A Portland law firm has been found guilty of legal malpractice after failing to identify zoning restrictions on land in Canby that was purchased by a cannabis business for an indoor grow operation.
The verdict came as Lake Oswego-based Tidewater Investments secured a $4.9 million award in its lawsuit against the firm, Emerge Law Group.
Tidewater Investments, a cannabis business, had sought the assistance of Emerge Law Group to purchase 25 acres of land along the Molalla River in Canby for an indoor cannabis cultivation center.
However, plaintiffs argued that the law firm failed to inform Tidewater about land use restrictions that would prevent their plants from coming to fruition.
It was only almost a year after the purchase that Tidewater discovered the property was within a floodway regulated by the Federal Emergency Management Agency and had a “flood hazard” zoning overlay imposed by Clackamas County, rendering indoor cultivation impossible.
Tidewater attempted outdoor grow operations after learning they couldn’t build greenhouses or other structures on the property, but it wasn’t profitable enough.
By the end of 2020, Tidewater had sold its dispensaries, its Aurora farm and the property in Canby.
“Had Defendants (Emerge Law, Celko and Kiley) properly advised Tidewater regarding the floodway prior to the purchase of the Fawver Property, Tidewater would have purchased a different property, capable of a large scale indoor farm operation under the model implemented at the Aurora Farm,” Tidewater’s attorneys wrote in legal filings. “This other farm would have provided the supply of cannabis necessary to become vertically integrated, and fundamentally changed the outcome of the business.”
As a result, Tidewater filed a legal malpractice suit against Emerge Law Group and two of its attorneys, Corinne Celko and Genny Kiley. During the trial, the judge dismissed Kiley from the lawsuit, stating that Tidewater hadn’t presented evidence of her responsibility.
After a two-week jury trial, Tidewater Investments was awarded $4.9 million, which was reduced from an initial $7 million due to a finding of comparative negligence.
The jury found that Tidewater had indeed lost $7 million, but determined that the plaintiff was 30% to blame and Emerge Law was 70% to blame, resulting in the $4.9 million award.
“Our clients relied on the counsel of Emerge Law and their team, which ended up costing them millions of dollars,” Tidewater’s attorney, Bonnie Richardson, told the Portland Business Journal. “Emerge Law has refused to acknowledge their responsibility. We are glad the jury has agreed, providing our clients with a measure of justice.”
Emerge Law Group told the publication through a spokesperson that it was disappointed in and disagrees with the verdict, but maintained that it would not affect their ongoing work serving other clients.
