Barbara Parmenter Living Trust v. Lemon, 345 Or 334, 194 P3d 796 (2008)

Brief Summary
Despite case law suggesting a liberal standard for awarding attorney fees in Oregon landlord-tenant disputes, courts must apply the same eight-factor test that applies to any other cases in which attorney fees are authorized.

Complete Summary
In this landlord-tenant dispute both parties prevailed on multiple claims and then moved for attorney fees as prevailing parties. The first issue was whether both parties could be designated prevailing parties. The second issue was what standard to use for awarding attorney fees.

After the trial court denied both parties’ motions, the tenants appealed, arguing first that they were the sole prevailing party because they had been awarded more money than the landlord. The court of appeals held that this issue was not properly before it. The Oregon Supreme Court declined to address the issue because it presented an abstract question which did not bear on the tenants’ ability to collect attorney fees nor on the tenants’ liability to pay attorney fees — an issue that had already been resolved in favor of tenants.

Regarding the second issue, the Supreme Court had to reconcile seemingly different standards for awarding attorney fees. Under ORS 90.225, a court “may” award attorney fees in actions involving rental agreements. The Supreme Court had previously concluded that, under this statute, “normally a ‘prevailing party’ would be entitled to recover attorney fees, barring unusual circumstances[.]”  Executive Mgt. Corp. v. Juckett, 274 Or 515, 519, 547 P2d 603 (1976).

The tenants argued that this passage requires an award of attorney fees in landlord tenant disputes unless unusual circumstances exist. But the court held that use of the word “normally” implied that the “unusual circumstances” standard was not the only mechanism for denying attorney fees. The Supreme Court further noted that ORS 20.075(1), which was enacted after Juckett, calls for courts to consider eight factors before awarding attorney fees in any case.

The Supreme Court concluded the trial court had abused its discretion because it had denied attorney fees based on factors that were not listed in ORS 20.075(1). Although ORS 20.075(1)(h) allows the court to consider “other, nonenumerated factors,” the trial court considered factors that went against the purpose of ORS 90.255. For example, the trial court noted that tenants sought attorney fees that were much greater than the amounts tenants recovered on their claims. But consideration of this factor, the Supreme Court held, does not square with the purpose of ORS 90.255, which is to allow small but legitimate claims in landlord-tenant disputes. The Supreme Court further held that courts need not consider the reasoning in Juckett under ORS 20.075(1)(h) or otherwise. The court reversed and remanded so the trial court could apply the ORS 20.075(1) factors.

Significance of Opinion
This case demonstrates that the path to statutory attorney fees can still be filled with obstacles.

This alert has been prepared by Hinshaw & Culbertson LLP to provide information on recent legal developments of interest to our readers. It is not intended to provide legal advice for a specific situation or to create an attorney-client relationship.

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