Thein Htaike v. Rosalind Sein a/k/a Daw Myint Myint Sein

Plaintiffs filed this action seeking recovery of over

$200,000 on the general theory that defendants had secured

a series of promissory notes at exorbitant interest rates from

plaintiffs through loansharking. Over the years, plaintiffs

paid substantial sums on those notes but, despite repeated

requests from plaintiffs, defendants never gave them an

accounting of how much they owed at any given time. Seven

years after the first note was given, defendants issued past

due notices, asserting that plaintiffs still owed more than

$180,000 to defendants. At that point, plaintiffs stopped

making payments, consulted an attorney, and brought an

action alleging several claims for relief. Before trial, the

trial court granted summary judgment to defendants on

plaintiffs' claim for fraud and a claim brought under the

Oregon Racketeer Influenced and Corrupt Organization Act

(ORICO), ORS 166.715 - 166.735. After a bench trial, the

court concluded that plaintiffs had proved claims for restitution,

unjust enrichment, money had and received, and

rescission, and entered judgment for plaintiffs awarding

damages, prejudgment interest, attorney fees, costs, and

an enhanced prevailing party fee. Defendants appeal, raising

eight assignments of error, and plaintiffs cross-appeal,

claiming that the trial court incorrectly granted summary

judgment on plaintiffs' ORICO claim. We affirm on appeal,

and reverse and remand on cross-appeal.

I. BACKGROUND

We state the facts in the light most favorable to

plaintiffs, who prevailed at trial.1 Fowler v. Cooley, 239 Or

App 338, 340, 245 P3d 155 (2010). The facts in this case are

extremely convoluted, but an exhaustive history of the various

loans and promissory notes involved in this case is not

necessary to our resolution of the appeal and cross-appeal.

Accordingly, we state the general background facts that

are necessary to provide context to our analysis, and where

necessary, we include additional facts that relate to specific

assignments of error.

1 To the extent that we discuss facts relevant to plaintiffs' cross-appeal, we

likewise state the facts in light most favorable to plaintiffs, the nonmoving party

at summary judgment. ORCP 47 C.

Cite as 269 Or App 284 (2015) 287

To begin, all of the parties are Burmese immigrants

who are connected through the Burmese community

that exists in the United States. The parties' dealings

began in February 2001 when plaintiffs, at the suggestion of

defendant Sanda Altman, borrowed $40,000 from Altman's

mother, defendant Rosalind Sein, for a down payment and

improvements on a home in Beaverton. Plaintiffs knew Sein

as a respected "elder” of the Burmese community who was

a member of Buddhist monasteries in California. Plaintiffs

also knew that Sein was in the business of lending money

to other members of the Burmese community. To memorialize

the loan, plaintiffs traveled to Sein's home in California,

where they executed a promissory note to Sein. The terms

of the note were 5 percent interest per month, compounded

monthly, with monthly payments of $2,000 plus interest.

Plaintiffs testified that the note was already prepared when

they arrived and that they did not ask questions of Sein

out of respect for her status as an elder and because they

trusted her. The note was secured by a deed of trust to the

home that plaintiffs had purchased, although Sein had told

plaintiffs previously that she would not secure the note with

a lien on the home.

Plaintiffs made their first payment of $4,000 to Sein

three weeks later, and thereafter made payments ranging

from $2,100 to $3,900 each month for the rest of 2001. In

total, plaintiffs paid Sein $31,900 in 2001. Sein did not provide

plaintiffs with receipts or any other documentation.

Plaintiffs' business experienced a downturn in late

2001, and they struggled to make payments to Sein throughout

2002. They missed some payments and made others

late. In response, Sein informed plaintiffs that her business

partner, "Linda,” would "sue them” and "throw them in jail.”

After plaintiffs filed this action, Sein admitted that she had

invented "Linda” as a method of dealing with borrowers who

missed payments. In 2002, plaintiffs paid Sein $15,300, but

Sein refused plaintiffs' requests for an accounting.

Plaintiffs' financial troubles persisted into 2003

and, in May of that year, they attempted to refinance their

home through their mortgage company. The mortgage company

informed plaintiffs that they could not refinance unless

288 Htaike v. Sein

Sein agreed to subordinate her interest in the property.

Sein refused, but offered plaintiffs new terms on their existing

debt to her. On her instruction, plaintiffs signed a new

promissory note for $60,000 with an annual interest rate

of 12 percent. Further, she informed them that the $60,000

was for the balance of the original $40,000 note, plus interest,

penalties, and late fees. Sein rejected their requests for

an accounting or other documentation to justify that figure,

and explained that she was simply trying to negotiate on

their behalf with "Linda.” Plaintiffs made payments in 2003

totaling $11,095.

In 2004, plaintiffs borrowed an additional $20,000

from Sein to pay for a trip to Burma for a family funeral.

They gave Sein a note for $20,000 at two percent interest per

month, and the note was secured by another deed of trust

to their home. Later in 2004, plaintiffs fell behind on their

mortgage, and the bank threatened them with foreclosure.

Plaintiffs worked out a repayment plan with the bank, but

Sein informed them that "Linda” was demanding payment

on the notes and that they would have to sell their home to

satisfy their obligations. Sein also counseled plaintiffs that

the house would need work before they put it on the market.

Plaintiffs agreed to borrow an additional $40,000 from Sein

to fix up the house. They gave Sein a note at two percent

interest per month and a deed of trust to secure it.

Sein put Altman in charge of the home sale and dictated

the asking price to plaintiffs. Plaintiffs received an

offer at the asking price in June 2005. However, Altman

informed plaintiffs that Sein would release her liens and

allow the sale to close only if plaintiffs gave her an installment

note for $70,000 with an annual interest rate of 24

percent. Plaintiffs signed the note and a trust deed. Both

documents were backdated to December 2004.

After the sale closed, Sein received $74,420 from

the proceeds. Before closing, Sein demanded that plaintiffs

sign another installment note for $56,000 with five percent

interest per month. She claimed that that note was for

money that they still owed her, plus $10,000 for Altman's

services related to the house sale. She threatened them

with legal action and jail. In addition to the money that Sein

Cite as 269 Or App 284 (2015) 289

received from the sale, plaintiffs paid her $44,500 in 2005

and $34,400 in 2006. Again, all of plaintiffs' requests for an

accounting were rebuffed.

In 2006, at the demand of Sein, plaintiffs gave

five more notes to Sein ranging from $5,000 to $10,000 at

five percent interest per month. Sein instructed plaintiffs

to deposit the funds related to those notes into her account

so that it would appear to "Linda” that plaintiffs had paid

more than $34,400 that year. That pattern was repeated

in 2007: plaintiffs paid Sein $39,600; Sein demanded that

they give another $5,000 note. In 2007, Sein told plaintiffs

that they could make reduced payments and that the new

principal balance was $80,000. They made payments of

$19,125 during 2008, but received a "past due” notice from

defendant Victor Sein on June 5, 2008, that showed a balance

of $187,400 and demanded payment of $7,933 within

two weeks. On June 23, 2008, plaintiffs received another

notice from Victor that showed a balance of $195,942 and

demanded payment of $9,300 by July 7, 2008. At that point,

plaintiffs stopped making payments, and sought the counsel

of an attorney.

In June 2009, plaintiffs filed an action against

defendants alleging an ORICO claim, as well as claims for

restitution, declaratory judgment, unjust enrichment, money

had and received, breach of fiduciary duty, and fraud. As the

basis for their claims, plaintiffs alleged facts that demonstrated

a pattern of threatening, manipulative, and deceitful

behavior by defendants that induced plaintiffs to give a

series of notes at exorbitant interest rates to Sein. Plaintiffs

later amended their complaint to add a claim for rescission.

They sought damages of $209,367 to account for money paid

to defendants in excess of the principal that plaintiffs had

actually received. Alternatively, plaintiffs sought a declaratory

judgment that they owed no further obligation to defendants,

or a judgment rescinding the notes because they were

"defective in their formation.” Plaintiffs alleged a right to

reasonable attorney fees under ORICO.

Before trial, defendants moved for summary judgment,

arguing that plaintiffs' claims for fraud, breach of

fiduciary duty, and recovery under ORICO were barred

290 Htaike v. Sein

by the applicable statutes of limitations. Defendants contended

that plaintiffs' claims for unjust enrichment, restitution,

money had and received, and rescission were based on

allegations that defendants had charged a usury rate, and

that ORS 82.010(4) precluded any claim by plaintiffs seeking

to recover interest that they had already paid to defendants

because a borrower may use ORS 82.010(4) only as a

defense in an action brought by a lender seeking to collect

on the usurious note. Further, defendants maintained that

ORS 82.010 provided plaintiffs an exclusive "remedy,” such

that no other provision in law or equity authorized plaintiffs'

remaining claims. The trial court granted summary

judgment on the fraud, breach of fiduciary duty, and ORICO

claims, but otherwise denied summary judgment.

The case proceeded to trial on plaintiffs' remaining

claims. After a bench trial, the court concluded that plaintiffs

had proved their claims for restitution, declaratory

judgment, unjust enrichment, money had and received, and

rescission. The court explicitly found that plaintiffs were

credible and defendants were not credible, going so far as to

indicate that Sein's testimony "was perjury; she contradicted

herself and the testimony of her son and daughter, both of

whom sought to distance themselves from any real knowledge

of the transactions.” The court also explained in some

detail what it termed Sein's "deliberate and comprehensive

effort to deceive her borrowers and the court.” In calculating

damages, the court found that plaintiffs had received

$100,000 from defendants, and had paid defendants about

$267,000. Accordingly, the court entered a judgment against

defendants for $167,556 in damages, $105,414 in prejudgment

interest, $197,374 in attorney fees, $14,406 in costs,

and an enhanced prevailing party fee of $5,500.

II. ANALYSIS

Defendants appeal, raising eight assignments of

error. We reject defendants' first, fourth, fifth, and eighth

assignments of error without published discussion. We break

defendants' remaining assignments of error into three categories.

First, defendants' second and third assignments

challenge the trial court's ruling that the usury statute did

not preclude plaintiffs' claims. Second, defendants' sixth

Cite as 269 Or App 284 (2015) 291

assignment challenges the trial court's application of the

statute of limitations. Finally, defendants' seventh assignment

challenges the trial court's decision to allow plaintiffs

to amend their complaint after trial to allege an entitlement

to attorney fees. For the reasons explained below, we reject

all of defendants' assignments of error, and affirm on appeal.

Plaintiffs cross-appeal, challenging the court's

pretrial ruling granting summary judgment against their

ORICO claim on the basis of the statute of limitations. We

conclude that the court erred in granting summary judgment

on that claim, and reverse and remand on that basis.

A. Usury Statute

Defendants' second and third assignments focus

on ORS 82.010. As relevant, ORS 82.010(3)(a) provides the

legal rate of interest for certain transactions and generally

prohibits a person from making a business loan of less than

$50,000 at an annual interest rate greater than 12 percent.

ORS 82.010(4) provides that a person who has violated subsection

(3)

"shall forfeit the right to collect or receive any interest

upon any loan for which a greater rate of interest or consideration

than is permitted by subsection (3) * * * has been

charged, contracted for or received. The borrower upon such

loan shall be required to repay only the principal amount

borrowed.”

Defendants, in their second assignment of error,

argue that in denying summary judgment the trial court

incorrectly ruled that plaintiffs could use the usury statute

"affirmatively” to recover interest that they had "voluntarily”

paid.2 On appeal, defendants reprise their argument

that ORS 82.010 "does not provide any affirmative remedy

or create a right of action for the borrower.” Defendants proceed

to argue that ORS 82.010(4) simply provides a penalty

to the lender for violating the statute—the lender forfeits

the right to collect interest. According to defendants, therefore,

the statute can be used only as a defense or "shield” by

2 An order denying summary judgment is reviewable if it rests on a purely

legal contention that does not require establishing predicate facts. Seidel v. Time

Ins. Co., 157 Or App 556, 560, 970 P2d 255 (1998).

292 Htaike v. Sein

the borrower in an action by the lender seeking to collect

usurious interest. They claim that the trial court erred in

this case because it allowed plaintiffs to use ORS 82.010(4)

as a "sword” when it allowed plaintiffs to use the usury statute

as a basis for affirmative relief to recover interest that

they had already paid.

Defendants' third assignment of error follows on

their second assignment. They assert that ORS 82.010 is

the exclusive remedy in actions that involve allegations of

usury. That is, they claim that plaintiffs' remedy was limited

to any relief to which they might be entitled under ORS

82.010, but that their claims for unjust enrichment, restitution,

money had and received, or rescission were unavailable

to them. In other words, defendants assert that, when

a loan is made at usurious rates, the borrower can use ORS

82.010(4) as a defense in any action brought by the lender

to collect on the loan, but that the borrower cannot bring an

affirmative claim to recover damages related to the lender's

usurious conduct.

The trial court disagreed with defendants' position

on ORS 82.010, and so do we. First, it bears emphasis

that plaintiffs did not assert a cause of action under ORS

82.010 to recover interest that they had paid to defendants.

We do not decide whether such an action could be sustained

because we need address only defendants' argument that

the legislature's enactment of ORS 82.010 provided plaintiffs

with the exclusive remedy in this case.

Defendants rely in part on Crisman v. Corbin, 169

Or 332, 348, 128 P2d 959 (1942), which held that a prior version

of the usury statute could be used by a borrower only as

a defense in an action brought by the lender to recover judgment

on a note or loan, not as a cause of action. Crisman is

inapposite to the question before us. The question here is not

whether a borrower could sustain a cause of action under

the usury statute to recover against a usurious lender, but

whether other claims are available to a borrower to seek

relief from a usurious lender. Crisman does not answer that

question. In fact, Crisman indicates that, although a borrower

could not use the then-existing usury statute as the

basis for a claim, the borrower had other claims for relief

Cite as 269 Or App 284 (2015) 293

available. Id. at 350. Specifically, at the time of Crisman,

the distinction between law and equity courts still existed

in Oregon, and the court decided that a law court could not

grant the plaintiff the relief that he had requested under

the usury statute. In the end, the court concluded that the

plaintiff was entitled to equitable relief for the amount of

the usurious interest because equity would not permit the

defendant to collect amounts that the defendant had admitted

were usurious. Id.

We conclude similarly that the existence of a statute

that provides borrowers a defense from the collection of

interest on usurious loans does not preclude the claims that

plaintiffs brought in this case. It is generally accepted that,

if there is no statutory basis to bring an action to recover

usurious interests paid, equitable relief may be available.

47 CJS Interest & Usury § 291 (2008). Also, at common law

a debtor who has made payments in excess of the legal rate

of interest may recover them in an action brought for that

purpose, including in an action for money had and received.

Id. § 312. Defendants have failed to persuade us that ORS

82.010—a statute that provides a defense in an action to collect

from a borrower—was intended to preclude a borrower

from bringing any claim to recover payments in excess of

the legal rate of interest.

Further, defendants' assertions fail to acknowledge

that plaintiffs' claims were not based entirely on the fact that

some of the notes exceeded the maximum rate allowed in

ORS 82.010, but also sought relief on the equitable principle

that, given defendants' wrongful conduct (beyond charging

usurious rates), it would be unjust for defendants to retain

the interest that plaintiffs had paid. Defendants have not

demonstrated why ORS 82.010 would prohibit plaintiffs

from pursuing relief based on that equitable principle.

B. Statute of Limitations

Defendants, in their sixth assignment of error,

argue that the trial court incorrectly determined that the

six-year statute of limitations for actions on contract, ORS

12.080(1), applied to plaintiffs' claims, instead of the twoyear

statute of limitations for tort actions, ORS 12.110(1).

294 Htaike v. Sein

We begin with the trial court's ruling on the statute

of limitations. The court apparently reached alternative conclusions

and determined that, regardless of which statute

of limitations it applied, plaintiffs' claims were not barred.

The court ruled that the six-year statute of limitations for

contracts applied and that, even though two of the notes fell

outside the six-year period in ORS 12.080(1), defendants'

actions "revived” those notes. Alternatively, the court ruled

that if the two-year period of ORS 12.110(1) applied, under

the "discovery rule” in ORS 12.110(1), plaintiffs' claims

accrued in 2008 when they first consulted an attorney.

On appeal, defendants reprise their argument that

ORS 12.110(1) is the correct statute of limitations because the

gravamen of plaintiffs' claims for restitution, unjust enrichment,

rescission, and money had and received was that defendants

"falsely informed” plaintiffs that they needed to sign

promissory notes or that their payments were insufficient.

That is, put simply, defendants assert that because plaintiffs'

rationale for recovery was defendants' fraudulent conduct,

ORS 12.110(1) applied to plaintiffs' remaining claims.

Plaintiffs counter that the trial court correctly

applied ORS 12.080(1) because the gravamen of their claims

was based on the promissory notes, not fraud or other tortious

conduct. In particular, plaintiffs argue that defendants'

fraudulent conduct arose in the context of the formation

and performance of contracts, i.e., the promissory notes,

and that their damages were based on that relationship.

We conclude that the statute of limitations in ORS

12.110(1) applies to plaintiffs' claims. The "gravamen or the

predominant characteristics” of an action, not the plaintiff's

election, determines whether the tort or contract statute of

limitations applies. Lindemeier v. Walker, 272 Or 682, 685,

538 P2d 1266 (1975). To determine the predominant characteristics

of an action, we examine the legal source of the

defendant's liability, the factual setting of the dispute, the

injuries asserted by the plaintiff, and the plaintiff's claimed

measure of damages. Securities-Intermountain v. Sunset

Fuel, 289 Or 243, 258-60, 611 P2d 1158 (1980). We agree

with defendants that the gravamen of plaintiffs' claims is

grounded in tort. Contrary to plaintiffs' assertions, plaintiffs'

Cite as 269 Or App 284 (2015) 295

claims do not place the promissory notes at the center of the

allegations other than to assert that the notes, because of

usurious rates, contributed to the harm that plaintiffs suffered.

Plaintiffs did not assert that defendants breached any

specific contractual obligations, nor can any of their claims

fairly be said to turn on contract principles.3 Rather, plaintiffs

asserted that the notes should be rescinded because

they were "defective at formation” because of the usurious

rates. Moreover, at the heart of plaintiffs' allegations was

an ongoing course of conduct by defendants that included

deceit, misrepresentations, and coercion. Accordingly, we

conclude that the predominant characteristics of plaintiffs'

claims sound in tort and that ORS 12.110(1) applies.

Of course, our determination that ORS 12.110(1)

governs in this case does not end the matter. As noted, the

trial court concluded that, even if ORS 12.110(1) applies,

plaintiffs' claims were timely under the discovery rule that

is incorporated within that statute. Under that rule, the

limitations period begins to run from the earlier of two possible

events: "(1) the date of the plaintiff's actual discovery of

injury; or (2) the date when a person exercising reasonable

care should have discovered the injury, including learning

facts that an inquiry would have disclosed.” Greene v. Legacy

Emanuel Hospital, 335 Or 115, 123, 60 P3d 535 (2002)

(emphasis in original). Discovery of an injury occurs when

a plaintiff knows or should have known of the existence of

three elements: "(1) harm; (2) causation; and (3) tortious

conduct.” Gaston v. Parsons, 318 Or 247, 255, 864 P2d 1319

(1994). Accordingly, "the facts that a plaintiff must have discovered

or be deemed to have discovered include not only

the conduct of the defendant, but also, under Gaston, the

tortious nature of that conduct.” Doe v. Lake Oswego School

District, 353 Or 321, 331, 297 P3d 1287 (2013).

3 We acknowledge that some of the claims brought by plaintiffs have been

labeled quasi-contractual in nature in other cases, and there have been instances

in which we have stated that the six-year statute of limitations for implied contracts

applies in cases involving a claim for money had and received. See Angelini

v. Delaney, 156 Or App 293, 303, 966 P2d 223 (1998). However, we look to the gravamen

of the plaintiff's claim, not just the label of the plaintiff's claim. Therefore,

our application of the six-year statute of limitations in Angelini does not preclude

our determination in this case that plaintiffs' claim for money had and received,

as well as plaintiffs' other claims, are subject to ORS 12.110(1).

296 Htaike v. Sein

To determine what facts a plaintiff should have

known, "[t]he discovery rule applies an objective standard—

how a reasonable person of ordinary prudence would have

acted in the same or a similar situation.” Kaseberg v. Davis

Wright Tremaine, LLP, 351 Or 270, 278, 232 P3d 980 (2011).

As the Supreme Court recently stated, "[i]n applying that

standard, a court must consider the facts from the perspective

of a reasonable person in the circumstances of the plaintiff.”

Doe, 353 Or at 333. Those circumstances include, but

are not limited to, the relationship between the parties and

the nature of the harm suffered. Id. Ordinarily, application

of the objective standard presents a factual question for the

factfinder. However, the question can be decided as a matter

of law if "the only conclusion a reasonable [factfinder] could

reach is that the plaintiff knew or should have known the

critical facts at a specified time and did not file suit within

the requisite time thereafter.” T. R. v. Boy Scouts of America,

344 Or 282, 296, 181 P3d 758 (2008).

Defendants claim generally that "plaintiffs were

aware of information which would have caused a reasonable

person to seek legal advice as to their rights” substantially

before 2007. Specifically, defendants assert that plaintiffs,

who had signed each promissory note and trust deed, were

aware of the interest rates and payments contained within

each note. Further, defendants maintain that the relationship

between the parties had been "troubled for many years”

in that Sein had repeatedly rejected plaintiffs' requests for

accountings or had failed to deliver when she told them that

she would provide an accounting. Finally, defendants point

out that plaintiffs could not refinance their home in 2003

because Sein had a lien on the home and would not consent

to subordinating her interest. According to defendants,

those facts and circumstances would have led reasonable

people to seek legal advice as to their rights.

To conclude that the trial court erred in this matter,

we would have to decide that a reasonable factfinder could

only find that, because plaintiffs knew of the facts advanced

by defendants above, a reasonable person in plaintiffs' position

would have investigated and discovered harm caused

by Sein's tortious conduct. For the reasons explained below,

we cannot reach that conclusion.

Cite as 269 Or App 284 (2015) 297

First, plaintiffs' relationship with Sein informs the

assessment of the reasonableness of plaintiffs' actions. In

general, "[w]hen a potential tortfeasor is in a relationship

of trust and confidence to a plaintiff and makes assurances

to the plaintiff, those assurances may 'have a bearing on

whether a reasonable person would be aware of the substantial

possibility of tortious conduct.' ” Kaseberg, 351 Or at 279

(quoting Gaston, 318 Or at 257). Here, although the relationship

between plaintiffs and Sein is not a relationship

that we would usually label as one of "trust and confidence”

(e.g., attorney/client, doctor/patient), the nature of the relationship

bears on whether plaintiffs, in order to be deemed

reasonable, must have investigated earlier whether Sein's

conduct was tortious. See Doe, 353 Or at 333 (concluding

that, in determining whether the plaintiffs knew that their

teacher's sexually abusive touching was offensive when the

touching occurred, their status as minors, their relationship

with the teacher, and the nature of the harm, could

have allowed a jury to conclude that the plaintiffs reasonably

did not understand the offensiveness of the conduct at

the time of the sexual abuse). Sein was a respected elder

within the Burmese community who was in the business

of lending money to other Burmese immigrants. There was

evidence that "younger” Burmese show extreme deference

to Burmese elders. Plaintiffs testified that, out of respect for

Sein's position in the Burmese community, they trusted her

and were predisposed to refrain from questioning her assurances

and her insistence on the bases and required direction

of various transactions.

There is also evidence that supports a pattern of

coercion throughout the parties' dealings. Sein used threats

by her fictitious business partner, "Linda,” of legal action and

jail to coerce plaintiffs into complying with Sein's demands.

Her use of "Linda” concealed her misconduct. As courts have

recognized, more than one person may be potentially responsible

for a plaintiff's harm. Id. at 280. Therefore, a plaintiff's

"awareness of the role of one potential tortfeasor may

not necessarily alert the [plaintiff] to the role of the other.”

Id. In this case, plaintiffs' awareness of "Linda's” actions as

described by Sein and the actions of the other defendants all

were designed to, and did, obscure Sein's own actions.

298 Htaike v. Sein

Finally, a factfinder could consider evidence in the

record that, because Burma lacked institutional lenders,

private loans at high interest rates were typical in Burma,

and evidence that plaintiffs were not sophisticated in financial

matters.

A reasonable factfinder could find that plaintiffs

should have known facts that alerted them to Sein's tortious

conduct well before they consulted an attorney in 2008.

However, a reasonable factfinder is charged with considering

how a reasonable person of ordinary prudence would

have acted in the same or similar situation.” Id. at 278. Given

plaintiffs' situation, their position and status in relation to

Sein, and the concerted effort by defendants to conceal Sein's

tortious conduct and to obfuscate the harm through coercion

and duplicitous behavior, we cannot conclude that, because

plaintiffs (1) knew the details of the promissory notes they

signed, (2) knew that Sein had refused or neglected to give

them an accounting when they requested one, and (3) knew

that Sein refused to subordinate her interest when plaintiffs

attempted to refinance their home, the only conclusion that

a reasonable factfinder could reach is that plaintiffs knew

or should have known the harm caused by defendants' tortious

conduct and investigated "substantially before 2007.”

Rather, the record supports a conclusion that a reasonable

person in plaintiffs' situation would have delayed investigating

the tortious nature of defendants' actions until a time

period within two years of when they filed their complaint.

C. Attorney Fees

In their seventh assignment, defendants maintain

that the trial court abused its discretion when it allowed

plaintiffs to amend their complaint after trial to allege a

new basis for attorney fees. Plaintiffs originally pleaded

an entitlement to attorney fees pursuant to the attorneyfee

provision of the ORICO, ORS 166.725(14). As noted,

the trial court granted summary judgment to defendants

on the ORICO claim because of the statute of limitations.

After plaintiffs prevailed at trial on the remaining claims,

they indicated that they intended to seek attorney fees.

Defendants objected, noting that no basis for an entitlement

to attorney fees remained in the case. Plaintiffs moved to

Cite as 269 Or App 284 (2015) 299

amend their complaint under ORCP 23 to assert that they

were entitled to attorney fees pursuant to an attorney-fee

provision in the promissory notes and ORS 20.096 (providing

for reciprocity of attorney fees and costs in proceedings

to enforce a contract).

The trial court allowed plaintiffs to amend their

complaint to assert an entitlement to attorney fees pursuant

to the notes, and the parties followed the procedure set

forth in ORCP 68 C. The court determined that plaintiffs

were entitled to attorney fees and included in the general

judgment an award of over $197,000 in attorney fees to

plaintiffs.

Defendants argue that the trial court abused its

discretion by allowing plaintiffs to amend their complaint

after trial to assert a basis for attorney fees. They assert

that they had no notice that plaintiffs were seeking attorney

fees on any basis other than ORS 166.725(14), and that they

did not know that they were at risk of an attorney fee award

of almost $200,000.

In general, ORCP 68 C(2) requires a party seeking

attorney fees to assert that right in a pleading. However,

allowing a party to amend its complaint after trial to assert

a basis for attorney fees is not unprecedented. In fact, we

have stated that ORCP 23, which requires that leave to

amend be freely given when justice requires, "extends to

a motion to amend a pleading to assert an entitlement to

attorney fees under ORCP 68 C where the amendment is

allowed before entry of final judgment and the defendant

has not been prejudiced.” Crandon Capital Partners v. Shelk,

219 Or App 16, 41, 181 P3d 773, rev den, 345 Or 158 (2008).

Defendants' sole argument is that they were prejudiced

by the amendment in this case because, if they had

known that they might be subject to attorney fees, they

might have made settlement offers. According to defendants,

the amendment came too late for them to take any action to

avoid or limit their liability for attorney fees, and that, as a

matter of law, defendants suffered prejudice as a result.

In Benj. Franklin Fed. Savings and Loan v. Phillips,

88 Or App 354, 357, 745 P2d 437 (1987), we affirmed a trial

300 Htaike v. Sein

court's decision to allow an amendment pursuant to ORCP

68 C to plead an entitlement to attorney fees. In that case,

the plaintiff moved to amend to plead a right to attorney

fees after the defendant had objected to a proposed judgment

that included attorney fees. The trial court allowed

the amendment, and awarded fees in the final judgment. We

noted that ORCP 23 A liberalized the process of amending

pleadings and that the trial court has broad discretion in

making that determination. We concluded that nothing in

ORCP 68 C suggested that an amendment to comply with

the rule is precluded, and we further concluded that the

record failed to show any prejudice to the defendant.

A few years later, in Hall v. Fox, 106 Or App 377,

379, 808 P2d 99 (1991), we affirmed a trial court's decision

to allow the plaintiff to amend her complaint to allege entitlement

to attorney fees after trial. In that case, the defendant

claimed that he was prejudiced by the amendment after

trial because he did not have "an opportunity, prior to trial,

to evaluate the entirety of [the] plaintiff's claim so as to be

fully informed on whether or not to settle.” Id. at 379-80. We

ultimately determined that the defendant had not suffered

any prejudice because the plaintiff had gone to trial on a

claim that did not entitle her to attorney fees. The plaintiff

did not gain the right to claim attorney fees until the

trial court, after trial, allowed her to amend her complaint

to state a claim for reformation and to enforce a contract.

It was at that moment that she gained the right to claim

fees, and we concluded that the defendant could not have

settled that claim before trial because it was not asserted

until after trial. We also noted that the "defendant was not

surprised by the contract provision; he had counterclaimed

for attorney fees under the contract, and the contract was in

evidence.” Id. at 380.

We acknowledge that this case is not in the same

posture as Hall. Here, the claims that plaintiffs ultimately

prevailed on existed prior to trial. However, defendants

essentially assert that prejudice is established any time that

the trial court allows a party to amend a pleading to assert

a right to attorney fees after trial, but before final judgment,

because that party "might have” made settlement offers if it

had known that it might be subject to an attorney fee award.

Cite as 269 Or App 284 (2015) 301

We decline to adopt such a rigid rule. Although we do not

foreclose the possibility that a party could establish prejudice

of the type that defendants assert here, we do not agree

that such prejudice exists simply as a matter of law. Here,

defendants' blanket statement that they "might have” made

settlement offers is not, in and of itself, enough to establish

prejudice, particularly given our conclusion below that the

trial court erred in dismissing plaintiffs' ORICO claim.

D. Plaintiffs' Cross-appeal: ORICO Claim

Finally, we address plaintiffs' cross-appeal. As

noted, the trial court granted summary judgment on plaintiffs'

ORICO claim. Plaintiffs assert that that was error, and

we agree.

Defendants' sole basis for summary judgment was

that the statute of limitations had run. The ORICO statute

of limitations, ORS 166.725(11)(a), provides, in relevant

part:

"Notwithstanding any other provision of law, a criminal

or civil action or proceeding under ORS 166.715 to 166.735

may be commenced at any time within five years after the

conduct in violation of a provision of ORS 166.715 to 166.735

terminates or the cause of action accrues.”

Defendants argued that plaintiffs knew of the

facts that gave rise to their ORICO claim more than five

years before they filed the action. In short, they argued that

plaintiffs' ORICO claim was premised on allegations that

defendants acted in concert to make usurious loans to plaintiffs

and then collect unlawful amounts of interest on those

loans. Defendants asserted that, therefore, plaintiffs were

aware of the excessive interest payments in 2001 when they

signed the original note at a usurious rate of interest and

that their ORICO claim accrued at that moment.

Defendants also addressed the "alternative” portion

of the statute of limitations. They acknowledged that ORS

166.725(11) "provides in the alternative that a civil ORICO

action may be brought within five years after the defendant's

unlawful conduct terminates, i.e., after commission

of the last predicate act in a pattern of racketeering activity.”

However, defendants asserted that no Oregon case had

302 Htaike v. Sein

applied "or even mentioned” the "last predicate act” option

of the statute. They went on to argue that the last predicate

act rule had been disapproved by the United States Supreme

Court in cases brought under the federal RICO statute.

The trial court agreed with defendants' arguments,

stating in a letter opinion that "[t]he court does not

adopt plaintiffs' position regarding the 'last predicate act,'

instead, the court finds the 'accrual rule' is the rule adopted

at the federal level and appears to be the preferred rule in

Oregon.” Under the "accrual rule,” the court concluded that,

once plaintiffs' made their first payment in 2001 on the original

note, they were aware of their injury and the cause of

their injury—the defendants' loan. Accordingly, the court

concluded that the statute of limitations ran in 2006, and

plaintiffs' ORICO claims were barred.

On cross-appeal, plaintiffs point out that they

alleged in their complaint that defendants had violated several

provisions of ORICO through conduct that occurred

as late as June 2008—one year before plaintiffs filed their

action. Accordingly, they contend that the trial court erred

when it ignored the "last predicate act” part of the statute of

limitations and concluded that the statute of limitations had

run.

ORS 166.725(11)(a) provides that an action is

timely if commenced within five years "after the conduct

in violation of [the ORICO] terminates.” That provision

plainly provides that an action can be brought within five

years of the last act that violated the ORICO. We see no

other way to interpret the statute. We reject defendants'

assertion that the opinion of a federal court addressing the

"last predicate act” rule has any bearing on the meaning

of Oregon's statute. The federal courts were interpreting a

federal statute that does not contain an explicit statute of

limitations, let alone any text that resembles that of ORS

166.725(11)(a).

Plaintiffs alleged violations of ORICO that were

based on conduct that occurred one year before they filed

their action. Accordingly, the statute of limitations had not

run against plaintiffs' ORICO claim, and the trial court

erred in concluding otherwise.

Cite as 269 Or App 284 (2015) 303

We reject defendants’ assignments of error, and

affirm on appeal. However, because the trial court erred in

granting summary judgment on plaintiffs’ ORICO claim, on

cross-appeal, we reverse the judgment in part, and remand

to the trial court.



Affirmed on appeal; reversed and remanded on

cross-appeal.