MENASHA FOREST PRODS. v. Curry County Title

• Decision Date: 03 March 2010
• Docket Number: A137464.,06CV0844
• Citation: Menasha Forest Prods. Corp. v. Curry Cnty. Title, Inc., 227 P.3d 770, 234 Or. App. 115 (Or. App. 2010)
• Parties: MENASHA FOREST PRODUCTS CORPORATION, Plaintiff-Appellant, v. CURRY COUNTY TITLE, INC., and Transnation Title Insurance Company, Defendants-Respondents.
• Court: Oregon Court of Appeals

227 P.3d 770

234 Or. App. 115

MENASHA FOREST PRODUCTS CORPORATION, Plaintiff-Appellant, v.CURRY COUNTY TITLE, INC., and Transnation Title Insurance Company, Defendants-Respondents.

06CV0844; A137464.

Court of Appeals of Oregon.

Argued and Submitted on June 30, 2009.

Decided March 3, 2010.

Gary Roberts argued the cause for appellant.With him on the briefs was Schwabe, Williamson & Wyatt, P.C.

Jonathan M. Radmacher argued the cause for respondents.With him on the brief was McEwen Gisvold, LLP.

Before LANDAU, Presiding Judge, and SCHUMAN, Judge, and ORTEGA, Judge.

SCHUMAN, J.

Plaintiff brought this action seeking a declaration that it would not be liable to defendantTransnation Title Insurance Company(Transnation) if Transnation sued plaintiff, as it threatened to do.Defendant moved for judgment on the pleadings, contending that the case was not ripe for adjudication.The trial court agreed, dismissed plaintiff's claim, and entered judgment in favor of defendants.Plaintiff appeals from that judgment and also from a supplemental judgment awarding defendants $31,449.85 in attorney fees.We affirm the judgment.On the supplemental judgment, we hold that the proper award of attorney fees is $2,500.

Plaintiff sold real property to a company called Golden Gate Trust.Golden Gate subsequently discovered that plaintiff had already sold part of that property to a different buyer.Golden Gate's title insurer, Transnation, informed plaintiff that, if Transnation had to pay a claim to Golden Gate based on plaintiff's failure to convey good title, Transnation would demand reimbursement from plaintiff.Plaintiff believed that it would not be obligated to reimburse Transnation; rather, plaintiff believed that the fault (and liability) would lie with the escrow company that had performed the faulty title search.Plaintiff brought this action against Transnation and the escrow company, Curry County Title, Inc.(CCT), seeking a declaration that plaintiff would have no obligation to reimburse Transnation if Transnation followed through on its demand.The court granted defendants' motion for judgment on the pleadings, concluding that the case was not justiciable.In a supplemental judgment, the court awarded defendants $31,449.85 in attorney fees.Plaintiff appeals.We agree with the trial court that the case was not justiciable, and consequently we affirm the judgment.On the supplemental judgment awarding attorney fees, we vacate and remand.

In reviewing a judgment on the pleadings, we presume that the parties' well-pleaded allegations are true, and we affirm only if we can determine that, as a matter of law, those allegations do not state a valid claim on which the adverse party can prevail.ORCP 21 B;Curtis v. MRI Imaging Services II,327 Or. 9, 11, 16, 956 P.2d 960(1998);Slogowski v. Lyness,324 Or. 436, 439, 927 P.2d 587(1996);Smith v. Washington County,180 Or.App. 505, 507, 43 P.3d 1171, rev. den.,334 Or. 491, 52 P.3d 1056(2002).We do not look outside the pleadings.Kelly v. Olinger Travel Homes, Inc.,200 Or.App. 635, 641, 117 P.3d 282(2005), rev. den.,340 Or. 308, 132 P.3d 28(2006).The pleadings in this case contain the following allegations.

Before selling timberland to Golden Gate, plaintiff entered into a contract with CCT, under which CCT would provide escrow services, an accurate title report, and title insurance to Golden Gate.CCT secured that title insurance from defendant Transnation; thus, Transnation stood as guarantors of good title in the transaction between plaintiff and Golden Gate.Although CCT and Transnation both allegedly knew that plaintiff had already sold a 40-acre parcel of the timberland to another buyer, Knox, CCT nonetheless prepared a title report and deed that erroneously included the Knox property.After discovering that error, Transnation, the guarantor of good title, wrote to plaintiff, asserting that plaintiff had breached the warranty of title that plaintiff had provided Golden Gate because the title erroneously included the Knox property, and claiming that plaintiff was obligated to indemnify Transnation "for all amounts Transnation pays Golden Gate" under the title insurance that Transnation had provided to Golden Gate.The damages were "in an unknown amount but were measured by the amount plaintiff may be required to pay to Transnation under its subrogation or other theory."Defendants Transnation and CCT, for their part, alleged that plaintiff"has initiated a separate action against Golden Gate Trust, in which the factual and legal issues related to the controversy between plaintiff and Transnation are at issue * * *."That "separate action,"plaintiff stated in its reply, was an arbitration with Golden Gate.

The present litigation involves plaintiff's declaratory judgment action against defendants, requesting a declaration that plaintiff"is not liable to Transnation for any amount Transnation may pay to Golden Gate and that CCT must defend, indemnify, and hold plaintiff harmless from all losses and expenses claimed by Transnation and Golden Gate"—that, in other words, if Transnation were determined to be entitled to indemnification for the amount that it might have to pay Golden Gate due to the faulty title, it would be CCT and not plaintiff that must bear the cost.Plaintiff also requested attorney fees.Defendants moved for judgment on the pleadings.The trial court granted defendants' motion on the ground that the declaratory judgment claim was not justiciable.¹In a supplemental judgment, the court awarded defendant Transnation $31,449.85 in attorney fees.Plaintiff appeals those judgments.

In plaintiff's first assignment of error, it argues that, contrary to the trial court's conclusion, the declaratory judgment action was justiciable.Defendants respond that the trial court was correct but that, more importantly, the case has become moot; plaintiff prevailed in the arbitration with Golden Gate, and the deed was reformed.Consequently (as Transnation admitted in oral argument before this court), Transnation cannot and will not seek any indemnification against plaintiff.Thus, according to defendants, we need not decide whether the case was justiciable at the time it was filed, because, in any event, it is not justiciable now.

We disagree.It is true that a case is not justiciable if it becomes moot during judicial proceedings.Yancy v. Shatzer,337 Or. 345, 349, 97 P.3d 1161(2004).A case remains justiciable, however, if "the court's decision in the matter will have some practical effect on the rights of the parties to the controversy."Brumnett v. PSRB,315 Or. 402, 405, 848 P.2d 1194(1993).Here, our decision has a practical effect on defendants' entitlement to attorney fees because those fees depend on (among other things)defendants' status as the prevailing parties.2606 Building v. MICA OR I Inc.,334 Or. 175, 179 n. 2, 47 P.3d 12(2002).If the trial court erred in ruling that the case was not justiciable, then it follows that it also erred in awarding attorney fees.We must therefore decide whether the case was justiciable at the time of the trial court's judgment.

Plaintiff relies on ORS 28.020andORS 28.030, provisions dealing with declaratory judgments.ORS 28.020 provides,

"Any person interested under a deed, will, written contract or other writing constituting a contract, or whose rights, status or other legal relations are affected by a constitution, statute, municipal charter, ordinance, contract or franchise may have determined any question of construction or validity arising under any such instrument, constitution, statute, municipal charter, ordinance, contract or franchise and obtain a declaration of rights, status or other legal relations thereunder."

ORS 28.030 provides, "A contract may be construed either before or after there has been a breach thereof."Plaintiff contends that its declaratory judgment claim seeks merely a declaration of its rights or status under its contract with CCT and that the statutes authorize the court to provide one even though no breach of contract has yet occurred.

That may be true, but it does not address the more fundamental issue: whether the controversy between the parties, even if it is authorized by statute, was nonetheless not ripe for adjudication.A controversy is ripe if it involves present facts, as opposed to future events of a hypothetical nature.McIntire v. Forbes,322 Or. 426, 434, 909 P.2d 846(1996).Ripeness is one aspect of justiciability, and, for that reason, a constitutional prerequisite for adjudication, the declaratory judgment statutes to the contrary notwithstanding.Brown v. Oregon State Bar,293 Or. 446, 449, 648 P.2d 1289(1982);Yancy,337 Or. at 349, 97 P.3d 1161.²

As noted, ripeness depends on whether the controversy involves present facts as opposed to hypothetical future events.McIntire,322 Or. at 434, 909 P.2d 846."Present facts" and "hypothetical future events," however, do not announce themselves as such.For example, it may be a fact that, at the time this case was tried, plaintiff was at risk of having to indemnify Transnation.The risk was real and present.At the same time, however, the present fact of risk always implicates the hypothetical occurrence of a future event or events, in this case(1) an outcome of plaintiff's arbitration with Golden Gate that left Golden Gate with a creditable claim against Transnation, (2) a claim by Golden Gate against Transnation, (3) a subsequent payment on the claim by Transnation, and (4) Transnation's follow-through on its threat to seek indemnification from plaintiff.Ripeness is often a matter of degree.Still, from several cases, we can infer that this case was not ripe, regardless of where the fine line between "present" and "hypothetical" might lie.

In support of its argument that the case was ripe for adjudication, plaintiff relies on insurance cases in which the underlying controversy involved a...