Mattiza v. Foster

Citation803 P.2d 723,311 Or. 1
Decision Date20 December 1990
Docket NumberNo. 87-01-21356-L,87-01-21356-L
CourtSupreme Court of Oregon
PartiesVirginia Dare MATTIZA, as Guardian/Conservator of Virginia Dare Sandy, a protected person, Petitioner on Review, v. Dorothy Jean FOSTER, Respondent on Review. ; CA A46889; SC S35734.

Virginia Dare Mattiza, Austin, Tex., filed the petitions for review and reconsideration, memorandum, and argued the cause pro se.

H. Clifford Looney, Vale, argued the cause for respondent on review. With him on the response and memorandum was Butler & Looney, P.C., Vale.

Phillip D. Chadsey, Portland, filed a brief on behalf of amicus curiae Oregon Fellows of the American College of Trial Lawyers.

Joel S. DeVore, Eugene, filed a brief on behalf of amicus curiae Oregon Ass'n of Defense Counsel. With him on the brief was Luvaas, Cobb, Richards & Fraser, P.C., Eugene.

Before PETERSON, C.J., and LINDE *, CARSON, JONES **, GILLETTE, VAN HOOMISSEN and FADELEY, JJ.

CARSON, Justice.

Upon review in this court, the issue before us is whether the trial court properly awarded defendant attorney fees, pursuant to ORS 20.105(1), 1 after finding that plaintiff had acted in bad faith in bringing and pursuing an action for undue influence. The Court of Appeals affirmed the trial court's award of attorney fees. We reverse.

FACTUAL AND PROCEDURAL BACKGROUND

In 1984, plaintiff, who resided in Texas, visited her 89-year-old aunt Virginia Dare Sandy in Ontario, Oregon. Plaintiff found her aunt unkempt and living in squalor. Concerned about these conditions, plaintiff initiated guardianship proceedings, and in 1985, plaintiff was appointed her aunt's guardian and conservator of her aunt's estate. In the course of arranging her aunt's affairs, plaintiff discovered that, in January 1985, her aunt had purchased a $10,000 certificate of deposit in the name of defendant, then her aunt's neighbor. Plaintiff became convinced that the $10,000 transfer was the result of defendant's improper influence over her aunt.

Plaintiff, as conservator of her aunt's estate, subsequently brought this action 2 in circuit court for return of the $10,000, plus interest. The trial judge made extensive findings of fact and conclusions of law, and held that defendant had not exercised undue influence over plaintiff's aunt. After making the additional finding that plaintiff's claims were asserted in bad faith, the court awarded $7,620 in attorney fees to defendant.

The Court of Appeals, in a per curiam opinion, affirmed the trial court's judgment, including the award of attorney fees. Mattiza v. Foster, 93 Or.App. 619, 762 P.2d 1067 (1988). The Court of Appeals' opinion did not specifically address the attorney fees issue. We allowed review to address the nature of the litigious conduct that allows a court, pursuant to ORS 20.105(1), to assess attorney fees for actions that are taken "in bad faith, wantonly or solely for oppressive purposes." 3 In so doing, we discuss the legislative history of the statute and set forth the hierarchical analysis necessary under ORS 20.105(1).

THE AWARD OF ATTORNEY FEES IN GENERAL

"[A]s a general rule American courts will not award attorney's fees to the prevailing party absent authorization of statute or contract." Deras v. Meyers, 272 Or. 47, 65, 535 P.2d 541 (1975). See Alyeska Pipeline Serv. v. Wilderness Soc., 421 U.S. 240, 247, 95 S.Ct. 1612, 1616, 44 L.Ed.2d 141 (1975); 6 Moore's Federal Practice p 54.78 (2d ed 1990) (stating the rule). Oregon courts follow this "American rule." See, e.g., Lewis v. Dept. of Rev., 294 Or. 139, 142, 653 P.2d 1265 (1982); Riedel v. First National Bank, 287 Or. 285, 290-91, 598 P.2d 302 (1979); Hughes v. Bembry, 256 Or. 172, 177-78, 470 P.2d 151 (1970). From time to time, the Oregon legislature has created a number of exceptions to this rule for particular classes of cases. 4 ORS 20.105(1), for example, is one provision allowing for the award of attorney fees based on the misconduct of the opposing party or attorney.

LEGISLATIVE INTENT OF ORS 20.105(1)

In circumstances such as this, the task of this court in interpreting a statute is to discern the intent of the legislature. ORS 174.020. The inquiry begins with an examination of the language of the statute itself. Whipple v. Howser, 291 Or. 475, 479, 632 P.2d 782 (1981). When the language of the statute does not provide sufficient insight into the legislative intent, it is appropriate to consider legislative history. State v. Leathers, 271 Or. 236, 242, 531 P.2d 901 (1975). The term "bad faith" is not self-explanatory. Accordingly, in determining whether plaintiff's actions were of the type that the legislature intended to address in ORS 20.105(1), we begin with an examination of the legislative history.

The legislative committees charged with the task of developing the specific language which was to become ORS 20.105(1) were deliberate about their choices. The statute began in 1983 as House Bill 2253 (sponsored by the Department of Justice), the original language of which would have permitted a court to award attorney fees to the State of Oregon when the state was a prevailing party defendant and when the court found that the opposing party had "acted frivolously or in bad faith." The bill was later amended to apply not only to the state but to any "prevailing party defendant."

Without reference to any specific case law, the Solicitor General testified that the proposed "frivolous" and "bad faith" standards both had been construed by the courts in a manner which would not penalize legitimate litigation. He compared those standards with the standard under which the state could be held liable for attorney fees. The latter standard--action by a state agency without a reasonable basis in fact or in law 5--was considered by the Solicitor General to require less serious misconduct than the proposed standards of "frivolous" and "bad faith." That is, a finding of bad faith under House Bill 2253 would have required something more than a lack of a reasonable basis in fact or in law.

Although the meanings of the quoted terms were discussed at length by committee members and witnesses, ultimately the committee decided that the terms should remain undefined, allowing the courts to determine their limits. House Bill 2253 eventually was tabled in committee, as was its successor, House Bill 3012. 6

The current language of ORS 20.105(1) emerged from a conference committee 7 as an amendment to House Bill 2364, which previously had not concerned the award of attorney fees for improper litigious conduct. Examination of the conference committee meeting transcripts reveals that the amendment was a resurrection and refinement of the then-defunct House Bill 3012. It was at this time that the language "in bad faith, wantonly, or solely for oppressive reasons" was suggested. From the minutes, it is clear that the committee's intent was for the specific language chosen to reflect the existing federal bad faith standard referred to in Alyeska Pipeline Serv. v. Wilderness Soc., supra, despite some uncertainty about what that standard actually was.

In summary, the legislative history of ORS 20.105(1) demonstrates the following: (1) A great deal of discussion and thought preceded the choice of the specific terms used in the statute; (2) there was an intent among those who chose the language to incorporate the federal "bad faith" standard mentioned in Alyeska; and (3) the committee charged with developing the statute deliberately left to the courts the task of shaping the contours of the somewhat broad language chosen.

ANALYSIS UNDER ORS 20.105(1)

At issue in this case is whether plaintiff acted in bad faith. However, in order to answer that question, it is necessary to set forth the complete hierarchical analysis required under ORS 20.105(1). This analysis is derived from the terms of the statute, federal bad-faith cases, and cases from our Court of Appeals.

Although it figured prominently in legislative committee discussions, Alyeska Pipeline Serv. v. Wilderness Soc., supra, was not a bad-faith case, and the United States Supreme Court did not define the term. Nor did the cases cited by the Alyeska court define "bad faith." However, since Alyeska, the federal courts have provided significant guidance regarding the definition of bad faith, as discussed below. 8

Prevailing Party

By its terms, ORS 20.105(1) first requires that the party to whom attorney fees are to be awarded must be a prevailing party. In the case before us, there is no dispute about this aspect of the statute; defendant clearly prevailed in the underlying action. 9

Meritlessness

Both the federal courts and our Court of Appeals have required a finding of meritlessness as a prerequisite to a finding of bad faith. For example, in Portland Development Comm. v. CH2M Hill Northwest, 92 Or.App. 43, 758 P.2d 353, rev. den. 307 Or. 77, 763 P.2d 731 (1988), the Court of Appeals relied on federal cases decided subsequent to Alyeska but prior to enactment of ORS 20.105 to determine the meaning of "bad faith." The court, citing Browning Debenture Holders' Committee v. DASA Corp., 560 F.2d 1078, 1088 (2d Cir.1977), stated that "a finding of 'bad faith' requires clear evidence that a claim has been made entirely without any basis in fact or law." 92 Or.App. at 48, 758 P.2d 353. After determining that the plaintiff had legal and factual reasons for filing and continuing the proceeding, the court reversed the trial court's award of attorney fees.

Other Court of Appeals' opinions have used similar language. In Brown v. Infotec Development, Inc., 88 Or.App. 37, 39, 744 P.2d 268 (1987), the Court of Appeals, without analysis, found that the plaintiff had "brought this appeal knowing that it has no basis in law or in fact. We find that he has acted in bad faith and that defendant is entitled to its attorney fees [under ORS 20.105]." See also Tyler v. Hartford Insurance Group, ...

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