FILED: March 23, 2011

IN THE COURT OF APPEALS OF THE STATE OF OREGON

JOHN GILBERT;
THOMAS K. HATFIELD,
Trustee of the Hatfield Irrevocable Trust Sella Hatfield Interest;
MARGARET S. IVERS; ELLEN LEIGH;
DONNA JENSEN FAMILY, LLC; DIANE L. NIKKILA;
FIRST INDEPENDENT BANK,
as Trustee for William L. Seibel Exempt Qtip Trust;
FIRST INDEPENDENT BANK,
as Trustee for William L. Seibel Nonexempt Qtip Trust;
JULIE L. MAYFIELD; WILLIAM R. HATFIELD; SUSAN E. HATFIELD;
ANDERSON LIVING TRUST;
and ROBERT WOOD,

Plaintiffs-Respondents,

v.

MEC OREGON RACING, INC.,
an Oregon corporation;
and MEC LAND HOLDINGS (OREGON), LLC,
an Oregon limited liability company,

Defendants-Appellants.

Multnomah County Circuit Court
080202071
A141715

Eric J. Neiman, Judge pro tempore.

Argued and submitted on July 15, 2010.

Richard L. Baum argued the cause for appellants. With him on the briefs were Rebecca Thiebes Gross and Roberts Kaplan LLP.

Eric S. Postma argued the cause for respondents. With him on the brief were Gary M. Bullock, Meredith Boyden, and Gary M. Bullock and Associates, P.C.

Before Ortega, Presiding Judge, and Sercombe, Judge, and Landau, Judge pro tempore.

LANDAU, J. pro tempore.

Affirmed.

LANDAU, J., pro tempore.

At issue in this case is the construction of a contract that governs the fees that the operators of the Portland Meadows horse racing track must pay to the owners of the race track for wagering on horse races that are "simulcast" from other horse racing sites. The decades-old contract, which was executed before simulcasting of off-track races was permitted, describes two different fees: one that applies to "race meets" conducted during the "regular racing season" and another that applies at other times of the year. The dispute arises out of the fact that the simulcasting occurs at times that the operators are not licensed to run live horse races, although they possess a racing license for the entire calendar year. The operators argue that, because the simulcasting does not occur during the live horse racing season, the higher rates that apply to the "regular racing season" do not apply. The owners, on the other hand, argue that, because the simulcasting involves "race meets" during the time covered by the operators' racing license, the "regular racing season" rates do apply.

The dispute precipitated this action for breach of contract and for declaratory judgment. The parties filed cross-motions for summary judgment, each arguing that the contract unambiguously required one fee or the other. The trial court sided with the owners, concluding that the contract unambiguously requires the operators to pay the rate that applies to race meets during the regular racing season. The operators appeal, arguing that the trial court erred in concluding that the regular racing season rate applies. We affirm.

I. FACTS

This appeal is but the latest in a series of cases concerning the payment provisions of the 1984 operating agreement; indeed, much of the argument in this case concerns the significance and proper interpretation of the prior cases. We therefore begin with a brief summary of the regulatory context in which the agreement was executed, follow that with a more detailed description of the prior cases, and then address the particular facts that gave rise to this most recent dispute.

A. Regulatory context and earlier litigation

The Oregon Racing Commission is delegated the authority to license, regulate, and supervise all "race meets" held in Oregon. ORS 462.270(1). A "race meet" is defined by statute as "any exhibition of animal racing where the mutuel system[(1)] is used in conjunction with any race." ORS 462.010(12). An operator must have a license from the commission to hold a race meet. ORS 462.020(1). The license must specify "the number of days the race meet shall continue and the number of races per day." ORS 462.040(4).

In 1984, plaintiffs (or their predecessors in interest), the owners of real property known as the Portland Meadows race track, entered into an agreement with Jensen Racing, Inc. (JRI), which was organized to operate races at Portland Meadows. The 1984 agreement included two provisions--sections 5 and 14--that defined how the operator was to pay fees to plaintiffs for the use of the race track. Section 5 of the agreement states:

"5. Use Fee. Operator shall pay to Owners, or their designated agent, each week of the regular racing season for the race meet conducted during that year, a fee for the use of the Race Track Facilities equal to one percent (1%) of the gross parimutuel wagering at the race track. This fee shall be paid weekly on a day to be selected by the parties."

(Emphasis added; underscoring in original.) By its terms, that section applied only to wagering on "race meets" that occurred during the "regular racing season." Section 14 then set out the rate that applied to other events:

"14. Use of Race Track Facilities for Special Purposes. Operator shall have the right to use the Race Track Facilities for special purposes other than conducting horse or animal racing. ('Special Purpose'). In such Special Purpose situations, however, the revenues, fees, or income ('Special Income'), if any, received by Operator from such activities or events shall be subject to payment of a Special Purpose fee by Operator to Owners, which shall be determined as follows:

"14.1. Horse Related Activities by Anyone. Operator shall pay to Owners a Special Purpose fee equal to one percent (1%) of the gross Special Income, but not including revenues from concessions, received by Operator for any Special Purpose use of the Race Track Facilities by anyone, including Operator, for all Special Purpose uses that are in anyway 'horse related' (e.g., horse shows, horse sales, etc.)."

(Underscoring in original.)

At the time the agreement was executed, Oregon law permitted wagering on live horse races only. It did not permit "simulcasting," that is, wagering on horse racing events that occurred at other locations but were broadcast to a permitted race track facility. JRI obtained racing licenses from the commission that authorized it to conduct live horse racing, generally from October through April, and the operator conducted live horse races in accordance with its licenses. It paid the owners for wagering on those live horse races pursuant to the provision in the operating agreement that governed wagering on "race meets" that occurred during the "regular racing season." Then, in the "off season," another operator, the Multnomah Kennel Club, ran live dog races under its own race meet license for that purpose.

In 1987, the Oregon legislature amended the law to authorize off-race-course mutuel wagering on races held at the licensee's race course, or on races held at race courses outside of Oregon. Or Laws 1987, ch 913,