Jones v. Emerald Pacific Homes, Inc.

• Decision Date: 02 July 2003
• Parties: Nathan L. JONES and Gail Jones, Appellants-Cross-Respondents, v. EMERALD PACIFIC HOMES, INC., Respondent-Cross-Appellant, and Jeffery L. Butts, and Kimberly Butts, Respondents, and Michael Butts, and Gary Donovan, Defendants.
• Court: Oregon Court of Appeals

71 P.3d 574

188 Or. App. 471

Nathan L. JONES and Gail Jones, Appellants-Cross-Respondents, v. EMERALD PACIFIC HOMES, INC., Respondent-Cross-Appellant, and Jeffery L. Butts, and Kimberly Butts, Respondents, and Michael Butts, and Gary Donovan, Defendants.

CCV 9809193; A108879.

Court of Appeals of Oregon.

Argued and Submitted March 11, 2003.

Decided July 2, 2003.

Gary G. Linkous, Welches, argued the cause for appellants-cross-respondents. With him on the briefs was John R. MacMillan.

Lisa E. Lear argued the cause and filed the briefs for respondent-cross-appellant Emerald Pacific Homes, Inc., and respondents Jeffery and Kimberly Butts.

Before EDMONDS, Presiding Judge, and KISTLER and SCHUMAN, Judges.

SCHUMAN, J.

Emerald Pacific Homes, Inc. (Emerald) contracted to build plaintiffs a custom home. Satisfied with neither the quality nor the speed of construction, plaintiffs brought this action against Emerald and its owners (collectively, defendants) for negligence and breach of contract. At the conclusion of plaintiffs' case-in-chief, the trial court granted defendants' "motion for partial directed verdict"¹ on the negligence claim, ruling that the only duties that defendants allegedly breached derived from the contract and not from some independent source of law. The contract claim proceeded; plaintiffs obtained a jury verdict and an enhanced prevailing party fee of $5,000. Plaintiffs appeal from the dismissal of their negligence claim. Emerald (but not the other defendants) cross-appeals from the award of the enhanced prevailing party fee. We affirm on the appeal and on the cross-appeal.

I. PLAINTIFFS' APPEAL

The following facts are not in dispute. Emerald agreed to build a home for plaintiffs according to the terms of a one-page form captioned "Custom Home Contract," which provided, in part:

"We AGREE, hereby to furnish material and labor to complete a single family home in accordance with the Architectural and/or Engineering plans as well as the signed specification form, and cost break down sheet, for the sum of: four hundred eleven thousand[ ] two hundred eighteen dollars ($411,218)[.]

"* * * * *

"All material is guaranteed to be as specified. All work to be completed in a workmanlike manner according to standard practices."

Plaintiffs became dissatisfied with Emerald's alleged failure to meet its schedule and with the allegedly poor workmanship for which it was responsible, in particular with a leaky roof that caused damage to the interior finish. When Emerald did not respond to plaintiffs' request for repairs, plaintiffs hired a substitute contractor, who subsequently discovered other construction defects.

Plaintiffs sued defendants and two other individuals who were voluntarily dismissed before trial. Against Emerald, plaintiffs alleged negligence and breach of contract; against defendants Jeffery and Kimberly Butts, they sought to "pierce the corporate veil" by alleging undercapitalization and failure to maintain corporate formalities. As noted above, the trial court dismissed the negligence claim. The jury found against plaintiffs on the "piercing" claim but in their favor on the breach of contract claim. Plaintiffs received damages of $86,652 plus a $5,000 enhanced prevailing party fee based on Emerald's conduct during the litigation.

Those outcomes were incorporated in a judgment entered on December 6, 1999. Plaintiffs filed a notice of appeal relative to their dismissed negligence claim on January 4, 2000, and Emerald filed a notice of cross-appeal on the prevailing party fees 10 days later. This court, however, discovered that the judgment did not resolve the claims against one of the parties that plaintiffs had voluntarily dismissed prior to trial. Because the judgment did not meet the requirements of ORCP 67 B, it was not an appealable judgment. ORCP 67 A, B; ORS 19.205(2)(e). We granted plaintiffs' motion for leave to allow the trial court to enter a final judgment and agreed to hold the appeal in abeyance as authorized by ORS 19.270(4). Our order gave plaintiffs 30 days after the entry of a final judgment to file an amended notice of appeal. On May 16, the trial court entered a stipulated judgment of dismissal dismissing the unresolved claim. Although that judgment, combined with the earlier one, created an appealable judgment, State ex rel Orbanco Real Estate Serv. v. Allen, 301 Or. 104, 116, 720 P.2d 365 (1986), plaintiffs nonetheless submitted a proposed amended judgment wrapping the two partial judgments into a single "super judgment." The trial court entered that judgment on June 23, 2000. Plaintiff filed another notice of appeal on July 6, 2000—within 30 days of entry of the "super judgment" but more than 30 days after entry of the stipulated judgment. Emerald filed a notice of cross-appeal on July 10.

The substantive issue on appeal is whether plaintiffs can state a claim for negligence arising out of Emerald's alleged breach of the duties specified in their contract. However, based on the sequence of events after the first, incomplete, judgment was filed, Emerald raises a threshold challenge to our jurisdiction.² Emerald contends that, because this case became appealable when the stipulated judgment disposing of the outstanding claim was entered on May 16, 2000, that event started the time period for plaintiffs to file their notice of appeal. That period, as noted above, expired on June 15. Plaintiffs' amended notice of appeal, however, was not filed until July 6. According to Emerald, when plaintiffs failed to meet the June 15 deadline, this court lost jurisdiction, regardless of the fact that plaintiffs filed within 30 days of the later "super judgment." Further, according to Emerald, plaintiffs appealed from the wrong judgment: they appealed from the "super judgment" instead of the stipulated judgment, and we should dismiss the appeal on that ground as well. Emerald's first argument is based on the assumption that, when we granted plaintiffs leave to seek a final judgment, we transferred jurisdiction to the trial court and that, once plaintiffs did not file a notice of appeal within 30 days of entry of the final judgment, ORS 19.255, we could not reassume jurisdiction. However, in Baugh v. Bryant Limited Partnerships, 312 Or. 635, 644, 825 P.2d 1383 (1992), the Supreme Court held that this court does not lose jurisdiction when, after a party attempts to appeal from a nonfinal judgment, the court grants that party leave to seek an appealable judgment under ORS 19.270.³ For that reason, "the law does not require that a new or amended notice of appeal be filed within a particular number of days after entry of an appealable judgment in order for the Court of Appeals to have jurisdiction." Baugh, 312 Or. at 644,825 P.2d 1383. Although this court "may" dismiss an appeal if the amended notice of appeal is not filed within a specified time, we are not obligated to do so. Id.; see also S.W. v. Schellenberg, 152 Or.App. 33, 36, 952 P.2d 567 (1998)

.

Further, because plaintiffs' amended notice of appeal specified that it "relates to the court's decision to dismiss plaintiffs' negligence claim against defendants," we conclude that, even though the notice of appeal referred to the "super judgment" and not to the stipulated judgment, it did not mislead the court or any party. See Ensley v. Fitzwater, 293 Or. 158, 645 P.2d 1062 (1982)

(reinstating appeal where notice of appeal specified wrong judgment but correct judgment was apparent). We therefore decline to exercise our discretion to dismiss this appeal, and we proceed to the merits.

Oregon courts have long recognized that, in some circumstances, a breach of contract can give rise to tort liability. In the older cases, the Supreme Court explained that, under common law pleading rules, a plaintiff could allege the existence of a contract with the defendant as part of the "inducement," Currey v. Butcher, 37 Or. 380, 385, 61 P. 631 (1900), thereby establishing the necessary predicate to a claim for negligence based on an allegation that the defendant "assumed a position, relationship or status upon which the general law predicates a duty independent of the terms of the contract * * *." Harper v. Interstate Brewery Co., 168 Or. 26, 37, 120 P.2d 757 (1942). The modern cases carry forward and refine the basic idea that a tort action between parties to a contract can arise when the plaintiff's damages result from breach of an obligation that is independent of the terms of the contract, that is, an obligation that the law imposes on the defendant because of his or her relationship to the plaintiff, regardless of the terms of the contract between them. E.g., Conway v. Pacific University, 324 Or. 231, 237, 924 P.2d 818 (1996)

; Georgetown Realty v. The Home Ins. Co., 313 Or. 97, 106, 831 P.2d 7 (1992); Securities-Intermountain v. Sunset Fuel, 289 Or. 243, 259, 611 P.2d 1158 (1980); Kisle v. St. Paul Fire & Marine Ins., 262 Or. 1, 6-7, 495 P.2d 1198 (1972). The plaintiff's tort claim may exist even if it is based on an obligation that the defendant assumes as an express or implied term of the contract, so long as the obligation would exist even if it were not in the contract. Georgetown Realty, 313 Or. at 106,

831 P.2d 7.

Numerous cases define the kinds of relationships between contracting parties that can impose extra-contractual obligations. Generally, such relationships must impose obligations "beyond the common law duty to exercise reasonable care to prevent foreseeable harm." Onita Pacific Corp. v. Trustees of Bronson, 315 Or. 149, 159, 843 P.2d 890 (1992). More specifically, the Supreme Court has described the relationships as falling into several categories: those between "professionals" such as lawyers, physicians, architects and engineers and their clients; those between principals such as brokers and their agents; those between trustees and beneficiaries; and, in some instances, those between insurers and their insureds. Conway...