Oregon Account Systems, Inc. v. Greer

• Decision Date: 01 March 2000
• Citation: 165 Or. App. 738,996 P.2d 1025
• Parties: OREGON ACCOUNT SYSTEMS, INC., an Oregon corporation, Appellant, v. Floyd S. GREER, Linda B. Greer, State of Oregon, by and acting through the Department of Veterans Affairs, Respondents.
• Court: Oregon Court of Appeals

996 P.2d 1025

165 Or. App. 738

OREGON ACCOUNT SYSTEMS, INC., an Oregon corporation, Appellant, v. Floyd S. GREER, Linda B. Greer, State of Oregon, by and acting through the Department of Veterans Affairs, Respondents.

(9710-07924; CA A100894)

Court of Appeals of Oregon, En Banc.

Argued and Submitted November 5, 1998.

Resubmitted October 13, 1999.

Decided March 1, 2000.

Jesse Neal Spencer, Portland, argued the cause and filed the brief for appellant. With him on the brief was Bernardi & Spencer.

Kirkland T. Roberts, Portland, argued the cause for respondents Floyd Greer and Linda Greer. With him on the brief was Edward Tylicki.

Philip Schradle, Assistant Attorney General, waived appearance for Department of Veterans Affairs.

Before DEITS, Chief Judge, and EDMONDS, De MUNIZ, LANDAU, HASELTON, ARMSTRONG, LINDER, WOLLHEIM, and BREWER, Judges, and WARDEN, Senior Judge.

Resubmitted En Banc October 13, 1999.

WOLLHEIM, J.

Plaintiff appeals the trial court's judgment dismissing plaintiff's action on the ground that his complaint failed to state ultimate facts sufficient to constitute a claim under the Uniform Fraudulent Transfer Act (UFTA), ORS 95.230. ORCP 21A(8). Assuming the truth of plaintiff's well-pleaded allegations and facts that might be adduced as proof of such allegations, we consider whether the pleadings are legally sufficient to state a claim. Brennen v. City of Eugene, 285 Or. 401, 405, 591 P.2d 719 (1979). We reverse and remand.

On October 23, 1993, Floyd Greer conveyed by statutory warranty deed all of his interests in residential real property to Linda Greer, his wife. Before that conveyance, the Greers (defendants) had owned the property as tenants by the entirety. The property was also encumbered by a pre-existing note and mortgage in the amount of $35,000. In October 1994, plaintiff's assignor agreed to extend an unsecured line of credit to Floyd, who subsequently defaulted. In May 1997, plaintiff obtained a money judgment against Floyd, which remains unsatisfied. Plaintiff brought this suit, alleging that the 1993 real property conveyance was fraudulent under ORS 95.230.¹

In order to state a claim under UFTA, plaintiff must plead the occurrence of a conveyance of property that constitutes a "transfer" under the statute. "Transfer" is defined as "every mode * * * of disposing of or parting with an asset or an interest in an asset * * *." ORS 95.200(12). "Asset" is defined, in part, as

"* * * property of a debtor but does not include:

"(a) Property to the extent that it is encumbered by a valid lien;

"* * * * *

"(c) An interest in property held in tenancy by the entirety to the extent that it is not subject to process by a creditor holding a claim against only one tenant." ORS 95.200(2).

Defendants moved to dismiss the action, arguing that plaintiff's complaint did not allege facts that, if true, would establish that the 1993 conveyance transferred an "asset" under UFTA as defined in ORS 95.200(2)(a) or ORS 95.200(2)(c). Plaintiff did not file a written response to defendants' motion. The trial court received oral argument at a hearing, but neither party requested that the proceeding be recorded. After considering the motion, the pleadings, and the arguments of counsel, the trial court entered an order to dismiss for failure to state a claim based on defendants' two specific arguments. The trial court held that the note and mortgage constituted a "lien" on the whole property and, therefore, the conveyance of the property was not a "transfer" of an "asset." The court also held that, because the property had been held by defendants as tenants by the entirety, plaintiff had no process against the property to collect its money judgment. Therefore, the court reasoned, the conveyance of the property was not a "transfer" of an "asset." On appeal, plaintiff challenges the arguments under both provisions made by defendants and adopted by the trial court.

Defendants raise a preliminary challenge to our ability to review plaintiff's assignment of error. Defendants argue that by failing to file a written response to the motion to dismiss or to record oral arguments, plaintiff has failed to create and designate a record in which it can demonstrate that it preserved its arguments for appeal. In particular, defendants contend that the record does not allow an appellate court to determine whether plaintiff raised the question of whether ORS 95.200(2)(a) applied and the question of whether ORS 95.200(2)(c) applied, much less whether plaintiff raised arguments concerning the proper interpretation of those separate provisions.² See State v. Hitz, 307 Or. 183, 188, 766 P.2d 373 (1988). Accordingly, defendants argue that the appeal must be dismissed.

ORAP 5.45 provides that only assignments of error preserved below may be considered on appeal and that the "pertinent portions of the record" must be designated to enable review of those assignments. See also York v. Bailey, 159 Or.App. 341, 346, 976 P.2d 1181, rev den 329 Or. 287 (1999). Plaintiff has done both.

First, defendants made a motion to dismiss for failure to state a claim on the very statutory sections at issue on appeal. By appearing at a hearing to oppose the motion, plaintiff raised its objection to that issue and identified both of the statutory sources for its objection. See Hitz, 307 Or. at 188, 766 P.2d 373 (noting distinctions between raising an issue at trial, identifying a source for a claimed position, and making particular arguments: "The first ordinarily is essential, the second less so, the third least."). We hold that this is sufficient to preserve the claimed error in this case, viewing the record in light of the purposes of fairness and efficiency that underlie the preservation requirement:

"`[T]he rules pertaining to preservation of error in trial courts are intended to advance goals such as ensuring that the positions of the parties are presented clearly to the initial tribunal and that parties are not taken by surprise, misled, or denied opportunities to meet an argument.'" Northwest Natural Gas Co. v. Chase Gardens, Inc., 328 Or. 487, 499-500, 982 P.2d 1117 (1999) (quoting Davis v. O'Brien, 320 Or. 729, 737, 891 P.2d 1307 (1995)).

The trial court was faced with an issue of statutory interpretation, which is purely a question of law within the province of the court. See Stull v. Hoke, 326 Or. 72, 77, 948 P.2d 722 (1997) (court is responsible for identifying the correct interpretation of a statute). And, importantly, the trial court's decision indicates that it actually considered the statutory provisions argued on appeal. In addition, defendants do not contend that plaintiff's arguments have unfairly surprised them, misled them, or denied them an opportunity to meet an argument. Rather, plaintiff merely seeks review of the same theories advanced by defendants below, considered and adopted by the trial court, and opposed by plaintiff. Denying review because we lack the exact details of plaintiff's arguments would exalt the form over the substance of the preservation doctrine.

Second, we find the record sufficient for review. Again, this is an appeal from a motion to dismiss based on the sufficiency of the complaint in light of a statutory provision. Plaintiff has designated its complaint, which we review on its face for its sufficiency. Statutory interpretation is, again, purely a question of law within the province of the court. See Stull, 326 Or. at 77, 948 P.2d 722. It is not a task that requires a factual record to resolve. See York, 159 Or.App. at 345, 976 P.2d 1181 (purely legal contentions do not require the establishment of any predicate facts). In addition, the briefs and the record provide us with the benefit of the parties' full exploration of the legal arguments concerning the meaning of the statute. Finally, any factual issues relevant to analyzing the sufficiency of the complaint in light of the proper interpretation of the statute were also designated in the record. Accordingly, we are not hindered from addressing the arguments presented on appeal.

We turn to the merits. Plaintiff argues that the subject real property is excluded from being an asset under UFTA only "to the extent" that it is encumbered by a lien and that "to the extent" means to the value of that lien. Thus, according to plaintiff, the value of the equity in the property in excess of the amount of the lien is still an asset. Plaintiff would seek to establish that the equity in the subject property exceeds the value of the note and mortgage encumbering it and that the excess equity is an asset. Defendants respond that the phrase "to the extent" refers to the type of lien on a property, not to the amount. They argue that, because the lien on the residential real property promised the whole property and not a portion or section thereof as available to satisfy the debt, the whole property is encumbered and exempt.

We have touched once before on this issue in Kellstrom Bros. Painting v. Carriage Works, Inc., 117 Or.App. 276, 844 P.2d 221 (1992),rev den 317 Or. 162, 856 P.2d 317 (1993). There, the trial court found that the defendant's property had a fair market value of $83,000 and that the lien on the property exceeded that amount. We explained that, because it was "undisputed that [the defendant's creditor] held a valid security interest that encumbered all of the assets of [the defendant]," those assets were exempt under UFTA. Id. at 279, 844 P.2d 221 (emphasis added). Thus, we implicitly applied the rationale that the phrase "to the extent" referred to the pecuniary value of the lien and not to the portion of the asset securing a lien.

That application embodies the intent of the legislature. We need only examine the text of the statute to determine that intent. PGE v. Bureau of Labor and Industries, 317 Or. 606, 610-11, 859 P.2d 1143 (1993). The statute does not define the phrase "to the extent." However, the plain meaning of "extent"...