Weatherspoon v. Allstate Ins. Co.

• Decision Date: 12 May 2004
• Parties: Benita WEATHERSPOON, Respondent, v. ALLSTATE INSURANCE COMPANY, an Illinois corporation, Appellant.
• Court: Oregon Court of Appeals

89 P.3d 1277

193 Or. App. 330

Benita WEATHERSPOON, Respondent, v. ALLSTATE INSURANCE COMPANY, an Illinois corporation, Appellant.

0012-12460; A118160.

Court of Appeals of Oregon.

Argued and Submitted December 11, 2003.

Decided May 12, 2004.

R. Daniel Lindahl, Portland, argued the cause for appellant. With him on the briefs were John R. Bachofner, and Bullivant Houser Bailey PC.

Willard Merkel, Portland, argued the cause for respondent. With him on the brief was Merkel & Associates.

Before EDMONDS, Presiding Judge, and DEITS, Chief Judge, and SCHUMAN, Judge.

EDMONDS, P.J.

Defendant appeals a judgment awarding attorney fees to plaintiff under ORS 742.061. Defendant argues that the court lacked jurisdiction to award the fees and, alternatively, that the trial court erred in awarding fees under ORS 742.061(1). We reverse.

Plaintiff is defendant's insured. She was injured in an accident with an underinsured motorist. After the accident, plaintiff applied for and received personal injury protection (PIP) benefits from defendant up to the policy benefit limit of $10,000. Plaintiff then settled her claim against the underinsured driver for the limit of the driver's policy, $25,000. Plaintiff subsequently brought an action on her policy against defendant for underinsured motorist (UIM) coverage. Plaintiff's policy provided for $100,000 of UIM coverage. A jury found in plaintiff's favor on her UIM claim, and plaintiff was awarded the full benefit amount, less the $25,000 paid by the underinsured motorist's insurance company.

Plaintiff subsequently petitioned for a judgment awarding attorney fees under ORCP 68. Plaintiff served the request on defendant and gave a copy to the trial court, but she never filed a copy with the court clerk as required by ORCP 68 C(4)(a)(i).¹ The trial court awarded plaintiff attorney fees after providing both parties with an opportunity to be heard on the issue.

Defendant argues that plaintiff's failure to file the statement of attorney fees with the clerk of court deprived the trial court of subject matter jurisdiction over plaintiff's request for those fees. Although defendant did not object to the award of fees on the basis of the alleged ORCP 68 C(4)(a)(i) violation at trial, it makes that argument on appeal. The general rule is that a party claiming error must present the error to the trial court before we will consider the asserted error on appeal. ORAP 5.45(4). However, subject matter jurisdiction is never waived and can be raised by any party or by the court sua sponte at any stage of the proceedings. We therefore consider defendant's assertion that the trial court lacked jurisdiction despite defendant's failure to raise the issue to the trial court. Dippold v. Cathlamet Timber Co., 98 Or. 183, 188, 193 P. 909 (1920).

Defendant relies on our holding in Averill v. Red Lion, 118 Or.App. 298, 846 P.2d 1203, clarified by 120 Or.App. 232, 850 P.2d 1173, rev. den., 317 Or. 271, 858 P.2d 1313 (1993), in support of its argument that a failure to file a statement of attorney fees with the clerk as required by ORCP 68 C(4)(a)(i) deprives a court of jurisdiction to award attorney fees. However, in Averill, the issue was not whether ORCP 68 imposes jurisdictional requirements but whether the trial court erred when it granted the defendant's motion for judgment notwithstanding the verdict (JNOV) despite the defendant's failure to comply with ORCP 63 D.² Although defendant recognizes that difference, it says that the

"principle is the same. Plaintiff's fee petition was not filed within the time specified by ORCP 68 C(4)(a). Indeed, it has never been filed."

(Emphasis in original.) Plaintiff responds,

"ORS 742.061 does not condition the court's authority to award fees upon plaintiff's filing of the fee petition with the court. Indeed, ORS 742.061 requires the court to award fees. * * * ORCP 68 C(4) only establishes a procedure for awarding fees and does not condition the court's authority to make fee award upon the formal filing of a fee petition with the court."

Plaintiff overstates the import of ORS 742.061.³ Although an award of attorney fees is mandatory as distinguished from discretionary under the statute, it does not follow from the mandatory language of the statute that a court is required to award fees under the statute when the proper procedure for invoking the court's statutory grant of authority is not followed. In general, procedural statutes exist to govern the invocation of substantive rights. Under plaintiff's proposed interpretation, ORCP 68 C(4)(a)(i) would be rendered meaningless. Rather, the issue is whether the filing of the statement with the clerk is a jurisdictional prerequisite or a procedural formality that can be waived.

Even if a court has both subject matter jurisdiction over the dispute before it and personal jurisdiction over the parties, a "jurisdictional" defect can limit or entirely negate that jurisdiction, and a judgment entered in violation of a jurisdictional defect is void to the extent of the violation. Rogue Val. Mem. Hosp. v. Salem Ins., 265 Or. 603, 611, 510 P.2d 845 (1973) (stating that "as a general rule, if the court has jurisdiction over the parties and the subject matter, the ensuing judgment, even if erroneous is not void and cannot be collaterally attacked until reversed or annulled, no matter how erroneous it may be"). An Oregon court has subject matter jurisdiction over a dispute if the constitution, a statute, or the common law tells the court to do something about the specific kind of dispute presented to the court. School Dist. No. 1, Mult. Co. v. Nilsen, 262 Or. 559, 566, 499 P.2d 1309 (1972). With those general principles in mind, we proceed to the analysis in this case.

Insurance policies are contracts. Under Article VII (original), section 9, of the Oregon Constitution,⁴ circuit courts generally have subject matter jurisdiction over contract disputes because courts had such jurisdiction at common law. Moreover, it is clear from the language contained in ORS 742.061 and ORS 742.504(1)(b) that the legislature intended that circuit courts have jurisdiction to adjudicate UIM claims. Contained within the court's subject matter jurisdiction over UIM claims is the authority to award attorney fees. Generally, a court does not properly exercise its authority to award attorney fees unless it is authorized to do so by contract or statute. Cash Flow Investors, Inc. v. Union Oil Co., 318 Or. 88, 91, 862 P.2d 501 (1993). Here, the circuit court is authorized to award attorney fees in disputes involving UIM claims by ORS 742.061.

Defendant argues that, even if the court had subject matter jurisdiction over the UIM dispute, plaintiff's failure to comply with ORCP 68 C(4)(a)(i) is a jurisdictional defect that negated the trial court's power to award attorney fees. In Montoya v. Housing Authority of Portland, 192 Or.App. 408, 86 P.3d 80 (2004), we considered a similar argument. At issue was whether compliance with ORCP 67 C(1) was jurisdictional in nature. In that regard, we noted

"the difference between procedural statutes that are directory in nature and procedural statutes that are jurisdictional in nature: `In reaching a conclusion as to what statutory provisions are jurisdictional, a distinction may be made between procedures which are required both by statute and also by the due process clause of the constitution on the one hand, and procedures required by statute alone, over and beyond anything rendered necessary by the constitution, on the other. * * * Those requirements of statute which are essential to due process are, of course, jurisdictional, and we think that statutory requirements over and beyond the bare necessities of due process may also be jurisdictional, but only if it is the legislative intent to make them so.'"

Id. at 415-16, 86 P.3d 80. (Quoting Frederick v. Douglas Co. et al., 176 Or. 54, 63-64, 155 P.2d 925 (1945)).

In Montoya, we pointed out that ORCP 67 C(1) provides that a default judgment may exceed the amount sought in a prayer for relief only if "reasonable notice and opportunity to be heard are given to any party against whom the judgment is to be entered." 192 Or.App. at 416, 86 P.3d 80. In Montoya, we reasoned that awarding more than the amount prayed for by default without notice and the opportunity to be heard is the functional equivalent of taking a default judgment on a complaint without service of process. We concluded that the language of the rule "makes clear that the legislature intended that notice and the opportunity to be heard are jurisdictional essentials before a party can obtain a judgment greater in amount than that sought in the complaint." Montoya, 192 Or.App. at 416, 86 P.3d 80.

In contrast, the rule applicable to this case, ORCP 68 C(4)(a)(i), requires a party to file "a signed and detailed statement of the amount of attorney fees or costs and disbursements" with the court "not later than 14 days after the entry of judgment."

While procedural due process requires at a minimum that a party have notice of a claim against the party and that the party be given an opportunity to respond to the claim,⁵ and while compliance with ORCP 68 C(4)(a)(i) affords that kind of due process, it does not necessarily follow that compliance with the rule is essential to due process (as is the case with ORCP 67 C(1)). For example, plaintiff included in his complaint in this case a request for attorney fees. He alleged,

"Defendant has not made settlement within six months from the date proof of loss was filed with the insurer and this action has been made necessary thereby, and, accordingly, plaintiff is entitled to an award of his reasonable attorney fees in a sum to be determined by the court pursuant to ORS 742.061."

Defendant answered, denying that the allegation was true. Thereafter, defendant litigated the issue before the trial court. Whereas ORCP 67 C(1) explicitly conditions the award of a...