Rains v. Stayton Builders Mart, Inc.

Citations: 258 Or. App. 652; 310 P.3d 1195Docket: 06C21040; A152100

Court: Court of Appeals of Oregon; September 25, 2013; Oregon; State Appellate Court

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Weyerhaeuser Company, the third-party defendant, sought to set aside multiple judgments against it, claiming they were obtained through fraud on the court. The trial court denied Weyerhaeuser's motions, ruling the motion under ORCP 71 B(1)(c) was untimely and that it lacked jurisdiction to hear the motion under ORCP 71 C due to a pending appeal. Weyerhaeuser appealed these rulings, which the appellate court upheld.

The case originated from an injury sustained by subcontractor Kevin Rains while working on a project managed by general contractor Five Star Construction, Inc. Rains and his wife sued Five Star and Stayton Builders Mart, Inc., the supplier of the board that caused the injury. Stayton filed a third-party complaint against Weyerhaeuser for indemnity. The plaintiffs obtained default judgments totaling over $18 million against Five Star. During a trial against Stayton, the jury apportioned fault among Weyerhaeuser (45%), Stayton (30%), and Rains (25%), ultimately awarding Stayton $2 million for indemnity from Weyerhaeuser.

After several judgments were entered in May and July 2010, Weyerhaeuser filed appeals which remained pending. In February 2012, over a year after the judgments, Weyerhaeuser moved to set them aside, citing a previously undisclosed agreement between the plaintiffs, their attorney, and Five Star that included a covenant not to execute on the default judgments against Five Star. Weyerhaeuser argued that this agreement, which could have mitigated its liability, constituted fraud. The trial court denied the motions, emphasizing the untimeliness of the ORCP 71 B(1)(c) motion and the lack of authority to consider the ORCP 71 C motion due to the ongoing appeal. Weyerhaeuser's appeal of these denials was subsequently considered.

Weyerhaeuser argues that ORCP 71 B(2) allows a motion to set aside a judgment based on fraud to be filed at any time during an ongoing appeal, despite ORCP 71 B(1)(c) imposing a one-year limit from the notice of judgment. Weyerhaeuser cites the historical context, noting that the original version of ORCP 71 B(2) contained a specific reference to the one-year limitation, which was removed in 1988, suggesting an intent to allow such motions during appeals without time constraints. Plaintiffs counter that the phrase "a motion under sections A or B" requires adherence to all terms, including the one-year limit in B(1)(c), and argue that Weyerhaeuser's motion was defective as it lacked a required pleading under ORCP 21 A. The interpretation of the one-year limit and the meaning of B(2) raises questions about the intent of the Council on Court Procedures in drafting the rules. The interpretation process involves examining the text, context, and legislative history of the rules, with the Council's intent guiding the understanding unless there have been specific amendments affecting the case. The essential question is whether a motion can be filed without meeting the one-year requirement during an appeal or if it must comply with all stipulations of the relevant sections.

ORCP 71 A and B outline the authority of trial courts to correct or set aside judgments. Under ORCP 71 A, clerical mistakes in judgments, orders, or records can be corrected at any time by the court, either on its own or upon a party's motion, provided that notice is given to all parties. If an appeal is pending, corrections require permission from the appellate court.

ORCP 71 B allows a party to request relief from a judgment for specific reasons: mistake, newly discovered evidence, fraud, void judgments, or if the judgment is no longer equitable. Such motions must be filed within a reasonable time and typically within one year of receiving notice of the judgment. The motion must be accompanied by a claim or defense under Rule 21 A.

During an appeal, the trial court may accept motions for correction or setting aside judgments but cannot grant relief until the appeal is resolved unless the appellate court grants permission. Amendments made in 1988 retained the ability for clerical corrections and established that motions could be filed and decided while an appeal is pending, requiring service on the appellate court and filing of the trial court's order within seven days. Adjustments to the appeal must comply with appellate court rules.

ORCP 71 A, B(2) has been amended to consolidate procedural requirements for filing motions under section A or subsection B(1) during an ongoing appeal. The amendment removes the previous reference to time limitations in subsection (1) and replaces the requirement for "leave of the appellate court" with a notice to that court. Both parties interpret ORCP 71 B(2) in plausible ways: one view suggests that the deletion of the time limit implies it no longer applies during an appeal, while another interprets it as a redundancy, as motions under section B must still be filed within one year of judgment notice. 

The historical context of the 1988 amendment supports the latter view. James Nass, legal counsel to the appellate courts, advocated for the amendment to eliminate the need for appellate court permission to file motions under ORCP 71 A or B. He expressed concerns about the implications of a potential erroneous denial of leave by the appellate court, emphasizing the necessity for parties to have the right to file motions without delay. 

The Council's commentary on the amendment indicated that the original rules required appellate court leave for motions to vacate judgments under appeal, based on the assumption that appellate courts could manage these motions. However, it recognizes that trial courts likely lack authority to rule on such motions while an appeal is pending. The amendment thus allows filing motions without prior appellate court approval, requiring only notification of the appellate court about the motion and its outcome, while leaving the impact of the motion on the appeal to be governed by appellate rules. The Council acknowledged a need for legislative changes to clarify trial court jurisdiction during appeals.

The Council on Court Procedures' comment on the amendment to ORCP 71 does not address the one-year deadline for filing a motion while an appeal is pending, implying that the council did not intend to eliminate this deadline. Consequently, Weyerhaeuser's interpretation of ORCP 71 B(2) is deemed implausible, and the plaintiffs' view that the one-year deadline from ORCP 71 B(1) remains in effect is supported. Weyerhaeuser's motion was deemed untimely since it was not filed within a year of receiving notice of the judgments to be set aside. 

In its second assignment of error, Weyerhaeuser argues that the trial court erred in concluding it lacked authority under ORCP 71 C to set aside judgments while an appeal was pending. Weyerhaeuser cites ORS 19.270(5)(a), which suggests trial courts retain jurisdiction to enter orders under ORCP 71 even after a notice of appeal is filed. However, this argument contradicts the precedent set in Koller v. Schmaing, which established that a trial court's authority is significantly limited during an appeal. Koller clarified that while ORCP 71 C allows for modification of judgments, it does not specify that such authority remains after an appeal is filed. Thus, the absence of explicit language in ORCP 71 C regarding modifications during an appeal indicates a deliberate design choice. The trial court, therefore, correctly determined it lacked authority to grant Weyerhaeuser relief under ORCP 71 C while the appeal was pending, as ORS 19.270(5)(a) does not provide independent jurisdictional grounds for the trial court to act.

Affirmation of the ruling occurred, with plaintiffs having included 'JOHN DOE LUMBER SUPPLIER' and 'JOHN DOE LUMBER MILL' as defendants, who are not part of the current appeal. Stayton added several lumber companies as third-party defendants, leading to further 'fourth-party' and 'fifth-party' complaints, but ultimately, all except Weyerhaeuser were dismissed from the case and are not involved in the appeal. Five Star's liability insurer denied coverage and declined to defend in the action. Under ORS 31.815(1), a tort claimant's covenant not to enforce a judgment against one liable party reduces claims against all other liable parties, with specific notice requirements outlined in subsection (2). ORCP 71 B(1) remained unchanged in 1988 but was amended in 2010 to allow for setting aside judgments due to fraud, which does not impact this appeal. Weyerhaeuser argued that the trial court had discretion to consider a motion despite a one-year limit, but this argument was rejected without further discussion.