Goodsell v. Eagle-Air Estates Homeowners Ass'n

• Decision Date: 31 August 2016
• Docket Number: A156532,A156532 (Control), A156733
• Citation: 280 Or.App. 593,383 P.3d 365
• Parties: Vernon Goodsell; Bruce Haphey; and 15840 Pilot Drive, LLC, Plaintiffs–Respondents Cross–Appellants, and John Schibel, Plaintiff, v. Eagle–Air Estates Homeowners Association, an Oregon non-profit corporation, Defendant, and Michael Morgan; Charles Harp; and Ben Lindner, as members of the board of directors of Eagle–Air Estates Homeowners Association, Defendants–Appellants Cross–Respondents.
• Court: Oregon Court of Appeals

280 Or.App. 593

383 P.3d 365

Vernon Goodsell; Bruce Haphey; and 15840 Pilot Drive, LLC, Plaintiffs–Respondents Cross–Appellants,andJohn Schibel, Plaintiff,

v. Eagle–Air Estates Homeowners Association, an Oregon non-profit corporation, Defendant,andMichael Morgan; Charles Harp; and Ben Lindner, as members of the board of directors of Eagle–Air Estates Homeowners Association, Defendants–Appellants Cross–Respondents.

A156532 (Control), A156733

A156532

Court of Appeals of Oregon.

Argued and submitted January 11, 2016.

August 31, 2016

Michael W. Peterkin, Bend, argued the cause for appellants-cross-respondents. With him on the briefs was Peterkin & Associates.

Margaret Fiorino, Portland, argued the cause for respondents-cross-appellants. With her on the briefs were Matthew J. Kress and Law Office of Matthew Kress.

Before Armstrong, Presiding Judge, and Egan, Judge, and Shorr, Judge.

SHORR, J.

This appeal is the most recent episode in a “long-running serial litigation” involving the residents, developers, and homeowners' association of a 12–lot airpark subdivision in Sisters. Goodsell v. Eagle–Air Estates Homeowners Assn. , 249 Or.App. 639, 641, 278 P.3d 133, rev. den. , 352 Or. 665, 293 P.3d 226 (2012) (Goodsell I ).¹ In Goodsell I, we reversed the trial court's dismissal of plaintiffs' complaint. On remand, plaintiffs voluntarily dismissed the case under ORCP 54 A(1). Defendants were subsequently awarded some, but not all, of their attorney fees.² On appeal, defendants argue that the trial court erred in concluding that they were not entitled to attorney fees for unsuccessful stages of litigation, notwithstanding that defendants were ultimately the prevailing party. Plaintiffs cross-appeal, arguing that defendants were not entitled to attorney fees under ORS 94.719 and ORS 94.780.

As explained below, we conclude that defendants, as the prevailing parties, were entitled to reasonable attorney fees for the entire case—including for unsuccessful stages of the litigation—and that the trial court erred in concluding otherwise. We further conclude, on the cross-appeal, that the trial court did not err in awarding attorney fees. Accordingly, we reverse and remand the judgment for reconsideration in light of this decision.

Because an extended discussion would not benefit the bench or bar, we recount only the facts bearing directly on this appeal:

“[P]laintiffs and the individually named defendants are all members of the defendant homeowners association and planned community subdivision, consisting of 12 lots. Plaintiff Goodsell was also a developer of the subdivision. * * * [A]t various times, both the individual plaintiffs and the individual defendants have served as members of the association's three-member board of directors. Even more to the point, the relationship between the individual plaintiffs and the individual defendants has been mutually antagonistic. For example, when the individual plaintiffs were serving as directors of the association, defendant Morgan asserted, in the course of litigating derivative claims, that those plaintiffs had abused their authority and discretion as directors, and Morgan unsuccessfully sought an order removing them as directors.

“The individual plaintiffs' terms as directors of the association expired in 2006, and the individual defendants succeeded those plaintiffs as directors. In March 2010, plaintiffs brought this action, alleging that the individual defendants had breached their fiduciary duties as directors in a variety of particulars, including engaging in impermissible self-dealing, and seeking their removal pursuant to ORS 65.327(1).”

Goodsell I , 249 Or.App. at 641–42, 278 P.3d 133.

Defendants moved to dismiss the complaint, which advanced a single claim for relief pursuant to ORS 65.327(1), under ORCP 21 A(8). The trial court granted the motion on the ground that the plaintiffs' invocation of ORS 65.327(1), the statute authorizing judicial removal of directors, “impermissibly conflicted with the association's bylaw provision pertaining to removal of directors,” and with various other statutes. Id. at 641, 278 P.3d 133. Plaintiffs successfully appealed, and the case was reversed and remanded. Id. We declined to exercise our discretion under ORAP 13.10(3) to award attorney fees for the appeal, specifically noting that that determination “does not, of course, preclude any potential recovery of attorney fees reasonably incurred in connection with this appeal.”

Following remand, plaintiffs, who had initially sought leave to file what would have been their third amended complaint, proceeded to voluntarily dismiss the action under ORCP 54 A(1). Defendants, as the prevailing parties, sought attorney fees pursuant to ORS 94.719 and ORS 94.780, which authorize attorney fees in certain lawsuits involving a homeowners' association. Defendants requested a total of $78,430.50 in attorney fees: $27,774 incurred in the original trial court proceedings; $36,038.50 incurred in the appeal; $12,058 incurred in the trial court proceedings post-remand; and $2,560 in estimated hearing and post-hearing supplemental fees. Plaintiffs objected, contending, among other things, that the statutes defendants invoked in seeking attorney fees were inapposite, and that defendants were not legally entitled to attorney fees incurred in the appeal because plaintiffs had prevailed in that stage of the litigation.

After written and oral arguments, the trial court awarded defendants $9,744.50 in attorney fees. Of that amount, $4,913 was awarded for fees incurred in the original trial court proceeding and $4,831.50 was for fees incurred in the trial court proceedings on remand. The judgment also provided that the trial court was “not awarding defendants attorney fees on appeal” and was awarding “only a portion” of the fees requested in connection with the trial proceedings. In addition, the trial court made written findings and conclusions explaining its ruling, which are discussed in greater detail in our analysis of defendants' challenge.

On appeal, defendants take issue with the trial court's conclusion that defendants were not entitled to attorney fees incurred in losing stages of the litigation, despite their status, ultimately, as the prevailing party, but do not challenge the reasonableness of the amount of attorney fees awarded. On cross-appeal, plaintiffs assert that the operative attorney fee statutes are entirely inapposite to this case, and, therefore, that defendants are not entitled to any attorney fees whatsoever. Both challenges present questions of statutory interpretation, which we analyze under the interpretive framework set out in State v. Gaines , 346 Or. 160, 164–65, 206 P.3d 1042 (2009), with the goal of construing the operative provisions in accordance with legislative intent. We first address the cross-appeal, which raises a threshold issue regarding defendants' entitlement to attorney fees in the first instance, before proceeding to defendant's arguments.

Plaintiffs argue that, because their claim was brought under ORS 65.327 (providing for judicial removal of directors), it does not qualify under either of the attorney fee statutes claimed by defendants to authorize fees. In other words, plaintiffs claim that theirs was neither an action “to enforce compliance” with the provisions of ORS chapter 94 or the bylaws or other rules and regulations adopted by the association (as required by ORS 94.719 ), nor was it an action seeking to remedy a violation of ORS 94.550 to 94.785 (as required by ORS 94.780 ).

We review a trial court's conclusions concerning a party's entitlement to attorney fees for legal error. Mountain High Homeowners Assn. v. Jewett , 224 Or.App. 45, 49, 197 P.3d 27 (2008), rev. den. , 346 Or. 65, 204 P.3d 95 (2009). The prevailing party in a legal proceeding generally “is not entitled to an award of attorney fees unless the award is authorized by statute or a specific contractual provision.” Domingo v. Anderson , 325 Or. 385, 388, 938 P.2d 206 (1997).

As noted above, the attorney fee award in this case was authorized on a statutory basis, under ORS 94.719 and ORS 94.780.

We begin with ORS 94.719, which provides:

“In any suit or action brought by a homeowners association to foreclose its lien or to collect delinquent assessments or in any suit or action brought by the declarant, the association or any owner or class of owners to enforce compliance with the terms and provisions of ORS 94.550 to 94.783 or the declaration or bylaws, including all amendments and supplements thereto or any rules or regulations adopted by the association, the prevailing party shall be entitled to recover reasonable attorney fees therein and in any appeal therefrom.”

(Emphasis added.)

Thus, ORS 94.719 establishes attorney fee entitlement for the prevailing party in several types of legal proceedings involving a homeowners' association. For purposes of this opinion, we focus on its authorization of attorney fees to the prevailing party in “any suit or action” brought by an “owner or class of owners” to enforce “the terms and provisions of ORS 94.550 to 94.783 ” or to enforce the association's bylaws, rules or regulations. It is undisputed that defendants are the prevailing party here, and neither party contends that plaintiffs, who brought this action as members of the homeowners' association, are not “owners” for purposes of ORS 94.719.³ The only issue raised is whether plaintiffs' action qualifies, by its nature, as one “brought to enforce the provisions of ORS chapter 94 or the bylaws or other rules and regulations adopted by the association to govern the planned community.” Morgan v. Goodsell , 198 Or.App. 385, 390–91, 108 P.3d 612 (2005).

We conclude that this action qualifies. Plaintiffs' complaint was predicated almost entirely on multiple alleged violations of ORS chapter 94 and the association's rules, and it sought a form of injunctive relief as a remedy for those alleged violations.⁴ Therefore, this action...