STATE, McAMIS INDUSTRIES v. M. Cutter Co.

• Decision Date: 07 July 1999
• Parties: The STATE of Oregon, for the Use and Benefit of McAMIS INDUSTRIES OF OREGON, INC., an Oregon corporation, Respondent—Cross-Appellant, v. M. CUTTER COMPANY, an Oregon corporation, and Indemnity Company of California, a California corporation, Appellants—Cross-Respondents.
• Court: Oregon Court of Appeals

984 P.2d 909

161 Or. App. 631

The STATE of Oregon, for the Use and Benefit of McAMIS INDUSTRIES OF OREGON, INC., an Oregon corporation, Respondent—Cross-Appellant, v. M. CUTTER COMPANY, an Oregon corporation, and Indemnity Company of California, a California corporation, Appellants—Cross-Respondents.

(9504-02347; CA A101156)

Court of Appeals of Oregon.

Argued and Submitted May 3, 1999.

Decided July 7, 1999.

E. Joseph Dean, Portland, argued the cause and filed the briefs for appellants— cross-respondents.

H. Lee Cook, Portland, argued the cause for respondent—cross-appellant. With him on the reply brief was Stewart, Sokol & Gray, LLC.

Before LANDAU, Presiding Judge, and DEITS, Chief Judge, and BREWER, Judge.

BREWER, J.

Defendants M. Cutter Company (Cutter) and Indemnity Company of California (ICC) appeal from a money judgment following a trial to the court in this breach of contract action stemming from damage to two barges. Among other contentions on appeal, defendants assign error to the trial court's refusal to grant summary judgment or, alternatively, their motion at trial for judgment as a matter of law in their favor on the ground that plaintiff's claim was barred by the doctrine of claim preclusion. Plaintiff cross-assigns error to the trial court's order allowing defendants to raise the defense of claim preclusion by supplemental pleading. We reverse and remand on appeal and affirm on cross-appeal.

In 1994, Cutter chartered two barges from plaintiff for use in a dredging project at the Port of Portland. Cutter provided a performance and payment bond issued by its surety, ICC. The charter party provided that surveys would be performed at the beginning and end of the project in order to assess any damage to the barges. Shortly after Cutter finished the Port of Portland project, it agreed to charter the same two barges for a project at Chinook Channel on the Columbia River. In the Chinook Channel charter party, plaintiff and Cutter agreed to dispense with the usual beginning-of-project (on-hire) survey, as well as the Port of Portland charter's end-of-project (off-hire) survey. The trial court found that the parties intended to determine all damage to the barges incurred on both projects at the end of the Chinook Channel project.

After the Chinook Channel project was finished, the off-hire survey disclosed that the barges had been damaged. While the barges were being repaired, Cutter did not pay charter rent.

On April 10, 1995, plaintiff initiated two actions against defendants. The first was filed in federal district court under the Miller Act, 40 USC § 270b (1994), for damages arising out of the Chinook Channel project. U.S. for McAmis Industries v. M. Cutter Co., 130 F.3d 440 (9th Cir.1997). The second action, which is the subject of this appeal, was filed in Multnomah County Circuit Court for damages arising out of the Port of Portland project under the Little Miller Act, ORS 279.526 to ORS 279.542. In May 1996, the trial court stayed this action pending the outcome of the federal action. In June 1996, the federal district court granted plaintiff's motion for summary judgment and, in July 1996, entered a money judgment in the sum of $192,195.66 in plaintiff's favor against defendants. Both parties appealed the federal district court's judgment to the Ninth Circuit Court of Appeals. In December 1997, the Ninth Circuit affirmed the district court, except for the damage award based on physical damage to the barges on the Chinook Channel project, which it remanded to the district court. McAmis Industries,130 F.3d at 441; U.S. for Use and Benefit of McAmis Industries of Oregon, Inc. v. M. Cutter Co., 132 F.3d 40 at 8 (mem.) (1997). On December 17, 1997, defendants filed an unopposed petition for rehearing, requesting that the Ninth Circuit affirm the federal district court's judgment in its entirety. In January 1998, the Ninth Circuit issued an order affirming the district court's judgment in its entirety.

Meanwhile, in July 1997, defendants moved to supplement their answer in this case to assert the defense of claim preclusion based on the existence of the district court judgment in the federal court action. The trial court granted that motion in September 1997, despite plaintiff's objection. Defendants thereafter moved for summary judgment based in part on claim preclusion. The trial judge denied summary judgment, explaining at oral argument on the motion that

"The only way you have claim preclusion is if the [federal] judge ruled on the identical issues that are before me because if there were not the same issues presented to her, or the same claim presented to her, and she made the decision about something other than what I am making a decision [about], then I don't see how the plaintiffs can be precluded from presenting whatever case is left."¹

Trial was held before the court, without a jury, in December 1997. Although contested evidence was submitted, much of the evidence was presented on written stipulation. At trial, defendants moved for judgment as a matter of law based, in part, on the alleged preclusive effect of the federal court judgment. The trial court also denied that motion.

In February 1998, the trial court entered judgment for plaintiff in the sum of $8,453.89, the amount by which it concluded the damage to the barges exceeded the federal court award. Among other undisputed findings of fact, the trial court found, in part, as follows:

"9. M. Cutter and [plaintiff] entered into a new Bareboat Charter Party for charter of the same barges on a project entitled `Columbia River Maintenance Dredging, Chinook Channel * * * on February 1, 1995 to begin on February 5, 1995. * * * The parties orally agreed that M. Cutter would not be required to do the off-hire survey at the conclusion of the Port of Portland Project and agreed in writing that M. Cutter would not be required to do the on-hire survey otherwise required at the start of the Chinook Project. * * *

"10. Implicit in the parties' second contract to forego the on-hire and off-hire survey between the Port of Portland Project and the Chinook Project, was the agreement that the parties would not be required to ascertain when during M. Cutter's possession of the barges damages to the barges were sustained, e.g., whether during the Port of Portland Project or the Chinook Project. Rather, it was the intent of the parties that all damages M. Cutter caused to the barges sustained during either project would be determined by surveys of the barges after the conclusion of the Chinook Project.

"10A. The parties agreed at the end of the Port of Portland Project to not make any determination of whether damages had occurred to either barge during the Port of Portland Project.

"11. It was also the intent of the parties that M. Cutter would be responsible for all damage identified by surveys conducted after the conclusion of the Chinook Project, and that M. Cutter would be responsible for charter hire on the two barges at the rates identified in the Port of Portland Charter until the damage was repaired."

The court also entered a supplemental judgment in plaintiff's favor for attorney fees and costs. This appeal followed.

Although defendants are the appellants in this case, plaintiff makes several cross-assignments of error, the first of which requires discussion before we address defendants' arguments. Plaintiff contends that claim preclusion does not apply in this case and, therefore, the trial court abused its discretion in granting defendants' motion to supplement their answer to include the claim preclusion defense after entry of the federal district court judgment. Defendants respond that the trial court properly allowed the supplemental pleading, because it raised issues that arose after the state case began.² We review the grant of a motion to amend or supplement pleadings for abuse of discretion. Hall v. Fox, 106 Or.App. 377, 380, 808 P.2d 99 (1991).

Even if we agreed with plaintiff that claim preclusion does not apply in this case, the existence and timing of entry of the federal court judgment justified the authorization of the supplemental answer. Plaintiff makes no serious claim of prejudice arising from the court's order. The supplemental answer was filed several months before trial and the issues raised by that pleading were fully and fairly litigated. It was well within the trial court's broad discretion under ORCP 23 E to allow defendants to supplement their answer.

Having disposed of plaintiff's procedural objection, we next turn to defendants' first and second assignments of error, which raise identical issues on separate procedural grounds. Defendants contend that the trial court erroneously denied their motion for summary judgment and subsequent motion for judgment as a matter of law, each of which asserted claim preclusion arising from the federal court judgment.³ We need not decide whether the trial court's denial of defendants' summary judgment motion is reviewable,⁴ since the trial court's denial of defendants' motion for judgment as a matter of law, made during trial, is unquestionably reviewable.

We will sustain the trial court's ruling if there is substantial evidence to create a triable issue. Abbott v. West Extension Irrigation District, 110 Or.App. 385, 387-88, 822 P.2d 747 (1991), rev. den. 313 Or. 299, 832 P.2d 455 (1992); Shook v. Travelodge of Oregon, 63 Or.App. 137, 142, 663 P.2d 1280, rev. den. 295 Or. 541, 668 P.2d 384 (1983). We review the legal issues raised by the motion for errors of law.

The doctrine of claim preclusion prevents parties from litigating more than one action based on the same transaction or series of connected transactions. Drews, 310 Or. at 141, 795 P.2d 531.

"[A] plaintiff who has prosecuted one action against a defendant through to a final judgment binding on the parties is barred on [claim preclusion] grounds from prosecuting another action against the same defendant

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