DocketNumber: 07CV0441ST; A145084
Citation Numbers: 253 Or. App. 195, 289 P.3d 334
Judges: Nakamoto, Schuman, Wollheim
Filed Date: 10/24/2012
Status: Precedential
Modified Date: 7/24/2022
Respondent John Salladay was the custodian of his minor daughter’s ownership interest in a house, in accordance with the Uniform Transfer to Minors Act (UTMA), ORS 126.805 to 126.886. After respondent sold the house, petitioner Ivers (who is respondent’s ex-wife and the minor’s mother and conservator) sought respondent’s removal as custodian, restitution, and an accounting. Respondent prevailed in the action,
The facts are primarily procedural and are undisputed on appeal. Petitioner and respondent divorced in 1996 and have one child, their minor daughter. Petitioner’s mother devised her house in Redmond, Oregon, to respondent and to the minor. In 2004, after petitioner’s mother had died and her will was probated, respondent received an undivided one-half interest in the house and respondent, as custodian in accordance with the will, received the minor’s undivided one-half interest in trust until she turned 25 years of age.
Respondent made various improvements to the house and its landscaping. In 2007, he sold the house for approximately $239,000, a significant increase in the house’s value as indicated by the inventory of petitioner’s mother’s estate. Respondent deposited the minor’s share of the net proceeds from the sale in a separate account for her at a financial institution.
The trial court found that respondent “did not act to the detriment of the minor’s estate but rather prudently increased the value of the estate through repair and renovation of the house, sale at a substantial profit, and fair distribution and investment of the proceeds.” The court approved respondent’s accounting and rejected petitioner’s request that respondent be removed as custodian and her other claims, as well as respondent’s counterclaim for sanctions. Noting that respondent was not entitled to an award of attorney fees, the trial court entered a judgment that allowed respondent, as the UTMA custodian, to obtain reimbursement of his reasonable expenses from the custodial estate pursuant to ORS 126.852(1), “upon application to the Court.”
The trial court explained its allowance of custodial expenses through its letter opinion, describing the kinds of expenses allowable:
“[Respondent], as custodian, is entitled to recover his ‘reasonable expenses’, pursuant to ORS 125.852, from custodial property. This would include, for instance, the expenses of preparing the accounting, even if prepared by an attorney. It could also potentially include the attorney fees and expenses incurred in defending this suit, if [respondent] makes that claim.”
The court also instructed respondent that he could “submit his request for reimbursement from custodial property for reasonable expenses, pursuant to ORS 126.852(1), by affidavit.” Separately, the court noted in its letter opinion that respondent could submit a cost bill under ORCP 68. In the judgment, the trial court reiterated that respondent was
Respondent timely sought his costs — his filing, service, and prevailing party fees — within 14 days of the judgment as required under ORCP 68. Petitioner paid the costs. Later, four months after the judgment was entered, respondent filed a “Custodian’s Motion for Reimbursement of Expenses” in which he sought reimbursement from the custodial estate for legal fees that attorneys had charged him for consultations, representation in the proceedings, and preparation of the accounting. Petitioner objected to the motion for expenses, arguing both that attorney fees were not includable as custodial expenses under ORS 126.852 and that respondent’s statement of attorney fees was not timely filed, within 14 days of the entry of judgment, as required by ORCP 68.
In its letter opinion concerning petitioner’s objections to respondent’s motion, the trial court reasoned that, under ORS 126.852(1), “reasonable expenses” can include the cost of experts and there is no reason to distinguish between fees of a CPA and the expense of legal representation. In fact, the UTMA expressly recognizes that an attorney may prepare an accounting instead of a CPA. See ORS 126.866(3) (a custodian’s legal representative may account). Petitioner has not challenged on appeal the court’s ruling that allowed respondent’s attorney fees as custodial expenses under the UTMA.
The trial court also explained that ORCP 68 is applicable to fee awards, not to custodial expenses under the UTMA, and that the approval procedure the court had ordered was not required under the UTMA:
“The court is not making an award of attorney fees to the custodian, against petitioner, as a prevailing party. In fact a custodian might still be entitled to reimbursement of attorney fees for defending a suit and losing, if the fees are ‘reasonable expenses.’ Assuming, however, that ORCP 68 and UTCR 5.080 would apply generally to fees incurred as expenses by a fiduciary, ORCP 68 is not applicable in this instance.
*200 “ORS 126.852(1) allows a custodian, ‘reimbursement from custodial property for reasonable expenses.’ There is no requirement for prior or even subsequent court approval. Typically, there is no case and no court involvement at all. No court action is required to create the custodial relationship and there is no court monitoring or oversight. The only mechanism for ensuring that a custodian performs his fiduciary duty properly, including reimbursing himself, is the right to petition the court for an accounting of transactions which have already occurred.
“In this case, the procedure used provided greater protection than is normally the case but it was not required by rule or statute.”
(Emphasis in original.) The trial court then entered an order denying petitioner’s objection because “ORCP 68 is not applicable in this instance.” Consistently with that understanding, the trial court allowed only custodial expenses, not an award of attorney fees to a prevailing party.
On appeal, petitioner contends that the trial court erred because respondent’s motion was untimely. In petitioner’s view, the custodial expenses approved included attorney fees and so constituted an award of attorney fees controlled by the pleading and proof requirements in ORCP 68 C(l). Accordingly, we decide the legal issue of whether ORCP 68 applies to a custodian’s request for reimbursement of expenses, including attorney fees and the cost of accounting, under the UTMA. The correlative standard of review is for errors of law. See Becker v. Pieper, 176 Or App 635, 641, 32 P3d 912 (2001) (“because granting respondents’ motion resulted necessarily from a substantive legal conclusion, we review that legal conclusion for errors of law”). Based on (1) our case law establishing that ORCP 68 does not apply when there is no substantive right to fees and (2) the purpose and provisions of the UTMA, we conclude that ORCP 68 does not apply.
First, petitioner incorrectly assumes that the UTMA custodial expenses in this case are an “award of attorney fees” for purposes of ORCP 68. Petitioner focuses most of her attention on the broad language in ORCP 68 C(l), which requires application of Rule 68 “[n]othwithstanding Rule 1A and the procedure provided in any rule or statute permitting
Although ORCP 68 C(l) states that it is designed to govern the award of attorney fees in “all” civil cases, we have held that not all attorney fee cases fall under the ambit of ORCP 68 C. For example, in Ashley v. Garrison, 162 Or App 585, 986 P2d 654 (1999), we held that ORCP 68 C did not apply to a party seeking judicial review of an arbitrator’s attorney fee award. In that case, the plaintiff was dissatisfied with the amount of attorney fees the arbitrator awarded to him and filed an exception to the fees with the circuit court pursuant to ORS 36.425(6), which allows challenges to an arbitrator’s award or denial of attorney fees. 162 Or App at 587. The trial court reviewed the plaintiff’s exceptions and issued a letter opinion reducing the plaintiff’s attorney fee award. On appeal, the plaintiff argued that the trial court had failed to conduct a hearing as required by ORCP 68 C. We analyzed ORCP 68 C to describe a process that operates before a decision on the award of attorney fees is made. By contrast, ORS 36.425(6) describes a process that operates after an arbitrator has decided the issue of attorney fees. Id. at 590. Although the rule and the statute both concern attorney fees, we recognized that they “denote different processes designed to accomplish different purposes.” Id. at 589. Thus, we concluded that ORCP 68 does not apply to an exception to the arbitrator’s award of attorney fees filed pursuant to ORS 36.425(6). Id. at 591.
In other cases, we have recognized that attorney fees sought as economic damages do not fall under ORCP 68. In Rivera-Martinez v. Vu, 245 Or App 422, 263 P3d 1078, rev den, 351 Or 318 (2011), the plaintiff filed a malpractice claim against his former lawyer, alleging, among other things, that he was entitled to the attorney fees he would have collected had the lawyer-defendant handled the case without negligence. The trial court denied the plaintiff the attorney fees, and he appealed, arguing that those fees
And, in a recent case, Baker and Andrews, 232 Or App 646, 223 P3d 417 (2009), where the trial court awarded the defendant the amount of his attorney fees to defend the action, we distinguished between attorney fee awards covered by ORCP 68 and attorney fees that are not, based on whether the party had a “substantive right” to an award of fees in the action. In Baker, the trial court entered a judgment rejecting all of the plaintiff’s claims and then allowed the defendant to “proceed pursuant to ORCP 68” with regard to his request for his attorney fees under ORCP 17, which permits sanctions against a party that makes false certifications to the court through a filed pleading or other document. 232 Or App at 653. After the plaintiff filed her notice of appeal, the court entered a supplemental judgment ordering the plaintiff and her counsel to pay the defendant’s attorney fees, which the plaintiff also appealed. Id.
On appeal, we concluded that, despite the defendant’s receipt of an award consisting primarily of his attorney fees for defending the action, that award constituted punitive sanctions under ORCP 17, not “compensatory attorney fees under ORCP 68 C[(2)(a)].” Id. at 657. Thus, regardless of the trial court’s directive to proceed pursuant to ORCP 68, we held that the attorney fee procedure under ORCP 68 did not apply. In particular, we held that ORCP 68 C(5)(b) (a fee award “shall be made by supplemental judgment” if “not decided before entry of a general judgment”) did not provide the trial court with authority to enter the supplemental judgment. Id. at 657.
Like the defendant in Baker, respondent did not, under ORCP 68 C(2)(a), “allege the facts, statute or rule that provides a basis for the award of such fees in a pleading filed by that party.” And, just like the attorney fees allowed under ORCP 17 as sanctions in Baker, the custodial expenses allowed in the present case did not constitute an award of attorney fees recovered under ORCP 68. Respondent had no substantive right to recover attorney fees qua an award of attorney fees — whether under the UTMA, which has no attorney-fee provision, or any other statute, rule of law, or contract brought to our attention.
We also reject petitioner’s position that ORCP 68 governed the custodial expenses allowed in this case for a second reason. Given the purpose and structure of the UTMA, ORCP 68 C does not apply to custodial expenses, even when a court reviews and approves the expenses and those expenses consist entirely of the custodian’s attorney fees incurred because of litigation concerning the custodian’s handling of the UTMA estate.
Oregon’s UTMA is taken from a uniform law promulgated in 1983 by the National Conference of Commissioners on Uniform Laws. Uniform Transfers to Minors Act Historical Notes, 8C ULA 2 (1983). Every state has adopted the UTMA or its predecessor, the Uniform Gifts to Minors Act (UGMA). Uniform Transfers to Minors Act Prefatory Note, 8C ULA 3 (1983). The Oregon legislature adopted the UGMA in 1959, see Or Laws 1959, ch 640, §§ 1-18, and the UTMA in 1985, see Or Laws 1985, ch 665, §§ 1-28.
As the trial court observed, under the Oregon UTMA, a custodian “is entitled to reimbursement from custodial property for reasonable expenses incurred in the performance of the custodian’s duties.” ORS 126.852(1). The UTMA does not require any application to a court for approval of such reimbursements either in ORS 126.852 or elsewhere in the statutory scheme.
Because of that purpose, along with the UTMA provisions mentioned, the Oregon legislature had no reason to insert into the UTMA any mention of ORCP 68. It is not surprising that the legislature did not address fee award procedures under the UTMA when the UTMA lacks an attorney fee provision and a custodian can manage funds and reimburse himself without court approval. Indeed, if the requirements of ORCP 68 were engrafted onto a custodial expense reimbursement under the UTMA, then those requirements would contravene at least one provision of the uniform law. The UTMA is devoid of any requirement for court approval of expense reimbursements, ORS 126.852, yet ORCP 68 concerns court approval of reasonable attorney fees allowed to a prevailing party after a judgment in that party’s favor.
The requirements of ORCP 68, if applied, would also undermine the purposes of the UTMA. To hold that ORCP 68 applies to reimbursement of a'custodian’s attorney fees would not simplify and reduce the cost of handling transfers of funds or property to minors and reduce the involvement of courts in the oversight of the custodial estate; it would have the opposite effect. And, application of ORCP 68 to custodial expenses under the UTMA contravenes the directive in ORS 126.882 because it creates uncertainty in the application of the UTMA and does not promote uniformity of the law with respect to reimbursement of custodial expenses. Accordingly, we conclude that ORCP 68 is inapplicable, not that the legislature intended it to apply, to reimbursements of custodial expenses consisting of attorney fees under the UTMA.
Affirmed.
Petitioner joined respondent’s wife as a party, and she also prevailed in the litigation, but because respondent is the UTMA custodian, we simply refer only to respondent throughout this opinion.
Section 15 of the UTMA is in relevant respects identical to ORS 126.852. The comment to section 15 says almost nothing regarding custodial expenses and is silent with regard to attorney fees as custodial expenses. Uniform Transfers to Minors Act § 15 Comment, 8C ULA 59. Perhaps unsurprisingly, the parties do not cite and we have not found a reported Oregon appellate case concerning attorney fees as custodial expenses under ORS 126.852 or its predecessors, former ORS 126.855 (1965), repealed by Or Laws 1967, ch 300, § 7, and former ORS 126.856 (1983), repealed by Or Laws 1985, ch 665, § 27 — or any other reported appellate decision on the issue. As noted, the trial court recognized that it was providing “greater protection” by ordering respondent to submit his custodial expenses to the court for approval.