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Porras v. Vial Fotheringham Llp

United States District Court, D. Oregon

May 21, 2015


BRET A. KNEWTSON, Hillsboro, Oregon, MARK G. PASSANNANTE, Broer & Passannante, PS, Portland, Oregon, Attorneys for Plaintiff.

SHANE P. SWILLEY, ROBERT E. SABIDO, Cosgrave Vergeer Kester, LLP, Portland, Oregon, Attorneys for Defendants.


ANNA J. BROWN, District Judge.

This matter comes before the Court on Plaintiff's Motion (#103) for Partial Summary Judgment and Defendants' Motion (#109) for Partial Summary Judgment.

For the reasons that follow, the Court GRANTS in part and DENIES in part Plaintiff's Motion for Partial Summary Judgment and GRANTS in part and DENIES in part Defendants' Motion for Partial Summary Judgment.


This once-straightforward debt-collection matter that began in 2009 and initially revolved around the nonpayment of less than $1, 000 in homeowners' association assessments is now before this Court on the parties' Cross-Motions for Partial Summary Judgment as to Plaintiff's unfair debt-collection practices claims in which Plaintiff asserts he is entitled to economic, noneconomic, and punitive damages well in excess of $1, 000, 000. What should have been resolved by the parties professionally and pragmatically on the then-uncomplicated issues is now before this Court as a two-year-old unfair debt-collection practices battle royale in which the parties' claims are myriad and the attorneys' meters continue to run.

The following facts are undisputed and derived from the parties' submissions on summary judgment:

In October 2004 Plaintiff purchased a home in the Oak Hill Settlement in Forest Grove, Oregon. Oak Hill is a planned community development created in 2003 by Skyline Development, Inc. Skyline filed a Declaration of Covenants, Conditions, and Restrictions for Oak Hill (CCRs) with Skyline named as the Declarant and signed by David Huttula as President of Skyline. The CCRs created the Oak Hill Settlement Owners' Association (the HOA) and reserved to Skyline administrative control of the HOA and the right to appoint between one and three persons to serve as the HOA's Interim Board of Directors to govern the HOA.

Under the CCRs all purchasers of property in the Oak Hill Settlement become members of the HOA. Notice of a meeting of the Board of Directors "shall be posted at a place or places on the property" at least three days prior to the meeting or otherwise provided by a method reasonably calculated to inform lot owners of the meeting.

All members of the HOA are responsible for paying periodic assessments established by the HOA. In addition, special assessments may be ordered by a majority vote of the HOA's Board of Directors. Assessments collected by the HOA are to be used "solely for the operation, care and maintenance of the Oak Hill Settlement" and are primarily used for HOA administration, insurance, management, and operation and maintenance of common areas within Oak Hill. Although none of the HOA assessments are used for any owner's individual lot, each owner in Oak Hill has an interest in the common areas appurtenant to the owner's lot.

Article 10.8 of the CCRs contains provisions regarding an owner's default in payment of HOA assessments. If a lot within Oak Hill is owned by multiple persons, the owners of the lot are jointly and severally liable for unpaid assessments. The HOA Board of Directors has the power to adopt a resolution to impose late fees, fines, and penalties for delinquent HOA assessments.

If at any time any assessment is delinquent, the HOA, "by and through its Board or any management agent, " may file a lien against the delinquent owner's lot. After a lien is filed, "such lien shall accumulate all future assessments or installments, interest, late fees, penalties, fines, attorneys' fees (whether or not suit or action is instituted) and other appropriate costs properly chargeable" to the owner by the HOA until such amounts are fully paid.

On February 27, 2007, Huttula signed the Bylaws of Oak Hill Settlement in which Huttula is identified as "President" of the HOA. Although there is not any evidence in the record concerning when Huttula was appointed as President of the HOA, the HOA was under the control of the "Declarant" Skyline and Huttula was President of Skyline during the relevant period.

The HOA engaged Northwest Community Management Company to serve as the management company for the HOA. Huttula signed that contract on behalf of the HOA. The contract includes a schedule of fees that Northwest Community Management charges the HOA for particular services, including a schedule of fees specifically relating to collection of unpaid HOA assessments. For services that are not specifically listed, the fee schedule provides such services will be billed based on listed rates for the individual components of the service.

On April 7, 2009, Huttula, as President of the Board of Directors, signed a resolution concerning collection of unpaid HOA assessments (Collection Resolution). The Collection Resolution describes the procedures to be followed in collecting unpaid HOA assessments and provides "all legal fees and costs incurred in collection of a delinquent account shall be assessed against the delinquent Owner and shall be collected as an assessment." There is not any evidence in the record as to whether members of the HOA were given notice of the Collection Resolution. That same day Huttula signed on behalf of the HOA an agreement with Vial Fotheringham to represent the HOA in collecting delinquent assessments.

As noted, Plaintiff purchased a home in Oak Hill in October 2004. Plaintiff fell behind on his HOA assessments on April 1, 2009, and was sent a First Notice of Default on. May 1, 2009. Plaintiff missed another HOA assessment on July 1, 2009.

On September 25, 2009, the HOA filed a lien on Plaintiff's property consisting of $158.00 in unpaid assessments, $62.00 in recording and mailing costs, and $190.00 in collection charges for a total of $410.00.

On December 7, 2009, Vial Fotheringham sent Plaintiff a letter informing him that his debt had increased to $837.24, including $489.00 in past-due assessments, late fees, and interest and $348.24 in attorneys' fees and collection costs. The letter instructed Plaintiff to direct all communication and payments to Vial Fotheringham and advised Plaintiff that Vial Fotheringham would assume the debt was valid unless Plaintiff notified Vial Fotheringham within 30 days that the debt was disputed. There is not any evidence in the record that Plaintiff communicated to Vial Fotheringham that he disputed the validity of the debt within 30 days of the letter. Moreover, Plaintiff continued to miss making his HOA assessment payments.

On June 1, 2010, Vial Fotheringham sent Plaintiff another letter informing him that Vial Fotheringham intended to commence a lawsuit against Plaintiff unless he paid the back assessments in full or made arrangements for a payment plan within 10 days of the date of the letter. The June 1, 2010, letter also advised Plaintiff that the amount owing had grown to $1, 253.16 and included $674.28 in past-due assessments, late fees, and interest and $578.88 in attorneys' fees and collection costs.

Sometime in June 2010 Plaintiff and Vial Fotheringham agreed Plaintiff would pay $120.00 per month until the debt was settled and Vial Fotheringham would receive a $25.00 monthly fee for processing and maintaining the payment plan. As a condition of entering into the payment plan, Plaintiff was required to sign and to return to Vial Fotheringham a confession of judgment that Vial Fotheringham could enter against Plaintiff in the event of a default. Plaintiff did not sign and return the confession of judgment. Beginning in June 2010, however, Plaintiff made four monthly payments of $120.00 each. Vial Fotheringham charged the $25.00 payment-plan fee when Plaintiff made the September and October 2010 payments.

Plaintiff's payments ceased in November 2010. On November 24, 2010, Vial Fotheringham sent Plaintiff another 10-day notice letter informing him that Vial Fotheringham intended to proceed with a lawsuit unless Plaintiff paid the money he owed in full or made arrangements for a payment plan. On November 24, 2010, the amount owed was $1, 539.70, which included $696.14 in past-due assessments, late fees, and interest and $843.56 in attorneys' fees and collection costs.

On December 29, 2010, Vial Fotheringham filed a lawsuit on behalf of the HOA in Washington County Circuit Court seeking all assessments and charges that Plaintiff owed to the HOA. Although Plaintiff was properly served with the complaint, he did not answer or otherwise make an appearance. Accordingly, the court entered a default judgment on May 17, 2011, in the amount of $2, 150.47, including $762.35 in principal, $17.62 in "judgment interest, " $620.50 in court costs, and $750.00 in attorneys' fees. The $750.00 the court awarded as attorneys' fees represented a write-down of $531.48 from the $1, 281.48 that the HOA requested. The judgment permitted the HOA to seek a supplemental judgment for recovery of any attorneys' fees incurred in collection of the judgment. The judgment included all assessments and late fees owed by Plaintiff to the HOA through May 4, 2011.

By September 2011 Vial Fotheringham had collected the full amount of the judgment by garnishing Plaintiff's wages.

Sometime in the fall or winter of 2011 Plaintiff decided to sell his home in Oak Hill.

On October 13, 2011, Plaintiff contacted Vial Fotheringham to inquire whether he owed any more money. Vial Fotheringham informed Plaintiff that he still owed a total of $1, 679.85 in post-judgment accruals, including $233.37 for assessments and related charges and $1, 446.58 for attorneys' fees and costs. Plaintiff offered to pay that amount with a payment plan under which Plaintiff would pay $100.00 per month, but the HOA insisted Plaintiff pay $200.00 per month. The parties could not agree on a new payment plan.

On December 9, 2011, the HOA, through Vial Fotheringham, submitted a motion for a supplemental judgment seeking $1, 137.92 in additional attorneys' fees and costs incurred in collecting the judgment. The record does not indicate why this number is lower than the amount that Vial Fotheringham demanded from Plaintiff in Vial Fotheringham's October 13, 2011, letter, but the $541.93 difference between the October 13, 2011, accounting and the amount sought in the December 9, 2011, motion is roughly the same (with interest) as the Washington County Circuit Court's May 2011 reduction of $531.48 in attorneys' fees. On December 14, 2011, Plaintiff, through his counsel Bret Knewtson (who also represents Plaintiff in this matter), objected to the HOA's motion for supplemental judgment. On December 20, 2011, however, the court entered a supplemental judgment for the full amount requested by the HOA.

On December 21, 2011, unaware that the court had entered a supplemental judgment the day before, Knewtson and Defendant Andrea G. Montag, then an attorney at Vial Fotheringham, engaged in settlement discussions. After the discussions were held, Montag sent Knewtson an email memorializing a "counteroffer" by which Plaintiff would pay a total of $733.37 ($233.37 in assessments and related fees and $500.00 in attorneys' fees and costs) over the course of two months and in two separate payments. In addition, Montag stated Plaintiff would be responsible for payment of all future HOA assessments beginning January 1, 2012. Montag instructed Knewtson to respond to her by December 30, 2011, with Plaintiff's decision about whether to accept or to reject the offer.

Knewtson responded to Montag's counteroffer with his own counteroffer: Plaintiff would pay the $733.37, but he would only have to make a $200 payment in January and pay the remainder before the end of April 2012. In addition, Knewtson agreed Plaintiff would pay "the $48.50 [HOA] due for the regular Jan[uary] to April dues at the beginning of January." Although the HOA had previously notified all owners that the 2012 assessments had increased to $70.00 per quarter, Montag did not bring this fact to Knewtson's attention.

Montag replied, however, that she was reluctant to accept a counteroffer by which Plaintiff could have until the end of April to complete payment because of the substantial reduction in attorneys' fees offered by Vial Fotheringham.

Knewtson responded to Montag by disagreeing that an April payment deadline was too far away. Montag replied, however, that if Plaintiff wanted to wait until April to finish paying, he would have to set up a plan that would cost approximately $350.00 with a $25.00 per month maintenance fee. Montag again offered to permit Plaintiff to pay the $733.37 in two installments in January and February without the additional expense of setting up a formal payment plan.

Knewtson did not respond until Friday, December 30, 2011, nine days after the initial email exchange. At that time Knewtson informed Montag that Plaintiff "will make the two payments. Half, $366.69 in Jan[uary], and $366.69 in Feb[ruary]."

On Tuesday, January 3, 2012, Montag wrote: "To clarify, if accepted, we will reduce this agreement to writing and your Client must timely make these payments on an agreed upon date... via certified funds." Knewtson responded that the dates for payment would be January 30, 2012, and February 29, 2012.

On January 4, 2012, Montag responded: "One more thing, we'll need to file a Motion to Stay the proceedings until the funds we receive from your Client clear. I'll incorporate it into the Settlement Agreement. Let me know what you decide." Knewtson replied seven minutes later: "I am not sure what you mean by decide.' If you are asking if I agree to the motion to stay proceedings I don't see the point of that. The agreement would null the motion." Montag responded: "I'll prepare the Settlement Agreement and send it to you. Does that work?" Knewtson replied "Thanks."

Two days later (January 6, 2012) Montag emailed Knewtson to inform him that Montag had just received notice from the court that it had entered the supplemental judgment in favor of the HOA. Montag informed Knewtson that she would "incorporate that fact into any settlement agreement. You can expect it today." Approximately two hours later Montag sent the settlement agreement to Knewtson and stated: "I'll expect to receive it from you, signed by your Clients, promptly."

Approximately 30 minutes later Knewtson replied: "Please forward what the court sent you on the fees." Approximately one hour later Montag emailed the supplemental judgment to Knewtson.

Nearly two weeks passed without comment from Knewtson.

On the morning of January 19, 2012, Montag emailed Knewtson again:

It has been nearly two weeks since I e-mailed you the Settlement Agreement as well as the Notice of Supplemental Judgment. I am not in receipt of a signed Agreement from your Client. That said, I will assume that your Client has not agreed to the terms of the Settlement and my only recourse is resume our collections efforts. If this is not the case, I expect a response from you no later than the close of business today.

That afternoon Knewtson responded:

My position is that we have an agreement that he will make the two payments.
We never discussed waiving claims he has against the HOA or its agents so your settlement agreement does not reflect our agreement. I think he has to appeal the supplemental judgment unless you voluntarily vacate it and withdraw your motion for fees. I won't be back till [ sic ] 4. Let me know your position.

Shortly after 4:00 p.m. that day Montag responded: "The Settlement Agreement that I sent you is part of our standard agreement. Does your Client care to strike that clause and does your Client otherwise agree to the other terms of the Agreement itself?"

One hour later Knewtson replied:

The condition that if he misses a payment you get your judgment is not agreeable. As well as para[graph] 2.4 - he misses a future assessment payment all amounts are. forgiven? ...

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