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WILLAMETTE VALLEY AMERICAN INN OF COURT

SALEM, OREGON

Team 7 Presents:

SHOW ME THE MONEY!!!


ATTORNEY FEES FROM A (Agreement) to Z (Zero Award)

Thursday, April 21, 2005

Roth’s Conference Center


Salem, Oregon

OREGON ATTORNEY FEES LITIGATION:


RECENT DEVELOPMENTS
(Attachment B)

Prepared by:

Hon. Robert D. Durham


Oregon Supreme Court

Hon. Jack L. Landau


Oregon Court of Appeals
ATTACHMENT B

Oregon Attorney Fees Litigation: Recent Developments

Hon. Robert D. Durham


Oregon Supreme Court

Hon. Jack L. Landau


Oregon Court of Appeals

April 1, 2005
Portland, Oregon

I. General Principles

A. General Rule

A court will not award attorney fees to the prevailing party unless

that award is authorized by statute or contract. However, a court sitting in equity has

the inherent power to award fees. Deras v. Myers, 272 Or 47, 65-66, 535 P2d 541

(1975) (political candidate succeeded in challenge, on constitutional grounds, to

statutory campaign expenditure limitations); Gilbert v. Hoisting & Port. Engrs., 237 Or

130, 384 P2d 136, 390 P2d 320 (1964) cert den 376 US 963, 84 S Ct 1125, 11 L Ed 2d

981 (union members succeeded in challenge to fairness of union elections, thus

preserving union democracy).

B. "Prevailing Party"-- ORS 20.077

In general, only a "prevailing party" can obtain attorney fees. The

2001 Legislature enacted ORS 20.077, which provides how the court shall determine

who is a prevailing party in any action or suit. ORS 20.077 only applies to actions

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commenced on or after January 1, 2002 and has not yet been interpreted by the

Oregon appellate courts. The 2003 Legislative Assembly amended ORS 20.077(2)(d),

effective January 1, 2004, directing that the form of judgment must comply with the

requirements of ORS 18.038 and 18.042, rather than with ORCP 70 A, which the

Legislative Assembly repealed. ORS 20.077 now provides:

"(1) In any action or suit in which one or more claims are asserted
for which an award of attorney fees is either authorized or required, the
prevailing party on each claim shall be determined as provided in this
section. The provisions of this section apply to all proceedings in the
action or suit, including arbitration, trial and appeal.

"(2) For the purposes of making an award of attorney fees on a


claim, the prevailing party is the party who receives a favorable final
judgment, decree or arbitration award on the claim. If more than one
claim is made in an action or suit for which an award of attorney fees is
either authorized or required, the court or arbitrator shall:

"(a) Identify each party that prevails on a claim for which attorney
fees could be awarded;

"(b) Decide whether to award attorney fees on claims for which the
court or arbitrator is authorized to award attorney fees, and the amount of
the award;

"(c) Decide the amount of the award of attorney fees on claims for
which the court or arbitrator is required to award attorney fees; and

"(d) Enter a judgment that complies with the requirements of ORS


18.038 and 18.042.

"(3) Notwithstanding subsection (2) of this section, upon appeal of a


judgment or decree in an action or suit in which one or more claims are
asserted for which the prevailing party may receive an award of attorney
fees, the appellate court in its discretion may designate as the prevailing
party a party who obtains a substantial modification of the judgment or
decree.

"(4) This section does not create a claim to an award of attorney


fees in any action or suit in which the court or arbitrator is not otherwise

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authorized or required to make an award of attorney fees by contract or
other law."

The amendment of ORS 20.077(2)(d) was part of a comprehensive

revision of the laws governing judgments undertaken by the 2003 Legislative Assembly.

Or Laws 2003, ch 576 (containing the text of HB 2646). One of the most significant

impacts of the legislation, from a practicing lawyer’s point of view, is that the statute

categorizes all judgments as “general,” “limited,” or “supplemental” judgments. See

ORS 18.005 for definitions. ORS 19.205(1) now provides, in pertinent part, that,

"[u]nless otherwise provided by law, a limited judgment, general judgment or

supplemental judgment, as those terms are defined by ORS 18.005, may be appealed

as provided in this chapter." The new legislation also repealed ORCP 70, which had

described the required form and content, as well as procedure for entry of judgments,

including money judgments. “Money judgments” are now “money awards.”

Galfano v. KTVL-TV Freedom Broadcasting of Oregon, 196 Or App 425, 102 P3d
766 (2004).

In Galfano, the Court of Appeals addressed the confusion wrought by the


change in terminology. It concluded that what it referred to as the trial court's
"supplemental general judgment," which awarded defendants attorney fees based on
the dismissal of one of plaintiff's claims in a civil action, was appealable notwithstanding
the fact that the trial court failed to use any of the terms that apply to appealable
judgments, including "limited judgment," "general judgment," or "supplemental
judgment.” The court stated:

“Even though the judgment document does not include one of the three
labels listed in ORS 19.205(1), we examine the substance of the court's
disposition to determine whether it satisfies the definition of a limited
judgment, general judgment, or supplemental judgment in ORS 18.005. In
this case, the 'supplemental general judgment' satisfies the definition of a
supplemental judgment in ORS 18.005(15) because (1) the 'supplemental
general judgment' is a judgment -- that is, it is the court's concluding

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decision on the claim for attorney fees and it is reflected in a judgment
document, a writing with a title that includes the word 'judgment;' (2) the
judgment, pursuant to ORCP 68 C(5)(b), may be rendered after a general
judgment has been entered; and (3) the legislature intended that a
judgment awarding attorney fees be one that affects a substantial right of
a party.”

196 Or App at 438.

II. Sources of Entitlement

A. Statutes

1. ORS 20.080 (mandatory attorney fees for certain tort claims of


$5,500 or less)

The 2001 Legislature amended ORS 20.080 so that it no longer applies to

any action based on contract. ORS 20.080(3). Former ORS 20.080 (1999) had been

interpreted to apply to breach of contract cases if the breach resulted directly in damage

to an item of real or personal property. See Mitchell v. City of St. Paul, 178 Or App 312,

36 P3d 513 (2001), rev den, 334 Or 76, 45 P3d 450 (2002) (so stating). ORS 20.080

provides:

"(1) In any action for damages for an injury or wrong to the


person or property, or both, of another where the amount pleaded
is $5,500 or less, and the plaintiff prevails in the action, there shall
be taxed and allowed to the plaintiff, at trial and on appeal, a
reasonable amount to be fixed by the court as attorney fees for the
prosecution of the action, if the court finds that written demand for
the payment of such claim was made on the defendant not less
than 10 days before the commencement of the action or the filing of
a formal complaint under ORS 46.465, or not more than 10 days
after the transfer of the action under ORS 46.461. However, no
attorney fees shall be allowed to the plaintiff if the court finds that
the defendant tendered to the plaintiff, prior to the commencement

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of the action or the filing of a formal complaint under ORS 46.465,
or not more than 10 days after the transfer of the action under ORS
46.461, an amount not less than the damages awarded to the
plaintiff.

"(2) If the defendant pleads a counterclaim, not to exceed


$5,500, and the defendant prevails in the action, there shall be
taxed and allowed to the defendant, at trial and on appeal, a
reasonable amount to be fixed by the court as attorney fees for the
prosecution of the counterclaim.

"(3) The provisions of this section do not apply to any action


based on contract."

Beers v. Jeson Enterprises, 165 Or App 722, 998 P2d 716 (2000).

The plaintiff mailed a letter to the defendant, demanding $4000 and


threatened one lawsuit. The plaintiff then filed two separate suits. Those claims, false
imprisonment and malicious prosecution, were consolidated and submitted to
mandatory arbitration. The arbitrator awarded plaintiff damages on each claim and
denied plaintiff's attorney fees request under ORS 20.080. The trial court affirmed the
denial of fees, and the Court of Appeals reversed. The court determined that, because
the plaintiff's letter met the requirements of ORS 20.080 for only one lawsuit, the plaintiff
was entitled to attorney fees on one, not both, of her consolidated claims.

Schwartzkopf v. Shannon the Cannon's Window, 166 Or App 466, 998 P2d 244

(2000).

The plaintiff received an arbitration award, but the trial court denied the
plaintiff's request for attorney fees under ORS 20.080 because the plaintiff had failed to
send the required demand letter to the defendant. The plaintiff had sent the demand
letter only to the defendant's insurer. The Court of Appeals affirmed the denial of fees;
however the court stated that "we disagree with the trial court's reasoning that a
demand pursuant to ORS 20.080 may not be made on an insurer who is acting as an
agent for an insured defendant for purposes of defending or settling a claim." 166 Or
App at 471. However, here, the court determined that the record did not show that the
insurer was in fact acting as an agent for the defendant at the time the letter was sent;
therefore, the court affirmed the trial court's denial of attorney fees.

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Reed v. Jackson County Citizens League, 183 Or App 89, 50 P3d 1281, rev den,
335 Or 142, 61 P3d 938 (2002).

The plaintiffs prevailed in the underlying trespass action, but the trial court
denied their request for attorney fees under ORS 20.080. The trial court concluded that
the defendant had made a prefiling "tender" sufficient to preclude an award of attorney
fees. The Court of Appeals determined that a "tender" is not invalidated by a condition
on that tender only if the offeror has a "right to insist" or, conversely, that the offeree has
"no right to refuse" that condition. The court concluded that such conditions could only
arise from a legally enforceable entitlement, generally, one grounded in a contractual
relationship or a statute. The defendant's letter offering settlement was conditioned on
full release and confidentiality. The court held that that offer was not a "tender" because
the defendant did not have a legal entitlement to insist upon confidentiality. Thus, the
court held that defendant's letter did not preclude an award of attorney fees under ORS
20.080.

Fresk v. Kraemer, 337 Or 513, 99 P3d 282 (2004).

The defendant, after receiving the plaintiff's demand letter, had offered to
settle with the plaintiff, on the condition that the plaintiff discharged the disputed claim.
The trial court determined that the defendant's offer was not a tender under ORS 20.080
because it was conditional, and awarded the plaintiff attorney fees. The Court of
Appeals reversed. In affirming the Court of Appeals, the Supreme Court observed that,
“although ‘tender’ under this court's common law often is described as an ‘unconditional
offer to pay money,’ its meaning more precisely is stated as an offer of payment that is
coupled either with no conditions or only with conditions upon which the tendering party
has a right to insist.” 337 Or at 522 (internal citation omitted). The Court concluded that,
in the case at hand, “the defendant was entitled to insist upon a release from further
liability for plaintiff’s negligence claim as a condition of payment under ORS 20.080(1)”
and held that, “without more, a condition of release from further liability for a plaintiff's
underlying claim does not prevent a defendant's offer of payment from acting as an
effective ‘tender’ under ORS 20.080(1).” 337 Or at 524.

Forsi v. Hildahl, 194 Or App 648, 96 P3d 852 (2004).

In this personal injury action, the trial court permitted plaintiff to amend her
complaint on the day of trial to reduce her prayer for damages from more than $27,000
to $5,500 in order to enable her to claim attorney fees pursuant to ORS 20.080. The jury
returned a verdict in the plaintiff's favor for $5,500, and the plaintiff was awarded attorney
fees. The Court of Appeals affirmed, stating that “there is no question that it is
permissible to amend a complaint to reduce a damage prayer, even when the purpose is
to be able to claim attorney fees under ORS 20.080." 194 Or App at 653. The court
added that allowing such an amendment did not subvert the policy of the statute to

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encourage early settlement because “[d]efendant had multiple opportunities to settle this
case early on and thereby avoid liability for attorney fees under ORS 20.080.” 194 Or
App at 654.

2. ORS 35.346(7) (mandatory attorney fees for condemnation

proceedings)

The 2003 Legislative Assembly made several amendments to ORS 35.346,

addressing, among other things, arbitration awards and the timing of the initial written

offer by condemner to purchase the owner’s property. The Legislative Assembly did not,

however, amend subsection 7. See Or Laws 2003, ch 476, §§ 1, 2; ch 598, § 33. ORS

35.346(7) provides:

"(7) If a trial is held or arbitration conducted for the fixing of the amount of
compensation to be awarded to the defendant owner or party having an interest in
the property being condemned, the court or arbitrator shall award said defendant
costs and disbursements including reasonable attorney fees and reasonable
expenses as defined in ORS 35.335 (2) in the following cases, and no other:

"(a) If the amount of just compensation assessed by the verdict in the trial
exceeds the highest written offer in settlement submitted by condemner to those
defendants appearing in the action at least 30 days prior to commencement of
said trial; or

"(b) If the court finds that the first written offer made by condemner to
defendant in settlement prior to filing of the action did not constitute a good faith
offer of an amount reasonably believed by condemner to be just compensation."

ODOT v. Kesterson, 182 Or App 105, 47 P3d 546, rev den, 335 Or 42, 57 P3d 581

(2002).

In this condemnation action, the defendant had sought, and obtained, an


award of attorney fees under ORS 35.346(7) on the ground that the jury verdict was
greater than the amount of any offer made by ODOT at least 30 days before trial. The
Court of Appeals reversed the attorney fee award. The court determined that the initial
prefiling offer required by ORS 35.346(1) can also function as the offer made at least 30
days before trial in subsection (7)(a) and does not need to remain available at the time of

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trial. Because ODOT had offered the defendant the same amount that he recovered
from the jury at least 30 days prior to filing the action and that offer had remained in
effect (i.e. was made and revoked) more than 30 days prior to trial, the court held that
the trial court erred in awarding the defendant attorney fees.

3. ORS 36.425 (attorney fees for trial de novo after mandatory

arbitration)

The 2003 Legislative Assembly repealed ORCP 70 A(2), which had

described the required form and content of money judgments, including the award of

attorney fees. “Money judgments” are now “money awards.” ORS 18.042 now

describes the form and content of money awards. The legislature amended ORS 36.425

to reflect that change, among other technical edits. Or Laws 2003, ch 576, § 170.

Williams v. Cabinet Masters, Inc., 335 Or 49, 57 P3d 145 (2002).

Defendant petitioned for attorney fees for successfully opposing two


petitions for review that the plaintiff had filed in the Supreme Court under ORS 36.425.
ORS 36.425(4)(b) and (5)(b) authorize an award of attorney fees to a prevailing
defendant up to 10 percent of the amount the plaintiff claimed in the complaint.
Defendant had obtained a 10 percent award in both the trial court and the Court of
Appeals (for attorney fees incurred on appeal) prior to seeking another 10 percent award
in the Supreme Court.

The Supreme Court held that ORS 36.425(4)(b) allows fees on appeal, but
that "ORS 36.425(4)(b) and (5)(b) authorize an award of attorney fees not to exceed, in
toto, 10 percent of the amount claimed in the complaint." 335 Or at 56. Because the
trial court already had already awarded the defendant more than the maximum amount
of fees, the court denied defendant's petition.

Deacon v. Gilbert, 164 Or App 724, 995 P2d 557 (2000), rev den, 331 Or 583 (2001).

Following mandatory court-annexed arbitration, the arbitrator awarded the


plaintiff damages and attorney fees. The defendant excepted to the award of attorney
fees. The plaintiff argued that, because the defendant did not request a trial de novo of
the entire arbitrator's award, the judgment was nonappealable. The Court of Appeals

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held that ORS 36.425(6) carves out an exception to the automatic finality of an
arbitrator's award. The court stated that "[w]here no request for an omnibus trial de novo
has been filed, but a party has filed timely exceptions to the arbitrator's attorney fee
disposition, the arbitrator's award becomes final on the 20th day after filing with respect
to all matters except for those attorney fee matters 'preserved' by virtue of subsection (6)
exceptions." 164 Or App at 731 (emphasis in original). Thus, the court held that the
attorney fee issues were not rendered final and nonappealable.

Foust v. American Standard Ins. Co. Of Wisconsin, 189 Or App 125, 74 P3d 1111

(2003).

The plaintiff prevailed in a court-annexed arbitration, but the arbitrator


declined to award her attorney fees. Petitioner filed exceptions pursuant to ORS
36.425(6), and the trial court concluded that the arbitrator's decision was not subject to
review. It entered a judgment for plaintiff on the arbitrator's award of underinsured
motorist benefits without awarding attorney fees. The Court of Appeals observed that
ORS 36.425(6) provides that the trial court “shall” decide the issue unless the exceptions
are not timely filed or are not directed to the legal grounds for the award or denial of
attorney fees or costs or to the amount of the award. It stated that, “[j]udicial review is
mandatory unless one or both of those requirements is not met.” 189 Or App at 131.
The court found that the plaintiff's exceptions were "directed to the legal grounds" for the
arbitrator's denial of attorney fees, because the arbitrator's decision was based on his
interpretation and application of the statutes under which plaintiff submitted evidence at
her hearing. The court therefore held that the trial court erred in concluding that the
arbitrator's decision was not reviewable under ORS 36.425(6).

The Court of Appeals went on to conclude that an arbitrator may bifurcate


the procedure for awarding attorney fees by requiring proof of entitlement to be adduced
at the hearing and leaving the determination of the amount of fees to post-hearing
resolution.

LeBrun v. Cal-Am Properties, Inc., 197 Or App 177 (2005) (petition for review
pending before the Oregon Supreme Court).

LeBrun brought action against landlord, and landlord counterclaimed in


quantum meruit for the cost of a post, which LeBrun allegedly had damaged. On
appeal, the court concluded that the LeBrun was not entitled to attorney fees for her
successful defense against landlord's counterclaim because the claim clearly did not
involve an important constitutional right, the rental agreement only authorized fees for
disputes "arising under this agreement," and, due to a pleading defect, LeBrun failed to
allege any facts that would provide a basis for an award of fees pursuant to ORS 36.425.
The Court of Appeals stated: “Although we have held that, under certain circumstances,

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it is ‘not necessary to specify the statutory basis of a request for fees when the facts
asserted would provide a basis for an award of fees,’ LeBrun alleged no facts that would
provide a basis for an award of fees under ORS 36.425.” (Internal citation omitted.)

4. ORS 90.255 (attorney fees in an action on a rental agreement)

Brennan v. La Tourelle Apartments, 184 Or App 235, 56 P3d 423 (2002).

The plaintiffs brought a claim based on an alleged rental agreement and


ORS 105.112 for the return of personal property. The trial court dismissed that claim as
moot and rejected the defendant's request for attorney fees under ORS 90.255. The
Court of Appeals held that the defendant should have been designated the prevailing
party because it was the "party in whose favor final judgment was rendered" as required
by ORS 90.255. The court stated that, typically, when a judgment dismisses the
complaint, the defending party is considered the prevailing party and, based on the text
of ORS 90.255, the defendant was the prevailing party as a matter of law. The dissent
disagreed, stating that a dismissal does not necessarily make the defendant the
prevailing party when the dismissal is based on events that are independent of the action
itself.

Oakleaf Mobile Home Park v. Mancilla, 189 Or App 458, 75 P3d 908 (2003).

After landlord voluntarily dismissed its forcible entry and detainer (FED)
action, the trial court refused to award attorney fees and costs to tenant. The Court of
Appeals reversed and remanded, concluding that, under ORS 90.255, tenant was the
"prevailing party" because the trial court entered a judgment dismissing the action. It
noted that, “under ORS 90.255, attorney fees are generally awarded to the ‘prevailing
party’ barring unusual circumstances which might arise in any particular case." 189 Or
App at 463 (internal citations omitted).

Barlow Trail Mobile Home Park v. Dunham, 189 Or App 513, 76 P3d 1146 (2003).

In an action under the Oregon Residential Landlord and Tenant Act (RLTA)
the trial court found for defendant on plaintiff's ejectment claim and for plaintiff on
defendant's counterclaim for retaliation. It designated defendant as the prevailing party
under ORS 90.255 and awarding him attorney fees. The Court of Appeals adopted the
definition of “prevailing party” that the Supreme Court set out for purposes of ORS
20.096 in Wilkes v. Zurlinden, 328 Or 626, 984 P2d 261 (1999), and concluded that,
because both plaintiff and defendant defeated the claims raised against them, they were
both prevailing parties under the statute. Nevertheless, the Court of Appeals affirmed
the trial court’s judgment because plaintiff had failed to assign error to the court's failure

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to designate it as the prevailing party and therefore had no predicate for seeking an
award of attorney fees in its favor on remand.

LeBrun v. Cal-Am Properties, Inc., 197 Or App 177 (2005) (petition for review
pending before the Oregon Supreme Court).

Rudnick brought action against landlord for breach of rental agreement and
unlawful entry. Landlord counterclaimed for late fees. The trial court entered judgment
for the landlord on the breach of rental agreement and unlawful entry claims, but for
Rudnick on the counterclaim. It denied landlord's request for attorney fees on the breach
of contract claim, awarded enhanced prevailing party fees against Rudnick on the breach
of contract claim, and awarded attorney's fees to Rudnick for successful defense of the
counterclaim.

The Court of Appeals concluded that, because neither party had received
damages, the court was presented with “what might be seen as an exception to the
general rule that, for purposes of attorney fees, there can be only one prevailing party
under any statute.” Relying on Wilkes v. Zurlinden, 328 Or 626, 984 P2d 261 (1999)
(construing the term "prevailing party" under ORS 20.096), and Barlow Trail Mobile
Home Park v. Dunham, 189 Or App 513, 516, 76 P3d 1146 (2003) (explicitly adopting
the Wilkes definition for purposes of ORS 90.255), the court concluded that the landlord
was the "prevailing party" as to Rudnick's breach of rental agreement claims under ORS
90.255 because it successfully defended against those claims.

5. ORS 107.105(5) (award of attorney fees on appeal from the

judgment or other appealable order in a suit for annulment or dissolution of a marriage or

for separation)

In re Marriage of Maresh, 193 Or App 69, 87 P3d 1154 (2004).

The Court of Appeals held that former wife was entitled to attorney fees
after she prevailed on former husband's appeal from a post-judgment order for execution
of a money judgment entered as part of the dissolution of the parties' marriage. The
court reasoned that the historical construction of the relevant statutes indicated that
judgment execution proceedings were part of the underlying action, and therefore the
order constituted an appealable order "in a suit" for dissolution of marriage within the
meaning of the attorney fees statute.

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6. ORS 151.505 (attorney fees for court-appointed attorneys)

The 2003 Legislative Assembly made two amendments to ORS 151.505. It

added post-conviction courts to the list of courts that may include in a judgment an order

that a person represented by appointed-counsel repay in full or in part the administrative

costs of determining the eligibility of the person for appointed counsel, as well as the

costs of the legal and other services that are related to the provision of appointed

counsel. Or Laws 2003, ch 334, §§ 1, 2. The legislature deleted from ORS 151.505(4)

the instruction that the determination of the ability of a person to pay costs and the

amount of thereof are subject to the guidelines and procedures set out in ORS 151.487.

Or Laws 2003, ch 449, §§ 18, 19.

Bacote v. Johnson, 333 Or 28, 35 P3d 1019 (2001).

In this post-conviction proceeding, the trial court assessed fees against the
petitioner under ORS 151.505 for the repayment of costs of court-appointed counsel.
The petitioner objected to the imposition of costs without a hearing on his ability to pay.
The Supreme Court held that ORS 151.505(4) has a two-step process: First, the court
must determine if the person is or, in the future, may be able to pay costs and the
amount of costs to be paid, subject to the guidelines and procedures provided by the
State Court Administrator. Second the court must determine the amount and method of
payment of those costs. The court remanded the case for a determination of petitioner's
ability to pay and amount of costs in the manner provided by ORS 151.505(4).

7. ORS 183.497 (Administrative Procedures Act). ORS 183.497(1)


and (2) provide:
"(1) In a judicial proceeding designated under subsection (2)
of this section the court:

"(a) May, in its discretion, allow a petitioner reasonable


attorney fees and costs if the court finds in favor of the
petitioner.

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"(b) Shall allow a petitioner reasonable attorney fees and
costs if the court finds in favor of the petitioner and
determines that the state agency acted without a
reasonable basis in fact or in law; but the court may
withhold all or part of the attorney fees from any allowance
to a petitioner if the court finds that the state agency has
proved that its action was substantially justified or that
special circumstances exist that make the allowance of all
or part of the attorney fees unjust.

"(2) The provisions of subsection (1) of this section apply to


an administrative or judicial proceeding brought by a petitioner
against a state agency, as defined in ORS 291.002, for:

"(a) Judicial review of a final order as provided in ORS


183.480 to 183.484;

(b) Judicial review of a declaratory ruling provided in ORS


183.410; or

"(c) A judicial determination of the validity of a rule as


provided in OR 183.400."

Kaib's Roving R.PH. Agency, Inc. v. Employment Dept., 189 Or App 579, 77 P3d
327 (2003), rev allowed, 336 Or 615 (2004).

Company had sought judicial review of an Employment Department


assessment of unemployment taxes. The Court of Appeals reversed and remanded. On
remand, the Director of the Employment Department affirmed the assessment. On
judicial review, the Court of Appeals remanded again, holding that the hearing officer, not
the Director, was the person with authority to act for the Department on remand.

The company petitioned for an award of attorney fees and costs. The
Court of Appeals concluded that a court had found "in favor" of the company for
purposes of attorney fees and costs because the Court of Appeals' decision would result
in a new decision-maker reassessing the case. However, the court denied the
company’s petition because the Department's failure to discern the applicability of
statutes, which required the hearing officer rather than the Director to hear the matter
upon remand, did not constitute an absence of reasonable basis in law.

Powell v. Bunn, ___ Or App ____ (March 2, 2005).

The Boy Scouts made presentations at petitioner's public school, but


petitioner was ineligible to participate because he is an atheist. He complained to the
Superintendent of Public Instruction that the school district had violated the anti-

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discrimination provision of ORS 659.850. The superintendent denied the complaint, and,
on review, the trial court held that the superintendent abused his discretion in so acting
and awarded attorney fees to petitioners, relying, in part, on ORS 183.497.

The Court of Appeals observed that the key issue in the case was whether the
superintendent acted without a reasonable basis in fact or in law. It determined that the
superintendent misconstrued ORS 659.850, primarily due to its reliance on federal
principles rather than focusing on the specific state statute that was at issue. The court
stated that, “Although the superintendent failed to understand why the principles on
which he relied did not apply to this case, it was not unreasonable for him to look to them
for guidance, particularly in light of the absence of relevant authority under the statute.”
The court concluded, therefore, that the superintendent made a reasonable mistake, and
that ORS 183.497(1) did not support the award of attorney fees against the department.

8. ORS 305.447(1) (attorney fees in tax court proceedings)

Preble v. Dept. of Rev., 331 Or 599, 19 P3d 335 (2001).

Taxpayers prevailed in the Supreme Court on appeal from the Tax Court.
The Supreme Court awarded costs and denied attorney fees. The court discussed the
effect of ORS 20.075 on previous case law interpreting ORS 305.447(1), which grants
the court discretion to award attorney fees to taxpayers. In Swarens v. Dept. of Rev.,
320 Or 669, 674, 890 P2d 1374 (1995), the court had stated that, generally, it will not
award attorney fees when "an agency erroneously but reasonably interprets a statute[.]"
Rather, the court "usually will exercise [its] discretion to award attorney fees to the
taxpayer when the department's interpretation contradicts the clear meaning of a
controlling statute, as disclosed by that statute's text and context or legislative history.'"
Id. The court noted that the factors listed in ORS 20.075 are mandatory and apply to a
discretionary award of attorney fees, including fees awarded by an appellate court.
However, the list of factors is nonexclusive. See ORS 20.075(1)(h) ("Such other factors
as the court may consider appropriate under the circumstances of the case."). The court
concluded that Swarens presents such an additional factor a court will likely consider in
these circumstances. Here, the agency had made a reasonable misinterpretation of the
statute, thus, the court denied the request for attorney fees.

9. Workers Compensation Proceedings

a. ORS 656.382(1) (penalties and attorney fees payable by insurer


or employer in processing claim)

Tri-Met, Inc. v. Wolfe, 192 Or App 556, 86 P3d 111 (2004).

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The Workers' Compensation Board (board) awarded claimant insurer-paid
attorney fees pursuant to ORS 656.382(1) for employer's delay in accepting the claim.
The Court of Appeals affirmed, holding that the employer's delayed acceptance of the
claim constituted "unreasonable resistance to payment of compensation" and thus
claimant was entitled to insurer-paid attorney fees, even though at the time of
acceptance medical bills were outstanding, but no compensation was yet due. The court
explained that the award of attorney fees was not dependent on compensation being
due, but instead was based on any conduct that unreasonably delayed processing of a
claim and thereby postponed, counteracted, or strove against the payment of
compensation.

b. ORS 656.382(2) (award of fees to claimant for successfully


defending workers' compensation award)

Reynolds v. Hydro Tech Inc., 182 Or App 488, 49 P3d 827 (2002).

The claimant successfully had defended SAIF's attempt to reduce the


claimant's benefits and sought review of the Workers' Compensation Board's (WCB)
denial of insurer-paid attorney fees under ORS 656.382(2). Under that statute, if an
insurer or employer initiates a request for a hearing and the ALJ determines that the
compensation awarded should not be disallowed or reduced, the ALJ is authorized to
award insurance-paid attorney fees. The WCB determined that SAIF's payment of
benefits through its claim processing obligation was not an award of compensation,
which is a more formal determination of entitlement. The Court of Appeals agreed,
determining that payment of benefits and award of compensation are distinct events.
The court held that "because claimant's temporary compensation had not been awarded
by a notice of closure, administrative or judicial determination, or other affirmative
determination of entitlement, ORS 656.382(2) does not provide for insurer-paid attorney
fees for services provided at the hearing level." 182 Or App at 493.

c. ORS 656.386(1) (recovery of attorney fees in appeal on denied

claim)

SAIF Corp. v. Wart, 192 Or App 505, 87 P3d 1138 (2004).

The Workers' Compensation Board (board) entered an order that awarded


claimant attorney fees under ORS 656.386(1) for prevailing over a noncooperation
denial. Upon review, the Court of Appeals affirmed, concluding that employer's denial of
the workers' compensation claim was a "denied claim" under ORS 656.386(1)(b)(A) and
that, because claimant succeeded in overturning the denial in a hearing before an
Administrative Law Judge, claimant finally prevailed on a denied claim and was entitled
to attorney fees. The court held that the award was proper despite the fact that the

15
board cited time devoted to the case as a factor in its award, but made no finding as to
the actual time that the attorney expended on the issue, reasoning that the board's rule
concerning attorney fees did not expressly require that the board make a finding about
the time an attorney devoted to a case.

10. Prevailing party under former ORS 659.121(1) (discrimination claims)

Siverly v. Young & Morgan Trucking Co., 172 Or App 282, 17 P3d 579 (2001).

After a trial, the jury found that the defendant had discriminated against the
plaintiff but awarded no back pay to the plaintiff. The trial court concluded that the
plaintiff had prevailed on her discrimination claim and awarded attorney fees under
former ORS 659.121(1) (1999). The Court of Appeals reversed. The court held that a
plaintiff is a prevailing party for attorney fees purposes if they succeed on a significant
issue that results in the plaintiff obtaining some benefit sought in bringing the suit. Here,
the plaintiff did not bring a declaratory action and had not obtained any of the relief she
sought, thus, the court concluded that the plaintiff was not the prevailing party for the
purposes of former ORS 659.121(1) (1999).

Note: ORS 659.121 was repealed by the 2001 Legislature. However, a similar statute,
ORS 659A.885 (allowing an award of attorney fees in a civil action for unlawful
discrimination), was enacted and applies to complaints filed on or after January 1, 2002.
Siverly may be helpful in interpreting that statute. The 2003 Legislative Assembly made
numerous changes to ORS 659A.885. Or Laws 2003, ch 521, § 5; ch 522, §§ 1, 2; ch
572, § 21; ch 603, §7; ch 637, § 18. However, the amendments do not directly affect the
section of ORS 659A.885 pertaining to attorney fees. Primarily, the statutory changes
relate to the effective dates of the amendments and designate additional statutes to
which ORS 659A.885 pertains.

11. Sanctions

McCarthy v. Oregon Freeze Dry, Inc., 334 Or 77, 46 P3d 721 (2002).

On remand from the Supreme Court, the Court of Appeals awarded


attorney fees on appeal to the defendant because it determined that the plaintiff's
arguments were frivolous, unreasonable, or without foundation. The Court of Appeals
had concluded that the plaintiff's argument on appeal that the trial court abused its
discretion in refusing to set aside the judgment of dismissal under ORCP 71 B lacked
any legal basis.

The Supreme Court reversed. The court stated that, "the issue before the
court is whether every argument made in support of plaintiff's appeal was not well
founded in fact or was not warranted either by existing law or by a reasonable argument

16
for the extension, modification, or reversal of existing law." 334 Or at 87. The court
concluded that the plaintiff's argument did not lack legal basis because there was at least
some support in the existing law or a reasonable argument for extension of existing law.

Young and Young, 172 Or App 108, 17 P3d 577 (2001).

The trial court had entered judgment for attorney fees to the father as a
remedial sanction in a contempt proceeding. On appeal, the mother argued that the trial
court erred in awarding fees without first allowing the 14 days to expire within which she
may object to the father's statement of fees under ORCP 68. The Court of Appeals held
that the requirements of ORCP 68 apply when attorney fees are imposed as a remedial
sanction in a contempt proceeding and that those requirements are mandatory. The
court determined that a trial court's failure to follow the procedure in ORCP 68 affects a
substantial right of the party denied appropriate process and, thus, a court may not
disregard the procedural defect under ORCP 12 B.

Sinio v. Bledsoe, 172 Or App 254, 18 P3d 410, rev den, 332 Or 305 (2001).

The trial court imposed attorney fees as a sanction on an attorney for filing
an affidavit of a client that was designed to make the court think that client had no or little
assets when in fact she had $60,000 to $70,000 in assets. The Court of Appeals stated
that "if an attorney or party does not reasonably believe that a factual assertion is or will
be supported by the evidence, the attorney has made a false certification for which the
trial court may impose sanctions." 172 Or App at 259. The court also noted that, if the
statement is ambiguous, then what the speaker intended to say is a question of fact for
the trial court. Here, the trial court identified a factual basis for resolving the ambiguity in
the client's affidavit, thus, the Court of Appeals concluded that trial court did not abuse its
discretion in awarding attorney fees. For a discussion of the Bar discipline
consequences of a lawyer's misrepresentation by nondisclosure to a court, see In re
Huffman, 331 Or 209, 217, 13 P3d 994 (2000).

a. ORS 18.235 (motion to satisfy money award)

The 2003 Legislative Assembly enacted ORS 18.235(8), which states:

"If the court finds that the judgment creditor willfully failed to provide a
satisfaction document under ORS 18.225, the court may render a
supplemental judgment awarding reasonable attorney fees to the person
making the motion. The supplemental judgment may provide that the
demanding party may satisfy the judgment by paying such amounts the
court determines to be necessary to satisfy the judgment less that sum of
money the court awards as attorney fees."

17
Galfano v. KTVL-TV Freedom Broadcasting of Oregon, 196 Or App 425, 102
P3d 766 (2004).

The Court of Appeals noted that “the legislature enacted a new statute,
ORS 18.235, that expressly provides that a trial court has authority to render a
supplemental judgment awarding attorney fees for a judgment creditor's willful failure to
comply with ORS 18.225.” Id. At 434.

b. ORS 20.105 (court may award attorney fees where party


disobeys court order or asserts claim, defense or ground for appeal
without objectively reasonable basis).

Dimeo v. Gesik, 195 Or App 362, 98 P3d 397 (2004) modified by Dimeo v. Gesik,
197 Or App 560, ___ Pd ___ 2005.

In a suit between a lienholder and bank, lienholder prevailed at trial. The


trial court awarded him attorney fees under ORS 20.105(1) because it determined that
the bank had no objectively reasonable basis for its counterclaim of equitable
subrogation. The Court of Appeals reversed the award of attorney fees, holding that the
bank had an objectively reasonable basis for initially asserting its counterclaim.

On reconsideration, the court agreed with lienholder that a party has a


continuing duty to evaluate its position throughout the course of litigation. The court
noted that “[i]t is possible that a claim that was objectively reasonable when asserted
may become unreasonable when viewed in light of additional evidence or changes in the
law.” It concluded, however, that “the bank's position never became objectively
unreasonable because it reasonably believed that an equitable subrogation claim could
be based on the escrow agent's assurances that the manager's standard instructions
were carried out.” The court adhered to the former opinion as modified.

c. ORS 20.190(3) (prevailing party fees)

McLemore v. Schiedler, 192 Or App 358, 85 P3d 344 (2004).

McLemore sought post-conviction relief. The trial court denied the petition
and, pursuant to ORS 20.190, awarded the state an $85 prevailing party fee. Petitioner

18
appealed from the award of that fee, contending that prevailing party fees assessed
pursuant to ORS 20. are subject to the limitations set forth in ORS 151.505(4), under
which the court must find that "the person is or may be able to pay the costs." The Court
of Appeals observed that

"Petitioner's reliance on ORS 151.505(4) is misplaced. The order at issue


requires petitioner to pay a prevailing party fee, not the cost of court-appointed
counsel or costs related to the appointment of counsel.

"* * * * *

"Petitioner has not identified, nor have we found, any statute or other legal
authority that requires the trial court in a civil case to consider a party's ability to
pay in imposing a prevailing party fee pursuant to ORS 20.190."

192 Or App at 360.

Shumake v. Foshee, 197 Or App 255, 105 P3d 919 (2005).

The trial court entered judgment for plaintiff injured in an automobile


accident against insured, and awarded plaintiff an enhanced prevailing party fee, based
on finding that the insurer engaged in bad faith and deceitful tactics, including use of a
computer method of handling injury claims. The Court of Appeals reversed and
remanded because the trial court exercised its discretion under ORS 20.190(3) based, in
part, on a consideration the Court of Appeals deemed to be irrelevant, namely, the
computerized method of handling injury claims.

B. Contract

1. "Prevailing party" under former ORS 20.096 (1999).

Wilkes v. Zurlinden, 328 Or 626, 984 P2d 261 (1999).

The plaintiff filed an action for breach of contract seeking damages and
attorney fees. The defendants filed a counterclaim for breach of contract and also
sought damages and attorney fees. The trial court found in favor of the defendants on
the plaintiff's claim and in favor of the plaintiff on the defendants' counterclaim. The trial
court designated the defendants as the prevailing party and awarded them attorney fees
under the attorney fee provision of the parties' contract. The Court of Appeals reversed,

19
concluding that, because neither party succeeded on its claim or counterclaim, neither
party was the prevailing party under former ORS 20.096(5) (1999).

The Supreme Court held that both parties are prevailing parties. Generally,
when there are both claims and counterclaims on the same contract and both parties are
awarded damages, the court nets the damage awards to determine the party in whose
favor final judgment is rendered. Also, under American Petrofina v. D & L Oil Supply,
283 Or 183, 583 P2d 521 (1978), if a plaintiff takes nothing on a claim the defendant is
the prevailing party under former ORS 20.096(5) (1999) and is entitled to attorney fees.
In this case, however, there was both a claim and a counterclaim on the contract and
both parties were successful in defeating the other party's claim for relief. In such a
circumstance, the court held that each party was the prevailing party on the claim on
which they successfully defended.

Berger Farms v. First Interstate Bank, 330 Or 16, 995 P2d 1159 (2000).

The plaintiffs brought an action against defendants in circuit court alleging


seven claims. The defendants moved to stay the proceeding pending arbitration, as
required by the mandatory arbitration provision in the parties' contracts. The trial court
denied the motion. On appeal, the Court of Appeals determined that, with exception of
the negligent misrepresentation claim and part of the breach of fiduciary duty claim, the
plaintiffs' claims were subject to arbitration. That court then awarded the defendants
attorney fees on appeal under the "prevailing party" provision in the parties' contracts.

The Supreme Court determined that the Court of Appeals was without
authority to award attorney fees as to the claims subject to arbitration, because "[t]he
effect of that decision was to halt the court proceedings on the arbitrable claims, thereby
suspending the court's involvement in those claims." 330 Or at 21. The court also
concluded that the Court of Appeals could not award attorney fees on the nonarbitrable
claims, because the defendant was not the "prevailing party" as to those claims under
former ORS 20.096(5) (1999) and former ORS 20.015 (1999).

Conifer Ridge Homeowners Assn. v. Hayworth, 176 Or App 603, 32 P3d 929 (2001).

The plaintiffs obtained a preliminary injunction stopping the defendants'


house construction. However, the plaintiffs did not post the required bond, so the
preliminary injunction never went into effect. The parties then agreed on a new set of
construction plans, and the defendants moved to dismiss the action as moot. The
plaintiffs requested attorney fees based on a provision in the land sale agreement. The
trial court granted defendants' motion to dismiss and determined that there was no
prevailing party for attorney fees purposes. The Court of Appeals affirmed, stating that
"[w]ithout an effective order granting plaintiff the injunctive relief it sought, plaintiff could
not be a prevailing party under [former] ORS 20.096(5) [(1999)]." 176 Or App at 608.

20
The court also rejected plaintiffs' proposed "catalyst theory," by which the plaintiff is the
"prevailing party" if the plaintiff's suit was a catalyst for the defendant's voluntary
compliance with the plaintiff's requested relief. The court stated that Oregon has not
adopted that theory, nor did the plaintiffs provide evidence that the defendants changed
their construction plans as a result of plaintiffs' claim.

CMS Sheep Co., Inc. v. Russell, 179 Or App 172, 39 P3d 262, rev den, 334 Or 260,
47 P3d 486 (2002).

The lessor brought a claim for breach of contract and timber trespass
against the lessee and the purchaser of lessee's leasehold interest. The trial court
entered judgment for the lessor on its timber trespass claim against the purchaser
awarded the lessor attorney fees against the purchaser. The lessee and the purchaser
appealed, and the lessor cross-appealed. The lessee argued that it should have been
awarded attorney fees because he prevailed on the contract claim. The Court of
Appeals held that the lessee should have been awarded attorney fees. The court
determined, based on its earlier precedent, that the prevailing party, for the purpose of a
contract attorney fee provision, is the party who prevailed on the claims that are subject
to the fee provision and the outcome of the claims not based on the contract are
irrelevant to that determination.

Petersen v. Fielder, 185 Or App 164, 58 P3d 841 (2002).

The plaintiffs filed an action seeking payment of a promissory note. The


case went to court-annexed arbitration, and the arbitrator ruled in favor of the plaintiffs on
their quantum meruit claim, but rejected the claim based on the note. The arbitrator also
ruled in favor of the defendants on their quantum meruit claim. The plaintiffs received
the net award. However, the arbitrator determined neither party was entitled to attorney
fees. The Court of Appeals determined that, under American Petrofina v. D & L Oil
Supply, 283 Or 183, 583 P2d 521 (1978), the plaintiffs were entitled to attorney fees as
the prevailing party under former ORS 20.096 (1999), because they had received the net
award on their quantum meruit claim. The court stated that, "under the Supreme Court's
interpretation of ORS 20.096, the pertinent inquiry is whether the plaintiff has recovered
damages 'on account of the transaction,' not merely whether the plaintiff has recovered
under the contract." 185 Or App at 172.

21
2. ORS 20.096(1) (reciprocity of attorney fees and costs in
proceedings to enforce contract)

Care Medical Equipment, Inc. v. Baldwin, 331 Or 413, 15 P3d 561 (2000).

The plaintiff-employer had sued the defendant-employee for breach of a


noncompetition agreement. The trial court ruled that the noncompetition provision was
void and unenforceable, dismissed the plaintiff's claims, and awarded the defendant
attorney fees. The Court of Appeals reversed the award of attorney fees. The Supreme
Court affirmed, stating that '[a] contract provision allowing for attorney fees is a
necessary predicate to the application of ORS 20.096(1)." Here, the defendant had
successfully asserted that the agreement was void, thus the court held that the
defendant had rendered void the provision of the employment contract on which
recovery of attorney fees was dependent.

Autolend, IAP, Inc. v. Auto Depot, Inc., 170 Or App 135, 11 P3d 693 (2000), rev den,
332 Or 240, 28 P3d 1175 (2001).

The defendant appealed the trial court's denial of attorney fees under a
contract provision. The defendant argued that, because the jury dismissed the claim as
to it, it was the prevailing party under former ORS 20.096(5) (1999). The Court of
Appeals held that, because the defendant had established that it was not a party to the
contract, it could not obtain attorney fees under that contract. The court noted that, as a
general rule, a party that successfully rescinds a contract may not recover attorney fees
based on that disavowed contract. The court also rejected the defendant's argument
that it was entitled to attorney fees under the reciprocal recovery provision of ORS
20.096(1). The court stated that the reciprocal recovery provision creates reciprocal
rights among parties under a contract. Here, there is no contract between the parties
that includes an attorney fee provision, thus, the court affirmed the denial of attorney
fees.

Desmarais v. The Stayers, Inc., 182 Or App 338, 51 P3d 1 (2002).

The defendant appealed the trial court's denial of attorney fees following a
successful defense of a commercial forcible entry and detainer (FED) action. The Court
of Appeals determined that the plaintiff's FED action depended on enforcing a lease
provision. Because the defendant prevailed in an action to enforce the lease, the court
concluded that the defendant was entitled to recover attorney fees under the governing
lease provision. The court stated that it was beside the point that the defendant used a
non-lease based defense, because "[w]here the plaintiff -- if successful-- would have
been entitled to recover attorney fees based on a contractual right, a successful

22
defendant is entitled to attorney fees, unless the judgment rescinded or otherwise
nullified the contract." 182 Or App at 345.

C. Equitable Authority

Deras v. Myers, 272 Or 47, 535 P2d 541 (1975).

A court will not award attorney fees to the prevailing party unless that
award is authorized by statute or contract. However, a court sitting in equity has the
inherent power to award fees. Often that power "has been exercised in cases where the
plaintiff brings suit in a representative capacity and succeeds in protecting the rights of
others as much as his own."

Armatta v. Kitzhaber, 327 Or 250, 959 P2d 49 (1998).

The trial court entered a supplemental judgment awarding the plaintiffs


attorney fees because they prevailed on one of their substantive challenges to Ballot
Measure 40 (1996) (crime victims rights). The Supreme Court affirmed the award of
attorney fees. The court held that there are three prerequisites before an equitable
attorney fee award is appropriate: (1) the proceeding must be one in equity; (2) the
requesting party must have prevailed; and (3) "the requesting party 'must have been
seeking to vindicat[e] an important constitutional right applying to all citizens without gain
peculiar to himself.'" 327 Or at 287.

Here, the plaintiffs were not vindicating an individualized, peculiar, or


pecuniary interest. Rather, plaintiffs "sought to benefit all Oregonians, because they
sought to defend the integrity of the amendment and initiative processes." 327 Or 289.
Thus, the court affirmed the award of attorney fees.

Leo v. Keisling, 329 Or 273, 986 P2d 562 (1999).

The plaintiffs were successful on the merits, in that the Supreme Court held
that Secretary of State's action in qualifying the challenged measure was not authorized
by law. The plaintiffs then sought attorney fees under the court's equitable power.

In arguing the case, the plaintiffs had confined their briefing and argument
to their constitutional challenge. However, the court decided the case on a sub-
constitutional basis. Because the plaintiffs focused solely on the constitutional issue, the

23
court stated that the plaintiffs' work did not meaningfully contribute to the court's ultimate
decision of the case. Thus, the court concluded that "it would not be equitable, despite
plaintiffs' ultimate success, to shift all or part of the cost of plaintiffs' representation to
defendants." 329 Or at 281. The court denied the plaintiffs' petition for attorney fees.

Lehman v. Bradbury, 334 Or 579, 54 P3d 591 (2002).

In the underlying action, the plaintiffs challenged the constitutional validity


of Ballot Measure 3 (1992) (term limits). The plaintiffs prevailed on the merits and
sought appellate attorney fees against defendant and intervenors.

The Supreme Court first noted that, because the defendant did not file
objections to the request for attorney fees, under ORAP 13.10(9), the court generally
would award the requested amount. However, the court stated that "because of the
extraordinary nature of the power that we exercise in Deras-type cases, we believe that
we should examine plaintiffs' petition for fees sufficiently to satisfy ourselves that there is
at least a prima facie justification for exercising our equitable power before we exercise
our 'authority' as that term is used in Rule 13.10(9)." 334 Or at 582-83. The court
concluded that the plaintiffs made that showing and awarded attorney fees against
defendant.

As to fees against the intervenor, the court stated that "when the source of
this court's authority to award attorney fees flows not from a statute, but from the court's
inherent power as a court of equity, the court should look to the equitable principles that
support such awards to determine against which party the court should award attorney
fees." Id. at 584. The court concluded that, when it exercises its equitable authority to
award attorney fees, "it does so against the group that ultimately benefits from the
prevailing plaintiffs' efforts--usually, as in this case, the people of Oregon." Id. at 585.
Here, the court stated, the intervenors were not a separate group that received a benefit,
other than the benefit they received equally with all Oregonians. Thus, the court
concluded that it would not be equitable to require the intervenors to pay attorney fees.

Tanner v. OHSU, 161 Or App 129, 980 P2d 186 (1999).

The plaintiffs won their underlying claim that denying them health insurance
benefits based on sexual orientation violated Article I, section 20, of the Oregon
Constitution. The plaintiffs then sought attorney fees under the court's equitable power.

The Court of Appeals first stated that, under Armatta, three conditions first
must be satisfied: "(1) the proceeding must be one in equity; (2) the requesting party
must have prevailed; and (3) the requesting party 'must have been seeking to vindicat[e]
an important constitutional right applying to all citizens without gain peculiar to himself.'"
161 Or App at 132-33. The court clarified the that the third condition "does not mean

24
that the requesting party cannot obtain a pecuniary benefit, but rather that the party
cannot obtain a pecuniary benefit peculiar to himself or herself." 161 Or App at 133.
Further, the court stated that "[h]ow small or large the directly benefited class may be is
not the point * * *. What controls is the extent to which the constitutional issue resolved
is a matter of primary concern to the public at large." Id.

Here, the plaintiffs vindicated the civil rights of a group of citizens who have
been subject to disparate treatment in employment on the basis of a suspect
classification, which, the court concluded, is a matter of primary concern to all
Oregonians. Thus, the court awarded the plaintiffs attorney fees.

Newport Church of the Nazarene v. Hensley, 161 Or App 12, 983 P2d 1072 (1999),
aff'd in part, rev'd in part on other grounds, 335 Or 1 (2002).

The Court of Appeals held that the Employment Department, as an


administrative agency, derives its powers from the statutes creating it and thus it does
not have inherent equitable authority to award attorney fees. The court concluded that,
because there was no statute authorizing attorney fees, the Employment Appeals Board
correctly denied the request.

Beal v. City of Gresham, 166 Or App 528, 998 P2d 237 (2000).

The plaintiffs prevailed in the trial court on its claim that the city had passed
a resolution in violation of its city charter. The trial court awarded the plaintiffs attorney
fees based on its equitable power.

The Court of Appeals reversed the award of attorney fees because the
plaintiffs were not seeking to prevent infringement of individual liberties guaranteed by
the constitution, to defend the initiative process, or to advance a constitutional right to be
free from discrimination. The court concluded that "[e]ven if the city's charter is a
'constitution' for the purpose of a fee award under Deras, [the] plaintiff's action in this
case does not vindicate the kind of important constitutional right that previously has
warranted an award of attorney fees." 166 Or App at 539.

Leppanen v. Lane Transit District, 181 Or App 136, 45 P3d 501 (2002).

The plaintiff prevailed on his claim that an LTD ordinance prohibiting


solicitation of initiative petition signatures in the vicinity of a bus platform violated Article
I, section 8, of the Oregon Constitution. The trial court awarded the plaintiff attorney fees
under its equitable authority. The Court of Appeals affirmed the award of attorney fees
because the plaintiff did not stand to gain individualized, peculiar, or pecuniary gain from

25
the judgment. Rather, the court concluded, the plaintiff brought the action to vindicate an
important constitutional right.

Swett v. Bradbury, 335 Or 378, 67 P3d 391 (2003).

Plaintiffs prevailed in an action under the Declaratory Judgments Act


challenging the constitutionality of an initiative that had been approved by the voters, and
petitioned the court for an award of attorney fees. The state opposed the petition,
principally on two grounds. First, the state argued that the court's decisions in Deras and
Armatta were "ill-considered" as a matter of policy and that the matter should have been
left to the legislature. Second, the state argued that the plaintiffs did not qualify for an
award of fees under Deras because their declaratory judgment action actually was legal
in nature. The court disposed of the state's first argument summarily by noting that the
state was “at liberty to take its policy argument to the political branches of government."
335 Or at 385. The court rejected the state's second argument by explaining that "the
'proceeding in equity' criterion is of limited utility in determining whether to award an
attorney fee and is of no utility at all if it is read to require a specific prayer for, or the
actual award of, equitable relief." Id. at 389. Particularly when the defendant to a
declaratory judgment action is the state, the court pointed out, a request for injunctive
relief would be "pointless," as it must be assumed that responsible state officials will
honor the court's declaration without the necessity of an injunction. Id. The Supreme
Court held that plaintiffs were entitled to an award of attorney fees.

TVKO v. Howland, 335 Or 527, 73 P3d 905 (2003).

The Supreme Court affirmed the Tax Court’s denial of a telecaster’s motion
for attorney fees and costs, holding that the state boxing and wrestling commission acted
with a reasonable basis in fact or in law in levying a gross-receipts tax on the telecaster,
because the state had relied on the advice of the attorney general that the tax statute
was constitutional. As a result, the telecaster was not entitled to an award of attorney
fees and costs under the statute providing for award of costs to the party that prevails
against a state agency, even though statute imposing the tax was found unconstitutional
as a result of the telecaster's challenge.

Bobo v. Kitzhaber, 194 Or App 419, 95 P3d 731 (2004), reversed 338 Or 111
(February 25, 2005).

Taxpayers who prevailed on appeal in an action for declaratory relief


seeking to restore more than $113 million to the 2001 "kicker" tax refund were not
entitled to Deras attorney fees for actions vindicating constitutional rights, because the
court did not reach the constitutional claim. The plaintiffs had cited Armatta v. Kitzhaber,
327 Or 250, 287, 959 P 2d 49 (1998) for the proposition that the prevailing party need
only to have filed an action "seeking to vindicate an important constitutional right[.]" The

26
Court of Appeals did not read Armatta so broadly, concluding that, “[a]lthough Armatta
and other cases refer to ‘seeking to vindicate’ important constitutional rights, they award
fees on the ground that the party actually vindicated important constitutional rights.” 194
Or App at 421. On review, the Oregon Supreme Court held that the legislature complied
with the Oregon Constitution when it enacted the underlying statute (SB 963), and
reversed the Court of Appeals' contrary determination.

II. Procedure

A. ORCP 68 (allowance and taxation of attorney fees and costs and


disbursements)

ORCP 68 provides:

"A Definitions. As used in this rule:

"A(1) Attorney fees. 'Attorney fees' are the reasonable value of legal services related
to the prosecution or defense of an action.

"A(2) Costs and disbursements. 'Costs and disbursements' are reasonable and
necessary expenses incurred in the prosecution or defense of an action other than for
legal services, and include the fees of officers and witnesses; the expense of publication
of summonses or notices, and the postage where the same are served by mail; any fee
charged by the Department of Transportation for providing address information
concerning a party served with summons pursuant to subparagraph D(4)(a)(i) of Rule 7;
the compensation of referees; the expense of copying of any public record, book, or
document admitted into evidence at trial; recordation of any document where recordation
is required to give notice of the creation, modification or termination of an interest in real
property; a reasonable sum paid a person for executing any bond, recognizance,
undertaking, stipulation, or other obligation therein; and any other expense specifically
allowed by agreement, by these rules, or by other rule or statute. The court, acting in its
sole discretion, may allow as costs reasonable expenses incurred by a party for
interpreter services. The expense of taking depositions shall not be allowed, even though
the depositions are used at trial, except as otherwise provided by rule or statute.

"B Allowance of costs and disbursements. In any action, costs and disbursements
shall be allowed to the prevailing party, unless these rules or other rule or statute direct
that in the particular case costs and disbursements shall not be allowed to the prevailing
party or shall be allowed to some other party, or unless the court otherwise directs. If,
under a special provision of these rules or any other rule or statute, a party has a right to
recover costs, such party shall also have a right to recover disbursements.

27
"C Award of and entry of judgment for attorney fees and costs and
disbursements.
"C(1) Application of this section to award of attorney fees. Notwithstanding Rule
1 A and the procedure provided in any rule or statute permitting recovery of attorney fees
in a particular case, this section governs the pleading, proof, and award of attorney fees
in all cases, regardless of the source of the right to recovery of such fees, except where:

"C(1)(a) Such items are claimed as damages arising prior to the action; or

"C(1)(b) Such items are granted by order, rather than entered as part of a judgment.

"C(2)(a) Alleging right to attorney fees. A party seeking attorney fees shall allege
the facts, statute, or rule which provides a basis for the award of such fees in a pleading
filed by that party. Attorney fees may be sought before the substantive right to recover
such fees accrues. No attorney fees shall be awarded unless a right to recover such fee
is alleged as provided in this subsection.

"C(2)(b) If a party does not file a pleading and seeks judgment or dismissal by
motion, a right to attorney fees shall be alleged in such motion, in similar form to the
allegations required in a pleading.

"C(2)(c) A party shall not be required to allege a right to a specific amount of attorney
fees. An allegation that a party is entitled to “reasonable attorney fees” is sufficient.

"C(2)(d) Any allegation of a right to attorney fees in a pleading or motion shall be


deemed denied and no responsive pleading shall be necessary. The opposing party may
make a motion to strike the allegation or to make the allegation more definite and certain.
Any objections to the form or specificity of allegation of the facts, statute, or rule which
provides a basis for the award of fees shall be waived if not alleged prior to trial or
hearing.

"C(3) Proof. The items of attorney fees and costs and disbursements shall be
submitted in the manner provided by subsection (4) of this section, without proof being
offered during the trial.

"C(4) Procedure for seeking attorney fees or costs and disbursements. The
procedure for seeking attorney fees or costs and disbursements shall be as follows:

"C(4)(a) Filing and serving statement of attorney fees and costs and
disbursements. A party seeking attorney fees or costs and disbursements shall, not
later than 14 days after entry of judgment pursuant to Rule 67:

"C(4)(a)(i) File with the court a signed and detailed statement of the amount of
attorney fees or costs and disbursements, together with proof of service, if any, in
accordance with Rule 9 C; and

28
"C(4)(a)(ii) Serve, in accordance with Rule 9 B, a copy of the statement on all parties
who are not in default for failure to appear.

"C(4)(b) Objections. A party may object to a statement seeking attorney fees or


costs and disbursements or any part thereof by written objections to the statement. The
objections shall be served within 14 days after service on the objecting party of a copy of
the statement. The objections shall be specific and may be founded in law or in fact and
shall be deemed controverted without further pleading. Statements and objections may
be amended in accordance with Rule 23.

"C(4)(c) Hearing on objections. C(4)(c)(i) If objections are filed in accordance


with paragraph C(4)(b) of this rule, the court, without a jury, shall hear and determine all
issues of law and fact raised by the statement of attorney fees or costs and
disbursements and by the objections. The parties shall be given a reasonable
opportunity to present affidavits, declarations and other evidence relevant to any factual
issue, including any factors that ORS 20.075 or any other statute or rule requires or
permits the court to consider in awarding or denying attorney fees or costs and
disbursements.

"C(4)(c)(ii) The court shall deny or award in whole or in part the amounts sought as
attorney fees or costs and disbursements.

"C(4)(d) No timely objections. If objections are not timely filed the court may award
attorney fees or costs and disbursements sought in the statement.

"C(4)(e) Findings and conclusions. On the request of a party, the court shall make
special findings of fact and state its conclusions of law on the record regarding the issues
material to the award or denial of attorney fees. A party shall make a request pursuant to
this paragraph by including a request for findings and conclusions in the title of the
statement of attorney fees or costs and disbursements or objections filed pursuant to
paragraph (a) or (b) of this subsection. In the absence of a request under this paragraph,
the court may make either general or special findings of fact and may state its
conclusions of law regarding attorney fees.

"C(5) Judgment concerning attorney fees or costs and disbursements.

"C(5)(a) As part of judgment. When all issues regarding attorney fees or costs and
disbursements have been determined before a judgment pursuant to Rule 67 is entered,
the court shall include any award or denial of attorney fees or costs and disbursements
in that judgment.

"C(5)(b) By supplemental judgment; notice. When any issue regarding attorney


fees or costs and disbursements has not been determined before a judgment pursuant to
Rule 67 is entered, any award or denial of attorney fees or costs and disbursements
shall be made by a separate supplemental judgment. The supplemental judgment shall

29
be filed and entered and notice shall be given to the parties in the same manner as
provided in Rule 70 B(1).

"C(6) Avoidance of multiple collection of attorney fees and costs and


disbursements.

"C(6)(a) Separate judgments for separate claims. If more than one judgment is
entered in an action, the court shall take such steps as necessary to avoid the multiple
taxation of the same attorney fees and costs and disbursements in those judgments."

"C(6)(b) Separate judgments for the same claim. If more than one judgment is
entered for the same claim (where separate actions are brought for the same claim
against several parties who might have been joined as parties in the same action, or
where pursuant to Rule 67 B separate limited judgments are entered against several
parties for the same claim), attorney fees and costs and disbursements may be entered
in each judgment as provided in this rule, but satisfaction of one judgment bars recovery
of attorney fees or costs and disbursements included in all other judgments.

Note: ORCP 70 was repealed by section 580, chapter 576, Oregon Laws 2003. The
text of ORCP 68 C was not amended by enactment of the Legislative Assembly to reflect
the repeal. Editorial adjustment of ORCP 68 C for the repeal of ORCP 70 has not been
made.

McCarthy v. Oregon Freeze Dry, Inc., 327 Or 84, 957 P2d 1200 (1997), clarified on
recons, 327 Or 185, 957 P2d 1200 (1998).

In McCarthy, the Supreme Court held that ORCP 68 governs the award of
attorney fees in the circuit courts, not the appellate courts.

Mulier v. Johnson, 332 Or 344, 29 P3d 1104 (2001).

The trial court had awarded attorney fees to the defendant-University after
it had granted the University's motion for summary judgment on all of the plaintiff's
claims. The University's motion for summary judgment had not alleged a right to
attorney fees as required by ORCP 68 C(2)(b). However, in the memorandum of law
supporting the motion, the University had alleged a right to recover attorney fees on one
of the plaintiff's claims. After the trial court granted summary judgment, the University
moved for attorney fees. Before expiration of 14 days allowed for the opposing party to
file an objection and before the plaintiff in fact filed an objection, the trial court awarded
the defendant the full amount of fees requested. The Court of Appeals vacated and
remanded attorney fee award.

30
The Supreme Court addressed "whether the University's failure to allege its
entitlement to attorney fees in the motion for summary judgment was an 'error' or 'defect'
as those terms are used in ORCP 12 B." 332 Or at 349. ORCP 12 B directs a court to
disregard an error or defect in pleadings or proceedings, so long as that error does not
affect the substantial rights of the adverse party. However, ORCP 68 C(2)(b) states that
a party shall allege attorney fees in such motion similar to an allegation in a pleading.
The Supreme Court held that "[a] complete failure to allege the right to attorney fees in a
motion under ORCP 68 C(2)(b) does not demonstrate an attempt to comply with the
requirements of that rule." 332 Or at 350. The court concluded that the University's
complete failure to allege or attempt to allege a right to attorney fees in its motion as
required by ORCP 68 C(2)(b) is not the type of error or defect that the court could
disregard, because the University did not demonstrate an attempt to comply with the
requirements of that rule. Thus, the court determined that the trial court erred in
awarding attorney fees.

Young and Young, 172 Or App 108, 17 P3d 577 (2001).

The trial court had entered judgment for attorney fees to the father as a
remedial sanction in a contempt proceeding. On appeal, the mother argued that the trial
court erred in awarding fees without first allowing the 14 days to expire within which she
may object to the father's statement of fees under ORCP 68. The Court of Appeals held
that the requirements of ORCP 68 apply when attorney fees are imposed as a remedial
sanction in a contempt proceeding and that those requirements are mandatory. The
court determined that a trial court's failure to follow the procedure in ORCP 68 affects a
substantial right of the party denied appropriate process and, thus, a court may not
disregard the procedural defect under ORCP 12 B.

Petersen v. Fielder, 170 Or App 305, 13 P3d 114 (2000), on appeal after remand,
185 Or App 164, 58 P3d 841 (2002).

The trial court had entered judgment incorporating the arbitrator's award of
damages and costs to the plaintiff and specified that the plaintiff's attorney fees would be
determined subsequently. After the plaintiff filed the required ORCP 68 C statement, the
court entered a supplemental judgment awarding attorney fees. The defendant
appealed from the supplemental judgment.

The Court of Appeals concluded that, under ORCP 68 C(5)(b), an award


must resolve all issues regarding attorney fees, including the specific amount, before that
award becomes final and appealable. Also, the court stated that any award of costs or
disbursements must be included with any award of attorney fees in a single judgment,
and "an award of either costs and disbursements or attorney fees is not completed until
all issues pertaining to each matter have been addressing in one judgment." 170 Or App
at 311. Because the trial court had awarded costs and attorney fees to the plaintiff in

31
separate judgments, the court concluded that the award not final and granted leave for
the trial court to enter a supplemental judgment.

Tibbetts and Meuller, 183 Or App 379, 52 P3d 1067 (2002).

The Court of Appeals vacated and remanded for further proceedings an


award of attorney fees to the wife because the trial court did not hold a hearing and
follow the procedural requirements of ORCP 68. In his objection to the wife's statement
of fees, the husband had directed the trial court's attention to ORCP 68 and specifically
requested a hearing.

Evans v. Brentmar, 186 Or App, 261, 62 P3d 847 ( 2003).

The trial court entered judgment for the defendants, including an award of
attorney fees, based on the plaintiffs' default. The defendants had submitted to the
court, but not to the plaintiffs, a statement of attorney fees. The Court of Appeals held
that the defendants were required to serve the plaintiffs with a statement of attorney fees
because the plaintiffs were in default for failure to plead, not for failure to appear. The
court concluded that, because the defendants did not argue that the plaintiffs were not
prejudiced, the court presumes prejudice because, lacking statutory or actual notice, the
plaintiffs had no opportunity to register their objections as permitted by ORCP 68 C(4)(b).
Thus, the court reversed the award of attorney fees.

Oakleaf Mobile Home Park v. Mancilla, 189 Or App 458, 75 P3d 908 (2003).

In this forcible entry and detainer (FED) action, the trial court refused
tenant’s request, pursuant to ORCP 68, for attorney fees and costs because the landlord
had voluntarily dismissed the suit before the tenant had filed his answer. The Court of
Appeals stated that “for FED actions that must comply with the summons requirements
in ORS 105.113, the first appropriate opportunity for a defendant to allege a right to
attorney fees is the first appearance before the trial court. Because [tenant] filed his
answer at [his first] appearance, he complied with ORCP 68 C.” 189 Or App 463.
Landlord asserted, however, that tenant was not entitled to costs and fees because he
filed his cost bill before final judgment was entered, and under ORCP 68 C(4), a party
seeking costs and attorney fees must file a detailed statement of costs and attorney fees
no later than 14 days after entry of judgment. In response, the Court of Appeals
observed that

“filing a bill for costs and attorney fees before final judgment is entered
does not prejudice the opposing party, if the amount of costs and fees

32
requested remains unchanged following submission of the statement.
Gier's Liquor v. Assn. of Unit Owners, 124 Or App 365, 371, 862 P2d 560
(1993). Additionally, in Way v. Prosch, 163 Or App 437, 442, 988 P2d
422 (1999), we held that the phrase 'no later than' did not prohibit the
filing of a motion for a new trial before the entry of a final judgment and
did not render the motion a nullity. Likewise, the filing of a cost bill before
the entry of a final judgment does not render the cost bill a nullity.”

189 Or App 464. Consequently, the Court of Appeals reversed and remanded the
judgment denying tenant costs and attorney fees.

McKee v. Department of Revenue, TC 4620, 2004 WL 2340265 (2004)

In a dispute over the proper procedure for filing for attorney fees in a
property tax case, the Tax Court explained,

"The requirement for pleading a claim for attorney fees is generally found in the
Oregon Rules of Civil Procedure (ORCP). See ORCP 68. * * * Further, the
ORCPs do not apply to this court. This court has its own rules of procedure. See
TCR Preface. TCR 68 C provides a procedure for pleading, proof, and award of
attorney fees * * *."

Galfano v. KTVL-TV Freedom Broadcasting of Oregon, 196 Or App 425, 102 P3d
766 (2004).

In a civil action for age discrimination, breach of contract, and other claims,
the trial court awarded defendants attorney fees in what the Court of Appeals referred to
as a "supplemental general judgment," based on a dismissal of one of plaintiff's claims.
On appeal, the Court of Appeals addressed the fact that the trial court had failed to use
the new terminology for judgments that was introduced by the 2003 Legislative Assembly
in HB 2646, namely, the "limited judgment," "general judgment," and "supplemental
judgment.” Or Laws 2003, ch 576. The Court of Appeals observed that

“in HB 2646, the legislature amended ORCP 68 C(6)(b) to substitute the


term ‘limited judgments’ for the term ‘final judgments.’ Or. Laws 2003, ch
576, § 262. That amendment suggests that the legislature intended ORCP
68 to be consistent with the new types of judgments and understood the
references in ORCP 68 C(5)(b) to a ‘supplemental judgment’ for attorney
fees to be consistent with the term ‘supplemental judgment’ as defined in
ORS 18.005(15). In other words, by continuing to authorize a supplemental
judgment for attorney fees under ORCP 68 C(5)(b), the legislature implicitly

33
determined that a request for attorney fees is a claim for purposes of ORS
18.005(4).”

196 Or App at 434-35. The court further noted that

“by definition, a supplemental judgment is a judgment "that affects a


substantial right of a party." ORS 18.005(15). A definition of "right" is
"[s]omething that is due to a person by just claim, legal guarantee, or moral
principle * * *." Black's Law Dictionary 1347 (8th ed. 2004). Of significance
here, ORCP 68 C(2) provides a procedure for alleging a "right" to attorney
fees. Thus, ORCP 68 C(2) contemplates that, if particular circumstances
are satisfied, a party has a " right" to attorney fees. For that reason, we
conclude that the "supplemental general judgment" in this case "affects a
substantial right of a party" as required by ORS 18.005(15).”

196 Or App at 437-38 (footnote omitted).

Weatherspoon v. Allstate Ins. Co., 193 Or App 330, 80 P3d 1277 (2004).

Plaintiff obtained judgment against her insurer and the trial court awarded
plaintiff statutory attorney fees. On appeal, defendant argued, inter alia, that the court
lacked jurisdiction to award the fees. The Court of Appeals held that the plaintiff's failure
to file a statement of attorney fees with the clerk of the court, as is required by ORCP 68
C(4)(a)(i), did not deprive the trial court of subject matter jurisdiction over the request of
such fees. It reasoned that the filing procedure is not essential to due process, because
notice and an opportunity to respond to the fees request arose from other circumstances.
Furthermore, the court determined that the legislature did not intend the rule to be a
jurisdictional pre-requisite to an attorney fees award.

LeBrun v. Cal-Am Properties, Inc., 197 Or App 177 (2005) (petition for review
pending before the Oregon Supreme Court).

Manufactured home park tenants brought action against their landlord for
breach of rental agreement and unlawful entry. Landlord counterclaimed against the first
tenant (Rudnick) for late fees and sued second tenant (LeBrun) in quantum meruit for the
cost of a post, which tenant allegedly had damaged.

The Court of Appeals held that Rudnick could not receive attorney fees on
her successful defense against landlord's claim for late rent payment fees because she
failed to file a fee petition as required by ORCP 68 C(4), which provides that "[a] party
seeking attorney fees or costs and disbursements shall, not later than 14 days after entry
of judgment pursuant to Rule 67 * * * [f]ile with the court a signed and detailed statement
of the amount of attorney fees or costs and disbursements * * * and [s]erve * * * a copy

34
of the statement on all parties * * *." The court found that record indicated that Rudnick
neither filed nor served a fee statement requesting fees for her claim.

The Court of Appeals found that LeBrun had failed to provide any basis to
claim attorney fees in her reply. It observed that under ORCP 68 C(2)(a), "[a] party
seeking attorney fees shall allege the facts, statute, or rule which provides a basis for the
award of such fees in a pleading filed by that party. * * * No attorney fees shall be
awarded unless a right to recover such fee is alleged as provided in this subsection."
The court stated, “Although we have held that, under certain circumstances, it is ‘not
necessary to specify the statutory basis of a request for fees when the facts asserted
would provide a basis for an award of fees,’ Page and Page, 103 Or App 431, 434, 797
P2d 408 (1990), LeBrun alleged no facts that would provide a basis for an award of fees
under ORS 36.425.”

Cramblit v. Diamond B Constructors, 197 Or App 358, 105 P3d 906 (2005).

The trial court granted employer’s motion to dismiss employee’s claim for
unpaid wage penalties and entered judgment. The employer requested fees based on
its status as a prevailing party and under ORS 20.105, representing to the court that
"[w]e pled them from the beginning * * *." The trial court’s judgment, however, provided
for the employer to submit a claim for attorney fees under ORCP 68. The employer
complied and, subsequently, the trial court awarded attorney fees and costs to the
employer, pursuant to ORCP 68, without conducting a hearing as required under ORCP
68 C.

Reversing the trial court, the Court of Appeals held that, under ORCP 68,
the requirement that the party seeking fees state the "facts, statute, or rule" that provides
a basis for a fee award is mandatory, citing Mulier v. Johnson, 332 Or 344, 350, 29 P3d
1104 (2001) (interpreting ORCP 68 C(2)(a) and construing the term "shall" as a
command). The court ruled that “[t]o fulfill that requirement, the party's assertion of facts
must clearly and explicitly indicate a party's entitlement to fees.”

Powell v. Bunn, ___ Or App ___ (March 2, 2005)

B. ORCP 54 E (compromise; effect of acceptance or rejection)

The Council on Court Procedures has promulgated the following

changes to ORCP 54 E for submission to the 2005 Legislative Assembly. Pursuant to

35
ORS 1.735, they will become effective January 1, 2006 unless the Legislative Assembly

by statute modifies the action of the Council. The amended rule is set out with both the

current and amended language. New Language is shown in boldface with underlining,

and language to be deleted is italicized and bracketed.

*****

E(1) Except as provided in ORS 17.065 through 17.085, the party against
whom a claim is asserted may, at any time up to 10 days prior to trial,
serve upon the party asserting the claim an offer to allow judgment to be
given against the party making the offer for the sum, or the property, or to
the effect therein specified.

E(2) If the party asserting the claim accepts the offer, the party asserting
the claim or such party's attorney shall endorse such acceptance thereon,
and file the same with the clerk before trial, and within three days from the
time it was served upon such party asserting the claim; and thereupon
judgment shall be given accordingly, as a stipulated judgment. [Unless
agreed upon otherwise by the parties, costs, disbursements, and attorney
fees shall be entered in addition as part of such judgment as provided in
Rule 68.] If the offer does not state that it includes costs and
disbursements or attorney fees, the party asserting the claim shall
submit any claim for costs and disbursements or attorney fees to the
court as provided in Rule 68.

E(3) If the offer is not accepted and filed within the time prescribed, it shall
be deemed withdrawn, and shall not be given in evidence on the trial; and if
the party asserting the claim fails to obtain a more favorable judgment, the
party asserting the claim shall not recover costs, prevailing party fees,
disbursements, or attorney fees incurred after the date of the offer, but the
party against whom the claim was asserted shall recover of the party
asserting the claim costs and disbursements, not including prevailing party
fees, from the time of the service of the offer.

C. ORS 20.075

Enacted in 1995, and amended in 2001, ORS 20.075 provides factors that

a court must consider in awarding attorney fees. ORS 20.075(1) provides factors that a

36
court shall consider in determining whether to award statutory attorney fees when the

court has discretion to award those fees. ORS 20.075(2) provides factors that a court

shall consider in determining the amount of an award of statutory attorney fees in any

case in which the statute authorizes or requires an award of attorney fees. ORS 20.075

provides:

"(1) A court shall consider the following factors in determining


whether to award attorney fees in any case in which an award of attorney
fees is authorized by statute and in which the court has discretion to decide
whether to award attorney fees:

"(a) The conduct of the parties in the transactions or occurrences


that gave rise to the litigation, including any conduct of a party that was
reckless, willful, malicious, in bad faith or illegal.

"(b) The objective reasonableness of the claims and defenses


asserted by the parties.

"(c) The extent to which an award of an attorney fee in the case


would deter others from asserting good faith claims or defenses in similar
cases.

"(d) The extent to which an award of an attorney fee in the case


would deter others from asserting meritless claims and defenses.

"(e) The objective reasonableness of the parties and the diligence of


the parties and their attorneys during the proceedings.

"(f) The objective reasonableness of the parties and the diligence of


the parties in pursuing settlement of the dispute.

"(g) The a mount that the court has awarded as a prevailing party
fee under ORS 20.190.

"(h) Such other factors as the court may consider appropriate under
the circumstances of the case.

"(2) A court shall consider the factors specified in subsection (1) of


this section in determining the amount of an award of attorney fees in any
case in which an award of attorney fees is authorized or required by

37
statute. In addition, the court shall consider the following factors in
determining the amount of an award of attorney fees in those cases:

"(a) The time and labor required in the proceeding, the novelty and
difficulty of the questions involved in the proceeding and the skill needed to
properly perform the legal services.

"(b) The likelihood, if apparent to the client, that the acceptance of


the particular employment by the attorney would preclude the attorney from
taking other cases.

"(c) The fee customarily charged in the locality for similar legal
services.

"(d) The amount involved in the controversy and the results


obtained.

"(e) The time limitations imposed by the client or the circumstances


of the case.
"(f) The nature and length of the attorney's professional relationship
with the client.

"(g) The experience, reputation and ability of the attorney performing


the services.

"(h) Whether the fee of the attorney is fixed or contingent.

"(3) In any appeal from the award or denial of an attorney fee


subject to this section, the court reviewing the award may not modify the
decision of the court in making or denying an award, or the decision of the
court as to the amount of the award, except upon a finding of an abuse of
discretion.

"(4) Nothing in this section authorizes the award of an attorney fee in


excess of a reasonable attorney fee."

McCarthy v. Oregon Freeze Dry, Inc., 327 Or 84, 957 P2d 1200 (1997), clarified on
recons, 327 Or 185, 957 P2d 1200 (1998).

In McCarthy, the Supreme Court held that ORS 20.075 states criteria that
apply to an award of attorney fees by an appellate as well as a trial court and that those

38
criteria shall be considered "in determining whether and to what extent to award attorney
fees pursuant to statute."

Preble v. Dept. of Rev., 331 Or 599, 19 P3d 335 (2001).

Taxpayers prevailed in Supreme Court on appeal from Tax Court. The


Supreme court awarded costs and denied attorney fees. The court discussed the effect
of ORS 20.075 on previous case law interpreting ORS 305.447(1), which grants the
court discretion to award attorney fees to taxpayers. In Swarens v. Dept. of Rev., 320 Or
669, 674, 890 P2d 1374 (1995), the court had stated that, generally, it will not award
attorney fees when "an agency erroneously but reasonably interprets a statute[.]"
Rather, the court "usually will exercise [its] discretion to award attorney fees to the
taxpayer when the department's interpretation contradicts the clear meaning of a
controlling statute, as disclosed by that statute's text and context or legislative history.'"
Id. The court noted that the factors listed in ORS 20.075 are mandatory and apply to a
discretionary award of attorney fees, including fees awarded by an appellate court.
However, the list of factors is nonexclusive. See ORS 20.075(1)(h) ("Such other factors
as the court may consider appropriate under the circumstances of the case."). The court
concluded that Swarens presents such an additional factor a court will likely consider in
these circumstances. Here, the agency had made a reasonable misinterpretation of the
statute, thus the court denied the request for attorney fees.

State ex rel Aspen Group v. Washington County, 166 Or App 217, 996 P2d 1032

(2000).

The trial court awarded the relator attorney fees against the intervenor.
The Court of Appeals reversed and remanded the attorney fee award because the trial
court had failed to apply ORS 20.075(1). On remand, the trial court again awarded
attorney fees. The trial court had based the award on factors (1)(a) (conduct that gave
rise to the litigation), (c) (extent award would deter good faith claims), and (d) (extent
award would deter meritless claims). The Court of Appeals concluded that

"[a]s a matter of law, (1) the conduct that gave rise to the action was that
of another party, the county; (2) intervenor's defenses were objectively
reasonable, insofar as they contributed to the trial court's modification of
the planning staff's approval conditions that were embodied in the relief
that relator sought; and (3) an award of attorney fees against intervenor
in this case would serve to deter other citizens from participating in good
faith in mandamus actions that are necessitated by the failure of local
governmental authorities to perform their statutory land use
decisionmaking responsibilities."

39
166 Or App at 227. Thus, the Court of Appeals reversed the award of attorney fees
because the trial court's award was not justified under the factors listed in ORS
20.075(1).

Stocker v. Keith, 178 Or App 544, 38 P3d 283 (2002).

The plaintiffs appealed the trial court's decision not to award attorney fees.
The trial court had entered judgment in favor of the plaintiffs for a specific amount on two
of their Residential Landlord Tenant Act (RLTA) claims and on the only asserted
Unlawful Trade Practices Act (UTPA) claim.

The Court of Appeals held that the plaintiffs were the prevailing party for
those claims. The court clarified that the rule from prior case law that, in RLTA cases,
the prevailing party is normally entitled to attorney fees in the absence of unusual
circumstances is merely an additional consideration that the court must take into account
under ORS 20.075(1)(h).

Kovac v. Crooked River Ranch Club and Maintenance Ass'n, 337 Or 162, 93 P3d 69
(2003).

Homeowner, whose application for a permit to operate a business out of


his residence was denied, sued his homeowner association, alleging a state antitrust
violation and interference with business relationship. The trial court granted the
association's motion for summary judgment. The Court of Appeals affirmed, and
subsequently awarded the association attorney fees for the appeal, including fees that
the association's counsel incurred in responding to homeowner's complaints to the
Oregon State Bar.

The Supreme Court modified the award, because, under ORS 9.537(1), a
person is immune from civil liability for filing a complaint to the Oregon State Bar, and
therefore homeowner, was not required to pay attorney fees incurred by the
association's counsel in defending homeowner's bar complaints.

D. Explanatory Findings and Objections

McCarthy v. Oregon Freeze Dry, Inc., 327 Or 84, 957 P2d 1200 (1997), clarified on
recons, 327 Or 185, 957 P2d 1200 (1998).

The defendant petitioned the Court of Appeals for attorney fees on appeal
based on ORS 659.121(1). The plaintiff filed objections. Without making written findings
or providing an explanation, the Court of Appeals awarded the defendant attorney fees in
an amount less than that requested.

40
The Supreme Court held, among other things, that, as a practical matter, a
court must, in its findings, identify the relevant facts and legal criteria on which the court
relies in awarding or denying attorney fees.

On reconsideration, the Supreme Court clarified that holding. The court


stated that the requirement of explanatory findings is based upon the practical
consideration that findings allow the court to conduct meaningful appellate review of an
award or denial of attorney fees. The obligation to make findings extends to facts and
legal criteria that the circumstances of the case require the court to address in making its
decision, that is, the court need not address irrelevant or immaterial facts or legal criteria.
Further, the court stated that "[s]tanding alone, the absences of explanatory findings to
support and award or denial of attorney fees is not a ground for reversal." Rather, an
opposing party's objections are important in this regard. The court stated:

"As a consequence of the court's role in resolving the parties'


disputed claims regarding attorney fees, the objections of a party who
resists a petition for attorney fees play an important role in framing any
issues that are relevant to the court's decision to award or deny attorney
fees. No party will be heard to complain of the absence of a finding by the
court on an issue that the party did not raise in a petition, objection, or reply
under ORAP 13.10(2) and (6). Moreover, the court need address only the
objection or objections that are material to its decision. If the court
concludes that one objection is well taken and precludes an award of
attorney fees, the court need only address that dispositive objection in its
order. The court need not make findings about the validity of other
objections that play no role in its decision."

327 Or at 189.

Dockins v. State Farm Ins. Co., 330 Or 1, 997 P2d 859 (2000).

The petitioners sought attorney fees on appeal under ORS 742.061.


The respondent only challenged the reasonableness of the amount requested.

The Supreme Court held that the factors the court considers in
determining an appropriate attorney fee award are drawn from Disciplinary Rule
(DR) 2-106 of the Code of Professional Responsibility. (The same set of factors
has since been codified in ORS 20.075.) The court also stated that it will consider
the extent to which counsel's written and oral arguments assisted the court in
reaching a decision. The court emphasized the importance of the opponent's
objections:

"In determining a reasonable attorney fee, our analysis largely will


be framed by the opponent's objections to a petitioner's request. We

41
depend on a petitioner's opponent to raise objections to the petitioner's
request with as much particularity as possible and to support those
objections with argument and (where appropriate) documentation that will
assist this court in its efforts."

330 Or at 6. The court also stated that, generally, if an opponent fails to object
timely, it will award the amount requested. ORAP 13.10(9) provides:

"In the absence of timely filed objections to a petition under


this rule, the Supreme Court and the Court of Appeals,
respectively, will allow attorney fees in the amount sought in the
petition, except in cases in which:

"(a) the entity from whom fees are sought was not a
party to the proceeding; or

"(b) when the Supreme Court or the Court of Appeals


is without authority to award fees."

Here, the court determined that the respondent's objections were


unpersuasive and that the petitioner's requested amount was reasonable as supported
by the petitioner's fact statement.

Kahn v. Canfield, 330 Or 10, 998 P2d 651 (2000).

The plaintiffs had prevailed against the defendants both at trial and in the
Court of Appeals. The defendants filed a petition for review in the Supreme Court, and
the plaintiffs filed a 35-page response urging the court to deny review. The court denied
review, and the plaintiffs requested an award of attorney fees based on its response to
the defendants' petition.

The Supreme Court stated that when a request for attorney fees comports
with the requirements of ORAP 13.10(5), the court's inquiry is generally limited to the
objections filed by the opposing party. Here, the defendants filed one objection, that the
amount requested was excessive because the response reflected little new work by
plaintiffs, that is, most of the response was identical to the plaintiff's brief in the Court of
Appeals. Based on that objection, the Supreme Court concluded that the plaintiffs'
lawyers should have been able to produce their response in, at most, 80 hours. The
court reduced the plaintiffs' attorney fees request accordingly.

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Ashley v. Garrison, 162 Or App 585, 986 P2d 654 (1999).

The plaintiff, the prevailing party in a court-mandated arbitration, sought


attorney fees under ORS 20.080. The arbitrator awarded the plaintiff attorney fees in an
amount less than that requested. The plaintiff filed an exception to the attorney fee
award, and the trial court entered an amended award that was less than the amount the
arbitrator awarded.

The Court of Appeals held that, because an award of attorney fees under
ORS 20.080 is mandatory, a trial court need not make findings regarding the decision to
award attorney fees. However, the court stated that "the trial court must describe the
relevant facts and legal criteria it relied on in determining the amount of the attorney
award." 162 Or App at 592. The court determined that the pertinent question is whether
the court's "findings" are susceptible to meaningful review.

Here, the trial court had stated that it reduced the amount of attorney fees
because co-counsel's hourly rate was too high and certain charges were excessive.
However, the court failed to distinguish between those grounds for reduction or state
what the court believed was a reasonable hourly rate or reasonable time to spend on the
case. The court concluded that "because the court's lumping together of those grounds
precludes meaningful review of the fee reduction, we remand to the trial court for findings
and conclusions consistent with McCarthy." 162 Or App at 593.

State ex rel Olson v. Renda, 171 Or App 713, 17 P3d 514 (2000).

The father failed to file objections to the mother's attorney fee statement.
The Court of Appeals held that, because the father did not raise objections in the trial
court, he is precluded from raising those objections on appeal. See also Gillies and
Gillies, 175 Or App 460, 463, 28 P3d 1244 (2001) ("[I]f a party fails to tender specific
objections to an award of fees, that party cannot later complain about the lack of findings
as to the basis for the award[.]").

Baker and Baker, 173 Or App 33, 20 P3d 263 (2001).

The trial court awarded the father custody of child and denied the mother's
request for attorney fees without explanation. On appeal, the mother argued that trial
court did not make findings in accordance with McCarthy. The Court of Appeals held
that, because ORS 107.135(7) grants a court discretion to award attorney fees in a
modification proceeding, ORS 20.075 applies as does the requirements of McCarthy.
The court remanded to the trial court for further findings concerning the denial of attorney
fees.

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E. ORAP 13.10 (procedure for petition for attorney fees)

ORAP 13.10 provides:

"(1) This rule governs the procedure for petitioning for attorney fees in all cases
except the recovery of compensation and expenses of court-appointed counsel under
ORS 138.500(3).1

"(2) A petition for attorney fees shall be served and filed within 21 days after the date
of decision. The filing of a petition for review or a petition for reconsideration does not
suspend the time for filing the petition for attorney fees.

"(3) When a party prevails on appeal or on review and the case is remanded for
further proceedings in which the party who ultimately will prevail remains to be
determined, the prevailing party on appeal or review may petition the appellate court for
attorney fees within the time and in the manner provided in this rule.2 If the appellate
court determines an amount of attorney fees under this subsection, it may condition the
actual award of attorney fees on the ultimate outcome of the case. In that circumstance,
an award of attorney fees shall not be included in the appellate judgment, but shall be
awarded by the court or tribunal on remand in favor of the prevailing party on appeal or
review, if that party also prevails on remand, and shall be awarded against the party
designated on appeal or review as the party liable for attorney fees.

"(4) When the Supreme Court denies a petition for review, a petition for attorney fees
for preparing the petition for review or a response to the petition for review shall be filed
in the Supreme Court.

"(5) (a) A petition shall state the total amount of attorney fees claimed and the
authority relied on for claiming the fees. The petition shall be supported by a statement of
facts showing the total amount of attorney time involved, the amount of time devoted to
each task, the reasonableness of the amount of time claimed, the hourly rate at which
time is claimed, and the reasonableness of the hourly rate.

"(b) If a petition requests attorney fees pursuant to a statute, the petition shall
address any factors, including, as relevant, those factors identified in ORS 20.075(1) and
(2) or ORS 20.105(1), that the court may consider in determining whether and to what
extent to award attorney fees.3

"(6) Objections to a petition shall be served and filed within 14 days after the date the
petition is filed. A reply, if any, shall be served and filed within 14 days after the date of
service of the objections.
"(7) A party to a proceeding under this rule may request findings regarding the facts
and legal criteria that relate to any claim or objection concerning attorney fees. A party
requesting findings must state in the caption of the petition, objection, or reply that the
party is requesting findings pursuant to this rule.4 A party's failure to request findings in a

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petition, objection, or reply in the form specified in this rule constitutes a waiver of any
objection to the absence of findings to support the court's decision.

"(8) The original of any petition, objections, or reply shall be filed with the
Administrator, accompanied by five copies if filed in the Court of Appeals and eight
copies if filed in the Supreme Court, together with proof of service on all other parties to
the appeal, judicial review, or proceeding.

"(9) In the absence of timely filed objections to a petition under this rule, the Supreme
Court and the Court of Appeals, respectively, will allow attorney fees in the amount
sought in the petition, except in cases in which:

"(a) The entity from whom fees are sought was not a party to the proceeding; or

"(b) The Supreme Court or the Court of Appeals is without authority to award fees."

McCarthy v. Oregon Freeze Dry, Inc., 327 Or 84, 957 P2d 1200 (1997), clarified on
recons, 327 Or 185, 957 P2d 1200 (1998).

In McCarthy, the Supreme Court held that ORAP 13.10 does not impose a
requirement of prior notification of an attorney fee claim similar to that found in ORCP 68
C(2)(a) and (b), rather, on appeal, a party may request attorney fees by filing a petition
under ORAP 13.10. The court also determined that the ORAP 13.10(5) requirement of "a
statement of the 'authority relied on' is not a jurisdictional prerequisite, but is a direction to
the parties to assist the appellate courts in determining whether the court has authority to
award attorney fees on appeal."
A party who is entitled to recover attorney fees for work done on appeal must serve and
file a petition for attorney fees "within 21 days after the date of decision." ORAP 13.10(2).
The filing of a petition for review or reconsideration does not suspend the time for filing
the petition for attorney fees. ORAP 13.10(2). The petition should be filed in the court
making the decision. When the Supreme Court denies a petition for review, any petition
for attorney fees incurred either in preparing the petition for review or opposing it shall be
filed in the Supreme Court. ORAP 13.10(4).

Objections to a fee petition must be served and filed within 14 days after the
date that the petition is filed. ORAP 13.10(6). A reply, if any, shall be filed within 14 days
after the date of service of the objections. ORAP 13.10(6). Any party who wants the
appellate court to make findings must request them. ORAP 13.10(7). In the absence of
timely objections to a fee petition, the Court of Appeals or the Supreme Court will allow
the fees in the amount sought unless (1) the entity from whom fees are sought was not a
party to the proceeding or (2) the court lacks authority to award fees. ORAP 13.10(9).

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Dockins v. State Farm Ins. Co., 330 Or 1, 997 P2d 859 (2000).

The Supreme Court stated that, under ORAP 13.10(9), in the absence of
timely objections made by the opposing party, the court generally will allow attorney fees
in the amount requested. In Dockins, the court emphasized the importance of the
objections filed by an opposing party:

"In determining a reasonable attorney fee, our analysis largely will be


framed by the opponent's objections to a petitioner's request. We depend
on a petitioner's opponent to raise objections to the petitioner's request with
as much particularity as possible and to support those objections with
argument and (where appropriate) documentation that will assist this court
in its efforts."

330 Or at 6.

Kahn v. Canfield, 330 Or 10, 998 P2d 651 (2000).

The plaintiffs had prevailed against the defendants both at trial and in the
Court of Appeals. The defendants filed a petition for review in the Supreme Court, and
the plaintiffs filed a 35-page response urging the court to deny review. The court denied
review, and the plaintiffs requested an award of attorney fees based on its response to
the defendants' petition.

The Supreme Court stated that when a request for attorney fees comports
with the requirements of ORAP 13.10(5), the court's inquiry is generally limited to the
objections filed by the opposing party. Here, the defendants filed one objection, that the
amount requested was excessive because that the response reflected little new work by
plaintiffs, that is, most of the response was identical to the plaintiff's brief in the Court of
Appeals. Based on that objection, the Supreme Court concluded that the plaintiffs'
lawyers should have been able to produce their response in, at most, 80 hours. The court
reduced the plaintiffs' attorney fees request accordingly.

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