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Vandermay v. Clayton

Supreme Court of Oregon
328 Or. 646 (1999)


Facts

From 1977 to 1983, Larry Vandermay (plaintiff) and Bob Wester operated VanWest Oil Company (VanWest), and Paul Clayton (defendant) served as VanWest’s attorney. In 1983, Wester sold his VanWest shares to Vandermay, and in 1986, Vandermay decided to sell VanWest. VanWest stayed on the market for three years. During that time, VanWest continued to grow. For one project, the Astoria site, Vandermay needed a bank loan, and the bank required an environmental assessment to approve the loan. Soil tests at the Astoria site revealed oil contamination up to 15 feet underground. In October 1989, David Harris submitted a written offer to buy VanWest. The offer included a provision requiring Vandermay to assume liability for any environmental claims on the Astoria site. Vandermay agreed that he would pay up to $5,000 to clean up the Astoria site and instructed Clayton to draft an agreement to that effect for the closing. Clayton drafted the agreement, but  at the closing, Harris informed Clayton and Vandermay that he would not sign Vandermay’s agreement and instead proposed his own. Harris’s agreement provided that VanWest would be liable for costs in excess of $5,000 under certain federal and state laws. Vandermay looked to Clayton, who indicated by nodding his head that it was okay for Vandermay to sign the new agreement. Vandermay signed the new agreement and completed the sale of VanWest. After the sale, additional soil tests revealed substantial contamination at the Astoria site. In litigation over the cleanup costs, Vandermay and Harris settled, splitting the cost of the cleanup, with Vandermay paying over $585,000. Vandermay then sued Clayton alleging legal malpractice for not advising Vandermay about his liability in signing Harris’s agreement at the closing. Vandermay called one expert witness at trial and asked the expert for his opinion about what a lawyer in Clayton’s position would have done when the revised agreement was presented at the closing. Clayton objected, and the court held a hearing to determine whether the expert could testify. The court concluded that the foundation for the expert’s testimony was inadequate. Clayton moved for a directed verdict, and the court granted the motion, holding that expert testimony was required to prove legal malpractice. Vandermay appealed the trial court’s decision, and the court of appeals found that expert testimony was not required and reversed the decision of the trial court.

Rule of Law

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Issue

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Holding and Reasoning (Leeson, J.)

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  • A “yes” or “no” answer to the question framed in the issue section;
  • A summary of the majority or plurality opinion, using the CREAC method; and
  • The procedural disposition (e.g. reversed and remanded, affirmed, etc.).

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