Portland General Electric Co. v. Ebasco Services, Inc.

No. 33 July 25, 2013 849

33 Or Ebasco Services, Inc.

353 v.

PGE

2013 July 25, 2013

IN THE SUPREME COURT OF

THE STATE OF OREGON

PORTLAND GENERAL ELECTRIC COMPANY,

an Oregon corporation,

Plaintiff-Respondent,

Petitioner on Review,

v.

EBASCO SERVICES, INC.,

fka Esicorp, Inc.; et al.,

Defendants,

and

LEXINGTON INSURANCE COMPANY,

Defendant-Appellant,

Respondent on Review.

EECI, INC.,

a Nevada corporation,

Third-Party Plaintiff,

v.

GENERAL ELECTRIC COMPANY,

a New York Corporation; et al.,

Third-Party Defendants.

(CC CV05120776; CA A143752; SC S060584)

En Banc

On review from the Court of Appeals.*

Argued and submitted April 29, 2013.

Brian R. Talcott, Dunn Carney Allen Higgins and

Tongue, LLP, Portland, argued the cause for petitioner on

review. With him on the brief were Thomas H. Tongue and

Bridget D. Lynn.

David M. Axelrad, Horitz & Levy LLP, Encino, California,

argued the cause for respondent on review. On the brief were

______________

*  Appeal from Clackamas County Circuit Court, Robert D. Herndon, Judge.

248 Or App 91, 273 P3d 165 (2012)

850 PGE v. Ebasco Services, Inc.

Stephen F. Deatherage and Daniel F. McNeil, Bullivant

Houser Bailey, PC, Portland.

BREWER, J.

The decision of the Court of Appeals is reversed, and

the case is remanded to the Court of Appeals for further

proceedings.

Plaintiff Portland General Electric Company (PGE) seeks review of a Court

of Appeals decision that reversed and remanded a trial court order denying

defendant Lexington Insurance Company’s motion under ORCP 71 to set aside a

default judgment entered against it in PGE’s favor, on the ground that the trial

court lacked jurisdiction to enter the default judgment. On review, the issues are

(1) whether a default judgment awarding monetary relief violates ORCP 67 C if

the underlying complaint did not state the specific amount of money or damages

being sought; and (2) if so, whether such a defect renders the judgment merely

voidable and therefore not subject to collateral attack or, instead, renders the

judgment void and therefore subject to challenge at any time. Held: The default

judgment violated ORCP 67 C however, that violation did not render the judgment

void because Lexington had multiple prejudgment opportunities to challenge the

defect in the pleadings before filing the present appeal. In such circumstances,

due process does not demand the nullification of the default judgment by means

of a collateral challenge such as this appeal.

The decision of the Court of Appeals is reversed, and the case is remanded to

the Court of Appeals for further proceedings.

Cite as 353 Or 849 (2013) 851

BREWER, J.

Plaintiff Portland General Electric Company (PGE)

seeks review of a Court of Appeals decision that reversed and

remanded a trial court order denying defendant Lexington

Insurance Company’s motion under ORCP 71 to set aside a

default judgment entered against it in PGE’s favor, on the

ground that the trial court lacked jurisdiction to enter the

default judgment. On review, the issues are (1) whether a

default judgment awarding monetary relief violates ORCP

67 C if the underlying complaint did not state the specific

amount of money or damages being sought; and (2) if so,

whether such a defect renders the judgment merely voidable

and therefore not subject to collateral attack or, instead,

renders the judgment void and therefore subject to challenge

at any time. We conclude that the default judgment did vio-

late ORCP 67 C in the asserted respect. However, we also

conclude that, in the circumstances of this case, the rule vio-

lation did not render the judgment void. Accordingly, we

reverse the decision of the Court of Appeals and remand to

that court for further proceedings.

The pertinent facts are procedural and not in dis-

pute. A former employee of PGE brought a personal-injury

action against PGE based on asbestos exposure. In December

2005, after settling that action, PGE sued certain insurers

that had issued insurance policies to PGE for the period during

which the exposure had occurred. In its complaint, PGE

alleged that it had entered into a confidential settlement

agreement in the underlying asbestos personal injury case;

that it had tendered its claims to its insurers; that it had

fulfilled its obligations under the policies or was excused from

any such obligations; that the policies provided coverage for

the claims resulting in the settlement; and that PGE’s insurers

had breached the insurance contracts by failing to indemnify

PGE for the settlement. In the prayer of the com-plaint,

PGE sought a judgment providing that the insurers were

“liable to reimburse [PGE] regarding the settlement of the

underlying lawsuit.” Lexington was one of the insurers, and

it was a party to a policy providing coverage not to exceed

$5 million. Because it had only a 16-percent share in that

policy, Lexington had a maximum exposure of $800,000.

852 PGE v. Ebasco Services, Inc.

However, PGE did not allege any specific amount of mon-

etary loss or damages that resulted from Lexington’s breach

of its indemnity obligation. Although a copy of the pertinent

insurance policy was attached to the complaint as an exhibit,

PGE did not allege that it was seeking damages equivalent

to the liability limit under that policy. Moreover, PGE’s com-

plaint did not specify the amount of money for which PGE had

settled the underlying asbestos-exposure litigation, stating

instead that the settlement amount had been “reasonable.”

In 2006, PGE served the complaint on a New York

law firm specified in the policy as an authorized agent for

service of process on the subscribing insurers. That firm

forwarded the complaint to another law firm, which filed

an answer on behalf of other insurers but not on behalf of

Lexington, because it did not represent Lexington. All the

other solvent insurer defendants appeared and defended,

but Lexington did not.

About three years after PGE filed its original com-

plaint, it moved for an order of default and for a limited judg-

ment of default against Lexington for $800,000, plus costs

and attorney fees. That motion was served on the firm that

represented the other subscribing insurers, but it was not

served on Lexington.1 The motion included a declaration that

PGE’s loss in the underlying personal-injury action exceeded

“the $800,000 policy limit provided by Lexington.” In

January 2009, the trial court granted PGE’s motion and

entered an order of default and limited judgment on default

against Lexington for $800,000, plus $26,865 in costs and

attorney fees. Lexington learned of the default judgment

almost immediately, and it retained counsel to review the

matter.

Lexington did not appeal the judgment. Rather, it

brought a collateral challenge to it. In July 2009, Lexington

filed a motion to set aside the default judgment under ORCP

71. In that motion, Lexington sought relief solely on the

grounds of its asserted excusable neglect in failing to appear

1

PGE was not required to serve Lexington with its motion for default under

ORCP 69, nor was it required to provide notice to Lexington under ORCP 69 B(2),

because Lexington had filed neither an appearance nor written notice of intent to

file an appearance.

Cite as 353 Or 849 (2013) 853

and the trial court’s “inherent discretion.” The trial court

concluded that Lexington had failed to provide a reasonable

explanation for its failure to appear and, accordingly, denied

the motion. The court later entered a supplemental judgment

awarding PGE additional costs and attorney fees.

Lexington appealed both the supplemental judg-

ment and the order denying its motion to set aside the

limited judgment of default. On appeal, Lexington asserted

for the first time that the trial court had lacked jurisdiction

to enter the default judgment awarding monetary relief on

the ground that PGE had failed to comply with ORCP 67 C.2

Lexington argued that, because PGE had not demanded a

specific amount of monetary relief in its complaint, the

default judgment awarded an amount “exceeding the amount

prayed for in the pleadings.” In Lexington’s view, that defect

rendered the entire judgment void.3 PGE responded that

the complaint had provided Lexington with “all of the infor-

mation necessary to allow it to understand the claim being

asserted and to assess its risk of not appearing.” In partic-

ular, PGE relied on the complaint’s allegation that the sub-

scribing insurers had breached a specific $5 million insur-

ance policy—attached as an exhibit to the complaint—

that outlined Lexington’s 16-percent share and $800,000

exposure limit.

The Court of Appeals concluded that the default

judgment was void because PGE had failed to state a specific

amount of damages in its complaint. PGE v. Ebasco Services,

Inc., 248 Or App 91, 100-01, 273 P3d 165 (2012). Relying on

its prior decision in Montoya v. Housing Authority of Portland,

2

ORCP 67 C provides:

“Every judgment shall grant the relief to which the party in whose favor it

is rendered is entitled. A judgment for relief different in kind from or exceeding

the amount prayed for in the pleadings may not be rendered unless reasonable

notice and opportunity to be heard are given to any party against whom the

judgment is to be entered.”

3

Lexington also argued on appeal that (1) the trial court had lacked juris-

diction to enter the default judgment because PGE had filed an amended com-

plaint seeking additional relief in the form of attorney fees, and it never served

Lexington with the amended complaint; and (2) the trial court had erred in denying

Lexington’s motion to set aside the default judgment on the ground of excusable

neglect. Because it deemed Lexington’s unpreserved jurisdictional challenge to be

dispositive, the Court of Appeals did not address Lexington’s alternative arguments.

854 PGE v. Ebasco Services, Inc.

192 Or App 408, 416, 86 P3d 80 (2004), the court concluded

that ORCP 67 C imposes a jurisdictional requirement, such

that a trial court lacks jurisdiction to enter a default judg-

ment in any amount where the underlying complaint failed

to specify the amount of monetary relief sought. Ebasco

Services, 248 Or App at 100. In Montoya, the Court of Appeals

had considered whether a default judgment was void for

lack of jurisdiction because, in violation of ORCP 67 C, the

amount of damages awarded exceeded the amount pleaded.

In concluding that the rule had been violated and that the

defect was jurisdictional, the court explained:

“  reaching a conclusion as to what statutory provisions

‘In

are jurisdictional, a distinction may be made between pro-

cedures which are required both by statute and also by

the due process clause of the constitution on the one hand,

and procedures required by statute alone, over and beyond

anything rendered necessary by the constitution, on the

other. * * * Those requirements of statute which are essen-

tial to due process are, of course, jurisdictional, and we

think that statutory requirements over and beyond the bare

necessities of due process may also be jurisdictional, but

only if it is the legislative intent to make them so.’ ”

192 Or App at 415-16 (quoting Frederick v. Douglas Co.

et al., 176 Or 54, 63-64, 155 P2d 925 (1945)). The court

reasoned that ORCP 67 C is jurisdictional because awarding

more than the amount prayed for by default without notice

and the opportunity to be heard is the functional equivalent

of taking a default judgment on a complaint without service

of process. Id. at 416. Thus, the court held that the default

judgment was void to the extent that it awarded monetary

relief exceeding the amount prayed for in the complaint. Id.

In this case, the Court of Appeals extended its

reasoning in Montoya to the circumstance where PGE’s com-

plaint had not provided Lexington with notice “that [PGE]

sought to recover any particular amount in damages from

[Lexington].” Ebasco Services, 248 Or App at 100. The court

concluded that the insurance policy attached to the com-

plaint did not cure the posited defect because the complaint

did not otherwise state that PGE sought the maximum

amount allowed under the policy or indicate that the under-

lying asbestos-exposure case had been settled for more than

Cite as 353 Or 849 (2013) 855

that amount. Id. The court ultimately concluded that the

default judgment was void, and it directed the trial court on

remand to vacate the default order; the court also vacated the

supplemental judgment awarding attorney fees, costs, and

disbursements. Id. at 100-01. PGE petitioned for recon-

sideration, arguing that the default judgment should be left

intact insofar as it adjudged Lexington liable for breach of

contract. The Court of Appeals denied reconsideration.

On review, PGE asserts that ORCP 67 C imposes

procedural requirements that do not implicate a trial court’s

jurisdiction and, accordingly, that the Court of Appeals

erred in concluding that the default judgment was void. PGE

urges that entry of the default judgment in this case was

consistent with due process because the underlying complaint

had adequately informed Lexington of the nature of the claim

and the amounts potentially at issue. Finally, PGE asserts

that, in any event, the default judgment should not be deemed

void as to its adjudication of Lexington’s liability for breach

of contract because, in that respect, the judgment did not

differ from the relief sought in the complaint.

Lexington responds that the Court of Appeals deci-

sion in Montoya was correct and that the result reached

in this case flows logically from that analysis. Lexington

observes that this court has stated that a trial court lacks

jurisdiction to adjudicate a matter where notice to the defen-

dant “is so defective that it does not satisfy the requirement

of due process.” Hood River County v. Dabney, 246 Or 14, 21,

423 P2d 954 (1967). According to Lexington, fundamental

principles of due process required PGE to give notice in its

complaint of the amount of monetary relief that it sought, so

that Lexington could make an informed decision whether to

incur the expense of defending against the action. Because

the complaint failed to give such notice, Lexington asserts

that entry of the default judgment violated its due process

rights and deprived the trial court of jurisdiction to enter a

default judgment. Moreover, Lexington argues that the pos-

ited defect necessarily infected the entire default judgment,

rendering it void.

We begin our analysis by noting what is not in dis-

pute on review: the trial court had subject matter jurisdiction

in this action and, because Lexington was properly served

856 PGE v. Ebasco Services, Inc.

with summons and the original complaint,4 the court also

had personal jurisdiction over Lexington. See School Dist.

No. 1, Mult. Co. v. Nilsen, 262 Or 559, 566, 499 P2d 1309

(1972) (holding that an Oregon court has subject matter

jurisdiction over an action if constitution, statute, or com-

mon law tells court to do something about specific kind of

dispute presented); Woods v. Carl Karcher Enterprises, Inc.,

341 Or 549, 556-57, 146 P3d 319 (2006) (service of summons

and complaint gives “the court personal jurisdiction over the

defendant, imposing on the defendant a number of immedi-

ate obligations (such as filing an appearance and responding

to the complaint) and a host of potentially adverse conse-

quences”). Generally speaking, when a trial court has both

subject matter jurisdiction and personal jurisdiction, its

judgment, even if erroneous, is not void. State ex rel English

v. Multnomah County, 348 Or 417, 440, 238 P3d 980 (2010);

State v. McDonnell, 343 Or 557, 563, 176 P3d 1236 (2007).

In McDonnell, we explained that a void judgment is

one that “has no legal force or effect” and can be attacked

“at any time and any place, whether directly or collaterally”;

a voidable judgment, in contrast, is one that “is irregular

or erroneous” although it is “rendered by a court having

jurisdiction.” 343 Or at 562 (quoting Black’s Law Dictionary

861 (8th ed 2004)). A voidable judgment may be attacked

through only a direct appeal or a cognizable collateral chal-

lenge, for example, under ORCP 71 B.5 See Ketcham v. Selles,

304 Or 529, 534-35, 748 P2d 67 (1987) (purported default

judgment that did not qualify as judgment because it did not

resolve all issues among all parties was voidable, not void,

and could not be collaterally attacked in a proceeding to

execute judgment); see also Johnson v. Johnson, 302 Or 382,

394, 730 P2d 1221 (1986) (entertaining, albeit denying on

merits, collateral challenge to dissolution judgment on ground

of extrinsic fraud under ORCP 71 C). Congruently with that

distinction, principles relating to preservation of error do not

4

As noted, PGE properly served the agent whom Lexington had identified in

the insurance policy.

5

ORCP 71 (B)(1) provides, in part, that “the court may relieve a party or such

party’s legal representative from a judgment for *  * (a) mistake, inadvertence,

*

surprise, or excusable neglect[.]”

Cite as 353 Or 849 (2013) 857

apply to void judgments; those principles do, however, apply

to the assertion of error with respect to judgments that are

merely voidable. Ailes v. Portland Meadows, Inc., 312 Or 376,

383, 823 P2d 956 (1991).

With that background in mind, we turn to the ques-

tion whether the default judgment in this case violated

ORCP 67 C. We begin with the text of ORCP 67 C itself,

which provides:

“Every judgment shall grant the relief to which the

party in whose favor it is rendered is entitled. A judgment

for relief different in kind from or exceeding the amount

prayed for in the pleadings may not be rendered unless

reasonable notice and opportunity to be heard are given to

any party against whom the judgment is to be entered.”

ORCP 18 B, which sets out the pleading rule that ORCP 67 C

reinforces, requires that a complaint contain “[a] demand of

the relief which the party claims” and, “if recovery of money

or damages is demanded, the amount thereof shall be

stated.”6 PGE concedes that its claim for breach of contract

sought recovery of money or damages for purposes of both

the ORCP 18 B requirement that an amount be pleaded and

the ORCP 67 C prohibition against a judgment exceeding the

amount prayed for in the complaint. PGE does not, however,

concede that the default judgment violated ORCP 67 C.7

Accordingly, we briefly turn to that issue.

As discussed, the claim in question was for breach

of an insurance contract, seeking monetary relief from

Lexington in the unspecified amount of the settlement that

PGE had paid in the underlying asbestos-exposure personal

6

The original staff comment to ORCP 67 C demonstrates the connection

between the two rules:

“In a case where money damages are claimed, the damages recoverable are

limited to the prayer. Note that ORCP 18 B requires a statement in the prayer

of the amount of damages claimed.”

Fredric R. Merrill, Oregon Rules of Civil Procedure: 1984 Handbook 154 (staff

comment).

7

In a footnote in its brief on review, PGE suggests that it is “questionable”

whether the default judgment implicated ORCP 67 C because the complaint did

not seek any specific amount of money or damages. Because PGE has not developed

any argument pertaining to that suggestion, we do not consider it further.

858 PGE v. Ebasco Services, Inc.

injury case, together with associated costs and attorney fees.

PGE notes that the complaint incorporated the pertinent

insurance policy as an exhibit, and the policy reflected that

Lexington’s pro rata share of the policy limits was 16 percent

of $5 million, or $800,000. Based on those references, PGE

asserts that the complaint sufficiently stated the amount of

monetary relief that PGE sought. We disagree.

The fact that—albeit inartfully—the complaint

implicitly might have capped PGE’s primary damages at

Lexington’s pro rata share of the policy limits, is not the same

as stating the amount of money or damages demanded. In

fact, the complaint did not demand money or damages in the

amount of $800,000 or, as required by ORCP 18 B, in any

stated amount. Accordingly, we conclude that the default

judgment violated ORCP 67 C because the complaint did not

seek any amount of damages.

The greater challenge is to determine the effect of

that violation in the circumstances of this collateral attack

on the default judgment. Both before and after the adoption of

the Oregon Rules of Civil Procedure, this court generally has

treated erroneously entered judgments as voidable, rather

than void. For example, in Travelers Insurance Co. v. Staiger,

157 Or 143, 69 P2d 1069 (1937)—an action to recover on a

promissory note—the plaintiff obtained a judgment against

the defendants that included certain amounts for costs and

disbursements, and the defendants did not timely appeal.

Id. at 146. Subsequent enforcement of the judgment resulted

in the sale of the defendants’ property. Id. The defendants

objected to the sale, arguing that the judgment was void

because it had awarded costs and disbursements when

no cost bill had ever been filed, in violation of the cost bill

provisions of the 1930 Oregon Code. Id. at 146-47. The trial

court overruled the defendants’ objections, and the defen-

dants appealed. Id. at 147. This court acknowledged that

the trial court might have erred in awarding costs and dis-

bursements without the required cost bill, but nonetheless

affirmed, stating:

“If the relief awarded or recovery authorized by a judgment

is excessive, either as being greater than the amount

demanded, greater than the facts or the evidence would jus-

tify, or as improperly including interest, costs, or counsel

Cite as 353 Or 849 (2013) 859

fees[,] *  * it is erroneous and voidable, but may not be

*

impeached in a collateral proceeding.”

Id. at 148 (quoting 34 CJ, Judgments, 564 § 864).

Similarly, in Rajneesh Foundation Intl. v. McGeer,

303 Or 139, 144 n 3, 734 P2d 871, adhered to on recons,

303 Or 371, 737 P2d 593 (1987), this court concluded that a

default judgment was not subject to collateral attack on the

ground that the pleadings were insufficient to support it.

See also Rogue Val. Mem. Hosp. v. Salem Ins., 265 Or 603,

615, 510 P2d 845 (1973) (judgment based on hospital lien

not filed within specified statutory period not subject to

collateral attack); Walling v. Lebb, 140 Or 691, 692, 15 P2d

370 (1932) (failure of complaint to state claim does not sub-

ject subsequent judgment to collateral attack); cf. Booth v.

Heberlie, 137 Or 354, 356, 2 P2d 1108 (1931) (judgment

entered prematurely “could be attacked only by motion in

the original case”).

As noted, those decisions confirm that, generally

speaking, when a trial court has both subject matter juris-

diction and personal jurisdiction, its judgment, even if

erroneous, is not void. State ex rel English, 348 Or at 440;

McDonnell, 343 Or at 563. To be sure, that conclusion is a

qualified one. First, in certain circumstances, it is necessary

to construe a statute to determine whether the legislature

intended to impose a limitation on the trial court’s authority

to exercise its jurisdiction. In that instance, a violation of

the statute may render the judgment void. For example, in

Dabney, the issue was whether a tax lien foreclosure statute

requiring 60-days’ notice before foreclosure imposed such a

limitation on the trial court’s power. 246 Or at 21-22. After

examining the statute’s text and context, this court concluded

that the legislature did not intend the notice requirement to

limit the court’s authority to exercise its jurisdiction, thereby

resulting in a void judgment. Id.

ORCP 67 C is a rule of civil procedure promulgated

by the statutorily created Council on Court Procedures.

ORCP 1.735(1). Applying the precepts that ordinarily apply

860 PGE v. Ebasco Services, Inc.

to the interpretation of statutes, the interpretation of such a

rule requires a determination of the Council’s intent. A. G.

v. Guitron, 351 Or 465, 479, 268 P3d 589 (2011).8 There is

no indication in ORCP 67 or any other provision of the

Oregon Rules of Civil Procedure that the Council intended

that a violation of the rule would render an ensuing default

judgment “void” or otherwise deprive the court of authority

to exercise its jurisdiction in the absence of a constitutional

violation. See Dabney, 246 Or at 22 (concluding that, absent

due process violation, there was no indication that legislature

intended violation of statutory notice requirement to result

in void judgment); see also Rogue Val. Mem. Hosp., 265 Or at

616 (1973) (concluding that, in the absence of a “clear indi-

cation” that the legislature intended for statutory time pro-

visions for filing a lien to impose “jurisdictional” require-

ments, court would infer that a judgment based upon such a

lien is voidable, not void).

Second, a statutory violation that also deprives a

party of due process may render a judgment void. As

explained below, however, the default judgment in this case

does not implicate concerns of constitutional dimension.

As dictated by the Due Process Clause of the

Fourteenth Amendment to the United States Constitution, it

is well established that the state may not deprive a person

of life, liberty, or property without “notice and opportunity

for hearing appropriate to the nature of the case.” Mullane

v. Central Hanover Bank & Tr. Co., 339 US 306, 313, 70 S Ct

652, 94 L Ed 865 (1950); Koskela v. Willamette Industries,

Inc., 331 Or 362, 378, 15 P3d 548 (2000). An appropriate

hearing is one that is provided “at a meaningful time and

in a meaningful manner.” Armstrong v. Manzo, 380 US 545,

552, 85 S Ct 1187, 14 L Ed 2d 62 (1965); State ex rel Juv.

Dept. v. Geist, 310 Or 176, 189-90, 796 P2d 1193 (1990).

8

An exception exists for situations where the legislature “amended the rule at

issue in a particular case in a manner that affects the issues in that case.” Waddill

v. Anchor Hocking, Inc., 330 Or 376, 382 n 2, 8 P3d 200 (2000), adhered to on recons,

331 Or 595, 18 P3d 1096 (2001). Here, ORCP 67 C was promulgated by the Council

on Court Procedures in 1980. See Merrill, Oregon Rules of Civil Procedure: 1984

Handbook 156. Although it has been amended by the Council on Court Procedures,

it has not been the subject of legislative amendment, nor have any amendments

materially changed the text at issue in this case.

Cite as 353 Or 849 (2013) 861

This court has previously recognized that, even

where a trial court has personal and subject matter jurisdic-

tion, a violation of due process notice requirements may

deprive the court of “jurisdiction” to enter an order or judg-

ment. State ex rel Hall v. Hall, 153 Or 127, 55 P2d 1102 (1936)

(stating that, in the absence of notice, the trial court lacked

jurisdiction to modify an order addressing support provisions

of a divorce decree). Used in that way, the word “jurisdiction”

is a term of art intended to convey that the violation was so

significant as to render the resulting judgment void. But not

every defect in notice renders a judgment void. Instead, it is

only when the notice “is so defective that it does not satisfy

the requirements of due process” that the court does not have

authority to enter a judgment. Dabney, 246 Or at 21. That is,

due process requires reasonable notice to a defendant before

a default judgment or order may be entered against it, but not

necessarily strict compliance with the applicable procedural

statutes and rules. See Restatement (Second) of Judgments § 2

cmt e (1982) (“A notice-giving effort may comply with Consti-

tutional requirements under the Due Process Clause and

yet fail to comply with the requirements of an applicable

statute or rule of court.”).

Dabney, which was an action to quiet title to land,

illustrates the point. There, the county acquired title to

land from the defendant’s predecessor in interest through a

tax foreclosure proceeding in 1928. The published summons

in the foreclosure proceeding had been defective because it

afforded the landowner only six weeks in which to appear,

rather than the 60 days required by statute. In 1963, the

defendant learned of that defect and challenged the plain-

tiff’s title. 246 Or at 17. The issue on appeal was whether

that challenge was barred by ORS 312.220, which pro-

vided that a decree of foreclosure for delinquent taxes “is

conclusive evidence of its regularity and validity in all

collateral proceedings,” and ORS 312.230, which barred any

action challenging a tax foreclosure decree, unless it was

commenced within specified time limits. Applying those

statutes, the court stated that “the decree must be regarded

as valid unless on constitutional grounds we must hold

that the legislature lacks the power to declare valid a tax

862 PGE v. Ebasco Services, Inc.

foreclosure decree defective for lack of jurisdiction.” 246 Or

at 20.

The court in Dabney revisited prior decisions in

which it had held that the legislature could enact statutes

barring challenges to tax foreclosure decrees that were merely

irregular due to “nonjurisdictional” defects, but could not so

insulate decrees that were void for lack of “jurisdiction.” Id.

at 20-21. The court reexamined those cases and, after dis-

cerning a legislative purpose to strictly limit challenges to

tax foreclosures, held that all defects in the underlying tax

foreclosure proceedings were “nonjurisdictional” unless they

deprived the taxpayer of due process. Id. at 22. The court also

held that the notice that the owner had received, although

insufficient to comply with the tax foreclosure statutes, was

sufficient to satisfy the demands of due process. Id. at 25-26.

Because there was no due process violation, the court con-

cluded that the statutes of limitation barred the defendant’s

challenge. Id.9

This court’s decision in Scarth v. Scarth, 211 Or 121,

315 P2d 141 (1957), illustrates a circumstance in which the

failure to comply with a statutory notice requirement did

result in a due process violation and a void judgment. In that

case, the trial court modified without notice the defendant’s

child support obligation. The defendant appealed, “contending

that the court had no jurisdiction of him in that he had no

proper notice or opportunity to be heard, amounting to a

denial of due process of law.” Id. at 125. This court noted that,

based on the applicable statute, the trial court had contin-

uing personal and subject matter jurisdiction relating to the

9

The court, however, chose to broaden the basis of its decision:

“Although we could rest our decision solely upon the ground that the defect

in the summons was nonjurisdictional and that, therefore the foreclosure

decree is free from collateral attack, in the interest of carrying out the clearly

indicated legislative purpose to give the ‘utmost stability’ to tax titles we pre-

fer to rest our decision upon the broader ground that even if the defect in the

proceedings is jurisdictional for failure to meet either legislative or con-

stitutional requirement deemed essential to jurisdiction, it was within the pur-

pose and power of the legislature in enacting ORS 312.220 and ORS 312.230 to

bar the delinquent owner from attacking the foreclosure decree.”

246 Or at 26. The breadth of the court’s ultimate holding in that case does not

detract from our reliance here on its initial conclusion, which was a foundational

holding of the case.

Cite as 353 Or 849 (2013) 863

defendant’s support obligations and that the court retained

the power to modify that portion of the original judgment. Id.

However, this court held that the retention of such jurisdiction

did not mean that the court could act without further notice

to the defendant. Id. at 126. Because the modification order

affected the defendant’s personal rights, due process entitled

him to reasonable notice and an opportunity to be heard. Id.

In so concluding, this court relied in part on Hall, in which

the court had held that an order modifying the support pro-

visions of a divorce decree entered without notice to the defen-

dant was an insufficient foundation for a subsequent judg-

ment of contempt. Similarly, the court relied on Griffin v.

Griffin, 327 US 220, 66 S Ct 556, 90 L Ed 635 (1946), in

which the United States Supreme Court had held that “an

order docketing arrears of alimony as a judgment, without

notice to the defendant, was held wanting in due process.”

Scarth, 211 Or at 126. In relying on those decisions, this

court in Scarth clarified the relationship between due process

requirements and a court’s retention of ongoing jurisdiction

over the defendant:

“In both the Hall case and the Griffin case, * * * it was said

that in the absence of notice the court had no jurisdiction to

make the order. But since the required notice may be some-

thing less than would be needed to give personal jurisdiction

at the commencement of the suit, the question is not strictly

one of jurisdiction but merely the adequacy of notice to war-

rant the court in exercising the jurisdiction which it has.”

211 Or at 127 (emphasis in original; internal citations and

footnote omitted).

With reference to the general notice problem pre-

sented in this case, cases decided under the parallel federal

rule, FRCP 54(c)10 —and comparable state rules of civil pro-

cedure—have held that, when a complaint demands a

specific amount of damages, due process prohibits a default

judgment from awarding additional damages. See, e.g.,

Compton v. Alton Steamship Co., 608 F2d 96, 104 (4th Cir

1979); Producers Equip. Sales, Inc. v. Thomason, 15 Kan

App 2d 393, 399, 808 P2d 881 (1991). The same is true

10

FRCP 54(c) provides, in pertinent part, that “[a] default judgment must not

differ in kind from, or exceed in amount, what is demanded in the pleadings.”

864 PGE v. Ebasco Services, Inc.

when a default judgment awards a different type of relief

than that sought in the claimant’s operative pleading. The

rationale for those decisions is that, insofar as due process

is concerned, a default judgment cannot (1) award monetary

relief that is greater than the specific amount pleaded; or

(2) provide other relief that is different in kind from the

relief sought in the pleadings, because the defendant could

not reasonably have expected that its exposure to liability

would exceed that amount or be different in kind. The lead-

ing commentators on the federal rule have explained the

“theory of this provision” as follows:

“[T]he defending party should be able to decide on the basis

of the relief requested in the original pleading whether to

expend the time, effort, and money necessary to defend the

action. It would be fundamentally unfair to have the com-

plaint lead defendant to believe that only a certain type

and dimension of relief was being sought and then, should

defendant attempt to limit the scope and size of the potential

judgment by not appearing or otherwise defaulting, allow

the court to give a different type of relief or a larger damage

award.”

Charles Alan Wright, Arthur R. Miller, and Mary Kay Marie

Kane, 10 Federal Practice and Procedure: Civil § 2663 (3d ed

2008) (footnote omitted).

In this case, by contrast, those concerns are not implic-

ated. First, Lexington does not assert that the default judg-

ment awarded a different kind of relief than was sought in

the complaint in this case. In its complaint, PGE sought

indemnity for the amount that it paid to settle the under-

lying asbestos claim and for its costs and attorney fees in

defending that claim. The default judgment awarded pre-

cisely that relief. Instead, the sole focus of Lexington’s due

process argument is on the amount of monetary relief that

the default judgment awarded. However, the defect in notice

concerning the amount of PGE’s claimed damages was

apparent on the face of the complaint when Lexington was

served with a copy of it and the required summons. Multi-

ple prejudgment options to remedy that defect were at

Lexington’s disposal. For example, Lexington could have

moved to make the complaint more definite and certain

Cite as 353 Or 849 (2013) 865

pursuant to ORCP 21 D. Alternatively, if it thought that the

defect was so egregious as to constitute a failure to state facts

sufficient to constitute a claim for relief, Lexington could

have moved to dismiss on that ground pursuant to ORCP 21

A(8).11 Yet it took neither action.

In these circumstances, Lexington’s challenge comes

too late. Unlike a case in which a variance exists between the

amount of damages sought in a complaint and the amount of

a subsequent default judgment, or in which a post-judgment

modification of an existing obligation is obtained without notice

to the obligor, Lexington had multiple prejudgment oppor-

tunities over a period of years to challenge the very defect

that it failed to raise before filing the present appeal. That

is, the defect that ultimately triggered a violation of ORCP

67 C in this case was the predicate violation of ORCP 18 B

based on PGE’s failure to state the amount of monetary relief

that it sought in its complaint. Service of the complaint itself

provided Lexington with notice of that defect, and the Oregon

Rules of Civil Procedure provided it with ample opportun-

ities for a predefault hearing at a meaningful time and in a

meaningful manner.

Stated differently, the complaint in this case could

not have led Lexington to believe that “only a certain type

and dimension of relief was being sought,” so that it could

“attempt to limit the scope and size of the potential judgment

by not appearing or otherwise defaulting.” Wright, Miller, &

Kane, 10 Federal Practice and Procedure § 2663. In such

circumstances, due process does not demand the nullification

of the default judgment by means of a collateral challenge. It

follows that the Court of Appeals erred in concluding other-

wise. Accordingly, it is necessary to remand the case to that

court to address Lexington’s remaining arguments that

the default judgment is void because PGE filed an amended

complaint seeking additional relief in the form of attorney fees

but never served Lexington with that pleading or, alter-

natively, that the trial court erred in denying Lexington’s

11

Although not pertinent to the adequacy of prejudgment notice, we note

that Lexington also did not move to set aside the judgment under ORCP 71 on

the ground of surprise. See ORCP 71 B(1) (providing, in part that “the court may

relieve a party or such party’s legal representative from a judgment for * * * (a) mis-

take, inadvertence, surprise, or excusable neglect” (emphasis added)).

866 PGE v. Ebasco Services, Inc.

motion to set aside the default judgment on the ground of

excusable neglect.

The decision of the Court of Appeals is reversed,

and the case is remanded to the Court of Appeals for further

proceedings.