Pelett v. Welch , 71 Or. App. 761 ( 1985 )

694 P.2d 574 (1985) 71 Or.App. 761

Thomas PELETT and Barbara Pelett, Husband and Wife, Appellants,
v.
John Q. WELCH and Carol Welch, husband and wife, Respondents.

A8107-04081; CA A32285.

Court of Appeals of Oregon.

Submitted on Record and Briefs November 7, 1984. Decided January 23, 1985.

Charles D. Bates, Portland, filed the brief for appellants.

Joan O'Neill, and Dunn, Carney, Allen, Higgins & Tongue, Portland, filed the brief for respondents.

Before BUTTLER, P.J., and WARREN and ROSSMAN, JJ.

WARREN, Judge.

Plaintiffs brought this action to recover damages for breach of a rental contract and conversion. Defendants counterclaimed for breach of contract. The jury returned a verdict awarding $610.20 to plaintiffs and nothing to defendants. The trial court refused to grant plaintiffs' request for attorney fees under a provision of the contract, and they appeal.

The operative provision of the contract reads:

"In case suit or action is instituted to enforce compliance with any of the terms, covenants or conditions of this lease, or to collect the rental which may become due hereunder, or any portion thereof, the losing party agrees to pay such sum as the trial court may adjudge reasonable as attorney's fees * * *."

In denying plaintiffs attorney fees, the trial court held that "under the jury's verdict defendants, also, were prevailing parties."

ORS 20.096(5) defines "prevailing party" as "the party in whose favor final judgment or decree is rendered." Carlson v. Blumenstein, 293 Or. 494, 651 P.2d 710 (1982), holds that, in the absence of evidence that the parties intended otherwise, this statutory definition applies to the use of the term "prevailing party" in a contract.

We held in Marquam Investment Corp. v. Myers, 35 Or. App. 23, 581 P.2d 545, rev. den. 284 Or. 341 (1978), that there can be only one prevailing party in an action, even in litigation involving counterclaims. If a plaintiff succeeds on a claim and the defendant also succeeds on a counterclaim, the prevailing party is the one who receives the net award, because it is that party "in whose favor final judgment or decree is rendered." ORS 20.096(5); Carlson v. Blumenstein, supra; Illingworth v. Bushong, 61 Or. App. 152, 656 P.2d 370 (1982), aff'd. 297 Or. 675, 688 P.2d 379 (1984). In this case, the court issued a judgment on the jury's verdict in plaintiff's favor, and the court erred as a matter of law in holding that both parties prevailed.

Defendants contend that the court had discretion under the contract not to award attorney fees, relying on Marguam Investment Corp. v. Myers, supra. That reliance is misplaced, because attorney fees in Marguam were claimed under ORS 91.755 and not under a contract. ORS 91.755 provides that "reasonable attorney fees * * may be awarded to the prevailing party." It places the decision whether to award attorney fees within the court's discretion.

In the contract in this case, each party agreed to pay the prevailing party's attorney fees in the event of litigation; the only issue within the trial court's discretion is the amount of attorney fees which is reasonable. This court construed an identical contract term in Marlowe v. Der-Hart Associates, 68 Or. App. 106, 680 P.2d 716 (1984), and held:

"* * * [T]he attorney fees provision here gives the trial court ``discretion' to find what constitutes a reasonable amount, but it does not permit the court in this action at law to refuse to make any award on grounds other than reasonableness of the amount." 68 Or. App. at 109, 680 P.2d 716.

See also Creditors Protective Assoc. v. Britt, 58 Or. App. 230, 235, 648 P.2d 414 (1982).

Reversed and remanded with instructions to award reasonable attorney fees to plaintiffs.