Title: Powers v. Quigley

State: oregon

Issuer: Oregon Supreme Court

Document:

FILED: December 11, 2008
IN THE SUPREME COURT OF THE STATE OF OREGON
ELENA POWERS,
Petitioner on Review,
v.
WILLIAM QUIGLEY,
Respondent on Review.
(CC 0406-05930; CA A129463; SC S054925)
En Banc
On review from the Court of Appeals.*
Argued and submitted March 3, 2008.
Christopher T. Hill, of Christopher T. Hill, PC, Portland, argued the cause and filed the briefs for petitioner on review.
James B. Rich, of Harris, Wyatt & Amala LLC, Salem, argued the cause and filed
the brief for respondent on review.
DURHAM, J.
The decision of the Court of Appeals is reversed.  The order of the circuit court
is reversed, and the case is remanded to the circuit court for further
proceedings.
*Multnomah County Circuit Court, Edward J. Jones, Judge.  212 Or App 644, 159 P3d 371 (2007).
DURHAM, J.
This case requires us to resolve an asserted conflict between ORS 20.080(1), which governs the recovery of attorney fees in tort claims for $5,500 or less, and ORCP 54 E,
which limits recovery of attorney fees after a party presents its opponent with
an offer of judgment.  We set out those provisions below.  Plaintiff seeks
review of a court order limiting her recovery of attorney fees to expenses
incurred prior to defendant's offer of judgment.  Plaintiff argues that ORCP 54
E does not apply to awards of attorney fees under ORS 20.080(1) because those
two statutes conflict and ORS 20.080(1) is the more specific statute.  The
Court of Appeals concluded that no such conflict existed and affirmed the
order.  Powers v. Quigley, 212 Or App 644, 648, 159 P3d 371 (2007).  We
now conclude that, with respect to attorney fees incurred after a defendant
makes an offer of judgment, there is a conflict between ORS 20.080(1) and ORCP
54 E.  Because ORS 20.080(1) is the more specific provision, it functions as an
exception to the rule stated in ORCP 54 E, and the offer of judgment procedure
under ORCP 54 E therefore does not limit a plaintiff's statutory right to an
award of attorney fees under ORS 20.080(1).  We therefore reverse the decision
of the Court of Appeals.
We begin with the facts of the case, which the parties do not dispute.  On April 3, 2003, defendant's car rear-ended plaintiff's car and damaged it.  Plaintiff had her
car repaired.  On May 21, 2004, plaintiff sent a written demand to defendant
and his insurance adjuster for $4,271 as compensation for the diminished value
of her car.  Defendant's insurance adjuster tendered an offer of $3,200 in
response, which plaintiff rejected.  On June 9, 2004, plaintiff filed a complaint
in Multnomah County Circuit Court, in which she alleged that defendant had been
negligent and requested damages of $4,271, as well as costs and attorney fees
under ORS 20.080.  After filing an answer, defendant served plaintiff with an
offer of judgment under ORCP 54 E for $3,636, exclusive of costs and
recoverable attorney fees, dated August 30, 2004.  Plaintiff rejected that
offer as well.
The case went to arbitration on March 29, 2005.  The arbitrator awarded plaintiff $3,300 in damages and $828.50 for attorney fees.  Pursuant to ORS 36.425(6), (1) plaintiff filed a written exception to the award of attorney fees, noting that she had submitted a statement listing her total attorney fees as $5,482.33.  Defendant
responded that plaintiff was not entitled to any recovery for attorney fees
incurred after defendant had served plaintiff with its offer of judgment
because defendant had offered plaintiff a greater amount of money than the
arbitrator had awarded her as damages.
The trial court held a hearing on May 6, 2005, and concluded that under ORCP 54 E, because defendant had submitted an offer of judgment for $3,636 and plaintiff had
recovered only $3,300, defendant's offer of judgment would prevent  plaintiff
from recovering attorney fees for legal work performed after August 30, 2004. 
The court allowed attorney fees of $1,267.67, and entered an order to that
effect. (2)
On appeal, plaintiff argued that the trial court should have granted her request for
attorney fees.  Plaintiff noted that, under ORS 20.080(1), she was entitled to
recover attorney fees because she had presented defendant with a written demand
for damages more than 10 days prior to filing a complaint and, although
defendant had tendered an offer of $3,200 in response, plaintiff had recovered
more than that amount in arbitration.  Plaintiff then argued that ORCP 54 E did
not apply to limit awards of attorney fees under ORS 20.080(1) because, with
respect to attorney fees incurred after an offer of judgment, ORCP 54 E was
"necessarily in conflict" with ORS 20.080(1).  Plaintiff noted that,
in Colby v. Larson, 208 Or 121, 297 P2d 1073 (1956), this court
identified a conflict between ORS 20.080 (1953) and former ORS 17.055
(1953), repealed by Or Laws 1979, ch 284, § 199, an offer-of-judgment
statute similar to ORCP 54 E. (3) 
This court concluded that, "[i]n such a case [,] the particular provisions
[of ORS 20.080] are considered an exception to the general [provisions of former
ORS 17.055]" and, therefore, an offer of judgment would not limit an
award of attorney fees under ORS 20.080.  Id. at 126-27.
The Court of Appeals had considered and rejected an argument similar to plaintiff's in Bell v. Morales, 207 Or App 326, 142 P3d 76 (2006).  Bell noted that,
under former ORS 17.055, the statute at issue in Colby, an offer
of judgment operated to cut off a plaintiff's recovery of costs, including
attorney's fees, if the plaintiff received less in damages than the amount that
the defendant had offered.  However, under ORCP 54 E, an offer of judgment cuts
off only the plaintiff's entitlement to attorney fees incurred after the
offer is made.  The Court of Appeals in Bell interpreted ORS 20.080 as
providing an incentive to settle a case prior to filing a complaint, while ORCP
54 E provided an incentive to do the same after the filing of the complaint
(and after the offer of judgment is made).  The court concluded that, by
enacting ORCP 54 E, the legislature had "eliminated the conflict that
concerned the court in Colby" by harmonizing the two statutory
provisions so that both "may be given full effect."  Id. at
336.  Accordingly, in this case, the court held that Bell foreclosed
plaintiff's argument and agreed with the trial court that ORCP 54 E cut off
plaintiff's statutory right to attorney fees.  Powers, 212 Or App at
648.
On review, plaintiff renews her argument that ORS 20.080(1) conflicts with ORCP 54 E and that the specific provisions of the former statute prevail over the general
provisions of the latter.  Defendant responds that the conflict identified in Colby
no longer exists and that this court should therefore read the provisions
together and give effect to both, as the Court of Appeals did.
We begin our analysis by examining the text of the statutes at issue.  ORS 20.080(1)
provides:
"In any action for damages for an injury or
wrong to the person or property, or both, of another where the amount pleaded
is $5,500 or less, and the plaintiff prevails in the action, there shall be
taxed and allowed to the plaintiff, at trial and on appeal, a reasonable amount
to be fixed by the court as attorney fees for the prosecution of the action, if
the court finds that written demand for the payment of such claim was made on
the defendant not less than 10 days before the commencement of the action or
the filing of a formal complaint under ORS 46.465, or not more than 10 days
after the transfer of the action under ORS 46.461.  However, no attorney fees
shall be allowed to the plaintiff if the court finds that the defendant
tendered to the plaintiff, prior to the commencement of the action or the
filing of a formal complaint under ORS 46.465, or not more than 10 days after
the transfer of the action under ORS 46.461, an amount not less than the damages
awarded to the plaintiff."
ORCP 54 E provides:
"E(1) Except as provided in ORS 17.065
through 17.085, the party against whom a claim is asserted may, at any time up
to 10 days prior to trial, serve upon the party asserting the claim an offer to
allow judgment to be given against the party making the offer for the sum, or
the property, or to the effect therein specified.
"E(2) If the party asserting the claim
accepts the offer, the party asserting the claim or such party's attorney shall
endorse such acceptance thereon, and file the same with the clerk before trial,
and within three days from the time it was served upon such party asserting the
claim; and thereupon judgment shall be given accordingly, as a stipulated
judgment.  If 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.
"E(3) If the offer is not accepted and filed
within the time prescribed, it shall be deemed withdrawn, and shall not be
given in evidence on the trial; and if the party asserting the claim fails to
obtain a more favorable judgment, 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 of the party asserting the claim costs and disbursements, not
including prevailing party fees, from the time of the service of the
offer."
Two basic rules govern this court's resolution of a conflict between statutes.  The first is that, when multiple statutory provisions are at issue in a case, this court, if
possible, must construe those statutes in a manner that "will give effect
to all" of them.  ORS 174.010; see State v. Guzek, 322 Or
245, 268, 906 P2d 272 (1995) (noting that when two statutes deal with the same
subject, "the two should be read together and harmonized, if possible,
while giving effect to a consistent legislative policy").  The second rule
is that, if two statutes are inconsistent, the more specific statute will
control over the more general one.  ORS 174.020(2); see Kambury v.
DaimlerChrysler Corp., 334 Or 367, 374, 50 P3d 1163 (2002) (illustrating
rule).  In short, if the court can give full effect to both statutes, it will
do so, and if not, it will treat the specific statute as an exception to the
general.  Guzek, 322 Or at 268 (citing State v. Pearson, 250 Or
54, 58, 440 P2d 229 (1968)). 
It is axiomatic that, to determine whether we can give
effect to both ORS 20.080(1) and ORCP 54 E, we must decide the effect that the
legislature intended those statutes to have.  The text of a statute provides
the best evidence of the intent behind its enactment.  In construing that text,
we also consider its context, including "prior opinions of this court
interpreting the same statutory wording."  Wal-Mart Stores, Inc. v.
City of Central Point, 341 Or 393, 397, 144 P3d 914 (2006).
Under ORS 20.080(1), a plaintiff who files a tort claim for $5,500 or less shall recover
attorney fees if (1) the plaintiff makes a written demand on the tortfeasor for
payment of a tort claim of $5,500 or less, at least 10 days prior to filing an
action; (2) the plaintiff files an action on that claim; (3) the plaintiff
prevails; and (4) the plaintiff obtains a judgment for an amount greater than
any prefiling settlement offer made by the tortfeasor.  Johnson v. Swaim,
343 Or 423, 427-28, 172 P3d 645 (2007) (so stating).  If the plaintiff satisfies
those procedural requirements, then the court must award "a reasonable
amount" as attorney fees to the plaintiff.
The legislature originally enacted ORS 20.080 in 1947, and this court "repeatedly has recognized" the policies underlying it, specifically,
"to encourage settlement of small claims, to prevent
insurance companies and tortfeasors from refusing to pay just claims, and to
discourage plaintiffs from inflating their claims."
Fresk v. Kraemer, 337 Or 513, 520, 99 P3d 282 (2004) (internal quotation
marks omitted).  The second of those policies -- preventing tortfeasors and
their insurers from ignoring just claims -- is particularly relevant to our
inquiry.  In the past, this court has recognized that tortfeasors and insurers
frequently rejected small claims, "knowing that the claimant would often
consider it impractical to bring an action if he had to pay his own attorney's
fees."  Bivvins v. Unger, 263 Or 239, 243, 501 P2d 1262 (1972). 
ORS 20.080 therefore allows plaintiffs to hold tortfeasors liable for their
attorney fees to promote settlement in cases where the plaintiff otherwise
might not be able to afford an attorney.  Landers v. E. Texas Motor Frt.
Lines, 266 Or 473, 476-77, 513 P2d 1151 (1973).  The idea that defendants
will be "pressured to settle cases * * * by the potential allowance of
attorney's fees" is "implicit" in ORS 20.080.  Heen v.
Kaufman, 258 Or 6, 8, 480 P2d 701 (1971).  A crucial feature of that
"pressure," to which we will return later, is that it applies prior
to filing the action.  By the explicit terms of ORS 20.080(1), a tortfeasor
can avoid an award of attorney fees under ORS 20.080(1) only by making an offer
of settlement before the plaintiff files a complaint.  A tortfeasor's offers
made after that date do not affect the statutory right to attorney fees that
ORS 20.080(1) creates.
Under ORCP 54 E, on the other hand, a plaintiff 's recovery of attorney fees can be limited if (1) the defendant, at any time up to 10 days prior to trial, offers to
allow judgment against itself for a specified sum; (2) the plaintiff does not
accept that offer, and; (3) the plaintiff fails to obtain a judgment that is
more favorable than the offer.  If those procedural requirements are met, then the
plaintiff may not recover attorney fees "incurred after the date of the
offer."  For Counsel, Inc. v. Northwest Web Co., 329 Or 246, 253,
985 P2d 1277 (1999).
A conflict between these provisions is apparent from their text.  ORS 20.080(1) provides that, in tort claims of $5,500 or less, a plaintiff is entitled to receive attorney fees
if the plaintiff satisfies certain procedural requirements prior to filing the
action.  ORCP 54 E, however, allows a defendant to cut off the plaintiff's
right to attorney fees by making an offer of judgment after the filing of an
action but before trial.  Therefore, the offer of judgment procedure under ORCP
54 E can negate, at least in part, an award of attorney fees that ORS 20.080(1)
requires.  For example, a plaintiff might serve a defendant with a written
demand for payment of a tort claim for $5,500 or less, receive no response, and
file a complaint.  If that plaintiff prevails at trial, he or she will have a
statutory right to receive attorney's fees.  However, the defendant can serve
the plaintiff with an offer of judgment under ORCP 54 E at any time up to 10
days before trial.  If the plaintiff refuses that offer, and thereafter fails
to recover more than that offer at trial, then the plaintiff's right to recover
attorney fees will not apply to any expenses incurred after the date that the
defendant makes the offer, including trial expenses. (4)  In short, ORCP 54 E allows a defendant to nullify, at least in part, the obligation to pay attorney
fees that ORS 20.080(1) creates.
Seen in that light, application of ORCP 54 E in circumstances like those presented here
would undermine the core purpose of ORS 20.080(1), namely, to prevent
tortfeasors and their insurers from refusing to pay just claims.  By requiring
an award of attorney fees, ORS 20.080(1) requires a defendant to evaluate the
plaintiff's case "and to make an offer at the risk of having to pay
attorney fees if the offer is inadequate."  Landers, 206 Or at
477.  Furthermore, the timing specified in the text of ORS 20.080(1)
demonstrates that the legislature intended to provide an incentive to defendants
to make those evaluations and offers before the plaintiff files an action,
because that statute does not allow a defendant to limit the liability
for attorney fees by making an offer to settle after the complaint is
filed.
It follows from the foregoing that we find a conflict between ORS 20.080(1) and ORCP 54 E on the basis of their statutory text alone.  Moreover, we must read that text in
light of this court's prior interpretations of it.  State v. McDonnell,
343 Or 557, 563, 176 P3d 1236 (2007).  And, in doing so, we are immediately
informed by this court's prior holding in Colby, 208 Or 121, in which we
addressed a nearly identical claim of statutory conflict.
The plaintiff in Colby sued to recover $372.59 for damages to his car, caused by the defendant's negligent driving.  The plaintiff also demanded attorney fees under ORS 20.080, claiming that he had made a written demand for that amount 10 days prior to
filing his complaint.  The defendant admitted his liability for the damages but
alleged that he had tendered with his answer and deposited with the court, a
payment of $372.59 for the plaintiff.  208 Or at 123.  The defendant contended
that he had made an offer of judgment under former ORS 17.055, a
predecessor of ORCP 54 E, and that the offer of judgment prevented the
plaintiff from recovering any attorney fees if he failed to obtain a
more favorable judgment.  The trial court accepted the defendant's argument and
denied the plaintiff's request for attorney's fees.  Id. at 124.
On the plaintiff's appeal, the court reversed the trial court.  We noted that, under ORS 20.080, the plaintiff was entitled to recover attorney fees if he had made a written
demand upon the defendant more than 10 days before commencing the action and if
the defendant had failed to tender $372.59 or more "prior to the
commencement of the action."  Id. at 125 (emphasis in
original).  On the other hand, under former ORS 17.055, the plaintiff
could not recover costs because "after the commencement of the action
but before trial," the defendant had made an offer of judgment for
$372.59.  Id. (emphasis in original).
This court held that, in light of the purposes of ORS 20.080, a conflict existed between that statute and former ORS 17.055:
"[ORS 20.080] was undoubtedly enacted for the purpose of
encouraging the settlement without litigation of meritorious tort claims
involving small sums.  The risk the defendant ran of having to pay the fee of
the plaintiff's attorney was evidently considered a spur to such settlements. *
* * Frequently the injured person might forego action upon a small claim
because he realized that, after paying his attorney, his net recovery would not
be worth the time and trouble of a vexatious law suit.  The legislature may
have found that [tortfeasors] or their insurance carriers frequently rejected
meritorious claims of this kind because of this known reluctance of injured
persons to litigate.  Claims which in honesty and fairness should have been paid
were not paid, and it was to remedy this evil that the statute was passed. 
But, if the defendant's position here were to be sustained, this clear
legislative purpose would be defeated by the defendant ignoring a demand made
pursuant to ORS 20.080, secure in the knowledge that if action should be
brought he could escape payment of an attorney's fee and other costs by
offering before trial to allow judgment to be given against him as provided in
[former] ORS 17.055."
Id. at 126.  Because the application of former ORS 17.055 in small
tort claims would negate awards of attorney fees under ORS 20.080, thereby
allowing a defendant to ignore demands made under the latter statute, this
court held that there was a conflict between the two.  Accordingly, ORS 20.080,
which applied specifically to tort claims below a certain amount, would prevail
over former ORS 17.055, which applied more generally to all civil
proceedings.  Id. at 126-27.
The Court of Appeals did not recognize the implications of that reasoning in Bell, 207 Or App 326.  In that case, the Court of Appeals noted that,
although offers of judgment under former ORS 17.055 operated to prevent
awards of any attorney fees, offers of judgment under ORCP 54 E would merely
prevent awards of attorney fees incurred after the offer was made. 
Accordingly, the court concluded that the legislature had "eliminated the
conflict that concerned the court in Colby."  207 Or App at 336. 
We disagree with the reasoning in Bell.  The conflict that concerned
this court in Colby was that, by allowing defendants a second chance to
avoid attorney fees after the plaintiff had filed the action, former ORS
17.055 eliminated a tortfeasor's incentive to settle prior to the filing of
the action, which was the goal of ORS 20.080.  The present version of former
ORS 17.055, ORCP 54 E, thus remains in conflict with ORS 20.080.  An offer of
judgment under ORCP 54 E no longer completely eliminates a plaintiff's
entitlement to an award of attorney fees, but it still can reduce the amount of
that award substantially.  If a defendant can reduce an award of attorney fees
under ORS 20.080 significantly by making an offer of judgment under ORCP 54 E,
the defendant's incentive to settle a claim before the filing of an action is
reduced, if not eliminated.
Because ORCP 54 E prevents this court from giving full effect to ORS 20.080(1), we must treat the more specific statute as an exception to the more general one.  ORS 20.080(1),
which applies to tort claims for $5,500 or less, is more specific than ORCP 54
E, which applies to all civil proceedings.  We therefore hold that the
procedure under ORS 20.080(1) is an exception to the procedure under ORCP 54
E.  Because of that exception, an offer of judgment, made after a plaintiff has
filed an action, will not serve to limit a plaintiff's entitlement to attorney
fees under ORS 20.080(1).  In this case, plaintiff is entitled to recover her
reasonable attorney fees, including fees that she incurred after August 30,
2004, the date of the defendant's offer of judgment.
The decision of the Court of Appeals is reversed.  The order of the circuit court is reversed, and the case is remanded to the circuit court for further proceedings.
1. ORS 36.425(6) provides, in part:
"Within seven days after the filing of a decision and award under subsection (1) of this section, a party may file with the court and serve on the other parties to the arbitration written exceptions directed solely to the award or denial of attorney fees or costs.  Exceptions
under this subsection may be directed to the legal grounds for an award or
denial of attorney fees or costs, or to the amount of the award."
2. The arbitrator had also denied costs to both plaintiff and defendant.  When the trial court entered its order awarding attorney fees, it
awarded costs to both parties.  On appeal, plaintiff challenged the award of
costs to defendant, claiming that defendant had failed to file and serve his
written exception to the arbitrator's denial of his costs within the time
required by ORS 36.425(6).  Powers, 212 Or App at 648-49.  The Court of
Appeals agreed and vacated the award of costs to defendant.  Id. at
652.  Neither party requests review of that ruling, and, accordingly, we do not
address it.
3. Former ORS 17.055 (1953) provided:
"The defendant may, at any time before trial, serve upon the plaintiff an offer to allow judgment or decree to be given against him for the sum, or the property, or to the effect therein
specified.  If the plaintiff accepts the offer, he shall by himself or attorney
indorse such acceptance thereon, and file the same with the clerk before trial,
and within three days from the time it was served upon him; and thereupon
judgment or decree shall be given accordingly, as in case of a confession.  If
the offer is not accepted and filed within the time prescribed, it shall be
deemed withdrawn, and shall not be given in evidence on the trial; and if the
plaintiff fails to obtain a more favorable judgment or decree, he shall not
recover costs, but the defendant shall recover of him costs and disbursements
from the time of the service of the offer."
4. This case provides an example of that scenario.  By bringing her case to trial, plaintiff incurred $5,482.33 in attorney fees.  However, the trial
court held that plaintiff's right to attorney fees was cut off as of August 30,
2004, the date of the offer of judgment.  Accordingly, plaintiff recovered
attorney fees of only $1,267.67, which amounts to less than 25 percent of the
total that she had claimed.