Portland General Electric Co. v. Ebasco Services, Inc.

326 P.3d 1274, 263 Or. App. 53
CourtCourt of Appeals of Oregon
DecidedMay 21, 2014
DocketCV05120776; A143752
StatusPublished
Cited by5 cases

This text of 326 P.3d 1274 (Portland General Electric Co. v. Ebasco Services, Inc.) 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
Portland General Electric Co. v. Ebasco Services, Inc., 326 P.3d 1274, 263 Or. App. 53 (Or. Ct. App. 2014).

Opinion

HADLOCK, J.

The Supreme Court remanded this case to us to determine whether the default judgment entered by the trial court is void because plaintiff had filed an amended complaint seeking additional relief — attorney fees — without serving defendant Lexington Insurance Company with the amended complaint or, alternatively, whether the trial court erred in denying defendant’s motion to set aside the default judgment on the ground of excusable neglect. PGE v. Ebasco Services, Inc., 353 Or 849, 865-66, 306 P3d 628 (2013) (PGE II). We conclude that the trial court had jurisdiction to enter judgment on the original complaint and did not err in denying defendant’s motion to set aside the judgment. Accordingly, we affirm.

The material facts are not in dispute. Plaintiff settled a personal-injury action brought by a former employee who alleged that he was injured by exposure to asbestos at one of plaintiffs power plants. Plaintiff then sued “Certain Underwriters at Lloyd’s London” and “Certain London Market Insurance Companies,” which had issued plaintiff insurance policies covering the period during which the asbestos exposure occurred. Plaintiff alleged that the insurers had breached the policies by refusing to indemnify it for the settlement. One of the policies was an excess liability policy providing coverage up to $5 million. Defendant had subscribed to a 16 percent share of the policy, giving it a maximum exposure of $800,000.

Plaintiffs complaint did not specify the amount of money for which plaintiff had settled the asbestos litigation, the monetary loss that resulted from defendant’s alleged failure to indemnify plaintiff, or the amount of damages that plaintiff sought to recover. Nor did the complaint allege that plaintiff was entitled to recover its attorney fees.

The policy identified Mendes & Mount, a New York law firm, as an authorized agent for service of process for the subscribing insurers. In 2006, plaintiff served the complaint that initiated this action on that firm. Following its normal procedure, Mendes & Mount contacted Certain Underwriters at Lloyd’s London to determine to whom the summons and complaint should be referred for defense. A Certain [56]*56Underwriters representative instructed Mendes & Mount to forward the documents to Lane Powell PC, an Oregon law firm, which Mendes & Mount did. In 2007, plaintiff filed an amended complaint that, among other changes, added an allegation that plaintiff was entitled to recover its attorney fees in the action.1 Plaintiff served the amended complaint directly on Lane Powell. In turn, Lane Powell filed an answer on behalf of the other subscribing insurers, but because it did not represent defendant and had not been instructed to file an answer on defendant’s behalf, it did not do so. Nor did it alert defendant that the action had been commenced.

In 2009, plaintiff moved for an order of default and for a limited default judgment against defendant. The trial court granted the motion. In the order of default, the court referred to the original complaint, noting that defendant “was duly and regularly served with the summons and complaint” in 2006. The order makes no reference to the amended complaint. The court entered a limited default judgment awarding plaintiff $800,000 in monetary damages and $26,165.50 in attorney fees. Defendant learned of the default order and judgment shortly thereafter. Nearly six months later, defendant moved to set aside the default order and judgment on grounds of surprise, inadvertence, or excusable neglect.2

In support of its motion, defendant submitted affidavits from attorneys with Mendes & Mount and Lane Powell, among others. Defendant did not submit an affidavit from any of its own employees or from any employee of Certain Underwriters.

The trial court denied the motion, stating in its order, “I find no facts to support a conclusion of excusable neglect in the handling of this matter by [defendant], Mendes & Mount, Lane Powell, or Certain Underwriters at Lloyd’s, London.”

[57]*57Defendant appealed, raising three assignments of error. It renewed its contention based on excusable neglect but also raised two new arguments. First, defendant argued that the court lacked jurisdiction to enter a default judgment that exceeded the amount prayed for in the complaint. Defendant asserted that the complaint had not specified the amount that plaintiff sought from defendant and, therefore, that the court had lacked jurisdiction to award any damages. Second, defendant contended that the trial court had erred “because the complaint on which the default was entered was superseded by an unserved amended complaint claiming additional relief.”

In our first opinion in this case, we agreed with defendant that, because the complaint had not specified the amount of damages that plaintiff sought, the trial court lacked jurisdiction to award any damages and the judgment was, therefore, void. PGE v. Ebasco Services, Inc., 248 Or App 91, 100, 273 P3d 165 (2012) (PGE I), rev’d, 353 Or 849, 306 P3d 628 (2013). Plaintiff sought review, and the Supreme Court reversed our decision. PGE II, 353 Or at 866. The court agreed that the complaint was defective and, consequently, that the judgment violated ORCP 67 C, but it held that the defect in the complaint was apparent on the face of the pleading, that defendant had had ample opportunity to challenge the defect, and, consequently, that the violation of ORCP 67 C was not “jurisdictional” in the sense that entry of the judgment deprived defendant of due process, rendering the judgment void. Id. at 864-65. The court remanded the case to us to address defendant’s remaining assignments of error.3 Id. at 865.

[58]*58We begin with defendant’s contention that the trial court erred in denying defendant’s motion to set aside the judgment for excusable neglect. ORCP 71 B(l) provides, in pertinent part:

“On motion and upon such terms as are just, the court may relieve a party * * * from a judgment for the following reasons: (a) mistake, inadvertence, surprise, or excusable neglect[.] *** The motion shall be made within a reasonable time, and for reasons (a), (b), and (c) not more than one year after receipt of notice by the moving party of the judgment.”

The party seeking relief must establish that the default was entered through mistake, inadvertence, surprise, or excusable neglect. Johnson v. Sunriver Resort Limited Partnership, 252 Or App 299, 308, 287 P3d 1153 (2012), rev den, 353 Or 280 (2013). Whether certain conduct or inaction constitutes excusable neglect is a question of law that we review for legal error, but we review the trial court’s ultimate decision whether to grant relief for abuse of discretion. Id. at 306. However, the trial court’s discretion “is controlled by fixed legal principles and must not be exercised arbitrarily, but, rather, it should be exercised to conform with the spirit of [ORCP 71] and not to defeat the ends of substantial justice.” Coleman v. Meyer, 261 Or 129, 134, 493 P2d 48 (1972).

This case is not on point with any other Oregon appellate case of which we are aware. However, prior cases establish several principles that guide our analysis here. First, to state the obvious, a party seeking relief from a default judgment on excusable-neglect grounds must offer some explanation for the party’s failure to appear. See Lowe v.

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Cite This Page — Counsel Stack

Bluebook (online)
326 P.3d 1274, 263 Or. App. 53, Counsel Stack Legal Research, https://law.counselstack.com/opinion/portland-general-electric-co-v-ebasco-services-inc-orctapp-2014.