Case Name: KEN LEAHY CONSTRUCTION, INC., an Oregon corporation, Respondent, v. CASCADE GENERAL, INC., an Oregon corporation, Appellant
Court: Oregon Court of Appeals
Jurisdiction: Oregon
Decision Date: 1997-08-20
Citations: 149 Or. App. 480
Docket Number: 9307-04717; CA A85442
Parties: KEN LEAHY CONSTRUCTION, INC., an Oregon corporation, Respondent, v. CASCADE GENERAL, INC., an Oregon corporation, Appellant.
Judges: Before Warren, Presiding Judge, and Edmonds and Armstrong, Judges.
Reporter: Oregon Reports, Court of Appeals
Volume: 149
Pages: 480–493

Head Matter:
Argued and submitted December 14,1995,
reversed and remanded August 20,1997
KEN LEAHY CONSTRUCTION, INC., an Oregon corporation, Respondent, v. CASCADE GENERAL, INC., an Oregon corporation, Appellant.
(9307-04717; CA A85442)
944 P2d 951
John R. Faust, Jr., argued the cause for appellant. With him on the briefs was Schwabe, Williamson & Wyatt.
Clarence M. Belnavis argued the cause for respondent. With him on the brief were Charles F. Adams, Richard E. Alexander and Stoel Rives.
Before Warren, Presiding Judge, and Edmonds and Armstrong, Judges.
ARMSTRONG, J.
Edmonds, J., dissenting.

Opinion:
ARMSTRONG, J.
Defendant appeals from a declaratory judgment that declared it the owner of certain dry docks and ordered it to take possession and accept responsibility of them. We review de novo, ORS 19.125(3), and reverse and remand.
Plaintiff is a construction and development company owned by Ken Leahy and his wife. Defendant is a ship-repair company based in Portland. Ken Leahy and two partners own a tract of land adjacent to the Columbia River known as the Bradwood property. The Bradwood property consists of 270 acres of forest land and 32 acres of marine industrial land.
In the summer of 1990, plaintiff and defendant began discussions about developing the Bradwood property as a ship-repair facility. As the discussions progressed, plaintiff contends that the parties reached an agreement under which plaintiff would develop and construct the facility for defendant at cost plus 10 percent. Plaintiff further claims that, during those discussions, defendant asked it to obtain a set of dry docks for the facility that were then being decommissioned by the Port of Portland. Defendant claims that any discussions about the Bradwood project were only preliminary at that point and that plaintiff purchased the dry docks on its own accord. In any case, on October 19,1990, plaintiff submitted a bid to the Port to acquire the dry docks. The Port accepted that bid and paid plaintiff $190,000 to move the dry docks to the Bradwood property.
After plaintiff had acquired the dry docks, the parties continued their discussions about the project. Plaintiff retained several consultants and engineers to develop the specifications for it. It contends that, as the discussions progressed, the parties reached sufficient agreement on the scope of the work and their respective responsibilities for the agreement to form an enforceable contract. Plaintiff claims that, as part of that contract, defendant agreed to purchase the dry docks from plaintiff for one dollar.
Defendant contends that the discussions between the parties were only preliminary and never led to an enforceable contract. In addition, it contends that it never agreed to purchase the dry docks from plaintiff. Defendant maintains that the project was always conditioned on securing a tenant for the facility. It further contends that the parties intended the facility to be used only as a home port and not as a repair facility. Therefore, according to defendant, the dry docks were not essential to the project. Ultimately, when negotiations to secure a tenant for the site failed, defendant felt free to walk away from the discussions without penalty, and it did so.
Plaintiff sued defendant for breach of contract, unjust enrichment and fraud and for declaratory and injunc-tive relief. The court dismissed plaintiffs unjust enrichment claim at trial. The contract and fraud claims were submitted to a jury. The jury found that there was an enforceable oral contract for the development of the Bradwood property, that defendant had breached that contract and that the contract included, as one of its terms, a promise by defendant to buy the dry docks from plaintiff for a dollar. The jury found, however, that plaintiff had sustained no damage from defendant's breach of the development contract and that defendant had not committed fraud. The court entered judgment for plaintiff on the contract claim and for defendant on the fraud claim.
The court decided the declaratory relief claim. After considering the jury's verdict as an advisory verdict on that claim, the court declared that title to the dry docks was vested in defendant and it ordered defendant to take possession and accept responsibility of them.
Defendant assigns error to the court's declaration. The parties dispute our scope of review on the factual issue that underpins the declaration, which is whether defendant agreed to buy the dry docks from plaintiff for a dollar. Relying on Sasser v. DeLorme, 56 Or App 630, 642 P2d 1192 (1982), plaintiff argues that the jury's finding on that issue is binding on us if there is any evidence to support it. Relying on Westwood Corp. v. Bowen, 108 Or App 310, 815 P2d 1282 (1991), rev dismissed 312 Or 589 (1992), defendant argues that the jury's finding is not binding and that we are required to decide the issue independently.
We need not decide whether plaintiff or defendant is correct about our scope of review, because, on de novo review, we make the same finding as did the jury on the agreement to purchase the dry docks. On de novo review, we give considerable weight to findings on issues that turn on credibility. See, e.g., Kuhl v. Garner, 134 Or App 185, 187, 894 P2d 525 (1995). Here, the finding on the agreement to buy the dry docks is such a finding. Both the jury and the court heard conflicting testimony on it. They implicitly found plaintiff's testimony on the issue to be more credible. From our review of the record, we see no reason to reject their finding on it.
Although we find that defendant agreed to buy the dry docks, we conclude that the trial court erred in declaring that defendant owns them. There simply is no evidence that defendant fulfilled its contractual obligation to buy them, which is a factual predicate to a declaration that it owns them.
The trial court may have assumed that it could declare the contract performed, even though it had not been, because the payment due from defendant was nominal and plaintiff had implicitly waived it. However, that is not a proper use of the authority granted to courts by the declaratory judgment statute. In effect, the court granted specific performance of the contract through its declaration about the ownership of the dry docks, without requiring plaintiff to establish that it had an inadequate legal remedy for defendant's breach of the parties' contract. Had plaintiff sought a declaration that defendant was required specifically to perform its contract, plaintiff would have had to show that it had an inadequate legal remedy in order to establish its right to that declaration. Plaintiff could not avoid the required showing of an inadequate legal remedy by having the court declare that the parties' contract had been performed when it had not.
Samuel v. Frohnmayer, 308 Or 362, 779 P2d 1028 (1989), confirms that the declaratory judgment statute cannot be used in that way to modify the legal principles that bear on a party's entitlement to judicial relief. There, a chiropractor sought a declaration that he was entitled to be indemnified by the state against costs that he had incurred in defending a civil action. The trial court ultimately gave him that declaration but declined to award him attorney fees in the action. We reversed on the attorney-fee issue, holding that the authority under ORS 20.080 to grant "further relief based on a declaratory judgment" provided authority for an award of attorney fees in the absence of any other source of authority for such an award. Samuel v. Frohnmayer, 95 Or App 561, 563-64, 770 P2d 914 (1989).
The Supreme Court reversed us on that point. It reasoned that the further relief that ORS 20.080 authorizes a court to award after it grants a declaratory judgment is relief that the law otherwise entitles a party to receive. If that were not the principle and ORS 20.080 provided an independent source of authority to award attorney fees as further relief in declaratory judgment actions, parties would convert many of their actions into declaratory judgment actions in order to obtain attorney-fee awards to which they would not otherwise be entitled.
That same principle applies to parties seeking equitable relief. The declaratory judgment statute, and the provision in ORS 20.080 under which courts are authorized to award further relief based on declaratory judgments, cannot be used to circumvent the normal requirements for equitable relief. The trial court erred, therefore, in declaring that defendant owns the disputed dry docks and is required to take possession and assume responsibility of them. On the facts of this case, the declaration to which plaintiff is entitled is a declaration that defendant does not own the dry docks.
The dissent rejects that conclusion based on a misunderstanding of our decision. It contends that we have denied plaintiff a declaration of its rights in the dry docks, contrary to ORS 28.010 and cases interpreting that statute. The dissent is wrong. We have directed the trial court to enter a judgment declaring that defendant does not own the dry docks. Although that declaration is contrary to the one that plaintiff sought, it is a declaration. Schmitt v. Culhane, 223 Or 130, 354 P2d 75 (1960), and the other cases cited by the dissent address the discretion given to courts under ORS 28.010 to refuse to give parties any declaration of their rights. They have no bearing on our decision because we have directed the trial court to enter a judgment declaring the parties' ownership rights in the dry docks.
The dissent also quotes a passage from Borchard's treatise on declaratory judgments that suggests that a declaration of the parties' rights under a contract can serve
"as a judgment for specific performance [of the contract] in cases where equity [could] not grant such relief."
149 Or App at 490 (quoting Edwin Borchard, Declaratory Judgments 548 (2d ed 1941)). If that were true, then, perhaps, a court could enter the declaration that the trial court entered here. With due respect to the late Professor Bor-chard, however, declaratory judgments under ORS chapter 28 cannot be used in the way that Borchard suggested.
Under ORS 28.020, a party to a contract can obtain a declaration on the "construction or validity" of the contract and on the party's "rights, status or other legal relations thereunder." In this case, for example, plaintiff could have sought and obtained a judgment declaring that defendant is required under the parties' contract to purchase the dry docks for one dollar. Significantly, however, that judgment would not constitute a court order requiring defendant to fulfill its contractual obligation to do that. The reason is that the declaration would establish what the contract required defendant to do, not what the court required it to do. Consequently, if defendant refused to act in accordance with the declaration, it would not be subject to contempt for that refusal.
Plaintiff could respond to the refusal by petitioning the court for further relief under ORS 28.080. That statute authorizes a court to grant "[f]urther relief based on a declaratory judgment whenever necessary or proper." Under Oregon law, an order granting specific performance of a contract is "necessary or proper" only when a party establishes that it has an inadequate legal remedy. Plaintiff did not make that showing, so it could not obtain that relief under ORS 28.080.
As noted above, plaintiff might instead have sought a declaration that it was entitled to have defendant specifically perform its contractual obligation to purchase the dry docks for one dollar. It should be evident that, to establish its right to that declaration, plaintiff would have to establish that it has an inadequate legal remedy, because the declaration, itself, embodies a determination that plaintiff is entitled to an equitable remedy, an entitlement that depends on whether plaintiff has an adequate legal remedy.
No matter how it approached the issue in this case, plaintiff is entitled to declaratory relief that results in specific performance of the parties' contract only on a showing that it lacks an adequate remedy at law for defendant's failure to fulfill its contractual obligations. It did not make that showing here.
Finally, the dissent contends that the result we reach in this case "is plainly inequitable." We respectfully disagree. The dissent suggests that plaintiff purchased the dry docks at the instance of defendant and for its benefit. 149 Or App at 492. Had plaintiff alleged and proven that it had acquired the dry docks as an agent for an undisclosed principal, defendant, it presumably would be entitled to a declaration that defendant owns the dry docks. Plaintiff did not do that, however, presumably because plaintiff did not, in fact, acquire the dry docks as defendant's agent. Plaintiff proved, instead, that it acquired the dry docks for the development and that defendant agreed as part of the parties' development contract to purchase the dry docks from it for one dollar. The relief to which plaintiff is entitled for defendant's breach of that contract is governed by established legal principles. Those principles do not permit a court to give plaintiff the relief that the dissent wishes to give it on this record.
We emphasize the last point to make clear that our decision does not determine the relief to which plaintiff may be entitled for defendant's breach of the parties' contract. All we hold is that, on this record, plaintiff is not entitled to a declaration that defendant owns the dry docks. ORS 28.080 authorizes the trial court to award plaintiff further relief based on the declaration that the court enters on remand. The relief that is "necessary or proper" in the light of that declaration is not now before us and we express no opinion about it.
Reversed and remanded for entry of judgment declaring that defendant does not own the dry docks.
Whether a claim for declaratory relief is legal or equitable depends on its nature, including the nature of the relief sought. State Farm Fire v. Sevier, 272 Or 278, 299, 537 P2d 88 (1975). Here, plaintiff sought a declaration that, in essence, required defendant specifically to perform an alleged contract to purchase the dry docks, coupled with an injunction requiring it to take possession and responsibility of them. In that light, we conclude that the claim is an equitable claim that we review de novo.
The parties treated plaintiffs claims for breach of the parties' development contract as presenting both legal and equitable claims. Because no question was raised at trial about whether plaintiff could obtain both legal and equitable relief for the breach, we do not address that issue.
ORS 20.080 provides:
"Further relief based on a declaratory judgment or decree may be granted whenever necessary or proper. The application thereof shall be by petition to a court having jurisdiction to grant the relief. If the application be deemed sufficient, the court shall, on reasonable notice, require any adverse party whose rights have been adjudicated by the declaratory judgment or decree, to show cause by further relief should not be granted forthwith."
See, e.g., Alsea Veneer, Inc. v. State of Oregon, 318 Or 33, 43, 862 P2d 95 (1993); Oregon Growers' v. Lentz, 107 Or 561, 579, 212 P 811 (1923).
See cases cited in note 4 above. Again, to avoid the confusion that the dissent apparently has over this issue, it is important to emphasize that plaintiff would not have to establish that it lacks an adequate legal remedy in order to get declaratory relief. In the example in the text, if plaintiff failed to establish that it lacked an adequate legal remedy, it would not get the declaration that it sought. It would, however, still get a declaration, to wit, that defendant is not required specifically to perform its contractual obligation. That it would get a declaration is what distinguishes our case from those cited by the dissent in which parties sought to oppose the issuance of any declaration on the ground that the party seeking the declaration had failed to show that it lacked an adequate legal remedy. See, e.g., Schmitt, 223 Or at 134.