SQUIER ASSOCIATES v. SECOR INVESTMENTS

• Decision Date: 15 December 2004
• Citation: 196 Or. App. 617,103 P.3d 1129
• Parties: SQUIER ASSOCIATES, INC., an Oregon company, Respondent-Cross-Appellant, v. SECOR INVESTMENTS, LLC, an Oregon limited liability company, Appellant-Cross-Respondent, Meadowbrook Clackamas, LLC, an Oregon limited liability company; Onecomm Corporation, N.A., dba Nextel West Corporation, a Delaware Corporation; and Clackamas County, Oregon, Defendants.
• Court: Oregon Court of Appeals

103 P.3d 1129

196 Or. App. 617

SQUIER ASSOCIATES, INC., an Oregon company, Respondent-Cross-Appellant, v. SECOR INVESTMENTS, LLC, an Oregon limited liability company, Appellant-Cross-Respondent, Meadowbrook Clackamas, LLC, an Oregon limited liability company; Onecomm Corporation, N.A., dba Nextel West Corporation, a Delaware Corporation; and Clackamas County, Oregon, Defendants.

CCV98-02-412; A116090.

Court of Appeals of Oregon.

Argued and Submitted September 14, 2004.

Decided December 15, 2004.

Roy B. Thompson argued the cause for appellant-cross-respondent. With him on the briefs were Thompson Bogran, P.C.

Janelle E. Chorzempa, Portland, argued the cause for respondent-cross-appellant. With her on the briefs was James H. Marvin, Portland.

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

SCHUMAN, J.

This appeal arises from a dispute between plaintiff Squier Associates, Inc., a company that performs environmental assessments of property, and defendant Secor Investments, LLC, a property owner that retained plaintiff to perform those services.¹ After a jury trial on various claims and cross-claims, the court entered a money judgment in favor of plaintiff and a supplemental judgment awarding plaintiff attorney fees and costs. Defendant appeals from both judgments, and plaintiff cross-appeals from the supplemental judgment. We affirm the judgment without discussion and focus our opinion exclusively on the supplemental judgment for attorney fees and costs.

In May 1996, defendant retained plaintiff to conduct a "Level 1 Environmental Site Assessment" on property that defendant planned to buy. As the jury found (and defendant does not contest), defendant knew when it retained plaintiff that gun-shooting activities had occurred on the property, but it did not inform plaintiff of that fact. Plaintiff found no environmental hazards, and defendant proceeded with its purchase. When defendant then attempted to sell the property to a third party, the prospective buyer engaged its own environmental inspector, who found lead contamination on the property, probably the residue from the shooting activity. Defendant then retained plaintiff a second time to conduct a more intensive "Level II Environmental Site Assessment" and to perform necessary decontamination. Plaintiff performed its duties under this second contract, but defendant refused to pay.

Plaintiff then brought this action for breach of the second contract (the December contract). Defendant counterclaimed, alleging that plaintiff negligently failed to discover the lead contamination in the initial assessment, that plaintiff defrauded defendant with the report that (incorrectly) found no contamination, and that plaintiff's alleged negligence and fraud effected a breach of the first contract (the May contract). Defendant also raised the same issues as affirmative defenses, arguing that plaintiff's alleged negligence, fraud, and breach of the May contract excused defendant from performing its obligation under the December contract, that is, paying plaintiff.

The jury, by a special verdict, found that defendant had breached the December contract with plaintiff and that plaintiff suffered damages in the amount of $8,667.22; that plaintiff had not breached the May contract; that plaintiff had not intentionally committed fraud, but that it had committed fraud recklessly; that the reckless fraud did not cause defendant any damages; that defendant knew of the shooting activity on the property but did not so inform plaintiff; that defendant's failure to inform caused some of defendant's own damages; and that defendant was 55 percent at fault. The court entered a money judgment in favor of plaintiff and also found plaintiff to be the prevailing party on defendant's counterclaims. The judgment awarded attorney fees, costs, and disbursements to plaintiff in an amount to be determined thereafter.

Pursuant to that provision of the judgment, the parties shifted their attention to attorney fees, governed by the December contract. Plaintiff argued that the attorney fee clause² entitled it to $172,879.35 in attorney fees, $6,447.20 in costs, and $37,415.68 in staff time. Defendant responded with objections and also with a subpoena duces tecum and a request for production demanding information from plaintiff about the nature and extent of its fee claims. After a hearing on fees and costs, the court awarded plaintiff $50,000 in fees and $6,447.20 in costs.

On appeal, defendant assigns error to the trial court's conclusion that plaintiff was the prevailing party and to the ensuing award of attorney fees. On cross-appeal, plaintiff assigns error to the trial court's failure to award the full amount of fees and costs that plaintiff requested and its failure to award the $5,000 that plaintiff requested in prevailing party fees.

Initially, we reject defendant's claim that it, and not plaintiff, was the prevailing party. Defendant bases that claim on two arguments: first, that defendant prevailed on its fraud claim against plaintiff; and second, that defendant successfully defended against a lien foreclosure claim that plaintiff included in its first complaint. Neither argument has merit.

The trial court judgment declared that plaintiff prevailed on all of defendant's counterclaims, one of which was for fraud. That declaration is correct. Although the jury found that plaintiff recklessly defrauded defendant, it also found that no damages resulted. Damages or injury to the defrauded party is an essential element of fraud. Conzelmann v. N.W.P. & D. Prod. Co., 190 Or. 332, 350, 225 P.2d 757 (1950). Thus, the trial court's legal conclusion that plaintiff prevailed on the fraud claim was not error.

Regarding the lien foreclosure, defendant contends that it should be considered the prevailing party under the contract because the foreclosure claim was for $72,000, an amount larger than the $8,667.22 that the court awarded plaintiff. However, as we explain below, defendant cannot be considered to have prevailed on the lien; therefore its claim to prevailing party status under the contract fails.

Defendant's claim to prevailing party status on the lien claim is governed by ORS 87.060(5), which provides, in part:

"In a suit to enforce a lien * * * the court shall allow a reasonable amount as attorney fees at trial and on appeal to the party who prevails on the issues of the validity and foreclosure of the lien."

Plaintiff's first complaint contained a claim to foreclose a lien against all defendants. However, after prevailing on that claim against a codefendant, Meadowbrook Clackamas, LLC, plaintiff dismissed the claim against defendant. Under the circumstances, defendant cannot be said to have prevailed on the issues of the validity and foreclosure of the lien. The situation resembles the one in Beaver State Scaffolding-Equip. Co., Inc. v. Taylor, 70 Or.App. 113, 688 P.2d 417 (1984). In that case, the plaintiff sued to foreclose a construction lien against the defendant. The defendant had deposited a bond, and she submitted an affidavit disclaiming any interest in the deposited money. She then moved for and obtained summary judgment on the theory that, although the plaintiff could obtain relief against the bond, it could obtain no relief against the defendant herself. Id. at 115, 688 P.2d 417. On appeal, we upheld the grant of summary judgment and also held that the defendant was not entitled to attorney fees under the predecessor to ORS 87.060(5). "The fact that the property owner obtains an early dismissal from the action * * * does not make her the `prevailing party' for the purposes" of the statute. Id. at 117, 688 P.2d 417. The same principle applies here. Defendant did not prevail. We turn to plaintiff's cross-appeal. We review the amount of an award of attorney fees for abuse of discretion. However, a court has discretion to choose only among legally correct options. State v. Rogers, 330 Or. 282, 312, 4 P.3d 1261 (2000). Thus, to the extent that plaintiff's entitlement to attorney fees depends on the interpretation of a contract, a legal question, we review for errors of law. Koster Remodeling & Construction, Inc. v. Jataka, 155 Or.App. 142, 145, 963 P.2d 726 (1998).

The provision in the December contract that serves as the basis for plaintiff's attorney fee and cost petition is unambiguous. It states:

"In the event that a dispute

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