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Quesnoy v. Department of Revenue

Court of Appeals of Oregon

June 28, 2017

Sandra QUESNOY and Katelyn S. Oldham, Petitioners,
v.
DEPARTMENT OF REVENUE, Respondent.

          Argued and submitted June 23, 2015

         Office of Administrative Hearings 1202866

          Katelyn S. Oldham argued the cause and fled the briefs for petitioners.

          Denise Fjordbeck, Assistant Attorney General, argued the cause for respondent. On the briefs were Ellen F. Rosenblum, Attorney General, Anna M. Joyce, Solicitor General, and Cecil A. Reniche-Smith, Assistant Attorney General.

          Kristina J. Holm, Julia E. Markley, Christopher L. Garrett, and Perkins Coie LLP, fled the brief amicus curiae for the American Civil Liberties Union of Oregon, Inc.

          Phil Goldsmith, Law Offce of Phil Goldsmith, Charles S. Tauman and Charles S. Tauman, PC, fled the brief amicus curiae for Oregon Trial Lawyers Association.

          Before Sercombe, Presiding Judge, and Hadlock, Chief Judge, and Tookey, Judge.

         Case Summary:

         Previously, petitioner Quesnoy was convicted of a property crime and sentenced to an 18-month term of incarceration and a requirement that she pay nearly $250, 000 in restitution. The judgment of conviction ordered that $148, 455.55 of the restitution "be referred to the Oregon Department of Revenue [(DOR)] for collection." Quesnoy later sued the State of Oregon, the Department of Corrections, and individual state employees, alleging that those defendants had violated her statutory and constitutional rights while she was incarcerated. She prevailed on some of her claims and was awarded $50, 000.00 in damages [286 Or. 360] plus $121, 970.20 in attorney fees and costs. DOR initially sought to garnish both of those amounts as setoff against Quesnoy's restitution debt. After a contested case proceeding before an ALJ, DOR initially issued a final order, allowing DOR to garnish both the damage award and award of attorney fees and costs. After petitioners fled their opening briefs before the Court of Appeals, DOR issued a final order on reconsideration that allows DOR to garnish the damages award but that prohibits DOR from garnishing the award for attorney fees and costs. On judicial review of the final order on reconsideration, petitioners raise six claims of error. In their first three assignments of error, petitioners challenge aspects of the ALJ's ruling that the award of attorney fees and costs was subject to garnishment. In their fourth assignment of error, petitioners challenge the ALJ's ruling that petitioner's entire damages award was subject to garnishment and that Quesnoy had not proved that $10, 000 of that award qualified for the "personal bodily injury" exemption to garnishment under ORS 18.345(1)(k). In their fifth and sixth assignments of error, petitioners contend that DOR erred in failing to include the appropriate interest in its calculation and payment of the attorney fees and costs unlawfully garnished pursuant to the initial final order and, further, that DOR also erred when it failed to provide for an amended award of attorney fees and costs in the final order on reconsideration. Held: The arguments raised in petitioners' frst three assignments of error are moot or otherwise not justifiable, as they challenge only DOR's ability to garnish the award of attorney fees and costs, which DOR no longer claims a right to do. Additionally, the arguments that petitioners make in conjunction with their fourth assignment of error present no basis to reverse DOR's final order on reconsideration. Specifically, as the ALJ and DOR maintained throughout the proceedings, a person claiming an exemption from garnishment has the burden to prove entitlement to the exemption. The ALJ and DOR did not err when they determined that Quesnoy failed to do so. Finally, petitioners' fifth and sixth assignments of error are not properly before the Court of Appeals.

         Affirmed. [286 Or. 361]

          HADLOCK, C. J.

         Several years ago, petitioner Quesnoy was convicted of a property crime. Her sentence included an 18-month term of incarceration and a requirement that she pay nearly $250, 000 in restitution. The judgment of conviction ordered that $148, 455.55 of the restitution "be referred to the Oregon Department of Revenue [(DOR)] for collection." Quesnoy later sued the State of Oregon, the Department of Corrections, and individual state employees in federal court, alleging that those defendants had violated her statutory and constitutional rights while she was incarcerated. She ultimately prevailed on some of her claims against the state and one individual defendant, and she was awarded a total of $50, 000.00 in damages plus $121, 970.20 in attorney fees and costs.

         DOR initially sought to garnish both of those amounts as setoff against Quesnoy's restitution debt. After a contested case proceeding and some procedural complications that we describe below, DOR issued a final order on reconsideration that allows DOR to garnish the $50, 000.00 damages award but that prohibits DOR from garnishing the $121, 970.20 award for attorney fees and costs. On judicial review from that order on reconsideration, petitioners raise six claims of error.[1] We reject each of those six claims of error for the reasons set out below. Accordingly, we affirm.

         I. FACTUAL AND PROCEDURAL BACKGROUND

         No party has challenged the factual findings in DOR's final order on reconsideration. Accordingly, those findings establish the facts for the purposes of judicial review. Jefferson County School Dist No 509-J v. FDAB, 311 Or. 389, 393 n 7, 812 P.2d 1384 (1991). Our description of the facts is therefore based mainly on DOR's findings; to add context, we also set out some evidence from the record regarding facts that are not in dispute.

         [286 Or. 362] A. Quesnoy's Conviction, the Restitution Judgment, Quesnoy's Successful Federal Suit, and DOR's Efforts at Garnishment

         In 2009, Quesnoy was convicted of first-degree aggravated theft of over $50, 000. She was sentenced to 18 months in prison and ordered to pay nearly $250, 000 in restitution. The judgment in the criminal case identified the state as the judgment creditor and included an order that "$148, 455.55 of the victim restitution *** be referred to [DOR] for collection."

         The following year, Quesnoy brought a federal action against the State of Oregon and a state corrections employee, Raines, among others, for alleged "violations of [her] federally protected rights and rights protected by the state of Oregon" while she was incarcerated at the Coffee Creek Correctional Facility. As pertinent here, Quesnoy alleged that the state had violated state and federal laws prohibiting discrimination on the basis of disability. Those claims were based on Quesnoy's assertion that the state had failed to accommodate her disabilities, which impair her mobility, by (among other things) placing her in segregation without a wheelchair or walker. Quesnoy alleged that she suffered "humiliation, frustration, distress, physical pain, mental anguish, anxiety and loss of her freedom" as a result of the failure to accommodate her disabilities.[2]In separate claims, Quesnoy alleged that Raines had unlawfully retaliated against her, after Quesnoy protested her treatment in prison, and had also violated Quesnoy's rights under the Fourteenth Amendment to the United States Constitution.

         Quesnoy ultimately succeeded on her claims against Raines for retaliation and for violation of her Fourteenth Amendment rights; she also prevailed on her claims that the state had violated state and federal disability-discrimination statutes. The jury awarded Quesnoy $15, 000 on her claims against Raines and $35, 000 on her claims against the state. The federal district court entered a $50, 000 judgment in [286 Or. 363] Quesnoy's favor in February 2012. At that point, Quesnoy had requested an award of attorney fees and costs, but the district court had not yet ruled on that request.

         Shortly after entry of the federal district court judgment, DOR notified petitioners of its intention to garnish that money judgment. Petitioners challenged the garnishment, asserting that $10, 000 of Quesnoy's $35, 000 damage award against the state was exempt under ORS 18.345(1)(k) as payment awarded for personal bodily injuries.[3] Specifically, Quesnoy asserted that her successful claims against the state "related to injuries and harm she suffered while incarcerated because she was denied access to needed mobility devices." Oldham also asserted that she had an interest in the attorney fees and costs yet to be awarded.

         The federal district court subsequently entered a supplemental judgment awarding Quesnoy $121, 970.20 in attorney fees and costs. Oldham filed a notice of attorney's lien against that supplemental judgment, which DOR sought to garnish.[4] Over the next few months, the parties continued to dispute whether DOR properly could garnish either the damages award or the award of attorney fees. DOR denied each of the challenges to garnishment.

         B. The Contested Case Hearing and the ...


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