STATE OF OREGON MAKARIOS-OREGON, LLC, an Oregon limited liability company, Plaintiff-Appellant,
ROSS DRESS-FOR-LESS, INC., a Delaware corporation, Defendant-Respondent.
and submitted March 7, 2017
Multnomah County Circuit Court 15LT04763 Jerry B. Hodson,
M. Joyce argued the cause for appellant. On the briefs were
Jeffrey M. Edelson, Lisa A. Kaner, Paul Bierly, and Markowitz
Gregory D. Call, California, argued the cause for respondent.
Also on the brief were Thomas V. Dulcich, Sara Kobak, Rebecca
Boyette, Schwabe, Williamson & Wyatt, P.C., Tracy E.
Reichmuth, California, and Crowell & Moring LLP.
DeHoog, Presiding Judge, and Egan, Chief Judge, and Hadlock,
and second supplemental judgments vacated and remanded for
reconsideration; otherwise affirmed.
Or.App. 733] Case Summary: Plaintiff appeals the trial
court's dismissal of its forcible entry and detainer
(FED) action against defendant on various, alternative
grounds. Plaintiff raises six assignments of error, including
challenges related to the trial court's interpretation of
the lease, its ruling that plaintiff's notice of default
was inadequate, the court's admission of a defense
witness's testimony, its ruling in favor of
defendant's affirmative defenses of laches and waiver,
and the court's award of attorney fees to defendant.
Held: The Court of Appeals affirmed the dismissal of
plaintiff's FED action based on the equitable defense of
laches, because plaintiff failed to preserve its challenge to
that ruling for appeal. As a result, the court did not
discuss the trial court's alternative grounds for
dismissal. The trial court, however, abused its discretion in
awarding the attorney fees ordered in the first supplemental
judgment. That disposition required the court to likewise
vacate the second supplemental judgment awarding attorney
fees and costs in connection with the first supplemental
and second supplemental judgments vacated and remanded for
reconsideration; otherwise affirmed.
Or.App. 734] DEHOOG, P. J.
appeals the trial court's dismissal of its forcible entry
and detainer (FED) action against defendant. Defendant was a
tenant of a building that plaintiff owned in downtown
Portland. Plaintiff filed an FED action alleging that
defendant had let the building fall into gross disrepair
despite defendant's continuing obligation under the lease
to maintain the building in good condition. Plaintiff raises
six assignments of error, including challenges related to the
trial court's interpretation of the lease, its ruling
that plaintiff's notice of default was inadequate, the
court's admission of a defense witness's testimony,
its ruling in favor of defendant's affirmative defenses
of laches and waiver, and the court's award of attorney
fees to defendant. We affirm the dismissal of plaintiffs FED
action based on the equitable defense of laches, because
plaintiff failed to preserve its challenge to that ruling for
appeal. As a result, it is unnecessary to discuss the trial
court's alternative grounds for dismissal. We conclude,
however, that the court abused its discretion in awarding the
attorney fees ordered in its first supplemental judgment and
we therefore vacate and remand that judgment for
reconsideration. Further, that disposition requires us to
likewise vacate the second supplemental judgment awarding
attorney fees and costs in connection with the first
supplemental judgment. Accordingly, we vacate and remand both
supplemental judgments, but otherwise affirm.
historical and procedural facts relevant to our decision are
undisputed. This FED action involves the Richmond Building in
downtown Portland. The lease at issue has been in place since
the building's original tenant, J.J. Newberry, Co.
(Newberry), built it in 1956. Newberry designed the building
for a retail operation that would span across two
buildings-the Richmond Building and the adjacent Failing
Building. Each building was subject to a separate lease; only
the Richmond Building lease is at issue here. Under that
lease, the tenant is responsible for separating the two
buildings at the expiration of the lease. The lease is
"triple-net," meaning that the tenant has agreed to
[293 Or.App. 735] pay all real estate taxes, insure the
building, and maintain and repair the building.
it built the Richmond Building, Newberry sold it to New York
Life Insurance Company, which then leased the building back
to Newberry. In 1986, the Calomiris family purchased the
Richmond Building from New York Life. Newberry continued to
lease the building until it filed for bankruptcy in 1996. In
the course of its bankruptcy proceedings, Newberry negotiated
with defendant, Ross Dress-for-Less, Inc., to take
Newberry's position as the building's tenant.
Defendant's assumption of the lease coincided with the
beginning of a 10-year option period under the lease. The
lease provided one additional 10-year option, which defendant
exercised in 2006. In 2011, the Calomiris family transferred
ownership of the Richmond Building to plaintiff,
Makarios-Oregon, LLC, an entity established by three members
of the family.
noted, the lease required the tenant to separate the Richmond
Building from the Failing Building at the expiration of the
lease in 2016. In December 2014, defendant filed a
declaratory judgment action in federal court to determine its
obligations under that provision. Shortly thereafter,
plaintiff sent defendant a notice of default, alleging that
it had failed to comply with its obligation to maintain the
building in a good and lawful state of repair. When, in May
2015, it concluded that defendant's response to the
notice of default had been inadequate, plaintiff served
defendant with a five-day notice to quit and surrender the
premises. Plaintiff followed up on that notice by initiating
this FED proceeding in Multnomah County Circuit Court on May
trial court held a six-and-a-half day bench trial.
Ultimately, the trial court dismissed plaintiff's FED
complaint, relying on several alternative grounds raised by
defendant. The court ruled from the bench that
defendant's affirmative defenses of laches, waiver, and
estoppel barred plaintiffs claims. The court further ruled
that, even if plaintiff's claims were not otherwise
barred, defendant was entitled to prevail on the ground that
plaintiff's notice of default had been inadequate.
Finally, the court ruled that [293 Or.App. 736] the
parties' course of conduct demonstrated that defendant
had not violated the lease's continuing maintenance
obligation. The trial court explained that each ruling was an
alternative ground on which to find in defendant's
prevailing party, defendant then petitioned the trial court
for costs and attorney fees as authorized under the lease and
by statute. Plaintiff moved to stay the determination of
attorney fees pending this appeal, but the trial court denied
plaintiff's motion. Plaintiff then filed written
objections to defendant's request for fees, and both
plaintiff and defendant submitted written expert testimony
regarding the reasonableness of defendant's request.
Following a hearing on defendant's petition, the court
entered a supplemental judgment awarding defendant attorney
fees and costs. Defendant subsequently filed a supplemental
petition to recover the fees and costs it had incurred in
filing the fee petition and responding to plaintiff's
motion to stay. Both parties waived oral argument regarding
defendant's supplemental petition and relied solely on
their written submissions. The court entered a second
supplemental judgment awarding defendant its additional
attorney fees and costs and explained that award in a brief
letter opinion. All told, the court awarded defendant $657,
166.45 in attorney fees and $82, 752.62 in costs.
multiple assignments of error, plaintiff challenges each of
the trial court's alternative bases for dismissing the
FED action; however, because it is dispositive, we address
only plaintiffs challenge to the court's reliance on
laches as a basis to dismiss plaintiffs action.
Plaintiff's argument on appeal is that laches is
inapplicable to continuing covenants, as plaintiff
characterizes defendant's obligation under the lease to
maintain and repair the Richmond Building. As a result,
plaintiff contends, the court erred in concluding that laches
barred its claim. Plaintiff did not, however, make that
argument to the trial court. And because, as we explain
below, plaintiff's challenge to that independent basis
for the court's ruling is therefore not preserved for
appeal, we affirm the judgment dismissing plaintiff's
complaint on that ground.
Or.App. 737] Our decision rests on the principle that we
generally will not consider claims of error that were not
raised in the trial court. State v. Walker, 350 Or.
540, 548, 258 P.3d 1228 (2011); see also John Hyland
Const., Inc. v. Williamsen & Bleid, Inc., 287
Or.App. 466, 471, 402 P.3d 719 (2017) ("In our system of
justice, the purpose of an appeal is not to give the
appellant an opportunity to pursue a new theory that it did
not rely on below. Rather, 'the function of appellate
review' is 'to correct errors of the trial
court.'" (Quoting Folk v. Amsberry, 290 Or.
839, 843, 626 P.2d 362 (1981).)). "'[T] he
preservation rule is a practical one, and close calls * * *
inevitably will turn on whether, given the particular record
of a case, the court concludes that the policies underlying
the rule have been sufficiently served.'"
Walker, 350 Or at 548 (quoting State v.
Parkins,346 Or. 333, 341, 211 P.3d 262 (2009)). The
policies underlying the rule of preservation include giving
the trial court a chance to consider and rule on an issue,
thereby possibly avoiding an error altogether and obviating
the need for an appeal. Id. The rule also promotes
fairness to opposing parties so that they are not taken by