SHRINERS HOSPITALS FOR CHILDREN, a Colorado nonprofit corporation; and Oregon Scottish Rite Clinics, an Oregon nonprofit corporation, Petitioners on Review,
Michael A. COX, as Personal Representative for Mack A. Woods, Deceased, Respondent on Review, and BENNETT, HARTMAN, MORRIS & KAPLAN, LLP and Tyler Smith & Associates, P.C., Respondents on Review.
and submitted September 13, 2018
review from the Court of Appeals. [*] (CC CV07110578) (CA
Richard L. Grant, Richard L. Grant, P.C., Portland, argued
the cause and fled the brief for petitioners on review.
W. Kelly, Eugene, argued the cause and fled the brief for
respondent on review Michael A. Cox.
appearance on behalf of respondents on review Bennett,
Hartman, Morris & Kaplan, LLP, and Tyler Smith &
Walters, Chief Justice, and Balmer, Nakamoto, Flynn, Duncan,
and Nelson, Justices, and Kistler, Senior Justice pro
Or. 395] Case Summary: Plaintiffs obtained a default judgment
against defendant. Defendant subsequently prevailed as a
plaintiff in a separate malpractice action, in which he used
the default judgment to establish damages. Defendant then
moved to set the default judgment aside, arguing that it was
void because of improper service. The trial court denied the
motion on timeliness grounds. The Court of Appeals reversed,
holding that the motion was timely and that a party could not
be estopped from setting aside a void judgment.
Held: (1) Judicial estoppel can prevent a party from
setting a judgment aside on the grounds that the judgment is
void due to improper service; (2) In this case, where
defendant had relied on the default judgment to establish
damages in another lawsuit, judicial estoppel applied.
Or. 396] KISTLER, S. J.
primary question in this case is whether defendant is
judicially estopped from setting aside a default judgment
that, he contends, resulted from improper
service. The trial court found that, even if
service were improper, defendant knew about the default
judgment shortly after it was entered and used it to his
benefit in two judicial proceedings. The trial court ruled
that, in those circumstances, defendant waited too long to
set it aside. The Court of Appeals reached a different
conclusion. It reasoned that the default judgment was void;
as a result, neither the passage of time nor other
circumstances barred defendant from seeking to set the
judgment aside. Shriners Hospitals for Children v.
Woods, 280 Or.App. 127, 380 P.3d 999 (2016). We allowed
Shriners' petition for review to consider that question.
Because we conclude that, in the circumstances of this case,
defendant was judicially estopped from setting the default
judgment aside, we reverse the Court of Appeals decision and
remand this case to the Court of Appeals.
brought this action against defendant to collect on a note
and obtained a default judgment against him. Shriners'
argument that defendant is judicially estopped from moving to
set aside the default judgment is based on Shriners'
claim that defendant used the default judgment to his
advantage in two other judicial proceedings: a dissolution
action between defendant and his wife and a malpractice
action that defendant brought against one of his lawyers in
the dissolution proceeding. In setting out the facts, we
first describe the note that defendant signed and the initial
phase of the dissolution proceeding. We then describe
Shriners' action to collect the note and the default
judgment, which occurred midway through the dissolution
proceeding. We turn next to defendant's use of the
default [364 Or. 397] judgment in the dissolution proceeding
and the later malpractice action. Finally, we describe
Shriners' efforts to garnish the proceeds of the
malpractice action and defendant's motion to set aside
the default judgment.
defendant's marriage, his wife borrowed $137, 000 from
her aunt and used the money to improve property that she and
defendant had purchased. On December 7, 2001, defendant
signed a note to repay the loan, which was
unsecured. In 2002, defendant and his wife filed an
action to dissolve their marriage. That action resulted in a
dissolution judgment in 2004, a successful appeal by
defendant, and a remand for a new trial in 2006. Woods
and Woods, 207 Or.App. 452, 142 P.3d 1072 (2006). After
the trial court entered the 2004 dissolution judgment but
before the Court of Appeals remanded the case for a new
trial, defendant's wife sold the marital
home. She spent the money that she received from
the sale and did not use it to repay the loan to her aunt.
Woods v. Hill, 248 Or.App. 514, 518, 273 P.3d 354
November 2007, the dissolution proceeding had been remanded
for a new trial, defendant had discharged the first attorney
(Hill) who had represented him in the dissolution proceeding,
and he had hired a new attorney (Renshaw) to represent him in
the dissolution proceeding on remand. Also, by November 2007,
defendant's note had been assigned to Shriners, the note
was approximately five years overdue, and Shriners filed this
action to collect the principal and interest due under the
note. Shriners filed an affidavit of service in the
collection action. In the affidavit, the process server
stated under penalty of perjury that he had personally served
a copy of the summons and complaint on defendant on November
28, 2007. Defendant did not appear in the collection action,
and the trial court entered a default judgment against
defendant on January 3, 2008. The default judgment
established the amount that defendant owed on the note and
the rate of interest and awarded Shriners court costs and
attorney fees. Additionally, interest began [364 Or. 398]
accruing on the attorney fees and court costs at a higher
rate than on the amount owed under the note.
January 3, 2008, the day that the default judgment was
entered, defendant's attorney (Renshaw) called
Shriners' attorney (Grant), who was not able to take
Renshaw's call. Grant returned Renshaw's call on
Monday, January 7, 2008, but was not able to reach him. Later
that day, Grant received a voice mail message personally from
defendant. On January 10, 2008, a week after the
default judgment was entered, Grant mailed a demand for
payment of the judgment with interrogatories to defendant,
return receipt requested, and copied Renshaw with those
documents. On January 11, defendant personally signed the
return receipt showing that he had received the demand to pay
the judgment and the interrogatories.
January 14, 2008, Grant and Renshaw discussed "the
payment of the judgment as well as the inability of the
defendant Mack Woods to set aside the Default Order and
Judgment for lack of a meritorious defense." Later that
month, Renshaw asked Grant to postpone enforcing the judgment
until the remand hearing on the dissolution proceeding had
conclusion of the remand hearing, the trial court entered a
supplemental judgment in the dissolution proceeding. The
supplemental judgment divided the proceeds of the sale of the
marital property equally between defendant and his wife. The
supplemental judgment also treated the debt represented by
defendant's note and reduced to a judgment in
Shriners' collection action as a marital debt.
Specifically, the supplemental judgment divided the debt,
"all accrued pre- and post-judgment interest and the
award of attorney fees and costs in the money award"
equally between defendant and his wife. The supplemental
judgment provided that each party's obligation under the
default judgment would be reduced by the proceeds from the
sale of another parcel of land that they owned.
was unhappy with the first attorney (Hill) who had
represented him in the dissolution proceeding. [364 Or. 399]
Defendant retained a third and later a fourth attorney, who
pursued a malpractice action against Hill for, among other
things, failing to file a notice of Us pendens
during the dissolution proceeding. Defendant took the
position in the malpractice action that, if Hill had filed a
notice of Us pendens, defendant's wife would not
have been able to sell the marital home without the proceeds
of the sale being used to pay off defendant's note to the
aunt. See Woods v. Hill, 248 Or.App. at 519.
found that Hill had committed malpractice, and defendant used
the default judgment, plus accrued interest, to establish his
damages. Specifically, defendant's attorney told the jury
that "our calculation on the Shriner's judgment was
damages of $221, 000-$221, 106.97," and he argued that
the jury should hold Hill responsible for those and other
damages. The jury agreed. It found that
defendant's damages were $274, 000, which were reduced to
$180, 840 as a result of defendant's comparative
2013, Shriners sought to garnish the proceeds from the
malpractice action to satisfy its default judgment against
defendant. In response, defendant moved to set aside the
default judgment under ORCP 71 B(1). In support of his
motion, defendant submitted a sworn declaration in which he
stated that he had been out of town on November 28, 2007,
and, as a result, had not been personally served with a copy
of the summons and complaint on that date. His declaration
then stated: "At the time I believed that Mr. Renshaw
[his attorney in the dissolution proceeding] was handling the
Shriners' situation and would take care of ...