A & E Security & Electronic Solutions, Inc. v. Fortalesa, Incorporation

290 P.3d 861, 253 Or. App. 448, 2012 Ore. App. LEXIS 1386
CourtCourt of Appeals of Oregon
DecidedNovember 7, 2012
DocketCV080042; A146047
StatusPublished
Cited by1 cases

This text of 290 P.3d 861 (A & E Security & Electronic Solutions, Inc. v. Fortalesa, Incorporation) is published on Counsel Stack Legal Research, covering Court of Appeals of Oregon primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
A & E Security & Electronic Solutions, Inc. v. Fortalesa, Incorporation, 290 P.3d 861, 253 Or. App. 448, 2012 Ore. App. LEXIS 1386 (Or. Ct. App. 2012).

Opinion

HADLOCK, J.

This case requires us to determine whether ORS 20.083 authorizes a court to award attorney fees to a party that successfully sues for rescission of a contract. That statute provides that, in a contract action in which a statute or the contract authorizes an attorney-fee award, the prevailing party is entitled to an award of attorney fees “even though the party prevails by reason of a claim or defense asserting that the contract is in whole or part void or unenforceable ***.” The trial court concluded that defendant, which prevailed on a counterclaim for rescission, was entitled to an award of attorney fees under the statute. We agree and therefore affirm.

The pertinent facts are not in dispute. Plaintiff entered into a contract with defendant to install a security system at defendant’s store. The contract includes a provision authorizing an award of attorney fees in actions arising out of the contract. Plaintiff later brought this action for breach of contract and quantum meruit, alleging that it had completed its obligations under the contract and that defendant had failed to pay for the work. In its answer, defendant asserted counterclaims for breach of contract, breach of warranty, and rescission, alleging that the security system was defective and did not meet plaintiff’s representations. Both parties requested attorney fees pursuant to the contract.

The case was referred to court-annexed arbitration. Following a hearing, the arbitrator “grant [ed] rescission of the contract.” After the arbitrator’s decision was filed with the court, defendant sought an award of attorney fees. Plaintiff objected, arguing that, because the contract had been rescinded, there was no contractual basis for awarding fees. The trial court concluded that attorney fees were authorized under ORS 20.083, and it entered a judgment awarding defendant $9,273 in fees. This appeal followed.

In its sole assignment of error, plaintiff again contends that attorney fees cannot be awarded based on ORS 20.083 when the underlying contract was rescinded. According to plaintiff, the statute “only prescribes an award of attorney fees in the instance of void or unenforceable contracts,” not rescinded contracts. Plaintiff asserts that [450]*450ORS 20.083 expressly conditions entitlement to attorney fees on those fees being authorized by the terms of the contract. In plaintiffs view, the effect of rescission is that there is no underlying contract. More specifically, plaintiff argues that, when a contract is rescinded, the parties are returned “to a place in time as if the contract never existed.” Therefore, plaintiff contends, when a contract is rescinded, there are no “terms of the contract” on which to base an attorney-fee award.

Defendant responds that ORS 20.083 was enacted specifically to overrule prior cases holding that attorney fees could not be awarded based on a provision in a contract that had been rescinded. Defendant argues that the statute restored “universal reciprocity” to contractual attorney-fee provisions. Defendant describes “universal reciprocity” as follows: “[I]f a party advances a claim based in contract and alleges entitlement to an award of attorney fees under that contract, the court will award attorney fees to a successful defendant regardless of the status of the contract * * *.”

The parties’ arguments raise a question of statutory interpretation. To determine the meaning of ORS 20.083, we look to the statute’s text in context and to any pertinent legislative history. State v. Gaines, 346 Or 160,172, 206 P3d 1042 (2009). We begin with the text, which provides:

“A prevailing party in a civil action relating to an express or implied contract is entitled to an award of attorney fees that is authorized by the terms of the contract or by statute, even though the party prevails by reason of a claim or defense asserting that the contract is in whole or part void, a claim or defense asserting that the contract is unenforceable or a claim or defense asserting that the prevailing party was not a party to the contract.”

ORS 20.083.

As we explained in King v. Neverstill Enterprises, LLC, 240 Or App 727, 734-35, 248 P3d 30 (2011), the statute consists of two clauses — one operative and one explanatory. The first, operative clause “conveys a broad entitlement to attorney fees under a contract when ORS 20.083 is applicable * * Id. at 734. The explanatory clause, on the other hand, “seeks to prevent courts from mistakenly undermining the broad principle expressed in the operative clause — similar [451]*451to what courts had previously done with respect to ORS 20.096 — by limiting the circumstances in which ORS 20.083 operates.” Id. at 735. So understood, the second clause does not limit the circumstances in which the first clause applies, but identifies examples of circumstances in which it applies. That is, the operative clause applies “even” in those circumstances, not “only” in them, as plaintiff argues.

Given that understanding of ORS 20.083, our task is not to determine whether a rescinded contract falls within the meaning of a contract that is “void” or “unenforceable” as those terms are used in the explanatory clause of ORS 20.083. Rather, we must determine whether the legislature intended the statute’s operative clause to prescribe “an award of attorney fees that is authorized by the terms of [a] contract” even if the contract has been rescinded as a result of the civil action.

The statutory context supports the view that the legislature did intend to authorize contractually prescribed attorney fees to a party who prevails by obtaining rescission of the contract. Statutory context includes related statutes and cases construing them. Nelson v. Keisling, 155 Or App 388, 393, 964 P2d 284 (1998), rev den, 328 Or 246 (1999). ORS 20.083 was enacted in response to cases construing ORS 20.096, which itself was enacted in 1971 to provide reciprocal rights to attorney fees in actions on contracts containing one-sided attorney-fee provisions. King, 240 Or App at 731. In Golden West Insulation v. Stardust Investment Co.,

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Bluebook (online)
290 P.3d 861, 253 Or. App. 448, 2012 Ore. App. LEXIS 1386, Counsel Stack Legal Research, https://law.counselstack.com/opinion/a-e-security-electronic-solutions-inc-v-fortalesa-incorporation-orctapp-2012.