Dunkin v. Dunkin

• Decision Date: 15 September 1999
• Citation: 986 P.2d 706,162 Or. App. 500
• Parties: Pamela Regan DUNKIN, Respondent, v. John Oliver DUNKIN, Appellant. In the Matter of the Marriage of, John Oliver Dunkin, Appellant, and Pamela Regan Dunkin, Respondent.
• Court: Oregon Court of Appeals

986 P.2d 706

162 Or. App. 500

Pamela Regan DUNKIN, Respondent, v. John Oliver DUNKIN, Appellant.

In the Matter of the Marriage of, John Oliver Dunkin, Appellant, and

Pamela Regan Dunkin, Respondent.

(95-2254-L-3, 88-3585-D-3; CA A98196)

Court of Appeals of Oregon.

Argued and Submitted July 28, 1998.

Decided September 15, 1999.

Susan E. Watts, Portland, argued the cause for appellant. With her on the opening brief were Peter Bunch and Kennedy, King & Zimmer LLP. With her on the reply brief were Kennedy, Watts, Arellano & Ricks LLP, Peter Bunch, and Zimmer & Associates LLC.

James Westwood, Portland, argued the cause for respondent. With him on the brief were M. Christie Helmer and Miller, Nash, Wiener, Hager & Carlsen LLP.

Before LANDAU, Presiding Judge, and DEITS, Chief Judge,¹ and WARREN, Senior Judge.

LANDAU, P.J.

The parties were married, but their marriage was dissolved in 1989. Six years later, wife initiated a civil action to set aside the dissolution judgment on the ground that husband had concealed his possession of marital assets, specifically his interest in a business and a beach house. Following the filing of the civil action, the legislature enacted ORS 107.452, which permits a dissolution proceeding that has gone to judgment to be reopened on the ground of discovery of previously undisclosed marital assets. Wife then initiated a separate action to reopen the dissolution proceeding under ORS 107.452. The trial court consolidated both matters for trial. After trial, the court found that husband, in fact, had concealed the nature of his interest in the business and the beach house. It awarded wife damages for breach of fiduciary duty and amended the dissolution judgment to revise the property division, awarding additional assets and attorney fees to wife. Husband appeals, contending that the trial court should have dismissed the breach of fiduciary duty claim, should not have reopened the dissolution proceeding, and, at the very least, should not have awarded attorney fees. We conclude that the trial court erred in awarding wife attorney fees, but otherwise affirm.

The following facts are not in dispute. The parties were married in 1967. There are three children of the marriage, all of whom are grown and no longer live at home. Wife remained at home to care for the children until 1981, when she began work as a part-time college professor. Husband had interests in various businesses and managed the family finances. Husband's business interests included Pacific Lumber Company (Pacific Lumber) and Grants Pass Moulding Company. In 1986, husband acquired a 50-percent interest in Rogue Valley Sash & Door, Inc. (Rogue Valley), through Pacific Lumber. In 1987, husband transferred Pacific Lumber's shares in Rogue Valley to a business partner in exchange for a promissory note payable to Pacific Lumber. The transaction apparently was designed to enable Rogue Valley to borrow additional funds. In 1988, however, husband reacquired the half interest in Rogue Valley. Husband also owned a beach house. His parents purchased the house in 1976, but they placed the title in husband's name for estate tax purposes.

The parties began contemplating divorce in 1988. They met with a mediator six times between September and December 1988. During that time, they lived apart, although they met frequently, sat together at the children's athletic events, and spent holidays together. The mediator suggested that husband and wife retain separate counsel, which they did. They negotiated a dissolution settlement directly, however, and not through their counsel.

When the parties reached an accord, husband drew up a settlement agreement. Among other things, the agreement listed husband's various business and real property interests. The agreement did not list husband's interest in Rogue Valley or in the beach house. The settlement agreement also contained a mutual release of rights. In April 1989, the dissolution court accepted the settlement agreement and entered a dissolution judgment incorporating the terms of the agreement.

In March 1995, wife initiated an action to set aside the 1989 dissolution judgment. Ultimately, after several amendments, the complaint alleged seven different claims. Only the fifth and seventh claims are relevant to this appeal. In her fifth claim, she alleged that husband's failure to disclose the full extent of his financial interests during settlement negotiations amounted to a breach of fiduciary duty for which she was entitled to damages. In the seventh claim, she alleged that husband's failure to disclose those interests entitled her to have the dissolution judgment set aside under ORCP 71 C. The complaint contained no request for attorney fees.

Husband moved to dismiss the fifth and seventh claims on the ground that wife had failed to alleged facts sufficient to warrant relief under ORCP 71 C as a matter of law. The trial court denied the motions.

Meanwhile, in 1995, the legislature enacted ORS 107.452, which provides, in part:

"(1) A court that entered a judgment of marital annulment, dissolution or separation shall reopen the case upon the motion of either party if the moving party alleges that significant assets belonging to either or both of the parties:

"(a) Existed at the time of the entry of the judgment; and

"(b) Were not discovered until after the entry of judgment."

The statute further provides that if, after taking evidence, the court finds that the nonmoving party inadvertently omitted assets, the court may enter such relief as is just and proper under the circumstances. ORS 107.452(2). If the court finds that the nonmoving party intentionally concealed assets, the court may order the division of the appreciated value of the omitted assets, the forfeiture of the omitted assets, a compensatory judgment, or other relief. ORS 107.452(3). The statute also authorizes the court to award attorney fees to the moving party. ORS 107.452(4).

Following the enactment of that statute, wife initiated a separate proceeding to reopen the 1989 dissolution case under ORS 107.452. She alleged a right to attorney fees under ORS 107.452(4). Husband moved to dismiss the proceeding, but the trial court denied the motion and ordered that action consolidated with the other for trial.

At trial, the parties testified to the foregoing facts. Wife also testified that she first learned of husband's interest in Rogue Valley in 1994. She testified that she knew that husband was in the business of making doors, but that she did not know about his interest in that particular company. She also testified that she did not learn of husband's interest in the beach house until depositions in preparation for trial, in 1996. She testified that she relied on husband as to family financial matters in general and in the dissolution negotiations in particular. Husband testified that he did not disclose the full extent of his ownership of Rogue Valley because, at the time of dissolution, he was not clear about the extent of his ownership interest in the company. He also testified that wife had seen financial records that showed that husband did have an interest in Rogue Valley, at least through his ownership of Pacific Lumber. As for the beach house, husband testified that he did not list it as an asset as a matter of principle; he did not consider the house to be his. He said that wife had asked about the beach house, but that he had told her that it was not negotiable.

Husband moved for a judgment of dismissal under ORCP 54 B, arguing that wife had failed to introduce evidence sufficient to warrant relief under either her fifth or her seventh claims. The trial court denied the motions.

The trial court concluded that, because wife had some knowledge of husband's interest in Rogue Valley and the beach house, she was not entitled to relief under ORS 107.452. The court went on to hold, however, that husband failed to make a complete disclosure as to the nature of his interests, which was required by their fiduciary relationship at the time of settlement negotiations. The trial court therefore found in favor of wife on her claim for breach of fiduciary duty and awarded damages to wife based on its calculation of her share of the concealed assets. On the basis of the breach of fiduciary duty, the trial court also granted relief on wife's seventh claim under ORCP 71 C, ordering the dissolution judgment amended so as to incorporate an additional award of assets to wife. Finally, the trial court awarded wife her attorney fees and interest from the date of the 1989 dissolution judgment.

On appeal, husband first contends that the trial court erred in denying husband's motion to dismiss wife's seventh claim for relief under ORCP 71 C. According to husband, relief under ORCP 71 C is warranted only in "extraordinary circumstances such as extrinsic fraud." Husband acknowledges that wife alleged fraudulent conduct in her complaint, but he argues that the fraud was not the extrinsic sort that justifies relief under ORCP 71 C. Wife argues that the fraud that she alleged does amount to extrinsic fraud, because husband's nondisclosure precluded an adjudication of the parties' interests in the 1989 dissolution case. In any event, she argues, she alleged a breach of fiduciary duty, which provides an independent basis for relief under ORCP 71 C. Husband replies that, although our cases suggest that a breach of fiduciary duty does provide a basis for relief under ORCP 71 C, those cases are wrong and should be reconsidered.

We need not address whether the allegations of wife's complaint amounted to allegations of extrinsic fraud because, at all events, the complaint alleged a claim for a breach of fiduciary duty, and such a claim suffices to warrant relief under ORCP 71 C. ORCP 71 C recognizes the "inherent power of a court * * * to modify a judgment within a reasonable time." It is within the court's discretion to exercise that inherent...