Carlson v. Blumenstein

CourtSupreme Court of Oregon
Citation651 P.2d 710,293 Or. 494
PartiesDonald B. CARLSON & Agnes Carlson, husband and wife, Petitioners on Review, v. Robert BLUMENSTEIN, Jr., and Robert B. Blumenstein, dba Mill City Builders, Respondents on Review. CA 18864; SC 28259.
Decision Date26 October 1982

Paul J. De Muniz, of Garrett, Seideman, Hemann, Robertson & De Muniz, P. C., Salem, argued the cause for petitioners on review. On the briefs in the Court of Appeals were Duncan, Tiger & Rothlisberger, Stayton.

Dale L. Crandall, of Crothers & Crandall, Salem, argued the cause and filed the briefs for respondents on review. With him on the reply brief was Kathleen A. Evans, certified law student.


PETERSON, Justice.

The parties entered into a contract containing a provision that "the losing party agrees to pay to the successful party" reasonable attorney fees to be fixed by the court. The plaintiffs' complaint for damages for breach of contract was met with a counterclaim for damages for breach of the same contract. The trial court found for plaintiffs on some of their claims and for defendants on some of their claims. The judgment concluded as follows:


"Plaintiffs are awarded judgment against the defendants in the sum of $2,727.04, plus interest at the rate of 6 percent per annum from August 1, 1976 until March 19, 1979, plus the sum of $2000, allowed as plaintiffs' reasonable attorney's fees and their costs and disbursements incurred herein, taxed in the sum of $165.70."

We first set forth the governing statutes. ORS 20.096 provides, in part:

"(1) In any action or suit on a contract, where such contract specifically provides that attorney fees and costs incurred to enforce the provisions of the contract shall be awarded to one of the parties, the prevailing party, whether that party is the party specified in the contract or not, at trial or on appeal, shall be entitled to reasonable attorney fees in addition to costs and disbursements.

" * * *.

"(5) * * * '[P]revailing party' means the party in whose favor final judgment or decree is rendered."

The "offer of compromise" statute, ORS 17.055, provided: 1

" * * * [T]he defendant may, at any time before trial, serve upon the plaintiff an offer to allow judgment or decree to be given against him for the sum, or the property, or to the effect therein specified. If the plaintiff accepts the offer, he shall by himself or attorney indorse such acceptance thereon, and file the same with the clerk before trial, and within three days from the time it was served upon him; and thereupon judgment or decree shall be given accordingly, as in case of a confession. If the offer is not accepted and filed within the time prescribed, it shall be deemed withdrawn, and shall not be given in evidence on the trial; and if the plaintiff fails to obtain a more favorable judgment or decree, he shall not recover costs, but the defendant shall recover of him costs and disbursements from the time of the service of the offer."

In this case, a $3,000 offer of compromise was made after filing, two months before trial. The offer was not accepted, and a judgment was entered for the plaintiffs for damages, attorney fees, costs and disbursements. The defendants assert that the judgment ultimately returned against them was not "more favorable" than their offer, and they therefore claim entitlement to costs, disbursements and attorney fees. The decision in this case turns upon a construction of the attorney fees statute, ORS 20.096, in relation to the offer of compromise statute, ORS 17.055.


On December 13, 1975, the parties entered into a contract under which the defendants contracted to build a residence for the plaintiffs. The parties used a printed Stevens-Ness Law Publishing Co. contract, Form No. 920, entitled "CONTRACT FOR PURCHASE AND CONSTRUCTION ON BUILDER'S LOT." The contract contained this provision:

"Should either party hereto bring any action against the other arising out of this contract, the losing party agrees to pay to the successful party (a) the latter's reasonable attorney's fees to be fixed by the trial court and (b) on appeal, if any, similar fees in the appellate court to be fixed by the appellate court."

In the plaintiffs' complaint, the plaintiffs sought damages for the defendants' failure to properly perform the construction work, and credits for work they performed and material they supplied. The defendants asserted three counterclaims. One involved a claim for extra work performed by the defendants. The second was for amounts due under the contract. The third counterclaim was unrelated to the contract.

On May 3, 1979, the defendants filed an "offer of compromise" offering "to allow Judgment in favor of the plaintiffs against the Defendants in the amount of $3000." According to its terms, the offer was "made pursuant to ORS 17.055; ORS 20.096; ORS 20.180; and Wetzstein v. Hemstreet, 276 Or. 623, 555 P.2d 1243 (1976)." Plaintiffs did not accept the offer, and the case went to trial in July. The trial judge found as follows:

                      For plaintiffs
                A.    Cost of repairing defects caused
                      by poor workmanship               $3,260.00
                B.    Items paid for by plaintiffs
                      "which were an integral part of
                      the construction contract and
                      which were the responsibility
                      of the defendants to pay for"      4,121.59
                      TOTAL                             $7,381.59
                      For defendants
                C.    Unpaid sums due defendants
                      under the contract                $3,677.19
                D.    Extra work requested by
                      plaintiffs                           766.76
                E.    Repairs to plaintiffs' former
                      residence                            220.60

The court awarded plaintiffs the difference, $2,717.04, plus prejudgment interest to March 19, 1979, 2 making a total award in excess of $3,000. The court also awarded plaintiffs $2,000 attorney fees. The defendants appealed.

The Court of Appeals, 54 Or.App. 380, 635 P.2d 380, held:

1. The defendants were entitled to prejudgment interest on items C and D from July 1, 1976, and on item E from August 1, 1976.

2. The plaintiffs were not entitled to prejudgment interest on item A, but were entitled to prejudgment interest on item B from July 1, 1976.

3. The plaintiffs' total judgment, after the Court of Appeals calculations were made, amounted to less than $3,000. Therefore, that court held that defendants, "having tendered $3,000 in settlement, are the prevailing parties, not plaintiffs." 54 Or.App. at 386, 635 P.2d 380. The Court of Appeals remanded the case to the trial court for "a precise calculation of the correct amount" of interest, and ordered that the trial court, on remand, "also award defendants an amount for attorney fees as the prevailing parties." 54 Or.App. at 386, 635 P.2d 380.

The plaintiffs have petitioned for review. They do not seek review of the Court of Appeals holding on the prejudgment interest questions. Their only claim is that they "are the prevailing party for purposes of ORS 20.096 and are not prohibited by ORS 17.055 from an award of attorney's fees."


ORS 20.096


The defendants claim that because the plaintiffs' net award did not exceed $3,000, the defendants were the "prevailing party" and therefore entitled to attorney fees under ORS 20.096. The plaintiffs claim that they were the "prevailing party" under ORS 20.096, irrespective of the offer of compromise made by the defendants under ORS 17.055. They further claim that "any offer of compromise must be compared with the petitioners' damages and the amount of attorney's fees accrued as of the date of the compromise offer, in determining whether [plaintiffs] have failed to 'obtain a more favorable judgment or decree' pursuant to ORS 17.055."

The contract is on a printed form in which the blanks contain handwritten entries. There is no evidence that the parties bargained about, considered or discussed the meaning of the attorney fee clause or the meaning of the terms "the losing party" and the "successful party."

Both parties invoke ORS 20.096. ORS 20.096 contains neither the term "the losing party" nor the term "the successful party." It uses the term "the prevailing party." In the absence of any evidence that the intention of the parties was otherwise, we will ascribe to the term "the successful party," the statutory meaning of "prevailing party," which is defined in ORS 20.096(5) as "the party in whose favor final judgment or decree is rendered." 3

U. S. Nat'l Bank v. Smith, 292 Or. 123, 637 P.2d 139 (1981), held that even though a defendant obtained a reduction of a judgment on appeal and was entitled to an award by the appellate court of the costs incurred on the appeal, the plaintiff, having obtained a final judgment in its favor, was entitled to attorney fees under ORS 20.096.

"It follows, in our opinion, as contended by plaintiff, that in an action or suit to enforce the provisions of a contract which includes a provision for payment of attorney fees incurred to enforce provisions of the contract, the only question to be determined in deciding which party is entitled to an award of attorney fees on appeal is the question of determining 'the party in whose favor final judgment or decree is rendered,' not whether the appellant has been successful on appeal in obtaining some substantial modification of the judgment or decree as entered by the trial court.

"Because the final decree in this case, although modified on appeal, affirmed the judgment in favor of plaintiff in the sum of $5,455, plus interest, as the...

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