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January 14, 2014

An Overlooked Attorney Fee Statute in Oregon

Summary:

In Oregon, it is important to notify your attorney right away after receipt of an ORS 20.080 letter to ensure that you strategize appropriately.

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Companies doing business in Oregon should be aware of ORS 20.080, which can provide for attorney fees in cases seeking damages of $10,000 or less.  That statute provides that prevailing plaintiffs may be awarded attorney fees. It is important to be aware that, in ORS 20.080 cases seeking compensatory damages of $10,000 or less, the attorney fees can quickly approach or outstrip the compensatory damages.

This article will explore three key questions that clients generally have when defending against an ORS 20.080 case: 1) How does the plaintiff receive attorney fees?; 2) Do courts require plaintiffs to strictly comply with ORS 20.080?; and 3) How can defendants escape attorney fees in ORS 20.080 cases?

1. How Does the Plaintiff Receive Attorney Fees Under ORS 20.080?

Generally, a plaintiff has a claim for attorney fees under ORS 20.080 if the plaintiff: gives the defendant notice of a claim for $10,000 or less at least 30 days before the plaintiff files a lawsuit; provides enough documentation for the defendant to generally value the claim; and was awarded more at trial or arbitration than the defendant offered before the plaintiff filed the lawsuit. 

ORS 20.080 provides that:

“(1) In any action for damages for an injury or wrong to the person or property, or both, of another where the amount pleaded is $10,000 or less, and the plaintiff prevails in the action, there shall be taxed and allowed to the plaintiff, at trial and on appeal, a reasonable amount to be fixed by the court as attorney fees for the prosecution of the action, if the court finds that written demand for the payment of such claim was made on the defendant, and on the defendant's insurer, if known to the plaintiff, not less than 30 days before the commencement of the action or the filing of a formal complaint under ORS 46.465, or not more than 30 days after the transfer of the action under ORS 46.461. However, no attorney fees shall be allowed to the plaintiff if the court finds that the defendant tendered to the plaintiff, prior to the commencement of the action or the filing of a formal complaint under ORS 46.465, or not more than 30 days after the transfer of the action under ORS 46.461, an amount not less than the damages awarded to the plaintiff.

“(2) If the defendant pleads a counterclaim, not to exceed $10,000, and the defendant prevails in the action, there shall be taxed and allowed to the defendant, at trial and on appeal, a reasonable amount to be fixed by the court as attorney fees for the prosecution of the counterclaim.

“(3) A written demand for the payment of damages under this section must include the following information, if the information is in the plaintiff's possession or reasonably available to the plaintiff at the time the demand is made:

“(a) In an action for an injury or wrong to a person, a copy of medical records and bills for medical treatment adequate to reasonably inform the person receiving the written demand of the nature and scope of the injury claimed; or

“(b) In an action for damage to property, documentation of the repair of the property, a written estimate for the repair of the property or a written estimate of the difference in the value of the property before the damage and the value of the property after the damage.

“(4) If after making a demand under this section, and before commencing an action, a plaintiff acquires any additional information described in subsection (3) of this section that was not provided with the demand, the plaintiff must provide that information to the defendant, and to the defendant's insurer, if known to the plaintiff, as soon as possible after the information becomes available to the plaintiff.

“(5) A plaintiff may not recover attorney fees under this section if the plaintiff does not comply with the requirements of subsections (3) and (4) of this section.

“(6) The provisions of this section do not apply to any action based on contract.”

2. Do Courts Require Plaintiffs to Strictly Comply With ORS 20.080?

The short answer is no.  Although ORS 20.080 requires that plaintiffs make their demands in writing to the defendant AND the defendant’s insurer, if known, courts generally do not require plaintiffs to strictly comply with this portion of the statute.  Under Schwartzkopf v. Shannon the Cannon’s Window & Other Works, Inc., 166 Or App 466, 471, 998 P2d 244 (2000), a person may act as an agent for the defendant (and therefore may be considered “the defendant”) for purposes of ORS 20.080 if that person has authority to defend or settle a claim for the defendant.  Under Schwartzkopf, trial court judges have allowed plaintiff’s lawyers to provide notice to the defendant’s insurer without providing notice to the defendant, even though the plain language of ORS 20.080 requires that the plaintiff provide notice to both.  In these kinds of cases, the insurer has usually already engaged in some kind of negotiations for the defendant or has gathered facts for and on behalf of the defendant, giving the plaintiff evidence of agency.  Therefore, under ORS 20.080 and Schwartzkopf, if the insurer is the only person who receives a demand, practically and generally speaking, the insurer should treat that demand as sufficient notice as long as it was made at least 30 days before plaintiff filed the lawsuit.

Courts do generally require plaintiffs to send any additional written information that the demand would include, such as additional medical bills, to the defendant (or the defendant’s insurer) as soon as possible if the plaintiff obtains such information after the plaintiff has made her written 20.080 demand and before she has filed the lawsuit.

However, in the initial written demand, courts generally give plaintiffs leeway and, as long as the plaintiff has provided the defendant with enough documentation to generally value the claim, the plaintiff generally does not have to strictly comply with the statute and provide all of the documentation “reasonably available at to the plaintiff at the time.”  For example, if you are provided with an ORS 20.080 notice from a plaintiff’s lawyer that includes most of the medical records and bills but does not include copies of the x-rays, a trial judge will generally hold that the plaintiff’s lawyer substantially complied with ORS 20.080 and that the claim may proceed.

3. How Can Defendants Escape Attorney Fees in ORS 20.080 Cases?

The only way the defendant can escape attorney fees in ORS 20.080 cases is if the defendant makes an offer to the plaintiff before the lawsuit is filed that is more than the damages ultimately awarded to the plaintiff. In other words, if the plaintiff recovers $5,000, but the defendant offered $3,000 before the lawsuit was filed, the plaintiff gets her attorney fees.  If the plaintiff recovers $5,000, but the defendant offered $8,000 before the lawsuit was filed, the plaintiff does not receive her attorney fees.

If the lawsuit is filed and the defendant has a counterclaim of up to $10,000 and the defendant prevails in the lawsuit, the defendant gets its reasonable attorney fees.  What is “reasonable” is decided by the court.

In Oregon, it is important to notify your attorney right away after receipt of an ORS 20.080 letter to ensure that you strategize appropriately.  Although it may seem unpalatable, generally the best strategy is for defendant to make its best offer first, to minimize the risk of an award in excess of the offer and exposure to attorney fees. Many times, lawyers don’t receive cases until the lawsuit is filed and, in ORS 20.080 cases, that is usually too late; the plaintiff’s attorney fee claim is already in play.

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