North Marion Sch. Dist. #15 v. Acstar Ins.

• Decision Date: 05 July 2006
• Docket Number: A122630.,000605846.
• Citation: 138 P.3d 876,206 Or. App. 593
• Parties: NORTH MARION SCHOOL DISTRICT # 15, for the use and benefit of Gonzalo Aranda TREJO, William Alan Avery, Eugene Beebe, Cory Breno, Joe Brockamp, Ray Cannon, Ronald Cooper, Chuck Craig, Keith Dossey, Allen Filer, Robin Fisk, David Flippin, David Gast, Lucas Glenn, Darrell Gutherie, Basilio Gutierrez, David Hill, Derek Holcomb, Monte Holcomb, Jeff Jones, Darren King, Fred Knipe, Donald Kuhns, John Ledoux, James Manning, Ignacio Mejia Valencia, Jose Luis Mejia Valencia, Guy Meyers, Nathan Morris, Tod Mundell, Steven Nichol, John Partlow, Nemesio Pina-mondragon, Jason Portlock, Basilio Rudometkin, Clayton Sabine, Kirt Siegwald, Alan Sims, Daniel Stephens, Jerry Tallmon, Dennis Tidwell, Robert Tuttle, Martin Vandervies, Micah Walter, Warren Wegleitner, Richard Witbeck and Charles Wolcott, Appellants, v. ACSTAR INSURANCE CO.; American Home Assurance Company, a foreign corporation; OC America Construction, Inc., a foreign corporation; and Christopher J. Vanderkley, an individual, dba Vander Kley & Co., Respondents.
• Court: Oregon Court of Appeals

138 P.3d 876

206 Or. App. 593

NORTH MARION SCHOOL DISTRICT # 15, for the use and benefit of Gonzalo Aranda TREJO, William Alan Avery, Eugene Beebe, Cory Breno, Joe Brockamp, Ray Cannon, Ronald Cooper, Chuck Craig, Keith Dossey, Allen Filer, Robin Fisk, David Flippin, David Gast, Lucas Glenn, Darrell Gutherie, Basilio Gutierrez, David Hill, Derek Holcomb, Monte Holcomb, Jeff Jones, Darren King, Fred Knipe, Donald Kuhns, John Ledoux, James Manning, Ignacio Mejia Valencia, Jose Luis Mejia Valencia, Guy Meyers, Nathan Morris, Tod Mundell, Steven Nichol, John Partlow, Nemesio Pina-mondragon, Jason Portlock, Basilio Rudometkin, Clayton Sabine, Kirt Siegwald, Alan Sims, Daniel Stephens, Jerry Tallmon, Dennis Tidwell, Robert Tuttle, Martin Vandervies, Micah Walter, Warren Wegleitner, Richard Witbeck and Charles Wolcott, Appellants, v. ACSTAR INSURANCE CO.; American Home Assurance Company, a foreign corporation; OC America Construction, Inc., a foreign corporation; and Christopher J. Vanderkley, an individual, dba Vander Kley & Co., Respondents.

000605846.

A122630.

Court of Appeals of Oregon.

Argued and Submitted July 29, 2005.

Decided July 5, 2006.

Jacqueline L. Koch, Portland, argued the cause for appellants. With her on the joint briefs were Bailey, Pinney & Associates, J. Dana Pinney, and Koch & Deering.

Darien S. Loiselle, Portland, argued the cause for respondents Acstar Insurance Co., American Home Assurance Company, and OC America Construction, Inc. With him on the joint brief were Schwabe Williamson & Wyatt, Stoel Rives, and Kenneth P. Childs.

Loren S. Scott argued the cause for respondent Christopher Vander Kley, dba Vander Kley & Co. With him on the brief were Rohn M. Roberts, Eugene, and Arnold, Gallagher, Saydack, Percell, Roberts & Potter, P.C.

Before EDMONDS, Presiding Judge, and LINDER and WOLLHEIM, Judges.

EDMONDS, P.J.

Plaintiffs, employees on a public improvement project, appeal supplemental judgments awarding attorney fees to defendants, the general contractor, subcontractor, and their respective sureties on the public improvement project. Plaintiffs argue that the trial court erred in awarding attorney fees to defendants, in failing to require defendants to segregate work performed on fee-generating claims and non-fee-generating claims, in awarding an enhanced prevailing party fee to the subcontractor, and in making the award of attorney fees and the enhanced prevailing party fee to the subcontractor joint and several. For the reasons that follow, we reverse and remand for reconsideration with respect to the award of an enhanced prevailing party fee and otherwise affirm.

The judgment resolving the claims underlying the trial court's attorney fee award was appealed separately. North Marion Sch. Dist. # 15 v. Acstar Ins. Co., 205 Or.App. 484, 136 P.3d 42 (2006). In that case, we rejected plaintiffs' appeal and affirmed the trial court's dismissal of their claims. We borrow from that opinion in order to provide background for defendants' attorney fee claims in this case:

"North Marion School District hired defendant OC America Construction, Inc. (OC) to be the general contractor for a public improvement project. OC obtained a labor and materials bond from American Home Assurance Company (AHA). Defendant Vander Kley was one of the subcontractors on the project. Vander Kley obtained two labor and materials bonds from defendant Acstar Insurance Co. (Acstar).

"After work on the project had begun, Vander Kley developed financial difficulties and did not pay his employees on time. In March 2000, OC wrote to Vander Kley demanding that he pay his employees on time. Then, in April 2000, Vander Kley became financially insolvent and could no longer pay his employees. OC informed Acstar of the situation, and Acstar prepared the paychecks for Vander Kley's employees. However, those paychecks were not timely issued. On May 8, 2000, plaintiffs provided notice to defendants of their claims for nonpayment of wages pursuant to ORS 279.528. The notices stated:

"`Pursuant to ORS 279, notice is hereby given that [named employee] was an employee of Vander Kley & Co., and has a claim for wages for labor performed because he was not paid wages at the prevailing wage rate when those wages were due. Pursuant to ORS 652.140 and ORS 652.150 for, penalty wages because he was not paid such wages when due; and for his attorney fees incurred in an amount to be determined pursuant to ORS 652.200 and 279.365; in addition an amount equal to the unpaid wages as liquidated damages pursuant to ORS 279.356; and interest on all moneys owed; all against the bonds taken from American International Companies and ACSTAR Insurance Company for the work of Facility Improvements with the North Marion School District # 15. Such labor was supplied to Vander Kley & Co.'

"Acstar delivered paychecks to plaintiffs on May 25, 2000. After plaintiffs received their paychecks, they filed this action for penalty wages, liquidated damages, and attorney fees. Plaintiffs' complaint contained three claims for relief. The first claim was captioned `Wage Claim, Statutory Penalty Wages,' and alleged that plaintiffs were entitled to statutory penalty wages pursuant to ORS 652.150. The second claim for relief, captioned `State Minimum Wage Claim, Civil Penalty,' alleged that `Defendant Vander Kley & Company was required to pay Plaintiffs at the then prevailing State of Oregon minimum wage rate for all hours worked, when those wages were due,' and that Vander Kley failed to pay plaintiffs' wages when due and that plaintiffs are therefore entitled to a penalty under ORS 653.055. Plaintiffs' third claim for relief, entitled `ORS 279.356 Liquidated Damages,' alleged that defendants had failed to pay plaintiffs at the prevailing wage rate as required by ORS 279.350 and that plaintiffs were entitled to an amount equal to the unpaid wages as liquidated damages.

"Plaintiffs and defendants each filed motions for summary judgment. The trial court concluded, among other things, that the sureties could not be liable for penalty wages, that plaintiffs failed to comply with the notice provisions of ORS chapter 279, and that plaintiffs' claims against Vander Kley were barred by his discharge in bankruptcy. Accordingly, the trial court granted defendants' motions for summary judgment on all claims and denied plaintiffs' motion."

205 Or.App. at 487-489, 136 P.3d 42 (s omitted). Following the entry of judgment in favor of defendants, the trial court awarded attorney fees to defendants under ORS 742.061(1).

On appeal, plaintiffs make five assignments of error: (1) that the attorney fee award was improper because the trial court erred in finding for defendants on the underlying claims in the litigation; (2) that the trial court erred in awarding attorney fees to the contractor and the sureties under ORS 742.061(1) because defendants did not make a "tender" within the meaning of the statute; (3) that the trial court erred by not requiring defendants to segregate their fee-generating claims from non-fee-generating claims; (4) that the trial court erred in awarding an enhanced prevailing party fee to Vander Kley as a result of Vander Kley's assertion of bankruptcy as an affirmative defense; and (5) that the trial court erred in making the supplemental judgments to Vander Kley joint and several rather than apportioning them among plaintiffs. Plaintiffs' first assignment of error fails in light of our decision in the appeal concerning the underlying claims. 205 Or.App. 484, 136 P.3d 42. We consider the remaining issues in turn.

In their second assignment of error, plaintiffs argue that the trial court incorrectly awarded attorney fees to defendants under ORS 742.061, the statute governing the award of attorney fees in an action on an insurance policy or contractor's bond. ORS 742.061(1) provides:

"[I]f settlement is not made within six months from the date proof of loss is filed with an insurer and an action is brought in any court of this state upon any policy of insurance of any kind or nature, and the plaintiff's recovery exceeds the amount of any tender made by the defendant in such action, a reasonable amount to be fixed by the court as attorney fees shall be taxed as part of the costs of the action and any appeal thereon. If the action is brought upon the bond of a contractor or subcontractor executed and delivered as provided [in the public contracting statutes] or 701.430 and the plaintiff's recovery does not exceed the amount of any tender made by the defendant in such action, a reasonable amount to be fixed by the court as attorney fees shall be taxed and allowed to the defendant as part of the costs of the action and any appeal thereon. If in an action brought upon such a bond the surety is allowed attorney fees and costs and the contractor or subcontractor has incurred expenses for attorney fees and costs in defending the action, the attorney fees and costs allowed the surety shall be applied first to reimbursing the contractor or subcontractor for such expenses."

(Emphasis added.)

The trial court concluded that defendants, who had paid $86,134.92 to plaintiffs for wages after plaintiffs made a claim on the bond, made a tender within the meaning of ORS 742.061(1). Alternatively, the trial court held that, in any event, plaintiffs had recovered nothing on the claim against the bond and, therefore, even if defendants had tendered nothing, plaintiffs' recovery did not "exceed the amount of any tender made by the defendant in such action" under the plain language of ORS 742.061(1).

According to plaintiffs, the trial court mischaracterized defendants' payment of $86,134.92 to plaintiffs as a "tender" within the meaning of ORS 742.061. Plaintiffs argue that the payment was "not a tender, but payment of past due wages on defendants' own terms." One issue raised by plaintiffs' argument is whether a tender by a surety under the statute must be made after the...