714
Submitted September 6, 2019; supplemental judgment modifying spousal
support affirmed, supplemental judgment awarding attorney fees and costs
reversed December 2, 2020
In the Matter of the Marriage of
Sharon Lynn CALLEN,
Petitioner-Appellant,
and
John Nelson CALLEN,
Respondent-Respondent.
Clackamas County Circuit Court
DR11070413; A167105
479 P3d 313
Wife appeals two related supplemental judgments. In the first judgment, the
trial court granted wife’s motion to modify spousal support but awarded her a
lesser amount than she wanted. The modification judgment is affirmed without
written discussion. In the second judgment, the trial court made a discretionary
award of attorney fees and costs to husband in the amount of $17,714.15, based
solely on wife having not been objectively reasonable in settlement negotiations.
Held: The trial court improperly relied on post hoc reasoning to conclude that wife
was unreasonable in settlement negotiations and therefore erred in concluding
that wife was not objectively reasonable in settlement negotiations.
Supplemental judgment modifying spousal support affirmed; supplemental
judgment awarding attorney fees and costs reversed.
Thomas J. Rastetter, Judge.
Sharon Lynn Callen filed the briefs pro se.
George W. Kelly filed the briefs for respondent.
Before Armstrong, Presiding Judge, and Tookey, Judge,
and Aoyagi, Judge.
AOYAGI, J.
Supplemental judgment modifying spousal support
affirmed; supplemental judgment awarding attorney fees
and costs reversed.
Cite as 307 Or App 714 (2020) 715
AOYAGI, J.
Wife appeals two related supplemental judgments.
In the first judgment, the trial court granted wife’s motion
to modify spousal support but awarded her a lesser amount
than she wanted. Wife raises multiple assignments of error
as to that judgment, which we reject without written discussion, thus affirming the modification judgment. In the second judgment, the trial court made a discretionary award
of attorney fees and costs to husband in the amount of
$17,714.15, based solely on wife having not been objectively
reasonable in settlement negotiations. See ORS 107.135(8)
(granting the trial court discretion to award attorney fees
and costs in a spousal-support modification proceeding);
ORS 20.075(1)(f) (listing factors that a court must consider
in deciding whether to make a discretionary attorney-fee
award, including the “objective reasonableness of the parties and the diligence of the parties in pursuing settlement
of the dispute”). As to the second judgment, we agree with
wife that the trial court erred in concluding that wife was
not objectively reasonable in settlement negotiations, and,
because that was the sole basis for the court’s award, we
reverse the second judgment.1
FACTS
The relevant facts are undisputed. Wife requests
de novo review, but such review is discretionary, and we
decline to provide it in this case, including because it would
make no difference to the disposition. See ORS 19.415(3)(b)
(granting us “sole discretion” whether to allow de novo
review in equitable proceedings); ORAP 5.40(8)(c) (limiting
de novo review to “exceptional cases”).
In 2013, husband and wife divorced after a 24-year
marriage. As part of the dissolution judgment, husband was
ordered to pay maintenance spousal support to wife in the
amount of $2,700 monthly for three years and then $2,200
monthly for nine years. At the time, husband was earning
about $136,000 annually, while wife was unemployed. Wife
was in good health, however, other than having an alcohol
1
We reject, however, wife’s other assignment of error regarding the second
judgment, which relates to wife’s own request for attorney fees.
716 Callen and Callen
addiction, and the court expected her to obtain employment
quickly and to earn $3,250 monthly.
In 2015, wife moved to modify spousal support, based
on a substantial and unanticipated change in economic circumstances, specifically that she had become disabled and
unable to work while husband’s income had increased. Wife
initially requested $4,950 monthly (instead of $2,200) for an
indefinite term. She later amended her motion to request an
amount “just and equitable under the circumstances.”
After various delays, a modification hearing was
scheduled for November 21, 2017. One month before the
hearing—on October 17, 2017—husband made a settlement
offer to wife in which he offered to pay $3,200 monthly
spousal support, effective September 1, 2017. In support of
that number, husband asserted that wife’s “physical and
emotional problems are a function of her alcohol and opioid
abuse,” that wife was “in the unique position of being able
to control whether or not she is disabled,” and that wife is
capable of working 15 to 20 hours a week.
In response, wife disputed husband’s view of the
facts. She strongly disagreed that she could work 15 to 20
hours weekly. Wife asserted that she suffers from chronic
pancreatitis and severe psychiatric conditions, that she is
both physically and mentally disabled, that she uses opioids in conformance with published guidelines and does
not abuse them, and that it was “disrespectful” for husband to claim that she can control being disabled. Wife
made a settlement counteroffer of $4,800 monthly spousal
support, effective April 1, 2017. Husband rejected wife’s
counteroffer.
The modification hearing took place as scheduled.
Consistent with the parties’ settlement communications,
two central issues at the hearing were wife’s health and her
ability to work. On husband’s motion, the court had ordered
an independent medical examination, including psychiatric testing, to assess wife’s medical condition and its effect
on her day-to-day functioning and her ability to find and
maintain employment. The independent medical examiner
testified at the hearing, as did wife’s primary care physician, another physician who was treating wife for chronic
Cite as 307 Or App 714 (2020) 717
pancreatitis, and wife’s therapist. It suffices to say that the
testimony of all four of those witnesses was more consistent
with wife’s view of her health and ability to work than with
husband’s view.
In a letter opinion dated December 20, 2017, the
trial court granted wife’s motion to modify spousal support, increasing her spousal support from $2,200 to $3,200
monthly, effective May 1, 2017, and making it indefinite. In
setting that amount, the court made findings about each
party’s income and expenses, including resolving the disputed issues about wife’s health and ability to work. As to
the latter, the court found that wife is disabled, that she
has been diagnosed with chronic pancreatitis and several
psychiatric disorders, and that she is unable to work. The
court further found that wife is an alcoholic and dependent on opioids to control her pain, but that the evidence
was insufficient to find that she abuses either substance.
Regarding wife’s expenses, the court found that wife’s
uniform support declaration “likely greatly overstated”
her utilities and health care expenses, which included
expenses for “discretionary matters such as travel,” and
that wife could reduce her housing expenses by moving
from her two-bedroom apartment into a one-bedroom apartment. Ultimately, the court determined that, on the whole,
$3,200 monthly was a “just and proper” amount of spousal
support.
After the trial court ruled on the merits, each party
petitioned for attorney fees and costs. By letter opinion dated
December 3, 2018, the trial court granted husband’s petition, awarding him $15,000 in attorney fees (which was less
than the $34,506.50 that he had requested) and $2,714.15 in
costs. The court stated that it was awarding fees and costs
to husband based on a single factor in ORS 20.075(1): the
objective reasonableness of the parties and their diligence
in pursuing settlement of the dispute. ORS 20.075(1)(f). The
court explained its reasoning:
“The court adopts the findings in the opinion letter dated
December 20, 2017. In light of those findings, [wife’s] settlement proposals were not reasonable and protracted
the litigation. The court ultimately ended up awarding
718 Callen and Callen
the increase in support that [husband] offered pre-trial,
although the effective date awarded by the court was more
favorable to [wife] than what was offered.”
Thus, the court awarded attorney fees and costs to husband,
as a discretionary matter, based solely on wife’s unreasonableness in settlement negotiations.
ANALYSIS
We generally review a trial court’s discretionary
decision to award attorney fees for abuse of discretion. See
ORS 107.135(8); ORS 20.075(3). However, “the proper exercise of discretion may be predicated on the trial court’s
determinations of questions of law or fact—and those determinations, in turn, may implicate independent standards of
review.” Niman and Niman, 206 Or App 400, 415,
136 P3d
1186 (2006); see also Espinoza v. Evergreen Helicopters, Inc.,
359 Or 63, 117,
376 P3d 960 (2016) (a trial court may abuse
its discretion if a decision is based on “predicate legal conclusions that are erroneous or predicate factual determinations that lack sufficient evidentiary support”). As relevant
here, we review for legal error a trial court’s determination
that a party was not objectively reasonable in pursuing settlement. Beaverton School Dist. 48J v. Ward,
281 Or App 76,
84-85,
384 P3d 158 (2016).
Wife argues that the trial court erred in awarding
attorney fees and costs to husband, because there is no evidence that she unreasonably protracted the litigation, particularly when one considers the timing of husband’s offer
(only one month before the scheduled hearing) and the relative financial positions of the parties. In wife’s view, her settlement positions were consistent with restoring the parties’
relative post-judgment positions after a change of circumstances, namely, her inability to work because of her disability. See Aaroe and Aaroe, 287 Or App 57, 63-64,
400 P3d
1024, rev den,
362 Or 300 (2017) (“A court’s primary objective
in modifying spousal support is to restore the relative, post-judgment positions of the parties after a change in circumstances has altered that relationship.”). Husband responds
that the trial court did not abuse its discretion in making
the award, pointing out that the court ultimately awarded
exactly the amount of monthly spousal support that he had
Cite as
307 Or App 714 (2020) 719
offered in settlement, albeit with an earlier effective date
than he offered.
We begin with the critical principle that, if a court
considers a party’s objective reasonableness in pursuing
settlement as a basis to award a discretionary attorney fee,
it must make that assessment “in the light of the parties’
circumstances and knowledge at the time the settlement was
tendered and rejected and not by some post hoc reference
to the result actually obtained.” Erwin v. Tetreault, 155
Or App 205, 214,
964 P2d 277 (1998), rev den,
328 Or 330
(1999) (emphasis added). Here, the trial court compared the
result actually obtained by wife—$3,200 monthly spousal
support, effective May 1, 2017—to husband’s pretrial settlement offer—$3,200 monthly spousal support, effective
September 1, 2017—to conclude that wife’s position in settlement had been unreasonable. That is precisely the kind of
post hoc reasoning that is not permitted.
As for the trial court’s reference to its December
2017 findings as supporting its conclusion, it is not entirely
clear what the court meant, in that those findings were
favorable to wife in some regards—particularly on the disputed issues of wife’s medical condition, her ability to work,
and her alleged substance abuse—and unfavorable to her
in others—specifically as to some of her expenses. To the
extent that the court was simply incorporating its prior
findings as part of its post hoc comparison of husband’s
settlement offer and the court’s ultimate award—which
appears the most likely case—such reasoning is improper,
as already discussed. See id. In any event, under the correct
legal analysis, which requires viewing the parties’ circumstances and knowledge at the time of the settlement negotiations, none of the court’s findings would be sufficient to support a conclusion that wife was unreasonable in settlement
negotiations.
We have said that a party’s subjective motivations
for deciding to reject a settlement offer and proceed with
the litigation can inform the reasonableness of a party’s conduct. Erwin, 155 Or App at 214-15. In Erwin, we pointed
to the trial court’s explanation that, because the plaintiff
was in “vindictive mode,” whereas the defendant was in
720 Callen and Callen
the mode of settling, the plaintiff was entirely or largely
responsible for the lawsuit going forward when it did not
have to.
Id. at 215. We held that the trial court did not err in
awarding attorney fees to the defendant because, “[i]mplicit
in [the trial court’s] observations was a determination that
an objectively reasonable person, after weighing the usual
cost/benefit considerations, would have accepted defendants’
settlement offer and that plaintiff did not do so because of
‘vindictive’ motivation.” In this case, the trial court did not
find that wife rejected husband’s offer out of vindictiveness
or any kind of bad faith, nor could it have so found on this
record.
There is also another point to consider when assessing the objective reasonableness of the parties in settlement
discussion for a modification of spousal support: A modification of spousal support must be “just and equitable,” which is
an assessment to be made within the trial court’s discretion.
Albrich and Albrich, 162 Or App 30, 37,
987 P2d 542 (1999)
(“The overriding consideration in determining the appropriate amount of spousal support is what is ‘just and equitable,’
ORS 107.105(1)(d), under the totality of the circumstances.”);
Tilson and Tilson,
260 Or App 427, 432,
317 P3d 391 (2013)
(“[W]e review for abuse of discretion the trial court’s determination whether and to what extent to modify the award.”).
Determining an appropriate level of support “is not a matter
of applying a mathematical formula.” Hoag and Hoag,
152
Or App 288, 293,
954 P2d 184 (1998). Given all the financial evidence that the court may consider and the significant
discretion that the court ultimately has in setting a “just
and equitable” amount, it is not a simple matter to predict
how much the court will award in a given case, particularly
when there are significant factual disputes relevant to one
or both parties’ income or expenses. Moreover, in a case such
as this one, whatever the court awards may be paid indefinitely, subject to further modification only if there is another
substantial and unanticipated change of circumstances,
which raises different considerations than negotiating a
one-time payment. The nature of a spousal support award
and the court’s significant discretion in setting the amount
is necessarily relevant in assessing the reasonableness of
a party’s willingness to accept a settlement offer versus to
Cite as
307 Or App 714 (2020) 721
let the court decide what is just and equitable on the whole
record.
Here, there was no mathematical formula on which
wife could rely to predict what the trial court would actually
award in spousal support. The trial court was ultimately
persuaded by and relied on an analysis prepared by husband’s accountant—based on which the accountant recommended an award of $3,200 monthly—but wife did not have
the benefit of that analysis during settlement discussions.
Moreover, several hotly contested factual issues regarding
wife’s health and ability to work could affect the court’s ultimate award. The court decided each of those factual disputes in wife’s favor. It decided some lesser factual issues
in husband’s favor, particularly regarding wife’s expenses,
but it was not unreasonable for wife to seek an award that
did not require her to move into a smaller apartment or cut
her travel expenses. See Cullen and Cullen, 223 Or App 183,
190,
194 P3d 866 (2008) (stating that the primary purpose
of maintenance support in a long-term marriage is to provide a standard of living like the one enjoyed during the
marriage). As for wife’s utilities, nothing in the evidentiary
record would allow a conclusion that wife’s expenses for utilities were so exaggerated as to themselves make wife’s settlement position unreasonable.
In sum, the trial court improperly relied on post
hoc reasoning to conclude that wife was unreasonable in
settlement negotiations. Moreover, under the correct legal
analysis, the record is insufficient to support that conclusion. Because the court made a discretionary award of attorney fees and costs to husband based solely on that one factor, we reverse the second supplemental judgment.
Supplemental judgment modifying spousal support
affirmed; supplemental judgment awarding attorney fees
and costs reversed.
