Rajneesh Foundation Intern. v. McGreer
| Decision Date | 15 August 1986 |
| Parties | RAJNEESH FOUNDATION INTERNATIONAL, a non-profit corporation, Rajneesh Neo- Sannyas International Commune, an Oregon cooperative corporation, and Ma Anand Sheela, Appellants-Cross-Respondents, v. Rosemary McGREER, Respondent-Cross-Appellant. Rosemary McGREER, Appellant, v. RAJNEESH FOUNDATION INTERNATIONAL, a non-profit corporation, Rajneesh Neo- Sannyas International Commune, an Oregon cooperative corporation, Ma Anand Sheela, and Bhagwan Shree Rajneesh, Respondents. A8210-06678; CA A31894. |
| Court | Oregon Court of Appeals |
Robert J. McCrea, Eugene, argued the cause for appellants-cross-respondents Rajneesh Foundation Intern. and Rajneesh Neo-Sannyas Intern. Commune. On the briefs were The Rajneesh Legal Services Corp. and Ma Deva Anando, Rajneeshpuram.
Mark L. Cushing, Portland, argued the cause for respondent-cross-appellant and appellant Rosemary McGreer. With him on the brief were Barbee B. Lyon and Tonkon, Torp, Galen, Marmaduke & Booth, Portland.
No appearance for appellant-cross-respondent Ma Anand Sheela.
Mark L. Cushing, Portland, argued the cause for appellant, Rosemary McGreer. With him on the briefs were Barbee B. Lyon and Tonkon, Torp, Galen, Marmaduke & Booth, Portland.
Robert J. McCrea, Eugene, argued the cause for respondents Rajneesh Foundation Intern. and Rajneesh Neo-Sannyas Intern. Commune. On the brief were The Rajneesh Legal Services Corp. and Ma Prem Sheelu, Rajneeshpuram.
No appearance for respondents Ma Anand Sheela or Bhagwan Shree Rajneesh.
Before RICHARDSON, P.J., and ROSSMAN and NEWMAN, JJ.
Plaintiffs initiated this action, alleging that defendant had defamed them. Defendant counterclaimed, alleging that plaintiffs and Bhagwan Shree Rajneesh (Rajneesh) 1 defamed her in three respects and that they had conspired to violate her constitutional rights, giving her a right of action under 42 U.S.C. § 1985(3). After plaintiffs filed their answer to the counterclaim, Rajneesh disobeyed the court's order to appear for a deposition, and the presiding judge of the Multnomah County Circuit Court ordered as sanctions that all of plaintiffs' pleadings be stricken and that an order of default be entered against them on the counterclaim. ORCP 46. The presiding judge later entered an order dismissing plaintiffs' complaint and declaring them to be in default on the counterclaim under ORCP 69. 2 The presiding judge assigned the case to the trial judge to determine damages and enter judgment. Plaintiffs then filed a motion to dismiss both the defamation and the section 1985 counterclaims on the ground that they fail to state claims. The court denied the motion as to the defamation claims, allowed it as to the section 1985 claim and awarded defendant damages of $75,000.
Plaintiffs appeal, assigning as error the court's denial of the motion to dismiss the defamation claims. 3 They do not argue that they moved to vacate the order of default or that the trial judge erred by failing to vacate the default. Defendant cross-appeals, contending that the court erred by dismissing her section 1985 action. In our view, the same considerations resolve both the appeal and the cross-appeal. Defendant argues that the trial court had no authority to entertain plaintiffs' motion to dismiss in the face of the unchallenged order of default. Plaintiffs argue that a motion to dismiss for failure to state a claim can be made at any point in the proceedings, ORCP 21G(3); Telford v. Clackamas County, 44 Or.App. 399, 605 P.2d 1365 (1980), including after the entry of a default.
An order of default serves as an admission by the defending party of all material facts alleged against it. State ex rel Nilsen v. Cushing, 253 Or. 262, 265, 453 P.2d 945 (1969). 4 Plaintiffs appear to acknowledge that the order had that effect. They contend, however, that only the factual allegations stand admitted, and they urge us to adopt what they represent to be the prevailing interpretation of the federal analog of ORCP 69. Plaintiffs quote 10 Wright, Miller and Kane, Federal Practice and Procedure, 447-48 (Civil 2d 1983):
" * * * Once the default is established, defendant has no further standing to contest the factual allegations of plaintiff's claim for relief. However, even after default it remains for the court to consider whether the unchallenged facts constitute a legitimate cause of action, since a party in default does not admit mere conclusions of law. * * * " 5 (Footnotes omitted.)
Plaintiffs neglect to quote the language which immediately follows that passage and which completes the paragraph in which it appears:
"If defendant wishes an opportunity to challenge plaintiff's right to recover, his only recourse is to show good cause for setting aside the default under Rule 55(c) and, failing that, to contest the amount of recovery." (Footnote omitted.)
FRCP 55(c) provides, as material, that "[f]or good cause shown the court may set aside an entry of default" rather than enter judgment on it. ORCP 69 does not contain corresponding language. However, the absence of the language is inconsequential. Wright, Miller and Kane, supra, state, at 464:
" * * * A number of federal courts have made it clear that with respect to the setting aside of an entry of default, [FRCP 55(c) ] expresses the traditional inherent equity power of the federal courts. * * * " (Footnote omitted.)
It is equally self-evident that, with or without a rule that so states, Oregon courts may, for good cause, set aside a default order. ORCP 71 governs the setting aside of judgments. It is implicit in the scheme of things that a court may set aside a default order before judgment, at least in circumstances where ORCP 71 would permit a judgment entered on the default order to be set aside.
In sum, even if we were to accept plaintiffs' premise that it is a basis for relief from default that the admitted facts fail to constitute a legal claim, 6 plaintiffs would not be assisted. They did not seek relief from default. They simply disregarded the default order and moved against the pleading. Plaintiffs' answer to the counterclaim raised the affirmative defense that defendant's "[c]omplaint and each claim thereof fails to state a claim upon which relief may be granted." That answer was among the pleadings which were stricken as part of the process which culminated in the default order. We decline to permit plaintiffs to defeat the default order and the order striking their pleadings, neither of which they challenge, by raising under a different name the defense that they had advanced earlier in their stricken answer.
As a more general proposition, the fundamental purpose of default orders would be undermined if a motion to dismiss could be entertained at the hearing concerning the entry of judgment on the default. ORCP 69B(2) enumerates the limited matters that can be considered at the hearing. Motions against the pleadings do not appear to be among those matters. See also State ex rel Nilsen v. Cushing, supra; Jones v. Siladic, 52 Or.App. 807, 629 P.2d 875, rev. den. 291 Or. 662, 639 P.2d 1280 (1981). The rule allowing the failure to state a claim to be raised at any point in the proceedings presupposes that there are ongoing proceedings. Axiomatically, a motion to dismiss for failure to state a claim cannot be raised after a judgment has become final. See Pacific Protective Wear v. Banks, 80 Or.App. 101, --- P.2d ---- (1986). One of the essential purposes of an order of default is to cut off defenses to liability. See Deane v. Willamette Bridge Co., 22 Or. 167, 171, 29 P. 440, 15 LRA 614 (1892). A motion to dismiss is as untimely after entry of an unchallenged order of default as it is after a final judgment.
The trial court erred by considering the motion to dismiss and by granting it as to the section 1985 claim.
Defendant also appeals from a post-trial order of the court staying enforcement of the judgment. After Rajneesh failed to perfect an appeal from the judgment against him on defendant's counterclaim, see note 1, supra, defendant moved to collect the amount of the judgment from securities which Rajneesh had deposited into court. Plaintiffs moved to stay enforcement pending the resolution of the appeal by the other parties against whom the counterclaim judgment runs. The theory by which they supported their...
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Rajneesh Foundation Intern. v. McGreer
...a claim for relief, that issue was not properly raised by a motion to dismiss for failure to state a claim. Rajneesh Foundation v. McGreer, 80 Or.App. 168, 721 P.2d 867 (1986). We reverse. The facts are as follows. Rajneesh Foundation International, Rajneesh Neo-Sannyas International Commun......
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Rajneesh Foundation Intern. v. McGreer
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