Mountain Woodworks, Inc. v. Voss

• Decision Date: 19 March 2008
• Docket Number: 160521823.,A130883.
• Citation: 180 P.3d 735,218 Or. App. 707
• Parties: MOUNTAIN WOODWORKS, INC., Plaintiff-Respondent, v. James VOSS, Defendant-Appellant.
• Court: Oregon Court of Appeals

180 P.3d 735

218 Or. App. 707

MOUNTAIN WOODWORKS, INC., Plaintiff-Respondent, v. James VOSS, Defendant-Appellant.

160521823.

A130883.

Court of Appeals of Oregon.

Argued and Submitted April 4, 2007.

Decided March 19, 2008.

Jeffrey E. Potter, Hartford, CT, argued the cause for appellant. With him on the briefs was Gardner, Honsowetz, Potter, Budge & Ford, Eugene.

Robert D. Montgomery, Albuquerque, New Mexico, and Derrick E. McGavic filed the brief for respondent.

Before SCHUMAN, Presiding Judge, and EDMONDS and ORTEGA, Judges.

ORTEGA, J.

Plaintiff obtained a judgment against defendant in the United States Bankruptcy Court for the District of New Mexico (the bankruptcy judgment). Eleven years later, plaintiff filed the bankruptcy judgment in Oregon pursuant to Oregon's Uniform Enforcement of Foreign Judgments Act (UEFJA), ORS 24.105 to 24.175. Defendant moved to have that judgment set aside, contending that, among other things, the bankruptcy judgment had become unenforceable in New Mexico because of the lapse of time. The trial court denied the motion, and defendant appealed, asserting three reasons why the trial court erred. We affirm.

The parties do not dispute the essential facts, which can be stated briefly. Having obtained the bankruptcy judgment in 1994, plaintiff, through attorney Montgomery, sought to file that judgment in Oregon in 2005 pursuant to the UEFJA. As required by ORS 24.125, plaintiff served defendant with notice of the filing. Defendant responded by filing a "motion to set aside filing of foreign judgment" (uppercase omitted) on three grounds. First, citing ORCP 71 B(1)(d), he contended that the bankruptcy judgment was "no longer a valid and enforceable judgment" in New Mexico pursuant to NMSA § 39-1-20, which allows seven years to execute on a judgment. Second, citing ORCP 71 B(1)(e), defendant argued that the bankruptcy judgment was wholly or partially satisfied as a result of a settlement in an earlier lawsuit brought by Montgomery. Finally, citing ORCP 71 C, defendant contended that plaintiff had perpetrated a fraud by failing to inform the trial court that the bankruptcy judgment was unenforceable in New Mexico, that the judgment had been satisfied in whole or in part, and that plaintiff's corporate status had been revoked, making it incapable of taking any action with respect to the judgment. Plaintiff did not respond to defendant's motion, and the trial court denied it without explanation but stayed execution of the judgment pending appeal.¹

On appeal, defendant asserts three arguments, which are different from the arguments he asserted below. First, he contends that plaintiff did not prove that it has any corporate existence, that its actions were lawfully authorized by a proper resolution of its board of directors or otherwise, or that it authorized Montgomery to file this proceeding on its behalf. He asserts that plaintiff's corporate status was revoked "beyond appeal" in New Mexico.

Second, defendant argues that, because the time for executing on the bankruptcy judgment in New Mexico has expired, that judgment is not entitled to full faith and credit and thus was not a proper judgment to file under the UEFJA. He further contends that, as a corporation whose corporate status has been "revoked," plaintiff could not lawfully take action to revive, and thereafter enforce, the bankruptcy judgment.

Finally, defendant contends that plaintiff's failure to notify the Oregon court of facts concerning the "status of the [j]udgment in New Mexico," its corporate status, and its failure to take lawful corporate action to authorize the filing of the judgment in Oregon amounted to extrinsic fraud. That fraud, defendant asserts, is grounds for setting aside a judgment pursuant to ORCP 71 B(1)(c) or 71 C.²

As we discuss in some detail, we do not consider defendant's first two arguments because he did not preserve them below. We also do not consider one of the subparts of his third argument because it, too, was not preserved. As for the remaining subparts of his third argument, we reject those because they are based on a legally incorrect premise. Accordingly, we affirm the trial court's order denying defendant's motion to set aside the bankruptcy court judgment.

Our assessment of preservation is driven by a concern that the trial court must be given "a realistic opportunity to make the right decision." East County Recycling v. Pneumatic Construction, 214 Or.App. 573, 578, 167 P.3d 464 (2007). As the Supreme Court explained in State v. Wyatt, 331 Or. 335, 343, 15 P.3d 22 (2000), "a party must provide the trial court with an explanation of his or her objection that is specific enough to ensure that the court can identify its alleged error with enough clarity to permit it to consider and correct the error immediately, if correction is warranted."

With those considerations in mind, we turn to defendant's arguments on appeal, beginning with his first argument. Defendant did not contend below, as he does here, that plaintiff failed to observe the corporate formalities necessary to authorize the filing of the bankruptcy judgment in Oregon. Rather, defendant limited his corporate authority argument to the contention that plaintiff lacked the legal capacity to file the judgment in Oregon because the State of New Mexico had revoked its corporate status. Further, defendant made that argument not as a separate basis for relief from the judgment or to have that judgment set aside, but solely as part of his contention that plaintiff had perpetrated a fraud on the court by not informing the court that its corporate status had been revoked. Defendant renews that argument as part of his third argument (relating to fraud) on appeal, and we address it later in this opinion. But his first argument in this court is different—that the judgment should be set aside because plaintiff did not prove that it has any corporate existence, that its actions were lawfully authorized by a proper resolution of its board of directors or otherwise, or that it authorized Montgomery to file this proceeding on its behalf.

Plaintiff did not respond to defendant's motion below. Had defendant argued to the trial court that plaintiff had failed to produce evidence that it had observed the corporate formalities necessary to authorize the filing of the bankruptcy judgment in Oregon, plaintiff might have filed a response presenting evidence and argument on that issue. Neither plaintiff nor the trial court had the benefit of considering and responding to the argument that defendant now makes.³ Accordingly, we do not address defendant's first argument.

Before discussing whether defendant preserved his second argument—that the bankruptcy judgment expired under New Mexico law and therefore is not entitled to full faith and credit—it is worth reviewing briefly some of the key provisions of the UEFJA, as adopted in Oregon. Under that act, a properly authenticated "foreign judgment" can be filed in an Oregon circuit court. ORS 24.115(1). A "foreign judgment" is "any judgment, decree or order of a court of the United States or of any other court which is entitled to full faith and credit in this state." ORS 24.105. Once filed, the judgment, in effect, becomes a judgment of the court in which it is filed and "has the same effect and is subject to the same procedures, defenses and proceedings for reopening, vacating or staying as a judgment of the circuit court in which the foreign judgment is filed, and may be enforced or satisfied in like manner." ORS 24.115(3). Promptly after filing the judgment, the judgment creditor must notify the judgment debtor by mail that the judgment has been filed. ORS 24.125(2). Five days must elapse from the time of filing the judgment before any process to execute on the judgment may begin. ORS 24.125(3).

As mentioned above, after plaintiff filed the bankruptcy judgment and served defendant with notice, defendant moved to set aside that judgment. In support of his motion, defendant invoked ORCP 71 B(1)(d) and (e) and 71 C. ORCP 71 B(1)(d) and (e) authorize the court, "[o]n motion and upon such terms as are just," to "relieve a party * * * from a judgment" if "the judgment is void" or if "the judgment has been satisfied, released, or discharged * * *." ORCP 71 C clarifies that ORCP 71 does not limit the inherent power of a court "to set aside a judgment for fraud upon the court."

Although defendant titled his motion in the trial court as a motion to set aside the filing of the foreign judgment, the substance of the motion was that the judgment itself should be set aside. That is clear from the first heading of his motion, in which he characterized it as a "Motion to Set Aside Judgment," as well as his argument relying on ORCP 71, which entitles a party to relief from a judgment under certain circumstances.

On appeal, however, defendant's argument has changed significantly. Here, he contends that the judgment was not entitled to full faith and credit in Oregon and therefore was not a "foreign judgment" that could be filed in Oregon under the UEFJA. The grounds for that argument are the same as those on which his argument rested below— i.e., that the judgment was not valid and enforceable in New Mexico. Defendant does not, however, renew on appeal his argument that he is entitled to relief from the judgment under ORCP 71 B because the judgment is unenforceable.

Whether a judgment debtor, in the case of a foreign judgment that is unenforceable in the state of its issuance, is entitled to relief from that judgment once it has been filed in Oregon (defendant's argument below) is a separate question from whether that same judgment is entitled to full faith and credit and qualifies in the first instance for filing in this state (defendant's argument on appeal). The former question involves consideration of ORCP 71 B and C and is properly raised by motion. The latter, particularly in the case of the...