Int'l Ass'n of Machinists, Woodworkers Local W-246 v. Heil

301 Or.App. 685

457 P.3d 357

INTERNATIONAL ASSOCIATION OF MACHINISTS, WOODWORKERS LOCAL W-246, an Oregon corporation, Plaintiff-Respondent,

v. John HEIL and Beverly Heil, husband and wife, Defendants-Appellants,andAll Occupants or Inhabitants of the Real Property Located At 2203 5th Street, Tillamook, Oregon Telephone: Unknown, Defendants.

A166909

Court of Appeals of Oregon.

Argued and submitted August 29, 2019.

January 8, 2020

Harry D. Ainsworth, Portland, argued the cause and filed the brief for appellants.

William H. Sherlock, Eugene, argued the cause for respondent. Also on the brief was Hutchinson Cox.

Before Ortega, Presiding Judge, and Shorr, Judge, and James, Judge.

SHORR, J.

Defendants appeal from a supplemental judgment awarding costs and attorney fees to plaintiff. Defendants assign error to the trial court’s ruling that the facts alleged in plaintiff’s complaint were sufficient to provide a basis for an award of attorney fees under ORCP 68 C. For the reasons that follow, we conclude that the court erred by awarding attorney fees because plaintiff’s pleadings did not "allege the facts, statute, or rule that provides a basis for the award of fees," as required by ORCP 68 C(2)(a). Accordingly, we reverse the award of attorney fees in the supplemental judgment.

This case has a long and complicated procedural history, and we state only the following relevant, uncontested facts. The parties entered into a land sale contract for certain real property owned by plaintiff. Defendants failed to make payments pursuant to the contract’s terms, leading plaintiff to ultimately file an eviction complaint against defendants. The only facts pleaded in the complaint were as follows:

"1. Defendants are in possession of a dwelling unit, premises and real property described above * * *.

"2. Plaintiff is entitled to possession of the premises because:

"It has fully complied with the requirements set forth in ORS 93.915 and ORS 93.930 and, having recorded the Affidavit of Forfeiture with Tillamook County Deeds and Records, are not required to provide additional notice to Defendants, who are deemed tenants at sufferance [as] a matter of law, and may be removed from possession pursuant to ORS 105.105 to ORS 105.168.

"3. Defendants are unlawfully holding the premises with force.

"4. Wherefore, Plaintiff prays for possession of the premises, costs and disbursements and attorney fees, if applicable ."

(Emphasis added.)

A trial was scheduled, but the trial was cancelled when the parties reached a settlement agreement ahead of the trial date. Among other things, the settlement agreement provided that, if defendants failed to pay plaintiff the full purchase price within 90 days, defendants would voluntarily vacate the premises and have judgment entered against them in this case. The settlement also included the following provision for attorney fees and costs:

"6. Attorney Fees and Costs. Should any of the parties successfully prosecute or defend any action, claim for relief or any other proceeding relating to any of the rights, duties or obligations arising under this Agreement, that party shall be entitled to recover the reasonable value of its attorney fees, paralegal fees, costs, disbursements and other expenses, including, without limitation, fees and costs arising before and at any trial, arbitration, mediation, or bankruptcy proceeding and any appeal thereof."

Ultimately, defendants failed to make the payments pursuant to the settlement agreement. In a separate case (the breach of contract case), plaintiff filed a claim for breach of contract based on defendants’ nonpayment and alleged breach of the settlement agreement.¹ Plaintiff initially sought at least some of its attorney fees for this case as economic damages in that case.

Around the same time, a hearing was held in this case. At that hearing, the parties put the settlement on the record. The trial court subsequently entered a general judgment against defendants, in which the court found that defendants had failed to make the agreed-upon payments and that plaintiff was entitled to possession of the premises plus costs. The general judgment recited some of the terms of the settlement agreement, but it neither mentioned the attorney fee provision nor awarded attorney fees.²

Plaintiff then filed a statement of attorney fees "per ORCP 68," seeking $29,219.30 in attorney fees plus other costs and expenses. In its statement of fees, plaintiff alleged that the basis for those fees was "pursuant to paragraph 6 of the Parties’ Settlement Agreement[.]" Defendants objected, and a hearing was held. At that hearing, defendants argued that plaintiff was not entitled to fees because the basis for fees was not alleged in a pleading, as required by ORCP 68 C(2)(a). Defendants contended that the settlement agreement could not provide the legal basis for an attorney fee award, because the settlement agreement did not exist and had not been contemplated at the time the original complaint was filed, and plaintiff had filed no amended pleading. Therefore, defendants argued, plaintiff’s request for attorney fees should be denied because the pleading requirements of ORCP 68 C(2) had not been met.

In response, plaintiff argued that it had met the pleading requirement of ORCP 68 C. Plaintiff asserted that the complaint included an assertion of an entitlement to attorney fees, and the settlement agreement that formed the basis for a fee award had been "subsumed" into this case when the parties executed the settlement agreement and put it on the record at an earlier hearing. Plaintiff also argued that defendants had suffered no prejudice from any alleged insufficiency of the pleadings because defendants knew that plaintiff would seek fees, based on both the complaint and the terms of the settlement agreement. Under those circumstances, plaintiff argued, the pleadings requirements of ORCP 68 C had been met. The court declined to rule on the issue at that hearing and set a later hearing so that the parties could develop their arguments in writing.

Defendants then filed a memorandum in which, in addition to the arguments raised at the hearing, defendants contended that the trial court could not properly permit plaintiff to amend or supplement its pleadings under ORCP 23. Plaintiff filed a response, and, in addition to reiterating its arguments raised at the hearing, plaintiff moved to file an amended complaint under ORCP 23 B³ to plead the settlement agreement as the basis for its attorney fees claim.

Another hearing was held, in which the trial court heard further argument on defendants’ objection to plaintiff’s request for attorney fees. Plaintiff again acknowledged that the specific basis for fees was not alleged in its complaint but stated that the parties had "implicitly tried that matter—when the settlement agreement was brought to the floor," and that the court should permit plaintiff to amend its complaint pursuant to ORCP 23 B. Plaintiff also argued that it would be a "gross injustice" to disallow the amendment because, plaintiff argued, the parties and the court had agreed in the breach of contract case that attorney fees for this case should be sought through the ordinary ORCP 68 process in this case. Defendants argued that, at that hearing in the breach of contract case, they had expressly reserved their right to object to any attorney fee petition filed in this case.

The trial court initially granted plaintiff’s motion to amend its complaint and entered an order reflecting that ruling. Plaintiff subsequently filed an amended complaint alleging a right to attorney fees pursuant to the parties’ settlement agreement. Defendants then filed a motion to strike plaintiff’s amended complaint, arguing that the court lacked jurisdiction to allow the amended complaint. Accordingly, defendants asserted, the trial court’s order granting plaintiff leave to amend its complaint and plaintiff’s amended complaint itself were both void.

Another hearing was held on defendants’ motion to strike. The parties raised various arguments related to the trial court’s authority to allow plaintiff to amend its complaint under ORCP 23. After hearing argument, the court rescinded its earlier ruling granting plaintiff’s motion to amend and stated that it would reconsider the parties’ arguments and issue a written ruling.

In a subsequent letter opinion, the trial court denied plaintiff’s motion to amend and awarded attorney fees to plaintiff. The court reasoned that, although it could have allowed plaintiff’s motion to amend, it was not necessary to do so because plaintiff’s claim for attorney fees was properly pleaded under ORCP 68 C. The court explained:

"Based on the holding in Htaike v. Sein [, 269 Or. App. 284, 344 P.3d 527, rev. den. , 357 Or. 595 [358 P.3d 1001] (2015),] the Court could properly allow the amended complaint. However, the issue to be resolved prior to allowing the amended complaint is if the issue of attorney fees is already alleged.

"* * * * *

"Based on Rymer v. Zwingli [, 240 Or. App. 687, 247 P.3d 1246, rev. den. , 350 Or. 716, (2011) ], the Court finds that attorney fees were alleged properly under ORCP 68 C(2)(a) and that the parties entry into the settlement agreement clearly put both parties on notice [that] attorney fees would be sought."

The court quoted from our opinion in Rymer , in which we observed that

"[a] defendant who includes a bare assertion of an entitlement to attorney fees in a pleading when defending against a claim in which the allegations of fact in the plaintiff’s pleading satisfy ORCP 68 C(2)(a) has adequately alerted the plaintiff that the defendant is seeking fees on the same basis as the plaintiff, and, therefore, the defendant’s pleading satisfies ORCP 68 C(2)(a)."

240 Or. App. at 695, 247 P.3d 1246. The court entered a supplemental judgment awarding plaintiff $20,831.80 in attorney fees for fees incurred after the parties entered into the settlement agreement.

Defendants now appeal...