Plaintiff Portland General Electric Company (PGE) seeks review of a Court of Appeals decision that reversed and remanded a trial court order denying defendant Lexington Insurance Company's motion under ORCP 71 to set aside a default judgment entered against it in PGE's favor, on the ground that the trial court lacked jurisdiction to enter the default judgment. On review, the issues are (1) whether a default judgment awarding monetary relief violates ORCP 67 C if the underlying complaint did not state the specific amount of money or damages being sought; and (2) if so, whether such a defect renders the judgment merely voidable and therefore not subject to collateral attack or, instead, renders the judgment void and therefore subject to challenge at any time. We conclude that the default judgment did violate ORCP 67 C in the asserted respect. However, we also conclude that, in the circumstances of this case, the rule violation did not render the judgment void. Accordingly, we reverse the decision of the Court of Appeals and remand to that court for further proceedings.
The pertinent facts are procedural and not in dispute. A former employee of PGE brought a personal-injury action against PGE based on asbestos exposure. In December 2005, after settling that action, PGE sued certain insurers that had issued insurance policies to PGE for the period during which the exposure had occurred. In its complaint, PGE alleged that it had entered into a confidential settlement agreement in the underlying asbestos personal injury case; that it had tendered its claims to its insurers; that it had fulfilled its obligations under the policies or was excused from any such obligations; that the policies provided coverage for the claims resulting in the settlement; and that PGE's insurers had breached the insurance contracts by failing to indemnify PGE for the settlement. In the prayer of the complaint, PGE sought a judgment providing that the insurers were "liable to reimburse [PGE] regarding the settlement of the underlying lawsuit." Lexington was one of the insurers, and it was a party to a policy providing coverage not to exceed $5 million. Because it had only a 16-percent share in that policy, Lexington had a maximum exposure
In 2006, PGE served the complaint on a New York law firm specified in the policy as an authorized agent for service of process on the subscribing insurers. That firm forwarded the complaint to another law firm, which filed an answer on behalf of other insurers but not on behalf of Lexington, because it did not represent Lexington. All the other solvent insurer defendants appeared and defended, but Lexington did not.
About three years after PGE filed its original complaint, it moved for an order of default and for a limited judgment of default against Lexington for $800,000, plus costs and attorney fees. That motion was served on the firm that represented the other subscribing insurers, but it was not served on Lexington.
Lexington did not appeal the judgment. Rather, it brought a collateral challenge to it. In July 2009, Lexington filed a motion to set aside the default judgment under ORCP 71. In that motion, Lexington sought relief solely on the grounds of its asserted excusable neglect in failing to appear and the trial court's "inherent discretion." The trial court concluded that Lexington had failed to provide a reasonable explanation for its failure to appear and, accordingly, denied the motion. The court later entered a supplemental judgment awarding PGE additional costs and attorney fees.
Lexington appealed both the supplemental judgment and the order denying its motion to set aside the limited judgment of default. On appeal, Lexington asserted for the first time that the trial court had lacked jurisdiction to enter the default judgment awarding monetary relief on the ground that PGE had failed to comply with ORCP 67 C.
192 Or.App. at 415-16, 86 P.3d 80 (quoting Frederick v. Douglas Co. et al., 176 Or. 54, 63-64, 155 P.2d 925 (1945)). The court reasoned that ORCP 67 C is jurisdictional because awarding more than the amount prayed for by default without notice and the opportunity to be heard is the functional equivalent of taking a default judgment on a complaint without service of process. Id. at 416, 86 P.3d 80. Thus, the court held that the default judgment was void to the extent that it awarded monetary relief exceeding the amount prayed for in the complaint. Id.
In this case, the Court of Appeals extended its reasoning in Montoya to the circumstance where PGE's complaint had not provided Lexington with notice "that [PGE] sought to recover any particular amount in damages from [Lexington]." Ebasco Services, 248 Or.App. at 100, 273 P.3d 165. The court concluded that the insurance policy attached to the complaint did not cure the posited defect because the complaint did not otherwise state that PGE sought the maximum amount allowed under the policy or indicate that the underlying asbestos-exposure case had been settled for more than that amount. Id. The court ultimately concluded that the default judgment was void, and it directed the trial court on remand to vacate the default order; the court also vacated the supplemental judgment awarding attorney fees, costs, and disbursements. Id. at 100-01, 273 P.3d 165. PGE petitioned for reconsideration, arguing that the default judgment should be left intact insofar as it adjudged Lexington liable for breach of contract. The Court of Appeals denied reconsideration.
On review, PGE asserts that ORCP 67 C imposes procedural requirements that do not implicate a trial court's jurisdiction and, accordingly, that the Court of Appeals erred in concluding that the default judgment was void. PGE urges that entry of the default judgment in this case was consistent with due process because the underlying complaint had adequately informed Lexington of the nature of the claim and the amounts potentially at issue. Finally, PGE asserts that, in any event, the default judgment should not be deemed void as to its adjudication of Lexington's liability for breach of contract because, in that respect, the judgment did not differ from the relief sought in the complaint.
Lexington responds that the Court of Appeals decision in Montoya was correct and that the result reached in this case flows logically from that analysis. Lexington observes that this court has stated that a trial court lacks jurisdiction to adjudicate a matter where notice to the defendant "is so defective that it does not satisfy the requirement of due process." Hood River County v. Dabney,
We begin our analysis by noting what is not in dispute on review: the trial court had subject matter jurisdiction in this action and, because Lexington was properly served with summons and the original complaint,
In McDonnell, we explained that a void judgment is one that "has no legal force or effect" and can be attacked "at any time and any place, whether directly or collaterally"; a voidable judgment, in contrast, is one that "is irregular or erroneous" although it is "rendered by a court having jurisdiction." 343 Or. at 562, 176 P.3d 1236 (quoting Black's Law Dictionary 861 (8th ed. 2004)). A voidable judgment may be attacked through only a direct appeal or a cognizable collateral challenge, for example, under ORCP 71 B.
With that background in mind, we turn to the question whether the default judgment in this case violated ORCP 67 C. We begin with the text of ORCP 67 C itself, which provides:
ORCP 18 B, which sets out the pleading rule that ORCP 67 C reinforces, requires that a complaint contain "[a] demand of the relief which the party claims" and, "if recovery of money or damages is demanded, the amount thereof shall be stated."
As discussed, the claim in question was for breach of an insurance contract, seeking monetary relief from Lexington in the unspecified amount of the settlement that PGE had paid in the underlying asbestos-exposure personal injury case, together with associated costs and attorney fees. PGE notes that the complaint incorporated the pertinent insurance policy as an exhibit, and the policy reflected that Lexington's pro rata share of the policy limits was 16 percent of $5 million, or $800,000. Based on those references, PGE asserts that the complaint sufficiently stated the amount of monetary relief that PGE sought. We disagree.
The fact that — albeit inartfully — the complaint implicitly might have capped PGE's primary damages at Lexington's pro rata share of the policy limits, is not the same as stating the amount of money or damages demanded. In fact, the complaint did not demand money or damages in the amount of $800,000 or, as required by ORCP 18 B, in any stated amount. Accordingly, we conclude that the default judgment violated ORCP 67 C because the complaint did not seek any amount of damages.
The greater challenge is to determine the effect of that violation in the circumstances of this collateral attack on the default judgment. Both before and after the adoption of the Oregon Rules of Civil Procedure, this court generally has treated erroneously entered judgments as voidable, rather than void. For example, in Travelers Insurance Co. v. Staiger, 157 Or. 143, 69 P.2d 1069 (1937) — an action to recover on a promissory note — the plaintiff obtained a judgment against the defendants that included certain amounts for costs and disbursements, and the defendants did not timely appeal. Id. at 146, 69 P.2d 1069. Subsequent enforcement of the judgment resulted in the sale of the defendants' property. Id. The defendants objected to the sale, arguing that the judgment was void because it had awarded costs and disbursements when no cost bill had ever been filed, in violation of the cost bill provisions of the 1930 Oregon Code. Id. at 146-47, 69 P.2d 1069. The trial court overruled the defendants' objections, and the defendants appealed. Id. at 147, 69 P.2d 1069. This court acknowledged that the trial court might have erred in awarding costs and disbursements without the required cost bill, but nonetheless affirmed, stating:
Id. at 148, 69 P.2d 1069 (quoting 34 CJ, Judgments, 564 § 864).
Similarly, in Rajneesh Foundation Intl. v. McGreer, 303 Or. 139, 144 n. 3, 734 P.2d 871, adhered to on recons., 303 Or. 371, 737 P.2d 593 (1987), this court concluded that a default judgment was not subject to collateral attack on the ground that the pleadings were insufficient to support it. See also Rogue Val. Mem. Hosp. v. Salem Ins., 265 Or. 603, 615, 510 P.2d 845 (1973) (judgment based on hospital lien not filed within specified statutory period not subject to collateral attack); Walling v. Lebb, 140 Or. 691, 692, 15 P.2d 370 (1932) (failure of complaint to state claim does not subject subsequent judgment to collateral attack); cf. Booth v. Heberlie, 137 Or. 354,
As noted, those decisions confirm that, generally speaking, when a trial court has both subject matter jurisdiction and personal jurisdiction, its judgment, even if erroneous, is not void. State ex rel. English, 348 Or. at 440, 238 P.3d 980; McDonnell, 343 Or. at 563, 176 P.3d 1236. To be sure, that conclusion is a qualified one. First, in certain circumstances, it is necessary to construe a statute to determine whether the legislature intended to impose a limitation on the trial court's authority to exercise its jurisdiction. In that instance, a violation of the statute may render the judgment void. For example, in Dabney, the issue was whether a tax lien foreclosure statute requiring 60-days' notice before foreclosure imposed such a limitation on the trial court's power. 246 Or. at 21-22, 423 P.2d 954. After examining the statute's text and context, this court concluded that the legislature did not intend the notice requirement to limit the court's authority to exercise its jurisdiction, thereby resulting in a void judgment. Id.
ORCP 67 C is a rule of civil procedure promulgated by the statutorily created Council on Court Procedures. ORCP 1.735(1). Applying the precepts that ordinarily apply to the interpretation of statutes, the interpretation of such a rule requires a determination of the Council's intent. A.G. v. Guitron, 351 Or. 465, 479, 268 P.3d 589 (2011).
Second, a statutory violation that also deprives a party of due process may render a judgment void. As explained below, however, the default judgment in this case does not implicate concerns of constitutional dimension.
As dictated by the Due Process Clause of the Fourteenth Amendment to the United States Constitution, it is well established that the state may not deprive a person of life, liberty, or property without "notice and opportunity for hearing appropriate to the nature of the case." Mullane v. Central Hanover Bank & Tr. Co., 339 U.S. 306, 313, 70 S.Ct. 652, 94 L.Ed. 865 (1950); Koskela v. Willamette Industries, Inc., 331 Or. 362, 378, 15 P.3d 548 (2000). An appropriate hearing is one that is provided "at a meaningful time and in a meaningful manner." Armstrong v. Manzo, 380 U.S. 545, 552, 85 S.Ct. 1187, 14 L.Ed.2d 62 (1965); State ex rel Juv. Dept. v. Geist, 310 Or. 176, 189-90, 796 P.2d 1193 (1990).
This court has previously recognized that, even where a trial court has personal and subject matter jurisdiction, a violation of due process notice requirements may deprive the court of "jurisdiction" to enter an order or judgment. State ex rel Hall v. Hall, 153 Or. 127, 55 P.2d 1102 (1936) (stating that, in the absence of notice, the trial court lacked jurisdiction to modify an order addressing support provisions of a divorce decree). Used in that way, the word "jurisdiction" is a term of art intended to convey that the violation was so significant as
Dabney, which was an action to quiet title to land, illustrates the point. There, the county acquired title to land from the defendant's predecessor in interest through a tax foreclosure proceeding in 1928. The published summons in the foreclosure proceeding had been defective because it afforded the landowner only six weeks in which to appear, rather than the 60 days required by statute. In 1963, the defendant learned of that defect and challenged the plaintiff's title. 246 Or. at 17, 423 P.2d 954. The issue on appeal was whether that challenge was barred by ORS 312.220, which provided that a decree of foreclosure for delinquent taxes "is conclusive evidence of its regularity and validity in all collateral proceedings," and ORS 312.230, which barred any action challenging a tax foreclosure decree, unless it was commenced within specified time limits. Applying those statutes, the court stated that "the decree must be regarded as valid unless on constitutional grounds we must hold that the legislature lacks the power to declare valid a tax foreclosure decree defective for lack of jurisdiction." 246 Or. at 20, 423 P.2d 954.
The court in Dabney revisited prior decisions in which it had held that the legislature could enact statutes barring challenges to tax foreclosure decrees that were merely irregular due to "nonjurisdictional" defects, but could not so insulate decrees that were void for lack of "jurisdiction." Id. at 20-21, 423 P.2d 954. The court reexamined those cases and, after discerning a legislative purpose to strictly limit challenges to tax foreclosures, held that all defects in the underlying tax foreclosure proceedings were "nonjurisdictional" unless they deprived the taxpayer of due process. Id. at 22, 423 P.2d 954. The court also held that the notice that the owner had received, although insufficient to comply with the tax foreclosure statutes, was sufficient to satisfy the demands of due process. Id. at 25-26, 423 P.2d 954. Because there was no due process violation, the court concluded that the statutes of limitation barred the defendant's challenge. Id.
This court's decision in Scarth v. Scarth, 211 Or. 121, 315 P.2d 141 (1957), illustrates a circumstance in which the failure to comply with a statutory notice requirement did result in a due process violation and a void judgment. In that case, the trial court modified without notice the defendant's child support obligation. The defendant appealed, "contending that the court had no jurisdiction of him in that he had no proper notice or opportunity to be heard, amounting to a denial of due process of law." Id. at 125, 315 P.2d 141. This court noted that, based on the applicable statute, the trial court had continuing personal and subject matter jurisdiction relating to the defendant's support obligations and that the court retained the power to modify that portion of the original judgment. Id. However, this court held that
211 Or. at 127, 315 P.2d 141 (emphasis in original; internal citations and footnote omitted).
With reference to the general notice problem presented in this case, cases decided under the parallel federal rule, FRCP 54(c)
Charles Alan Wright, Arthur R. Miller, and Mary Kay Marie Kane, 10 Federal Practice and Procedure: Civil § 2663 (3d ed. 2008) (footnote omitted).
In this case, by contrast, those concerns are not implicated. First, Lexington does not assert that the default judgment awarded a different kind of relief than was sought in the complaint in this case. In its complaint, PGE sought indemnity for the amount that it paid to settle the underlying asbestos claim and for its costs and attorney fees in defending that claim. The default judgment awarded precisely that relief. Instead, the sole focus of Lexington's due process argument is on the amount of monetary relief that the default judgment awarded. However, the defect in notice concerning the amount of PGE's claimed damages was apparent on the face of the complaint when Lexington was served with a copy of it and the required
In these circumstances, Lexington's challenge comes too late. Unlike a case in which a variance exists between the amount of damages sought in a complaint and the amount of a subsequent default judgment, or in which a post-judgment modification of an existing obligation is obtained without notice to the obligor, Lexington had multiple prejudgment opportunities over a period of years to challenge the very defect that it failed to raise before filing the present appeal. That is, the defect that ultimately triggered a violation of ORCP 67 C in this case was the predicate violation of ORCP 18 B based on PGE's failure to state the amount of monetary relief that it sought in its complaint. Service of the complaint itself provided Lexington with notice of that defect, and the Oregon Rules of Civil Procedure provided it with ample opportunities for a predefault hearing at a meaningful time and in a meaningful manner.
Stated differently, the complaint in this case could not have led Lexington to believe that "only a certain type and dimension of relief was being sought," so that it could "attempt to limit the scope and size of the potential judgment by not appearing or otherwise defaulting." Wright, Miller, & Kane, 10 Federal Practice and Procedure § 2663. In such circumstances, due process does not demand the nullification of the default judgment by means of a collateral challenge. It follows that the Court of Appeals erred in concluding otherwise. Accordingly, it is necessary to remand the case to that court to address Lexington's remaining arguments that the default judgment is void because PGE filed an amended complaint seeking additional relief in the form of attorney fees but never served Lexington with that pleading or, alternatively, that the trial court erred in denying Lexington's motion to set aside the default judgment on the ground of excusable neglect.
The decision of the Court of Appeals is reversed, and the case is remanded to the Court of Appeals for further proceedings.
Fredric R. Merrill, Oregon Rules of Civil Procedure: 1984 Handbook 154 (staff comment).
246 Or. at 26, 423 P.2d 954. The breadth of the court's ultimate holding in that case does not detract from our reliance here on its initial conclusion, which was a foundational holding of the case.