Adams v. State By and Through Bargaining Unit Benefits Bd.
| Decision Date | 18 December 1990 |
| Docket Number | No. 23J,No. 12,D,No. 4 and N,No. 48J,No. 40,No. 7,No. 3JT,No. 3,No. 28J,48J,23J,40,4 and N,3JT,7,3,28J,12 |
| Citation | 798 P.2d 244,103 Or.App. 288 |
| Parties | Elizabeth ADAMS, Jean Ady, Merrilin Fabian, Jane Howard, Bonnie McCauley, Ruby Noji, Sue O'Reilly, Cheryl Otostompkins, Elena Ottoboni, Stuart Pemble-Belkin, Edit Rozman, Sue Shaver, Karoline Torrey, Eugene Whitney, Pat Whitney, Martha Wolf, and Gene Mechanic and Goldberg, Mechanic and Goldstein, Attorneys at Law, Respondents, v. STATE of Oregon, By and Through its BARGAINING UNIT BENEFITS BOARD, State Employment Benefits Board and Department of Human Resources, Adult and Family Services Division; Public Employees Retirement System; Port of Portland; Metropolitan Services District; Multnomah County; Clackamas County; Washington County; City of Oregon City; City of Tigard; City of Gresham; City of Beaverton; City of Milwaukie; City of Portland; Tri-Met; Clackamas Community College District; Mt. Hood Community College District; Portland Community College District; Beaverton School District; Tigard School District; David Douglas School District; Gresham School Districto. U2-20JT; Hillsboro Union High School; Hillsboro Elementary School District; Parkrose School District; Reynolds School District ; Centennial School District; North Clackamas School District; West Linn DistrictJ, Defendants, and City of Hillsboro, Appellant. A8807-03682; CA A60791. |
| Court | Oregon Court of Appeals |
Carrell F. Bradley, Hillsboro, argued the cause and filed briefs, for appellant.
Marc D. Blackman, Portland, argued the cause, for respondents. With him on brief, was Gene Mechanic, Portland.
Before BUTTLER, P.J., and WARREN and ROSSMAN, JJ.
This appeal is by defendant City of Hillsboro (Hillsboro) from the trial court's denial of its claims for attorney fees and sanctions against plaintiffs and plaintiffs' attorneys, Mechanic and the Goldberg, Mechanic and Goldstein law firm. ORS 20.105; ORCP 17. We affirm.
The underlying action arose out of a 1988 labor dispute between three unions and Kaiser Foundation Health Plan of the Northwest (Kaiser). Plaintiffs, who are taxpayers of Hillsboro but not union employees, were solicited by union representatives to pursue a declaratory judgment proceeding against various entities that had contracts with Kaiser. 1 Kaiser's nurses were on strike, as a result of which services to patients were reduced. Hillsboro's contract provided that premium payments to Kaiser would not be forgiven in the event of a labor dispute. Plaintiffs' claim against Hillsboro was that by continuing to pay Kaiser for services that were not received, the city was unconstitutionally lending credit to Kaiser in violation of Article XI, section 9, of the Oregon Constitution. 2
After the strike against Kaiser was settled, plaintiffs sought to dismiss their lawsuit. Hillsboro would not agree to the dismissal, unless plaintiffs paid Hillsboro's costs and attorney fees. Plaintiffs refused. 3 After a hearing on Hillsboro's claim for fees under ORS 20.105, the trial court found that there was a factual and legal basis for the action and denied Hillsboro's motion. It also refused sanctions under ORCP 17. 4
We turn first to a threshold matter. Respondent attorneys argue that the appeal must be dismissed as to Goldberg, because Hillsboro did not name him personally as an adverse party in the notice of appeal. ORS 19.029; ORS 19.033. It is undisputed that the notice of appeal did not name Goldberg personally. The record shows that Goldberg, Mechanic & Goldstein is a partnership, and Hillsboro's designation of adverse parties makes it clear that Hillsboro treated the firm as an entity. The notice of appeal names as adverse parties "all of the plaintiffs; and Gene Mechanic; and Goldberg, Mechanic and Goldstein, Attorneys at Law." The notice of appeal shows service on "Mr. Gene B. Mechanic" and, separately, on the "Firm of Goldberg, Mechanic & Goldstein." The notice of appeal thus specifically names Mechanic as an individual, but not Goldberg. He is not an adverse party, and there is no basis on which to dismiss him personally. 5
Turning to the merits, Hillsboro's characterization of the basis for the lawsuit differs fundamentally from that of plaintiffs. Hillsboro takes the position that the action was brought solely for the purpose of bringing economic pressure on Kaiser to help force a settlement of the labor dispute. It contends that the "real plaintiffs" were the unions and the lawyers 6 and that sanctions should be imposed against the nominal plaintiffs, because they lent their names to baseless litigation without any real concern for resolution of a dispute between them and the municipality. Plaintiffs, while not disputing that they were recruited by union personnel to bring the action, argue that they had a legitimate concern that their taxes were being used to pay for services that were unavailable because of the strike.
ORS 20.105(1) provides:
"In any civil action, suit or other proceeding in a district court, a circuit court or the Oregon Tax Court, or in any civil appeal to or review by the Court of Appeals or Supreme Court, the court may, in its discretion, award reasonable attorney fees appropriate in the circumstances to a party against whom a claim, defense or ground for appeal or review is asserted, if that party is a prevailing party in the proceeding and to be paid by the party asserting the claim, defense or ground, upon a finding by the court that the party wilfully disobeyed a court order or acted in bad faith, wantonly or solely for oppressive reasons." 7
Hillsboro argues that the trial court erred in refusing sanctions, because ORS 20.105 was designed to address the situation of a party bringing an action for collateral purposes. 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 defendant seeking sanctions also claimed that the plaintiff had brought the action against it for collateral reasons. We discussed ORS 20.105 primarily as it relates to "bad faith." We concluded that an award of fees as a sanction for an action brought in bad faith must be based on a finding that the claim was brought without any basis in law or fact. 92 Or.App. at 50, 758 P.2d 353.
Plaintiffs could be held to have brought an action in bad faith, if there had been no basis on which to proceed. Hillsboro contends that plaintiffs' claim had no basis in law, because they brought the action as taxpayers. It argues that they should have known that they were without standing, because "no Oregon case and no case in any jurisdiction * * * allows a taxpayer to file a case against a municipality involving a contract that that person is neither a party to nor a beneficiary of." Hillsboro suggests that its position is supported by the fact that plaintiffs' first complaint was dismissed on the ground that they had not alleged facts specific enough to establish standing.
We do not agree. Although plaintiffs' original complaint did not establish their standing as taxpayers, they were allowed to replead. There is authority to suggest that a taxpayer whose burden will be augmented by an unlawful expenditure of public funds has standing to challenge the expenditure, even though the expenditure is made by contract. See Hanson v. Mosser, 247 Or. 1, 427 P.2d 97 (1967). There was precedent on which plaintiffs could base a reasonable claim of standing.
Hillsboro also claims that plaintiffs' action was without legal basis because, even if they had standing, it was "wacky to argue that the payment of a premium to Kaiser under a negotiated contract * * * is in some manner the loaning of credit prohibited by the constitution." However, we need not determine the answer to plaintiffs' contention for the purpose of determining whether sanctions should have been imposed. The claim was not "wacky." Plaintiffs' attorneys based their analysis on DeFazio v. WPPSS, 296 Or. 550, 679 P.2d 1316 (1984), in which the Supreme Court held that a public body's unconditional promise to pay for services, whether or not the services were provided, was not...
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