East Side Plating, Inc. v. City of Portland ( 2021 )

111
Argued and submitted November 4; dismissal of claims 1 and 2 reversed and
remanded, otherwise affirmed December 1, 2021; petition for review denied
April 21, 2022 (369 Or 675)
EAST SIDE PLATING, INC.,
an Oregon corporation,
Plaintiff-Appellant,
v.
CITY OF PORTLAND,
Defendant-Respondent.
Multnomah County Circuit Court
19CV44791; A174138
502 P3d 1192
Eric J. Bloch, Judge.
Charles A. Ford argued the cause for appellant. Also on
the briefs was Rose Law Firm, P.C.
Denis Vannier argued the cause and filed the brief for
respondent.
Before Lagesen, Presiding Judge, and James, Judge, and
Kamins, Judge.
PER CURIAM
Dismissal of claims 1 and 2 reversed and remanded;
otherwise affirmed.
112 East Side Plating, Inc. v. City of Portland
PER CURIAM
Plaintiff appeals a judgment that dismissed its
claims for declaratory and supplemental relief under the
Uniform Declaratory Judgments Act, ORS 28.010 to 28.160,
(Claims 1 and 2), as well as a tort claim. On the claims for
declaratory and supplemental relief, plaintiff seeks a dec-
laration of its rights under a City of Portland ordinance,
and related supplemental relief. On the city’s motion, the
trial court dismissed those claims for failure to state a
claim under ORCP 21 A(8). It did so because, in a previous
action, the United States District Court for the District of
Oregon determined that the city had no ongoing obligations
to plaintiff under the ordinance. That prior ruling, the trial
court concluded, means that the doctrine of issue preclusion
bars plaintiff from relitigating the issue of the city’s obliga-
tions under the ordinance, making dismissal appropriate.
Although we agree with the trial court’s issue-preclusion
ruling, under our longstanding case law, the court erred
by dismissing the case instead of entering a declaration of
the parties’ respective rights and obligations, in view of the
prior federal court ruling.
On the issue of the dismissal, the law is clear that a
declaratory judgment action cannot be dismissed for failure
to state a claim under ORCP 21 A(8): “[A] failure to state a
claim is not a proper basis for dismissing a declaratory judg-
ment action.” Erwin v. Oregon State Bar, 149 Or App 99, 106,
941 P2d 1094 (1997); see Waters v. Klippel Water, Inc., 304
Or App 251, 261, 464 P3d 490 (2020) (same); Doe v. Medford
School Dist. 549C, 232 Or App 38, 45-46, 221 P3d 787 (2009)
(same; summarizing cases). One way or another, if there is
a justiciable controversy, then the court must enter “a judg-
ment that declares the rights of the parties[.]” Doe, 232 Or
App at 46.
Implicitly, if not explicitly, recognizing this, on
appeal, the city recasts the trial court’s dismissal of the case
as a dismissal for lack of justiciable controversy. In essence,
the city argues that because the issue that plaintiff seeks
to litigate in this case was resolved against it in the prior
federal case, the doctrine of issue preclusion means that
Cite as 316 Or App 111 (2021) 113
plaintiff lacks standing to pursue this declaratory judgment
action seeking to resolve the same issue.
That argument is not tenable. The city’s motion
to dismiss and the trial court’s ruling were not based on
lack of standing, they were based on the conclusion that the
claims at issue did not state a claim for which the requested
relief was available. Plaintiff also plainly has standing to
seek the declaration it has requested; the provision that
plaintiff seeks to have construed was adopted explicitly for
plaintiff’s benefit, and a declaration that the city had con-
tinuing obligations under it would have a concrete effect on
plaintiff’s interests, in particular, its interest in accessing
its property. See MT & M Gaming, Inc. v. City of Portland,
360 Or 544, 546-47, 383 P3d 800 (2016) (discussing standing
requirements under the Uniform Declaratory Judgments
Act). Finally, the fact that a party might eventually lose on
the merits on a claim—on the ground of issue preclusion
or otherwise—does not translate to the conclusion that the
party lacks standing to bring it. If that were the case, no one
would ever have standing.
Thus, the trial court therefore erred in dismissing
the claim for declaratory relief and the dependent claim for
supplemental relief. That conclusion does not end our work
on appeal. We must examine the merits of the trial court’s
ruling, as is our approach when a trial court has erroneously
dismissed a claim for declaratory relief based on a merits
decision, as happened here. Waters, 304 Or App at 261.
On the merits, we agree with the trial court that,
under Nelson v. Emerald People’s Utility Dist., 318 Or 99, 104,
862 P2d 1293 (1993), the elements of issue preclusion are
met. Further, we are not persuaded by plaintiff’s arguments
that it is unfair to apply the doctrine in this case. See State
v. Manwiller, 295 Or App 370, 378-79, 435 P3d 770 (2018)
(requiring courts to consider whether application of issue
preclusion is fair under the circumstances). On remand, the
trial court should enter a declaration to that effect. See Hunt
v. City of Eugene, 249 Or App 410, 430, 278 P3d 70, rev den,
353 Or 103 (2012) (affirming judgment declaring that plain-
tiffs “are not entitled to” the declaration they sought where
114 East Side Plating, Inc. v. City of Portland
the doctrine of issue preclusion barred them from obtaining
the relief that they wanted).
Dismissal of claims 1 and 2 reversed and remanded;
otherwise affirmed.