IN THE COURT OF APPEALS FOR THE STATE OF OREGON

BRIAN OLSON.

Plaintiff-Appellant.

v.

JARROD HOWARD,

Defendant-Respondent,

and

JERRY HOWARD, individually and in his capacity as Successor Trustee of the Resser Family Trust Dated January 19, 1994; RICHARD REDINGER; DEBRA MILLER; KELLY RESSER; JA YSON RESSER; and PATRICIA OLSON,

Defendants.

) Polk County Circuit ) Coun No. 04P1894 )

) CA AI315496 )

) ) ) ) ) ) ) ) ) ) ) ) ) ) )

RESPONDENT'S BRIEF

Appeal frum the Judgment of the Polk County Circuit Court

Honorable Fred E. Avera

Nonnan R. Hill, OSB #943409 Lee C. Nusich, OSB No. 772918 Lane Powell PC Martinis & Hill

110 Madrona Avenue SE Salem OR 97302 Telephone: 503-566-5800 Attorneys for Respondent Jarrod Howard

601 SW Second Avenue, Suite 2100 Portland OR 97204-3158 Telephone: 503-778-2100 Attorneys for Appellant Brian Olson

January 2009

TABLE OF CONTENTS

STATEMENT OF THE CASE ........................................................ .

1. Nature of the Action and Proceedings Below........................ 1 2. Jurisdiction and Timeless of Appeal................................... 2

QUESTIONS PRESENTED............................................................ 2

SUMMARY OF ARGUMENT.................. ................................... .... 3

SUMMARY OF FACTS............................................................... 4

1.

2.

Substantive Facts ............................................................... . A. The parties ......................................................... . B. The property ...................................................... .. C. The sale ............................................................ .

Procedural Facts ............................................................... .

4 4 4 5 8

RESPONSE TO FIRST ASSIGNMENT OF ERROR............................. 11

A. B.

Standard ofRevie\v ............................................................ . Argunlent. ...................................................................... .

RESPONSE TO SECOND ASSIGNMENT OF ERROR

A. B.

Standard of Revie\v ........................................................... . Argument. ...................................................................... .

RESPONSE TO FIRST ASSIGNMENT OF ERROR IN

11 11

14

15 15

SUPPLEMENTAL BRIEF... ............ .......... .. ...... .. .... ... . .. ...... ... ... ... 20

A. B.

Standard of Review ........................................................... . Argunlent ....................................................................... .

RESPONSE TO SECOND ASSIGNMENT OF ERROR IN

20 20

SUPPLEMENTAL BRIEF. ........ . ........ ... ......... ...... . . . .. . .... .. ...... . .. ... 25

A. B.

Standard of Review ........................................................... . Argument. ...................................................................... .

25 25

11

RESPONSE TO THIRD ASSIGNMENT OF ERROR IN PLAINTIFF'S SUPPLEMENTAL BRIEF..................... ..................... 31

A. Standard of Review. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... 31 B. Argument........................................................................... 32

RESPONSE TO FOURTH ASSIGNMENT OF ERROR IN PLAINTIFF' S SUPPLEMENTAL BRIEF. .. ... ... .. ... . ... ......... 33

A. B.

Standard of Review ........................................................... . Argument ...................................................................... ..

RESPONSE TO FIFTH ASSIGNMENT OF ERROR IN

34 34

PLAINTIFF'S SUPPLEMENTAL BRIEF.......................................... 34

A. B.

Standard of Review ........................................................... . Argument ....................................................................... .

34 35

CONCLUSION... .. .... ... .. .... . .......... ....... . ... ..... ... ... . ............. ... .... 36

APPENDIX

List of Beneficiaries and Distributive Amounts ...................................... . Powell Valuation Inc. Appraisal May 5, 2005 ..................................... .. Bill Woodrum Market analysis April 30, 1997 .................................... .. Power of Attorney dated August 22, 1995 ......................................... . Judge Homer opinion letter dated May 28, 2000 .................................. .

TABLE OF AUTHORITIES

Statutes and Rules

ORS 20.105 ......................................................................... .. ORS 20.105(1) ...................................................................... . ORS 20.010 ......................................................................... .. ORS 28.040 ......................................................................... .. ORS Chapter 90 ..................................................................... .. ORS 93.860(2)(b) ................................................................... . ORS 128.115 ............................................ '" .......................... . ORS 128.135 ......................................................................... . ORS 128.135 128.145 ............................................................ . ORS 128.155 ................................................................... . 19,20

App-l App-2 App-38 App-39 App-40

2,3,25 25 15 19 7 29 3,16,17,18 17, 19 9 2,8,9,17,18.

111

ORS 128.155(2) ................................................................... .. ORS 128.175 ........................................................................ . ORS 105.810 ......................................................................... . ORS 105.810(2) ..................................................................... . ORS 105.815 ......................................................................... .

ORCP 23 ............................................................................ . ORCP 25 ............................................................................. . ORCP 54 ............................................................................. . ORCP 62 ......................................................................... . ORCP 62A .......................................................................... .. ORCP 62B ........................................................................... . ORCP 62C ......................................................................... .. ORCP 68 ............................................................................ . ORCP68C .......................................................................... . ORCP 68C(3) ..................................................................... .. ORCP 68C(4) ..................................................................... . ORCP 68C(4)(a) ................................................................... . ORCP 68C( 4)(b) ................................................................... . ORCP 68C(4)(c) .................................................................. .. ORCP 68C(4)(e) ................................................................... . ORCP 68C(5) ..................................................................... . ORCP 68C(6) ........... , ........................................................ .. ORCP 68D ......................................................................... .

Community Bank v. US National Bank of Oregon,

19 18 2,4,32,33,35 4,31,32 1

11,12,13 12, 13 10, 14,33

3,20,21,22,23 20

21,22,23,25,25 22,23

10,21,22,34,35 3,10,21,22 35 35 21 21 21,22,35 3,21,23 23 23 24

2760r471,555P2d435(l976).......................................... 20

Dimeo v. Gesik, 195 Or 362, 98 P3d 397 (2004) ................. ........ ........ 25

Galego v. Knudsen, 282 Or 155,578 P2d 769 (1978) ........................... 16

In re Harrell, 104 Or App 332, 335-36, 801 P2d 852 (1990) .. ................ 18

In re Porter, 320 Or 692, 890 P2d 1377 (1995) .................................. 25

Kaiser Foundation Health Plan of the Northwest v. Jane Doe, 138 Or App 428, 908 P2d 850 (1996) ..... ....... ....... . .. ... ...... .......... ... 14

Lenn v. Boltem, 221 Or App 241, ] 90 P3d 399 (2008) ........................ 26

IV

Lovejoy Speciality Hospital, Inc. v. Advocates/or Life, Inc., 121 Or App 160,855 P2d 159 (1993) .................................... . 25,32,34

Mackv. R.J Hendricks, 126 Or 400, 270 P476 (1928) ......................... . 13

McCrae v. Vogler, 272 Or 230,235, 536 P2d 509 (1975) ..................... . 12

McGinnis v. Keen, 189 Or 445, 449, 221 P2d 907 (1950) .................... .. 15

McKinley v. Weidner, 73 Or app 396, 698 P2d 983 (1985) ..................... . 35

McNeely v. Hiatt, 138 Or App 434,909 P2d 101 (1996) ....................... . 9,17,18

Morgan v. Goodsell, 198 Or App 385, 108 P3d 612 (2005) ................. . 34

Olson v. Howard, 179 Or App 551, 42 P3d 286 (2002) ...................... . 4,8

Panushka v. Panushka, 221 Or 145,149,349 P2d 450 (1960) ............. .. 28

Patterson v. Wasner, 128 Or App 254,875 P2d 506 (1994) .................. . 12

Raymond v. Flavel, 27 Or 219, 241,40 P 158 (1895) .......................... . 29

Rieker v. Kaiser Foundation Hospitals, 194 Or App 708, 96 P3d 833 (2004) ......................................................... .. 24

Scovill v. City 0/ Astoria, 324 Or 159,921 P2d 1312 (1996) ................. . 11

Slogowski v. Lyness, 324 Or 436,927 P2d 587 (1996) ....................... .. 11

Stanley v. Mueller, 211 Or 198, 315 P2d 125 (1957) ......................... .. 14

Wright v. Hazen Investments, Inc., 293 Or 259, 648 P2d 360 (1982) ........ 14

1

ST A TEMENT OF THE CASE

1. Nature of the Action and Proceedings Below.

Plaintiffs recitation of the nature of the action and proceedings below is overly

argumentative. Respondent Jarrod Howard offers the following alternative.

This case is about a trust. Plaintiff is one of the beneficiaries of the William Resser

Trust. l Plaintiffs Second Amended Complaint alleges that Jerry Howard, as successor

trustee of the trust, improperly sold real estate belonging to the trust. Specifically, it alleges

that Jerry Howard sold Mr. home to his son, Jarrod Howard, for $55,000.00 in a

sham transaction in which Jarrod was merely a straw buyer for Jerry and Howard.

Plaintiff claims this price was too low. The Complaint also alleges that Jerry Howard was

not the successor trustee and therefore had no power to act.

Plaintiff asked the court to set aside the sale, reconvey the property to the trust and

order the trustee to resell the property and distribute the new proceeds to the beneficiaries.

Plaintiff also asked the court to relieve the trust of any obligation to repay the $55,000.00,

unless Jarrod proved he was entitled to a refund of the purchase price. If Jarrod proved that

he was entitled to a refund, then Plaintiff alleged that he should be charged, among other

things, for treble damages in the amount of $32,632.89 for timber trespass under ORS

105.815. These damages would be an offset against repayment of the purchase price.

Plaintiff also sought attorney fees and costs.

Jerry Howard filed a motion to strike the Second Amended Complaint and make it

more definite and certain. (CR-50). The trial court granted that motion. (CR-78). The

1 The beneficiaries and their distributive amounts are listed at APP- 1.

2

court also granted Plaintiff leave to file an amended complaint and required Plaintiff to file

a bond under ORS 128.155.

Plaintiff chose not to amend the Complaint, preferring to stand on its pleadings.

Thereafter, the court granted Defendant Jarrod Howard's motion for judgment on the

pleadings and in the alternative, motion to dismiss. It also awarded Jarrod Howard his

attorney fees and costs pursuant to ORS 20.105 and ORS 105.810. Plaintiff appeals from

these rulings. He also challenges the portion of the trial court's order requiring him to post

a bond. However, he does not appear to appeal or argue that the court's order granting the

motion to strike the Second Amended Complaint and make it more definite and certain was

error. He claims the attorney fee award was procedurally and substantively deficient.

2. Jurisdiction and Timeliness of Appeal.

Jarrod Howard accepts Plaintiff's representations concernIng the Court's

jurisdiction and timeliness of appeal.

QUESTIONS PRESENTED

1. Did the trial court err by entering judgment when Plaintiff declined to replead after

the court struck critical elements of Plaintiff's Complaint and ordered Plaintiff to make it

more definite and certain?

2. Can a party obtain the court's assistance in controlling the operation of the trust and

avoid the requirements for posting a bond under ORS 128.155 by claiming that they are

proceeding tUlder equitable common law rights?

3. Does the trial court lose the ability to decide a case or award attorney fees if a party

fails to submit findings of fact and conclusions oflaw under ORCP 62.

3

4. Are the procedural requirements for a petition and award of attorney fees found

under ORCP 62 or ORCP 68, or both?

5. Did the trial court err in awarding attorney fees to Jarrod Howard when it found that

the claims filed were not objectively reasonable and that Jarrod Howard was the prevailing

party on a timber trespass claim?

SUMMARY OF ARGUMENT

The trial court properly granted Jarrod Howard's motion for judgment on the

pleadings. When Plaintiff refused to amend the Complaint after the court granted the

motion to strike, there was no operative complaint. The court had no choice but to enter

judgment on the pleadings. The trial court correctly granted the motion to strike where

Plaintiff s allegations were internally inconsistent and Plaintiff attempted to have the court

direct the trustee's actions without posting a bond as then required by ORS 128.115.

The trial court's award of attorney fees to Jarrod Howard was procedurally proper.

Attorney fee awards are governed by ORCP 68. That rule has a specific procedure for

findings of fact and conclusions of law, which the trial court followed. See ORCP

68C(4)(e). ORCP 62, cited by Plaintiff, applies to bench trials and not attorney fee awards.

The court had the authority to adopt any findings of fact it deemed proper, even if no

proposed findings of fact were submitted. Most importantly, Plaintiff is estopped from

arguing that the filing was untimely, because he agreed that Jarrod Howard could delay

filing proposed findings of fact until after the parties completed settlement negotiations.

Any error in adopting findings late is harmless.

The award of fees was also substantively appropriate. Plaintiffs claims were

without legal or factual merit in violation of ORS 20.105. Plaintiffs mother previously

4

filed very similar claims that were deemed frivolous. This court upheld that determination

in Olson v. Howard, 179 Or App 551, 42 P3d 286 (2002)(affirming without opinion).

Moreover, Plaintiffs suit relied, in part, on a claim that Jarrod Howard committed timber

trespass in violation of ORS 105.810. As the prevailing party on that claim, Jarrod Howard

was entitled to an award of reasonable attorney fees and costs. ORS 105.810(2).

SUMMARY OF FACTS

1. Substantive Facts.

The statement of facts provided by Plaintiff is so one sided and incomplete as to be

misleading. Accordingly, Defendant Jarrod Howard offers the following alternate fact

statement.

A. The parties.

The man at the center of this case, lived outside of Falls City,

Oregon in a cabin on the subject property. As he aged, he relied on friends and neighbors

for assistance. Richard Redinger and Jerry Howard were both neighbors who helped

named Mr. Redinger as his attorney-in-fact under a durable power of

attorney. App-39 Unbeknownst to everyone, named Jerry Howard as successor

trustee of his revocable living trust which owned the subject property. App-41, 42. With

the exception of Jarrod Howard, all the parties to this case are beneficiaries of the

Revocable Living Trust.

B. The property.

The property consists of 20 acres of very steep woodlands on the side of a hill above

the rural community of Falls City. App-15. Only about two acres are flat enough to be

usable ground. App-15, 38. There is no septic system. It is served by a crude cesspooL

5

Prior to the sale, there was no water, other than an unimproved spring and a well that

produced very little water. The well produced enough water for a shower or a pot of coffee,

but not both. ld.

The dwelling is a log cabin built in 1900. App-19. The roof leaked and it was full

of dry rot. App-3S. The property was infested with pests and animals, including skunks.

The logs in the house suffered from substantial dry rot. See Exhibit 6, Affidavit of Norman

R. Hill in reply to Plaintiffs objections. (CR-I27); See Exhibit F, Affidavit of Norman R.

Hill. (CR-IIS).

The property was a logged over tree farm. The remaining timber consisted of blow

downs and standing timber that was simply not worth commercially harvesting. Even the

Plaintiff concedes that there was no stumpage value, and that any further harvesting of

timber did not diminish the property value. Instead, it increased the value. See Plaintiffs

Second Amended Complaint at Page 13.

C. The sale.

In 1997, began having physical and mental problems. See Exhibit J to

Affidavit of Norman R. Hill. (CR-127). Mr. Redinger was helping him. In order to assist

Mr. Redinger sought assistance from Salem attorney, Marcia McMinimee, a

specialist in elder law. Ms. McMinimee advised Redinger that he needed to begin the

process of selling the home. See Exhibit H to Affidavit of Norman R. Hill. (CR-lIS).

Redinger contacted local Realtor, Bill Woodrum. Mr. Woodrum has over 30 years

experience. He is a former member of the Polk County Planning Commission. He is

familiar with rural properties in Polk County and Falls City, in particular. Mr. Woodrum

interviewed the tenant at the time and inspected the property. He concluded that the

6

property was worth only $75,000.00, if it could be sold on a land sale contract, because

conventional lenders would not loan on the property. The cash price was less. This

infonnation was passed on to Ms. McMinimee, who apprised the Oregon Department of

Senior Services of the proposed sales price. See Exhibits F, G and H to Affidavit of

Nonnan R. Hill. (CR-] 18); Exhibits C and H to Affidavit of Nonnan R. Hill. (CR-127).

About this same time, Jarrod Howard expressed interest in purchasing the property.

He contacted Redinger, who sent him to Woodrum. Jarrod offered to buy the property for

$55,000.00 cash. He planned on borrowing the money from his mother and father,

and Jerry Howard. See Exhibit 8, Affidavit of Lee Nusich. (CR-122). Woodrum drafted

Jarrod's offer and presented it to Redinger who accepted it. The parties opened escrow at

First American Title in Dallas, Oregon.

Prior to closing, the escrow company examined the title and detennined that Jerry

Howard should sign the deed as successor trustee. It is undisputed that nobody involved in

the transaction knew that Jerry Howard was listed as successor trustee, until after Jarrod

struck his agreement with Redinger. The news that Jerry was successor trustee came as a

shock. AppA2. 43. Jerry Howard dutifully appeared at the appointed time and executed

the statutory warranty deed used to complete the sale. The transaction closed in June, 1997,

and the proceeds were deposited in the trust's bank account.

Mr. died shortly after closing. Attorney McMinimee represented Jerry

Howard as the successor trustee to help finalize the trust and distribute the remaining estate

assets to the beneficiaries. See Exhibit H to Affidavit of Nonnan R. Hill. (CR-118). The

assets included proceeds from the sale of the house. All the beneficiaries, including

Plaintiff, received payments from the trustee in distribution. Plaintiff~ like the other

7

beneficiaries, executed a release of all claims relating to trust administration when he

received his final distribution. See Exhibit B, Affidavit of Norman R. Hill. (CR-118).

Following the escrow closing, Jarrod Howard took possession of the property and

began making improvements. See Exhibit G to Affidavit of Norman R. Hill. (CR-l27).

He and his father and brother cleared the downed timber from the property and harvested

the trees that were left over from Mr. previous logging activities. As discussed

above, all the parties agreed that the logging improved the value of the property, as the logs

were located in places that made them commercially worthless.

Jarrod Howard also began repairing the water source. He improved the spring on

the property and piped its water across the face of the mountain to the cabin. He repaired

holes in the roof, evicted the skunks, and replaced dry rotted wood. The house was still not

habitable under the standards required by ORS Chapter 90 for a residential tenant.

However, Jarrod Howard lived in the property for a short time and then rented it to friends.

See Exhibit G to Affidavit of Norman R. Hill. (CR-127). Contrary to Plaintiffs statement

of fact, Jarrod Howard was always gainfully employed. When this transaction started, he

was a partner in the family logging business. He was also a student at Willanlette

University. Id.

Jarrod Howard's ownership of the property was uneventful, until a dispute

developed between Jarrod Howard and one of his neighbors, and The

and Howard became embroiled in a boundary dispute after cut down

trees that encroached onto Howard's property. They claimed as a defense that Jarrod

Howard was not the true owner of the property because of irregularities in the sale. The

trial court considered this defense and rejected it. App-40, 41.

8

Nevertheless, Patricia Olson filed her own action against Jerry and Jarrod Howard in

Polk County, alleging the sale was a sham and seeking to have the sale set aside and the

property resold. The trial court dismissed the action after Ms. Olson failed to post a bond

required by the court pursuant to ORS 128.155 in effect at that time. The court also

awarded the trustee attorney fees and costs on the grounds that the complaint was frivolous.

See Exhibit E, Affidavit of Norman R. Hill. (CR-118). This court affirmed that ruling

without opinion. See Olson v. Howard, supra.

2. Procedural Facts.

This dispute's most recent chapter began when Plaintiff filed suit against Jarrod

Howard in U.S. District Court, alleging diversity jurisdiction because Plaintiff resided in

Missouri. The court granted Jarrod Howard's motion to dismiss and ruled that the trustee

and other beneficiaries were necessary parties. The dismissal was with prejudice because

adding these new parties would destroy diversity.

Plaintiff thereafter filed the present action in Polk County Circuit Court? Jarrod

Howard and Jerry Howard each filed separate Rule 21 motions against the First Amended

Complaint. Jarrod Howard argued that the Amended Complaint did not include facts

justifying the type of constructive trust Plaintiff sought in the prayer. The court denied

Jarrod Howard's motion.

Jerry Howard's motion was different. He argued that the Complaint's allegations of

his vvrongdoing was sham or frivolous, given the fact Plaintiff was seeking no relief against

2 The allegations in Plaintiffs original Complaint are virtually identical to the Complaint his mother filed in Olson v. Howard, Polk County Circuit Court Case No. 00P1108. His mother's Complaint was dismissed when she failed to post a bond under ORS 128.115. The trial court also ruled that her Complaint was frivolous and awarded attorney fees and costs under ORS 20.105. This court affirmed without opinion. Olson v. Howard, 179 Or app 551, 42 P3d 286 (2002).

9

him. He also argued that if the Plaintiff was seeking to have the court direct the trustee's

actions by taking the property back and reselling it, then the bonding requirements of ORS

128.l55 applied. Jerry Howard asked the court to require the Plaintiff to make its

allegations more definite and certain, so that the court could determine if ORS 128.155

applied and he could determine if other affirmative defenses were appropriate. The court

granted Jerry Howard's motion with leave to file an amended complaint.

Plaintiff responded with a Second Amended Complaint containing the same basic

allegations as the First Amended Complaint, except that this time the Complaint was

prefaced with a statement that Plaintiff was not petitioning under ORS 128.135 - ORS

128.145. Rather, he was seeking equitable remedies under this court's decision in McNeely

v. Hiatt, 138 Or App 434, 909 P2d 101 (1996). Plaintiff also included a statement that

Plaintiff was not seeking affirmative relief against Jerry Howard or the other defendants.

The Second Amended Complaint retained the request that the court order the trustee to take

back the property and sell it again.

Not surprisingly, Jerry Howard refiled his prior Rule 21 motion. The court again

granted the motion, explaining that the court was ruling that Plaintiff should make its claims

more definite and certain and specify its cause of action against Mr. Howard as trustee.

Rec. Hearing September 14, 2005 at Pages 27, 28. The court also invited Olson and Jerry

Howard to submit evidence and argument assisting the court in setting a bond, if the court

determined that the allegations of the presumably third amended complaint implicated ORS

128.155. Rec. Hearing, September 14,2005, at Pages 28 and 29. An order reflecting the

court's ruling was entered on October 27,2005. (CR-78).

10

Plaintiff did not file an amended complaint. He filed motions to reconsider and set

aside the order requiring a bond. (CR-87). Finally, he simply dismissed Jerry Howard from

the case pursuant to ORCP 54 and filed a motion for a separate trial against Jarrod Howard.

(CR-81; CR-95). At oral argument, Plaintiff agreed that the motion for relief from the order

requiring a bond was moot. Rec. Hearing June 8,2006, Page 17. Also, the court explained

that given the dismissal and lack of a complaint, the motion for a separate trial and other

pending motions were also moot. Id at 14, 18. The trial court strongly suggested that

Defendants file motions terminating the case. Id at 23,27.

Jarrod Howard filed his motion for judgment on the pleadings and motion to

dismiss on October 17, 2006, arguing that there was no operative complaint. (CR-I06). He

also argued that the court lost subject matter jurisdiction when Plaintiff dismissed Jerry

Howard. The trial court agreed and entered a limited jUdgment as to Jarrod Howard on

April 2, 2007. (CR-114).

Jarrod's Attorney also filed a petition for attorney fees and costs pursuant to ORCP

68. Plaintiff objected and requested findings of fact pursuant to ORCP 68. The court heard

argument and granted the petition. At oral argument, the court directed the Defendant to

prepare proposed findings within two weeks. However, following the hearing, the parties

conducted settlement discussions. Jarrod Howard's attorney asked Plaintiff for an

extension of time within which to file the proposed findings so that the parties could try and

settle the entire case. Plaintiffs attorney acknowledges that he agreed to an open ended

extension. Eventually, it became clear that settlement was improbable. Jarrod Howard filed

his proposed findings of fact and conclusions of law on December 5, 2007. (CR-138).

Plaintiff objected to those findings and offered substitute findings. (CR-141). The court

11

issued findings of fact by signing and entering Jarrod Howard's proposed findings. (CR-

138). This appeal followed.

RESPONSE TO FIRST ASSIGNMENT OF ERROR

The trial court properly granted Defendant's motion to dismiss and/or motion for

judgment on the pleadings. The court had no choice after Plaintiff refused to file an

amended complaint in response to the court's order to strike the Complaint and make it

more definite and certain. The fact that Plaintiff's Complaint stated a claim before the

pleading was struck is irrelevant.

DISCUSSION

A. Standard of Review.

On a motion for judgment on the pleadings the court detemlines whether the

allegations in the pleadings show plaintiff cannot prevail as a matter of law. Scovill v. City

of Astoria, 324 Or 159, 921 P2d 1312 (1996); Slogowski v. Lyness, 324 Or 436, 927 P2d

587 (1996).

B. Argument.

1. The trial court properly entered judgment because there was no complaint.

The trial court correctly entered judgment on the pleadings in this case. ORCP 23 directs

the court to enter judgment on the pleadings when the pleadings viewed as a whole show

there are no issues of fact and judgment is appropriate as a matter oflaw. ORCP 23. In this

case, elements of Plaintiff's last operative complaint, the Second Amended Complaint, were

stricken and the court ordered the Plaintiff to make the claim more definite and certain.

Plaintiff refused to do so. Therefore, there was no complaint and no issues for the court to

determine. Judgment was appropriate.

12

The resolution of this case is clearly dictated by Rules 23 and 25 of the Oregon

Rules of Civil Procedure. ORCP 23 provides that whenever an amendment is made to a

pleading (except amendments to correct typographical errors) a new pleading must be filed.

ORCP 23. The pleading must be complete in itself without reference to the original or any

proceeding pleading. Id. When the court grants a motion striking part of a pleading, a party

must file an amended pleading using the procedures of ORCP 23. See ORCP 25. Under

ORCP 23, the party has ten days to file an amended pleading unless the order directs

otherwise. The court may dismiss any amended complaint filed after the ten day period

expires and enter judgment. Patterson v. Wasner, 128 Or App 254,875 P2d 506 (1994).

The case of Patterson v. Wasner, supra, is particularly instructive. That case also

involved a declaratory judgment action. The trial court tirst dismissed the complaint on the

grounds that it did not allege a judiciable controversy. The plaintiff amended the complaint

but filed its amendment more than ten days after the court issued its order. The court, on its

own motion, dismissed the complaint and entered judgment. This court aftlrmed the trial

court, even though the amendment was filed a mere 13 days later.

The case at bar is a much clearer case. Here, Plaintiff never filed an amended

complaint and insisted he was standing on the prior pleadings and had no intention of

amending or filing a further pleading. Plaintiff is certainly entitled to do so. However, the

trial court does not err by entering judgment accordingly.

This result is also supported by the cases decided before the Rules of Civil

Procedure were adopted. In McCrae v. Vogler, 272 Or 230, 235, 536 P2d 509 (1975) the

Supreme Court upheld the trial court's entry of judgment when a Plaintiff refused to plead

further in response to the court's denial ofthe plaintiffs demur to an intervenors complaint.

13

Likewise, in Mack v. R.J Hendricks, 126 Or 400, 270 P 476 (1928), the defendant filed

several answers which were all stricken in some regard. Thereafter, the defendant declined

to plead further. The court upheld the subsequent entry of the judgment.

Defendant anticipates that Plaintiff will argue that the Complaint was still at issue

against Jarrod Howard because the motion to strike and make more definite and certain was

directed at allegations concerning only Jerry Howard.3 However, a review of the Complaint

dispels that argument. The Second Amended Complaint contains a single claim for

declaratory relief. It does not set forth discreet claims for relief against Jarrod Howard and

Jerry Howard separately. Instead, the allegations against Jarrod Howard and Jerry Howard

are intertwined. For example, paragraph 12 of the Second Amended Complaint alleges that

the sale to Jarrod was essentially a sale of the property from the Jerry to himself for grossly

inadequate consideration and without legal authority. (CR-45). This is the heart of

Plaintiffs Complaint. It was stricken by the court's order. Likewise, all of the other

allegations in the Complaint alleging that the transaction was wrongful were stricken from

the Complaint as welL Without an amended complaint, the court could not go forward.

2. The fact that the court previously ruled the Complaint stated a claim against Jarrod Howard is irrelevant.

Plaintiff s argument on the First Assignment of Error is limited to his contention

that the original Second Amended Complaint stated a claim before the motion to strike and

make more definite and certain was granted. Plaintiffs argument misses the point.

The allegations he relies on were stricken pursuant to the court's order entered on

October 27,2005. (CR-78). Without some showing of a breach of duty by the trustee,

3 Plaintiffs brief does not address the impact of ORCP 23 and 25, or the court's reasoning that there was no operative Complaint after it granted thc motion to strike.

14

Plaintiff has no justification for imposing a constructive trust on JalTod Howard. Plaintiff

cites no authority and does not argue that the court may order the buyer to give property

back to a trust and order the trustee to resell the property, merely because one of the

beneficiaries hopes that a better offer may be obtained in the future. The court was required

to grant the motion for judgment on the pleadings.

3. The court lacked subject matter jurisdiction after Jerry Howard was dismissed from the case.

The court's decision was further justified by Plaintiffs action dismissing the trustee

pursuant to ORCP 54. The court lacks subject matter jurisdiction to proceed in a

declaratory relief action unless all the parties impacted by the decision are in the case.

Wright v. Hazen Investments, Inc., 293 Or 259, 648 P2d 360 (1982); Kaiser Foundation

Health Plan of the Northwest v. Jane Doe, 138 Or App 428, 908 P2d 850 (1996). In this

case, the Plaintiff was seeking to set aside the sale of real property and return the property to

the seller. It seems obvious that the seller would need to be joined in the action in order to

proceed. When the trustee was dismissed, the court lacked subject matter jurisdiction

because all the parties necessary for determination were no longer before the court. Stanley

v. Mueller, 211 Or 198,315 P2d 125 (1957).

RESPONSE TO SECOND ASSIGNMENT OF ERROR

Plaintiffs Second Assignment of ElTor challenges the trial court's ruling that

Plaintiff must post a bond. However, the existence or nonexistence of a bond did not

preclude the court from dismissing the case and entering judgment after Plaintiff chose to

stand on the pleadings. Also, the court did not elT in granting Defendant Jerry Howard's

motion to strike and in the alternative, make more definite and certain.

15

DISCUSSION

A. Standard of Review.

The court reviews the trial court's interpretation of the statute for errors oflaw. The

standard of review for an order granting a motion to strike or motion to make more definite

and certain is abuse of discretion. McGinnis v. Keen, 189 Or 445,449,221 P2d 907 (1950).

B. Argument.

1. The trial court did not err in granting Jerry Howard's motion to strike and in the alternative to make more definite and certain.

The trial court entered judgment in favor of Jarrod Howard because there was no

operative complaint after the court granted Jerry Howard's motion striking the only claim

for relief included in the case. To the extent the trial court's ruling in that regard is

challenged in this proceeding, it is correct. The trial court did not abuse its discretion.

Plaintiff s Second Amended Complaint is confusing on its face. It alleges that Jerry

Howard, as successor trustee, sold trust property to himself through a disguised sale to his

son, Jarrod Howard. It also alleges that Jerry Howard was not the successor trustee and had

no authority to transfer the trust property to his son. These seemingly contrary allegations

are not set forth in the alternative, but rather a part of a single narrative Complaint entitled,

"Action for declaratory judgment pursuant to ORS 28.010 et seq., to determine interest in

real property; equitable restitution and constructive trust."

The Complaint also contains numerous allegations of misconduct by the successor

trustee and asks the court to order the trust to take possession of the property, hold it, and

attempt to resell it. At the same time, it alleges that no affirmative relief is sought against

the trustee. Despite these allegations, Plaintiffs lawyer verbally represented to the court

16

that the Complaint alleged breach of tiduciary duty, fraud, misrepresentation and a

conversion, among other things. Rec. Hearing dated February 8, 2005, Page 34.

The trustee reasonably sought clarification. The motions to strike argued that

Plaintiff could not simultaneously allege breaches of fiduciary duty, and other malfeasances

and request that the court order the trustee to take back property, while at the same time

alleging he is not seeking any affirmative relief. The pleading was subject to a pretrial

motion to make more definite and certain based on this vagueness. See Galego v. Knudsen,

282 Or 155, 578 P2d 769 (1978). The trustee asked the court to strike the offending

language and asked that the trustee be dismissed, if, in fact, Plaintiff was seeking no relief

from the trustee. Otherwise, the court should require the Plaintiff to expressly state the

cause of action he was alleging against the trustee so that the trustee could properly prepare

to meet the allegations and assert relevant affirmative defenses. The court did not abuse its

discretion in granting the motion to strike and make more definite and certain, particularly

where it granted Plaintiff leave to amend.

2. The court's decision to strike the pleading is independent of any claim regarding the bond.

Plaintiff does not challenge the court's order granting the motion to strike and make

more definite and certain. Instead, it limits its assignment of error and argument to the

contention that the court should not have concluded that ORS 128.115 was implicated, or

required a bond under that statute. The problem with Plaintiffs argument is that the

propriety or impropriety of requiring a bond is irrelevant to whether the order striking the

pleadings is proper. In his motions and at oral argument, Jerry Howard made it clear that he

was concerned about the actual state of the pleadings, and knowing precisely what claims

were being made against him and the trust. Rec. Hearing September 14,2005. (CR-21).

17

The court's order was designed to correct that uncertainty. While it is true that the court

also granted a bond, the order granting the motion to strike and make more definite and

certain was justified, even if the court had denied or refused to rule on the request for a

bond.

3. The bond.

As discussed above, the court was justified in striking the Second Amended

Complaint and requiring it to be made more definite and certain regardless of whether a

bond was required. However, the court was also correct in requiring a bond.

Oregon trusts were governed by ORS 128.115 et seq. when this case was filed. That

section sets forth procedural mechanisms allowing the court to supervise trusts, which

would not otherwise be subject to probate proceedings. In particular, ORS 128.135 is

entitled, "Authority of beneficiary to obtain equitable remedies to modifY administration of

the trust. ... " It states that any beneficiary of a trust has a right to petition the court to review

any matter concerning the interpretation, the settlement and administration of a trust.

However, before seeking to have the court control the trustee, the beneficiary must first post

a bond to ensure that the beneficiary will pay any costs or attorney fees awarded, if the

petition is frivolous or filed in bad faith. ORS 128.155.

Plaintiff claims that ORS 128.115 et seq. does not apply to his claims. He argues

that McNeely v. Hiatt, supra, is directly on point and establishes that the bonding

requirements of ORS 128.155 are merely permissive. Plaintiff contends he can avoid the

requirements of posting a bond, merely by claiming he is proceeding under common law

equitable remedies, instead ofORS 128.115 et seq. Plaintiffs reliance is misplaced.

18

McNeely v. Hiatt. supra, does not hold that ORS 128.175 is merely permissive. In

McNeely, supra, the court was not confronted with the question of whether a beneficiary

must post a bond in order to have the court control the trust. Rather, that case involved a

question of whether a party who did not proceed under ORS 128.155 was barred from

recovering attorney fees from the trust based on recovery of a common benefit to the other

beneficiaries. After the case was decided, the trust argued that plaintiffs failure to post a

bond invalidated her claim for attorney fees. This court held that the claim for fees was not

barred because the statute did not abrogate plaintiff s common law right to fees, and noted

that she did not petition under the statute. From the case, it does not appear that any party

argued that plaintiff was required to file a bond as a condition of going forward with her

claim in the first place. That issue was simply not before the court.

Plaintiff also cites In re Harrell, 104 Or App 332, 335-36, 801 P2d 852 (1990), but

that case is inapplicable. In re Harrell, supra, involved a petition under ORS 128.115 et

seq. for the court to modify a trust. The court ruled that ORS 128.115 et seq. did not grant

the court the power to modify the trust. Therefore, if petitioner was to have relief, she

would need to rely on common law principals, such as the Cy-pres doctrine. The court did

not conclude that petitioner could seek the relief specifically listed in the statute, without

complying with the statute, merely by claiming she was proceeding in equity.

Jarrod Howard has not found any Oregon case addressing this issue directly.

However, the statute's text and context strongly suggests that compliance is mandatory.

ORS 128.115 et seq. is a procedural statute. By its terms, it does not limit or abrogate any

inherent power of a court to grant equitable remedies. ORS 128.175. It merely provides a

procedural framework for bringing those claims to the court's attention, when the remedy

19

sought implicates one of the remedies specified in ORS 128.135. In this case, Plaintiff is

asking the court to direct the administration and distribution of a trust asset. Therefore, it

must comply with ORS 128.155(2) and obtain a bond.

Plaintiff s contrary interpretation ignores the text and context of the statute. First,

the title of the statute specifically refers to equitable remedies. ORS 128.135. Thus,

Plaintiffs contention that ORS 128.155 does not apply to equitable claims is not correct.

Second, Plaintiff's interpretation makes the bonding requirement of ORS 128.155

meaningless. ORS 28.040 already allows a court to issue declaratory relief in the form of an

order controlling a trustee and the administration of the trust in determining any question

arising in the administration of the trust. IfORS 128.155 is merely permissive and optional,

as Plaintiff suggests, no plaintiff would ever submit a claim under the statute. The

legislature's intent that they post a bond would be completely thwarted.

The rationale for such a bond seems self evident. Beneficiaries should not be able

to waste trust assets with frivolous claims. When they do, other beneficiaries are hurt

because the trust assets are used up fighting with the petitioning party. Even if it wins, the

trust may be unable to recover fees from the petitioning party and the rest of the

beneficiaries suffer.

This case graphically demonstrates what happens when there is no bond. Plaintiff

has already been paid and spent his portion of the proceeds from the original sale of the

property and he signed a release absolving the trustee from any claims relating to this

distribution. He now claims poverty and presumably has no ability to repay any portion of

the sale proceeds, even if the court unwinds the transaction. Therefore, he sued the trustee

and buyer on the unlikely hope that the court will order Jarrod Howard to reconvey the

20

property to the trust without recovering any of the purchase price. In short, the Plaintiff is

hoping he would get rescission without paying any restitution. The trust is now depleted.

Rec. hearing September 14, 2005 at Page 32. Ifthere was ever a case that called for a bond

under ORS 128.155, this is it.

RESPONSE TO FIRST ASSIGNMENT OF ERROR FROM SUPPLEMENTAL BRIKF

Jarrod Howard did not waive his claims for attorney fees by not filing a proposed

findings of fact within ten days from the court's decision under ORCP 62. First, ORCP 62

does not apply to awards of attorney fees and costs. It is limited to bench trials. See ORCP

62A. The procedure for findings of fact for attorney fee awards are now governed by

ORCP 68C(4)(e), which does not contain the same time limits. Second, ORCP 62 does not

preclude the court from adopting its own findings of fact, even if the parties do not submit

proposed findings of fact. Thus, the court was always free to draft its own findings of fact

and conclusions of law. The fact that it simply adopted Jarrod Howard's proposed findings

of fact is immaterial. Third, Plaintiff is estopped from arguing that the findings of fact are

untimely because his attorney gave Defendants an open extension of time to allow for

settlement talks.

DISCUSSION

A. Standard of Review.

The court reviews interpretations of statute for errors of law. Community Bank v.

US National Bank of Oregon, 276 Or47l, 555 P2d 435 (1976).

B. Argument.

Plaintiff argues that Jarrod Howard's attorney fees claims are barred because his

proposed findings of fact and conclusions of law were untimely. In a nutshell, he argues

21

that ORCP 62B required Defendant to file proposed findings of fact within ten days of the

court's decision, and a failure to do so amounts to a waiver of the claim for attorney fees or

somehow precludes the court from adopting its own findings of fact and ruling on the issue.

1. Attorney fee awards are governed by ORCP 68 and not ORCP 62.

Plaintiff's argument fails because the parties and the court were proceeding under

ORCP 68 and not ORCP 62. The procedural rules for awarding attorney fees are found in

ORCP 68. That rule contains a specific procedure for filing an objection to a request for

attorney fees. A party seeking an award of costs or attorney fees must file their petition

within 14 days of date the court enters judgment. ORCP 68C(4)(a). The opposing party has

14 days to file any objections ORCP 68C(4)(b). If objections are filed, the court determines

all issues of law or fact raised by the statement of attorney fees or objections thereto without

a Jury. ORCP 68C(4)(c).

ORCP 68 contains a separate proceeding for adopting findings of fact. ORCP

68C( 4)( e) provides that in a request of a party, the court shall make separate findings of fact

and conclusions of law "on the record." A party does not request findings of fact at the

beginning of the "trial" as they would under ORCP 62. Instead, the party requests findings

of fact under ORCP 68 by including such a request in the title of their objections. ORCP

68C(4)(e). Plaintiff did so in this case. His objections state that he is requesting findings of

fact pursuant to ORCP 68C(4)(e). Thus, the court, and the parties, were operating under

ORCP 68. The proposed findings of fact were not untimely.

Plaintiff argues that ORCP 62B and C apply to attorney fees and findings of fact

under ORCP 68. He asserts that the text and context of ORCP 62 "clearly indicates" that

the legislature intended to apply ORCP 62B to all situations where the court is called on to

22

make factual findings. He notes that attorney fee claims are decided by the court "v,ithout a

jury" and therefore concludes that because ORCP 68C does not contain the same deadlines

as those found in ORCP 62B and C, "[t]he only possible conclusion is that no other

procedures and deadlines relating to the proposed findings of fact are not (sic) set forth in

ORCP 68C(4)(c) because the governing procedures and deadlines are already set forth in

detail in ORCP 62." Plaintiffs Supplemental Brief at 18. Plaintiff offers no other analysis

supporting his argument.

However, a closer look at the rules show that the Plaintiffs conclusion is erroneous.

First, ORCP 62, by its very terms, applies to civil "trials." ORCP 62A states that,

"Whenever any party appeared in a civil action tried by the court so demands prior to the

commencement of trial, the court shall make special findings of fact, and shall state

separately its conclusions of law thereon." (emphasis added). By contrast, factual dispute

in attorney fee awards are not determined in a "trial" under ORCP 68. Rather, the parties

are given a, "reasonable opportunity to present affidavits, declarations or other evidence

relevant to any factual issue .... " ORCP 68C(4)(c)(i). In this case, there was no trial.

Judgment was entered following oral argument on Defendant's petition for attorney fees

and costs under ORCP 68, as Plaintiff requested.

Second, the absence of provisions under ORCP 68 specifically invoking ORCP 62B

and C is a strong suggestion that the drafters did not intend to apply those limits to ORCP

68. If the drafters intended the rules to apply, they would have referenced them explicitly.

In addition, the drafters would not have used different language to describe the procedures.

For example, the findings of facts contemplated under ORCP 62 are undoubtedly written as

they must be served on the parties. See ORCP 62B. However, under ORCP 68, the court

23

merely makes its findings "on the record." ORCP 68C(4)(e). These distinctions in

procedures indicate that these provisions are independent. Moreover, Plaintiff never

explains why it is necessary or even helpful to have additional provisions governing the

timing and entry of attorney fee judgments, other than those contained in ORCP 68C(4), (5)

and (6).

2. The court had a right to adopt any findings it found appropriate.

Even if ORCP 62 applies to findings of fact under ORCP 68C(4)(e), Plaintiffs

assignment of error fails because he never explains why the failure to file proposed findings

of fact within ten days would deprive the court of its ability to adopt any findings of fact at

all, or to decide the issue. It is undisputed that the petition for attorney fees was timely filed

in this case, as were the objections. Thus, the court was required to decide the attorney fee

issue. Plaintiff does not point to any part of ORCP 62 which says that the court is

prohibited from making a decision or adopting findings of fact, unless the parties provide

proposed findings of fact within ten days.

The rules seem to say otherwise. ORCP 62B states that within ten days of the date

the court makes its decision, any party or the court, may serve proposed findings of fact and

conclusions of law on the parties. The parties then have ten days to file objections and offer

alternative or supplemental findings. The court has 30 days to hear and determine such

objections. If it does not make a detern1ination, the objections are deemed denied. Once

the objections are decided or the time expires, the court enters "the appropriate" judgment.

ORCP 62C. However, nothing in the statute says that by failing to propose findings within

the time frames set forth in the statute, that the court loses its ability to decide the case.

24

In this case, the court was required to make findings of fact and conclusions of law.

It did so after giving the Plaintiff the opportunity to object to those findings and urge other

findings.

Plaintiff does not assIgn as error any deficiencies in the form of the findings

themselves. Plaintiff also fails to illicit any prejudice it suffered based on the delay in filing

the findings. The mere fact that the court adopted the findings of the Defendant as its own

is not error. Moreover, if it was error, the error is harmless. See Rieker v. Kaiser

Foundation Hospitals, 194 Or App 708, 96 P3d 833 (2004)(error is not reversible unless the

losing party demonstrates that it substantially affected their rights).

The contrary ruling Plaintiff urges is quite remarkable, and as the following

hypothetical demonstrates, totally unworkable. Assume this was a breach of contract case

tried to the court. Before trial, one of the parties asked for special findings of fact. At the

conclusion of the trial, the court verbally indicated that its verdict was for the defendant and

35 days later submitted to the parties its proposed findings of fact and conclusion of law

under ORCP 62B. According to Plaintiff's logic, the court would be barred from entering

judgment for the Defendant, or adopting its findings of fact, because the court was outside

of the 30 day timeframe of ORCP 68D. On the other hand, the Plaintiff would not win

because the decision was for the Defendant. Thus, the parties and the court would be left in

a procedural no man's land. That cannot be the law, particularly where no judgment has

been entered and there is no prejudice to the Plaintiff.

3. Plaintiff should be estopped from claiming that the findings of fact and conclusions of law are untimely.

Finally, Plaintiff should be estopped that the proposed findings of fact and

conclusions of law were untimely. It is undisputed that Plaintiff's counsel agreed to an

extension of time to file the proposed findings of fact so that the parties could engage in

settlement discussions. Plaintiff relied on those representations in good faith. Plaintiff

should not be entitled to modifY his position now and claim that ORCP 62B renders the

filing untimely. This is the type of "sharp practice" the Supreme Court has sanctioned in

the past. In re Porter, 320 Or 692, 890 P2d 1377 (1995). It is also the type of procedural

defect the court may disregard under ORCP 12B.

RESPONSE TO SECOND ASSIGNMENT OF ERROR IN PLAINTIFF'S SUPPLEMENTAL BRIEF

The court properly awarded Defendant attorney fees under ORS 20.105. Plaintiffs

allegations were untrue and amounted to nothing more than innuendo. Most importantly,

Plaintiffs claim is lacking critical facts. His representations to this court and the trial court

"that each and every material fact is uncontroverted and incontrovertible" is not true. The

court's findings are supported by competent evidence and justified awarding attorney fees.

DISCUSSION

A. Standard of Review.

An award of attorney fees is reviewed for abuse of discretion. Whether fees are

authorized by statute is reviewed as a question of law. Lovejoy Speciality Hospital, Inc. v.

Advocates/or L((e, Inc., 121 Or App 160,855 P2d 159 (1993).

B. Argument

ORS 20.105(1) allows the court to award reasonable attorney fees against any party

who pursues a claim that has no objectively reasonable basis. The claim has no objectively

reasonable basis if it is entirely devoid of legal or factual support when it is made, or if a

party continues litigating after facts emerge making the claim objectively unreasonable.

Dimeo v. Gesik, 195 Or 362, 98 P3d 397 (2004). A claim is also not objectively reasonable

26

if a party proceeds with a claim without evidence of a critical and material fact, or in the

face of evidence, which conclusively disproves their claim. Lenn v. Baltern, 221 Or App

241, 190 P3d 399 (2008).

1. The court was justified in awarding fees because several critical facts were missing from Plaintiffs case.

Plaintiff asserts that the evidence overwhelmingly establishes facts needed to justifY

his claims. Specifically, he lists a series of facts he claims cannot be controverted. Plaintiff

claims that "any reasonable person would look at these facts and conclude that there is an

objectively reasonable basis to believe the sale should be set aside." Plaintiffs

Supplemental Brief at 22. However, Plaintiffs blanket assertion, without citation to the

record, that Plaintiff s claim was supported by a large body of evidence does not overcome

the fact that critical elements of Plaintiffs case were missing or undeniably wrong.

(a) The value of the property.

The most critical aspect of this case is the value of the property. Plaintiff does not

cite any cases where the court imposed a constructive trust, or ordered the property resold if

the original purchase price was reasonably equivalent to fair market value. Indeed, the

lynch pin of Plaintiffs case is his contention that the fair market of the property was

substantially more on the sale date than the purchase price of$55,000.00.

However, the overwhelming evidence shows that the property was worth roughly

the amount of the purchase price. Prior to the sale, Mr. Redinger engaged Bill Woodrum to

perform a market analysis of the property. Mr. Woodrum examined the property and its

condition at the time of the sale and determined that it was worth $75,000.00 if it was sold

on a land sale contract. App-34. However, a cash sale would render a lower price. He

viewed the property and noticed it was in an extreme state of disrepair. ld Therefore, the

27

parties listed the property at $65,000.00. According to Woodrum, the $55,000.00 sales

price was a very good price for the property. See Exhibit G to Affidavit of Norman R. FIill

at Pages 58, 207. (CR-llS). Woodrum's assessment was confirmed by a professional

appraisal. Spencer Powell conducted an appraisal of the property. The effective date of the

appraisal was the date of closing. He concluded that the fair market value on that date was

$60,000.00. See Exhibit A to the Affidavit of Norman R. Hill filed in support of Jarrod

Howard's motion for attorney fees. (CR-127).

Plaintiff never produced any admissible evidence of the property's value at the time

of the sale. His expert's report estimated the value at $140,000.00 as of 2005. This

appraisal, approximately eight years after the sale, presumably relied upon the condition of

the property after Jarrod Howard made improvements. Plaintiff offers no explanation as to

why he chose to value the property in 2005, only that his attorney's assertion that his expert

had some type of ethical problem valuing the property as of June 1997, the relevant date for

this proceeding. Rec. Hearing May 23,2007 at Page 17.

Plaintiff s only evidence of value in 1997 was the Polk County Tax Assessor. He

claims this evidence establishes the value because the assessor is required by statute to

establish a fair market value. However, Oregon law is clear that tax assessments are not

relevant in court to establish value. State Highway Commission v. Anderegg, 241 Or 31,

403 P2d 717 (1965) is directly on point. In that case, the Supreme Court ruled that tax

values are not admissible to establish value in any condemnation case. It explains:

"The property owners admit the great weight of authority holds that assessed value is not competent direct evidence of value for purposes other than taxation. See cases collected in annotation at 39 ALR 2d 214. In the ease of Oldenberg v. Oregon

Id.

28

Sugar Co., 39 Or 564, 569, 65 P 869 (1901), it was held that the assessed value was not admissible to show the value of property in a case in which damages were sought for injuries to it."

It seems this has been the rule in Oregon for over 109 years. Under the circumstances, it

was clearly objectively unreasonable for Plaintiff to file this case, causing the parties to go

to such an extreme expense without any admissible evidence of value as of the date of the

sale from Redinger to Jarrod Howard.

(b) Who made the sale?

Throughout this case, and on appeal, Plaintiff offers the familiar refrain that this was

a sale from a father to his son. However, the undisputed evidence shows that the Plaintiff is

wrong. The sale took place between Richard Redinger and Jarrod Howard. Mr. Redinger

was the duly appointed attorney-in-fact under a power of attorney from When he

signed the earnest money agreement, he did so as attorney-in-fact for Mr. as trustee

of the Resser Revocable Living Trust. Under the doctrine of equitable conversion, the

earnest money signed by Mr. Redinger was effective to pass equitable title to Jarrod

Howard. Panushka v. Panushka, 221 Or 145, 149,349 P2d 450 (1960). The trust retained

only the legal right to obtain payment of the purchase price at closing. Id.

Plaintiff tried to finesse this issue in the trial court by arguing that Redinger was

merely a "front" for Howard, who was trying to help her son, Jarrod Howard.

Plaintiffs Objections to Attorney Fees at Page 11. (CR-121). That arguement contradicts

Plaintiffs alleged theory that the sale was really a sale to Jerry Howard. There is no actual

evidence or any pleadings supporting this alternative theory. Additionally, Plaintiff never

29

challenged the earnest money agreement and, in fact, released Mr. Redinger from any

liability.

On appeal, Plaintiff argues that Redinger had no power to bind the trust to the

earnest money agreement because his was an attorney-in-fact for individually, and

not in his capacity as trustee of the trust. Plaintiff offers no authority for this position and it

is contradicted by the terms of the duly recorded power of attorney, which states that

Redinger has the authority to do any act could do if was present. App-35,

Exhibit 2 to Defendant Jarrod Howard's Answer, Affirmative Defenses, Counterclaims and

Cross Claims. (CR-48). That includes entering into trust agreements for the sale of land, if

it is in best interest as deemed by the agent. Id

Finally, Plaintiff also argues that the conveyance was no good because was

not judged incompetent by two physicians and was still alive. He claims that this means the

conveyance was void or voidable. Defendant disagrees with Plaintiff s analysis of the trust.

However, in the end, the interpretation is irrelevant because Mr. was no longer

living. The conveyance was a bargain and sale deed carrying with it the after acquired title.

ORS 93.860(2)(b); Raymond v. Flavel, 27 Or 219, 241, 40 P 158 (1895). Thus, the parties

always end up in the same place because the trustee had to convey the property after

death. Either way, the trustee was obligated to convey the property, particularly

after taking Jarrod's money. Plaintiffs complaints about the sale simply never added up to

a basis for a constructive trust.

(c) Loan repayment and tax returns.

Plaintiff argues that there is evidence that Jarrod Howard never repaid the loan to his

parents and did not have the income to do so. This argument does not help Plaintiff. First,

30

whether Jarrod ever paid his parents back is irrelevant. Indeed, it does not matter whether

Jarrod borrowed the money, was given money, or won the lottery. The issue is whether the

estate received fair market value, which it did. Second, Plaintiff ignores the evidence from

Jarrod's accountant, and the evidence of payments documenting every payment of the loan

repayment, and showing that the money came from Jarrod's own resources. This evidence

demonstrates that Jarrod borrowed the money from his parents and received a credit line on

one of their other rental properties. Jarrod paid that money back in full. See Exhibit J,

Affidavit of Norman R. Hill. (CR-llS).

(d) Logging.

Plaintiff's contentions regarding the post-sale logging also do not add up to a

reasonable basis for this lawsuit. The evidence shows that the property was logged over

with only blow downs and non-merchantable timber left. Even Plaintiff admits that logging

the property increased its value. Thus, the only reasonable conclusion is that the trees did

not add to the value of the property. The payment Jarrod Howard and his company received

from the mill was never available to the trust, because the trust would have to pay a logger

to remove the trees. The costs of logging would exceed the value of those trees.

This situation is similar to one where a lot is covered with trash and debris that a

new buyer must remove in order to build on the lot. One would not think that the lot price

was too low just because the buyer recouped some of the costs of clearing the lot by

recycling some of the trash.

(e) Plaintiff has already been paid and released the trustee.

Finally, Plaintiff has already been paid and signed a release. Moreover, he has no

ability to restore to the trust the funds he previously received. This puts the court and other

31

beneficiaries in a precarious position. In this case, Plaintiff is essentially asking for

rescission but refusing to pay back any of the purchase price. That is simply not objectively

reasonable.

(2) The court's findings 17 and 18 were supported by competent evidence.

Plaintiff also argues that the court's findings 17 and 18 are not supported by any

competent evidence. Plaintiff is mistaken. In finding 17, the court determined that the

Plaintiff offered no evidence of value as the sale date and that Powell's valuation showed

that the purchase price was reasonably sufficient value. As discussed above, that finding

was correct and supported by competent evidence. In finding 18, the court determined that

the transaction between Jarrod and Redinger was an arms length transaction, and that the

conveyance from the trustee merely completed that transaction. This finding was also

supported by competent evidence in the form of deposition testimony and affidavits. (CR-

118-127). Under the circumstances, the court was well justified in awarding attorney fees

and costs under ORS 20.105.4

RESPONSE TO THIRD ASSIGNMENT OF ERROR IN PLAINTIFF'S SUPPLEMENTAL BRIEF

The court properly awarded attorney fees under ORS 105.810(2).

DISCUSSION

A. Standard of Review.

A trial court's decision to award all, part or no part of attorney fees that are

authorized by statute is reviewed for abuse of discretion. The determination of whether fees

4 If Plaintiff is correct that ORCP 62 applies to these findings, then the findings have the same force and effect and are as equally conclusive as the verdict of a jury. ORCP 62F.

32

are authorized by the statute is reviewed as a question of law. Lovejoy Specialty Hospital

Inc., v. Advocates/or Llfe. Inc., 121 Or App 160,855 P2d 159 (1993).

B. Argument.

Plaintiffs Second Amended Complaint invoked the treble damages provisions of

the timber trespass statute. ORS 105.810. Plaintiff asked the court to reduce any amounts

repaid to Jarrod Howard by three times the value of the timber removed from the property.

See Plaintiffs Second Amended Complaint at Page ] 8. (CR-45). Defendant is the

prevailing party on that claim and is therefore entitled to attorney fees under ORS

105.810(2). The court properly exercised its discretion and awarded Defendant attorney

fees. 5

Plaintiffs argument on appeal is simple. He contends that ORS 105.810(2) does

not apply because he never made a claim for timber trespass. According to Plaintiff, he was

merely asking the court for a setoff of three times the value of the timber under ORS

105.810. Plaintiff reasons that asserting rights under the statute as a setoff is not the same

as making a claim under the statute.

Plaintiffs argument is a distinction \vithout a difference. Plaintiff was asking the

court to find that Jarrod Howard violated ORS 105.810 by harvesting timber from land that

he did not own. There is no other reason for invoking that statute. If Plaintiff was merely

contending that Defendant should repay the proceeds or profits he recovered from the

property, he would not have invoked the timber trespass statute.

5 Plaintiff does not argue that the court improperly exercised its discretion in awarding fees, but rather limits this discussion to whether the court had the authority to award any fees.

33

Defendant Jarrod Howard was confronted with Plaintiff's claim for timber trespass.

Regardless of whether it was an offset or a claim for new funds, the result was the same for

Jarrod. It would mean money out of his pocket. The following hypothetical illustrates this

point. Assume Property Owner A sold ten acres of his property to Buyer B. After moving

onto the property, Buyer B committed timber trespass against the remaining property

retained by the seller. If for some reason the buyer filed a breach of contract action against

the seller, the seller could not seek treble damages under the timber trespass statute and

avoid the risk of attorney fees, merely by raising it as a setoff against the breach of contract

action. The circumstances in the present case are no different. ORS 105.810 was

implicated. Defendant is entitled to his attorney fees.

Finally, Plaintiff seems to argue that the fact that the judgment was entered in this

case after Defendant failed to file a further amended complaint has some implication on this

issue. Plaintiff argues, HJarrod cannot argue that he is entitled to attorney fees for prevailing

on a timber trespass when he achieved dismissal of the case by arguing that Plaintiff had not

stated any claim for relief against him." (emphasis in original). See Plaintiff's

Supplemental Brief at Page 25. Of course, this argument makes no sense. Defendant is the

prevailing party because the Complaint was struck and jUdgment was entered for the

Defendant. Indeed, Defendant would still be the prevailing party, even if Plaintiff had filed

an ORCP 54 dismissal of its case against Defendant.

RESPONSE TO FOURTH ASSIGNMENT OF ERROR IN PLAINTIFF'S SUPPLEMENTAL BRIEF

The court did not err by awarding Defendant Jarrod Howard attorney fees without

segregation.

34

DISCUSSION

A. Standard of Review.

The trial court's decision to award a portion of fees is a review for abuse of

discretion. Lovejoy Specialty Ho:.pital, supra.

B. Argument.

Plaintiff argues that the court should have apportioned attorney fees between

Plaintiff's claim for fees under the timber trespass statute and those incurred defending the

claim as a whole. Plaintiff's argument is not well taken. A court need not apportion

attorney fees between eligible and ineligible claims, when there are substantive issues

common to both claims. Morgan v. Goodsell, 198 Or App 385, 108 P3d 612 (2005). In

this case, the central issue relating to timber trespass was whether Jarrod Howard was the

proper owner of the property. Thus, the issues were inextricably intertwined. The court

was not required to apportion fees.

RESPONSE TO FIFTH ASSIGNMENT OF ERROR IN PLAINTIFF'S SUPPLEMENTAL BRIEF

The court was not required to give Plaintiff a separate trial on his affirmative

defense to a claim for attorney fees.

DISCUSSION

A. Standard of Review.

The trial court's deternlination of the proper forum for determining defenses to a

claim for attorney fees is reviewed for abuse of discretion. See ORCP 68 (the court must

give reasonable opportunity to present evidence).

35

B. Argument.

Plaintiff argues that the trial court erred by failing to gIve him a trial on his

counterclaim of unclean hands. Plaintiff's argument is \vithout merit.

First, Plaintiff is not entitled to a trial on an affirmative defense against a

counterclaim for attorney fees. As discussed above, attorney fees are governed by ORCP

68. The determination of whether attorney fees are appropriate in this circumstance is not

made at trial. ORCP 68C(3) provides that items of attorney fees and costs are to be

determined in the manner provided in Subsection 4 of ORCP 68 without proof being

offered during trial. Id. ORCP 68C(4) contains a detailed proceeding for determining an

award of attorney fees and costs. Objections and affirmative defenses are raised by hearing.

See ORCP 68C( 4)( c). The rule requires that the parties be given a reasonable opportunity to

present affidavits, declarations and other evidence relevant to any factual issue.

In this case, Plaintiff had that opportunity. The court held a hearing on May 23,

2007. (CR-131). The court considered Plaintiff's evidence, including its claim of unclean

hands. The court was not required to hold a separate hearing to consider this one defense.

It is also clear that Plaintiff's unclean hands defense is not applicable to the claim

for attorney fees and costs. Unclean hands is an equitable defense. The claim for attorney

fees and costs under ORS 105.810 is a statutory claim. While the distinction between law

and equity has been abolished for most purposes, it is still retained in this circumstance. See

McKinley v. Weidner, 73 Or app 396, 698 P2d 983 (1985). The court did not err in failing

to give him a separate trial solely on his counterclaim, particularly where the basis for that

claim was already rejected by the court.

36

CONCLUSION

Despite this case's long and tortured history several conclusions are unmistakable.

The trust was paid fair market value for the property. The proceeds were distributed to the

beneficiaries, including Plaintiff, Brian Olson. Mr. Olson spent his proceeds and has no

ability to repay them to the trust. Nevertheless, he is asking the court to set aside the sale

and put the property back on the market on the hopes that it may obtain a higher price and

provide additional sums for Mr. Olson. These claims have never been viable. The trial

court properly dismissed the action and awarded attorney fees and costs.

DATED this 14th day of January, 2009.

MARTINIS & HILL

By:

<

--N( ~ ____ , _ ~~ "'\f •. rTV)

Of Attorneys for Respondent Jarrod Howard 110 Madrona Avenue SE Salem OR 97302 Telephone: 503-566-5800 Facsimile: 503-566-6775 Email: nrh@opusnet.com

CERTIFICATE OF SERVICE

STATE OF OREGON ) ) ss.

County of Marion )

I, Norman R. Hill, hereby certify that I am one of the attorneys for Respondent in this matter and that I served the within and foregoing Respondent's Brief on the following individuals at their last known addresses, to wit:

The original and 20 copies hand delivered to:

State Court Administrator Court of Appeals Case Records Division Supreme Court Building 1163 State Street Salem, OR 97310

tW0 (2) true copies to:

Lee C. Nusich Lane Powell PC Attorneys at Law 601 SW Second A venue, Suite 2100 Portland OR 97204-3158

by mailing of true and correct copies thereof, duly certified to be such by me, on the date stated below. Said Attorney resides or has his office at said address. The singular includes the plural.

I certify that I reside and have my office in Salem, Marion County, Oregon.

Dated this 14th day of January, 2009.

Norman R. Hill, OSB #943409 Of Attorneys for Respondent