Sherwood Park Business Center, LLC v. Taggart
267 Or. App. 217
Or. Ct. App.2014Background
- SPBC sued Brad Taggart and BT of Sherwood, LLC to void an alleged transfer of Taggart’s SPBC membership, expel Taggart, and unwind transactions; SPBC sought fees under the SPBC Operating Agreement.
- Taggart formed BT and purportedly transferred his SPBC interest to it; the trial court later found the transfer void and expelled Taggart, concluding Taggart never successfully assigned his interest to BT.
- Taggart obtained a Chapter 7 discharge before trial and moved to dismiss monetary claims against him; the court refused to dismiss nonmonetary claims (expulsion) and tried the case to the court.
- After judgment (no money damages), plaintiffs sought attorney fees and costs; the court awarded SPBC $45,404.30 in fees and costs from Taggart and $3,309.95 in costs from BT, denying fees against BT and denying fees/costs to Emmert/Jehnke.
- Defendants appealed, arguing the bankruptcy discharge barred fee awards against Taggart and that SPBC failed to file a proper fee statement; plaintiffs cross-appealed the denial of fees against BT and the court’s prevailing-party designations.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Taggart’s bankruptcy discharge barred post-judgment attorney fees and costs against him | Plaintiffs: Taggart engaged in post-petition actions (failed to dismiss counterclaim, opposed discovery, appeared at hearings) so fees may be awarded under Ybarra | Defendants: Discharge bars any money liability; Taggart did not voluntarily return to the fray | Reversed: discharge barred fee/cost award; Taggart’s post-petition conduct was passive/reactionary and did not constitute returning to the fray under In re Ybarra and related authority |
| Whether SPBC timely and properly filed a statement for attorney fees under ORCP 68 C(4) | Plaintiffs: Emmert/Jehnke’s counsel filed the statement on behalf of SPBC with SPBC counsel’s signed declaration and permission, satisfying ORCP 68 C(4) | Defendants: The statement was only signed by counsel for Emmert/Jehnke and thus deficient for SPBC | Affirmed: the combined petition and SPBC counsel’s signed declaration satisfied ORCP 68 C(4) |
| Whether BT—never a party to the Operating Agreement—could be liable for contractual attorney fees under ORS 20.083/20.096 | Plaintiffs: Statutes allow recovery by prevailing party without regard to whether the prevailing party is a party to the contract; reciprocity permits fees against BT | Defendants: BT was not a party and never claimed to be; statutes do not create fee liability against a contract stranger | Affirmed: court correctly denied contractual fees against BT; statutes do not make a nonparty defendant liable where it was never alleged or claimed to be a party to the contract |
| Whether trial court erred by not designating Emmert and Jehnke prevailing parties as to BT and denying costs | Plaintiffs: They prevailed on some claims against BT and should be designated prevailing parties and awarded costs/fees | Defendants: Court properly exercised discretion; designation made no difference to entitlement to fees (BT not liable) | Affirmed: even if designation was arguable error, plaintiffs identified no harm—fees against BT not available and court permissibly denied costs under ORCP 68 B |
Key Cases Cited
- In re Ybarra, 424 F.3d 1018 (9th Cir.) (post-petition voluntary return to litigation can make debtor liable for post-petition attorney fees)
- Seigel v. Federal Home Loan Mortgage Corp., 143 F.3d 525 (9th Cir.) (discusses return to the fray standard for post-petition fee liability)
- King v. Neverstill Enterprises, LLC, 240 Or. App. 727 (reciprocity and ORS 20.096 context for fee awards in contract litigation)
- A & E Security & Electronic Solutions v. Fortalesa, 253 Or. App. 448 (interpretation of ORS 20.083’s operative and explanatory clauses)
- Golden West Insulation v. Stardust Investment Co., 47 Or. App. 493 (early reciprocity principle on fee awards under one-sided contract provisions)
- Care Medical Equipment, Inc. v. Baldwin, 331 Or. 413 (explains limits on fee reciprocity where later case law narrowed earlier holdings)
- Bodenhamer v. Patterson, 278 Or. 367 (background on fee award principles in contract disputes)
- Barbara Parmenter Living Trust v. Lemon, 345 Or. 334 (no remedy where designation of prevailing party caused no harm)
- AutoLend, IAP, Inc. v. Auto Depot, Inc., 170 Or. App. 135 (trial court’s discretion under ORCP 68 B to deny costs)