Int. Assn. Machinist, Woodworkers Local W-246 v. Heil ( 2020 )

442
Argued and submitted November 16, 2018; supplemental judgment for attorney
fees reversed and remanded as to defendant Jon Heil, otherwise affirmed
February 26, 2020
INTERNATIONAL ASSOCIATION OF
MACHINIST, WOODWORKERS LOCAL W-246,
an Oregon corporation,
Plaintiff-Respondent,
v.
Jon HEIL
and Beverly Heil,
husband and wife,
Defendants-Appellants.
Tillamook County Circuit Court
15CV04458; A164772
461 P3d 1035
Plaintiff prevailed in a breach of contract claim, and the trial court awarded
$6,801 in damages. Plaintiff then sought attorney fees. Defendants objected to
plaintiff’s fee petition, raising unique arguments as to each defendant. As to
defendant Jon Heil, defendants argued that plaintiff failed to recover a more
favorable judgment than Jon Heil’s $7,800 offer of judgment pursuant to ORCP
54 E. As to defendant Beverly Heil, defendants argued that her $2,600 offer of
judgment, while not exceeding plaintiff’s ultimate damages award, exceeded
those damages that plaintiff could have recovered at the time the offer was
made. The trial court denied defendants’ objections and entered a supplemental
judgment in favor of plaintiff for attorney fees and costs. In determining that
plaintiff’s judgment exceeded defendant Jon Heil’s offer of judgment, the court
compared the $7,800 offer to plaintiff’s $6,801 damages award plus $1,400.10 in
fees and costs that the parties agreed plaintiff had incurred at the time of the
offer. Defendants now appeal the supplemental judgment awarding attorney fees.
Held: The trial court erred in concluding that plaintiff obtained a more favorable
judgment than defendant Jon Heil’s offer, but the court did not err in concluding
that plaintiff obtained a more favorable judgment than Beverly Heil’s offer. In
this case, when determining whether plaintiff recovered a more favorable judg-
ment than the offer of judgment, the proper comparison under ORCP 54 E was
between the offer, which here included the right to pursue recoverable attorney
fees and costs incurred up to the time of service of the offer, and the judgment,
which included the sum of the damages award plus those same fees and costs. As
to defendant Beverly Heil, plaintiff’s judgment clearly exceeded her $2,600 offer.
Plaintiff did not obtain a more favorable judgment than defendant Jon Heil’s offer
but did obtain a more favorable judgment than Beverly Heil’s offer.
Supplemental judgment for attorney fees reversed and remanded as to defen-
dant Jon Heil; otherwise affirmed.
Jonathan R. Hill, Judge.
Cite as 302 Or App 442 (2020) 443
Harry D. Ainsworth argued the cause and filed the brief
for appellants.
William H. Sherlock argued the cause for respondent.
Also on the brief was Hutchinson Cox.
Before Armstrong, Presiding Judge, and Tookey, Judge,
and Shorr, Judge.
SHORR, J.
Supplemental judgment for attorney fees reversed and
remanded as to defendant Jon Heil; otherwise affirmed.
444 Int. Assn. Machinist, Woodworkers Local W-246 v. Heil
SHORR, J.
This is the second opinion relating to attorney fees
involving plaintiff and defendants.1 Plaintiff filed a petition
for an award of attorney fees after its successful claim for
breach of contract. Defendants objected to plaintiff’s peti-
tion for fees, arguing that defendant Jon Heil’s ORCP 54 E
pretrial offer of judgment exceeded plaintiff’s ultimate
judgment and that, accordingly, plaintiff was entitled only
to the fees and costs that it had incurred prior to the offer
and not those incurred through the entire litigation.2 The
court compared Jon Heil’s $7,800 offer of judgment, which
neither expressly included nor excluded attorney fees or
costs, to plaintiff’s ultimate damage award of $6,801 plus
the $1,400.10 in attorney fees and costs that plaintiff had
incurred up to the time of the offer. In other words, the court
did not include attorney fees and costs in determining Jon
Heil’s offer of judgment at the start of its calculation but did
include them in the judgment at the end of its calculation.
Comparing those two numbers, the court concluded that
plaintiff’s judgment exceeded Jon Heil’s offer of judgment,
and, accordingly, the court entered a supplemental judgment
awarding plaintiff its request for costs and attorney fees
incurred throughout the litigation. As for defendant Beverly
Heil, defendants argued that her $2,600 offer of judgment
also exceeded plaintiff’s judgment because, despite the ulti-
mate $6,801 damages award against defendants, the dam-
ages that were awardable against Beverly Heil at the time
the offer was made purportedly did not exceed $2,600. The
court rejected that argument.
1
See Int. Assn. Machinists, Woodworkers Local W-246 v. Heil, 301 Or App
685, 457 P3d 357 (2020) (IAM I) (reversing a supplemental judgment awarding
attorney fees to the plaintiff in FED action).
2
ORCP 54 E(3) provides:
“If the offer is not accepted and filed within the time prescribed, it shall
be deemed withdrawn, and shall not be given in evidence at trial and may
be filed with the court only after the case has been adjudicated on the mer-
its and only if the party asserting the claim fails to obtain a judgment more
favorable than the offer to allow judgment. In such a case, 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 from the party asserting the claim costs
and disbursements, not including prevailing party fees, from the time of the
service of the offer.”
(Emphasis added.)
Cite as 302 Or App 442 (2020) 445
Defendants now appeal the supplemental judgment,
assigning error to the trial court’s ruling that the judgment
exceeded their offer.3 For the reasons that follow, we con-
clude that the court did not err in concluding that plaintiff
obtained a more favorable judgment than defendant Beverly
Heil’s offer of judgment, but that the court erred in con-
cluding that plaintiff did obtain a more favorable judgment
than defendant Jon Heil’s offer of judgment. Accordingly,
we reverse the award of attorney fees and costs against
defendant Jon Heil but affirm the award of attorney fees
and costs against defendant Beverly Heil. We also remand
for further proceedings for the trial court to reexamine the
award of attorney fees and costs against defendant Jon Heil
in a manner consistent with this opinion.
We recount below only those facts relevant to this
appeal, which are all either undisputed or procedural in
nature. Defendants Jon and Beverly Heil are a married
couple. Plaintiff and defendants were parties to a land
sale contract for certain real property in Tillamook. When
defendants failed to make payments pursuant to the con-
tract, plaintiff initiated a forcible entry and detainer (FED)
action. See Int. Assn. Machinists, Woodworkers Local W-246
v. Heil, 301 Or App 685, 687, 457 P3d 357 (2020) (IAM I).
After a period of ongoing litigation, the parties entered into
a settlement agreement. That agreement provided that
defendants would have 90 days to pay plaintiff the purchase
price for the property. If defendants failed to pay plaintiff
the agreed-upon amount within 90 days, defendants agreed
to vacate the property and have a judgment entered against
them in the pending FED action. The settlement agreement
also provided the prevailing party a right to attorney fees
and costs if either party successfully prosecuted or defended
an action relating to the rights or obligations under the
agreement.
Defendants subsequently failed to pay plaintiff the
purchase price within 90 days and also failed to voluntarily
vacate the premises. Plaintiff then filed this action for breach
3
We reject without further written discussion defendants’ first, second, and
fourth assignments of error.
446 Int. Assn. Machinist, Woodworkers Local W-246 v. Heil
of the settlement agreement.4 On April 16, 2015, defendants
offered to have judgment entered against them for “$2,600
jointly against [both defendants] and an additional $5,200
against John Heil [sic] only.” The offer did not say whether
or not it included attorney fees and costs. Plaintiff rejected
the offer, and the case went before an arbitrator, who issued
an arbitration award in favor of plaintiff. Defendants then
appealed the arbitration award and requested a trial de novo
in the circuit court.
The trial court granted plaintiff’s pretrial motion
for partial summary judgment on the issue of defendants’
liability for breach of the settlement agreement. The parties
then tried the issue of damages to the court. At that trial,
the court ruled that plaintiff was entitled to $6,801 in dam-
ages for taxes and property insurance from 2014 to 2017.
The court entered a general judgment and money award in
favor of plaintiff for $6,801 plus $252 for a filing fee and
$275 for a prevailing party fee. Plaintiff then sought attor-
ney fees.
Defendants objected to plaintiff’s attorney fee peti-
tion on a number of grounds, including that the judgment
entered in favor of plaintiff did not exceed defendants’ April
2015 offer of judgment and that, therefore, the court should
limit plaintiff’s attorney fee award to only those fees incurred
prior to the date of the offer. Defendants raised unique
arguments as to each defendant. Regarding defendant Jon
Heil, defendants argued that he had offered a judgment of
$7,800, which exceeded plaintiff’s $6,801 damages award.
As to defendant Beverly Heil, defendants argued that her
$2,600 offer of judgment should be compared only to those
damages that plaintiff could have recovered at the time the
offer was made—specifically, taxes and insurance for 2014
only. Defendants argued that her $2,600 offer “appear[ed] to
exceed” those damages, which defendants calculated to be
$2,369.50.
4
A judgment was also subsequently entered against defendants in the FED
action. Defendants appealed that judgment and posted a supersedeas bond in
order to retain possession of the premises during the pendency of that appeal,
which we ultimately affirmed without opinion. See International Association of
Machinists, Woodworkers Local W-1 v. Heil, 277 Or App 783, 376 P3d 306 (2016),
rev den, 361 Or 350 (2017).
Cite as 302 Or App 442 (2020) 447
In response, plaintiff argued that, for ORCP 54 E
purposes, the amount of the “judgment” equaled the sum
of the damages award, $6,801, that plaintiff had obtained
plus fees and costs, including attorney fees, that had been
incurred by the prevailing party at the time of service of
the offer. Plaintiff calculated that it had incurred $1,400.10
in costs and fees as of the date of service of the offer. Thus,
plaintiff argued, the judgment—damages of $6,801 plus fees
and costs of $1,400.10—totaled $8,201.10, which exceeded
Jon Heil’s offer of $7,800 and Beverly Heil’s offer of $2,600.5
In making that argument, plaintiff relied chiefly on a gen-
eral statement in Carlson v. Blumenstein, 293 Or 494, 504,
651 P2d 710 (1982) (“The comparison of the offer with the
judgment received should be made by comparing the offer of
compromise against the sum of the award plus the costs and
recoverable attorney fees incurred up to the time of service
of the offer.”).
The trial court agreed with plaintiff. In a written
letter opinion, the court relied on Carlson to conclude that
“the Court must compare the offer of judgment against the
sum of the award plus the costs and recoverable attorney
fees incurred up to the time of service of the offer.” The court
noted that the parties agreed that attorney fees and costs at
the time of the service of the offer were $1,400.10. Thus, the
court found that the total judgment in favor of plaintiff was
$8,201.10 (the damage award of $6,801 plus the fees and
costs at the time of the offer). That amount exceeded either
defendant’s offer of judgment. Accordingly, the court denied
defendants’ objection to limit plaintiff’s attorney fees to those
incurred up until the time of defendants’ offer and entered
a supplemental judgment awarding plaintiff $28,752.32 in
attorney fees for plaintiff’s fees that were incurred through-
out the course of the litigation.
Defendants now appeal the supplemental judgment,
assigning error to the court’s award of fees and costs incurred
after the service of their ORCP 54 E offer of judgment. As
they had below, defendants raise arguments unique to each
defendant. As to defendant Jon Heil, defendants argue that
5
Defendants stipulated that plaintiff incurred $1,400.10 in preoffer costs
and fees.
448 Int. Assn. Machinist, Woodworkers Local W-246 v. Heil
the court misinterpreted Carlson, and that, under the cur-
rent version of ORCP 54 E, when an offer of judgment is
silent regarding attorney fees, the correct approach is to
exclude preoffer costs and fees on both sides of the compari-
son. At other points, defendants suggest that the same result
would be reached by including preoffer costs and fees on both
sides of the comparison.6 In response, plaintiff argues that
the trial court’s approach—namely, not to add preoffer fees
and costs to the offer of judgment but add them only to the
judgment—was the correct one. Plaintiff points to two cases
that seemingly applied the Carlson rule after ORCP 54 E
was amended to its current form. See Elliott v. Progressive
Halcyon Ins. Co., 222 Or App 586, 593, 194 P3d 828 (2008)
(holding that attorney fee sanction was not to be included
in ORCP 54 E comparison because the fee sanction was not
recoverable at the time of service of the offer); Mulligan v.
Hornbuckle, 227 Or App 520, 523-25, 206 P3d 1078 (2009)
(comparing the offer of judgment with the “face amount of
the verdict combined with plaintiff’s pre-offer costs” and
prevailing party fee to conclude that the judgment exceeded
the offer). We review for errors of law. Mulligan, 227 Or App
at 523.
Under ORCP 54 E(1), a party against whom a claim
is asserted may “serve upon any other party asserting the
claim an offer to allow judgment to be entered against the
party making the offer for the sum, or the property, or to
the effect therein specified.” The party asserting the claim
is free to reject the offer, but,
“if the party asserting the claim fails to obtain a judgment
more favorable than the offer to allow judgment[,] * * * the
party asserting the claim shall not recover costs, prevail-
ing party fees, disbursements, or attorney fees incurred
after the date of the offer, but the party against whom the
claim was asserted shall recover from the party asserting
the claim costs and disbursements, not including prevail-
ing party fees, from the time of the service of the offer.”
ORCP 54 E(3). If the offer does not specify whether or not
it includes attorney fees, “the party asserting the claim
6
As we note below, whether you include or exclude costs on both sides of the
comparison does not matter in this particular case because the preoffer fees and
costs that are included in the offer and the ultimate judgment are the same.
Cite as 302 Or App 442 (2020) 449
shall submit any claim for * * * attorney fees to the court
as provided in Rule 68.” ORCP 54 E(2). When determining
whether the offer of judgment under ORCP 54 E was more
favorable than the judgment, the court “must compare both
amounts.” Mulligan, 227 Or App at 523 (citing Carlson, 293
Or at 503-04). For comparison purposes, the “judgment
encompasses the sum of the award plus the costs and recov-
erable attorney fees incurred up to the time of service of the
offer.” Elliott, 222 Or App at 592 (citing Carlson, 293 Or at
504 (internal quotation marks omitted)).
In Carlson, the issue before the Supreme Court was
whether plaintiffs had obtained a more favorable judgment
than the defendants’ offer of judgment under the statutory
precursor to ORCP 54 E. See former ORS 17.055 (1977),
repealed by Or Laws 1979, ch 284, § 199. Significantly,
unlike the current version of ORCP 54 E, that predeces-
sor statute did not provide that, if the offer was silent as to
attorney fees, the party asserting the claim would be free
to seek attorney fees through the usual ORCP 68 process.
Cf. ORCP 54 E(2) (“If the offer does not state that it includes
costs and disbursements or attorney fees, the party assert-
ing the claim shall submit any claim for costs and disburse-
ments or attorney fees to the court as provided in Rule 68.”).
To the contrary, before Carlson was decided, the Supreme
Court had held that, in contract cases in which attorney fees
had been pleaded in the complaint, a party’s acceptance of
an offer of judgment under former ORS 17.055 (1977) that
did not include attorney fees prohibited that party from
later seeking fees. See State ex rel State Scholarship Com’n
v. Magar, 288 Or 635, 642, 607 P2d 167 (1980) (holding that,
when “an offer to allow entry of a judgment which does not
include a part of the judgment sought by the complaint—in
this case a judgment for attorney fees—* * * the only judg-
ment that can properly be entered is one which is in accor-
dance with the terms of the offer, as accepted”).
In 1980, former ORS 17.055 (1977) was repealed.
Or Laws 1979, ch 284, § 199. In its place, the Council on
Court Procedures promulgated ORCP 54, which “altered
that formulation” set forth in former ORS 17.055 (1977) and
Carlson. Adler Leather Sportswear v. Roberts, 67 Or App
188, 192, 677 P2d 757 (1984) (noting that, unlike former
450 Int. Assn. Machinist, Woodworkers Local W-246 v. Heil
ORS 17.055 (1977), which is the statute that the court con-
strued in Carlson, under ORCP 54, “acceptance of the offer
to have judgment entered for a certain amount gives the
plaintiff the right to seek costs as provided in ORCP 68,”
and that, consequently, costs should be considered on both
sides of the comparison). As noted above, ORCP 54 E(2) pro-
vides that, “[i]f 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.” In other
words, a party who accepts an offer of judgment that is silent
regarding attorney fees is entitled to seek reasonable attor-
ney fees and costs through the ORCP 68 process.
As mentioned above, defendants’ offer did not
expressly state that it included attorney fees and costs. It
also did not exclude such fees and costs. Nevertheless, under
ORCP 54 E(2), if plaintiff had accepted the offer, plaintiff
would have been entitled to seek its reasonable attorney
fees, costs, and disbursements that were incurred up to the
date of service of the offer through the ORCP 68 process.7
The amount of attorney fees and costs would have been
exactly the same as the fees and costs that the trial court
later found that plaintiff had actually incurred at the time
of service of the offer—$1,400.10.8 See, e.g., Adler Leather
Sportswear, 67 Or App at 192 (holding that, because the
defendant’s offer under ORCP 54 E was silent as to costs
and the plaintiff would have been entitled to seek preoffer
costs had it accepted the offer, the offer and the judgment
both “should have included an additional amount for [the
plaintiff’s] costs incurred up to the date of the offer,” and
“[t]he two total amounts would be exactly the same”).
Consequently, plaintiff’s judgment plus preoffer attorney
fees and costs was less than defendant Jon Heil’s ORCP 54 E
offer plus preoffer attorney fees and costs. Plaintiff did not
obtain a more favorable judgment against defendant Jon
7
As noted above, the parties had a prevailing party attorney fee provision in
their settlement agreement.
8
As previously explained, the parties stipulated before the trial court that
plaintiff had incurred preoffer fees in the amount of $1,083.10 and $317.00 in pre-
offer costs, for a total of $1,400.10 in fees and costs. There is no dispute regarding
that amount on appeal.
Cite as 302 Or App 442 (2020) 451
Heil. Plaintiff was not entitled to attorney fees and costs
incurred after the date of defendant Jon Heil’s offer.
The purpose of the rule regarding offers of judg-
ment is to “encourage the settlement of cases and reduce
court congestion by penalizing a plaintiff who fails to accept
what, in retrospect, is seen to have been a reasonable offer.”
Carlson, 293 Or at 503-04; see also Quality Contractors, Inc.
v. Jacobsen, 154 Or App 343, 349, 963 P2d 30 (1998) (look-
ing to purpose of rule to conclude that an offset resulting
from settlement with the codefendant should not be taken
into account in determining whether the plaintiffs obtained
a more favorable judgment). To allow the attorney fees that
were incurred up to the time of service of the offer to be
considered only on one side of the comparison, even though
plaintiff would have been entitled to seek the exact same
amount of fees had it accepted the offer, would frustrate the
purpose of the rule. Rather, such a construction may encour-
age parties to reject reasonable offers and continue litigat-
ing if the attorney fees incurred up to the time of service of
the offer could later be calculated to inflate only the judg-
ment and not the offer. We do not believe that the Council
on Court Procedures, which drafted ORCP 54 E, nor the
Supreme Court in Carlson, intended such a result.
Plaintiff asserts that Elliott and Mulligan are two
cases in which this court applied the rule as proposed by
plaintiff. Those cases, however, are easily distinguishable
and do not control here. In Mulligan, the defendant offered
judgment for $16,000, and that offer “encompass[ed] dam-
ages, costs and fees.” 227 Or App at 522 (internal quotation
marks omitted). The jury returned a verdict of $18,000.50
in damages. We observed that, when preoffer costs and fees
were added to the damages award, the judgment “easily
exceeds the amount of the settlement offer.” Id. at 524. Thus,
there was no need to calculate precisely what the preoffer
costs and fees would have been because the offer—which
included fees and costs—was clearly less than the damages
award without adding costs and fees. Mulligan, therefore,
did not address the question presented in this case.
Nor did Elliott directly address the question pre-
sented here. In that case, the defendant offered to allow
452 Int. Assn. Machinist, Woodworkers Local W-246 v. Heil
judgment in the amount of $10,000, including costs but not
attorney fees. 222 Or App at 589. The plaintiff recovered
$8,509.64 in damages at a jury trial and sought costs in the
amount of $1,199.50 and attorney fees as a discovery sanc-
tion. Id. We first ruled that an attorney fee sanction was not
“recoverable” until after it had been proved at trial under
ORCP 46 C, and thus was not properly part of the judgment.
222 Or App at 592-93. Then, comparing the judgment with
the offer excluding those attorney fees on both sides of the
calculation, we determined that the plaintiff had failed to
exceed the offer of judgment.
In this case, when determining whether the party
asserting the claims recovered a more favorable award
than the offer of judgment, the proper comparison under
ORCP 54 E is between the offer of judgment, which here
includes the right to pursue recoverable attorney fees and
costs incurred up to the time of service of the offer, and
the judgment, which includes the sum of the award plus
those same fees and costs.9 Here, Jon Heil’s offer of judg-
ment was for $7,800, plus plaintiff would have been enti-
tled at that time to pursue $1,400.10 in preoffer attorney
fees and costs; the trial court later concluded that $1,400.10
was the correct awardable amount of preoffer fees and costs
although it erred when it did not include that amount in
calculating the total offer of judgment. The court also later
concluded that the judgment included the damages award
of $6,801, plus the same $1,400.10 in recoverable preoffer
fees and costs.10 Therefore, the offer was for $9,200.10 and
the judgment was in the amount of $8,201.10. Plaintiff
did not obtain a more favorable judgment than defendant
Jon Heil’s April 2015 offer. The trial court erred in ruling
otherwise.
90
Conversely, in this case, the same result would be achieved if the combined
preoffer recoverable attorney fees and costs were not considered on either side of
the equation.
10
The parties do not address in their briefs the $275 prevailing party fee
that was awarded to plaintiff as part of the general judgment. As noted above,
the parties agreed in the trial court on the amount of plaintiff’s total preoffer
fees and costs, and the court accepted that amount in determining the amount of
the total judgment. The parties do not address how that prevailing party fee was
accounted for within that total. Because the parties do not address it, we do not
consider it.
Cite as 302 Or App 442 (2020) 453
We turn to the effect of ORCP 54 E on defendant
Beverly Heil’s offer of $2,600, which was far less than the
$6,801 in damages that the trial court ultimately awarded
against her, whether or not fees and costs are considered in
the comparison. As noted above, defendants argue that the
court is required to examine the case at the time the offer
of judgment is made and determine what damages plaintiff
would have been awarded at that time. Defendants argue
that, as of the April 16, 2015, offer of judgment, the only
damages that plaintiff would have been awarded were taxes
and insurance for 2014, which total $2,369.50. Defendant
Beverly Heil, therefore, contends that plaintiff could not
recover attorney fees and costs against her that plaintiff
incurred after the offer of judgment.
Defendant Beverly Heil’s argument is not supported
by and, indeed, is contradicted by ORCP 54. ORCP 54 E(3)
calls for a comparison between the offer of judgment and
the ultimate judgment obtained. See ORCP 54 E(3) (stat-
ing that the court shall not award fees, among other things,
incurred after the date of offer when “the party asserting
the claim fails to obtain a judgment more favorable than
the offer to allow judgment”). There is no support for defen-
dant Beverly Heil’s contention that the court is to compare
her offer of judgment with the amount that plaintiff would
have obtained against her on the date of the offer of judg-
ment. See also Mulligan, 227 Or App at 525 (stating that
“trial courts have no obligation to look behind the dollar
amount of a judgment in making the comparison required
by ORCP 54 E”). The trial court did not err when it awarded
plaintiff its fees and costs for the duration of the litigation
against defendant Beverly Heil rather than cutting the fees
and costs off at the time of defendant Beverly Heil’s offer of
judgment. Plaintiff’s judgment (as with Jon Heil, $8,201.10
representing $6,801 in damages plus fees and costs) against
Beverly Heil clearly exceeded her $2,600 offer of judgment
(plus fees and costs).
In conclusion, the trial court erred in determining
that the judgment exceeded defendant Jon Heil’s $7,800 offer
of judgment, but the trial court did not err in determining
that the judgment exceeded defendant Beverly Heil’s offer
of $2,600. We therefore reverse the supplemental judgment
454 Int. Assn. Machinist, Woodworkers Local W-246 v. Heil
awarding attorney fees and remand to the trial court to
determine attorney fees and costs in a manner consistent
with this opinion.
Supplemental judgment for attorney fees reversed
and remanded as to defendant Jon Heil; otherwise affirmed.