Montoya v. Housing Authority of Portland

• Decision Date: 10 March 2004
• Citation: 86 P.3d 80,192 Or. App. 408
• Parties: Forest MONTOYA, Respondent, v. HOUSING AUTHORITY OF PORTLAND, an Oregon nonprofit organization, Defendant, and Quantum Residential, Inc., dba Quantum Residential, an active Washington corporation, qualified to do business in Oregon, Appellant.
• Court: Oregon Court of Appeals

86 P.3d 80

192 Or. App. 408

Forest MONTOYA, Respondent, v. HOUSING AUTHORITY OF PORTLAND, an Oregon nonprofit organization, Defendant, and Quantum Residential, Inc., dba Quantum Residential, an active Washington corporation, qualified to do business in Oregon, Appellant.

0007-07638; A118655.

Court of Appeals of Oregon.

Argued and Submitted October 20, 2003.

Decided March 10, 2004.

Todd S. Baran, Portland, argued the cause and filed the brief for appellant.

Kathryn Hall Clarke, Portland, argued the cause for respondent. With her on the brief was Daniel Snyder.

Before EDMONDS, Presiding Judge, and DEITS, Chief Judge, and WOLLHEIM, Judge.

EDMONDS, P.J.

Defendant Quantum Residential, Inc. (Quantum) appeals from the trial court's denial of its motion to set aside a default judgment entered against it. ORCP 71 B(1). Quantum first asserts that the judgment is void for lack of jurisdiction because the judgment's face amount exceeds the amount pleaded, contrary to ORCP 67 C(1). Alternatively, Quantum asserts that the trial court erred in determining that it had not established that its failure to defend was the product of "excusable neglect" pursuant to ORCP 71 B(1)(a). We agree with Quantum's first argument and hold that the judgment is void to the extent that its amount exceeds the amount sought in plaintiff's complaint. Otherwise, we agree with the trial court's ruling.

On July 28, 2000, plaintiff filed an action for personal injuries against Quantum and the Housing Authority of Portland (HAP), alleging injuries as a result of a fall by plaintiff on premises owned by HAP and managed by Quantum. Plaintiff alleged, among other things, a failure to maintain, inspect, and repair the premises. The original complaint alleged:

"[P]laintiff prays for judgment against defendants and each of them jointly and severally, in the sum of $40,000.00 in non-economic damages, to be proven more accurately at trial, with economic damages for $25,800.00, and for her costs, disbursements and attorney fees incurred herein."

(Emphasis added.) Plaintiff filed an amended complaint on August 30, 2000, containing similar language:

"Plaintiff suffered non-economic damages for $40,000.00.

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"As a further result of defendants' negligence, plaintiff incurred approximately $9,000.00 in health care and medical expenses and approximately $16,800.00 in lost wages and benefits, said wage loss continuing and to be proven more accurately at trial."

(Emphasis added.) Both defendants were served with civil process. On October 5, 2000, an order of default was entered against Quantum. On October 19, 2000, pursuant to plaintiff's request, the court dismissed the claims against HAP with prejudice. On December 7, 2000, the trial court awarded a default judgment against Quantum in the amount of $79,766, which included $40,000 in noneconomic damages and $39,766 in economic damages. The award exceeded the specific amount prayed for in the original and amended complaints by $13,966. The record includes a copy of the notice of entry of judgment in the trial court file that lists Quantum's name but not its address. Quantum asserts that it did not receive notice that a judgment had been entered against it until plaintiff made a post-judgment demand for payment on February 9, 2002. On March 8, 2002, Quantum filed a motion to set aside the default judgment on the basis of excusable neglect pursuant to ORCP 71 B(1)(a).

In support of its motion to set aside the default judgment, Quantum submitted an affidavit from its president, Gary O'Connell. O'Connell averred that he learned of the lawsuit in August 2000 but that, based on HAP's previous practices and based on a conversation with HAP's Director of Asset Management, John Meyer, he believed that HAP's insurer, Housing Authority Risk Retention Pool (HARRP), would undertake the defense of Quantum. O'Connell asserted:

"When an action is filed against a HAP building and the property manager, occasionally the property manager will defend the case. However, most often HAP—as owner of the building—will take on the defense of the case through HARRP."

O'Connell also said in his affidavit that, at the time of the filing of the lawsuit, Meyer had "informed [him] that HAP would take over defense of this case." Meyer, on the other hand, testified that he did not recall whether O'Connell asked him if HAP or HARRP would defend Quantum. He did, however, note that, although it was not his understanding that HAP or HARRP "would necessarily represent [Quantum]," it was his understanding "that HAR[R]P and [HAP's] counsel should have been working with the property—with Quantum's counsel to coordinate a defense on" the claim. (Emphasis added.) Meyer noted that his usual practice is to "make sure the property manager would forward [information regarding a lawsuit] on to HAR[R]P," or that the asset manager working for him would coordinate that.

Additionally, portions of a "Property Management Services Agreement" between HAP and Quantum were submitted to the court by the parties with regard to Quantum's motion to set aside the default judgment. The agreement contains two relevant indemnification provisions on which the parties relied below in support of their respective excusable neglect arguments. Article 5(A)(1) of the agreement states:

"Indemnification for Third Party Injuries to Person and Property: Irrespective of whether [Quantum] is negligent [Quantum] shall indemnify, defend and save [HAP] harmless from any and all claims, or liability relating to the management of the premises. This obligation shall include all costs and expenses (including, but not limited to, fines, penalties and reasonable attorney fees), for injuries or damages to persons, including any employee of [HAP], or property of others. * * *

"This obligation does not extend to claims arising against [HAP] which solely allege wrongdoing by * * * [HAP], its officers or employees. [Quantum's] obligation to indemnify [HAP] shall not exceed five million ($5,000,000) for any single claim or in the aggregate for each year during which this Agreement is in effect. This limitation shall not apply to claims based upon allegations of the sole wrongdoing of [Quantum]."¹

Article 5(A)(2), of the agreement provides:

"Indemnification for Violation of Law: [HAP] shall indemnify, defend and save [Quantum] from any and all claims, or liabilities, as well as all costs and expenses thereof (including, but not limited to, fines, penalties and reasonable attorney's fees) involving alleged or actual violation by [HAP] of a criminal statute, rule or regulation pertaining to the premises, property, the management or operation of the Property, except to the extent that such a claim, proceeding or liability resulted from the intentional wrongdoing of [Quantum] or the failure of [Quantum] to notify [HAP] of the issue after having gained actual knowledge thereof."

(Emphasis added.) The agreement further states that, "except in any claim which is clearly against only [HAP], [Quantum] shall be responsible for conducting the joint defense and protecting the common interest." (Emphasis added.)

The trial court denied Quantum's motion, ruling that it failed to establish sufficiently that it was entitled to relief based on its claim of excusable neglect. The trial court specifically referred to the provision of the agreement that required Quantum to conduct a joint defense and to protect the common interest of HAP and itself. The trial court also said that it "was not persuaded that Quantum [had] shown that the HAP agreed to defend Quantum" and that "Quantum and Gary O'Connell did not have reason to believe that the HAP was going to defend Quantum in this lawsuit."

We turn to Quantum's first assignment of error. Quantum asserts:

"Quantum did not argue below that the trial court lacked jurisdiction; that the default judgment is void; or that the default judgment should be set aside under ORCP 71 B(1)(d). However, `[a] void judgment is subject to collateral attack at any time.' * * * Also, a question concerning the trial court's jurisdiction is not waivable. Finally, as explained infra, this court can and should treat the trial court's denial of the motion to set aside that judgment as plain error. ORAP 5.45(4)(b). For any of these reasons, this otherwise unpreserved error is reviewable."

(Citations omitted.)

In light of the above arguments, we determine first whether the trial court had jurisdiction to enter a default judgment for approximately $14,000 more than requested by plaintiff's pleading. First, there is no indication in the record that the trial court lacked personal jurisdiction over the parties at the commencement of the action. Rather, the record reflects that Quantum was properly served at the outset of the lawsuit. Second, under the Oregon Constitution, trial courts "have subject matter jurisdiction over all actions unless a statute or rule of law divests them of jurisdiction." Greeninger v. Cromwell, 127 Or.App. 435, 438, 873 P.2d 377 (1994) (citation omitted). "The fact that a court acts in violation of a statute does not mean that the resulting judgment is void." Geranghadr v. Entagh, 189 Or.App. 567, 572, 77 P.3d 323 (2003) (citation omitted).

Quantum, however, relies on our opinion in Cooley v. Fredinburg, 144 Or.App. 410, 927 P.2d 124 (1996), modified on other grounds, 146 Or.App. 436, 934 P.2d 505 (1997),

to support its assertion that the lack of notice and opportunity to be heard underlying the award in the default judgment renders it void. In that case, we said:

"The fact that a court has initial jurisdiction over the parties and the subject matter does not authorize it to act without appropriate notice to the parties. If the proposed order would grant relief different from that contemplated by the original proceeding and would affect a party's personal rights, due process requires that there be reasonable notice and an opportunity to be heard. Scarth v.

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