Opinion ID: 1286488
Heading Depth: 2
Heading Rank: 4

Heading: Local Defendants' Remaining Arguments.

Text: As noted, local defendants have raised a number of cross-claims against the state. Those claims are: (1) that the state breached the covenant of good faith and fair dealing implied in the PERS contract between the state and participating employers; (2) that the state breached a fiduciary duty owed to local defendants; (3) that the state is liable to contribute to local defendants all sums that they may have to pay to plaintiffs; (4) that the state should be required to indemnify local defendants for all damages that they may have to pay to plaintiffs; (5) that the state will be unjustly enriched if local defendants are held liable; and (6) that SB 656 and HB 3349 are unconstitutional taxes under Article I, section 32, and Article IX, section 1, of the Oregon Constitution, and that those acts violate the equal privileges and immunities clauses of Article I, section 20, of the Oregon Constitution. Defendant Oregon League of Cities has asked that we remand the case for additional briefing and argument as to these remaining claims, if we determine that there is no enforceable statutory contract between the state and local defendants. For the most part, we agree that remand is appropriate for those claims that, although raised below, have not been briefed or argued to this court. However, the trial court expressly disposed of two of the claims that Oregon League of Cities now asks us to remand. For the sake of judicial economy, we address those claims of plaintiffs that were raised below, on which the trial court expressly ruled.
Local defendants' claims asserting common law indemnity fail. In an action for common law indemnity, the claimant must plead and prove that (1) he has discharged a legal obligation owed to a third party; (2) the defendant was also liable to the third party; and (3) as between the claimant and the defendant, the obligation ought to be discharged by the latter. Fulton Ins. v. White Motor Corp., 261 Or. 206, 210, 493 P.2d 138 (1972). As a matter of law, local defendants have failed to establish the second element. As we have explained, above, local defendants not the stateare liable to plaintiffs for the breach of contract as to retirees who worked for local defendants. Therefore, the trial court erred when it ruled that local defendants were entitled to indemnification from the state on their common law indemnification theory.
Local defendants' claims for unjust enrichment fare no better. Unjust enrichment is a theory of quasi-contract that depends on the existence of an implied contract. See Derenco v. Benj. Franklin Fed. Sav. and Loan, 281 Or. 533, 557, 577 P.2d 477 (describing the theory of unjust enrichment as being rooted in quasi-contract: an obligation implied in law), cert. den., 439 U.S. 1051, 99 S.Ct. 733, 58 L.Ed.2d 712 (1978). In Hughes, this court cautioned explicitly that it will not imply the existence of a statutory contract between the state and another party. See 314 Or. at 17, 838 P.2d 1018 (a contract will not be inferred from    legislation unless it unambiguously expresses an intention to create a contract). In the light of that statement in Hughes, local defendants' request that we infer the existence of a statutory quasi-contract in the absence of an actual, enforceable statutory contract is not well taken. The trial court erred when it ruled that local defendants were entitled to relief from the state on a theory of unjust enrichment.
Local defendants' remaining claims are that the state breached a contractual duty of good faith and fair dealing; that the state breached its fiduciary duty to local defendants; that the state must make contribution to local defendants for any money that they pay out as a result of Hughes; and that HB 3349 is unconstitutional for various reasons. Those claims shall be addressed by the trial court on remand.