Anderson v. Jensen Racing, Inc.

931 P.2d 763, 324 Or. 570, 1997 Ore. LEXIS 7

• Court: Oregon Supreme Court
• Decided: February 13, 1997
• Docket: CC 9203-01970; CA A81853; SC S42954
• Status: Published

Opinions

GRABER, J.

Plaintiffs, along with defendant Donna Jensen, are owners of the Portland Meadows Race Track (Portland Meadows). Donna Jensen is the principal in Jensen Racing, Inc. (JRI). JRI operated Portland Meadows from 1984 to 1989 under a 1984 “Fourth Amendment and Restatement of Operating Agreement” (the agreement). In 1991, after an intervening operator’s bankruptcy, JRI assigned its interest in the agreement to defendant New Portland Meadows, Inc. (NPM). After various disputes arose, plaintiffs (the track’s owners) brought the present action against Jensen, JRI, and NPM (the track’s operators), seeking damages for breach of contract, an accounting, and declaratory relief.

As it reaches us, this case presents two issues: (1) Do the payment provisions of paragraph 5 or the payment provisions of paragraph 14 of the agreement apply to parimutuel wagering conducted at Portland Meadows on races conducted live in other locations but “simulcast” to Portland Meadows? (2) Are plaintiffs “the prevailing party” within the meaning of paragraph 17 of the agreement, so that they are entitled to receive attorney fees?¹ We answer those questions as follows: (1) The payment provisions of paragraph 5 apply to parimutuel wagering on the simulcast races. (2) Plaintiffs are “the prevailing party” within the meaning of paragraph 17. We therefore reverse the contrary decision of the Court of Appeals as to those issues. Anderson v. Jensen Racing, Inc., 138 Or App 212, 908 P2d 339 (1995).²

Throughout this litigation, plaintiffs have asserted that paragraph 5 of the agreement applies to parimutuel wagering on simulcast races at Portland Meadows. Paragraph 5 provides:

“Use Fee. Operator shall pay to Owners, or their designated agent, each week of the regular racing season for the race meet conducted during that year, a fee for the use of the Race Track Facilities equal to one percent (1%) of the gross parimutuel wagering at the race track. This fee shall be paid weekly on a day to be selected by the parties.”

Plaintiffs contend that the simulcast races are part of “the race meet conducted during” each year of the agreement.

Defendants, on the other hand, have asserted that paragraph 14 applies. It states:

“Use of Race Track Facilities for Special Purposes. Operator shall have the right to use the Race Track Facilities for special purposes other than conducting horse or animal racing (‘Special Purpose’). In such Special Purpose situations, however, the revenues, fees, or income (‘Special Income’), if any, received by Operator from such activities or events shall be subject to payment of a Special Purpose fee by Operator to Owners, which shall be determined as follows:

“14.1. Horse Related Activities by Anyone. Operator shall pay to Owners a Special Purpose fee equal to one percent (1%) of the gross Special Income, but not including revenues from concessions, received by Operator for any Special Purpose use of the Race Track Facilities by anyone, including Operator, for all Special Purpose uses that are in anyway “horse related’ (e.g., horse shows, horse sales, etc.).

“14.2. Non-Horse-Related Activities by Anyone. Operator shall pay to Owners a Special Purpose fee equal to five percent (5%) of all the gross Special Income up to $800,000 and three percent (3%) of all the gross Special Income above $800,000, including revenues from concessions, received by Operator for any Special Purpose activities, other than horse-related activities as provided in paragraph 14.1, that are conducted by Operator or any other person on the Race Track Facilities.

“14.3. Payment of Special Purpose Fees. All Special Purpose Fees shall be paid with [sic] thirty (30) days following the receipt by Operator of the Special Income from the Special Purpose event.” (Emphasis in text added.)

Defendants assert that, when JRI offered simulcast races, it was not itself “conducting horse or animal racing” and that paragraph 14, when read with paragraph 5, shows that the coverage of paragraph 5 is limited to “conducting horse or animal racing.”

Although they disagree about whether paragraph 5 or paragraph 14 applies to the money generated by simulcast races, the parties agree on four points that bear on the analysis. First, they agree that the simulcast races are a use of the “Race Track Facilities” within the meaning of the agreement. Second, they agree that the money generated from simulcast racing is generated as gross parimutuel wagering, rather than in some other form. Third, they agree that the simulcast races occur only during the annual season when the operator of Portland Meadows is licensed to conduct a “race meet.” Fourth, they agree that the contracting parties did not expressly contemplate simulcast racing when they executed the agreement in 1984, and they introduced no extrinsic evidence regarding the contracting parties’ actual intention.

“As a general rule the construction of a contract is a question of law for the court.” Hekker v. Sabre Construction Co., 265 Or 552, 555, 510 P2d 347 (1973).

“Unambiguous contracts must be enforced according to their terms; whether the terms of a contract are ambiguous is, in the first instance, a question of law.” Pacific First Bank v. New Morgan Park Corp., 319 Or 342, 347, 876 P2d 761 (1994) (citation omitted).

Additionally, in deciding whether the terms of a contract are ambiguous and in deciding what those terms mean, the court must consider the context in which they appear. Id. at 348, 353-54. See also Miller v. Miller, 276 Or 639, 645-48, 555 P2d 1246 (1976) (entire agreement, including recitals, should be considered as a whole); Strandholm v. Barbey, 145 Or 427, 441, 26 P2d 46 (1933) (“The courts construe the whole mass of words and not merely some of them.”). The court’s goal is to give effect to the intention of the contracting parties. Investment Service Co. v. Smither, 276 Or 837, 843, 556 P2d 955 (1976). See also ORS 42.240 (in the construction of a written instrument the intention of the parties is to be pursued if possible).

Applying the foregoing principles, we conclude that paragraph 5 of the 1984 agreement applies to parimutuel wagering on simulcast races at Portland Meadows. Paragraph 5 contains five clauses: “[1] Operator shall pay to Owners, or their designated agent, [2] each week of the regular racing season for the race meet conducted during that year, [3] a fee for the use of the Race Track Facilities [4] equal to one percent (1%) of the gross parimutuel wagering at the race track. [5] This fee shall be paid weekly on a day to be selected by the parties.” We shall consider the applicability of each of those clauses in turn.

Clause 1 describes the parties to the payment obligation. There is no dispute that it applies here.

Clause 2 is a self-contained temporal term, describing the overall period of time during which payments must be made. That is, payments must occur “each week of the regular racing season for the race meet conducted during that year.” It is only in that temporal context that the term “race meet” appears in paragraph 5. Clause 2, including its use of the term “race meet,” does not define the substantive nature of the payments or of the activities that generate the payment obligation, but only the period during which payments are due.

Other portions of the agreement that use the term “race meet” make clear that Clause 2 of paragraph 5 refers to the annual racing season during which the operator is licensed. Paragraph 11 provides:

“Possession. Operator shall have the immediate right to possession of the Race Track Facilities and all personal property located thereon; provided, however, that if Operator shall fail to obtain a race meet license for the 1984 race season, such property shall immediately be returned to Owners.”

Paragraph 12 provides:

“Oregon Racing Commission Approval. This Agreement is contingent upon approval by the Oregon Racing Commission of Operator as a race meet licensee, and upon Operator receiving a race meet license suitable for conducting ahorse race meet at the Race Track Facilities for the 1984 racing season, and for each subsequent race season thereafter. In the event Operator is unable to obtain a race meet license for the 1984 season, this Agreement shall have no other force and effect. In the event Operator is unable to obtain a race meet license for any racing season subsequent to the 1984 season, this Agreement may be terminated as provided in Section 18. Operator agrees to substantially comply with the terms and conditions of all race meet licenses issued by the Commission (including the conduct of racing on dates specified).”

Those paragraphs require the operator of Portland Meadows to receive “a race meet license” from the Oregon Racing Commission for each annual racing season. As noted, the parties agree that the simulcast races occur only during the annual season when the operator of Portland Meadows is licensed to conduct a “race meet.” Accordingly, the condition of clause 2 of paragraph 5 is met.

Clause 3 of paragraph 5 explains substantively what the payment is for: it is a fee for the use of the “Race Track Facilities.” Betting on simulcast races by bettors located at Portland Meadows is, by its terms, a use of the Race Track Facilities as defined in paragraph 1 of the agreement. Indeed, the parties agree that presenting simulcast races at Portland Meadows is a use of the Race Track Facilities. Clause 3 applies to simulcast racing.

The next clause of paragraph 5, clause 4, states the amount to be paid: one percent of “gross parimutuel wagering at the race track.” By contrast, paragraph 14 of the agreement establishes a different means of payment when the operator receives “revenues, fees, or income” from an activity or event. There is no mention in paragraph 14 of parimutuel wagering. As noted, the parties agree that simulcast racing generates gross parimutuel wagering at the race track but does not generate other forms of revenues, fees, or income. We also note that clause 4 requires that the gross parimutuel wagering be “at the race track,” but does not similarly require that the race be held at Portland Meadows. Because all the conditions therein are met, clause 4 of paragraph 5 applies.

The final sentence of paragraph 5 of the agreement is clause 5. It states a detailed mechanism for the timing of each payment: weekly on a day of the parties’ choosing. Clause 5 is consistent with the application of paragraph 5 to simulcast racing.

In conclusion, every part of paragraph 5 of the agreement applies to simulcast racing. Therefore, paragraph 5 controls payment under the agreement for parimutuel wagering generated by simulcast races at Portland Meadows.

We turn next to the question of attorney fees. Paragraph 17 of the agreement provides:

“Attorney Fees. If suit or action is instituted in connection with any controversy arising out of this Agreement, the prevailing party shall be entitled to recover in addition to costs such sum as the court may adjudge reasonable as attorney fees, including any fees and costs on appeal.” (Emphasis in text added.)

Plaintiffs sought various forms of relief in this action, including contract damages, an accounting, and declaratory relief. All claims arose in connection with controversies arising out of the agreement; none was founded on an independent controversy (such as a tort or statutory claim). Plaintiffs failed to prevail on most of their claims although, as the Court of Appeals noted, “there is no question that, ultimately, the monetary relief in the case can only run from defendants to plaintiffs and, in some measure, to Jensen.” Anderson, 138 Or App at 219 (emphasis in original).

Nonetheless, the Court of Appeals concluded that it was not error for the trial court to deny fees to plaintiffs altogether because, “[a]s of now, they have lost more than they have won.” Id. at 221. That conclusion misreads the term “prevailing party” in the parties’ agreement.

By using the definite article “the,” the agreement establishes that every “suit or action * * * instituted” will result in having one, but only one, prevailing party, who “shall be entitled to recover” attorney fees “in addition to costs.” The agreement does not define the term “prevailing party.” The term “prevailing party” is not a term of common usage, but it has a well-recognized legal meaning in the context of whether to award costs and attorney fees in an action on a contract. ORS 20.096 and 20.097 provide for an award of costs and attorney fees to “the prevailing party’ in an action on a contract, in certain circumstances. ORS 20.096(5) defines “prevailing party’ for the purpose of ORS 20.096 and 20.097 as “the party in whose favor final judgment or decree is rendered” in the trial court.

This court has stated that, in the absence of evidence that the parties had a different intention, the court will ascribe to the term “prevailing party’ (or a similar one) in a contract “the statutory meaning of‘prevailing party,’ which is defined in ORS 20.096(5) as ‘the party in whose favor final judgment or decree is rendered.’ ” Carlson v. Blumenstein, 293 Or 494, 499-500, 651 P2d 710 (1982) (footnote omitted). In that case, the court made clear that the statutory meaning applies even when the reciprocal provisions of a contract make ORS 20.096 theoretically unnecessary: “We therefore hold that absent any express language in a contract to the contrary, or absent other evidence, the meaning of‘prevailing party (or similar terms) in contracts such as the contract at bar, be given the meaning contained in ORS 20.096(5).’’Id. at 500 n 3. The plaintiffs and the defendants each sought damages for breach of contract in Carlson, and both succeeded on their respective claims. Id. at 496-98. This court held nonetheless that the plaintiffs were “the prevailing party,” entitled to obtain fees under the contract, because the contract damages awarded to them exceeded the contract damages awarded to the defendants, so that final judgment for the net amount was entered in the plaintiffs’ favor. Id. at 501.

As noted, the 1984 agreement contains no wording that would suggest a meaning for the term “prevailing party” that differs from the statutory meaning contained in ORS 20.096(5). There is no evidence in this record that the parties intended to give any other meaning to that term. Accordingly, we construe the term “prevailing part/’ in the agreement to mean the party in whose favor final judgment is rendered.³

As the Court of Appeals observed, final judgment in this case will be rendered in favor of plaintiffs for some amount. Plaintiffs are, therefore, “the prevailing party” within the meaning of paragraph 17 of the agreement. Under paragraph 17, the prevailing party “shall be entitled to recover” attorney fees in a “reasonable” amount.

The decision of the Court of Appeals is reversed as to the issues of contract interpretation involving “simulcast” races and attorney fees, but is otherwise affirmed. The judgment of the circuit court is reversed as to the issue of attorney fees, and the case is remanded to that court for further proceedings as to attorney fees. The judgment of the circuit court is otherwise affirmed.

1 The trial court and the Court of Appeals considered several other issues as well. Neither party has petitioned this court for review of any of those other issues, however. Thus, we do not consider or disturb the Court of Appeals’ holdings as to them. The Court of Appeals’ holdings as to the other issues are reflected in the dis-positional paragraph at the end of this opinion.

2 The trial court held that paragraph 5 of the agreement applied to wagering on simulcast races. The Court of Appeals reversed and held that paragraph 14 applied. 138 Or App at 219.

On the issue of attorney fees, the trial court concluded that neither party had prevailed. Therefore, it did not award attorney fees to either party. The Court of Appeals held that the attorney fees issue was “not ripe,” 138 Or App at 217, but made rulings with respect to that issue, id. at 221, which will be discussed below in the text.

3 Our opinion in this case is confined to circumstances in which the parties are advancing competing claims under a particular contract. We are not called on in this case to decide who may be entitled to attorney fees when, for example, one party prevails (in the sense used in this opinion) on a contract claim under a contract providing for an award of fees to the prevailing party and the other party prevails on a competing claim of another kind that also carries an entitlement to fees for the prevailing party (e.g., a statutory claim).