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De Young v. Brown

Court of Appeals of Oregon

November 14, 2019

James B. DE YOUNG, a resident of Damascus, Plaintiff-Appellant,
v.
Kate BROWN, in her official capacity as Governor of Oregon; State of Oregon; and Clackamas County, a political subdivision of the State of Oregon, Defendants-Respondents, and DAMASCUS, a municipal corporation, Defendant.

          Clackamas County Circuit Court 16CV12583; Katherine E. Weber, Judge.

         On appellant's petition for attorney fees fled May 20, 2019; respondents' response to appellant's petition fled June 3, 2019 and appellant's reply fled June 13, 2019. Opinion fled September 9, 2019. 297 Or.App. 355, 443 P.3d 642 (2019).

          Tyler Smith for petition.

          Ellen F. Rosenblum, Attorney General, Benjamin Gutman, Solicitor General, Jona J. Maukonen, Assistant Attorney General, and Stephen Madkour for respondents.

          Before DeVore, Presiding Judge, and Egan, Chief Judge, and Powers, Judge.

         [300 Or. App.531] Case Summary: After successfully appealing a judgment of the circuit court declaring the validity of the election results disincorporating the City of Damascus, plaintiff seeks attorney fees in the amount of $41, 086.05, relying on this court's inherent equitable authority as described in Gilbert v. Hoisting & Port. Engrs., 237 Or. 130, 384 P.2d 136 (1963), cert den, 376 U.S. 963 (1964). Defendants object, asserting that, because plaintiff's appeal was decided on statutory grounds-instead of on constitutional grounds-any award of attorney fees is foreclosed by Bobo v. Kitzhaber, 194 Or.App. 419, 95 P.3d 731 (2004). Held: Courts have the inherent equitable power to award attorney fees when a plaintiff prevails on statutory grounds. Under the "substantial benefit" theory of equitable attorney fees, when a plaintiff acts in a representative capacity and confers a substantial benefit on others, attorney fees may be awarded. In this case, plaintiff acted in a representative capacity on behalf of the City of Damascus and its residents to ensure that a special election to disincorporate the city complied with statutes governing municipal disincorporation. The benefit conferred-both in regard to the direct litigation and potentially in regard to how the legislature makes referrals to voters-is substantial enough to warrant an award of attorney fees.

         [300 Or. App.532] POWERS, J.

         Plaintiff, a former resident and city councilor of the City of Damascus, brought statutory and constitutional challenges to a judgment that declared that the city validly disincorporated pursuant to Ballot Measure 93, which the voting residents of Damascus approved in a special election. We agreed with plaintiffs statutory arguments and reversed the trial court's judgment. See De Young v. Brown, 297 Or.App. 355, 443 P.3d 642 (2019) (concluding that the passage of Ballot Measure 93 did not comply with ORS 221.610 and ORS 221.621, which provide the only means for a city to disincorporate, and that the legislature did not effectively exempt Ballot Measure 93 from the requirements of those statutes or otherwise provide an alternative means of disincorporation). Plaintiff now seeks an award of attorney fees in the amount of $41, 086.05, relying on this court's inherent equitable authority as described in Gilbert v. Hoisting & Port. Engrs., 237 Or. 130, 384 P.2d 136 (1963), cert den, 376 U.S. 963 (1964), Deras v. Myers, 272 Or. 47, 535 P.2d 541 (1975), and Armatta v. Kitzhaber, 327 Or. 250, 959 P.2d 49 (1998). Defendants object to an award of attorney fees, asserting that, because plaintiffs appeal was decided on statutory grounds-instead of on constitutional grounds-any award of attorney fees is foreclosed by Bobo v. Kitzhaber, 194 Or.App. 419, 95 P.3d 731 (2004), rev den, 338 Or. 374 (2005). Thus, as framed by the parties, the issue is whether a plaintiff must prevail on a constitutional issue in order for us to exercise our inherent equitable power to award attorney fees. For the reasons that follow, we conclude that courts have the inherent equitable power to award attorney fees when a plaintiff prevails on statutory grounds. Applying that holding in this case, we allow plaintiffs petition for attorney fees in the amount of $15, 335.55 and costs in the amount of $818, and remand the case for a determination of attorney fees and costs before the circuit court.

         Before turning to the specific arguments that the parties raise on appeal, we begin with a brief overview of a court's equitable authority to award attorney fees. Generally speaking, a court awards attorney fees only if such an award is authorized by statute or contract. Swett v. Bradbury, 335 Or. 378, 381, 67 P.3d 391 (2003) (so stating). Courts also have [300 Or. App.533] the inherent equitable power to award attorney fees. Id.; Gilbert, 237 Or at 137; Deras, 272 Or at 65-66.

         The inherent equitable power to award attorney fees was first recognized in Oregon in Gilbert. In that case, the plaintiffs, as representatives of all of the members of a local union, brought suit in equity for the appointment of a receiver, an accounting, and other relief. The trial court awarded the plaintiffs their attorney fees, and the defendants appealed, arguing that there is no authorization in the statutes for an award of attorney fees under the circumstances of the case. The Supreme Court affirmed the award of attorney fees, stating:

"The authority of a court of equity to award attorneys' fees is not derived solely from the statutes. Equity may under some circumstances as a part of its inherent equitable powers award attorneys' fees. This power is frequently exercised where the plaintiff brings a representative suit on behalf of other members of an organization ***."

Gilbert, 237 Or at 137. The court explained that no pecuniary benefit to the organization is necessary, and that the preservation of the democratic process in the functioning of unions is a matter of primary concern, not only to union members but to the public as well. Id. at 138. The court cautioned, however, that attorney fees would not be awarded in all equity cases; rather, recovery would be limited to cases "where there is a representative or derivative suit brought for the benefit of the entire organization or where there are other circumstances in which equitable relief would in effect be denied or severely inhibited unless the plaintiff who prevails in the suit is awarded attorneys' fees." Id. at 142.

         Following Gilbert, the court awarded equitable attorney fees to the plaintiff in Deras, who successfully sought a declaratory judgment that statutes that limit amounts spent on political campaigns are unconstitutional. Deras, 272 Or at 49. The court stated that the protection of individual liberties guaranteed against governmental infringement is an even greater public interest than the public's interest in the preservation of the democratic functioning of unions that was present in Gilbert. Id. at 66. Therefore, the court concluded that the plaintiff in Deras, at least as much as the [300 Or. App.534] plaintiff in Gilbert, should not be required to bear the cost of litigation that benefits all members of the public equally. Id.

         In Armatta, a case involving a challenge to the constitutionality of Ballot Measure 40, a crime victims' rights initiative, the Supreme Court awarded attorney fees to the plaintiffs. In discussing the principles of the equitable attorney fee doctrine, the court noted three prerequisites for an award: (1) the proceeding must be one in equity; (2) the party requesting attorney fees must be the prevailing party; and (3) "in filing the action, the party requesting attorney fees must have been seeking to 'vindicat[e] an important constitutional right applying to all citizens without any gain peculiar to himself,' Dennehy v. City of Gresham, 314 Or [600, ] 602[, 841 P.2d 633 (1992)], as opposed to vindicating 'individualized and different interests,' Vannatta [v. Keisling], 324 Or [514, ] 549[, 931 P.2d 770 (1997)], or 'any ...


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