Shriners Hosps. for Children v. Woods

280 Or.App. 127

380 P.3d 999

Shriners Hospitals for Children, a Colorado nonprofit corporation; and Oregon Scottish Rite Clinics, an Oregon nonprofit corporation, Plaintiffs–Respondents,

v. Mack A. Woods, Defendant–Appellant,andBennett, Hartman, Morris & Kaplan, LLP ; and Tyler Smith & Associates, P.C., Respondents.

A155952

Court of Appeals of Oregon.

Argued and submitted December 19, 2014.

August 3, 2016

George W. Kelly, Eugene, argued the cause and filed the briefs for appellant.

Richard L. Grant, Portland, argued the cause for respondents Shriners Hospitals for Children and Oregon Scottish Rite Clinics. With him on the brief was Richard L. Grant, P.C.

Michael J. Morris, Portland, argued the cause for respondent Bennett, Hartman, Morris & Kaplan, LLP. With him on the brief was Bennett, Hartman, Morris & Kaplan, LLP.

Tyler D. Smith, Canby, argued the cause for respondent Tyler D. Smith & Associates, P.C. With him on the brief was Tyler Smith & Associates, P.C.

Before Ortega, Presiding Judge, and DeVore, Judge, and Garrett, Judge.

DEVORE, J.

In this garnishment proceeding, defendant Woods appeals an order that disbursed to others a money award that he was to receive from a legal malpractice action. Plaintiffs, Shriners Hospitals for Children and Oregon Scottish Rite Clinics (together, Shriners), sought to garnish the malpractice award to collect on a default judgment against Woods. Woods's first assignment of error asserts that the trial court erred when it denied his ORCP 71 B(1)(d) motion to set aside Shriners' default judgment from an earlier proceeding. He contends that failure of service of summons and complaint precluded personal jurisdiction over him and means that the default judgment against him was void ab initio . He argues that, for that reason, the trial court could not properly declare the service of summons to be immaterial, nor his motion to be untimely. We conclude that the trial court erred in ruling that Woods's motion to set aside the default judgment was untimely and that the motion could be decided based on his knowledge of Shriners' claim. We vacate and remand for the court to determine whether Woods was duly served.

Additionally, two of Woods's former attorneys or law firms filed liens on the money award for their work on the malpractice case. The attorney liens were presented as objections to Shriners' garnishment. The objecting attorneys had not separately initiated, nor pleaded, lien foreclosure proceedings against Woods. Rather, in the garnishment proceeding, Woods's former attorneys sought payment, and Woods tried to reduce the amount of their liens by alleging that he was entitled to “recoup” some of their fees due to their alleged errors while representing him. Woods assigns error to the trial court's rejection of his recoupment claim against the attorneys' liens. Bennett, Hartman, Morris & Kaplan (Morris) cross-assigns error as to the court's reduction of his lien. Because the lien issues are ancillary and dependent upon the trial court's personal jurisdiction determination, we do not consider what may be hypothetical or nonjusticiable issues, and, accordingly, we do not reach the assignment and cross-assignmnent of errors involving the lien issues. SeeUtility Reform Project v. PUC, 215 Or.App. 360, 376, 170 P.3d 1074 (2007) (after remand, issues may arise differently or not at all); see also Couey v. Atkins , 357 Or. 460, 470, 355 P.3d 866 (2015) (to be justiciable, a controversy must involve a present, not hypothetical issue).

FACTS

In November 2007, Shriners brought an action against Woods to collect on an unpaid note. Shriners filed an affidavit of service of summons and complaint that recited that Woods was personally served on November 28, 2007, at 7:30 p.m. at his residence in Canby. Woods did not appear and defend the case. An order of default and a general judgment were entered on January 3, 2008. According to Shriners' attorney, he received a voice message that same afternoon from Woods's dissolution attorney. The promissory note Shriners held originated from debt that was implicated in a pending dissolution proceeding. On January 25, Shriners agreed to postpone enforcement of the default judgment until the conclusion of Woods's dissolution case, which was expected to occur later that month. The judgment in the dissolution proceeding was entered in July 2008.¹

In 2013, Woods received a jury award of $180,840 in a malpractice action against his original attorney in his dissolution proceeding. On that attorney's behalf, the Professional Liability Fund of the Oregon State Bar (PLF) tendered the money to the court for disbursement. That sum, $187,075.26 with costs and interest, became the object of Shriners' garnishment and the competing attorney liens.

In April 2013, Shriners filed a writ of garnishment upon the PLF funds, seeking to collect on its default judgment on the promissory note. See ORS 18.635 (allowing writ enforcing judgment lien). Woods challenged Shriners' garnishment by moving to set aside the underlying default judgment pursuant to ORCP 71 B(1)(d). Woods argued that the judgment should be set aside because he was not served with the summons and complaint in the action on the note. Woods attested that he was not in Canby on November 28, 2007, the day on which Shriners' process-server claimed to have served Woods at his residence. The motion was supported by declarations from five witnesses reporting that, on that day, Woods was with them near Prairie City in eastern Oregon attending a wedding anniversary celebration. Because service of summons and complaint was the premise for personal jurisdiction, Woods asserted that the default judgment was void and should be set aside. See ORCP 71 B(1)(d) (providing means to set aside a void judgment). A void judgment, he asserted, could not provide a basis for Shriners' garnishment action.²

In June 2013, in what had been intended to be an evidentiary hearing, Woods brought several witnesses who were prepared to testify that he was away in eastern Oregon at the time he was purportedly served in Canby. The trial court entertained the parties' legal arguments, while reserving until a later date the prospect of an evidentiary hearing, if necessary. Relying on his own declaration and those of his witnesses, Woods argued his motion to set aside the default judgment. Shriners argued that events demonstrated that Woods had known of the proceeding.

The court issued a letter opinion in October 2013, without having conducted an evidentiary hearing. The court determined:

“Defendant Woods' ORCP 71 B motions do not depend on whether he was personally served with the Summons and Complaint on November 28, 2007. He was personally aware of this case in January, 2008. It was an issue in both his divorce case and his malpractice case. Woods' motion now is not reasonably timely.”

The court ruled that the attorneys' liens had priority and were valid but that an evidentiary hearing was needed to determine the amount of the liens. The court entered an order denying Woods's motion to set aside the default judgment and determining that the malpractice proceeds would be disbursed after the lien sums were determined.

DISCUSSION

Woods's ORCP 71 B(1)(d) motion to set aside the judgment is based on an argument that the judgment was void for lack of personal jurisdiction. We review that determination for legal error, accepting the court's factual findings if the evidence supports them. Estate of Selmar A. Hutchins v. Fargo , 188 Or.App. 462, 466, 72 P.3d 638 (2003) (Hutchins ).

In this case, the trial court did not make any findings on the critical factual dispute—whether Woods was served with summons and complaint in Shriners' action on the promissory note. Instead, the court concluded, as its first point, that it sufficed that Woods had knowledge of Shriners' action in January 2008. The court also concluded that the motion was not made within a reasonable time. On the latter point, ORCP 71 B(1) generally provides that a motion “shall be made within a reasonable time.”³ There was no dispute that Woods's motion was made five years after the default judgment. Nevertheless, in this case, reliance on either point was mistaken as a matter of law.

In Hutchins, we explained that “there is no timeliness requirement for moving to set aside a void judgment.” 188 Or.App. at 468, 72 P.3d 638. In that case, a party in interest had moved to set aside a judgment that foreclosed on a property he owned through an unrecorded deed. The motion was filed nearly seven years after the judgment of foreclosure was entered. Id. at 465, 72 P.3d 638. The party argued that his predecessor was not properly served with the complaint because the service by publication was inadequate. He asserted that his predecessor had no knowledge of the foreclosure. The trial court dismissed the motion, but we reversed.

We recognized that the language of ORCP 71 B(1) might seem to require the defendant to file the motion within a reasonable time after learning of the judgment and, for that reason, might seem to provide the trial court discretion in ruling on the motion. Yet, we have held that neither of those requirements can apply to a motion to set aside a void judgment. We explained:

“Because a void judgment * * * is a ity ab initio , all that a trial court does when it sets it aside is to give effect to its prior determination of its ity. It does not exercise any discretion, and there cannot be any time limitations on its action.”

Id. at 469, 72 P.3d 638. We concluded that “the reasonable time to move to set aside a void judgment is forever, and it is an abuse of discretion for a trial court to fail to do so.” Id. at 470, 72 P.3d 638. That precedent controls here. If the Shriners' judgment is void, as Woods contends, then his motion...