Case Title: Building Structures, Inc. v. Young

Citation: 

Docket Number: S41820

State: oregon

Court: Oregon Supreme Court

Date: 1998-12-10T00:00:00Z

Document:
Filed:  DECEMBER 10, 1998

IN THE SUPREME COURT OF THE STATE OF OREGON

BUILDING STRUCTURES, INC., an
Oregon corporation,

	Respondent on Review,

	v.

GARY C. YOUNG, MELODY YOUNG,
and YOUNG EQUIPMENT SALES CO.,
INC., an Oregon corporation,

	Petitioners on Review.

(CC 90-9-141; CA A71758; SC S41820)

	On review from the Court of Appeals.*

	Argued and submitted May 3, 1995; resubmitted May 27, 1998.

	Jay W. Beattie, of Lindsay, Hart, Neil & Weigler, Portland,
argued the cause and filed the petition for petitioners on
review.

	W. Theodore Guthrie, Portland, argued the cause and filed
the response for respondent on review.  

	Before Carson, Chief Justice, and Gillette, Van Hoomissen,
Durham, and Kulongoski, Justices.**

	DURHAM, J.

	The decision of the Court of Appeals is affirmed.  The case
is remanded to the circuit court with instructions to enter
judgment on plaintiff's fraud claim consistent with the jury
verdict. 

	*Appeal from Clackamas County Circuit Court,

	 Raymond Bagley, Judge.

	 131 Or App 88, 883 P2d 1308 (1994).

	**Unis, J., retired June 30, 1996, and did not participate
in this decision.  Fadeley, J., retired January 31, 1998, and did
not participate in this decision.  Graber, J., resigned March 31,
1998, and did not participate in this decision.  Leeson, J., did
not participate in the consideration or decision of this case.

	DURHAM, J.

	This action arises from a dispute over a contract to
build a commercial building.  Plaintiff brought four claims
against defendants, including breach of contract and fraud.  The
jury returned a verdict and the court entered judgment for
plaintiff.  However, the court subsequently granted a new trial
on the fraud claim, because the jury had awarded punitive damages
but no compensatory damages for fraud.

	Plaintiff appealed and the Court of Appeals held that
the circuit court had erred in granting a new trial.  Building
Structures, Inc. v. Young, 131 Or App 88, 94, 883 P2d 1308
(1994).  The Court of Appeals decided that, although defendants
had asserted that the jury's award of punitive damages on the
fraud claim was defective, defendants had failed to raise that
objection when the jury still was present.  Id. at 93.  The Court
of Appeals reasoned that defendants' failure to raise that
objection in a timely manner deprived plaintiff and the circuit
court of the opportunity to resubmit the verdict to the jury for
correction and constituted a waiver of the objection.  Id. at 92. 
Based on the foregoing, the Court of Appeals held that, because
defendants had waived their objection to the verdict, and
therefore were foreclosed from subsequently attacking the
resulting judgment based on the verdict, the circuit court had
erred in granting a new trial.  The Court of Appeals stated:

	"In this case, defendants allowed a patently defective
verdict to stand.  Then, after the jury was discharged,
they sought to take advantage of the defect.  As in
Smith [v. J. C. Penney Co., 269 Or 643, 525 P2d 1299
(1974),] and Marquam [Investment Corp. v. Myers, 35 Or
App 23, 581 P2d 545, rev den 284 Or 341 (1978)], that
sort of 'laying in the weeds' is impermissible."  

131 Or App at 93.  For the reasons that follow, we agree with the
Court of Appeals.

	The underlying facts are not pertinent to the
resolution of the question before this court.  It is sufficient
to state that defendants retained plaintiff to design and
construct a commercial building.  A dispute arose between the
parties, defendants contracted with another builder to complete
the project, and this action followed.  Plaintiff sought damages
on theories of breach of contract, quantum meruit, and fraud. 
Defendants admitted liability on quantum meruit for the value of
plaintiff's design work, but denied liability on the other
claims.

	The case was tried to a jury.  The jury returned a
special verdict for plaintiff for $23,450 on the breach of
contract claim.  With respect to the fraud claim, the special
verdict stated:

		"4.  Are defendants liable to plaintiff for fraud?

			"Answer     Yes      (Yes or No)

		"If you answered 'yes', go to Question No. 5.  If
you answered 'No', do not answer any further questions,
sign and return this verdict form.

		"5.  What is the amount of plaintiff's damages as
a result of defendants' fraud?

			"Answer $   -0-      (General Damages)[(1)]

			"Answer $ 51,550.00  (Punitive Damages)"

(Emphasis in original.) 

	Neither party objected to the verdict.  The court
received it and dismissed the jury.  The court entered judgment
for, among other things, the amount of the punitive damages
awarded to plaintiff on the fraud claim.

	Later, defendants moved for judgment notwithstanding
the verdict, ORCP 63, or in the alternative for a new trial, ORCP
64, on the breach of contract and fraud claims.  The court denied
the motions with respect to the breach of contract claim.  With
respect to the fraud claim, defendants argued that the jury's
verdict for punitive damages was erroneous and defective because
the jury did not award compensatory damages for fraud.  The court
denied the motion for judgment notwithstanding the verdict, but
granted the motion for a new trial on the fraud claim.  

	Plaintiff appealed the order granting a new trial. 
Defendants cross-appealed, arguing, as pertinent, that the court
should have entered judgment notwithstanding the verdict on the
fraud claim in plaintiff's favor for zero damages.  The Court of
Appeals reversed on plaintiff's appeal and affirmed on
defendants' cross-appeal.

	Defendants contend that the verdict on the fraud claim
is legally defective due to the lack of an award of actual
damages for fraud and that the court must set aside the award of
punitive damages for that reason.  Plaintiff responds that the
verdict in favor of plaintiff for punitive damages complies with
Oregon law and is not defective.  As a consequence of their
dispute about whether the jury's award of punitive damages to
plaintiff is defective or valid, the parties each contend that,
by failing to object to the verdict when the jury was present,
the other party waived any objection to the verdict or to the
judgment based on the verdict.  

	We begin by noting this court's general rule, on which
defendants rely, to the effect that a jury may not award punitive
damages in the absence of an award of actual damages to the
plaintiff.  See Klinicki v. Lundgren, 298 Or 662, 686, 695 P2d
906 (1985) (except in cases involving breach of public trust or
presumed damages, plaintiff may recover punitive damages only if
plaintiff "was somehow actually hurt and damaged by the
defendant's conduct"); Crouter v. United Adjusters, Inc., 259 Or
348, 364, 485 P2d 1208 (1971) (punitive damages are not
recoverable absent proof of actual damages).	 

	The question before us concerns the effect, if any, on
the validity of the verdict of defendants' failure to object to
the verdict when the jury returned it.  This court addressed a
closely analogous question in Edmonds v. Erion et al, 221 Or 104,
350 P2d 700 (1960).  That case involved a claim for damages for
personal injury resulting from an automobile accident.  The jury
returned a verdict for plaintiff for substantial economic damages
but for zero noneconomic damages.  The court acknowledged the
existence of a general rule regarding verdicts for economic
damages only:

		"The general rule governing recovery in actions
for damages based on ordinary negligence is that there
can be no verdict for [economic] damages unless a
verdict for [noneconomic] damages is had.  The obvious
reason for that is that if the claimant suffered no
[noneconomic] damages then he could not have incurred
[economic] damages."

Id. at 105.  We note that that general rule is indistinguishable
analytically from the general rule recited above regarding the
necessity of proof of actual damages as a predicate to an award
of punitive damages.(2)

	In Edmonds, neither party objected to the verdict when
the jury returned it.  The court entered judgment for the amount
of economic damages awarded by the jury.  Later, the plaintiff
moved for a new trial.  The court denied the motion.  The
plaintiff appealed, assigning error to the court's receipt of the
verdict and the denial of the motion for a new trial.  This court
described the issue as follows:

	"The determination of the appeal hinges on whether the
stated general rule renders the verdict conclusively
invalid or whether the insufficiency or irregularity
may be waived by conduct of the parties.

		"Defendants made no objection to the verdict in
the trial court and have not cross-appealed.  They are
deemed satisfied therewith.  [Former] ORS 17.355,
governing procedure when the jury returns into court
with a verdict, provides in part:

			"'* * * If the verdict is informal or
insufficient, it may be corrected by the jury
under the advice of the court, or the jury may be
again sent out.'

		"Counsel for plaintiff was present when the above
verdict was returned in court.  He knew the contents
thereof at the time, but made no objection to its being
received by the court and filed with the clerk for
entry in the journal.  The verdict was irregular and
insufficient, and on timely objection plaintiff was
entitled to have it resubmitted to the jury with
appropriate instruction or otherwise disposed of in the
discretion of the court."

Edmonds, 221 Or at 106.

	The statute cited by the Edmonds court, former ORS
17.355, survives without substantial change as ORCP 59 G(4),
which provides:

		"If the verdict is informal or insufficient, it
may be corrected by the jury under the advice of the
court, or the jury may be required to deliberate
further."

Edmonds thus confirms that a jury's improper designation in its
verdict of an award of economic damages without an award of
noneconomic damages is an example of an irregularity or
insufficiency in the verdict that is subject to ORCP 59 G(4).

	The Edmonds opinion continued:

		"In Fischer v. Howard, 201 Or 426, 271 P2d 1059
[1954], the jury returned a verdict for $1 for
[noneconomic] damages, $1 for punitive damages, and $35
[economic] damages.  Counsel for both parties were
present when the verdict was returned.  They were
informed of the verdict and neither asked that it be
corrected nor that the jury be again sent out.  The
verdict was received and judgment entered for $37 in
plaintiff's favor.  Plaintiff later moved for a new
trial, which was allowed.  Defendant appealed from the
order allowing the new trial, and on appeal the order
was reversed.  That case differed in that the action
was for an assault, so that nominal damages could have
been allowed, but is cited for the reasoning which is
applicable to the present case as follows:

			"'We are satisfied that when the plaintiff,
after acquainting himself with the verdict, made
no objections to its receipt and no motion that
the cause be recommitted to the jury, he waived
the objections now under analysis.  Having waived
them, they were unavailable as the basis for a
motion for a new trial.  The motion should,
therefore, have been denied.  Error was committed
when it was sustained.'

		"* * * * *

		"Consonant with the rights reserved to litigants
by the constitution and laws, there must be reasonable
rules for bringing litigation to an end.  We hold that
the right to object to a verdict because it allows
[economic] damages not supported by an allowance of
[noneconomic] damages may be waived, and that such
right was waived by plaintiff in this case."

221 Or at 106-09 (emphasis added).

	Three months after it announced the decision in
Edmonds, this court decided Mullins v. Rowe et ux, 222 Or 519,
353 P2d 861 (1960).  In Mullins, the plaintiff sought substantial
noneconomic and economic damages.  The jury returned a verdict
for the plaintiff for $332 for noneconomic damages and $0 for
economic damages.  According to the evidence, the plaintiff had
spent $332 on medical services.  The plaintiff did not object
when the jury was present, but later moved for and obtained an
order of the court setting aside the verdict and granting a new
trial.  The plaintiff argued that, in reality, the jury had
awarded economic damages but had failed to support that award
with a verdict for noneconomic damages.  This court reversed and
ordered reinstatement of the verdict and judgment based on the
verdict, stating the following rules:

		"(1) The time to object to a defective verdict, if
it is defective, is while the jury is still on hand so
that the trial court can resubmit the matter with
proper instructions.

		"(2) An objection not taken when the verdict is
returned into court is waived.

		"(3) The only correct procedure to follow is to
resubmit the matter to the same jury.

		"* * * * *

		"In the case before us the record is free from
legal error.  The trial judge understandably disagreed
with the verdict.  But if the verdict was erroneous, it
was an error only the jury could remedy."

Mullins, 222 Or at 524-25.	

	In a number of cases following Edmonds and Mullins,
this court has confirmed that, by failing to object when the jury
is present, a party waives objection to the jury's failure to
accompany an award of economic damages with an award of
noneconomic damages.  For example, in Null v. Siegrist, 262 Or
264, 497 P2d 664 (1972), the jury returned a verdict for the
plaintiff for $1 for noneconomic damages and $256 for economic
damages, and the court entered judgment on the verdict.  The
court denied the plaintiff's motion for a new trial and this
court affirmed, stating:

	"The law is well-established in this state in cases
similar to the case at bar that if counsel is present,
or had a reasonable opportunity to be present, and made
no objection or challenge to the form of the verdict
returned by the jury, the insufficiency or irregularity
of the verdict is waived."

Null, 262 Or at 268-69 (citations omitted).

	To the same effect, see Big Bend Agric. Coop. v. Tim's
Trucks, 277 Or 17, 20, 558 P2d 844 (1977) (plaintiff waived any
objection to verdict favoring defendant by failing to object when
jury was present); Kriner v. Weaver, 276 Or 741, 744-45, 556 P2d
652 (1976) (where verdict awarded only economic damages,
plaintiff waived "any claimed irregularity" of the verdict by
failing to object when the court received the verdict; court
reversed order granting a new trial and ordered reinstatement of
the judgment on the jury's verdict); Skourtis v. Ellis, 272 Or
149, 151, 535 P2d 1367 (1975) (where jury awarded no noneconomic
damages but substantial economic damages, plaintiff waived
objection by failing to object before court received the verdict
and discharged the jury); Clubb v. Hanson, 272 Or 236, 245-47,
536 P2d 528 (1975) (defendants waived any error or irregularity
in the jury's special findings of fact by failing to object when
the verdict was returned; trial court correctly denied
defendants' motion for new trial).  

	This court summarized the rule in those cases in Smith
v. J.C. Penney Co., 269 Or 643, 654-55, 525 P2d 1299 (1974):

	"We * * * were of the opinion [in Fischer] that a
contemporaneous objection [to the verdict] was required
by ORS 17.355(2).  201 Or at 433. 

		"* * * * *

		"* * * There is no reason why a verdict that may
be defective on the issue of damages should be treated
differently than a verdict that may be defective on the
issue of liability.  The underlying basis for the line
of reasoning adopted by this court in these defective
verdict cases is the promotion of justice and the
efficient administration of justice.  In all cases in
which the validity of a verdict is doubtful, an
objection must be made in order that the trial court
can decide whether the verdict is faulty.  If it is,
the trial court can decide whether to resubmit the case
to the jury and have the case decided correctly by the
jury which has heard the case."

	Rhodes v. Harwood, 273 Or 903, 926, 544 P2d 147 (1975),
confirms that the contemporaneous objection requirement described
in the foregoing cases applies equally in the context of an
arguably defective award of punitive damages.  In Rhodes, the
jury returned a verdict for each plaintiff that included awards
of punitive damages for trespass in the sum of $1,500 and awards
of general damages of $1.  The defendant argued, just as
defendants argue here, that

	"the law in Oregon is well settled that punitive
damages are not recoverable in the absence of an award
of actual and substantial compensatory damages."

Rhodes, 273 Or at 925.  The plaintiffs argued in response that
the  defendant had failed to make a timely objection to the
sufficiency of the verdict before the court discharged the jury. 
This court concluded that the defendant had made a timely and
continuing objection, before the court discharged the jury, to
the propriety of the verdict, i.e., that the jury had awarded
punitive damages for trespass but also had concluded that the
plaintiffs had suffered no actual damage on the trespass claim. 
Id. at 926.  The court's analysis of the timeliness of the
defendant's objection to the verdict would have served no purpose
if the defendant had no obligation to object to the verdict
before the court had discharged the jury.

	The logic of the decisions summarized above is
inescapable.  Subject to certain exceptions noted above, our
cases have relied on a similar rationale in requiring an award of
noneconomic damages to support an award of economic damages and
in requiring an award of actual damages to support an award of
punitive damages.  Either party may assert that a verdict is
defective because it violates those rules, but a party waives
that objection by failing to assert it "while the jury is still
on hand so that the trial court can resubmit the matter with
proper instructions."  Smith, 269 Or at 653 (citation omitted). 
The only correct procedure for curing the defect is "to resubmit
the matter to the same jury."  Id. at 654.  If neither party
objects to receipt of the verdict when the jury returns it, the
court may assume that the parties are satisfied with the amount
or amounts awarded, if any, and enter judgment accordingly.  As
this court said in Fischer, 201 Or at 463: 

		"Plainly, a litigant who wishes to present the
contentions offered by this appeal [i.e., that the
verdict is defective because it awards economic damages
but lacks a substantial award of noneconomic damages]
must object promptly when he observes the irregularity
or forfeit his right to object.  Rights to object which
have been waived cannot be reclaimed and revived by
resort to a motion for a new trial."

	Defendants argue that the verdict here, in reality, was
one for defendants, not a defective verdict for plaintiff,
because the jury's failure to award actual damages necessarily
means that plaintiff failed to prove that it had suffered harm
from the alleged fraud, and that it was therefore incumbent on
plaintiff to object to the verdict.  Defendants rely on State ex
rel Sam's Texaco & Towing, Inc. v. Gallagher, 314 Or 652, 842 P2d
383 (1992), Klinicki, and ORCP 61 A(2).(3)  

	Defendants appear to recognize that that argument, if
accepted, would support entry of judgment for defendants, not the
order entered here granting a new trial because the verdict was
defective.  They rely on that argument not to defend the judgment
on appeal but, instead (in their words) to support the "circuit
court's refusal to enter a judgment including punitive damages"
on the fraud claim, and they assert that argument "subject to the
disposition of the cross-appeal."  Because defendants' argument,
if accepted, would result in a reversal or modification of the
judgment, we consider it in the context of defendants' cross-appeal, and 
do not consider it as an alternative argument that
supports the circuit court's judgment.  See ORAP 5.57(2); Artman
v. Ray, 263 Or 529, 533, 501 P2d 63 (1972) (cross-appeal
unnecessary if the respondent seeks to sustain the judgment
below).

	On their cross-appeal, defendants assign error to the
court's decision

	"* * * granting a new trial on plaintiff's fraud claim
rather than entering judgment [notwithstanding the
verdict] on that claim without an award of punitive
damages * * *."

Defendants raised that argument in connection with their motion
for judgment notwithstanding the verdict and for a new trial
after the court had entered judgment on the jury verdict.

	Defendants acknowledge that an order denying a judgment
notwithstanding the verdict is not appealable, Stahl v.
Krasowski, 281 Or 33, 36, 573 P2d 309 (1978), and that defendants
did not make the "motion for a directed verdict * * * at the
close of all the evidence," ORCP 63 A,(4) that is the necessary
predicate for entry of a judgment notwithstanding the verdict
under ORCP 63.  Despite those problems, defendants argue that
theirs is not a "garden-variety" motion for judgment
notwithstanding the verdict, because they could not have raised
the alleged error on which they rely in a preverdict motion.

	We are not persuaded.  Defendants' argument disregards
the requirement under ORCP 63 A that a motion for judgment
notwithstanding the verdict be preceded by the denial of a motion
for directed verdict made at the close of all the evidence.  As
the cases discussed above demonstrate, defendants' proper course
was to treat the verdict as one that embodied a defect and to
raise that objection before the court discharged the jury.

	The authorities on which defendants rely do not require
a different result, because they are distinguishable.  Neither
Sam's Texaco & Towing nor Klinicki involved the procedural
consequences that attend a party's failure to object to a
defective jury verdict that awards punitive damages but no actual
damages.  Sam's Texaco & Towing held that a jury's dispositive
answers to questions about the defendant's liability on a special
verdict form provided the basis for a judgment for the defendant
despite the jury's failure to answer other questions on the form,
such as those concerning the amount of damages.  Sam's Texaco &
Towing, 314 Or at 660-61.  Klinicki held that a party's liability
for the equitable remedy of an accounting entailed no proof of
harm to the other party, let alone the oppressive or malicious
injury that arguably might furnish the basis for an award of
punitive damages.  Klinicki, 298 Or at 686-88.  Klinicki applied
the general rule, noted earlier, that actual harm must underlie
an award of punitive damages, id. at 686, but the court did not
apply, and the opinion does not address, the waiver rule on which
this case turns. 

	Neither is ORCP 61 A(2) applicable.  That rule purports
to control only if the verdict is a general verdict that contains
a specific designation that no amount of recovery shall be had. 
The verdict here was a special verdict that purported to award
substantial punitive damages.

	Finally, defendants argue that, for practical reasons,
the court cannot expect them to object under the circumstances. 
They contend that an objection would invite the jury, by
implication, to award even greater damages against them in order
to support the punitive damages award.

	That argument is a telling reminder of the important
policy reasons that support the requirement of a timely objection
to a defect in a jury verdict.  Both parties faced some degree of
risk in deciding whether to object to the jury's verdict.  Each
party potentially could have objected and argued that the verdict
was defective due to the absence of an award of actual damages. 
Such an objection would have permitted the court to allow the
jury to correct the verdict or to deliberate further, as
contemplated by ORCP 59 G(4).  However, the outcome of such
further proceedings would have been unpredictable.  On the one
hand, as defendants contend, the jury might have added an award
of actual damages to its fraud verdict, thereby supporting the
existing punitive damages award.  On the other hand, the jury
might have stricken the punitive damages award because it was not
willing to award actual damages to plaintiff on the fraud claim. 
The jury also might have taken other corrective action to
eliminate the defect.  

	By choosing not to object, defendants impeded the
proper functioning of the procedure, described in ORCP 59 G(4)
and discussed in our cases, for obtaining a timely correction by
the jury of a defective verdict.  That choice would lead to the
needless retrial of cases, with the attendant burdens to
litigants and the justice system of greater delay and expense. 
See Fischer, 201 Or at 454:  

	"Objections which urge irregularities and lack of
proper form will be treated as waived unless they were
voiced before the jury was discharged.  * * * When
reconciled in the manner just indicated, effect is
given to § 5-319 [now ORCP 59 G(4)] and a simple rule
of procedure is had which can be easily employed.  The
rule minimizes retrials.  Any rule which obviates
needless retrials renders the administration of justice
more prompt and less expensive.  The rule which we have
distilled from our previous decisions does not reward
with a new trial a party who sits mute when he should
have spoken."

	We hold that defendants waived their objection to the 
defect in the jury's verdict by failing to object when the jury
was present.  Defendants cannot remain silent, permit the trial
court to discharge the jury and enter a judgment for the amounts
awarded by the jury, and then, at a later date, seek a new trial
because the verdict contains a defect.  Because defendants waived
their objection to the verdict, they are not permitted to rely
later on the same objection in seeking a new trial.  The trial
court erred in granting a new trial on the basis of a claim of
error that defendant had waived.(5)  See Beglau v. Albertus, 272 Or
170, 180, 536 P2d 1251 (1975) (trial court may order a new trial
only for prejudicial error).

	The decision of the Court of Appeals is affirmed.  The
case is remanded to the circuit court with instructions to enter
judgment on plaintiff's fraud claim consistent with the jury
verdict.

1.      	The definition of the terms "economic damages" and
"noneconomic damages" that appear in ORS 18.560(2) apply in a
civil action seeking damages arising out of bodily injury.  Those
terms and their statutory definitions are inapplicable to this
case because plaintiff's alleged damages do not arise out of
bodily injury.

2.      	The general rules are subject to some exceptions.  As
this court noted in Klinicki, 298 Or at 686:

	"[A]n award of punitive damages coupled with an award
of only nominal damages is proper when the case
involves special circumstances * * *." 

As examples of cases that involve special circumstances, the
court cited those that demonstrate a breach of a fiduciary duty
by a public officer, Lane County v. Wood, 298 Or 191, 203, 691
P2d 473 (1984), and those in which damages are presumed, such as
invasion of privacy, Hinish v. Meier & Frank Co., 166 Or 482,
506-07, 113 P2d 438 (1941), wrongful attachment of property,
Crouter, 259 Or at 365, and trespass, Rhodes v. Harwood, 273 Or
903, 926-27, 544 P2d 147 (1975).  Klinicki, 298 Or at 686.

	For a discussion of the circumstances in which a jury may
return a verdict for economic damages without an award of
noneconomic damages, see Wheeler v. Huston, 288 Or 467, 479-82,
605 P2d 1339 (1980) (confirming that objection to verdict for
claimed economic damages only is subject to waiver by failure to
object while jury is present).

3.      	ORCP 61 A(2) states:

		"When a general verdict is found in favor of a
party asserting a claim for the recovery of money, the
jury shall also assess the amount of recovery.  A
specific designation by a jury that no amount of
recovery shall be had complies with this subsection."	

4.      	ORCP 63 A states:

		"When a motion for a directed verdict, made at the
close of all the evidence, which should have been
granted has been refused and a verdict is rendered
against the applicant, the court may, on motion, render
a judgment notwithstanding the verdict, or set aside
any judgment which may have been entered and render
another judgment, as the case may require."

5.      	We reject, without discussion, defendants' separate
arguments that the parties' contract was too indefinite to
enforce and that the record contains insufficient proof of a
fraudulent misrepresentation by defendants.