Last week the Oregon Court of Appeals applied Oregon law to a dispute between a credit card holder and an issuing bank, refusing to enforce the choice of Virginia law in the parties' cardholder agreement. In Capital One Bank v. Fort, the parties' agreement provided that it would be controlled by Virginia law, and that in an action to recover sums owing under the agreement the bank was entitled to recover its attorney fees. The bank sued the cardholder for breach of the cardholder's payment obligations. The cardholder prevailed on a statute of limitations defense and sought attorney fees under ORS 20.096, which makes one-sided attorney fee clauses reciprocal. The bank sought to apply Virginia law, which does not provide for reciprocal attorney fees.
The Court of Appeals noted that Oregon courts will enforce the parties' contractual choice of law unless to do so would violate a fundamental policy of the state. Because ORS 20.096, designed to protect consumers like the cardholder in this case, is a fundamental policy, and because the cardholder resides in Oregon, Oregon has a greater interest than Virginia in applying its law. On that basis, the court held that the right to recover attorney fees is reciprocal, and the cardholder, as prevailing party, is entitled to recover his fees.