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Stangland v. First Interstate Commercial Corp.

filed: June 20, 1991.

CHRISTOPHER STANGLAND, HUSBAND; SUSAN STANGLAND, WIFE; PEPPERWOOD INTERNATIONAL CORPORATION, AN OREGON CORPORATION DOING BUSINESS IN CALIFORNIA; KEN LEE (ASIA) LTD., A HONG KONG CORPORATION, PLAINTIFFS-APPELLANTS,
v.
FIRST INTERSTATE COMMERCIAL CORPORATION, INC., A CALIFORNIA CORPORATION; FIRST INTERSTATE, A DELAWARE CORPORATION; STAMPOS, INC.; JOSEPH PINOLA; GREG JONES; PHIL STROBEL; GREGG COREY; BILL DAVIS; JAMES HOOK; PETER HART; JOHN MITCHELL; STUART BROWN & TONKON, TORP, GALEN, MARMADUKE & BOOTH, A PARTNERSHIP OF PROFESSIONAL CORPORATIONS, DEFENDANTS-APPELLEES; CHRISTOPHER STANGLAND, HUSBAND; SUSAN STANGLAND, WIFE; PEPPERWOOD INTERNATIONAL CORPORATION, AN OREGON CORPORATION DOING BUSINESS IN CALIFORNIA; KEN LEE (ASIA) LTD., A HONG KONG CORPORATION, PLAINTIFFS-APPELLEES, V. FIRST INTERSTATE COMMERCIAL CORPORATION, INC., A CALIFORNIA CORPORATION; FIRST INTERSTATE, A DELAWARE CORPORATION; STAMPOS, INC.; JOSEPH PINOLA; GREG JONES; PHIL STROBEL; GREGG COREY; BILL DAVIS; JAMES HOOK; PETER HART; JOHN MITCHELL, DEFENDANTS-APPELLANTS



Appeal from the United States District Court for the Northern District of California; William W. Schwarzer, District Judge, Presiding; DC No. CV-88-1469-WWS.

Sneed, Schroeder and Canby, Circuit Judges.

MEMORANDUM

Christopher and Susan Stangland with their business, Pepperwood International Corporation,*fn1 appeal the district court's summary judgment dismissing their action against the First Interstate Commercial Corporation ("FICC"). FICC cross-appeals the district court's denial of its motion for attorney fees. We affirm on the appeal and the cross-appeal.

1. Summary Judgment

The district court concluded that the release clause in the surrender agreement executed by the Stanglands barred their claims against the FICC. The Stanglands argue that the release clause is void on the grounds that fraud and economic duress caused them to sign the surrender agreement.

a. Fraud

We agree with the district court that there is no evidence that the FICC engaged in fraud. First, there is insufficient evidence that the FICC's promise to continue funding Pepperwood was made with the intent to induce the Stanglands to act upon the promise. Furthermore, if the Stanglands relied on the FICC's alleged promise to continue funding Pepperwood regardless of its financial condition, no rational trier of fact could find that such reliance was reasonable.

b. Economic Duress

The Stanglands premise their claim of economic duress on the FICC's fraudulent acts. According to the Stanglands, the FICC's breach of its promise to continue funding Pepperwood caused Pepperwood to undergo financial difficulties. As a result of the financial distress, they had no alternative but to sign the surrender agreement.

At the outset, we note that the uncontroverted evidence supports the FICC's assertion that the Stanglands voluntarily entered into the surrender agreement. The Stanglands were represented by counsel. What they bargained for and received -- a reduction of the debt owed by Pepperwood and a release from their personal guarantees -- was sufficient consideration to support the release. See Tri-City Bldg. Center, Inc. v. Stoneridge Develop. Co., 60 Or. App. 344, 348, 653 P.2d 1012, 1014 (1982). Moreover, the Stanglands' threat to enforce the agreement against the FICC, three months after the date they discovered the FICC's alleged fraud, supports the conclusion that the agreement was entered into voluntarily.

To present a prima facie case of economic duress, the Stanglands must establish: "(1) wrongful acts or threats; (2) financial distress caused by the wrongful acts or threats; and (3) the absence of any reasonable alternative to the terms presented by the wrongdoer." Oregon Bank v. Nautilus Crane & Equipment Corp., 68 Or. App. 131, 142-43, 683 P.2d 95, 103 (1984). The Stanglands allege that the FICC's fraudulent promise to continue to fund Pepperwood until the fall of 1986 constitutes a wrongful act. Because we reject for lack of supporting evidence the Stanglands' claim that the FICC acted fraudulently or wrongfully by terminating Pepperwood's funding, we necessarily reject their claim of economic duress. Furthermore, even assuming that the FICC had an obligation to continue funding Pepperwood, the Stanglands have not shown that their legal remedies for this breach of contract were inadequate. Under Oregon law, a breach of contract, for which there are adequate legal remedies, does not constitute economic duress. Oregon Bank, 68 Or. App. at 143, 683 P.2d at 103.

C. Trademark Claims

Finally, the Stanglands assert that the release does not bar their trademark claims because these claims arose after the surrender agreement was executed. Because the Stanglands did not raise this argument in the district court, we do not consider it on appeal. Romain v. Shear, 7 ...


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