S058450, Opinion — Menasha Forest Products Corp. v. Curry County Title

81
Argued and submitted November 10, 2010, decision of Court of Appeals on attorney
fees reversed; decision of Court of Appeals otherwise affirmed;
judgments of circuit court affirmed March 25, 2011
MENASHA FOREST PRODUCTS CORPORATION,
Respondent on Review,
v.
CURRY COUNTY TITLE, INC.,
and Transnation Title Insurance Company,
Petitioners on Review.
(CC 06CV0844; CAA137464; SC 8058450)
249P3d1265
An escrow contract between plaintiff and defendant Curry County Title pro-
vided that, if Curry County Title prevailed in an action based on that contract, it
would be entitled to "reasonable attorney fees * * * incurred[.]" Plaintiff filed an
action for breach of contract against Curry County Title, and for declaratory relief
against Curry County Title and its principal, Transnation. Defendants were rep-
resented by a shared attorney; Transnation paid that attorney's fees pursuant to
an agency agreement between it and Curry County Title. Defendants prevailed
and the trial court awarded them $31,449.85 in attorney fees. On plaintiffs appeal,
the Court of Appeals vacated the trial court's judgment and remanded for entry of
a lesser attorney fee award, reasoning that Curry County Title had "incurred" only
$2,500 in attorney fees, i.e., the amount that the agency agreement required Curry
County Title to indemnify Transnation. Held: Applying the plain meaning of the
terms "attorney fees" and "incurred," a party incurs attorney fees when that party
has become obligated in law or equity, or otherwise is subject to, responsible for, or
answerable for the payment of the reasonable value of an attorney's services,
regardless of whether, or by what means that party, or someone else, pays for those
services.
The decision of the Court of Appeals on attorney fees is reversed. The decision
of the Court of Appeals is otherwise affirmed. The judgments of the circuit court
are affirmed.
On review from the Court of Appeals.*
Jonathan 	M. 	Radmacher, 	McEwen 	Gisvold 	LLP,
Portland, argued the cause and filed the brief for petitioners
on review.
Gary 	Roberts, 	Schwabe, 	Williamson 	& 	Wyatt, 	P.C.,
Portland, argued the cause and filed the brieffor respondent
on review.
Before De Muniz, Chief Justice, and Durham, Balmer,
Kistler, Walters, and Linder, Justices.**
* 	Appeal from Curry County Circuit Court, Richard L. Barron, Judge. 234 Or
App 115, 227 P3d 770 (2010).
** Gillette and Landau, JJ., did not participate in the consideration or deci-
sion of this case.

82 	Menasha Forest Products Corp. v. Curry County Title
DURHAM,J.
The decision of the Court of Appeals on attorney fees is
reversed. The decision of the Court of Appeals is otherwise
affirmed. The judgments of the circuit court are affirmed.

Cite as 350 Or 81 (2011) 	83
DURHAM,J.
The issue in this action is whether defendants are
entitled to an award of attorney fees against plaintiff and, if
so, the amount of the award. An escrow contract between
plaintiff Menasha Forest Products Corporation and defen-
dant Curry County Title, Inc. (CCT) provided that ifCCT pre-
vailed in an action based on the contract, CCT would be enti-
tled to "reasonable attorney fees expended or incurred[.]"
Plaintiff brought an action for breach of contract against
CCT, and for negligence and declaratory relief against CCT
and its principal, Transnation Title Insurance Company
(Transnation). Defendants prevailed and sought attorney
fees. The same attorney had represented both CCT and
Transnation in the action, and Transnation had paid that
attorney's fees pursuant to an agency agreement between
CCT and Transnation.
This case requires us to determine the effect of that
third-party payment on CCT's contractual right to recover
attorney fees from plaintiff. The trial court determined that
Transnation's payment did not affect CCT's entitlement to
attorney fees; it awarded $31,449.85 in attorney fees to
defendants. The Court of Appeals disagreed, and determined
that CCT's entitlement to attorney fees was limited by the
terms of the agency agreement, quoted below, between CCT
and Transnation; it reduced the attorney fee award to $2,500.
Menasha Forest Products Corp. u. Curry County Title, 234 Or
App 115, 126-27, 227 P3d 770 (2010). On review, we con-
clude, as did the trial court, that Transnation's payment of
the attorney fees had no effect on CCT's entitlement to an
attorney fee award under the escrow contract. We also agree
with the trial court that Transnation, which prevailed in this
action, also may recover its reasonable attorney fees unre-
duced in the manner described by the Court of Appeals.
CCT provides escrow and other services related to
the conveyance of real property. Before 2004, CCT entered
into an agency agreement with Transnation under which
Transnation, as principal, would provide title insurance for
CCT's escrow customers and CCT, as agent, would indemnify
Transnation for certain losses, including attorney fees and

84 	Menasha Forest Products Corp. v. Curry County Title
costs of litigation, incurred by Transnation. The agency
agreement provided, in part:
"13. 	Liability of AGENT; Insurance
"a) 	Agent shall be liable to COMPANY for, and
hereby 	agrees 	to 	indemnify the 	COMPANY
against all loss, cost or expense, including attor-
ney's fees and costs of litigation, incurred by the
COMPANY and arising from
"l. 	the fraud, misconduct or gross negligence of
AGENT or any agent, servant or employee of
AGENT; or
"2. 	the failure of AGENT to comply with the
terms of this Agreement or with the rules,
regulations or instructions given to AGENT
by COMPANY; or
"3. 	any loss or misapplication of funds, docu-
ments or other things of value by AGENT or
any agent, servant or employee of AGENT; or
"4. 	any other actual or alleged act or omission by
AGENT or any agent, servant or employee of
AGENT, whether or not occurring in connec-
tion with the issuance of a Policy, and any
Policy issued by AGENT, but the liability of
AGENT under this Section 13(a) 4 shall not
exceed the first $2,500.00 of such loss, cost or
expense."
In 2004, plaintiff entered into an agreement to sell
timber property to a company called Golden Gate Trust. To
facilitate that transaction, plaintiff contracted with CCT to
provide escrow services, a title report, and title insurance to
Golden Gate Trust. The escrow contract, which CCT drafted
as a set of instructions from plaintiff to CCT, provides, in
part:
"If you [CCT] are the prevailing party in any action or
proceeding between you and some or all of the parties to the
escrow, you shall be entitled to all costs, expenses, and
reasonable attorney fees expended or incurred in connec-
tion therewith."

Cite as 350 Or 81
CCT secured title insurance for the transaction
through Transnation. Although plaintiff provided CCT with
a correct description of the property to be conveyed, CCT pre-
pared a title report and deed that erroneously included
40 acres of property that plaintiff previously had conveyed
to a different buyer. The title insurance policy issued by
Transnation also included the previously sold parcel.
After Transnation discovered the error, it wrote to
plaintiff asserting that plaintiff had breached its warranty of
title and would be required to indemnify Transnation in the
event that Transnation was required to pay any claim by
Golden Gate Trust. Plaintiff then brought this action for
breach of contract against CCT and for a declaratory judg-
ment against both CCT and Transnation. As part of the
breach of contract claim against CCT, plaintiff asserted its
entitlement to attorney fees under ORS 20.096(1) (2007).1 In
their answer, defendants asserted entitlement to attorney
fees pursuant to the escrow contract and ORS 20.096(1). On
defendants' motion, the trial court granted judgment on the
pleadings in favor of defendants on plaintiffs declaratory
judgment claim, concluding that plaintiff had not pleaded a
controversy that entitled it to seek a declaratory judgment.
Plaintiff then voluntarily dismissed its breach of contract and
negligence claims. The trial court entered a general judg-
ment dismissing all of plaintiffs claims without prejudice.
Defendants, through their shared attorney, filed a
petition for attorney fees and costs. Defendants asserted that
plaintiff was contractually obligated to pay defendants' attor-
ney fees pursuant to the attorney fee provision of the escrow
contract, quoted above. Defendants' attorney detailed the
legal services performed in his representation of defendants.
1 ORS 20.096(1) (2007) provides:
"In any action or suit in which a claim is made based on a contract, where
such contract 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 prevails on the claim, whether that party is the party specified in
the contract or not, shall be entitled to reasonable attorney fees in addition to
costs and disbursements."
The legislature amended ORS 20.096(1) in 2009. Or Laws 2009, ch 285, § 2. The
amendments are inapplicable to this case. All references in this opinion to ORS
20.096(1) are to the 2007 version of the statute.

86 	Menasha Forest Products Corp. v. Curry County Title
He asserted that, although his "attorney fees were expended
for both Defendants, [the] amounts of fees would have been
identical if only one Defendant had been sued[.]"
Plaintiff 	filed 	objections. 	Plaintiff 	argued 	that
Transnation was not entitled to attorney fees because it was
not a party to the escrow contract, and that CCT was not enti-
tled 	to 	attorney fees 	because it had 	not "expended 	or
incurred" any attorney fees within the meaning of the escrow
contract. Plaintiff pointed out that defendants' attorney had
billed Transnation for all attorney fees associated with the
underlying 	action, 	pursuant 	to 	the 	agency 	agreement
between CCT and Transnation, and that Transnation had
paid those bills.
In a letter opinion, the trial court overruled plain-
tiffs objections, stating:
"Plaintiff alleged in its declaratory relief claim that [CCT]
at all times was acting as the agent for Transnation. Its
complaint is filed against both defendants, which are
required to defend the matter and which, according to
plaintiff, are subject to its request for declaratory relief.
[CCT] is entitled to attorney fees under the contract
between it and plaintiff in defending this matter and the
fact that Transnation may be paying for the attorney fees
does not affect [CCT's] right to attorney fees as the prevail-
ing party. Domingo v. Anderson, 325 Or 385[, 938 P2d 206]
(1997)."
The court entered a supplemental judgment awarding defen-
dants their attorney fees in the amount of $31,449.85, paya-
ble by plaintiff.
Plaintiff appealed and assigned error to the trial
court's award of attorney fees to defendants. The Court of
Appeals agreed with plaintiff that the escrow contract enti-
tled CCT to recover "attorney fees expended or incurred" in
connection with 	the 	underlying action. 	The court then
resolved the question of whether CCT had "incurred" fees by
analyzing 	the 	agency 	agreement 	between 	CCT 	and
Transnation:
"[A)ttorney fees are 'incurred' if a party seeking those fees
'has become liable to pay them.' The record in this case
clearly demonstrates that Transnation, not CCT, was billed

Cite as 350 Or 81
for and paid all attorney fees. Thus, whether the trial
court's award was proper turns on whether CCT was 'liable'
to pay the attorney fees billed to and paid by Transnation.
That inquiry, in turn, depends on the agency agreement
between CCT and Transnation."
87
Menasha Forest Products Corp., 234 Or App at 126 (citation
omitted; 	emphasis 	in original). 	Because 	the 	agreement
between CCT and Transnation limited CCT's indemnifica-
tion obligation to 	Transnation to $2,500, 2 the Court of
Appeals vacated the trial court's supplemental judgment and
remanded for entry of an attorney fee award to defendants in
that amount. Id. at 127. We allowed review to address the
attorney fee issues. 3
On review, defendants argue that CCT is entitled to
attorney fees pursuant to the escrow contract between plain-
tiff and CCT, regardless of the separate contractual arrange-
ment between CCT and Transnation for the payment of the
attorney fees. Defendants propose a rule oflaw that "[w ]here
a contract or statute provides that a party will recover
reasonable attorney fees, the prevailing party is entitled to
an award of attorney fees, without regard to whether a third
party paid those attorney fees on behalf of the prevailing
party." According to defendants, engaging in an evaluation of
who actually pays the attorney fees is inconsistent with the
contractual term "incurred" and subverts the reciprocity
principle contained in ORS 20.096(1).
Plaintiff responds that defendants failed to prove
that CCT "expended or incurred" fees as required by the
escrow contract, because CCT did not assert either that it
paid fees or that it was required to pay fees. Plaintiff also con-
tends that ORS 20.096(1) does not aid defendants because
2 The agency agreement between CCT and Transnation, quoted above, pro-
vided three exceptions to that liability limitation, i.e., three situations in which
CCT would have been required to indemnify Transnation for all "loss, cost or
expense, including attorney[] fees"' incurred by Transnation. None of those excep-
tions is presented on the facts of this case.
3 On appeal, plaintiff also assigned error to the trial court's conclusion that
plaintiff had alleged no present controversy that qualified for declaratory relief.
The Court of Appeals determined that the trial court did not err in that respect. We
limit our review to the attorney fee issue and thus express no opinion on plaintiffs
entitlement to declaratory relief.

88 	Menasha Forest Products Corp. v. Curry County Title
that statute does not extend the right to recover attorney fees to
a nonparty to the underlying contract, such as Transnation.
Accordingly, plaintiff contends, the Court of Appeals erred in
concluding that defendants were entitled to any attorney fee
award.4
Generally, a party is not entitled to an award of
attorney fees unless a statutory or contractual provision spe-
cifically authorizes that award. Mattiza v. Foster, 311Or1, 4,
803 	P2d 	723 	(1990). 	Defendants identify two 	potential
sources of authority for an attorney fee award in this case:
the attorney fee provision in the escrow contract, and ORS
20.096(1). Under that statute, if a contract entitles one con-
tracting party to recover attorney fees upon prevailing in an
action to enforce the provisions of the contract, the prevailing
party in the action is entitled to attorney fees whether or not
that party is the party specified in the contract. See Jewell v.
Triple B. Enterprises, 290 Or 885, 887-88, 626 P2d 1383
(1981) (concluding that the statute "requires reciprocity of
recovery of attorney fees").
Plaintiff raised different objections to the claim of
each defendant to recover attorney fees. For that reason, we
examine the trial court's authority to award attorney fees
separately for each defendant.
We begin with CCT. The escrow contract between
CCT and plaintiff expressly entitles CCT to recover attorney
fees "expended or incurred" in connection with this action if
CCT prevails in the action. As we shall explain, that provi-
sion authorizes the award of attorney fees that the trial court
granted. There is no reason, therefore, to consider whether
the 	"reciprocity 	of 	recovery" 	policy 	embodied 	in 	ORS
20.096(1) has any application to CCT's claim for attorney
fees.
The legal issue before us is straightforward: Did
CCT "expend" or "incur" "attorney fees" in connection with
this action if Transnation paid the attorney fees pursuant to
its agency agreement with CCT? The escrow contract here
' In the alternative, plaintiff argues that the Court of Appeals correctly
reduced the attorney fee award to $2,500 pursuant to the indemnity agreement
between CCT and Transnation. Although plaintiff challenges the trial court's
authority to award attorney fees in any amount, plaintiff does not dispute the rea-
sonableness of the amount of attorney fees awarded by the trial court.

Cite as 350 Or 81 	89
does not specially define the key terms of the attorney fee
provision. Consequently, we accord those terms their ordi-
nary meaning.
The phrase "attorney fees," when used in the context
of an attorney fee award, means "the reasonable value of an
attorney's services, whether or not the client was required to
pay for those services." Colby v. Gunson, 349 Or 1, 5, 238 P3d
374 (2010). That definition accords no significance to the exis-
tence of any obligation on a client's part to pay for the attor-
ney's services. Domingo, 325 Or at 389; see Colby, 349 Or at 5
(discussing holding in Domingo.) Our inquiry thus narrows
to the question whether the escrow agreement modifies the
usual conception of attorney fees noted in Colby by incorpo-
rating the phrase "expended or incurred in connection there-
with" after the phrase "attorney fees." For ease of analysis,
we focus on the second of those alternatives, "incurred,"
because it provides the most direct answer in this case.
The pertinent definition of "incur" is to "become lia-
ble or subject to[.]" Webster's Third New Int'l Dictionary 1146
(unabridged ed 2002). "Liable" means "bound or obligated
according to law or equity: RESPONSIBLE, ANSWERABLE."
Id. at 1302. Those definitions, when read together, indicate
that a party is entitled to "attorney fees*** incurred" when
the party has become obligated in law or equity, or otherwise
is subject to, responsible, or answerable for the payment of
the reasonable value of an attorney's services.
The recent decision in White v. Jubitz Corp., 347 Or
212, 219 P3d 566 (2009) provides guidance regarding the
meaning of the term "incur."5 The plaintiff in White sought
The Colby and White decisions addressed the meaning of statutory terms, i.e.,
"attorney fees" and "incurred," respectively, not the terms of a contract. In constru-
ing a statute, we typically pursue the intent of the legislature, whereas, in constru-
ing a private contract, we endeavor to determine the intent of the contracting par-
ties. As those cases illustrate, however, if the legislature has not supplied a special
definition for a statutory term, we ordinarily infer that the legislature intended the
term to receive its plain and ordinary definition. See Colby, 349 Or at 5 (addressing
"plain and ordinary meaning" of the statutory term "attorney fees"); See White, 34 7
Or at 232-34 (examining meaning of statutory term "incurred" according to its ordi-
nary dictionary definition). In a similar manner, we apply the plain and ordinary
meaning of the terms "attorney fees" and "incurred" here, because the parties gave
no special definitions to those terms in the escrow contract and we assume, there-
fore, that the parties intended them to carry their plain and ordinary definitions.
For that reason, Colby and White are helpful here even though those cases involved
statutory, rather than contractual, interpretation.

90 	Menasha Forest Products Corp. v. Curry County Title
medical treatment for an injury. Id. at 215. Medicaid pro-
vided coverage for the plaintiffs medical costs and capped the
amount that the plaintiffs medical providers could charge for
their services. Id. The issue presented was whether the
charges billed to the plaintiff by his medical providers but
later 	written 	off were 	"reasonable 	charges 	necessarily
incurred" under ORS 31.710, such that the plaintiff could
claim those charges as economic damages. Applying the plain
meaning of the term "incur," the court in White rejected the
defendant's argument that the plaintiff had not incurred
those charges:
"A plaintiff who is injured and who obtains necessary med-
ical treatment becomes 'liable or subject to' reasonable
charges for that treatment and thereby 'incurs' them. ORS
31.710 does not require that a plaintiff also pay or other-
wise satisfy those charges. Whether or by what means the
plaintiff or a third party satisfies medical charges is a mat-
ter between the plaintiff, the third party, and the medical
providers."
Id. at 234. Accordingly, the court held that ORS 31.710 did
not prevent plaintiff from claiming the disputed charges as
economic damages.
From our discussion of the ordinary meaning of
"incur" and from White, we derive two legal principles appli-
cable to this case. 	First, just as the plaintiff in White
"incurred" charges for medical treatment upon receipt of that
medical treatment, even though the plaintiff was not charged
and did not pay the full cost of those services, so too did CCT
"incur" attorney fees in this context upon performance of the
attorney's services on CCT's behalf, even though CCT did not
pay the full cost of the attorney's services. Second, whether or
by what means a party to a legal action (or someone else)
pays an attorney's bill has no bearing on the question of
whether the party "incurred" attorney fees. Domingo, 325 Or
at 389-90. The act or condition that causes a party to incur, or
become liable for or subject to, an attorney fee is legally dis-
tinguishable from the act of paying for or otherwise satisfying
a liability for that fee. Plaintiffs argument that a party does
not incur attorney fees when those fees are billed to and paid
by a third party fails because it blurs that distinction. Plain-
tiff, the losing party in this action, may not take advantage of

Cite as 350 Or 81 	91
CCT's separate agreement with Transnation that protects
CCT, in whole or in part, from the burden of paying the full
cost of attorney fees that CCT incurred. Under the circum-
stances in this case, CCT remained answerable for the cost of
the attorney's services, whether or not the attorney billed
CCT, ifTransnation, for some reason, was unable to pay.
With the foregoing legal discussion in mind, we
return to the facts of this case. CCT received legal services
from an attorney representing both CCT and Transnation in
the defense of an action under the escrow contract. Upon per-
formance of those legal services, CCT "incurred" attorney
fees, valued by the trial court at $31,449.85. As noted,
the attorney submitted his statement for those services to
Transnation and Transnation paid for the services, all in
accordance with the agency agreement between CCT and
Transnation. The agency agreement governs the rights and
liabilities between CCT and Transnation regarding attorney
fees, but it has no effect on CCT's ultimate responsibility for
the reasonable value of the legal services that the attorney
performed for CCT.6 Accordingly, we hold that the Court of
Appeals erred in reducing the amount of CCT's attorney fee
award. Under the escrow contract, CCT is entitled to recover
the full amount of reasonable attorney fees incurred, i.e.,
$31,449.85. 7
Finally, we address Transnation's entitlement to an
award of attorney fees. Transnation does not seek an addi-
tional award of fees separate and apart from the award of
fees to CCT. The question, then, is whether the trial court
erred in including Transnation as a judgment creditor with
CCT on the award of attorney fees.
6 Plaintiff has focused its arguments about whether CCT "incurred" attorney
fees on the assumed legal effect ofTransnation's payment of the attorney's bills. To
the extent that plaintiff contends that Transnation's agency agreement protected
CCT from the outset of this litigation from incurring liability for attorney fees, we
disagree. Notwithstanding the agency agreement, CCT "incurred" liability for
attorney fees, under the theory of quantum meruit, and perhaps other theories,
upon performance of the legal services on CCT's behalf. We do not address that
question further, beyond that observation, because the parties did not address it
before the trial court or the Court of Appeals.
' Whether the agency agreement requires CCT to pay any of the proceeds of the
attorney fee award to Transnation is not an issue presented by this case.

92 	Menasha Forest Products Corp. v. Curry County Title
Plaintiff contends that the escrow contract does not
name Transnation as a party to that contract and, therefore,
the contract does not authorize an award of attorney fees to
Transnation. The trial court rejected plaintiffs argument,
reasoning that plaintiff had alleged in its claims that, at all
times, CCT was the agent for Transnation. The court also
concluded that Transnation's agency relationship with CCT
entitled Transnation to recover attorney fees from plaintiff in
accordance 	with 	the 	escrow 	contract. 	The 	record 	con-
firms that CCT was Transnation's agent in the property
transaction.
Plaintiff does not come to grips with the legal conse-
quences 	of 	the 	trial 	court's 	determination 	that 	CCT
was Transnation's agent in the property transaction. The
premise of the trial court's ruling was that a principal in
Transnation's position acquires a right to enforce the attor-
ney fee provision of the contract even ifthe contract does not
so provide and even if the principal is not a signatory to the
contract. 	On review, 	plaintiff presents no 	argument 	or
authority suggesting that the trial court's premise was
incorrect.
The 	undisputed fact 	of the 	agency 	relationship
between Transnation and CCT refutes plaintiffs claim that
Transnation was a stranger to the contract. In the absence of
some demonstration by plaintiff that Transnation's status as
CCT's principal included no authority to enforce its agent's
contract, the trial court did not err in overruling plaintiffs
objection to Transnation's petition for attorney fees. As a con-
sequence, the trial court correctly awarded attorney fees to
Transnation, and the Court of Appeals erred in requiring a
reduction in the award of attorney fees to which Transnation
was entitled.
The decision of the Court of Appeals on attorney fees
is reversed. The decision of the Court of Appeals is otherwise
affirmed. The judgments of the circuit court are affirmed.