Mindful Insights, LLC v. VerifyValid, LLC
Citation454 P.3d 787, 301 Or. App. 256
Date Filed2019-12-11
DocketA161850
JudgePowers
Cited12 times
StatusPublished
Full Opinion (html_with_citations)
256
575
Mindful Insights, LLC v. VerifyValid, LLC 30111,
December Or2019
App
Argued and submitted May 31, 2018; supplemental judgment reversed in
part, otherwise affirmed December 11, 2019; appellantâs amended petition
for reconsideration filed January 24, and respondentâs response to petition for
reconsideration filed January 30, reconsideration allowed by opinion
February 26, 2020
See 302 Or App 528,461 P3d 1034
(2020)
MINDFUL INSIGHTS, LLC,
an Oregon limited liability company,
Plaintiff-Respondent,
v.
VERIFYVALID, LLC,
a Michigan limited liability company,
Defendant-Appellant,
and
Paul DOYLE,
an individual and
Steve Sprindis, an individual,
Defendants.
Multnomah County Circuit Court
14CV11173; A161850
454 P3d 787
Plaintiff filed an action against defendant to recover unpaid consulting fees,
alleging separate âclaims for reliefâ in its complaint for (1) breach of a written
consulting agreement, which included an attorney-fee provision; (2) breach of
an implied contract for its consulting services; and (3) quantum meruit based
on the benefit that plaintiff conferred. The jury found in defendantâs favor on
the first issue but for plaintiff on the second and third issues. Thereafter, each
party sought its attorney feesâdefendant on the ground that it had successfully
defended against the claim for breach of a written contract, and plaintiff on
the ground that it had prevailed on an implied agreement to the same terms as
the written contract, attorney-fee provision included. The trial court ruled that
plaintiff was the only prevailing party, awarded plaintiff $260,000 in attorney
fees, and denied defendantâs attorney-fee request. On appeal, defendant argues
that the trial court erred both in denying its request and in awarding attorney
fees to plaintiff. Held: Plaintiffâs separately denominated âclaimsâ for breach of a
written contract and breach of an implied-in-fact contract were alternative the-
ories within a single claim for breach of contract, and the trial court correctly
ruled that plaintiff, not defendant, was the prevailing party on that claim.
However, the court erred in awarding plaintiff its attorney fees for prevailing on
the implied-in-fact contract theory. The jury expressly rejected the theory that
the parties had agreed to the terms of the written consulting agreement, and
there was no evidence of any conduct itself from which to infer that the parties
had otherwise reached an implied agreement on a term related to attorney fees.
Supplemental judgment reversed in part; otherwise affirmed.
Cite as 301 Or App 256 (2019) 257
Thomas M. Ryan, Judge.
Sara Kobak argued the cause for appellant. Also on the
briefs were Sara C. Cotton and Schwabe, Williamson &
Wyatt, P.C.
Amy Heverly argued the cause for respondent. Also on
the brief was Jordan Ramis PC.
Before Ortega, Presiding Judge, and Egan, Chief Judge,
and Powers, Judge.*
POWERS, J.
Supplemental judgment reversed in part; otherwise
affirmed.
______________
* Egan, C. J., vice Garrett, J. pro tempore.
258 Mindful Insights, LLC v. VerifyValid, LLC
POWERS, J.
Under Oregon law, the prevailing party on a breach-
of-contract claim can recover its attorney fees if the terms
of the contract, whether express or implied, authorize the
award. ORS 20.077; ORS 20.083; ORS 20.096. The question
in this case is how that fee recovery operates when a plain-
tiff has alleged both an express contract and an implied con-
tract as alternative theories of recovery from a defendant,
and a different party prevails on each theory.
Plaintiff, Mindful Insights, LLC, filed this action
against defendant, VerifyValid, LLC, to recover unpaid con-
sulting fees, alleging separate âclaims for reliefâ in its com-
plaint for (1) breach of a written consulting agreement, which
included an attorney-fee provision; (2) breach of an implied
contract for its consulting services; and (3) quantum meruit
based on the benefit that plaintiff conferred. The jury found
in defendantâs favor on the first issue but for plaintiff on
the second and third issues. Thereafter, each party sought
its attorney feesâdefendant on the ground that it had suc-
cessfully defended against the claim for breach of a written
contract, and plaintiff on the ground that it had prevailed
on an implied agreement to the same terms as the writ-
ten contract, attorney-fee provision included. The trial court
ruled that plaintiff was the only prevailing party, awarded
plaintiff $260,000 in attorney fees, and denied defendantâs
attorney-fee request.
Defendant appeals, arguing that the trial court
erred both in denying its request and in awarding attor-
ney fees to plaintiff. For the reasons explained below, we
conclude that plaintiffâs separately denominated âclaimsâ
for breach of a written contract and breach of an implied-in-
fact contract were alternative theories within a single claim
for breach of contract, and we affirm the trial courtâs rul-
ing that plaintiff, not defendant, was the prevailing party
on that claim for purposes of ORS 20.077, ORS 20.083, and
ORS 20.096. We further conclude, however, that the court
erred in ruling that the right to attorney fees was part of
an implied-in-fact contract between the parties, and we
therefore reverse the trial courtâs attorney-fee award to
plaintiff.
Cite as 301 Or App 256 (2019) 259
BACKGROUND
The relevant background underlying the attorney-fee
issues is largely undisputed for purposes of appeal. Plaintiff
is a consulting firm specializing in the intersection of tech-
nology and banking. Defendant is a company that invented
a system for electronic check payments. In July 2013, defen-
dantâs chief operating officer, Ted Spooner, reached out to
plaintiffâs managing member and chief consultant, Edward
Woods, and told him that he was now working for defendant;
Spooner had previously done consulting work for plaintiff,
and he and Woods had previously worked together at an
online banking company.
Spooner eventually emailed Woods and requested
that he send an âengagement agreementâ for plaintiff to per-
form consulting work for defendant. Spooner then invited
Woods and another of plaintiffâs consultants, Thomas
Brooke, to participate in a conference call along with some
of defendantâs staff. Following that call, an attorney work-
ing for defendant, Thomas Coke, emailed Woods and said
that Spooner âwanted me to follow up with regards to an
existing contract you have that we might use to engage you
with [defendant].â In response, Woods sent Coke plaintiffâs
âstandardâ Master Consulting Services Agreement (MCSA).
On October 1, 2013, Coke told Woods, âIâm looking
over the contract now, and will let you know if I see anything
that stands out.â That same day, Coke emailed Spooner, say-
ing, âI think the contract is fine. We can move forward.â
Two days later, Woods, Brooke, Coke, and Spooner
participated in a conference call in which they discussed the
scope of plaintiffâs work for defendant. According to Woods,
Spooner told him that he was âable to get approval for your
doing workâ for defendant but with two exceptionsâthe
price would need to be $28,000 for a 30-day term, and Woods
and Brooke would have to attend an upcoming trade show
called Money 2020. The MCSA was not discussed, nor was it
returned to plaintiff.
Thereafter, Brooke and Woods attended the Money
2020 trade show, where they performed work for defendant,
including meeting with defendantâs president, Paul Doyle,
260 Mindful Insights, LLC v. VerifyValid, LLC
as well as with defendantâs potential clients and business
contacts. Following that trade show, Brooke and Woods con-
tinued to perform consulting work for defendant.
On October 22, Woods emailed a copy of the MCSA
to Spooner, stating, âAttached is the MCSA (exactly the
same as previously sent to you and Thomas Coke) and the
work order capturing the scope weâve discussed and have
been working under.â The MCSA, as well as an attached
project initiation work order, were signed by Woods and
included blank spaces for execution by defendant. Spooner
replied, âno problem will make sure we turn it around asap.â
Spooner also forwarded Woodsâs email to defendantâs chief
financial officer, Steve Sprindis.
Meanwhile, plaintiff continued performing consult-
ing services for defendant, including sending consultants to
defendantâs headquarters in Michigan in early November.
Over the next few weeks, Woods sent invoices to Spooner
and Sprindis in the amount of $46,818.74 that went unpaid.
During that time, Spooner assured Woods that â[w]e will
pay [plaintiffâs] bill that weâve approved but Iâve got to get a
handle on what we can do for December and beyond in the
next few days.â
On December 13, Doyle fired Spooner for acting
beyond his authority with regard to engaging plaintiff.
Three days later, on December 16, Woods, Brooke, Sprindis,
and Doyle participated in a conference call. Doyle expressed
dismay at the size of the invoices, explained that he had
terminated Spooner for reasons related to plaintiff, and that
Doyle was trying to understand what work plaintiff had
performed for defendant. Following the call, plaintiff pro-
vided defendant with additional documentation for the work
that plaintiff had performed, but defendant still did not pay
plaintiff.
Eventually, plaintiff filed a complaint that included
four claims for relief against defendant: âBreach of Contractâ;
âBreach of Implied Contractâ; âUnjust Enrichment/Quantum
Meruitâ; and âFraud.â1 In allegations common to all claims,
1
The complaint also included a request for declaratory relief regarding arbi-
tration, which does not bear on this appeal.
Cite as 301 Or App 256 (2019) 261
plaintiff alleged that, on October 3, 2013, defendant indi-
cated that it accepted the MCSA and that it would engage
defendant on a monthly basis for $28,000 per month while
the parties worked out a longer-term scope of engagement.
Plaintiff further alleged that defendant twice renewed the
engagement, for the months of November and December
2013.
Plaintiff alleged that it rendered approximately
300 hours of consulting services and incurred $4,818.74
in costs and expenses, and that defendant terminated its
engagement with plaintiff and reneged on its obligation to
pay for the consulting services. The total alleged debt was
$88,818.74 for consulting services rendered and costs and
expenses incurred.
In its âFirst Claim for Relief,â denominated as
âBreach of Contract,â plaintiff realleged and incorporated
its previous allegations and then alleged that plaintiff âhad
a contract with [defendant] to provide consulting services,â
that defendant âmaterially breached its obligations under
the MCSA by failing to pay for services rendered,â that plain-
tiff performed all of its obligations under the MCSA, and
that, as a result of the breach, plaintiff was entitled to not
less than $88,818.74, âwhich includes the unpaid balance of
the MCSA and [plaintiffâs] hard costs that were incurred in
connection with the engagement.â And, of particular import
for this appeal, plaintiff alleged, âThe MCSA provides that
the prevailing party may recover its reasonable attorneysâ
fees and costs incurred in arbitrating, litigating, or other-
wise resolving any dispute arising out of the MCSA.â
In its âSecond Claim for Relief,â which was denom-
inated âBreach of Implied Contract,â plaintiff realleged and
incorporated by reference its previous allegations; it then
alleged as follows:
â[Defendant] requested that [plaintiff] provide [defen-
dant] with consulting services.
â[Plaintiff] communicated, and [defendant] understood,
that it expected to be compensated for the consulting ser-
vices it provided.
262 Mindful Insights, LLC v. VerifyValid, LLC
â[Plaintiff] then provided consulting services to [defen-
dant].
â[Defendant] received progress reports and encouraged
[plaintiff] to continue to provide consulting services.
âBased on the conduct of the parties, [plaintiff] was to
provide consulting services to [defendant] on the condition
that these services would be paid for. [Plaintiff] is therefore
entitled to recover the reasonable value of the services per-
formed and costs and expenses incurred.â
(Paragraph numbering omitted.) The final paragraph of
that claim alleged the same amount of damages that was
alleged with regard to breach of the express contract: âThe
reasonable value of the consulting services performed and
costs and expenses incurred is not less than $88,818.74.â
Plaintiffâs third claim for relief was captioned
âQuantum Meruit/Unjust Enrichment.â After again real-
leging and incorporating all previous allegations, plaintiff
alleged that it had conferred a benefit on defendant by pro-
viding the consulting services, defendant had knowledge of
the benefit, defendant accepted and retained the benefit, and
that it would be inequitable for defendant to keep the benefit
without paying for it. Plaintiff alleged that the âvalue of the
benefits conferredâ was ânot less than $88,818.74.â
Plaintiff also alleged an additional claim against
defendant and against Doyle and Sprindis for fraud.2 That
claim alleged that defendant, with the authorization of
Doyle and Sprindis, falsely represented to plaintiff that it
would pay for consulting services when it had no intention
of doing so.
Those four claims were tried to a jury, and much
of the partiesâ evidence and their theories at trial revolved
around the involvement of Spooner, his authority to bind
defendant, and what he communicated to plaintiff. In its
closing argument, plaintiff stated that it âhad every rea-
son to believe that the chief operating officer [for defendant]
was being accurate with usâ with regard to whether its con-
tract was approved, even though Spoonerâs testimony was
2
Doyle and Sprindis are not parties on appeal, and our references to âdefen-
dantâ throughout are to VerifyValid, LLC.
Cite as 301 Or App 256 (2019) 263
âa little ambiguous about what exactly he communicated.â3
In describing its theories of recovery to the jury, plaintiff
explained that, âeven though we have four claims, weâre not
asking for [$]88,818.74 times four. So all of our claims fall
under the same set of facts, which is different legal theo-
ries on which [plaintiff] would be entitled to recover those
damages.â
With regard to the contract-based claims, plaintiff
explained that âthe first one is breach of express contract.
Thatâs the Master Consulting Services Agreement.â With
respect to that claim, plaintiff told the jury that defendant
by âits words and conductâ agreed to the terms that were
incorporated into the MCSA.
After further describing the facts supporting its
theory that defendant had accepted the terms of the MCSA,
plaintiff turned to its second theory, breach of an implied
contract:
âSo Iâll turn next to the breach of implied contract
claim. Thatâs a different legal theory thatâs closely related,
thatâs whether or not the parties agreed to the terms of the
Master Consulting Services Agreement, we can infer from
the partiesâ conduct that they were acting together as if
they had a contract.
âAnd when you look at the volume of communica-
tions, itâs two giant binders. The slides weâve seen and the
testimony you heard, [defendant and plaintiff] were acting
as if they had a contract and [defendant] was requesting
work. [Plaintiff] was doing it. [Plaintiff] was repeatedly
making clear they expected to be paid and [defendant]
promised to pay.â
3
Spooner was not called as a witness, but his deposition testimony was
played at trial. Spooner testified that he had told plaintiff â[m]ore than onceâ that
he lacked authority to bind defendant; he further testified that, to his knowledge,
plaintiff had begun working for defendant without a signed contract âbecause
they trusted me that that agreement would get signed, because I trusted
Mr. Doyle that he would negotiate and sign that agreement, because thatâs what
Mr. Doyle told me.â He also testified, âI got verbal approval from Paul Doyle for
them to do work, pending the negotiation of the Master Services Agreement and
terms, and both sides agreed to proceed subject to his approval. * * * [T]he con-
tract hadnât been negotiated yet by the time that Money 20/20 arrived, and that
work ensued.â According to Spooner, Doyle had âintentionallyâ not executed the
contract, as part of a pattern of using the leverage of an unsigned contract to
later pressure companies to negotiate better deals.
264 Mindful Insights, LLC v. VerifyValid, LLC
The jury was subsequently instructed about con-
tracts generally and implied-in-fact contracts in particular.
The jury first was instructed: âFor a contract to exist, there
must be an offer that is accepted,â and that â[a]n acceptance
is either words, conduct, or both that would reasonably lead
the party who made the offer to believe the essential terms
of the offer had been agreed to.â
Later, the jury received the following written
instruction, captioned âContract Implied in Factâ:
âIn the alternative to their express contract claim,
plaintiff contends, and defendants deny, that there is a con-
tract implied in fact in which defendant agreed to a legally
enforceable promise or set of promises with plaintiff.
âA contract implied in fact can arise where the natural
and fair interpretation of the acts of the parties leads a rea-
sonable person to conclude that they agreed to the implied
contract. The assent and the terms of the partiesâ agree-
ment may be inferred from the partiesâ conduct.â
The jury ultimately returned a split verdict. It
found in defendantâs favor on claims for breach of an express
contract and fraud. With respect to the former, the jury
answered âNoâ to the question, âDid the MCSA form the
terms of an express contract between [plaintiff] and [defen-
dant]?â
The jury also found in plaintiffâs favor on the remain-
ing two claims. It answered âYesâ to the question, âDid
[defendant] breach an implied contract it had with [plain-
tiff]?â It then awarded plaintiff $46,818.74 on that claimâ
essentially, the amount on the invoices sent in November
that Spooner said were approved and would be paid. The
jury also returned a verdict in plaintiffâs favor on the claim
for quantum meruit. The jury found that the amount of the
benefit conferred was $56,000.
In the wake of that split verdict, both parties
claimed an entitlement to attorney fees as the prevailing
party. Defendant sought to recover fees it incurred defend-
ing against the claim for breach of the MCSA, based on
a statutory right to recover attorney fees authorized by a
Cite as 301 Or App 256 (2019) 265
contract even if the defense is âthat the prevailing party was
not a party to the contract,â ORS 20.083. Plaintiff opposed
any award to defendant and argued that breach of express
contract and breach of a contract implied-in-fact were (con-
trary to its pleading) alternative ways of proving a single
claim for purposes of determining a prevailing party. In
plaintiffâs view, plaintiff âalleged that [defendant] accepted
the terms of the Contract both with its words (express con-
tract) and with its conduct (implied contract),â and the jury
simply agreed with the latter theory. For that reason, plain-
tiff was the prevailing party, and the same terms from the
MCSA, which defendant accepted by its conduct, authorized
an award of attorney fees to plaintiff.
The trial court agreed with plaintiff, ruling that
the express and implied contract claims were âalternative
methods of proving the existence of a contract and are not
mutually exclusive claims. That the jury found that there
was a contract implied in fact and not an express contract
does not negate that plaintiff is the prevailing party.â The
court further concluded that, in addition to the implied-
in-fact contract claim, the quantum meruit claim âwas an
alternative theory for recovering the same damagesâ and
that plaintiff was entitled to fees for work performed on that
claim as well. The court, after further proceedings related
to the reasonableness of the amount requested by plain-
tiff, entered a supplemental judgment awarding plaintiff
$260,000 in attorney fees and $10,251.92 in litigation costs.
Defendant appeals from that supplemental judgment.
ANALYSIS
On appeal, defendant assigns error to the courtâs
denial of its petition for fees for breach of the MCSA and to
the award of fees to plaintiff for the implied-in-fact contract
and quantum meruit claims. Plaintiff defends both rulings,
arguing that it alone was entitled to fees under an implied
agreement to the fee provision in the MCSA. Those compet-
ing arguments present two overarching questions: (1) How
is a âprevailing partyâ determined in the context of a split
verdict like this one? (2) What were the terms of the implied-
in-fact contract in this case?
266 Mindful Insights, LLC v. VerifyValid, LLC
A. Express and Implied Contracts
The answer to both questions turns, in significant
part, on the distinction between three related concepts:
express contracts, implied-in-fact contracts, and implied-in-
law contracts. The first two conceptsâexpress contracts and
implied-in-fact contractsâare âno different in legal effect.â
Staley v. Taylor, 165 Or App 256, 262,994 P2d 1220
(2000) (citing Restatement (Second) of Contracts § 4 comment a (1979)). For more than a century, Oregon courts have rec- ognized that the two concepts distinguish between matters of proof, not substance. In Rose v. Wollenberg,36 Or 154, 157
,59 P 190
(1899), the court held that an implied-in-fact
contract, âlike any other contract, must be founded upon the
mutual agreement and intention of the parties.â The court
explained that the distinction between express and implied-
in-fact contracts turned on the âmode of proofâ:
âWhen an agreement consists of words, written or
spoken, stating in terms the understanding and obliga-
tions of the parties, it is called an âexpress contractâ; but
when it is inferred from the acts or conduct of the parties,
instead of their words, it is an âimplied contract.â But in
either instance it exists as an obligation solely because
the contracting party has willed, under circumstances to
which the law attaches the sanction of an obligation, that
he shall be bound. And the distinction between an express
and implied contract lies, not in the nature of the under-
taking, but solely in the mode of proof. In either case there
must be an offer of terms, or its equivalent, on the one side,
and the acceptance of such terms, or its equivalent, on the
other. * * * When this intention is expressed, we call the
contract an express one. When it is not expressed, it may
be inferred, implied, or presumed, from circumstances as
really existing, and then the contract, thus ascertained, is
called an implied one.â
(Internal citation and quotation marks omitted.)
We made the same observation more recently in
Staley, explaining that the âonly differenceâ between an
express contract and an implied-in-fact contract âis the
means by which the parties manifest their agreement.
In an express contract, the parties manifest their agree-
ment by their words, whether written or spoken. In an
Cite as 301 Or App 256(2019) 267 implied-in-fact contract, the partiesâ agreement is inferred, in whole or in part, from their conduct.â165 Or App at 262
(citing Restatement § 4 comment a); accord Gadalean v. SAIF,364 Or 707
, 717 n 3,439 P3d 965
(2019) (âIn an implied-in- fact contract, the partiesâ agreement is inferred, in whole or in part, from their conduct. * * * This court has explained that a contract implied in fact arises âwhere the natural and just interpretation of the acts of the parties warrants such [a] conclusion.â Owen v. Bradley,231 Or 94, 103
,371 P2d 966
(1962).â).
In that way, an implied-in-fact contract differs sub-
stantially from an implied-in-law contract, also referred to
as a âquasi-contractâ theory. See Staley, 165 Or App at 262
(observing that â[t]he two concepts differ substantially, and
the failure to distinguish them has sometimes led to con-
fusionâ (citing Arthur Linton Corbin, 1 Corbin on Contracts
§ 19 at 44 (1963)). Unlike an express or implied-in-fact con-
tract, a â âquasi contractual obligation is one that is created
by the law for reasons of justice, without any expression of
assent,â â and â[t]he category includes a variety of types of
contractual obligations that are implied to prevent injus-
tice.â Id. (quoting 1 Corbin on Contracts § 19 at 46).
B. Determination of âPrevailing Partyâ
With those conceptual differences in mind, we turn
to the preliminary question posed on appeal: Who is prop-
erly considered a âprevailing partyâ in the context of this
split verdict?
According to defendant, it is entitled to attorney fees
under two related statutes, ORS 20.083 and ORS 20.096(1).
The former provides:
âA prevailing party in a civil action relating to an
express or implied contract is entitled to an award of attor-
ney fees that is authorized by the terms of the contract or
by statute, even though the party prevails by reason of a
claim or defense asserting that the contract is in whole or
part void, a claim or defense asserting that the contract is
unenforceable or a claim or defense asserting that the pre-
vailing party was not a party to the contract.â
268 Mindful Insights, LLC v. VerifyValid, LLC
ORS 20.083 (emphasis added). ORS 20.096(1), in turn, pro-
vides:
âIn any action or suit in which a claim is made based
on a contract that specifically provides that attorney fees
and costs incurred to enforce the provisions of the contract
shall be awarded to one of the parties, the party that pre-
vails on the claim shall be entitled to reasonable attorney
fees in addition to costs and disbursements, without regard
to whether the prevailing party is the party specified in the
contract and without regard to whether the prevailing party
is a party to the contract.â
(Emphasis added.)
As the emphasized parts of those statutes reflect,
both refer to recovery of attorney fees by the âprevailing
party.â That is where a third statute, ORS 20.077, comes
into play. That statute provides, in part:
â(1) In any action or suit in which one or more claims
are asserted for which an award of attorney fees is either
authorized or required, the prevailing party on each claim
shall be determined as provided in this section. The provi-
sions of this section apply to all proceedings in the action or
suit, including arbitration, trial and appeal.
â(2) For the purposes of making an award of attorney
fees on a claim, the prevailing party is the party who receives
a favorable judgment or arbitration award on the claim. If
more than one claim is made in an action or suit for which
an award of attorney fees is either authorized or required,
the court or arbitrator shall:
â(a) Identify each party that prevails on a claim for
which attorney fees could be awarded;
â(b) Decide whether to award attorney fees on claims
for which the court or arbitrator is authorized to award
attorney fees, and the amount of the award;
â(c) Decide the amount of the award of attorney fees
on claims for which the court or arbitrator is required to
award attorney fees; and
â(d) Enter a judgment that complies with the require-
ments of ORS 18.038 and 18.042.â
ORS 20.077 (emphases added).
Cite as 301 Or App 256 (2019) 269
As the text of ORS 20.077 indicates, â âprevail-
ing partyâ is to be determined on a âclaim-by-claimâ basis.â
Robert Camel Contracting, Inc. v. Krautscheid, 205 Or App
498, 504,134 P3d 1065
(2006). The statute was intended âto specifically clear up the âconfusionâ â in defining prevailing party that had resulted from arguably inconsistent appel- late decisions, some of which had designated a single pre- vailing party in the action as a whole, and others of which had identified a prevailing party for each individual claim.4Id.
(quoting Staff Measure Summary, House Committee on Judiciary, HB 2374, Apr 11, 2001; Staff Measure Summary, Senate Committee on Judiciary, HB 2374, May 18, 2001). The legislature opted for the latter, claim-by-claim approach. Id.; see also 16th Group, LLC v. Lynch Mechanical Construction,265 Or App 217, 220
,334 P3d 988
(2014) (â[T]o the extent
that a claim requires an award of attorney fees, under ORS
20.077(2)(c) the court âshallâ award attorney fees to the âpre-
vailing partyâ on that âclaim.â â).
In defendantâs view, under a claim-by-claim approach,
it prevailed on a separate claim for breach of an express con-
tract, even though it lost on the implied-in-fact theory. We
disagree. Although those alternative theories were pleaded
as separate âclaims for reliefâ in the complaint, they were
not distinct âclaims.â Rather, they involved the same oper-
ative factsâthat defendant promised to pay for plaintiffâs
consulting services and failed to do soâand sought the
same damages. As described earlier, breach of express con-
tract and breach of implied-in-fact contract are not distinct
claims but instead involve alternative ways of proving how
the parties manifested their agreementâeither orally or in
4
Specifically, prior to the enactment of ORS 20.077, Oregon appellate courts
had used both a ânet judgmentâ approach, which yielded one prevailing party
in an action involving multiple claims, and a claim-by-claim approach, which
could yield multiple prevailing parties in a single action. Compare Carlson v.
Blumenstein, 293 Or 494,651 P2d 710
(1982) (netting damages awards on claims and counterclaims in a contractual dispute to determine the âprevailing partyâ), with Wilkes v. Zurlinden,328 Or 626, 633
,984 P2d 261
(1999) (distinguishing Carlson and recognizing the âpossibility of more than one prevailing party when there is both a claim and a counterclaim on a contract and each party succeeds in defeating the other partyâs claim for reliefâ), and Newell v. Weston,156 Or App 371, 378
,965 P2d 1039
(1998), rev den,329 Or 318
(1999) (holding that âthe refer- ence to the âprevailing partyâ in ORS 20.096 was intended to mean the party who prevails on claims that are subject to the statute, not the party who prevails on all claims in the actionâ). 270 Mindful Insights, LLC v. VerifyValid, LLC writing (express) or through conduct (implied-in-fact). They are no different in legal effect. Staley,165 Or App at 262
.
We reached a similar conclusion in Mount Hood
Community College v. Federal Ins. Co., 199 Or App 146,111 P3d 752
(2005). In that case, the plaintiff brought claims for
breach of contract and quantum meruit. We assumed, for the
sake of argument, that the contract contemplated an award
of attorney fees on a âclaim-by-claim basis,â but rejected the
defendantâs argument that there were actually two separate
âclaimsâ for purposes of determining a prevailing party:
â* * * [D]efendants are incorrect that plaintiffâs quantum
meruit claim is a separate âclaimâ under the contract for
these purposes. Plaintiff sought damages of $59,570.35 on
its claim for breach of contract. Plaintiff alleged the same
operative facts and sought the same amountâ$59,570.35â
on its quantum meruit claim. Although not captioned as
such, plaintiffâs quantum meruit claim was an alternative
theory for recovering the same damages that it claimed
under its breach of contract claim. Indeed, the use of a
quantum meruit claim as an alternative to a breach of con-
tract claim is so common that it is not only unremarkable
but something that is expected. As is also common, plain-
tiff based both its breach of contract claim and its quan-
tum meruit claim on the same operative facts. Plaintiff was
entitled to plead alternatively on an express contract and
in quantum meruit without having to elect the theory upon
which it would rely. Kashmir Corp. v. Patterson, 289 Or 589,
592,616 P2d 468
(1980); see also ORCP 24 A.â199 Or App at 158
(emphasis omitted). Although our analysis in Mount Hood Community College was not premised on ORS 20.077, we noted that the outcome would have been no different under that statute.Id.
at 158 n 6 (âEven if we were
to assume that ORS 20.077, as enacted in 2001, see Or Laws
2001, ch 417, § 1, applies to this case, our analysis would not
be affected.â).
The same is true here: Although not captioned as
such, plaintiff alleged a single âclaimâ based on alterna-
tive theories of recovery for the same conduct involving a
breach of promises about the same services, and for the
same amount of damages. See ORCP 16 B (âWithin each
claim alternative theories of recovery shall be identified as
Cite as 301 Or App 256(2019) 271 separate counts.â); see also Petersen v. Fielder,185 Or App 164, 173
,58 P3d 841
(2002), rev den,335 Or 255
(2003) (con-
cluding that a quasi-contract claim âcould more properly
have been pleaded as a separate countâ but that the error
did not change the analysis for purposes of determining
the prevailing party). Defendant has not identified, and we
are not aware of, anything in the text, context, or history of
ORS 20.077 to suggest that the legislature intended to treat
alternative theories of recovery under a contract as sepa-
rate âclaims,â particularly when more than a century of case
law in Oregon has treated them otherwise.5 We therefore
reject defendantâs argument that it was a prevailing party;
the trial court correctly ruled that plaintiff, not defendant,
prevailed on the single breach-of-contract claim.
C. The Terms of the Implied-in-Fact Contract
The remaining issue is whether plaintiff, having
prevailed on the contract claim, was entitled to recover its
attorney fees. Oregon follows the so-called âAmerican ruleâ
that parties ordinarily bear their own costs of litigation,
so plaintiff must prove that a statute or a contract autho-
rizes the recovery of those fees. See Peace River Seed Co-Op
v. Proseeds Marketing, 355 Or 44, 65,322 P3d 531
(2014); Draper v. Mullennex et al,225 Or 267, 271
,357 P2d 519
(1960) (âIf plaintiff is entitled to a judgment for attorneyâs
fees against a defendant by reason of any special contract
5
Despite the trial courtâs ruling that ORS 20.077 does not support defen-
dantâs entitlement to fees because âit did not prevail in the dispute or as to the
contract claim as a whole,â defendantâs briefing does not cite ORS 20.077, let
alone develop an argument as to why claims for breach of an express contract and
claims for breach of a contract implied-in-fact should not be treated as a single
contract claim. At oral argument, however, defendant contended that the reci-
procity provisions in ORS 20.083 and ORS 20.096 were designed to prevent par-
ties from leveraging a nonexistent right to attorney fees to extract settlements
in contract disputes, and that treating express and implied-in-fact theories as a
single claim would undermine that intent. We disagree. The risk of leveraging
a nonexistent right to attorney fees is present regardless of how many theories
of contract are alleged based on a single set of facts. For example, a party could
assert a single claim for breach of express contract and allege that the agreement
included a right to attorney fees. If the plaintiff prevailed on that claim but failed
to prove that a right to attorney fees was a term of the contract, the defendant
would not somehow become a prevailing party for purposes of ORS 20.077. This
situation is not materially different; plaintiff proved that defendant breached its
contract but ultimately failed to prove that a right to attorney fees was a term of
that contract.
272 Mindful Insights, LLC v. VerifyValid, LLC
* * * then the right to such recovery should be particularly
pleaded and proved.â). In this case, plaintiff contended, and
the trial court agreed, that the implied contract between the
parties authorized the recovery of fees.
The trial courtâs ruling was premised on the view
that the attorney-fee provision in the MCSA was part of the
implied-in-fact agreement. The courtâs letter opinion begins
by quoting that provision from the MCSA:
âThe attorney fee provision in the contract between the
parties is very broad and provides, in relevant part:
â âIn the event of any dispute arising out of the sub-
ject matter of this Consulting Agreement, the prevail-
ing party shall recover, in addition to any other dam-
ages assessed, its reasonable fees and costs incurred in
arbitrating, litigating, or otherwise settling or resolving
such dispute.â â
Although the trial court did not explain the basis for con-
cluding that the partiesâ implied-in-fact agreement included
that fee provision, it presumably agreed with the argument
that plaintiff made below and continues to advance on
appeal: that âwhat makes an express contract is the oral or
written specific assent to the terms. And [an] implied con-
tract, which can still be reflected in the terms of the MCSA,
is accepting it by their conduct.â In other words, plaintiff
contends that the only difference between its theories of an
express contract and an implied-in-fact contract was the
manner of acceptance.
As defendant correctly observes, that is not how
the case was tried by plaintiff or decided by the jury. First,
plaintiffâs express contract theory was not limited to accep-
tance of those terms by signature or words, as opposed to
conduct. During closing argument, plaintiff told the jury
that âthe first one is breach of express contract. Thatâs the
Master Consulting Services Agreement.â Plaintiff then
explained, âThey started working on that and [defendant],
by its words and conduct makes aâagreed to those terms
and those terms were eventually incorporated into the
Master Consulting Services Agreement, which Edward
Woods had sent two days before in which [defendant] never
Cite as 301 Or App 256 (2019) 273
disagreed with.â That argument was consistent with the
jury instructions, which likewise stated that acceptance is
either âwords, conduct, or both that would reasonably lead
the party who made the offer to believe the essential terms
of the offer had been agreed to.â
At the close of the evidence, plaintiff told the jury
that the terms of the âimplied-in-factâ theory presented a
different question from whether the parties agreed to the
terms of the MCSA: âThatâs a different legal theory thatâs
closely related, thatâs whether or not the parties agreed to
the terms of the Master Consulting Services Agreement, we
can infer from the partiesâ conduct that they were acting
together as if they had a contract.â Then, when describing the
evidence to support that theory, plaintiff made no mention
of the MCSA being sent or that the terms of the implied-in-
fact contract were the same as the MCSA. Rather, plaintiff
pointed to a more limited set of promises around payment
and expectation of payment:
âAnd when you look at the volume of communications,
itâs two giant binders. The slides weâve seen and the testi-
mony you heard, [defendant] and [plaintiff] were acting as
if they had a contract and [defendant] was requesting work.
[Plaintiff] was doing it. [Plaintiff] was repeatedly making
clear they expected to be paid and [defendant] promised to
pay.â
The written jury instructions then reiterated that
the implied-in-fact contract theory was â[i]n the alterna-
tive to their express contract claimâ; the instructions were
also consistent with the distinction between acceptance of
express terms through conduct (an express contract the-
ory) and plaintiffâs closing argument on its claim for breach
of the express contract, which stated that the terms of the
MCSA had been accepted by words and conduct.
And then the verdict form itself reflected the dis-
tinction between a contract theory based on the terms of
the MCSA (the express contract) and an implied-in-fact con-
tract in which the terms were not expressed but could be
inferred from the partiesâ conduct. Whereas the jury was
asked specifically whether âthe MCSA form[ed] the terms
of an express contract betweenâ the parties, the question
274 Mindful Insights, LLC v. VerifyValid, LLC
regarding the implied-in-fact contract theory simply referred
to âan implied contractâ defendant had with plaintiff.
In light of how the case was tried, plaintiffâs post-
trial explanationâthat the jury found an implied contract
with the same terms as the MCSAâhas no support in the
record. The only fair reading of the verdict is that the jury
explicitly rejected plaintiffâs theory that the parties, through
words or conduct, had agreed to the express terms set out
in the MCSA, but nonetheless found that it had an implied-
in-fact agreement to pay for the invoiced consulting services
and plaintiffâs expenses.
Because the jury rejected the theory that the par-
ties agreed to the terms of the MCSA, that theory cannot
supply a basis for concluding that plaintiff prevailed at trial
on such a claim. Moreover, because there is no evidence of
any conduct itself from which to infer that the parties other-
wise reached an implied agreement on a term related to
attorney fees, the trial court erred in awarding plaintiff its
attorney fees and litigation costs on that basis.6 Accordingly,
we reverse those parts of the supplemental judgment and
otherwise affirm.
Supplemental judgment reversed in part; otherwise
affirmed.
6
The trial courtâs award of attorney fees for time spent on the quantum
meruit theory was derivative of the entitlement related to the implied-in-fact
contract, and plaintiff does not offer any independent justification for awarding
those fees. The court also awarded $10,251.92 âin litigation costs and expenses
pursuant to the partiesâ contractâ based on the same provision in the MCSA, and
we reverse that award as well.