Defendants appeal an order denying their motion to set aside a judgment in favor of plaintiff. The judgment, which awarded plaintiff damages, was entered following an arbitration that was conducted without defendants’ participation. Among other things, defendants assert that their absence from the arbitration and the consequential judgment in plaintiffs favor occurred as a result of mistake, surprise, or excusable neglect, as well as the misconduct of plaintiffs attorney. Accordingly, defendants assert the trial court erred in not setting aside the judgment under ORCP 71 B.
We liberally apply ORCP 71 B(l) so as to avoid the deprivation of a party’s day in court “when it can be done without doing violence to the regular disposition of litigation.” National Mortgage Co. v. Robert C. Wyatt, Inc.,
Plaintiff owns and operates building supply stores in northeast Oregon. In June 2002, defendant Ron Miller entered into an open account agreement with plaintiff for building supply purchases. In July 2010, plaintiff brought an action on that account against defendant Ron Miller and his wife, defendant Linda Miller, for the cost of goods purchased by defendants’ son, Ean Miller. The complaint in Union County Circuit Court Case No. 100746539 set out claims for breach of contract and unjust enrichment, alleging that Ean Miller purchased building supplies at plaintiffs stores, charging the cost of the purchases to the account with his father’s authority, and that the materials were used to improve defendants’ properties in Union County. The complaint sought $17,865 in damages as the “current unpaid balance on Defendant Ron Miller’s account.” The complaint was personally served on defendant Linda Miller at the Millers’ home in Burlington, Wisconsin, on August 3. Substituted service was obtained on her husband at that location in November 2010.
Each defendant sent a “power of attorney” to plaintiffs attorney, appointing Ean Miller as “my true and lawful attorney * * * to answer the complaint filed in Case No. 10-07-46539 * * * hereby ratifying and confirming all that my attorney lawfully does or causes to be done by virtue hereof.” On August 30, Ean Miller filed the powers of attorney and defendants’ answer and counterclaim with the court. The answer asserted that the purchases were by Ean Miller
The court referred the case to mandatory arbitration on March 2, 2011. See ORS 36.405(l)(a) (requiring referral for civil actions “where all parties have appeared” and the only relief claimed is damages in an amount not exceeding $50,000). The court appointed Glenn Null as the arbitrator of the case. The notice of that appointment shows that it was copied to Jonel Ricker (plaintiffs counsel) and to “Ron Miller, etal [sic].” Later, the arbitrator sent letters to Ricker and to “Ean Miller POA,” notifying them of potential hearing dates, the rates of his charges for services, and the time and place of the hearing. Those letters were sent to Ean Miller at the North 2nd Street address set out in defendants’ answer to the complaint. Ricker sent his prehearing statement of proof to Ean Miller at that same address.
The arbitration hearing occurred on May 26, 2011. Defendants did not appear or participate in the hearing. The arbitrator issued a “decision and arbitration award” the next day, again mailing a copy of the decision to Ricker and to “Ean Miller POA” at the North 2nd Street address. The decision notes that evidence was received and testimony taken at the hearing, plaintiffs exhibits and prehearing statement of proof were considered, and that “the bankruptcy defense [is] ineffective for Defendant because Defendant is not under bankruptcy protection.” The arbitrator also found that “Ean Miller is not an attorney licensed to practice law in the State of Oregon” and granted “Plaintiffs oral motion to dismiss Defendant’s Answer” on the grounds that “Ean Miller is not authorized by Oregon law” to file a pleading on defendants’ behalf. The decision concludes with an award that, “[hjaving heard the motions and testimony and fully reviewing the evidence received [,] it is the conclusion of this arbitrator that Plaintiff prevails on both claims for relief.”
On June 16, 2011, plaintiffs counsel prepared and filed with the court a proposed judgment, attorney fee petition, and cost bill, serving copies of those documents on Ean Miller by mail to the North 2nd Street address. The court signed the judgment on July 14. Defendants learned of the judgment from their son shortly thereafter.
Defendants retained counsel and moved to set the judgment aside under ORCP 71 B. Defendants argued three grounds for relief: (1) mistake, inadvertence, surprise, or excusable neglect in failing to appear at the arbitration hearing; (2) misconduct by plaintiffs counsel in failing to send pleadings, notices, and correspondence to them as required by court rules; and (3) that the judgment was void because it was taken by default without notice to defendants and because notice of the arbitration hearing had not been posted as required by ORS 36.420(1).
More specifically, defendants and Ean asserted in their declarations that (1) the notices and pleadings in the case had been sent to Ean and not to defendants individually; (2) Ean’s authority to act on behalf of defendants was limited by the power of attorney to signing and filing their answer to plaintiffs complaint (“It was [our] intent to defend the remainder of this matter personally.”); (3) Ean changed his residence shortly after the answer was filed, filed a forwarding address with the post office, but never received documents related to the case until notice of the entry of the judgment was mailed to him; (4) after the case was filed, defendant Ron Miller called an employee of plaintiff, and “[s]he told me she was aware the allegations against me and my wife were false and I assumed that the case would be dropped”; (5) the building supplies had been charged to Ean’s account and had not been used to improve defendants’ properties; and (6) Ean’s debt to plaintiff for the purchased supplies had been discharged in his bankruptcy.
Plaintiffs counsel alleged in response that the materials were used to improve specific properties owned by defendants, that none of the pleadings, notices, and correspondence sent to Ean by plaintiff, the arbitrator, or the court were returned as undelivered, and that
After holding a hearing on the motion, the court ruled from the bench:
“Yeah. I guess I’m — I’m really not very sympathetic to your position, [defendants’ counsel], because the Millers were served. They chose not to get an attorney. They chose to rely on their son. And the matter went all the way through to arbitration. And, now, they come in and claim a problem when they could have solved the entire thing by getting an attorney in the first place and jumping through all the hoops.
“To set this aside, will require the Plaintiffs to go back to square one and then file it all over again, incurring additional expense, which they could have avoided if the Millers had properly got an attorney and filed the proper response. I guess I’m not very sympathetic to your position here.
“I’m going to deny the motion to set aside the judgment.”
On appeal, defendants first argue that their failure to participate in the arbitration was inadvertent and excusably neglectful because they initially took steps to appear and defend the case pro se, reasonably assumed that notices, pleadings, and orders would be sent to them or to their son, and mistakenly concluded that no further actions on their part were necessary to defend the case. Plaintiff responds that defendants’ inaction after filing the answer was not excusable and was the cause of the judgment against them. Defendants also contend that the judgment was obtained by fraud or misconduct of plaintiffs counsel in sending notices to Ean and not the defendants when Ean lacked capacity to act as defendants’ legal representative in the case. Plaintiff counters that the documents were sent to the address listed as “Defendant’s Address” in the answer. Defendants finally assert that the striking of their answer made the arbitrator’s decision and resulting judgment a default judgment, which was obtained without notice to them as required by ORCP 69 A(l).
A motion under ORCP 71B may be granted if (1) the judgment was entered by virtue of mistake, inadvertence, surprise, or excusable neglect, or any of the other reasons stated in the rule; (2) the defendant acted with reasonable diligence after learning of the judgment; and (3) the defendant possesses a meritorious defense to the action. Saldivar,
In reviewing an order granting or denying relief under ORCP 71 B, “[wjhether certain conduct or inaction constitutes excusable neglect [or mistake] is a question of law that we review for legal error, but we review the trial court’s ultimate decision whether to grant relief for abuse of discretion.” PGE v. Ebasco Services, Inc.,
We have generally held that any ineffectiveness of legal counsel in avoiding a judgment, by itself, is not excusable neglect sufficient to require relief under the rule. For example, in Blue Horse v. Sisters of Providence,
Similarly, in this case, the ineffectiveness of the pro se defendants’ appearance through Ean did not compel relief under ORCP 71 B. The trial court here did not abuse its discretion in denying relief on that basis under the rule. It explicitly found that defendants could have better defended the case by hiring an attorney to appear on their behalf or by personally monitoring the progress of the case.
Furthermore, the court implicitly found that defendants could have avoided the judgment had they effectively appeared in the case by filing a proper answer to the complaint under ORCP 17 A. That rule requires that
“[e]very pleading, motion, and other document of a party represented by an attorney shall be signed by at least one attorney of record who is an active member of the Oregon State Bar. A party who is not represented by an attorney shall sign the pleading, motion, or other document and state the address of the party.”
Defendants’ answer was defective under ORCP 17 A in two regards. The answer was not signed by defendants, and it did not state the address of the defendants in Burlington, Wisconsin, where they reside and were served with the summons and the complaint. Instead, the answer set out Ean’s address. See Marguerite E. Wright Trust v. Dept. of Rev.,
Defendants’ neglect in causing a defective answer to be filed results from their lack of legal acumen and choice to proceed pro se, notwithstanding the risk of error given their lack of expertise. Because defendants embraced that risk by choosing to proceed pro se, the resulting error does not constitute excusable neglect as a matter of law. “A defendant appearing pro se must inform himself of and comply with court rules as any other litigant.” State v. Palmer,
Nonetheless, defendants’ lack of success in establishing their defenses to plaintiff’s claims resulted from their failure to participate in the arbitration, object to the judgment when plaintiff presented it to the court,
“Whenever under these rules service is required or permitted to be made upon a party, and that party is represented by an attorney, the service shall be made upon the attorney unless otherwise ordered by the court. Service upon the attorney or upon a party shall be made by delivering a copy to such attorney or party, by mailing it to such attorney’s or party’s last known address or, if the party is represented by an attorney, by telephonic facsimile communication device or e-mail as provided in sections F or G of this rule.”
Defendants in this case were not “represented by an attorney” until after the judgment was entered. See ORCP 17 A (when a “party [is] represented by an attorney,” pleadings or filed documents “shall be signed by at least one attorney of record who is an active member of the Oregon State Bar”). Under ORCP 9 B, until defendants were represented by an attorney, the orders of the court and arbitrator and filings by plaintiffs counsel were required to be served on defendants by mail at their “last known address.”
But defendants’ “last known address” was not Ean’s address, despite what was listed in the answer. Plaintiff served its summons and complaint on defendant Linda Miller by personal service at her residence on McHenry Street, in Burlington, Wisconsin, on August 3, 2010. The answer was filed by Ean on August 30 and contained the inaccurate listing of “Defendant’s Address.” But defendant Ron Miller was served by substituted service on defendant Linda Miller in November 2010 at the Wisconsin address. Plaintiffs counsel filed a notice of substituted service with the court, asserting that the Wisconsin address was defendant Ron Miller’s “usual place of abode.” Thus, by the end of 2010 — after the filing of the answer — defendants’ “last known address,” as reflected in the court’s file, was at their Wisconsin residence. As noted, the referral of the case to arbitration occurred later, on March 2, 2011.
None of plaintiff’s 2011 filings in connection with the litigation were mailed to defendants at their last known address. Instead, those documents were mailed to Ean at his address. The documents that were not properly served include plaintiffs prehearing statement of proof, proposed judgment, attorney fee petition, and cost bill.
Nor were the orders relating to the arbitration properly served on defendants. The arbitrator’s letters to the parties announcing his appointment, soliciting hearing dates, and setting the time and place of the hearing were sent to Ean at the La Grande address. ORS 36.425(1) requires an arbitrator to file “proof of service of a copy of the decision and award upon each party.” Under ORCP 9 B, service of the decision and award by mail must be made to defendants’ last known address. As with plaintiffs filings, the arbitrator’s decision and award were not mailed to defendants’ last known address as shown in the court’s files. That failure of service inhibited defendants’ exercise of their rights to seek a de novo trial of the action under ORS 36.425(2)(a) in order to present their defenses to the claims. Thus, as a matter of law, and notwithstanding defendants’ otherwise inexcusable neglect, the judgment in question resulted from mistakes made by the arbitrator and plaintiffs counsel in failing to serve defendants with significant orders and filings as required by law. See Trucke v. Baughman,
Furthermore, the allowance of relief under the circumstances here would not do “violence to the regular disposition of litigation.” National Mortgage Co.,
Reversed and remanded.
Notes
ORCP 71 B(1) provides, in relevant part:
“On motion and upon such terms as are just, the court may relieve a party or such party’s legal representative from a judgment for the following reasons: (a) mistake, inadvertence, surprise, or excusable neglect; (b) newly discovered evidence which by due diligence could not have been discovered in time to move for a new trial under Rule 64 F; (c) fraud (whether previously called intrinsic or extrinsic), misrepresentation, or other misconduct of an adverse party; (d) the judgment is void; or (e) the judgment has been satisfied, released, or discharged, or a prior judgment upon which it is based has been reversed or otherwise vacated, or it is no longer equitable that the judgment should have prospective application. A motion for reasons (a), (b), and (c) shall be accompanied by a pleading or motion under Rule 21 A which contains an assertion of a claim or defense. The motion shall be made within a reasonable time, and for reasons (a), (b), and (c) not more than one year after receipt of notice by the moving party of the judgment.”
Defendants also appeal a supplemental judgment that awarded plaintiff costs and attorney fees incurred in connection with defendants’ motion to set aside the judgment. In light of our disposition, we reverse and remand the supplemental judgment as well. ORS 20.220(3)(a) (“If the appellate court reverses the judgment, the award of attorney fees or costs and disbursements shall be deemed reversed!.]”).
In a court-mandated arbitration process, ORS 36.400 to 36.425, once a decision and award is filed with the court and served on the parties, the party against whom relief is granted may file a written notice of appeal and a “request for a trial de novo of the action in the court on all issues of law and fact.” ORS 36.425(2)(a).