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Wells Fargo Bank, N.A. v. Clark

Court of Appeals of Oregon

September 26, 2018

WELLS FARGO BANK, N.A., its successors in interest and/or assigns, Plaintiff-Respondent,
v.
Merri Sue CLARK, as Trustee of the Richard W. Clark and Merri Sue Clark Revocable Living Trust under Trust Agreement dated July 26, 1994; Merri Sue Clark, individually; Richard W. Clark, aka Richard Warren Clark, as Trustee of the Richard W. Clark and Merri Sue Clark Revocable Living Trust under Trust Agreement dated July 26, 1994; and Richard W. Clark, aka Richard Warren Clark, individually, Defendants-Appellants, and SELCO COMMUNITY CREDIT UNION, et al., Defendants.

          Submitted February 3, 2017.

          Lane County Circuit Court 161420692; Charles D. Carlson, Judge.

          Merri Sue Clark and Richard W. Clark filed the briefs for appellants pro se.

          Peter J. Salmon fled the brief for respondent.

          Before Armstrong, Presiding Judge, and Tookey, Judge, and Shorr, Judge.

         [294 Or.App. 198] Case Summary: Defendants appeal a trial court judgment dismissing this action, because it prevents defendants from pursuing counterclaims that defendants sought to bring against plaintiff. Defendants moved to dismiss plaintiff's complaint, but before the court ruled on that motion, defendants also fled an answer and counterclaims. After the court granted defendants' motion to dismiss, defendants sought to proceed on their counterclaims. The court instead entered a judgment that dismissed the entire case, concluding that defendants could not file a motion to dismiss and a responsive pleading at the same time. Held: Because the Oregon Rules of Civil Procedure did not prohibit defendants from fling their answer and counterclaims before the court ruled on their motion to dismiss, the trial court erred in dismissing the entire case.

         Reversed and remanded with respect to defendants' counterclaims; otherwise affirmed.

         [294 Or.App. 199] ARMSTRONG, P. J.

         Defendants appeal a judgment dismissing this action because it prevents defendants from pursuing counterclaims that they sought to bring against plaintiff. We conclude that the trial court erred. Accordingly, we reverse and remand with respect to defendants' counterclaims but otherwise affirm.

         The relevant facts in this case are undisputed and primarily procedural. Plaintiff filed a complaint against defendants, among others, for judicial foreclosure of real property. In response, defendants filed a motion to dismiss the complaint under ORCP 21 A, asserting that plaintiff lacked standing and was not the real party in interest. On the same morning as the hearing on defendants' motion to dismiss, two things happened: Plaintiff filed a notice of voluntary dismissal of the complaint without prejudice and submitted a general judgment of dismissal for the court to sign; and defendants filed a pleading that answered plaintiff's complaint and asserted counterclaims against plaintiff. At the hearing, the parties made the court aware of those filings and discussed them with the court, but the court did not make any rulings with respect to them. The court granted defendants' motion to dismiss but did not enter a judgment at that time.

         Three months later, defendants filed a notice of intent to apply for an order of default against plaintiff on defendants' counterclaims. Plaintiff replied, denying every allegation of the counterclaims. Defendants moved to strike plaintiff's reply as a "sham" that was "false on its face" because it denied facts previously alleged by plaintiff in its complaint. In response, plaintiff asserted that defendants were not permitted under the procedural rules to file counterclaims while their motion to dismiss was pending. Because the motion to dismiss had been granted, plaintiff argued, there was nothing left to litigate. Plaintiff also submitted a general judgment of dismissal for the court's signature. Defendants moved to strike plaintiff's proposed judgment. The day after defendants filed their motion to strike, the trial court signed a general judgment of dismissal without ruling on defendants' pending motions.

         [294 Or.App. 200] The court later held a hearing on defendants' motions, which it denied by written order. In its order, the court concluded that, because defendants had chosen to make their initial appearance by filing a motion to dismiss under ORCP 21 A, they "had no right to submit further pleadings in the form of an answer and counterclaim until the motion to dismiss had been ruled upon or withdrawn." The court further concluded that, as a result, defendants' answer and counterclaims were "a legal nullity that should not have been filed, [because] [p]arties are not allowed to file an appearance by motion under ORCP 21 and a responsive pleading under ORCP 19 at the same time." The court reasoned that, because it had granted defendants' motion to dismiss, the case was concluded "except for the submission of an appropriate general judgment." With respect to the submitted judgment, the court concluded that there was no basis on which to set it aside. Finally, the court advised defendants that, if they wished to pursue claims against plaintiff, then they "will need to file those claims as the plaintiff in a separate action."

         On appeal, defendants argue that nothing in the procedural rules or Oregon case law prohibits a party from filing counterclaims while a motion to dismiss is pending. Defendants assert that, to the contrary, the text of those rules allows such a procedure and nothing about that approach would prejudice plaintiff. Plaintiff argues that defendants' reading of the procedural rules ignores the implicit timing found in ORCP 21 A and ORCP 15, which, plaintiff asserts, contemplates that a responsive pleading and counterclaims will be filed only if a motion to dismiss is denied. As explained below, we agree with defendants that they were not prohibited from filing counterclaims while their motion to dismiss was pending, and, therefore, we reverse and remand the judgment of the court with respect to defendants' counterclaims.[1]

         Because the trial court's ruling that defendants' counterclaims were a "legal nullity" involves a question of statutory construction, we review it for legal error. Delcastillo [294 Or.App. 201] v. Norris,197 Or.App. 134, 140, 104 P.3d 1158, rev den,338 Or. 488 (2005). In construing the procedural rules, our task is to discern the intentions of the Council on Court Procedures in adopting them and, doing that, we use "the same analytical method that applies to statutory construction." Rains v. Stayton Builders Mart, Inc.,258 Or.App. 652, 658, 310 P.3d 1195 (2013); see also Waddill v. Anchor Hocking, Inc., 330 Or. 376, 382 n 2, 8 P.3d 200 (2000), adh'd to on recons,331 Or. 595, 18 P.3d 1096 (2001) ("[U]nless the legislature amended the rule at issue in a particular case in a manner that affects the issues in that case, the Council's intent governs the interpretation of the rule."). In this case, the legislative history of the relevant rules is not useful to our analysis; thus, we focus on the text of those rules. See State ...


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