Ken Leahy Construction, Inc. v. Cascade General, Inc.

EDMONDS, J.,

dissenting.

This is an action for a declaratory judgment under ORS chapter 28 in which plaintiff seeks a declaration that defendant be declared the owner of certain dry docks that plaintiff obtained for defendant pursuant to their agreement to develop plaintiffs property as a ship repair facility. As part of the agreement, defendant promised to purchase the docks for one dollar after plaintiff procured the dry docks from the Port of Portland and moved them to its property. The majority agrees that defendant breached the parties’ agreement. However, it denies plaintiff relief on the ground that the trial court and we do not have the authority to issue a declaration of ownership in defendant in the absence of evidence that plaintiff has an inadequate legal remedy for defendant’s breach. That holding creates an inequitable result and is contrary to ORS 28.010 and Oregon case law.

ORS 28.010 provides:

“Courts of record within their respective jurisdictions shall have the power to declare rights, status, and other legal relations, whether or not further relief is or could be claimed. No action or proceeding shall be open to objection on the ground that a declaratory judgment or decree is prayed for. The declaration may be either affirmative or negative in form and effect, and such declaration shall have the force and effect of a final judgment or decree.” (Emphasis supplied.)

ORS 28.010 is not a new statute. The above language was first enacted in 1927.¹ In construing OCLA § 6-601, where ORS 28.010 was previously compiled, the court in Recall Bennett Com. v. Bennet et al, 196 Or 299, 323, 249 P2d 479 (1952), had occasion to quote the following passage from Edwin Borchard, Declaratory Judgments, 302-04 (2d ed 1941):

“As already observed, however, it is wrong for courts to decline a declaration on the mere ground that another remedy was available, for declaratory relief was not intended to be exclusive or extraordinary, but alternative and optional. It is only where the court believes that more effective relief can and should be obtained by another procedure and that for that reason a declaration will not serve a useful purpose, that it is justified in refusing a declaration because of the availability of another remedy.” (Emphasis in original.)

That language was relied on by the court in Schmitt et ux v. Culhane et al, 223 Or 130, 354 P2d 75 (1960), where the plaintiffs sought a declaratory judgment regarding the application of a land use restriction to their land. The trial court ruled that the restriction did not attach to the plaintiffs’ land, and the defendants appealed. On appeal, they contended that the plaintiffs had an adequate remedy at law and that the trial court erred in failing to uphold their defense on that ground. The court ruled:

“This was a proceeding for a declaratory judgment. The courts may not decline a declaratory judgment on the mere ground that another remedy is available, since declaratory relief was not intended to be exclusive or extraordinary, but alternative and optional. * * * We find this assignment without merit.” 223 Or at 134. (Citation omitted.)

Borchard explains why declaratory judgments afford relief when the relief of specific performance is not available because of the absence of an inadequate legal remedy.

“[Declaratory judgments] enable[] specific duties to be declared, and [a declaratory judgment] serves as a judgment for specific performance in cases where equity cannot grant such relief. * * *

* * * *

“The performance of specific duties may be assured, without seeking to enjoin any breach or suing for damages after ostensible breach, by an action for a declaration that the defendant is under a duty to perform, an effective substitute for, and extension of, the limited equitable bill for specific performance. * * *

* * * *

“The opportunity to achieve specific performance without compulsory process and in circumstances beyond the scope and the technical conditions of an equitable bill of specific performance will be readily appreciated.” Borchard, Declaratory Judgments, 548-54 (2d ed 1941).

In sum, the Supreme Court, in Schmitt, held directly contrary to the majority’s position in this case. The language of ORS 28.010 is clear: that courts may not decline declaratory relief on the ground that there is an adequate legal remedy is mandated by the language of the statute that declaratory relief is available “whether or not further relief is or could be claimed.” Brooks v. Dierker, 23 Or App 697, 701, 544 P2d 598, rev on other grounds 275 Or 619 (1976).² As Borchard points out, declaratory judgment statutes are intended to provide remedies where the requirements of a claim for specific performance are not met. The majority, by its opinion in this case, has defeated the intention of the legislature when it adopted ORS chapter 28.

Moreover, the majority’s reliance on the holding in Samuel v. Frohnmayer, 308 Or 362, 779 P2d 1028 (1989), in support of its interpretation of ORS 28.010, is misplaced. In Samuel, the plaintiff chiropractor sought a judicial declaration that he was entitled to be indemnified by the state’s attorney general for the expenses he incurred in defending a civil action that arose out of his activities as chairman of a review committee that concluded that another chiropractor was rendering unnecessary medical services to an injured worker. His claim was based on the premise that the attorney general was obliged to undertake his defense in the civil action against him. We held that he should have been provided a defense by the attorney general and remanded the matter to the trial court. On remand, Samuel sought additional relief, i.e., an award for the attorney fees that he had incurred in bringing the indemnity action against the attorney general. The trial court denied his claim and once again he appealed to this court. We held that attorney fees could be a proper form of awardable relief under ORS 28.080. On review, the Supreme Court disagreed. It held that the language of ORS 28.080 providing for supplemental relief did not include the authority to award attorney fees in the absence of other express statutory or contractual authority to award attorney fees under the circumstances. As is evident, the court’s holding was premised on the well recognized proposition that attorney fees are not recoverable in the absence of a statute or a contractual provision that provides for their availability. The holding has nothing to do with the issue in this case, which is whether a court is authorized to deny declaratory relief under ORS 28.010 because plaintiff did not prove that its legal remedy was inadequate.

Finally, the majority’s result is plainly inequitable. Declaratory judgment proceedings are equitable or legal in nature depending on the kind of declaration sought and the essential nature of the case. International Health & Life v. Lewis, 271 Or 35, 530 P2d 517 (1975). Clearly, plaintiff seeks equitable relief in its attempt to have defendant declared the owner of the dry docks. Equity will not permit a wrong to occur without a remedy.

“In a case made appropriate by the facts, equity looks to the substance and not the shadow, to the spirit and not the letter. Equity seeks justice rather than technicality, truth rather than evasion, common sense rather than quibbling.” State of Oregon ex rel. v. Dobson, 195 Or 533, 577, 245 P2d 903 (1952).

In this case, defendant made a bargain with plaintiff. It agreed that if plaintiff would procure the dry docks from the Port and move them to plaintiffs property, then defendant would move its ship repair facility from the ports of Portland and Astoria to plaintiffs property. However, because of its relationship with the Port of Portland, defendant insisted that plaintiff procure the dry docks from the Port of Portland without disclosing defendant’s involvement. Accordingly, the parties mutually agreed not to put their development agreement in writing to protect defendant’s relationship with the Port. As part of their development agreement, defendant promised to buy the dry docks from plaintiff for one dollar. Plaintiff performed as it had promised. It bid successfully on the dry docks and subsequently transported them to its property. The necessary proposed zoning changes were agreed on by the parties and construction plans were drawn. However, after several months, defendant repudiated its agreement with plaintiff and walked away from the development project, leaving plaintiff with the dry docks on its property.

The majority rewards defendant for its breach by refusing to declare it the owner of the dry docks. The principles of equity dictate otherwise. Plaintiff procured the dry docks at the instance of defendant and for defendant’s benefit. Plaintiff owns the dry docks only because defendant asked it to purchase them on defendant’s behalf to protect its relationship with the Port of Portland. Plaintiff is now stuck with the docks on its property, and defendant has refused to perform its promises to develop the property into a ship repair facility and move its businesses there. Justice, fairness and common sense all cry out that defendant be held accountable for its wrongful repudiation of the parties’ agreement. Under the express language of ORS 28.010, the fact that there may be available legal remedies is not a proper ground for denying plaintiff the relief that it seeks, and the majority errs in holding otherwise.

I dissent.

1 See Or Laws 1927, ch 300, § 1. See also OCLA § 6-601.

2 Although declaratory relief will not be withheld simply because other relief is available, the existence of a more appropriate remedy is a relevant consideration in determining whether declaratory relief is proper in a particular case. Brooks v. Dierker, 275 Or at 624; see also Campbell v. Henderson, 241 Or 75, 80-81, 403 P2d 355 (1069). Nonetheless, “[w]hile the courts do have some discretion in granting declaratory relief, * * * the court should afford relief absent countervailing reasons.” Brown v. Oregon State Bar, 293 Or 446, 451, 648 P2d 1289 (1982).