Title: Ken Leahy Construction, Inc. v. Cascade General, Inc.
Citation: N/A
Docket Number: S44812
State: Oregon
Issuer: Oregon Supreme Court
Date: December 30, 1999

Filed: December 30, 1999

IN THE SUPREME COURT OF THE STATE OF OREGON

KEN LEAHY CONSTRUCTION, INC.,
an Oregon corporation,

	Petitioner on Review,

	v.

CASCADE GENERAL, INC.,
an Oregon corporation,

	Respondent on Review.

(CC 9307-04717; CA A85442; SC S44812)

	On review from the Court of Appeals.*

	Argued and submitted November 2, 1998.

	Charles F. Adams, of Stoel Rives LLP, Portland, argued the cause for petitioner
on review.  With him on the briefs was Richard E. Alexander.  

	John R. Faust, Jr., of Schwabe, Williamson &amp; Wyatt, P.C., Portland, argued the
cause for respondent on review.  With him on the brief was Peter A. Ozanne.

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

	RIGGS, J.

	The decision of the Court of Appeals is reversed.  The judgment of the circuit
court is affirmed.

	*Appeal from Multnomah County Circuit Court,

	149 Or App 480, 944 P2d 951 (1997).

	**Leeson, J., did not participate in the consideration or decision of this case.

	RIGGS, J.

	This is an appeal from a declaratory judgment that held that defendant
Cascade General, Inc., is the owner of certain dry docks located on the property of
plaintiff Ken Leahy Construction, Inc., and that required defendant to take possession
of the dry docks.  The Court of Appeals reversed that judgment.  Ken Leahy
Construction, Inc. v. Cascade General, Inc., 149 Or App 480, 944 P2d 951 (1997).  For
the reasons that follow, we reverse the decision of the Court of Appeals and affirm the
judgment of the trial court.

	We take the following facts from the Court of Appeals' opinion and also
from the record:

		"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 [plaintiff] to obtain a set of dry docks
for the facility that were then being decommissioned by the Port of
Portland."  

Id. at 482.

		There is evidence that plaintiff agreed to bid on the dry docks because
defendant, as a tenant of the Port of Portland (Port), did not want the Port to know of
defendant's interest in the purchase of the dry docks.  Plaintiff contends that the parties
agreed not to put their development agreement in writing to protect defendant's
relationship with the Port.  For its part, defendant claims that any discussion about the
Bradwood project only was preliminary 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
remove the docks from the Port's property.  The Port accepted that bid and paid plaintiff
$190,000.  Plaintiff moved the dry docks to the Bradwood property. 

		After plaintiff moved the dry docks, the parties continued their discussions
about the development project.  Plaintiff retained several consultants and an engineer
to develop specifications for the construction and development of the Bradwood site as
a dry dock facility.  Defendant began negotiating with a potential tenant for the site. 
Defendant also supplied plaintiff's engineer with defendant's specifications.  The
engineer's plans, however, did not include plans or cost estimates for dry dock repair
and restoration.  Plaintiff explained that it never contemplated that it ultimately would be
responsible for the dry docks themselves, because plaintiff understood that defendant
was to have sole responsibility for them upon completion of the agreements between
plaintiff and defendant.

		As the discussions progressed, the parties reached sufficient agreement
on the scope of the work and their respective responsibilities for the agreement to
become an enforceable contract.  As part of that contract, defendant agreed to
purchase the dry docks from plaintiff for one dollar.

		Ultimately, defendant's negotiations to secure a tenant for the site failed. 
Defendant, because of its erroneous belief that it had not formed an enforceable
agreement with plaintiff, 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.  Additionally, plaintiff sought  declaratory and injunctive relief.  At trial, the court
granted defendant's motion for a directed verdict against plaintiff's unjust enrichment
claim.  Plaintiff introduced evidence supporting its other claims, including evidence that
the dry docks had no value to plaintiff, because it could not run a dry dock facility
without defendant's participation.  Plaintiff also introduced evidence that dismantling the
dry docks and removing them from the Bradwood property would cost an estimated
$548,000.

		The contract and fraud claims were submitted to a jury.  The jury found
that the parties had an enforceable oral contract and that defendant had breached that
contract.  The jury also found that the contract included, as one of its terms, a promise
by defendant to buy the dry docks from plaintiff for one dollar.  The jury found, however,
that plaintiff had sustained no damage from defendant's breach of the contract and that
defendant had not committed fraud.

	Following trial and the jury's verdict on the contract and fraud claims, the
trial court then decided plaintiff's claim for declaratory and injunctive relief.  Plaintiff had
based that claim on the alleged breach of contract and further allegations that the dry
docks constituted a nuisance, a trespass, and were a continuing financial liability.  The
court issued a declaration in the form that plaintiff had requested:

     "Pursuant to the Fourth Claim for Relief, the Court declares that title to
the dry docks * * * is vested in defendant and that defendant shall accept
responsibility for and take possession of the dry docks immediately upon
entry of this Judgment."

The trial court, however, did not make any findings of fact concerning its judgment.

	Defendant appealed, assigning error to the trial court's declaration, but not
to the jury's verdict on the breach-of-contract claim.  The Court of Appeals first resolved
a disputed fact by finding that the parties had an enforceable contract by which
defendant was required to buy the docks for one dollar.  The Court of Appeals' majority
reversed and remanded to the trial court, because there was "no evidence that
defendant fulfilled its contractual obligation to buy [the dry docks for one dollar], which
is a factual predicate to a declaration that it owns them."(1)  Ken Leahy, 149 Or App at
484.  To the contrary, the court continued, plaintiff had proved that defendant had not
fulfilled its contractual duty to purchase the docks.  Under those circumstances, the
Court of Appeals held, the trial court in effect had "granted specific performance of the
contract through its declaration * * *."  Id.

	Granting specific performance was improper, the Court of Appeals
reasoned, because plaintiff had not shown that it lacked an adequate remedy at law,
which is a prerequisite to obtaining specific performance.  The court noted that plaintiff
would have been entitled to a declaration that defendant was obligated by contract to
buy the dry docks and that plaintiff also could have obtained specific performance by
proving the elements of that equitable remedy during the trial or in a later proceeding. 
The Court of Appeals concluded, however, that plaintiff is entitled to declaratory relief,
resulting in specific performance, only on a showing that it lacks an adequate remedy at
law and that plaintiff did not make that showing.  Id. at 484-87.

	We first address our standard of review.  Declaratory judgment
proceedings can be legal or equitable in nature, depending on the nature of the case
and the relief sought.(2)  State Farm Fire v. Sevier, 272 Or 278, 299, 375 P2d 88 (1975). 
The Court of Appeals correctly concluded that the claim in this case is an equitable
claim and reviewed de novo, as ORS 19.415(3) requires.  See Winthers v. Bertrand,
239 Or 97, 98-99, 396 P2d 570 (1964) (holding that suit for declaratory judgment of
ownership of real property and for injunction requiring defendant to remove part of
encroaching building was in equity).  Under ORS 19.415(4), this court also may review
de novo or it may limit its review to questions of law.  Here, the facts either are
undisputed or, where disputed, have been resolved by the Court of Appeals or the trial
court.  We thus limit our review to questions of law.  See Sleeper and Sleeper, 328 Or
504, 506, 982 P2d 1126 (1999) (declining to review de novo when facts were not
disputed).

	Against the backdrop of the underlying reasons for the formation of the
parties' agreement, our task on review is to determine whether the trial court properly
declared defendant to be the owner of the dry docks and whether the trial court properly
ordered defendant to take possession of the docks.  To answer those questions
requires, among other things, a proper characterization of the parties' agreement and a
proper characterization of the relief granted by the trial court.  The jurisprudence of this
court is well-settled that, under ORS 28.010, ORS 28.020, and ORS 28.030, set out
below, a trial court can, on a proper showing, declare a party to be the owner of
property.  See Wright v. Hazen Investments, Inc., 293 Or 259, 261, 648 P2d 360 (1982)
(deciding procedural issue in suit for declaration of ownership of assigned leasehold
interest); Jackson and Jackson, 281 Or 575, 577, 576 P2d 12 (1978) (affirming
declaration of ownership of income tax refund); Winthers, 239 Or at 98-99 (affirming
declaration of ownership of real property); In re Estate of Ida Dahl, 196 Or 249, 251,
248 P2d 700 (1952) (holding that declaration of ownership of partnership interest was
res judicata for dispute in pending case).

	In this case, the Court of Appeals' majority opinion appears to conflate the
analysis necessary for granting a declaratory judgment with the separate analysis
necessary for determining what, if any, coercive relief is appropriate to effectuate the
declaration.  That conflation stems from two analytical errors.  First, the Court of
Appeals erroneously characterized the trial court's declaration of ownership of the
docks as a grant of specific performance.  Because of that misunderstanding, the court
proceeded to analyze whether plaintiff proved the necessary equitable elements that
would have entitled it to a declaration of specific performance.  In declaratory
proceedings generally, however, specific performance is a form of coercive relief that is
appropriately analyzed under ORS 28.080.  See Edwin Borchard, Declaratory
Judgments, 441, 441 n 71 (2d ed 1941) (defining coercive relief to include claims for
injunctions, damages, specific performance, and other orders of execution).  That is
because the distinguishing characteristic of a declaratory judgment is the absence of
coercive relief.  Id. at 25-26.  Thus, the Court of Appeals erred a second time when it
concluded that a coercive declaratory judgment could be proper under ORS 28.010,
ORS 28.020, or ORS 28.030.  

	ORS 28.010 governs the issuance of declaratory judgments and provides,
in part:

     "Courts of record within their respective jurisdictions shall have power
to declare rights, status, and other legal relations, whether or not further
relief is or could be claimed. * * *"

ORS 28.020 provides for declarations of rights under contracts and allows a party to a
contract to "obtain a declaration of rights, status or other legal relations thereunder."(3) 
ORS 28.030 provides that "[a] contract may be construed either before or after there
has been a breach thereof."

	Although often brought to determine whether a law is constitutional,(4) or to
determine parties' rights under an insurance contract,(5) a declaratory judgment action
also can be brought to declare a particular party to be the owner of certain property,
even though the purchase contract has not been performed fully.  In Davis v. Wood,
200 Or 602, 268 P2d 371 (1954), the plaintiff purchased restaurant equipment and
fixtures under a conditional sales contract from the defendants.  The purchase price
under the written contract was $5,500, payable in a down payment and monthly
installments.  Plaintiff also agreed to purchase $2,500 worth of additional personal
property to use in the restaurant.  With $131.32 owing on the contract, plaintiff
defaulted.  Defendant argued that it then declared a forfeiture of all payments and took
possession of all the personal property involved in the contract.  This court remanded
the case, ordering the trial court to determine whether, taking into consideration the
defendants' repossession of personal property that never was theirs, the plaintiff owed
the defendant any money.  This court held that, if the trial court found that the plaintiff
did not owe the defendant money, then the "plaintiff shall be declared to be the owner
of the personal property and entitled to its possession."  Id. at 626.

	Here, the trial court had the power to decide whether, as claimed by
plaintiff, an oral contract between plaintiff and defendant existed.  Upon finding that
such a contract existed, the trial court had the power to construe the parties' rights with
respect to that contract.  ORS 28.010; ORS 28.020.  The record is unclear with respect
to the methodology that the trial court employed in reaching its decision.  However, on
this record, the trial court was entitled to conclude that the parties had agreed that
defendant was to be the owner of the dry docks from the beginning.  The record
supports that construction, because an agreement that defendant was to own dry docks
that were to be located on plaintiff's property makes sense only if ultimate ownership of
the docks was part of a larger business transaction that included site development by
plaintiff, repair of the docks by someone, and the conduct of an on-site dry dock
business by defendant alone or in a joint venture with plaintiff and, perhaps, by others. 
In the context of such a larger agreement, the trial court could have viewed the payment
of a dollar for the dry docks to be an inconsequential act.  Or, the trial court might have
viewed the dollar payment to be a sham component of a larger agreement under which
plaintiff had claimed that defendant sought to preserve defendant's ability to deny
involvement in the deal to the Port.  Davis demonstrates that a contract that technically
was not performed could be deemed or declared performed, thus prompting a transfer
of title.  See Davis, 200 Or at 626 (holding that amount due seller under conditional
sales contract could be offset by seller's wrongful repossession).  We therefore hold
that the declaration that the trial court issued was proper under ORS 28.010, ORS
28.020, and ORS 28.030.

	We turn to whether "further relief" was appropriate.  Coercive, or "further,"
relief, based on a declaratory judgment, is available to parties under ORS 28.080.  See
Lowe v. Harmon, 167 Or 128, 136, 115 P2d 297 (1941) (holding that, under statute
renumbered as ORS 28.080, trial court may grant assessment of damages and other
coercive relief).  Under ORS 28.080, a court may, when "based on a declaratory
judgment" and when "necessary or proper," grant other forms of coercive relief,
including injunctive relief.  ORS 28.080 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 why further relief should
not be granted forthwith." 

	Here, the relief that plaintiff sought embodied both a declaration of
contractual rights under ORS 28.020 and a request for "further relief" under ORS
28.080.  The "further relief" that the trial court selected took the form of an injunction
requiring that defendant take possession of and remove the docks that the trial court
found belonged to defendant, but which were on plaintiff's property.  Defendant argues
that the trial court erred in granting injunctive relief because plaintiff failed to prove a
lack of an adequate remedy at law, which is a necessary element for injunctive relief.

	We need not decide whether proof of all the equitable elements of an
injunction is a prerequisite in every case seeking injunctive relief under ORS 28.080,(6)
because the record in this case supports the trial judge's conclusion that an injunction
was appropriate to give effect to the declaration of ownership.  We thus find no error in
the trial court's grant of injunctive relief, in light of the facts that:  (1) the court declared
that defendant owned the dry docks; (2) those docks were located on property owned
by plaintiff and two others; (3) the docks were costly to remove; and (4) the docks had
no value to plaintiff outside the context of an agreement for participation by defendant
in operating them in some fashion.  The supplemental relief here was designed to
provide the kind of complete relief to plaintiff in the manner contemplated by ORS
28.080, that was not available to plaintiff in an action at law.

	The decision of the Court of Appeals is reversed.  The judgment of the
circuit court is affirmed.

1. 	Judge Edmonds dissented from the three-judge panel's
decision, opining that the trial court properly issued the
declaratory judgment.  Ken Leahy, 149 Or App at 488-89 (Edmonds,
J., dissenting).

2. 	In his treatise, Professor Edwin Borchard explains that
a declaratory judgment action is neither legal nor equitable, but
has roots in equity.  Edwin M. Borchard, Declaratory Judgments,
238-40 (2d ed 1941), quoted in Consolidated Freightways, Inc. v.
Flagg, 180 Or 442, 453-54, 176 P2d 422 (1947).  For the purposes
of determining which standard of review to apply, however, it
becomes necessary to classify a declaratory judgment proceeding
as either legal or equitable.

3. 	ORS 28.020 provides, in part:

		"Any person * * * whose rights, status or other
legal relations are affected by a constitution,
statutes, municipal charter, ordinance, contract or
franchise may have determined any question of
construction or validity arising under any such
instrument, constitution, statute, municipal charter,
ordinance, contract or franchise and obtain a
declaration of rights, status or other legal relations
thereunder."

4. 	See, e.g., Ecumenical Ministries v. Oregon State
Lottery Comm., 318 Or 551, 555, 871 P2d 106 (1994) (statutes);
Savage v. Munn, 317 Or 283, 287, 856 P2d 298 (1993)
(constitutional amendment).

5. 	See, e.g., St. Paul Fire v. McCormick &amp; Baxter
Creosoting, 324 Or 184, 191, 923 P2d 1200 (1996) (declaration of
obligations under insurance policy); Vega v. Farmers Ins. Co.,
323 Or 291, 293, 918 P2d 95 (1996) (same); Windsor Ins. Co. v.
Judd, 321 Or 379, 381, 898 P2d 761 (1995) (same).

6. 	See Amer. F. of L. v. Bain, 165 Or 183, 216, 106 P2d
544 (1940) (refusing to issue injunction restraining officials
from enforcing statutes declared to be unconstitutional because
plaintiffs failed to prove irreparable harm).