FILED: September 15, 1999
PAMELA REGAN DUNKIN,
Respondent,
v.
JOHN OLIVER DUNKIN,
___________________________
In the Matter of the Marriage of,
and
PAMELA REGAN DUNKIN,
Appeal from Circuit Court, Jackson County.
Mitchell Karaman, Judge.
Argued and submitted July 28, 1998.
Susan E. Watts argued the cause for appellant. With her on the opening brief
were Peter Bunch and Kennedy, King & Zimmer LLP. With her on the
reply brief were Kennedy, Watts, Arellano & Ricks LLP, Peter Bunch, and
Zimmer & Associates LLC.
James Westwood argued the cause for respondent. With him on the brief were M.
Christie Helmer and Miller, Nash, Wiener, Hager & Carlsen LLP.
Before Landau, Presiding Judge, and Deits, Chief Judge,* and Warren, Senior
Judge.
LANDAU, P. J.
Award of attorney fees vacated; otherwise affirmed.
*Deits, C. J. vice Riggs, P. J., resigned.
LANDAU, P. J.
The parties were married, but their marriage was dissolved in 1989. Six
years later, wife initiated a civil action to set aside the dissolution judgment on the
ground that husband had concealed his possession of marital assets, specifically his
interest in a business and a beach house. Following the filing of the civil action, the
legislature enacted ORS 107.452, which permits a dissolution proceeding that has gone
to judgment to be reopened on the ground of discovery of previously undisclosed marital
assets. Wife then initiated a separate action to reopen the dissolution proceeding under
ORS 107.452. The trial court consolidated both matters for trial. After trial, the court
found that husband, in fact, had concealed the nature of his interest in the business and
the beach house. It awarded wife damages for breach of fiduciary duty and amended the
dissolution judgment to revise the property division, awarding additional assets and
attorney fees to wife. Husband appeals, contending that the trial court should have
dismissed the breach of fiduciary duty claim, should not have reopened the dissolution
proceeding, and, at the very least, should not have awarded attorney fees. We conclude
that the trial court erred in awarding wife attorney fees, but otherwise affirm.
The following facts are not in dispute. The parties were married in 1967.
There are three children of the marriage, all of whom are grown and no longer live at
home. Wife remained at home to care for the children until 1981, when she began work
as a part-time college professor. Husband had interests in various businesses and
managed the family finances. Husband's business interests included Pacific Lumber
Company (Pacific Lumber) and Grants Pass Moulding Company. In 1986, husband
acquired a 50-percent interest in Rogue Valley Sash & Door, Inc. (Rogue Valley),
through Pacific Lumber. In 1987, husband transferred Pacific Lumber's shares in Rogue
Valley to a business partner in exchange for a promissory note payable to Pacific
Lumber. The transaction apparently was designed to enable Rogue Valley to borrow
additional funds. In 1988, however, husband reacquired the half interest in Rogue
Valley. Husband also owned a beach house. His parents purchased the house in 1976,
but they placed the title in husband's name for estate tax purposes.
The parties began contemplating divorce in 1988. They met with a
mediator six times between September and December 1988. During that time, they lived
apart, although they met frequently, sat together at the children's athletic events, and
spent holidays together. The mediator suggested that husband and wife retain separate
counsel, which they did. They negotiated a dissolution settlement directly, however, and
not through their counsel.
When the parties reached an accord, husband drew up a settlement
agreement. Among other things, the agreement listed husband's various business and
real property interests. The agreement did not list husband's interest in Rogue Valley or
in the beach house. The settlement agreement also contained a mutual release of rights.
In April 1989, the dissolution court accepted the settlement agreement and entered a
dissolution judgment incorporating the terms of the agreement.
In March 1995, wife initiated an action to set aside the 1989 dissolution
judgment. Ultimately, after several amendments, the complaint alleged seven different
claims. Only the fifth and seventh claims are relevant to this appeal. In her fifth claim,
she alleged that husband's failure to disclose the full extent of his financial interests
during settlement negotiations amounted to a breach of fiduciary duty for which she was
entitled to damages. In the seventh claim, she alleged that husband's failure to disclose
those interests entitled her to have the dissolution judgment set aside under ORCP 71 C.
The complaint contained no request for attorney fees.
Husband moved to dismiss the fifth and seventh claims on the ground that
wife had failed to alleged facts sufficient to warrant relief under ORCP 71 C as a matter
of law. The trial court denied the motions.
Meanwhile, in 1995, the legislature enacted ORS 107.452, which provides,
in part:
"(a) Existed at the time of the entry of the judgment; and
"(b) Were not discovered until after the entry of judgment." The statute further provides that if, after taking evidence, the court finds that the
nonmoving party inadvertently omitted assets, the court may enter such relief as is just
and proper under the circumstances. ORS 107.452(2). If the court finds that the
nonmoving party intentionally concealed assets, the court may order the division of the
appreciated value of the omitted assets, the forfeiture of the omitted assets, a
compensatory judgment, or other relief. ORS 107.452(3). The statute also authorizes the
court to award attorney fees to the moving party. ORS 107.452(4).
Following the enactment of that statute, wife initiated a separate
proceeding to reopen the 1989 dissolution case under ORS 107.452. She alleged a right
to attorney fees under ORS 107.452(4). Husband moved to dismiss the proceeding, but
the trial court denied the motion and ordered that action consolidated with the other for
trial.
At trial, the parties testified to the foregoing facts. Wife also testified that
she first learned of husband's interest in Rogue Valley in 1994. She testified that she
knew that husband was in the business of making doors, but that she did not know about
his interest in that particular company. She also testified that she did not learn of
husband's interest in the beach house until depositions in preparation for trial, in 1996.
She testified that she relied on husband as to family financial matters in general and in
the dissolution negotiations in particular. Husband testified that he did not disclose the
full extent of his ownership of Rogue Valley because, at the time of dissolution, he was
not clear about the extent of his ownership interest in the company. He also testified that
wife had seen financial records that showed that husband did have an interest in Rogue
Valley, at least through his ownership of Pacific Lumber. As for the beach house,
husband testified that he did not list it as an asset as a matter of principle; he did not
consider the house to be his. He said that wife had asked about the beach house, but that
he had told her that it was not negotiable.
Husband moved for a judgment of dismissal under ORCP 54 B, arguing
that wife had failed to introduce evidence sufficient to warrant relief under either her
fifth or her seventh claims. The trial court denied the motions.
The trial court concluded that, because wife had some knowledge of
husband's interest in Rogue Valley and the beach house, she was not entitled to relief
under ORS 107.452. The court went on to hold, however, that husband failed to make a
complete disclosure as to the nature of his interests, which was required by their fiduciary
relationship at the time of settlement negotiations. The trial court therefore found in
favor of wife on her claim for breach of fiduciary duty and awarded damages to wife
based on its calculation of her share of the concealed assets. On the basis of the breach
of fiduciary duty, the trial court also granted relief on wife's seventh claim under ORCP
71 C, ordering the dissolution judgment amended so as to incorporate an additional
award of assets to wife. Finally, the trial court awarded wife her attorney fees and
interest from the date of the 1989 dissolution judgment.
On appeal, husband first contends that the trial court erred in denying
husband's motion to dismiss wife's seventh claim for relief under ORCP 71 C.
According to husband, relief under ORCP 71 C is warranted only in "extraordinary
circumstances such as extrinsic fraud." Husband acknowledges that wife alleged
fraudulent conduct in her complaint, but he argues that the fraud was not the extrinsic
sort that justifies relief under ORCP 71 C. Wife argues that the fraud that she alleged
does amount to extrinsic fraud, because husband's nondisclosure precluded an
adjudication of the parties' interests in the 1989 dissolution case. In any event, she
argues, she alleged a breach of fiduciary duty, which provides an independent basis for
relief under ORCP 71 C. Husband replies that, although our cases suggest that a breach
of fiduciary duty does provide a basis for relief under ORCP 71 C, those cases are wrong
and should be reconsidered.
We need not address whether the allegations of wife's complaint amounted
to allegations of extrinsic fraud because, at all events, the complaint alleged a claim for a
breach of fiduciary duty, and such a claim suffices to warrant relief under ORCP 71 C.
ORCP 71 C recognizes the "inherent power of a court * * * to modify a judgment within
a reasonable time." It is within the court's discretion to exercise that inherent power,
although the power has been held to be unavailable in the absence of "extraordinary
circumstances such as fraud." Vinson and Vinson, 57 Or App 355, 359, 644 P2d 635,
rev den 293 Or 456 (1982). We pause to emphasize that we have held that the power
may be exercised in the face of extraordinary circumstances, such as fraud. That is to
say, fraud is an example of the sort of extraordinary circumstances that justify relief
under ORCP 71 C. We have never held that fraud--extrinsic or otherwise--is the sole
ground for obtaining relief under that rule. To the contrary, in Campbell and Campbell,
151 Or App 334, 339, 948 P2d 765 (1997), we held:
See also Renninger and Renninger, 82 Or App 706, 711, 730 P2d 37 (1986) ("A court
has inherent power to modify the property division provisions of a dissolution judgment
based on fraud, duress or gross inequity, or breach of fiduciary duty." (citations
omitted)). Husband argues that we were simply wrong in holding that a breach of
fiduciary duty supports relief under ORCP 71 C. We decline to reconsider our prior
cases.(1)
Husband argues that, even assuming a claim of breach of fiduciary duty
suffices to warrant relief under ORCP 71 C, wife neither pleaded nor proved her claim.
Thus, husband contends, the trial court still should have granted his motion to dismiss.
For the same reasons, husband also contends that the trial court should have granted his
motion for a judgment of dismissal at trial.
We consider those arguments together, as they raise essentially the same
issue. In evaluating whether a trial court properly denied a motion to dismiss a claim that
ultimately went to trial, we consider the whole record, including the evidence introduced
by both parties at trial, to determine whether the plaintiff presented a prima facie case.
Scholes v. Sipco Services & Marine, Inc., 103 Or App 503, 506, 798 P2d 694 (1990). In
evaluating a trial court's denial of a motion for a judgment of dismissal under ORCP 54
B(2) at the close of the plaintiff's evidence, we again examine the whole record, to
determine whether the plaintiff introduced "credible evidence on the essential elements
of the cause or causes of action." Castro and Castro, 51 Or App 707, 713, 626 P2d 950
(1981).
Husband in this case argues that wife's pleading and proof was deficient in
two respects: First, in that she failed to show the existence of a fiduciary relationship
and, second, in that she failed to show that husband breached a fiduciary duty, assuming
that such a relationship existed.
We begin with the question whether wife presented evidence of a fiduciary
relationship. A fiduciary duty exists when there is a relationship of special confidence, in
which one party to the relationship is bound to act in good faith and with due regard to
the interests of the other. Starkweather v. Shaffer, 262 Or 198, 205, 497 P2d 358 (1972).
Oregon courts have recognized that a relationship of husband and wife is such a
relationship of special confidence, requiring "a fiduciary duty of the highest degree."
Eltzroth and Eltzroth, 67 Or App 520, 525, 679 P2d 1369 (1984). That fiduciary duty
continues "'while the parties contemplate dissolution of their marriage as long as the
confidential relationship remains intact, and the parties are not dealing at arms' length
through separate agents or attorneys.'" Auble and Auble, 125 Or App 554, 560, 866 P2d
1239 (1993) (quoting Eltzroth, 67 Or App at 522). Determining precisely when the
confidential relationship ceases is not the subject of an easy litmus test. Any number of
actions by the parties may suffice. Id. But as long as there is "confidence reposed on one
side with a resulting superiority and influence on the other," the relationship continues,
as does the fiduciary duty that attends it. Id. (quoting U.S. National Bank v. Miller, 74
Or App 405, 411, 703 P2d 246 (1985)).
In this case, there is evidence that, throughout the marriage, husband
managed the family financial affairs and that wife had little knowledge of husband's
financial interests; wife relied on husband for such information. During the separation,
wife continued to rely on husband for information concerning the family finances.
Further, although they lived separately, they met frequently, celebrated holidays and
attended other family events together. Although both husband and wife consulted briefly
with separate attorneys, they did not negotiate their settlement through counsel. They
dealt directly with one another. Wife testified that, throughout the negotiations, she did
not question whether husband was disclosing all of his assets. Husband drafted the
settlement agreement and brought it to wife for her signature. On the basis of the
foregoing evidence, we conclude that wife offered evidence of the existence of a
relationship of confidence, and, in consequence, of the existence of a fiduciary duty.
We turn, then, to the question whether there is evidence that husband
breached that fiduciary duty. A marital partner who is subject to a fiduciary duty has a
duty "to deal with [the other marital partner] fairly and to make a full and frank
disclosure of all circumstances materially bearing on the contemplated agreement,
including a full disclosure of marital assets." Eltzroth, 67 Or App at 526. In this case,
there is evidence that, although wife was aware of the existence of Rogue Valley and of
the beach house, she did not know of the nature and extent of husband's interests in those
assets. There also is evidence that, although at the time of the settlement negotiations,
husband knew that he held, or shortly was about to hold, a 50-percent interest in Rogue
Valley, he failed to say anything about that holding to wife. Further, there is evidence
that husband held title to the beach house, that he knew of the existence of that interest,
that he knew that wife did not fully understand the nature of that interest, and that he
simply refused to include it in the list of assets during settlement negotiations. In the
light of that evidence, we conclude that wife presented evidence of husband's breach of
his fiduciary duty and that the trial court therefore did not err in denying both husband's
motion to dismiss the seventh claim before trial and the motion for judgment of dismissal
during trial.
Husband next argues that the trial court erred in entering judgment in favor
of wife on her seventh claim, that is, in setting aside the dissolution judgment under
ORCP 71 C. We review the trial court's decision to grant relief under ORCP 71 C for an
abuse of discretion. Dept. of Human Resources v. Shinall, 148 Or App 560, 563, 941
P2d 616 (1997). Husband begins by asserting that the trial court abused its discretion
because there was no evidence of either a fiduciary duty or a breach of a fiduciary duty.
As we have explained, however, there is such evidence.
Husband alternatively asserts that wife failed to file a timely request for
relief under ORCP 71 C, having waited more than five years from the entry of the
dissolution judgment. Wife testified, however, that she did not learn of the nature and
extent of husband's interest in Rogue Valley until 1994, a matter of months before she
initiated the ORCP 71 C action. She further testified that she did not learn that husband
held title to the beach house until depositions in 1996. ORCP 71 C recognizes a court's
authority to modify a judgment within a "reasonable time." The trial court did not abuse
its discretion in concluding that wife initiated her ORCP 71 C claim within a reasonable
time following her knowledge of the basis for the claim.
As still another alternative argument, husband asserts that wife waived the
right to bring the ORCP 71 C action when she executed the settlement agreement, which
contained an express waiver of rights. Husband, however, did not plead waiver as a
defense and did not assert the argument below. ORAP 5.45. We conclude, therefore,
that the trial court did not abuse its discretion in granting relief under ORCP 71 C.
Husband next assigns error to the trial court's denial of his motion to
dismiss wife's fifth claim for relief, that is, the breach of fiduciary duty claim for
damages. He also assigns error to the trial court's denial of his motion for a judgment of
dismissal under ORCP 54 B(2) as to the same claim. As with husband's contentions
regarding the seventh claim, we consider the two assignments together, as they present
essentially the same legal issue. Scholes, 103 Or App at 506; Castro, 51 Or App at 713.
Husband argues that the claim should have been dismissed as a matter of
law because it constitutes an impermissible collateral attack on the dissolution judgment.
Husband's argument is, frankly, difficult to understand. The complaint alleged in the
fifth claim a breach of fiduciary duty, which claim was incorporated by reference as a
basis for asserting relief from the judgment under ORCP 71 C. Even assuming, for the
sake of argument, that the fifth claim--standing alone--was an impermissible collateral
attack on the dissolution judgment, the fact remains that the claim was the permissible
basis for a direct attack on the dissolution judgment under ORCP 71 C. Campbell, 151
Or App at 338; Renninger, 82 Or App at 709.
On the same ground, husband also assigns error to the trial court's entry of
judgment in favor of wife on her fifth claim. We reject that assignment without further
discussion.
Husband next contends that the trial court erred in reopening the
dissolution case pursuant to ORS 107.452. According to husband, the statute was
enacted six years after the dissolution judgment was entered in this case and was not
intended to apply retroactively to permit courts to reopen cases that became final before
the effective date of the act. Wife contends that, because the trial court denied wife relief
under ORS 107.452--and instead modified the dissolution judgment under ORCP 71 C--whether the court erred in denying husband's motion to dismiss the ORS 107.452
proceeding is academic. In any event, she argues, ORS 107.452 was intended to apply
retroactively.
We agree with wife that it is not necessary to address the question whether
the trial court erred in denying husband's motion to dismiss the proceeding initiated
under ORS 107.452, because the trial court ultimately denied relief under that statute.
We therefore express no opinion as to whether the statute was intended to apply
retroactively.
Husband next assigns error to the trial court's award of attorney fees,
arguing that wife had failed to allege entitlement to attorney fees. In any event, husband
argues, there is no statutory basis for an award of attorney fees in this case. Wife argues
that the fact that she alleged entitlement to fees in the ORS 107.452 action was sufficient
to put husband on notice that she intended to seek fees and that ORS 107.105(1), which
authorizes courts to include an award of fees in a dissolution judgment, provides the
basis for an award in this case.
We agree with husband that the trial court erred in awarding attorney fees.
Although it is not necessary to specify the exact statutory provision under which a party
is seeking attorney fees, it is necessary to make the request, so that the parties are fairly
alerted that attorney fees will be sought. Douthit and Swift, 125 Or App 466, 471, 865
P2d 479 (1993). In this case, although wife alleged a right to attorney fees in the ORS
107.452 case, she did not allege a right to attorney fees in the separate civil proceeding.
The two proceedings later were consolidated, but, given that the request for attorney fees
was expressly predicated on success in the ORS 107.452 case only, we conclude that
husband was not fairly alerted to the possibility that wife intended to seek attorney fees
even if she did not prevail in the statutory action.
Husband finally assigns error to the trial court's decision to award wife
prejudgment interest. Wife contends that husband failed to preserve that assignment.
We agree. Husband, in fact, concedes that he did not raise the issue below. We are not
persuaded that the alleged error is apparent on the face of the record or that it is error that
we should review in our discretion, despite the failure to preserve it. See Ailes v.
Portland Meadows, Inc., 312 Or 376, 381-82, 823 P2d 956 (1991).
Award of attorney fees vacated; otherwise affirmed.
JOHN OLIVER DUNKIN,
Appellant,
Respondent.
"(1) A court that entered a judgment of marital annulment,
dissolution or separation shall reopen the case upon the motion of either
party if the moving party alleges that significant assets belonging to either
or both of the parties:
"Courts have inherent authority under ORCP 71 C to modify a
judgment. However, that authority is limited to extraordinary
circumstances such as extrinsic fraud, duress, breach of fiduciary duty or
gross inequity."
1. The basis for husband's contention that Campbell and Renninger are wrong is not entirely clear. Husband asserts that they are inconsistent with the Supreme Court's decision in Johnson v. Johnson, 302 Or 382, 730 P2d 1221 (1986). In Johnson, the court held that, if fraud is the basis for setting aside a judgment under ORCP 71 C, it must be extrinsic fraud, that is, fraud that deprived the complaining party of "a real contest before the court" about the matters in issue. Id. at 394. We need not address the extent to which our cases are inconsistent with Johnson, however. Even assuming that Johnson requires that a breach of fiduciary duty also be extrinsic in nature, the pleadings and proof at trial in this case provide evidence that husband's failures to disclose deprived wife of an opportunity to obtain a "real contest" before the dissolution court. In other words, the breach of fiduciary duty was extrinsic in nature.
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