Weitman Excavation, LLC v. CPM Development Corp.

Under ORS 36.715, attorney fees may only be awarded when incurred in a judicial proceeding. Under ORS 20.190(3), in order to award an "enhanced prevailing party fee," the court must show that the opposing party acted in a manner that is not "in good faith" or "objectively reasonable."

Defendant sought arbitration to seek relief for Plaintiff's alleged breach of contract. Plaintiff sought a declaratory judgment that Defendant had no contractual rights enforceable through arbitration. In arbitration, Defendant awarded damages and attorney fees. Plaintiff then filed for summary judgment in the declaratory judgment action. The trial court determined that no contract existed and that the arbitrator could not enter an award. Plaintiff prevailed in the judgment, and received attorney fees under ORS 36.715(3) and an “enhanced prevailing party fee” (EPPF) under ORS 20.190(3), citing “recklessness” on the behalf of Defendant for seeking arbitration. Defendant appealed, challenging the attorney fee award and EPPF. Defendant argued that under ORS 36.715(3), parties may only recover fees from “a judicial proceeding” after an arbitration award, and that the “enhanced prevailing party fee” was awarded on a false determination of recklessness. Plaintiff cross-appealed, arguing that under 20.105 and 36.715(3), Plaintiff did not receive the proper amount of attorney fees. The Court held that attorney fees may only be be awarded in a judicial proceeding, and that the court erred in awarding Plaintiff's attorney fees in arbitration. The Court further held that the trial court erred in determining that Defendant was reckless to seek arbitration because defendant sought arbitration in good faith and in an objectively reasonable manner. Award of attorney fees to Plaintiff reversed; award of enhanced prevailing party fee vacated and remanded; otherwise affirmed.