Sherwood Park Business Center, LLC v. Taggart

Under ORS 20.083 and 20.096, where a losing party is a stranger to an agreement that contains an attorney fee provision, the losing party shall not be subject to an assessment of fees against it even where it asserts a reciprocal right to fees. A party’s conduct that is merely an attempt to extract himself from litigation post-bankruptcy and that is not voluntary affirmative action shall not subject him to assessment of attorney fees against him for further litigation regarding the discharged debts.

Defendants Brad Taggart (Taggart) and BT of Sherwood, LLC (BT) appealed a supplemental judgment awarding Sherwood Park Business Center, LLC (SPBC) attorney fees and costs against Taggart and costs against BT. After Taggart converted funds from SPBC, a judgment was entered against Taggart; subsequently, Taggart attempted to transfer his interest in SPBC to BT, a newly-formed company. SPBC commenced litigation to expel Taggart from SPBC, declare the transfer invalid, declare BT had no interest in SPBC and unwind the transactions between Taggart and BT. BT brought counterclaims, including a reciprocal claim for attorney fees under SPBC’s Operating Agreement. Taggart obtained a discharge of his debts in bankruptcy and filed a motion to dismiss the charges in the present case, which was denied. At the conclusion of the trial, the court decided Taggart was subject to expulsion and the transfer was invalid. The parties disagreed as to the form of judgment, and Taggart appeared pro se and made a statement regarding the proceedings as they related to his bankruptcy. The court awarded attorney fees to SPBC against Taggart and costs against both Taggart and BT. On appeal, the Court held Taggart’s post-petition conduct was not voluntary affirmative action such that he should have been held liable for attorney fees because he simply sought to extricate himself from the litigation and briefly spoke at the form of judgment hearing after the court refused to dismiss him from the litigation. The Court also held that the trial court did not err in refusing to award attorney fees to SPBC against BT because BT was never a party to the Operating Agreement under which attorney fees were claimed, and the legislative intent of both ORS 20.096 and ORS 20.083’s operating clause did not include parties who were a stranger to the contract, where BT merely asserted a reciprocal right to fees and both parties agreed that BT was never a party to the agreement containing the attorney fee provision. Attorney fees and costs against Taggart reversed; all other claims and counter-claims affirmed.