Al Disdero Lumber Co. v. Dick W. Ebeling, Inc.

Citations: 95 Or. App. 671; 770 P.2d 945Docket: 85-1597C; CA A46412

Court: Court of Appeals of Oregon; March 21, 1989; Oregon; State Appellate Court

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Plaintiff appealed a judgment that dismissed his complaint with prejudice, claiming the trial court wrongly held that a Michigan judgment on a similar action barred his claim in Oregon under the doctrine of res judicata. The case involved two Oregon corporations: the plaintiff, who contracted to supply building components for a Michigan building, and the defendant, who provided engineering services. After the building's roof partially collapsed, lawsuits were filed in Michigan against the plaintiff and others, leading the plaintiff to file a third-party complaint against the defendant for indemnification. The Michigan Court of Appeals dismissed the plaintiff's claim based on a six-year statute of limitations and repose, stating that indemnification rights arise only if primary liability is established in Michigan.

In December 1985, the plaintiff filed a similar claim in Oregon, which the defendant argued was barred by the Michigan judgment. The trial court accepted this argument and dismissed the case. The plaintiff contended this was erroneous, emphasizing that for res judicata to apply, the cases must share operative facts and there must be an adjudication on the merits. The defendant claimed the Michigan judgment was a merits adjudication due to the nature of the statute involved. However, the Michigan court characterized its statute as one affecting procedural rights, not substantive rights.

The key issue is whether a judgment based on a statute of limitations from another state can bar a new action in Oregon. The Oregon Supreme Court has ruled that its statutes of limitations affect remedies but do not extinguish rights, and most jurisdictions agree that a foreign judgment based on a statute of limitations does not preclude an action in another state. Thus, the appeal reversed the dismissal, allowing the plaintiff's claim to proceed.

In *Bank of United States v. Donnally*, the Michigan judgment based on its statute of limitations does not prohibit an action in Oregon. The applicability of former ORS 12.260, the Oregon borrowing statute, is examined; however, it is determined that it does not apply to this case as both parties are Oregon corporations and residents. The court reversed and remanded the decision. Cliff Forest Products Co. filed a complaint against Al Disdero Lumber Co., O’Dovero Construction Co., and Wright. Barker, Ltd., while Disdero initiated a third-party complaint against Rosboro Lumber Co. and Dick Ebeling, Inc., for indemnification or contribution. Ebeling's motion for accelerated judgment was granted based on the limitations outlined in Mich Comp Laws 600.5839, which restricts actions for damages arising from defective conditions of real property improvements to six years post-occupancy, except against those in actual possession of the property when the injury occurred. The defendant argued the statute affects the right to bring an action, referencing *O’Brien v. Hazelet. Erdal*, but the court clarified that the statute impacts procedural rights without impairing substantive rights. The court did not need to determine whether the statute of repose is substantive or procedural, nor whether it has a res judicata effect. Former ORS 12.260 states that if a cause of action arises in another jurisdiction between nonresidents and is barred there due to time lapse, it cannot be maintained in Oregon.