§6.8 Judgments
| Jurisdiction | Oregon |
§ 6.8-1 Generally
The term judgment as used in the Oregon Rules of Civil Procedure is defined in ORS 18.005(8) as "the concluding decision of a court on one or more requests for relief in one or more actions, as reflected in a judgment document." See ORCP 67 A (judgments); State ex rel. Costello v. Cottrell, 318 Or 338, 340 n 2, 867 P2d 498 (1994) ("'judgment is the proper term for 'the final determination of the rights of the parties in an action' and . . . 'judgment includes a decree'"); Webber v. Olsen, 330 Or 189, 192 n 1, 998 P2d 666 (2000), superseded by statute on other grounds, ORS 107.104, as recognized in In re Marriage of Brown, 259 Or App 618, 624, 315 P3d 422 (2013).
A stipulated judgment has the same effect as a judgment that is entered after a trial on the merits of a claim. ORS 107.104(2).
In In re Marriage of Ashlock, 186 Or App 212, 217, 62 P3d 874 (2003), the trial court's decision to allow the husband to pick between alternative results was not error. The court gave the husband the alternative of paying his wife $25 per month for five years or giving her half of the stock in his corporation. The wife unsuccessfully argued that granting him the choice was an improper delegation of the court's authority. The appellate court disagreed, finding that proposed alternative resolutions that took into account a party's preferences in attempting to structure the dissolution judgment were fair and equitable because the court retains the authority to accept or reject the parties' choices.
§ 6.8-2 Notice of Intent to Take Default—ORCP 69
Under ORCP 69 B(2), notice of intent to apply for a default order must be given 10 days before applying for the order if the party against whom default is sought has filed an appearance in the action, or has provided written notice of intent to file an appearance. The notice must be in the form prescribed by UTCR 2.010 (in the form of a pleading), and must be filed with the court in addition to being served on the party against whom default is sought. ORCP 69 B(2). This reverses the prior decision in Evans v. Brentmar, 186 Or App 261, 267, 62 P3d 847, rev den, 336 Or 60 (2003), which held that "[t]he purpose of the rule is to ensure that a party will not be defaulted by surprise before having an opportunity to plead or defend," and therefore found sufficient the plaintiffs' use of a letter advising the opposing party that they intended to apply for a default.
Service of the notice of intent to apply for an order of default must be made in accordance with ORCP 9, and failure to do so renders any resulting default judgment void. Unifund CCR Partners v. Kelley, 240 Or App 23, 28, 245 P3d 694 (2010). A void judgment must be set aside under ORCP 71 B(1)(d); the court has no discretion in the matter. In re Estate of Hutchins v. Fargo, 188 Or App 462, 469-70, 72 P3d 638 (2003).
If a party "is represented by an attorney, the service shall be made on the attorney unless otherwise ordered by the court." ORCP 9 B. If a party is not represented by an attorney, the service must be made on the party. ORCP 9 B.
The notice of intent to default may not be served before the time required by ORCP 7 C(2) or other applicable rule or statute has expired. ORCP 69 B(2).
§ 6.8-3 Judgments to Equalize Distribution
§ 6.8-3(a) Calculation
An equalization judgment is "one-half of the difference in value between the assets awarded to [one spouse] and those awarded to [the other spouse]," not simply the difference in those values. In re Marriage of Coats, 64 Or App 594, 597, 669 P2d 370 (1983). Debts should be factored into the computation. In re Marriage of Nolan, 20 Or App 432, 436, 532 P2d 35 (1975).
In In re Marriage of Coote, 112 Or App 342, 347, 831 P2d 32 (1992), the court divided the property and then entered an equalizing judgment in the wife's favor so that each party had an equal division of the assets. The court could have selected assets in the husband's possession and given them to the wife to equalize the distribution without having to enter a money judgment. The court instead chose to use the equalizing judgment because it minimized the disruption to the parties' current living condition by allowing the husband to decide which of the assets in his possession he wished to liquidate to satisfy the judgment. It also gave him the opportunity to make other arrangements to pay without liquidating assets.
§ 6.8-3(b) Effect of Bankruptcy on Judgments
See chapter 23 for a complete discussion of the interaction between bankruptcy law and family law.
A judgment entered while a bankruptcy automatic stay is in effect is void ab inito. In re Marriage of Cam, 216 Or App 358, 361-62, 174 P3d 1018 (2007). "[T]here is no time limit for moving to set it aside, and it is an abuse of discretion for a court to fail to do so." Cam, 216 Or App at 361.
In Cam, the husband filed a petition for relief under the Bankruptcy Code a few days before the court actually signed a final judgment of dissolution. The bankruptcy court dismissed the bankruptcy petition approximately 30 days later because the husband had not filed all the necessary documents within the requisite time. "Although the trial court was unaware of the fact, the bankruptcy case was active when the court entered the judgment of dissolution" and, therefore, that judgment was void. Cam, 216 Or App at 360. "[A] void judgment is a nullity ab initio, there is no time limit for moving to set it aside, and it is an abuse of discretion for a court to fail to do so." Cam, 216 Or App at 361. "Thus, once [the court has] information that shows that all or a portion of a judgment is void, [the court] must take that fact into consideration in deciding the case." Cam, 216 Or App at 361-62.
Any obligation owed to a former spouse, including an equalization judgment, cannot be discharged in a Chapter 7 bankruptcy. Equalization judgments may be dischargeable in a Chapter 13 bankruptcy to the extent that they are not considered domestic support obligations. The bankruptcy court will analyze the respective financial situation of the parties at the time of the obligation, and the more factors supporting a conclusion that a particular obligation is in the nature of support, the more likely it is that a bankruptcy court will consider the obligation to be nondischargeable under 11 USC § 523(a)(5).
A divorce attorney should help his or her client in advance by making clear the character of a particular obligation, and whether or not it is in the nature of support, through findings of fact in the judgment, or by negotiating the point directly in correspondence leading up to settlement (which can be used as evidence in the bankruptcy proceeding).
A commonly encountered fact pattern involves one party being awarded the family home and the other party being awarded an equalizing judgment. The homeowner declares bankruptcy and seeks to discharge the judgment while retaining the home by claiming the homeowner's homestead exemption. The United States Supreme Court faced this issue in Farrey v. Sanderfoot, 500 US 291, 111 S Ct 1825, 114 L Ed 2d 337 (1991). The Supreme Court refused to allow the bankruptcy laws to defeat the Wisconsin family law court's intent in awarding the former wife a lien against the family home awarded to the husband at the time of the divorce. The lien was intended to be the wife's security in collecting her equalizing judgment. The husband sought to remove the security lien entirely in his subsequent bankruptcy. He argued that it was a judicial lien that was subject to avoidance in a bankruptcy proceeding. The Supreme Court disagreed and determined that it was all a matter of timing. The Court held that when the judicial lien was created at the time the husband actually obtained his interest in the home against which the lien was then imposed, the lien could not be wiped out later in the ordinary process of bankruptcy exemption. Only when the bankrupt (husband) had already owned an interest in the property before the judicial lien was imposed could he call into play the lien-avoidance procedures with respect to the properties otherwise covered by exemption statutes, such as the state homestead-exemption laws.
§ 6.8-3(c) Time for Payment of Judgment
In In re Marriage of Benson, 146 Or App 364, 366, 932 P2d 104 (1997), the appellate court modified the trial court's decision to prevent the wife from executing on a property judgment for a period of one year after its entry so that the husband would have an opportunity to finance the payment of that judgment.
From what source is the court given the authority to prohibit execution on a judgment?
The payment terms of the judgment must be such that they have a financial value to the party to whom the judgment is awarded.
In In re Marriage of Salter, 45 Or App 555, 558, 609 P2d 374 (1980), the wife received a judgment against the husband for her one-half equity in the home that was awarded to him. Judgment was payable with interest in 15 years. The court determined that postponing the payment for 15 years substantially diluted its value and deprived the wife of the current use of the money. See In re Marriage of Bushell, 122 Or App 43, 48, 857 P2d 174 (1993), in which the court deemed 16 years too long for the husband to wait to receive his portion of the equity in the family home, even though the wife was required to make monthly payments toward satisfaction. "To the extent possible, the financial affairs of parties to a dissolution should be disentangled as expeditiously as possible." Bushell, 122 Or App at 48. The trial court had treated the monthly installment payments as an offset against spousal support, but the appellate court removed that provision, noting that such a procedure was inappropriate "because spousal support could be terminated or modified in the future." Bushell, 122 Or App at 48.
In In re Marriage of Walker, 68 Or App 212, 216, 681 P2d 152 (1984), the trial...
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