FILED: January 26, 2000
VALLEY CREDIT SERVICE, INC.,
an Oregon corporation,
Respondent,
v.
WILLIAM KELLEY,
Appellant,
and
EMELIE KELLEY,
Defendant.
Appeal from Circuit Court, Marion County.
Connie M. Haas, Judge pro tempore.
Argued and submitted December 21, 1998.
James D. Vick argued the cause and filed the brief for appellant.
Marcie R. McMinimee argued the cause for respondent. With her on the brief was Douglas, Conroyd & McMinimee, P.C.
Before Landau, Presiding Judge, and Wollheim and Brewer,* Judges.
LANDAU, P. J.
Reversed and remanded for entry of order allowing claim of exemption in the amount of $7,821.38.
*Brewer, J., vice Warren, P. J., retired.
LANDAU, P. J.
Defendant(1) appeals an order denying a post-judgment claim of exemption
from execution on a default judgment. He contends that the trial court erred in
permitting plaintiff to satisfy the judgment with funds that defendant had received in
settlement of a personal injury claim, because such funds are subject to a statutory
exemption. We agree and reverse and remand for entry of an order allowing the claim of
exemption.
Plaintiff initiated this action in 1987 for collection of a debt that defendant
and his wife had incurred for medical services. A default judgment was entered for the
sum of $10,048.55 plus interest.
In 1994, defendant was injured in an automobile accident when the vehicle
in which he was a passenger was struck by a vehicle driven by Debra Hamlin. Following
the accident, defendant incurred substantial medical expenses, which he did not pay.
Some of those medical services were financed by state public assistance. Defendant
initiated an action against Hamlin and incurred legal expenses in the process, which he
also did not pay.
In 1997, defendant obtained a judgment against Hamlin for $34,251.10.
The judgment was to be paid by Hamlin's insurance carrier, State Farm Insurance. By
the time of the entry of the judgment, three statutory liens had been filed, one by
defendant's lawyer, one by a private hospital that had provided medical services in
connection with the 1994 accident, and one by the state Department of Human Services,
which also had provided cash assistance in connection with treatment for the accident.
The three liens totaled $26,429.62. Meanwhile, still holding an unpaid default judgment
for $10,048.55, on April 24, 1997, plaintiff served a writ of garnishment on State Farm,
seeking payment of that judgment. State Farm first paid the three statutory liens, which
left a balance of $7,821.38. State Farm paid the balance to plaintiff.
On August 27, 1997, defendant filed a claim of exemption under ORS
23.160(1)(j)(B), which exempts from execution
"(j) The debtor's right to receive, or property that is traceable to:
"* * * * *
"(B) A payment or payments, not to exceed a total of $10,000, on
account of personal bodily injury of the debtor * * *[.]"
Plaintiff argued, and the court held, that defendant was not entitled to the $10,000
exemption, because he already had received the benefit of the exemption by the use of
the personal injury judgment to pay the statutory liens.
On appeal, defendant argues that the trial court erred in failing to give him
the benefit of the exemption provided in ORS 23.160(1)(j)(B). Plaintiff offers two
arguments in support of the trial court's decision. First, plaintiff argues that even if ORS
23.160(1)(j)(B) otherwise applied, it does not aid defendant in this case: (1) because
defendant filed his claim of exemption more than 30 days after the delivery of the writ of
garnishment; and (2) because he received the benefit of the exemption by the prior
payment of the statutory liens.
We review the trial court's decision for errors of law. Forsythe v.
Homestead Development Corp., 142 Or App 45, 50, 919 P2d 537 (1996). We begin with
the preliminary issue of the timeliness of defendant's claim. ORS 29.142 sets out the
procedure for filing a claim of exemption and provides that such a claim must be filed
"[w]ithin 30 days after the writ of garnishment is delivered to the defendant * * *."
Plaintiff argues that defendant's claim clearly was untimely, having been filed over four
months after the delivery of the writ of garnishment. Defendant replies that plaintiff
failed to raise that argument below and is precluded from raising it for the first time on
appeal. We agree with defendant.
Although a trial court sometimes may be affirmed on alternative grounds
not raised below, such "right for the wrong reasons" arguments are cognizable on appeal
only so long as there is evidence in the record to support them. Kinross Copper Corp. v.
State of Oregon, 160 Or App 513, 520, 981 P2d 833, on recons 163 Or App 357, 988
P2d 400 (1999). In this case, there is no such evidence. The 30-day deadline for filing a
claim of exemption under ORS 29.142 is triggered by the date that plaintiff "delivered to
the defendant" a copy of the writ of garnishment. In this case, there is nothing in the
record establishing when plaintiff delivered a copy of the writ to defendant. We
therefore reject plaintiff's argument that the trial court's order may be affirmed on the
ground that defendant's claim of exemption was not timely filed.
As for the merits of the applicability of the exemption, ORS
23.160(1)(j)(B) exempts from execution "a debtor's right to receive" payments for bodily
injury. The trial court held that, because defendant had a right to receive the entire
$34,251.10 personal injury judgment, he had already received the benefit of the
exemption by the application of $26,429.62 of the judgment to pay the three outstanding
statutory liens. The question is whether defendant indeed had a right to receive the entire
$34,251.10 personal injury judgment.
In this case, the three statutory liens were not liens on defendant's property
generally. Instead, because each arose out of expenses attributable to the 1994 accident,
they attached only to the personal injury judgment that resulted. See ORS 87.445
(attorney's lien attaches to "actions, suits and proceedings after the commencement
thereof, and judgments, decrees, orders and awards entered therein"); ORS 87.555(1)
(hospital lien attaches to damages awarded for injury for which debtor was treated); ORS
416.540(1) (state personal injury lien attaches to damages awarded for injury for which
debtor received state assistance). Those liens had to be paid before the judgment
proceeds could be disbursed to defendant. See ORS 87.475(2) (no party can satisfy a
judgment until the attorney's fee lien has been satisfied); ORS 87.580 (any insurer with
notice of the lien who makes payment to the injured person before satisfying the hospital
lien is liable to the hospital for the amount of the lien); ORS 416.580(1) (any person who
makes payment to the injured recipient before satisfying the personal injury lien to the
state is liable to the state for the amount of the lien).
Defendant, in other words, did not have the right to receive the entire
$34,251.10 judgment. He had the right to receive only the amount that remained after
satisfaction of the three statutory liens. As a result, the exemption provided in ORS
23.160(1)(j)(B) applied to the $7,821.38 balance remaining after the payment of the
statutory liens, and the trial court erred in reaching a contrary conclusion.
Reversed and remanded for entry of order allowing claim of exemption in
the amount of $7,821.38.
1. We refer to defendant William Kelley. Defendant Emelie Kelley is not a party to the appeal.
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