Ore. Supreme Holds Claims for Lost Money are No Exception to Statute of Repose

By Jim Sams | November 29, 2023

Oregon’s statute of repose bars any action for negligent injury filed more than 10 years after the act or omission that caused the damage, even if money is the only thing at stake, the Oregon Supreme Court ruled Tuesday.

In a 5-2 decision, the high court reversed the Court of Appeals in a lawsuit filed by shareholders of a construction company against their former accountants and attorneys for bad advice they got about a stock sale. The majority rejected an argument that the state statute of repose, which bars recovery for negligence claims if no action is taken within 10 years, does not apply if the loss is solely economic.

Janet Schroer

Portland attorney Janet M. Schroer, who represented the defendants in the case on appeal, said there would have been “an open-ended time frame” for professional negligence claims if the decision had gone the other way. She said the impact of potential never-ending liability would force professional organizations to hold onto their records indefinitely and would have attorneys sparring over conflicts that date back decades, making it difficult to find witnesses or reconstruct what the standard of care was at the time of the alleged injury.

Owners of Marshall Associated Contractor Inc. sued former accountants at PriceWaterhouseCooper and former attorneys at Schwabe Williamson & Wyatt in 2017 over advice they got in a stock-sale transaction in 2003. John, Karen and Patsy Marshall say they had to pay $20 million in back taxes, penalties, and interest and spend $2 million to defend themselves against the Internal Revenue Service because of the professional negligence.

Unfortunately, Oregon Revised Statute 12.115(1) states that no action for “negligent injury to person or property of another shall be commenced more than 10 years from the date of the act or omission complained of.” A Multnomah County judge cited that law when he dismissed the Marshalls’ lawsuit.

A panel of the Court of Appeals, however, revived the suit in 2021, ruling that the statute does not apply to the Marshalls’ lawsuit because the alleged damage was not an “injury to person or property” but rather a purely economic loss.

The Supreme Court’s majority opinion explains that ORS 12.115(1) is a statute of repose. Unlike a statute of limitations, which requires that actions be filed with a certain time after an injury is discovered or should have been discovered, a statute of repose creates an absolute deadline for filing a claim regardless of when the injury was discovered.

A chart posted online by the American Council of Engineering Companies shows that Oregon’s 10-year repose limit was adopted by 21 other states. Other states have adopted statutes of repose with limits ranging from four to 15 years.

While Court of Appeals panel found that the statute does not apply to purely economic losses because the wording, “injury to person or property,” the Supreme Court majority said the legislative history of the law shows that legal term was understood at the time to mean the loss of money as well. When discussing the bill, lawmakers said that it would apply to lawyers and other professionals.

“We presume that, when the legislature adopted an ultimate repose limit that would apply to negligence claims against lawyers, the legislature was aware that negligence claims against lawyers commonly included claims for injury consisting of purely financial loss,” the majority opinion says.

Justices Bronson D. James and Aruna A. Masih dissented. They said they would have affirmed the Court of Appeals process.

Schroer, a partner with Hart Wagner law firm who argued the case before the Supreme Court, said she thinks the intent of state lawmakers’ was perfectly clear. Schroer said the legal battle has lasted far too long: She noted that oral arguments were made on Nov. 29, 2022, nearly a year before decision was released.

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