Albany & E. R.R. Co. v. Martell

319 Or.App. 816

511 P.3d 1101

ALBANY & EASTERN RAILROAD COMPANY, an Oregon corporation, Plaintiff-Appellant,

v.Michael MARTELL and Cindy Martell, a married couple; John Harcrow and Elaine Harcrow, a married couple; Jeffrey Kaiser and Beverly Kaiser, a married couple; Joanne Fagan, an individual; Ray McMullen and Michelle McMullen, a married couple; Jeremy Orr and Karen Orr, a married couple; Richard Hutchins and Jill Hutchins, a married couple; Laura Mithoug, an individual, Defendants-Respondents.

A161921

Court of Appeals of Oregon.

Submitted on remand December 3, 2020.

May 25, 2022

John Kennedy, Lebanon, argued the cause for appellant. Also on the briefs was The Morley Thomas Law Firm.

Dan Armstrong argued the cause for respondents. Also on the brief was Heilig Misfeldt & Armstrong, LLP

Before Mooney, Presiding Judge, and Pagán, Judge, and DeHoog, Judge pro tempore.

DeHOOG, J. pro tempore.

This case is before us on remand from the Supreme Court. Albany & Eastern Railroad Co. v. Martell , 366 Or. 715, 729, 469 P.3d 748 (2020) ( Albany & Eastern Railroad Co. II ), adh'd to as modified on recons. , 367 Or. 139, 475 P.3d 437 (2020) ( Albany & Eastern Railroad Co. III ). In its initial opinion, the Supreme Court reversed our ruling on the merits, Albany & Eastern Railroad Co. v. Martell , 298 Or. App. 99, 445 P.3d 319 (2019) ( Albany & Eastern Railroad Co. I ), and affirmed the circuit court's ruling establishing that the residents of a neighborhood (defendants) had a prescriptive easement to use a railroad crossing on plaintiff's property to access their homes. In Albany & Eastern Railroad Co. III , 367 Or. at 141-42, 475 P.3d 437, the Supreme Court modified its opinion on reconsideration and remanded the case to us to determine an issue that we had not decided: whether the trial court had correctly ruled that defendants were entitled to attorney fees under ORS 20.080(2). We originally found it unnecessary to reach that issue in light of our conclusion that defendants’ counterclaim could not succeed, which rendered their attorney-fee claim moot. Albany & Eastern Railroad Co. I , 298 Or. App. at 101 n. 1, 445 P.3d 319. Now addressing the issue on remand, we conclude that the trial court did not err in awarding defendants their attorney fees. Accordingly, we affirm.

We review "attorney fee awards under ORS 20.080^{[1 ]} for errors of law." Johnson v. Swaim , 343 Or. 423, 427, 172 P.3d 645 (2007). We first briefly recount the underlying facts of the parties’ dispute to give context to our analysis of the attorney-fee issue. As we explained in our previous decision:

"Defendants are the owners and residents of eight developed lots in a subdivision known as the Country Lane neighborhood. The Country Lane neighborhood is bounded to the east by the South Santiam River; to the west is a narrow strip of land owned by [Albany & Eastern Railroad Company (AERC)]. AERC maintains and actively uses railroad tracks that run along its property. A road (Country Lane) runs through the subdivision and abuts AERC's strip of land. There is a marked railroad crossing at the juncture of Country Lane and the tracks. Defendants all use the crossing to access their homes from the South Santiam Highway, and they and their predecessors have done so for many years. The Country Lane crossing, which is the subject of the parties’ dispute, is defendants’ only way to travel between their homes and the South Santiam Highway or any other public roadway.

"* * * * *

"*** AERC filed this action alleging trespass[, requesting associated nominal damages,] and seeking to quiet title in the disputed crossing. In their answer, defendants raised various affirmative defenses and counterclaims, including a [counter]claim that they were entitled to use the crossing by virtue of a prescriptive easement. Following a bench trial, the court found for defendants on that counterclaim."

Albany & Eastern Railroad Co. I , 298 Or. App. at 101-03, 445 P.3d 319.

At trial, plaintiff argued that defendants were not entitled to fees, because they had prevailed on an equitable claim, rather than a legal claim, and ORS 20.080(2) authorizes fees only with regard to legal claims. In rejecting that argument, the trial court reviewed three cases that, in the court's view, collectively supported an award of attorney fees under ORS 20.080(2) on defendants’ counterclaim.²

In the first case that the trial court considered, Rose v. Rose and Freeman , 279 Or. 27, 29, 566 P.2d 180 (1977), the plaintiff had filed suit seeking "to establish an access easement across land of defendants-intervenors." In response, the defendant and the defendant-intervenors "counterclaimed for injunctions to prevent plaintiffs from using the roadway and for incidental money damages allegedly resulting from trespasses by plaintiffs using the roadway." The trial court in that case denied the plaintiff's request for equitable relief but granted the equitable counterclaims, along with the incidental damages that the defense had sought. Id. The court also awarded attorney fees. On review, the Supreme Court summarily reversed the attorney-fee award, holding without further discussion that ORS 20.080 "applies only to actions at law, not suits in equity." Id.

The trial court next considered Barnes v. Lackner , 93 Or. App. 439, 762 P.2d 1043 (1988), noting our holding there that, given the legislature's use of the term "any action" in ORS 20.080(1), it could not have intended to limit the statute's application to tort actions.³ See id . at 442, 762 P.2d 1043 ("The term ‘any action’ cannot reasonably be read to mean just ‘any tort action.’ " (Emphases added.)). Notably, in reaching that conclusion, we declined to follow dictum in Colby v. Larson , 208 Or. 121, 125-26, 297 P.2d 1073 (1956), in which the Supreme Court had expressly noted that ORS 20.080 "applies only in tort actions" and had been "enacted for the purpose of encouraging the settlement without litigation of meritorious tort claims involving small sums."

Finally, the trial court considered Bunnell v. Bernau , 125 Or. App. 440, 442, 865 P.2d 473 (1993), a case in which the plaintiff had alleged that the "defendants had interfered with their use of a water pipeline easement over defendants’ property," and "[t]he trial court granted plaintiffs injunctive relief and awarded them damages for their costs of obtaining an alternative water supply and other costs that they [had] incurred as a result of the interference." There the trial court denied the plaintiffs’ request for attorney fees under ORS 20.080, not because their claims had in part been equitable, but because, in the court's view, the plaintiffs’ interest in the easement was not "property" within the statute's meaning. Id.

On appeal, we expressly rejected that reasoning before turning our focus to whether ORS 20.080 authorized an attorney-fee award when the "plaintiffs sought both equitable relief and damages." Id. In concluding that the plaintiffs could recover their fees under those circumstances, we acknowledged that, in Rose , the Supreme Court had "held that attorney fees under ORS 20.080 are not recoverable in equitable proceedings, and it therefore vacated an award in an action where both ‘equitable relief’ and ‘incidental damages’ were awarded." Id . at 442-43, 865 P.2d 473. We explained, however, that we did not read Rose "to mean that ORS 20.080 can never apply in cases where any equitable relief is given, along with damages." Id. at 443, 865 P.2d 473 (emphases in original). We further expressed uncertainty as to what the exact relationship in Rose was between the equitable relief the defendants had sought and the "incidental" damages awarded to them, though we understood the damages to be attributable to a trespass on the property at issue. Id .

Ultimately, we distinguished Rose because, in the case before us in Bunnell , the "plaintiffs sought damages in a separate count from the one in which they asked for equitable intervention," and that damages claim "could have been asserted even if no equitable claim had been made." Id. We therefore considered it "in every sense" to be " ‘an action for damages’ " under ORS 20.080. Id .⁴

Based on its review of those earlier decisions, the trial court in the present case drew the following conclusions:

"The Court finds that the rulings in Rose , Bunnell , and Barnes provide that ORS 20.080 does apply to equitable relief sought under ORS 20.080. It follows that a party is not limited by the statute to plead only a legal counterclaim, but may also rely on an equitable counterclaim. The Court's reading of ORS 20.080(2) is that the statute is not limited to small tort counterclaims or legal counterclaims. Because the plaintiff's legal claim invoked ORS 20.080(1) and the [defendants] prevailed in the action claiming a counterclaim that did not exceed $10,000, defendants have met the statutory criteria for authorization of attorney fees as pleaded and are entitled to an award of attorney's fees."⁵

The trial court further explained:

"Plaintiff's complaint sought damages for a claim to quiet title and trespass. Defendants prevailed on the claims asserting a prescriptive easement defense [sic ]. Because the trespass claim is subject to ORS 20.080 and the [defendants] prevailed on that claim , [d]efendants are entitled to attorney's fees pursuant to ORS 20.080(2)."

(Emphasis added.)

On appeal, plaintiff argues that "[d]efendants are not entitled to an award of attorney fees because ORS 20.080 applies exclusively to small tort actions at law, not equitable claims for prescriptive easement." Plaintiff observes that "[t]here can be no doubt" that the prescriptive easement counterclaim that defendants succeeded on "was an action in equity." Thus, plaintiff argues, defendants were not entitled to attorney fees under ORS 20.080(2).

Plaintiff acknowledges that defendants prevailed on plaintiff's trespass claim seeking damages, a claim that, under the foregoing case law, could have...