Tupper, this court distilled from its prior deci-
sions three “elements”1 that a plaintiff must prove in order
to prevail on an unjust enrichment claim, as a basis for
imposing a constructive trust as an equitable remedy:
(1) that property or a property interest that rightfully
belongs to the plaintiff was taken or obtained by someone
else under circumstances that in some sense were wrongful
1
Although it seems anomalous to refer to “elements” of a remedy that, of
itself, does not qualify as an independent substantive claim, we have used that
description in Tupper and other cases and retain it here.
798 Evergreen West Business Center, LLC v. Emmert
or inequitable; (2) that the person who now possesses the
property is not a bona fide purchaser for value and without
notice; and (3) by clear and convincing evidence, that the
property in the hands of that person, i.e., the property upon
which the plaintiff seeks to impose a constructive trust, in
fact is the very property that rightfully belongs to the plain-
tiff, or is a product of or substitute for that property. Tupper,
349 Or at 223.
The formula for entitlement to a constructive trust
reveals the first problem with defendant’s position. That
is, although the right to restitution underlying a construc-
tive trust depends on the defendant’s having been unjustly
enriched, the latter requirement does not mean that the
wrongful acquisition must have been profitable to the defen-
dant. In fact, it is not “material that there should be an
advantage, or profit, arising out of a purchase by the [defen-
dant] from the [plaintiff]. It is not necessary to prove such
advantage or profit: it is enough to show the relation and
the purchase.” 1 Perry on Trusts § 197 (6th ed)). That being
so, we reject defendant’s argument that plaintiff was not
entitled to a constructive trust in the absence of a determi-
nation that defendant “profited” from his appropriation of
plaintiff’s property.
As noted, defendant nevertheless contends that,
in deciding the constructive trust claim, the trial court
adopted the jury’s verdict in the damage claim, including
the jury’s determination that the value of plaintiff’s interest
in the property was essentially worthless when defendant
acquired it. In any event, according to defendant, the jury’s
damage determination controlled the resolution of the equi-
table claim, and, as the Court of Appeals reasoned, there was
no justification for the imposition of a constructive trust to
enforce a property interest of such negligible value. Because
of their multiple implications, those interrelated arguments
require extended attention.
We begin our analysis by rejecting defendant’s
threshold premise that the trial court adopted the jury’s
determination that plaintiff’s actual damages were merely
$1. To the contrary, the court was careful, in deciding the
equitable claim, merely to adopt by reference in its general
Cite as 354 Or 790 (2014) 799
judgment the jury’s findings that defendant owed a fidu-
ciary duty to plaintiff and that he breached that duty by
acquiring the property for himself. Nothing in the record
indicates that the court adopted the jury’s damage determi-
nation. Defendant is mistaken in contending otherwise.
To the extent that defendant argues that the trial
court was bound by the jury’s damage determination, the
analysis is more complicated. Both defendant and the Court
of Appeals appear to have reasoned that the jury’s award—
even though unsatisfactory to plaintiff—was legally ade-
quate so as to preclude an award of equitable relief. In sup-
port of that proposition, defendant relies, as did the Court
of Appeals, on decisions by this court holding that equitable
relief is not available if there is an adequate remedy at law
for the same breach or wrong. See, e.g., Alsea Veneer, Inc. v.
State of Oregon, 318 Or 33, 862 P2d 95 (1993); Johnson v.
Steen, 281 Or 361, 575 P2d 141 (1978).
It is true that this court repeatedly has discussed—
and sometimes has relied on—that principle in cases involv-
ing a choice between legal and equitable remedies. It is also
true that the meaning of that principle has been the source
of confusion over the years, owing in part to the shifting
sands of its foundation. In the beginning,
“the chancery courts were established primarily to miti-
gate the harsh application of common law in the law courts,
[so] the applicant in chancery had to first demonstrate that
his remedy at law was ‘inadequate.’ Because the politi-
cally powerful law courts were jealous of their authority,
the inadequacy requirement became solidly entrenched
as a jurisdictional limitation on the power of the chancel-
lors. Thus, the policy considerations behind the inadequacy
rule are largely jurisdictional, based upon the function of
the equity courts in English jurisprudence. Although the
merger of law and equity has rendered these considerations
anachronistic, American courts continue to apply the rule
without fully evaluating the continuing validity of its
underlying policy considerations.”
M.J. Mehr and L.A. Kilgore, Enforcement of the Real Estate
Loan Commitment: Improvement of the Borrower’s Remedies,
24 Wayne L Rev 1011, 1026-27 (1978) (citations omitted).
800 Evergreen West Business Center, LLC v. Emmert
In Oregon, as elsewhere in the United States, the
procedural distinctions between law and equity largely
have been abolished. As this court explained in M. K. F. v.
Miramontes, 352 Or 401, 420, 287 P3d 1045 (2012), in 1979,
“the Oregon legislature adopted the Oregon Rules of Civil
Procedure (ORCP) and dispensed with the procedural dis-
tinctions between law and equity.” See ORCP 2 (providing,
in part, that “[a]ll procedural distinctions between actions
at law and suits in equity are hereby abolished, except for
those distinctions specifically provided for by these rules, by
statute, or by the Constitution of this state”); see also ORCP
24 A (permitting joinder of legal and equitable claims and
defenses in one action). Thus, in Oregon the jurisdictional
rationale for the legal adequacy principle no longer exists.
That change has altered the nature of the choice between
legal and equitable remedies for the same wrong. As a lead-
ing authority aptly put it many years ago:
“In those states which have carried out ‘the true spirit
of the reformed procedure,’ all branches of the law are of
equal dignity—the common law, statutory law, and princi-
ples of equity. The court does not so much inquire into the
question as to the adequacy of a legal remedy as compared
with an equitable remedy, as it inquires into the appropri-
ateness of the relief sought.”
John Norton Pomeroy, 1 Pomeroy’s Equity Jurisprudence
§ 358 (5th ed 1941). In conducting that inquiry, “the growth
of modern equity has been in the direction of granting spe-
cific relief more freely.” William F. Walsh, A Treatise on
Equity 133-34 (1930).
In the wake of those developments, the adequate
legal remedy principle has receded to narrower limits. As
pertinent here, when the choice of remedies for breach of
fiduciary duty is between a money award and a construc-
tive trust, the rule in Oregon is well established. In Kroll
v. Coach, 45 Or 459, 472-73, 78 P. 397 (1904), this court
explained that that a constructive trust may be imposed for
breach of a fiduciary duty “wherever it is necessary for the
obtaining of complete justice, although the law may also give
the remedy of damages against the wrongdoer.” In Kroll,
this court further elaborated:
Cite as 354 Or 790 (2014) 801
“[D]efendant has procured something with plaintiffs’
money that he is not entitled to have or retain, and it is
distorted logic to say that the plaintiffs are entitled to dam-
ages, but not to the land which their money has purchased.
If the land were worth much less than the purchase price,
defendant might be contending that the land, and not dam-
ages, was the only relief to which they were entitled. But,
legally, they are entitled to either remedy, according to
their own choosing. Defendant came by their money fraud-
ulently, and has invested it in property. Plaintiffs may
now either ratify the purchase and accept the property, or
recover damages for the defendant’s fraudulent practices
whereby he obtained their funds.
“This solves also the question made by defendant that
plaintiffs are without relief in equity because they have an
adequate remedy at law.”
Id. at 474-75.
The foregoing reasoning applies here even though
the jury determined that plaintiff’s actual money damages,
measured in terms of defendant’s unjust enrichment when
he acquired the property, were a mere dollar. Only a con-
structive trust would permit plaintiff to obtain the property
that defendant misappropriated and to enjoy its benefit.
Butson v. Misz, 81 Or 607, 613, 160 P. 530 (1916); Ferchen v.
Arndt, 26 Or 121, 126-29, 37 P. 161 (1894). Said another way:
“A claimant who seeks restitution via constructive
trust—either because property in the hands of the defen-
dant has increased in value, or for the sake of priority
against the defendant’s general creditors—does not usually
have to explain to the court why an award of damages does
not afford equivalent relief.”
1 Restatement (Third), Restitution and Unjust Enrichment,
§ 4 cmt e (2011).
Defendant nevertheless urges that, because plain-
tiff’s damage claim was properly tried to a jury, the jury’s
damage finding required the trial court to find in the equita-
ble claim that defendant had not been unjustly enriched. In
Miramontes, this court stated that Article I, section 17, and
802 Evergreen West Business Center, LLC v. Emmert
Article VII (Amended), section 3, of the Oregon Constitution,2
do not guarantee a right to jury trial for claims or requests
for relief that, standing alone, are equitable in nature and
would have been tried to a court without a jury at common
law. 352 Or at 425. However, the court concluded that, in the
absence of a showing that the nature of a claim or request
for relief is such that, for that or some other reason, it would
have been tried to a court without a jury, those provisions
do guarantee a right to jury trial on claims or requests that
are properly categorized as “civil” or “at law.” Id. The court
also observed that, with the abolition of the procedural dis-
tinction between law and equity that permitted the joinder
of such claims in a single action,
“[t]he availability of jury trial must be separately deter-
mined for different issues when a case arises presenting
both legal and equitable issues. *  * Some issues in the
*
same case may involve a right to jury trial while others do
not * * *.
“[S]ome care is necessary in order of trial in mixed law
and equity cases because of the constitutional right to jury
trial. If there are overlapping factual issues between a
legal claim and an equitable defense * * *, having the court
pass on the defense first would settle those factual issues
and bind the jury. If under the historical test the plaintiff
actually would have been able to maintain an action at law
and have the jury pass on those factual issues, the result
may be a denial of the right to jury trial. * * * The question
of order of trial should not be allowed to obscure the ques-
tion of right to jury trial.”
Miramontes, 352 Or at 421-22 (internal citations omitted).
In this case, the jury returned its verdict before
the trial court decided the equitable claim, so there is no
potential problem with the order of trial. Thus, defendant’s
2
Article I, section 17, of the Oregon Constitution provides: “In all civil cases
the right of Trial by Jury shall remain inviolate.” Article VII (Amended), sec-
tion 3, provides in part that, “[i]n actions at law, where the value in controversy
shall exceed $750, the right of trial by jury shall be preserved.” Reading those
provisions together, this court has explained that Article I, section 17, guaran-
tees a jury trial “in those classes of cases in which the right [to a jury trial] was
customary at the time the [Oregon] [C]onstitution was adopted or in cases of like
nature.” Lakin v. Senco Products, Inc., 329 Or 62, 69, 987 P2d 463 (1999) (quoting
Molodyh v. Truck Insurance Exchange, 304 Or 290, 295, 744 P2d 992 (1987)).
Cite as 354 Or 790 (2014) 803
argument reduces to the proposition that the jury’s damage
finding prohibited the trial court from making what defen-
dant asserts was an inconsistent finding—that is, that defen-
dant had been unjustly enriched—in awarding a construc-
tive trust. That argument founders on its initial premise
that the jury and the trial court made inconsistent findings
of fact. As discussed, the jury’s damage finding was based
on its determination of the value of the property when defen-
dant acquired it at the foreclosure sale. In contrast, in the
constructive trust claim, plaintiff sought specific relief that
did not require a determination of the value of the property
at that point in time. Instead, that relief assigned to plain-
tiff the potential benefit—as well as the risk of loss—associ-
ated with holding the property for a court-ordered sale that
would facilitate the winding-up of plaintiff’s affairs and sat-
isfaction of its debts. As we already have concluded, plaintiff
was entitled to pursue that relief, even though the jury had
determined that plaintiff’s actual money damages were a
mere dollar. Because the constructive trust claim focused on
a different sort of unjust enrichment—that is, the benefit of
owning the property itself—the jury’s damage finding was
not material to the availability of equitable relief.3
Defendant contends, however, that the fact that
plaintiff sought a sale of the disputed property, rather than
its outright award, distinguishes this case from other con-
structive trust cases. The Court of Appeals appeared to
regard the remedy of sale as the functional equivalent of a
money award and, therefore, not an equitable remedy that
plaintiff could elect. Evergreen West, 254 Or App at 375 n 1.
So understood, the Court of Appeals’ reasoning invoked a
limitation on equitable relief sometimes associated with
the adequate legal remedy principle that is described in the
following passage from the Restatement of Restitution and
Unjust Enrichment:
“There remains a narrow class of cases in which an equita-
ble remedy (typically constructive trust) may not be allowed
merely for the asking; the reasons for the refusal might at
one time have been described by saying that the claimant
3
We do not reach the question whether, in making a finding of fact in an
equitable claim, a trial court must defer to a jury’s previous finding of fact on the
same issue in a legal claim in the same action.
804 Evergreen West Business Center, LLC v. Emmert
had an adequate remedy at law. Such a case is one in which
the claimant asks for constructive trust although the effect
of the remedy is identical to what would be achieved by an
action at law for unjust enrichment. The same limitation
means, of course, that this is a case in which constructive
trust will not be requested; or if it is requested, it is only
because the claimant misconceives the function of the rem-
edy. Constructive trust may be refused in such a case, not
because of any supposed primacy of legal over equitable
remedies, but because constructive trust is superfluous.”
1 Restatement (Third) of Restitution and Unjust Enrichment,
§ 4 cmt e (2011).
That limitation on the availability of equitable relief
is not implicated here, though. As discussed, the reach of a
constructive trust is not confined to the specific property at
issue; it extends to any other property or funds that “can
be traced and followed” from the specific property, including
proceeds from the sale of that property. Ferchen, 26 Or at
129. Because a constructive trust can attach to sale proceeds,
no redundancy arises from plaintiff’s request for a judgment
imposing a constructive trust on the property and ordering
its sale, with the net proceeds to be paid to plaintiff.
Here, a sale was ordered not because plaintiff may
not have wanted the disputed property, but because plain-
tiff was required to “do equity if [it] is to obtain equity.”
Bechtel v. Bechtel, 162 Or 211, 220, 91 P2d 529 (1939).
Because defendant paid $613,979.49 for the property, plain-
tiff needed to reimburse those funds to defendant as part of
any constructive trust remedy. Id. at 219-20. Plaintiff, how-
ever, was in “significant financial distress” and facing fore-
closure. Evergreen, 254 Or App at 383 n 3. The trial court
properly could have determined based on those facts that
plaintiff lacked the resources to reimburse defendant and
could only obtain those funds through sale of the property.
In other words, sale was practical, if not necessary, under
the circumstances here. See Cameron v. Benson, 295 Or 98,
105, 664 P2d 412 (1983) (where equity is concerned, “it is
the function of the court to do full and complete justice to
the parties. With this principle in mind, the court requires
broad discretion in framing its equitable remedies in order
to adapt the relief to the circumstances of a particular case”).
Cite as 354 Or 790 (2014) 805
Consistently with the foregoing considerations, the
judgment in this case ordered the property sold for plain-
tiff’s benefit, with the proceeds going first to reimburse
defendant for the sum that he paid for the property, and
the excess going to plaintiff after the payment of its debts.
The judgment also accounted for the fact that defendant
had encumbered the property with a $900,000 loan. To the
extent that sale proceeds were used to pay off that loan, the
first $613,979.49 would be credited toward plaintiff’s obliga-
tion to defendant, and the next $286,020.51 would result in
a money judgment in plaintiff’s favor against defendant for
that amount (because, while plaintiff owed defendant only
$613,979.49, it effectively would be paying $900,000 to sat-
isfy defendant’s obligations under the loan).4 In short, that
remedy was not identical to what plaintiff was able to obtain
at law.
Finally, as noted, the Court of Appeals disapproved
plaintiff’s election of its equitable remedy after the jury
returned a disappointing verdict. The Court of Appeals
explained that plaintiff sought damages at trial which
“would wholly compensate” it for defendant’s wrongdoing.
Evergreen, 254 Or App at 375. The Court of Appeals then
stated that “[i]t was only after the jury awarded nomi-
nal damages on that claim that [plaintiff] requested that
the court rule on its alternative request for a constructive
trust.” Id. at 373. In the Court of Appeals’ view, that proce-
dural posture rendered a constructive trust impermissible:
“Equitable remedies are not for the purpose of correcting
disappointing jury verdicts or remedying a failure of proof.”
Id.
The Court of Appeals’ statement is inapposite. The
doctrine of election between inconsistent remedies does not
require an election before the entry of judgment. A party
need only choose between or among inconsistent reme-
dies, not inconsistent claims or theories of recovery. ORCP
16 C; see also Colonial Leasing Co. v. Tracy, 276 Or 1193,
4
Because the Court of Appeals reversed the constructive trust remedy
entirely, it did not resolve defendant’s assignment of error asserting that he was
entitled to a greater reimbursement than the trial court allowed. Evergreen, 254
Or App at 375 n 2. Thus, it is necessary to remand that issue to that court to
resolve in the first instance.
806 Evergreen West Business Center, LLC v. Emmert
1196-97, 557 P2d 639 (1976) (“Ordinarily an election is not
made until a judicial proceeding has gone to judgment on
the merits.”). Accordingly, subject to the limiting principles
discussed above, when it comes to an election of remedies,
the choice is for the claimant to make, not the defendant or
the court. Kroll, 45 Or at 474-75 (“[L]egally, [plaintiffs] are
entitled to either remedy, according to their own choosing.”);
Oregon etc. Colonization Co. v. Strang, 123 Or 377, 382, 260
P. 1002 (1927) (“Defendants have no right to select for plain-
tiff the remedy or the course of procedure where it has more
than one open to it under the law.”).
To sum up, the constructive trust that the trial
court imposed was available to plaintiff despite the jury’s
damage award. Although the jury properly determined
plaintiff’s damages in this case, the jury’s damage finding
did not foreclose equitable relief because the trial court did
not adopt it, and that finding was not necessary to plaintiff’s
constructive trust claim. Nor was the constructive trust rem-
edy identical to the damage award because plaintiff sought
a sale of the disputed property. And, finally, plaintiff—not
defendant—was entitled to elect its preferred remedy before
the entry of final judgment. It follows that the trial court did
not err in awarding a constructive trust in this case, and the
Court of Appeals mistakenly concluded otherwise.
We turn briefly to defendant’s cross appeal from
the Court of Appeals’ reinstatement of the punitive damage
award that the jury made. It is undisputed that plaintiff
was required to elect between its damage and constructive
trust claims. Plaintiff pleaded the claims alternatively in its
complaint and, as noted, plaintiff expressed its preference
for the equitable remedy in its complaint. Moreover, plaintiff
has prevailed before this court on its election of the equita-
ble remedy, and it does not assert on review that the trial
court erred in requiring it to make an election. It follows
that the jury’s damage award—including the punitive dam-
age award—must be vacated, and there is nothing for us to
decide on defendant’s cross appeal; it is therefore moot.
However, plaintiff did assign error before the Court
of Appeals to the trial court’s ruling that “punitive dam-
ages are not legally available for [plaintiff’s] claim for a
Cite as 354 Or 790 (2014) 807
constructive trust.” Evergreen West, 254 Or App at 377-78.
Because the Court of Appeals reversed the constructive trust
award, it concluded that that assignment of error was moot
and did not reach it. Id. at 378. Our reinstatement of the
constructive trust award puts that assignment of error back
in play. Accordingly, the Court of Appeals should address it
on remand.
The decision of the Court of Appeals is reversed and
the case is remanded to that court for consideration, in light
of this decision, of the parties’ remaining assignments of
error.