Title: McFadden v. Dryvit Systems, Inc.
Citation: N/A
Docket Number: S51901
State: Oregon
Issuer: Oregon Supreme Court
Date: May 26, 2005

FILED:  May 26, 2005
IN THE SUPREME COURT OF THE STATE OF OREGON
DIXIE McFADDEN;
GREGORY W. BYRNE;
and DEBRA D. BYRNE,
Plaintiffs,
v.
DRYVIT SYSTEMS, INC.,
a Rhode Island corporation,
Defendant.
(USDC CV-04-103-HA; SC S51901)
En Banc
On certified question from United States District Court for
the District of Oregon Order dated October 29, 2004;
certification accepted November 23, 2004.
Honorable Ancer L. Haggerty, Chief Judge, United States
District Court for the District of Oregon.
Argued and submitted March 7, 2005.
Gregory W. Byrne, Portland, argued the cause and filed the
brief for plaintiffs.
Kenneth Hobbs, of Stafford Frey Cooper, Seattle, Washington,
argued the cause and filed the brief for defendant.
Peter R. Chamberlain, of Bodyfelt Mount Stroup &amp; Chamberlain
LLP, Portland, filed a brief for amicus curiae DaimlerChrysler
Corporation.
GILLETTE, J.
Certified question answered.  
GILLETTE, J.
This case presents a question of law certified to this
court by the United States District Court for the District of
Oregon.  See generally ORS 28.200 to 28.255; Western Helicopter
Services v. Rogerson Aircraft, 311 Or 361, 364-71, 811 P2d 627
(1991) (setting out and explaining certification process).  The
certified question asks whether a 2003 amendment to ORS 30.905,
which revives certain product liability actions for which a court
had entered a final judgment of dismissal before the effective
date of the amendment, violates the separation of powers
provisions of the Oregon Constitution.  For the reasons that
follow, we conclude that the answer to that question is "no."  
We take the following facts from the District Court's
certification order:  
"Plaintiffs own adjacent townhouse residences in
Portland, Oregon.  Plaintiffs seek to recover damages
allegedly resulting from water intrusion to their
residences, which they allege stems from improper
installation of an exterior stucco siding system (EIFS)
and defective components.  
"In 2001, plaintiffs filed a lawsuit against the
siding installer and against defendant Dryvit Systems,
Inc.  ('Dryvit'), the manufacturer of the siding. 
After plaintiffs settled with the siding installer, the
lawsuit was removed from state court to federal court,
and then transferred to the Judicial Panel on
Mutidistrict Litigation ('MDL Panel').  In December
2003, the MDL Panel dismissed all of plaintiffs' claims
against Dryvit as time-barred under ORS 30.905, the
two-year statute of limitations applicable to a product
liability action.  
"The Oregon legislature amended ORS 30.905,
effective January 1, 2004, to allow a products
liability civil action to be commenced within two years
after the date on which the plaintiff discovers or
reasonably could have discovered the injury or property
damage and the causal connection between the injury or
damage and the product.  The amendment also contains a
provision that revives any cause of action that was
filed under the former Oregon product liability law and
dismissed as untimely under the former version of ORS
30.905, so long as a final judgment was entered prior
to January 1, 2004.  Plaintiffs' claims are covered by
this revival provision.  
"As a result, plaintiffs filed this action on
January 22, 2004.  Plaintiffs assert the same five
causes of action against Dryvit that they alleged in
their prior lawsuit: deceit, strict liability, breach
of implied warranty of merchantability, breach of
implied warranty of fitness, and a claim under the
Magnuson-Moss Warranty Act.  However, Dryvit claims
that the Oregon legislature's attempt to revive a
dismissed cause of action violates the doctrine of
separation of powers under the Oregon Constitution."
The District Court concluded that Oregon case law does
not provide a definitive answer to the constitutional question
presented and, therefore, certified the following question of law
to this court:
"Whether § 2 of the 2003 amendments to ORS 30.905 (Sec.
2, Chap. 768, Or Laws 2003), which revives certain
product liability causes of action for which a final
judgment of dismissal has been entered prior to the
effective date of the amendments, violates the
separation of powers clause in Article VII, § 1, of the
Oregon Constitution."
We accepted the certified question.
Article VII (Amended), section 1, of the Oregon
Constitution provides: 
"The judicial power of the state shall be vested in one
supreme court and in such other courts as may from time
to time be created by law. * * *"
Although that clause does not, by its terms, strictly address the
separation of governmental powers, this court has acknowledged
that a separation of powers concept inheres in those words.  As
this court stated in Circuit Court v. AFSCME, 295 Or 542, 547,
669 P2d 314 (1983), "[w]hen this provision is invoked it becomes
our task to examine whether some other department of government,
by legislation or otherwise, prevents or obstructs the courts'
exercise of its judicial power."
In addition to the provision just quoted, however, the
Oregon Constitution contains another separation of powers clause,
in Article III, section 1, which addresses a somewhat different
concern, viz., whether one department of government, by its
actions, exercises a function that the constitution commits to
another department of government.  Article III, section 1,
provides:
"The powers of the Government shall be divided into
three separate (sic) departments, the Legislative, the
Executive, including the administrative, and the
Judicial; and no person charged with official duties
under one of these departments, shall exercise any of
the functions of another, except as in this
Constitution expressly provided."
This court has described its inquiry under Article III, section
1, as whether, in taking an action, "a 'person' or member of one
department is exercising a function of another department of
government."  AFSCME, 295 Or at 547.  
Plaintiffs contend that this court's separation of
powers jurisprudence is grounded at least as much on Article III,
section 1, as on Article VII (Amended), section 1, and that the
precise question presented here implicates the considerations in
Article III more than those in Article VII (Amended), because it
concerns whether the legislature, in enacting a law that revives
certain actions that courts already had dismissed as untimely,
has usurped a judicial function in some way.  For those reasons,
plaintiffs urge this court to exercise its discretionary
authority to reframe the question so as to consider the
constitutionality of ORS 30.905 under both Articles III and VII
(Amended).  
We agree that the question of the constitutionality of
the claim revival provisions of ORS 30.905 includes whether the
legislature has improperly exercised a judicial function and,
therefore, is one properly answered by reference to Article III. 
Indeed, as will be seen below, the cases on which the parties
principally rely to support their respective positions here are
based on Article III, rather than on Article VII (Amended). (1) 
For that reason, we exercise our discretion to modify the
question certified to us to address whether the 2003 amendment to
ORS 30.905 violates the separation of powers provisions of
Article VII (Amended), section 1, or of Article III, section 1,
of the Oregon Constitution.  See Western Helicopter, 311 Or at
370-71 (describing circumstances under which this court reserves
the right, in the exercise of its discretion, to reframe
questions); A.K.H. v. R.C.T., 312 Or 497, 501, 822 P2d 135 (1991)
(reframing certified question because court assumed that
certifying court would wish to have answer on issue and reframed
question was easily resolved without further briefing from
parties).  
We turn now to answer the certified question, as
reframed.  
In 2001, when plaintiffs first filed an action against
Dryvit, ORS 30.905 provided, in part:
"(1) * * * [A] product liability civil action
shall be commenced not later than eight years after the
date on which the product was first purchased for use
or consumption.
"(2) Except [in circumstances not relevant to this
case], a product liability civil action shall be
commenced not later than two years after the date on
which the death, injury or damage complained of
occurs."
In Gladhart v. Oregon Vineyard Supply Co., 332 Or 226, 26 P3d 817
(2001), this court held that, under the foregoing statutory
provision, the two-year limitations period for a product
liability action begins to run when the "death, injury or damage
complained of" occurs, whether or not the plaintiff discovers the
harm within the ensuing two-year period.  Id. at 234.  That is,
the court held that ORS 30.905 (2001) did not include a
"discovery rule" that extended the statute of limitations in
those cases in which the plaintiff could not have discovered the
harm within two years of purchasing the product.  Id.  The record
in this case discloses that plaintiffs purchased the allegedly
defective siding product in 1997.  Apparently, the harm began to
occur immediately, but plaintiffs did not learn of that harm
until 2000 and did not file their action against Dryvit until
2001.  Accordingly, in 2003, the federal district court dismissed
plaintiffs' action against Dryvit as untimely under ORS 30.905
(2001).  
In early 2004, however, plaintiffs refiled their claims
against Dryvit under authority granted by a 2003 amendment to ORS
30.905, which added a discovery rule to the statute of
limitations for product liability actions and which revived
certain actions that previously had been dismissed under the
earlier version of the statute.  Oregon Laws 2003, chapter 768,
section 1, amended ORS 30.905 to provide, in part, as follows: 
"(2) Except [in circumstances not relevant here],
a product liability civil action for personal injury or
property damage must be commenced not later than the
earlier of:
"(a) Two years after the date on which the
plaintiff discovers, or reasonably should have
discovered, the personal injury or property damage and
the causal relationship between the injury or damage
and the product, or the causal relationship between the
injury or damage and the conduct of the defendant; or
"(b) Ten years after the date on which the product
was first purchased for use or consumption."
Further, section 2 of that enactment provides that, effective
January 1, 2004, and
"(1) Subject to the provisions of this section,
the amendments to ORS 30.905 by section 1 of this 2003
Act apply only to deaths, personal injuries or property
damage that occurs [sic] on or after the effective date
of this 2003 Act * * *.
"(2) The amendments to ORS 30.905 by section 1 of
this 2003 Act revive a cause of action for which a
civil action for death, personal injury or property
damage was filed before the effective date of this 2003
Act if:
"(a) The civil action was filed within the time
provided by ORS 30.905 as amended by section 1 of this
2003 Act;
"(b) The civil action was adjudicated based on the
provisions of ORS 30.905 as in effect immediately
before the effective date of this 2003 Act; and
"(c) A final judgment was entered in the civil
action on or after June 8, 2001, and before the
effective date of this 2003 Act.
"(3) A civil action based on a cause of action
revived by subsection (2) of this section must be
refiled within one year after the effective date of
this 2003 Act."
Or Laws 2003, ch 768, § 2. 
The Article VII (Amended), section 1, question before
us is whether the foregoing statutory provision amounts to a
legislative action that "interferes with the judiciary in a
manner which prevents or obstructs the performance of its
irreducible constitutional task, adjudication."  AFSCME, 295 Or
at 550.  As this court further stated in AFSCME, "[o]nly an
outright hindrance of a court's ability to adjudicate a case * * * or the substantial destruction of the exercise of a power
essential to the adjudicatory function" will amount to a
violation of Article VII (Amended), section 1.  Id. at 551; 
accord DeMendoza v. Huffman, 334 Or 425, 454, 51 P3d 1232 (2002)
(by setting out distributive scheme for punitive damage awards in
ORS 18.540, legislature established reasonable guidelines for
courts to follow in exercise of their duties and did not
interfere impermissibly with adjudication of plaintiff's claims). 
The 2003 amendment to ORS 30.905 neither burdens a
court's ability to adjudicate a case nor substantially destroys
its ability to exercise a power essential to its adjudicatory
function.  Revival of claims that a court earlier had dismissed
as untimely is no more burdensome to a court's ability to
adjudicate a case than any other legislative enactment setting
out statutes of limitations or other prerequisites for filing
claims.  Moreover, it cannot reasonably be said that the
amendment to ORS 30.905 destroys a court's ability to exercise
any power essential to its adjudicatory function, because a
court's ability to decide the merits of the issues before it is
unaffected by the amendments.  
Based on the foregoing, we conclude that the 2003
amendment to ORS 30.905, reviving certain product liability
claims that earlier had been dismissed as untimely, does not
violate Article VII (Amended), section 1, of the Oregon
Constitution.  
As discussed above, the separation of powers clause of
Article III is directed at a somewhat different concern than that
of Article VII (Amended), viz., whether a person or member of one
department of government has exercised a function that the
constitution commits to another department of government.  Dryvit
asserts that the legislature has the authority to change statutes
of limitations prospectively, and even to change statutes of
limitations retroactively as to matters that have not yet been
adjudicated, but argues that the legislature cannot, without
running afoul of Article III, section 1, interfere in actions
that the judiciary already has decided.  Because, in Dryvit's
view, the 2003 amendment to ORS 30.905 does purport to affect
rights of litigants that the judicial branch already has
resolved, it is unconstitutional.  
Plaintiffs, for their part, agree that the legislature
cannot constitutionally enact laws that purport to overturn
judicial decisions or otherwise interfere with the vested rights
of litigants, but, they argue, that is not what the amendment to
ORS 30.905 does.  Rather, according to plaintiffs, the amendment
simply provides injured parties with a second opportunity to file
and litigate their claims, which, until now, had not been decided
on their merits.  
This court considered a similar question in State ex
rel Huntington v. Sulmonetti, 276 Or 967, 557 P2d 641 (1976).  In
that case, a worker was injured in April 1969 and filed a claim
for workers' compensation in July 1970.  The Worker's
Compensation Board denied the claim as untimely under the then-applicable statute of limitations, which required claims like
those of the worker to be filed within one year of the date of
the accident causing the injury.  In so doing, the board did not
adjudicate any issue in the matter other than the claim's
timeliness.  The Court of Appeals affirmed the denial of the
claim in 1973.  See Dahlstrom v. Huntington Rubber Mills, 12 Or
App 55, 505 P2d 352 (1973) (so holding).  In 1975, the
legislature amended the applicable statute of limitations in a
manner that made the worker's claim timely and made the amendment
retroactive to all claims for compensable injuries that occurred
before its effective date.  The worker filed the identical claim
a second time.  The employer argued, as Dryvit does here, that
the issue of the timeliness of the claim was completely litigated
after its first filing and that that adjudication was binding on
the worker. 
The court identified the issue presented in the case as
one of res judicata, insofar as the case involved whether the
claimant could bring a second identical claim against the
employer after receiving an adverse ruling.  Sulmonetti, 276 Or
at 970.  And, the court concluded, legislative action abrogating
the rule of res judicata in certain cases does not offend the
constitution in any way that the employer had contended.  Id. at
971-72.  First, the court rejected the employer's argument that
it had a vested right in the result of the first adjudication
and, therefore, that the revival of the worker's claims violated
the employer's due process rights.  The court observed that,
because res judicata is a court-created rule, the court can
determine the circumstances of its application; accordingly, a
party cannot have a vested right in an expected application of
the rule.  Id. 
Second, the court rejected the employer's argument that
revival of workers' claims amounts to the legislature's attempt
to interfere with the court's application of the rule of res
judicata and, therefore, violates the separation of powers
provision of Article III, section 1, of the Oregon Constitution. 
Of particular pertinence here, the court stated: 
"If the legislature wants to provide for the refiling
or retrial of claims previously created and litigated
in accordance with legislative direction because it
feels that the claimants did not have a fair
opportunity to do so under prior law, it is the
legislature's business and not an interference with any
judicial function. It can be contended that the
legislature cannot retroactively interfere with the
prior results of litigation based upon common law or
court established causes of action.  We do not have to
decide this question, however, because workmen's
compensation claims are part of an exclusively
legislative plan.[ (2)]  The legislature is not
setting aside the court's original determination, which
is final as to the law then existing.  It is merely
deciding that prior claimants should have another
opportunity to file and litigate their claims under a
new and different set of standards.  If the legislature
would originally have had authority to enact the
statutes relating to the filing of claims as such
statutes were subsequently amended (and it is plain it
would have had), it had the authority to make the
amendment retroactive and to permit claimant to refile
despite the intervening litigation."  
276 Or at 972.  
As in Sulmonetti, the 2003 amendment to ORS 30.905
reviving certain claims does not effectively set aside the
courts' initial determinations as to those claims.  Those rulings
remain final as to the law then existing.  Rather, the amendment
merely constitutes a legislative determination that the earlier
version of the statute did not provide certain litigants with a
fair opportunity to discover and pursue their claims.  As was the
case in Sulmonetti, it is undisputable that the legislature would
have had the authority to include a "discovery rule" in the
product liability statute of limitations in the first instance. 
Accordingly, the legislature had the authority to do so by
amendment to the earlier statute, to make the amendment
retroactive, and to permit plaintiffs to refile their claims
notwithstanding an earlier judicial determination that their
claims were untimely.  
Dryvit argues that the court came to the opposite
conclusion in Macartney v. Shipherd, 60 Or 133, 117 P 814 (1911),
and, essentially, that the court's decision in Sulmonetti was
wrong.  Dryvit's reliance on Macartney is misplaced.  In
Macartney, the trial court entered a judgment against the
defendant in a contract dispute.  The defendant filed a motion
for a new trial based on certain errors that he alleged that the
trial court had committed during the trial.  The court kept that
motion under advisement for more than six months before ruling
against the defendant.  Within six months after the defendant
received notice that the court had denied his motion, the
defendant filed a notice of appeal.  The statute governing the
timing of appeals in effect at that time mandated that notices of
appeal be filed within six months of the trial court's judgment. 
In addition, controlling case law at that time provided that
orders granting or refusing a new trial were not appealable.  The
plaintiff, therefore, moved to dismiss the appeal as untimely.  
After the defendant filed the notice of appeal, but
before this court had issued its decision, the legislature
amended the statute governing the time for filing appeals.  The
amendment purported to "validate" any "pending and undetermined"
appeals that had been filed in the Supreme Court within six
months of an order denying a motion for a new trial, and required
that they "shall be deemed to have been taken within the time
required by law."  60 Or at 140-41, quoting Or Laws 1911, ch.
143, § 1.  
This court held that the amendment to the statute
governing appeals could not be applied to pending cases without
running afoul of the constitution.  The court first observed that
the dispute arose out of a contract between the plaintiff and the
defendant, and that the laws relating to the enforcement of a
contract are deemed to be part of the agreement so that, "when a
judgment is rendered upon such contract, the rights of the
parties after the time for appeal has elapsed become fixed and
vested, and the legislature cannot, by any subsequent act, change
those rights under such judgment."  Macartney, 60 Or at 141. 
Accordingly, the court held, the plaintiff had a vested right in
the fruits of the judgment on the contract that the circuit court
had rendered at the time that the period for appeals from that
judgment elapsed, and the legislature's attempt to interfere with
that vested right was invalid.  Id. at 142. 
In addition, the court in Macartney considered the
matter under Article III, section 1, of the Oregon Constitution. 
The court first observed that, "[t]o declare what the law is or
has been is judicial power; to declare what the law shall be is
legislative."  60 Or at 142, (quoting Griffin's Ex'r v.
Cunningham, 20 Gratt 31, 61 Va 31 (1870) (which, in turn, quoted
Cooly, Constitutional Limitations, 92)).  In addition, the court
quoted with approval the following from its earlier decision in
Thomas v. Portland, 40 Or 50, 52, 66 P 439 (1901):
"A statute which operates to annul or set aside the
final judgment of a court of competent jurisdiction,
and to disturb or defeat rights thus vested, is
inoperative and void.  By reason of the distribution of
powers under the constitution, assigning to the
legislature and the judiciary each its separate and
distinct functions, one department is not permitted to
trench upon the functions and powers of the other."
Macartney, 60 Or at 143.  The court observed that the act in
question did not profess to give litigants any new rights of
appeal; rather, it purported to "construe [previous legislative
enactments] and to declare their meaning validating appeals,
notices of which had been theretofore served."  Macartney, 60 Or
at 143.  According to the court, that effort to validate pending
appeals that had been filed late was "plainly an invasion of the
judicial power by the legislative assembly, and is not
admissible."  Id.  
As is evident from the foregoing, the court's holding
in Macartney is not inconsistent with this court's later decision
in Sulmonetti.  As discussed above, the legislation at issue in
Sulmonetti left intact existing rulings by the courts.  It merely
gave litigants a second opportunity to litigate their claims
under new standards.  As such, that legislation was an effort to
"declare what the law shall be."  Macartney, 60 Or at 142.  By
contrast, the legislation at issue in Macartney purported to
construe existing legislation in a way that "validated" appeals
then pending.  As such, it was an effort to "declare what the law
has been."  Id. 
It follows that Macartney is inapposite here.  As
discussed above, in enacting the 2003 amendment to ORS 30.905,
the legislature did not retroactively "declare what the law has
been."  That is, the legislature was not declaring what the
previous statute of limitations meant; that was done by the court
in dismissing plaintiff's first case under the earlier statute of
limitations.  Neither did the amendment "operate to annul or set
aside a final judgment of a court" on the merits.  Rather, it
gave litigants with product liability claims a new right to file
an action.  In so doing, the legislature performed the
legislative function of "declar[ing] what the law shall be" with
respect to newly filed claims.  That choice was within the
legislature's power to make. (3)
Based on the foregoing, we hold that, in enacting the
2003 amendment to ORS 30.905 and thereby reviving certain product
liability actions for which a court had entered a final judgment
of dismissal before the effective date of the amendment, the
legislature did not violate the separation of powers provision of
Article III, section 1 of the Oregon Constitution.  As discussed
above, we also hold that the legislature did not violate Article
VII (Amended), section 1, of the Oregon Constitution in enacting
that amendment.  
Certified question answered.  
1. In fact, Dryvit, for its part, does not make any
argument to this court concerning the constitutionality of ORS
30.905 that is based on Article VII (Amended).  
2. Although we do not necessarily share the reservations
that the Sulmonetti court expressed, we note that plaintiffs'
product liability claims in the instant case are governed by a
"legislative plan."
3. Our purpose in discussing Macartney at length is to
demonstrate that the case, by its own terms, does not control the
outcome here.  And, because it does not, we do not address the
question whether we still would adhere completely to its
analysis.