The Oregon Court of Appeals has affirmed a ruling against Lamar Obie Company, LLC, for breaching the implied duty of good faith and fair dealing in a lease agreement with plaintiffs Jim A. Atwood and his associated entities. The court awarded the plaintiffs $1,237,191.92 in damages, marking a significant decision in contract law regarding the expectations of parties in commercial leases.

This case, Atwood v. Lamar Obie Co., LLC, docket number A181594, centers around the leasing of a large exterior wall for commercial advertising in Portland, Oregon. The ruling, issued on November 12, 2026, by Presiding Judge Ortega, highlights the importance of good faith in contractual relationships and the implications of failing to uphold that duty.

The plaintiffs, who own a building on West Burnside in Portland, had historically leased their wall to advertising companies. In June 2015, they were required to obtain a permit from the Oregon Department of Transportation (ODOT) for the advertising use. The advertising company OnDisplay Advertising, which was leasing the wall at that time, obtained the permit but did so in its name alone, contrary to the plaintiffs' instructions. Later, OnDisplay sold its lease to Lamar, who also did not inform the plaintiffs that the permit was only in its name.

In 2019, the plaintiffs terminated their lease with Lamar due to declining revenue and disputes over the permit. Lamar refused to transfer the ODOT permit back to the plaintiffs and instead surrendered it to ODOT for relocation credit, which the plaintiffs argued ended their ability to use the wall for advertising. This led to the plaintiffs suing Lamar for breach of the implied duty of good faith and fair dealing.

The jury found in favor of the plaintiffs, concluding that Lamar's actions violated the implied covenant of good faith and fair dealing inherent in the lease agreement. The court ruled that the parties could have reasonably expected that Lamar would act in a manner that would not undermine the plaintiffs' ability to use their property for advertising. Judge Ortega stated, "the parties could have held the objectively reasonable contractual expectations that formed the bases of plaintiffs’ claim."

Lamar appealed, arguing that the trial court erred in allowing the jury to consider the good faith claim and in its instructions regarding damages. However, the court upheld the jury's decision, stating that the plaintiffs' expectations were reasonable and that the damages were not too speculative. The court noted that the plaintiffs had provided sufficient evidence of their lost revenue due to Lamar's actions.

This ruling is significant as it reinforces the principle that parties in a contract must act in good faith and fair dealing, especially in commercial leases where the actions of one party can significantly impact the other. The court's decision clarifies that the implied duty of good faith can encompass actions not explicitly outlined in the contract but that affect the reasonable expectations of the parties involved.

The implications of this ruling extend beyond the immediate parties involved. It sets a precedent for future cases involving lease agreements and the duties of lessees and lessors. Businesses entering into lease agreements in Oregon should be aware of their obligations under this ruling and ensure they maintain open communication and transparency regarding permits and other significant contract elements.

As for what’s next, Lamar may consider appealing the decision to the Oregon Supreme Court, although details on any potential appeal were not available in the court filing. Additionally, the plaintiffs have ongoing litigation against ODOT regarding the permit issue, which could further affect their ability to use the wall for advertising.