Liberty Natural Products, Inc. v. Hoffman et al, No. 3:2011cv00264 - Document 85 (D. Or. 2012)

Court Description: OPINION AND ORDER: Plaintiff's motion ( 33 for partial summary judgment is GRANTED in part and DENIED in part; Defendants' cross-motion 51 for summary judgment is DENIED; Defendants' motion 72 for leave is GRANTED; and Defendants' motion 77 to strike is GRANTED in part and DENIED in part. Signed on 4/11/12 by Magistrate Judge Dennis J. Hubel. (kb)

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1 2 3 4 5 6 7 UNITED STATES DISTRICT COURT 8 DISTRICT OF OREGON 9 PORTLAND DIVISION 10 11 LIBERTY NATURAL PRODUCTS, INC., 12 13 14 15 16 17 ) ) Plaintiff, ) 03:11-cv-00264-HU ) vs. ) OPINION AND ) ORDER VALERIE HAWK HOFFMAN, SUNRISE ) HERBAL REMEDIES, INC., Dissolved, ) and SAGE ADVICE OF PALM BEACH, ) INC., Dissolved, ) ) Defendants. ) ________________________________ 18 Philip F. Schuster, II Dierking & Schuster 19 3565 NE Broadway Street Portland, OR 97232 20 (503) 335-7765 (503) 281-1983 (fax) 21 schuster@pcez.com 22 Attorney for Plaintiff 23 William D. Brandt William D. Brandt, PC 24 880 Liberty Street NE Salem, OR 97301 25 (503) 485-4168 (503) 364-6735 (fax) 26 bill@brandtlawoffices.com 27 Attorney for Defendants 28 OPINION AND ORDER 1 1 HUBEL, Magistrate Judge: 2 This matter comes before the court on plaintiff Liberty 3 Natural Products, Inc. s (hereinafter, Plaintiff ) motion for 4 partial summary judgment; defendants Valerie Hoffman ( Hoffman ), 5 Sunrise Herbal Remedies, Inc. ( Sunrise ), and Sage Advice of Palm 6 Beach Inc. s ( Sage Advice ) (collectively, Defendants ) cross7 motion for summary judgment; Defendants motion for leave to file 8 a first amended answer; and Defendants motion to strike various 9 portions of James Dierking s ( Dierking ) supplemental declaration 10 and Plaintiff s reply memorandum. The parties have given full 11 consent to adjudication of the case by a magistrate judge pursuant 12 to 28 U.S.C. § 636(c). For the reasons set forth below, 13 Plaintiff s motion (dkt. #33) for partial summary judgment is 14 GRANTED in part and DENIED in part; Defendants cross-motion (dkt. 15 #51) for summary judgment is DENIED; Defendants motion (dkt. #72) 16 for leave is GRANTED; and Defendants motion (dkt. #77) to strike 17 is GRANTED in part and DENIED in part. 18 19 I. FACTUAL AND PROCEDURAL BACKGROUND As a preliminary matter, Plaintiff has requested that I take 20 judicial notice of the Complaint, Answer, General Judgment, and 21 Supplemental Judgement from the Clackamas County proceeding. It is 22 well settled that courts may take judicial notice of court filings 23 and other matters of public record because they are readily 24 verifiable and, therefore, the proper subject of judicial notice. 25 Reyn s Pasta Bella, LLC v. Visa USA, Inc., 442 F.3d 741, 746 n.6 26 (9th Cir. 2006). Accordingly, with respect to the aforementioned 27 court filings, Plaintiff s request for judicial notice is granted. 28 OPINION AND ORDER 2 1 Plaintiff 2 transcripts has from also the presented Clackamas the County court with proceeding. It hearing is not 3 entirely clear whether Plaintiff is requesting that I take judicial 4 notice of the hearing transcripts. To the extent Plaintiff is 5 making such a request, it is denied. 6 On November 6, 2008, Defendant prosecuted two counterclaims 7 against Plaintiff in a case filed in Clackamas County Circuit 8 Court. (Schuster Decl. Ex. 2.) Both counterclaims were for breach 9 of contract. (Schuster Decl. Ex. 2.) Under the first counterclaim, 10 Defendants sought $76,400 for allegedly damaged and expired 11 product, and $300,000 for the alleged resulting loss of business. 12 (Schuster Decl. Ex. 2.) The second counterclaim sought $100,000 13 based on Plaintiff s alleged sale of Defendants product known as 14 Chill Out. 15 (Schuster Decl. Ex. 2.) On April 13, 2009, Plaintiff obtained a general judgment 16 against Defendants, which provided, in pertinent part, that: 17 18 19 20 21 Following closing argument, the court pronounced its judgment in favor of the Plaintiff against the Defendants Valerie Hawk Hoffman, Sunrise Herbal Remedies, Inc. and Sage Advice, Inc., jointly and severally, on its first claim, in the sum of $67,466.90, with pre-judgment interest thereon as set forth hereafter, together with further judgment in favor of the Plaintiff against the Defendants Valerie Hawk Hoffman, Sunrise Herbal Remedies, Inc. and Sage Advice, Inc., jointly and severally, on its second claim, in the sum $69,198.20[.] 22 (Schuster Decl. Ex. 3.) 23 On August 11, 2009, a Supplemental Judgment was entered in 24 favor of Plaintiff, which stated: 25 26 27 28 Plaintiff is entitled to an enhanced prevailing party fee in the sum of $5,500, per ORS 20.190. The court finds that Defendants against whom judgment was granted herein filed counterclaims and/or defenses that were not objectively reasonable and were filed in an effort to gain leverage in settlement negotiations. OPINION AND ORDER 3 1 2 3 4 5 6 7 8 The court finds that the same Defendants, through Valerie Hoffman, repeatedly offered false testimony and exhibits in trial of this matter. The court also finds that the Defendants did not act with diligence in trying to settle Plaintiff s claims. The court, in awarding attorney fees to the Plaintiff under ORS 20.105, finds that the Defendant against whom judgment was entered had no objectively reasonable basis to counterclaim against Plaintiff for an alleged overpayment of Plaintiff s account. The Defendants did not raise the alleged overpayment in a series of emails between the parties months before trial when Plaintiff s account was being discussed. [] Defendant Hoffman at trial fabricated an exhibit to support the claim of overpayment and testified falsely regarding it. 9 (Schuster Decl. Ex. 4) (emphasis added). Based on the court s 10 findings, judgment was entered against Hoffman, Sunrise, and Sage 11 Advice, but the court denied Plaintiff s demand that the judgment 12 be entered against Defendants counsel under ORS 105.160. (Schuster 13 Decl. Ex. 4.) 14 On January 20, 2011, Plaintiff filed the present action 15 against Defendants in Clackamas County Circuit Court.1 Plaintiff 16 set forth a single claim for wrongful use of civil proceedings in 17 violation of ORS 31.230(1)2 and sought $7,058 in damages. On 18 February 7, 2011, Plaintiff sought leave to amend its complaint. 19 The Amended Complaint requested consequential damages of $9,367.69 20 21 22 23 24 25 1 The following facts are taken from this court s September 2, 2011 Findings and Recommendation. (Dkt. #16.) 26 2 [A] claim for damages for wrongful use of a civil proceeding 27 shall be brought in an original action after the proceeding which is the subject matter of the claim is concluded. OR. REV. STAT. 28 31.230(3) (2009) (emphasis added). OPINION AND ORDER 4 1 and punitive damages of $200,000 based on the counterclaims that 2 Plaintiff argues were wrongfully prosecuted against them.3 3 Defendants timely filed their notice of removal in this court 4 on March 2, 2011. Plaintiff subsequently moved to remand the 5 proceeding to Clackamas County Circuit Court; however, on September 6 2, 2011, that motion was denied. II. 7 A. 8 9 LEGAL STANDARD Motion for Summary Judgment Summary judgment is appropriate if pleadings, the discovery 10 and disclosure materials on file, and any affidavits show that 11 there is no genuine issue as to any material fact and that the 12 movant is entitled to judgment as a matter of law. FED. R. CIV. 13 P. 56(c). Summary judgment is not proper if factual issues exist 14 for trial. Warren v. City of Carlsbad, 58 F.3d 439, 441 (9th Cir. 15 1995). 16 The moving party has the burden of establishing the absence of 17 a genuine issue of material fact. 18 U.S. 317, 323 (1986). Celotex Corp. v. Catrett, 477 If the moving party shows the absence of a 19 genuine issue of material fact, the nonmoving party must go beyond 20 the pleadings and identify facts which show a genuine issue for 21 trial. Id. at 324. A nonmoving party cannot defeat summary 22 judgment by relying on the allegations in the complaint, or with 23 unsupported conjecture or conclusory statements. Hernandez v. 24 Spacelabs Medical, Inc., 343 F.3d 1107, 1112 (9th Cir. 2003). Thus, 25 summary judgment should be entered against a party who fails to 26 27 3 Plaintiff s motion for partial summary judgment indicates that they are now requesting a reduced amount of $5,432.66 as 28 consequential damages. (Pl. s Mem. Supp. Mot. Summ. J. at 4 n.3.) OPINION AND ORDER 5 1 make a showing sufficient to establish the existence of an element 2 essential to that party s case, and on which that party will bear 3 the burden of proof at trial. 4 Celotex, 477 U.S. at 322. The court must view the evidence in the light most favorable 5 to the nonmoving party. Bell v. Cameron Meadows Land Co., 669 F.2d 6 1278, 1284 (9th Cir. 1982). All reasonable doubt as to the 7 existence of a genuine issue of fact should be resolved against the 8 moving party. Hector v. Wiens, 533 F.2d 429, 432 (9th Cir. 1976). 9 Where different ultimate inferences may be drawn, summary judgment 10 is inappropriate. Sankovick v. Life Ins. Co. of N. Am., 638 F.2d 11 136, 140 (9th Cir. 1981). 12 However, deference to the nonmoving party has limits. The 13 nonmoving party must set forth specific facts showing a genuine 14 issue for trial. FED. R. CIV. P. 56(e). The mere existence of 15 a scintilla of evidence in support of plaintiff s positions [is] 16 insufficient. 17 (1986). Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 Therefore, where the record taken as a whole could not 18 lead a rational trier of fact to find for the nonmoving party, 19 there is no genuine issue for trial. Matsushita Elec. Indus. Co., 20 Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (internal 21 quotation marks omitted). B. 22 23 Motion to Strike Rule 12(f) provides that [t]he court may strike from a 24 pleading an insufficient defense or any redundant, immaterial, 25 impertinent or scandalous matter on their own initiative or 26 pursuant to a party s motion. FED. R. CIV. P. 12(f). Granting a 27 motion to strike is within the discretion of the district court. 28 See Fed. Sav. & Loan Ins. Corp. v. Gemini Mgmt., 921 F.2d 241, 244 OPINION AND ORDER 6 1 (9th Cir. 1990). Motions to strike are disfavored and should not 2 be granted unless it can be shown that no evidence in support of 3 the allegation would be admissible. Pease & Curren Ref., Inc. v. 4 Spectrolab, Inc., 744 F. Supp. 945, 947 (C.D. Cal. 1990) (internal 5 quotation marks omitted), abrogated on other grounds by Stanton Rd. 6 Ass n v. Lohrey Enters., 984 F.2d 1015 (9th Cir. 1993). III. 7 A. 8 9 PRELIMINARY PROCEDURAL MATTERS Leave to Amend Pursuant to Rule 15(a), Defendants seek leave to amend their 10 answer to add an affirmative defense of advice of counsel. Advice 11 of counsel, if sought in good faith and if given after full 12 disclosure of information in the possession of the accuser 13 establishes probable cause as a matter of law, Hartley v. Water 14 Res. Dept., 77 Or. App. 517, 520 (1986), which, in turn, negates an 15 essential element of a claim for misuse of civil proceedings. See 16 Pereira v. Thompson, 230 Or. App. 640, 674 (2009) (recognizing one 17 element of a claim for wrongful initiation of a civil proceeding as 18 the absence of probable cause to prosecute the action. ) 19 utilize that defense, a defendant must plead it. 20 But to Id. at 675. In determining whether to grant a motion to amend, the court 21 should consider (1) bad faith, (2) undue delay, (3) prejudice to 22 the opposing party, (4) futility of amendment, and (5) prior 23 amendments to the pleading. Sisseton-Wahpeton Sioux Tribe v. 24 United States, 90 F.3d 351, 355-56 (9th Cir. 1996). 25 Plaintiff opposes Defendants motion for leave to amend, 26 arguing that the doctrine of issue preclusion renders amendment 27 futile. It well established that futility alone can justify the 28 denial of a motion for leave to amend, but the Ninth Circuit has OPINION AND ORDER 7 1 also repeatedly stressed that the court must remain guided by the 2 underlying purpose of Rule 15, e.g., to facilitate decision on the 3 merits, as opposed to procedural technicalities. Nunes v. Ashcroft, 4 375 F.3d 805, 808 (9th Cir. 2004). 5 As discussed further below, neither party in this case has 6 cited an Oregon appellate court decision that addresses whether 7 findings that arise out of a proceeding under ORS 20.105 should be 8 given preclusive effect.4 With respect to the probable cause 9 element, I am hesitant to conclude Defendants should be deprived of 10 their right to a jury trial without the guidance of an Oregon Court 11 of Appeals or Supreme Court decision. 12 a determination is necessary at Nor do I believe that such this time, considering (1) 13 Plaintiff s motion for partial summary judgment is denied on other 14 grounds and (2) the record before me regarding the Clackamas County 15 proceeding is quite limited. 16 That said, because amendments should be granted with extreme 17 liberality in order to facilitate decision on the merits, United 18 States v. Webb, 655 F.2d 977, 979 (9th Cir. 1981), Defendants 19 motion for leave to file a first amended answer and affirmative 20 defense is GRANTED. B. 21 22 Evidentiary Objections Pursuant to Rule 12(f), Defendants have moved to strike 23 various paragraphs in Dierking s supplemental declaration, exhibits 24 4 ORS 20.105 provides that a prevailing party against whom a claim is brought is entitled to reasonable attorney fees to be 26 paid by the party asserting the claim, defense or ground, upon a finding by the court that the party willfully disobeyed a court 27 order or that there was no objectively reasonable basis for asserting the claim defense or ground for appeal. OR. REV. STAT. 28 § 20.105(1) (2009). 25 OPINION AND ORDER 8 1 attached thereto, and portions of Plaintiff s reply memorandum. 2 During oral argument, it was alleged that Defendants counsel 3 failed to confer with opposing counsel prior to filing his motion 4 to strike. Because Plaintiff s counsel was willing to make certain 5 concessions, the parties were able to agree to rulings with respect 6 to the following motions: 7 ¢ Motion No. 4: Defendants moved to strike Paragraph 12 of 8 Dierking s supplemental declaration, which pertains to an 9 itemization of proceedings involving the parties in Oregon, 10 Maine, Connecticut, and Florida. 11 of Dierking s supplemental declaration concerns litigation 12 other than that which took place in Clackamas County before 13 Judge Maurer, Plaintiff has conceded this motion. 14 ¢ Motion No. 5: 15 Dierking s supplemental declaration, which pertains to fees 16 expended by Plaintiff in an attempt to execute and collect its 17 judgments 18 incurred by Plaintiff in this case. 19 this motion to the extent it relates to litigation taking 20 place in Florida or Maine. 21 ¢ Motion No. 7: 22 of Plaintiff s reply memorandum, which references Defendants 23 long 24 involving the parties in Oregon, Maine, Connecticut, and 25 Florida. 26 references 27 Clackamas Defendants moved to strike Paragraph 13 of entered against history To Defendants and attorney s fees Plaintiff has conceded Defendants moved to strike a portion of page 6 of abusive the matters County practices extent other or the and Plaintiff s than that 9 the proceedings reply which Connecticut 28 OPINION AND ORDER To the extent Paragraph 12 took memorandum place investigation in into 1 consumer complaints of unfair trade practices, Plaintiff has 2 conceded this motion. 3 ¢ Motion No. 8: 4 and 23 of Plaintiff s reply memorandum, wherein Plaintiff 5 discusses 6 Clackamas County litigation and alleges that Hoffman has 7 transferred 8 collecting on its judgments. Plaintiff has conceded this 9 motion, with exception of any reference to expenses incurred Defendants moved to strike portions of page 22 the dismissal assets in of Hoffman s order to husband prevent from Plaintiff the from 10 in the Clackamas County proceeding or this case. 11 ¢ Motion No. 9: Defendants moved to strike portions of page 36 12 and 37 of Plaintiff s reply memorandum, wherein Plaintiff 13 references legal expenses incurred by Plaintiff and alleges 14 that Defendants have attempted to shield themselves from 15 execution on the lien and collection of the Clackamas County 16 judgments. Plaintiff has conceded this motion, with exception 17 of any reference to expenses incurred in the Clackamas County 18 proceeding or this case. 19 ¢ Motion No. 10: Defendants moved to strike footnote 19 of 20 Plaintiff s reply memorandum, which references the itemization 21 of 22 Connecticut, and Florida. Plaintiff has conceded this motion, 23 with exception of any reference to expenses incurred in the 24 Clackamas County proceeding or this case. 25 I turn now to Defendants remaining evidentiary objections. proceedings involving the parties in Oregon, Maine, 26 Defendants moved to strike two exhibits attached to Dierking s 27 supplemental 28 business declaration, (Exhibit OPINION AND ORDER 3) and i.e., an information 10 appraisal regarding of Plaintiff s its financial 1 history (Exhibit 4); and paragraphs 6, 7, and 14 of Dierking s 2 supplemental declaration. The objectionable material relates to 3 Hoffman s husband and the fact that Plaintiff claims its business s 4 financial growth was stunted as a result of the counterclaims being 5 filed in the Clackamas County proceeding. 6 In short, Defendants remaining evidentiary objections are 7 denied as moot because I either found it unnecessary to rely on the 8 objectionable material or the objections raised were duplicative of 9 the summary judgment standard itself. See Ross v. Indep. Living 10 Res. of Contra Costa, No. C08-00854 TEH, 2010 WL 2898773, at *2 n.1 11 (N.D. Cal. July 21, 2010) (denying evidentiary objections as moot 12 because the court did not rely on the evidence to which the 13 objections were lodged); see also Burch v. Regents of the Univ. of 14 Cal., 433 F. Supp. 2d 1110, 1119 (E.D. Cal. 2006) ( A court can 15 award summary judgment only when there is no genuine dispute of 16 material fact. It cannot rely on irrelevant facts, and thus 17 relevance objections are redundant. ) 18 Plaintiff has also objected to exhibits attached to Felstiner 19 and Hoffman s declarations on the ground that they are not, nor 20 can they be, presented in a form that would be admissible in 21 evidence. (Pl. s Reply at 17.) Because these exhibits had no 22 bearing on my analysis, Plaintiff s objections are overruled as 23 well. IV. 24 25 Under Oregon law, DISCUSSION the elements of a claim for wrongful 26 initiation of a civil proceeding are as follows: 27 (1) The commencement and prosecution by the defendant of a judicial proceeding against the plaintiff; 28 OPINION AND ORDER 11 1 (2) The termination of the proceeding in the plaintiff s favor; 2 3 4 (3) The absence of probable cause to prosecute the action; 5 (4) The existence of malice, or as is sometimes stated, the existence of a primary purpose other than that of securing an adjudication of the claim; and 6 (5) Damages. 7 Roop v. Parker Nw. Paving, Co., 194 Or. App. 219, 237-38 (2004), 8 rev. den., 338 Or. 374, 110 P.3d 113 (2005). 9 The commencement and prosecution element pertains to the 10 person who is the primary catalyst for the proceeding and is not 11 limited to the party who formally initiates it. Checkley v. Boyd, 12 170 Or. App. 721, 737 (2002). Such an understanding prevents one 13 who wrongfully uses a civil proceeding . . . from being shielded 14 from liability merely because that person was not the party who 15 formally filed the action. Id. In the state court proceeding, 16 the counterclaims were formally commenced on behalf of Sunrise and 17 Sage Advice. Nevertheless, I agree with Plaintiff that, even 18 though Hoffman did not formally initiate the proceeding, she was an 19 active participant which, according to Checkley, satisfies the 20 initiation element. See also Restatement (Second) of Torts § 674 21 (noting that an active participant is one who sets the machinery 22 of the law in motion, whether he acts in his own name or in that of 23 a third person, or whether the proceedings are brought to enforce 24 a claim of his own or that of a third person. ) 25 Defendants do not contest this assertion. (See Defs. Mem. 26 Supp. at 3) ( The uncontradicted evidence in this case is that 27 defendant Hoffman and her attorneys subjectively believed that 28 there was a good chance of prevailing on the counterclaims at the OPINION AND ORDER 12 1 time the pleading was filed[.] ) 2 have seen no authority Instead, Defendants claim they establishing that the assertion of a 3 counterclaim constitutes the commencement and prosecution of a 4 judicial proceeding. 5 merit. (Defs. Opp n at 3.) This argument lacks According to section 674 of the Restatement Second of 6 Torts, one who files a counterclaim to a cause of action initiates 7 a civil proceeding. Restatement (Second) of Torts § 674 cmt. a 8 (1977). Because Oregon courts consider the Restatement, along 9 with its comments, to be an instructive authority in this area, 10 Roop, 194 Or. App. at 238 n.12, I conclude that the initiation 11 element is met. 12 claim for See also ORCP 18 (indicating that asserting a relief includes asserting an original claim or 13 counterclaim). 14 The second element is whether the proceeding terminated in 15 Plaintiff s favor. It appears evident that this element is met 16 here and Defendants do not argue otherwise. 17 As to the third element, the Oregon Court of Appeals has 18 stated, [p]robable cause means that the person initiating the 19 civil action reasonably believes that he or she has a good chance 20 of prevailing-that is, he or she has a subjective belief, and that 21 belief is objectively reasonable. Pereira, 230 Or. App. at 674 22 (internal quotation marks omitted).5 23 Plaintiff contends that the doctrine of issue preclusion bars 24 Defendants from asserting they had probable cause to prosecute 25 26 5 Whether a defendant had probable cause to initiate a proceeding is a question of law for the court if the facts or 27 inferences are undisputed; if the facts are disputed, then a jury must decide the facts and the court must instruct the jury what 28 facts constitute probable cause. Id. at 675. OPINION AND ORDER 13 1 their first counterclaim. The preclusive effect of an Oregon 2 judgment is described in Dodd v. Hood River County, 136 F.3d 1219, 3 1225 (9th Cir. 1998). Under Oregon law, issue preclusion applies 4 when: 5 (1) The issue in the two proceedings is identical; 6 (2) The issue was actually litigated and was essential to a final decision on the merits in the prior proceeding; 7 8 (3) Defendants had a full and fair opportunity to be heard on that issue; 9 (4) Defendants were parties in or were in privity with a party to the prior proceeding; and 10 11 (5) The prior proceeding was the type of proceeding to which Oregon courts will give preclusive effect. 12 See Nelson v. Emerald People s Util. Dist., 318 Or. 99, 104, 862 13 P.2d 1293 (1994) (citations omitted). 14 ORS 43.160 codifies the common law, 15 Blumstein LLP, 209 Or. App. 171, Tarlow v. Landye Bennett 174 (2006), and [b]y the 16 statute s plain terms, when the face of a judgment or order in a 17 prior proceeding demonstrates that a matter was actually 18 determined, the determination is preclusive. Westwood Construction 19 Co. v. Hallmark Inns, 192 Or. App. 624, 636 (2002). 20 Here, Plaintiff has not identified, nor has research revealed, 21 any decision in which an Oregon appellate court decided whether 22 findings that arise out of a proceeding under ORS 20.105 are to be 23 given preclusive effect. 24 Tarlow provides little guidance here. In Tarlow, the defendants moved for summary judgment, arguing 25 that the doctrine of issue preclusion barred a wrongful initiation 26 claim because the plaintiff s request for an enhanced prevailing 27 28 OPINION AND ORDER 14 1 party was denied in a prior ORS 20.190(3) proceeding.6 2 Or. App. at 173. Tarlow, 209 The trial court granted summary judgment, ruling 3 in a letter opinion as follows: 4 5 6 7 8 1) Plaintiff s claim of wrongful initiation of civil proceedings requires that malice be proven on the part of the defendants. 2) That in the prior proceeding . . . [, the court] determined that neither plaintiff Oldroyd [n]or her attorneys (defendants in this action) acted in a reckless, wilful or malicious manner. This conclusion was reached pursuant to [plaintiff s] request for enhanced prevailing attorney fees. 9 10 11 12 13 14 3) The court has examined the Oldroyd case file and determined that the issues raised by [plaintiff] in the prior proceedings are the same issues that are the basis of this wrongful initiation of civil proceedings case. 4) Consequently, this court concludes that the issues in the two proceedings are identical; that the [malice] issue was actually litigated and essential to a final decision on the merits in the prior proceedings; that [plaintiff] had a full and fair opportunity to be heard; and that [plaintiff] was a party in the prior case. 15 16 5) This court also concludes [that] the prior proceeding requesting enhanced prevailing party fees is the type to which the Oregon courts will give preclusive effect. 17 Id. at 174 (alterations in the original). 18 On appeal, the plaintiff argued that the trial court erred in 19 applying the doctrine of issue preclusion because the issues of bad 20 faith and malice (the fourth element of a wrongful initiation 21 claim) were not actually litigated. Id. The plaintiff argued, in 22 effect, that he did not have a full and fair opportunity to be 23 24 6 ORS 20.190(3) provides: [I]n any civil action or proceeding 25 in a circuit court in which recovery of money or damages is sought, the court may award to the prevailing party up to an additional 26 $5,000 as a prevailing party fee. Or. Rev. Stat. § 20.190(3) (2009). In making this determination, Oregon courts consider, 27 inter alia, the conduct of the parties . . . , including any conduct of a party that was reckless, willful, malicious, in bad 28 faith or illegal. Id. § 20.190(3)(a). OPINION AND ORDER 15 1 heard on that issue because of the ancillary nature of the ORS 2 20.190 proceeding, which did not involve the examination of live 3 witnesses. Id. at 175. Because the trial court s grant of summary 4 judgment was correct on different grounds, the Court of Appeals in 5 Tarlow declined to decide whether findings that arise out of a 6 proceeding under ORS 20.190 should be given preclusive effect. Id. 7 In short, I am not inclined to express an opinion whether 8 findings that arise out of a proceeding under ORS 20.105 should be 9 given preclusive effect. This is not an issue which has been 10 squarely addressed by the Oregon appellate courts, nor has the 11 record been adequately developed regarding the Clackamas County 12 proceeding in order to make such a determination. I would rather 13 reserve the substantive treatment of this issue for a later date 14 when the record of the court proceedings before Judge Maurer are 15 better developed in this court. 16 The fourth element of Plaintiff s claim for wrongful 17 initiation of civil proceedings is malice, or as is sometimes 18 stated, the existence of a primary purpose other than that of 19 securing adjudication of the claim. Roop, 194 Or. App. at 238. It 20 is true that the law will permit the jury to draw an inference of 21 malice in most cases where a want of probable cause is found. 22 Alvarez v. Retail Credit Ass n of Portland, Or., Inc., 234 Or. 255, 23 264 (1963). However, malice, unlike probable cause, is a question 24 for the jury. Gustafson v. Payless Drug Store, 269 Or. 354, 366 25 (1974); Erlandson v. Pullen, 45 Or. App. 467, 478 (1980). 26 Plaintiff argues that the court should find that issue 27 preclusion bars Defendants from revisiting the issue of malice or 28 improper purpose. OPINION AND ORDER Plaintiff claims 16 Hoffman s malice or [] 1 improper purpose in presenting the wrongful counterclaims, is 2 identical to the issue confronting the trial court when it awarded 3 attorney fees pursuant to ORS 20.105(1). 4 19.) (Pl. s Mem. Supp. at I disagree. ORS 20.105 provides that a prevailing party 5 against whom a claim is brought is entitled to reasonable attorney 6 fees to be paid by the party asserting the claim, defense or 7 ground, upon a finding by the court that the party willfully 8 disobeyed a court order or that there was no objectively reasonable 9 basis for asserting the claim defense or ground for appeal. 10 REV. STAT. § 20.105(1) (2009). 11 malice. Accordingly, OR. ORS 20.105 makes no mention of Plaintiff s motion for partial summary 12 judgment is denied on this ground. 13 The last element is that of damage. The legislature adopted 14 ORS 30.230(1), which provides, [i]n order to bring a claim for 15 wrongful use of a civil proceeding against another, a person shall 16 not be required to plead or prove special injury beyond the expense 17 and any other consequences normally associated with defending 18 against unfounded legal claims. OR. REV. STAT. § 30.230(1) (2009). 19 When the essential elements of a cause of action for wrongful civil 20 proceedings have been established, the plaintiff is entitled to 21 recover, inter alia, reasonable attorney fees; costs incurred in 22 defending against the proceedings; and any other loss of a 23 pecuniary character that [the plaintiff can prove] resulted from 24 the initiation of the civil proceedings. Restatement (Second) of 25 Torts § 681 cmt. d and e; Pereira, 230 Or. App. 640 at 675 n.9. 26 Here, Plaintiff does not seek damages for attorney fees and 27 costs that were previously awarded . . . by virtue of the [state] 28 court s Supplemental Judgment. OPINION AND ORDER 17 (Pl. s Mem. at 22.) Instead, 1 Plaintiff prays for other consequential damages . . . that were a 2 consequence of and normally associated with [Plaintiff] defending 3 against Defendants unfounded legal counterclaims. (Id.) 4 Specifically, Plaintiff claims they lost time and productivity of 5 its CEO in the reasonable and necessary sum of $4,895.09 ; lost 6 staff time in the reasonable and necessary sum of $182.24 ; and 7 expended reasonable and necessary costs for materials in the sum 8 of $355.33. (Id.) Plaintiff also seeks $200,000 in punitive 9 damages. 10 Defendants arguments regarding damages are two-fold. First, 11 Defendants argue that Plaintiff s claim for damages fails because 12 Plaintiff has presented no evidence of any legally compensable or 13 judicially recognizable loss which [P]laintiff sustained. (Defs. 14 Opp n at 12.) Second, Defendants argue that Plaintiff was 15 adequately compensated for costs incurred as a result of the filing 16 of the counterclaims via the enhanced prevailing party fee of 17 $5,500 awarded by the Clackamas County Circuit Court. (Id. at 13.) 18 In Oregon, enhanced prevailing party fees are based on the 19 consideration of the following factors: 20 21 (a) The conduct of the parties in the transactions or occurrences that gave rise to the litigation, including any conduct of a party that was reckless, willful, malicious, in bad faith or illegal. 22 23 24 25 26 27 (b) The objective reasonableness defenses asserted by the parties. of the claims and (c) The extent to which an award of a larger prevailing party fee in the case would deter others from asserting good faith claims or defenses in similar cases. (d) The extent to which an award of a larger prevailing party fee in the case would deter others from asserting meritless claims and defenses. 28 OPINION AND ORDER 18 1 2 3 4 5 (e) The objective reasonableness of the parties and the diligence of the parties and their attorneys during the proceedings. (f) The objective reasonableness of the parties and the diligence of the parties in pursuing settlement of the dispute. (g) Any award of attorney fees made to the prevailing party as part of the judgment. 6 7 (h) Such other factors as the court may consider appropriate under the circumstances of the case. 8 OR. REV. STAT. § 20.190 (2009). 9 Absent a specific finding under subsection (h), the foregoing 10 factors do not suggest that parties are compensated for costs 11 incurred as a result of the filing of claim which lacks probable 12 cause. That said, although it is a rather trivial amount, 13 Defendants own damage expert has stated, I have reviewed the 14 declaration that says that Liberty Natural expended $281.00 in 15 reasonable and necessary printing costs and $74.33 in reasonable 16 and necessary discovery expenses for a total of $355.33 in material 17 expenses allocated to the defense of the counterclaims. It is my 18 opinion that to the extent the corporation can establish the 19 $355.33, that 20 corporation. would represent a legitimate (Phillips Decl. at 3.) expense of the Because these costs would 21 almost certainly qualify as costs incurred in defending against, or 22 other loss of a pecuniary character that resulted from, Hoffman s 23 initiation of the civil proceeding, Defendants cross-motion for 24 summary judgment is denied on this ground. 25 Although Plaintiff s exhibits demonstrate that they incurred 26 $355.33 in costs, Plaintiff has not definitively established that 27 these costs were incurred as a result of Defendants filing of 28 counterclaims, as opposed to the pursuit of Plaintiff s own claims OPINION AND ORDER 19 1 in state court. 2 testimony The parties have also presented conflicting regarding the legitimacy of the damages Plaintiff 3 attributes to lost CEO and staff time. 4 In short, there are questions of fact regarding entitlement to 5 some types of damages and the amount of all claimed damages. VI. 6 7 CONCLUSION For the reasons stated above, Plaintiff s motion (dkt. #33) 8 for partial summary judgment is GRANTED in part and DENIED in part; 9 Defendants cross-motion (dkt. #51) for summary judgment is DENIED; 10 Defendants motion (dkt. #72) for leave is GRANTED; and Defendants 11 motion (dkt. #77) to strike is GRANTED in part and DENIED in part. 12 IT IS SO ORDERED. 13 Dated this 11th day of April, 2012. 14 /s/ Dennis J. Hubel ________________________________ Dennis James Hubel Unites States Magistrate Judge 15 16 17 18 19 20 21 22 23 24 25 26 27 28 OPINION AND ORDER 20

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