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SPS of Oregon, Inc. v. GDH, LLC

Court of Appeals of Oregon

August 21, 2013

SPS OF OREGON, INC., an Oregon corporation; and VERN SPAUR, Plaintiffs-Appellants,
GDH, LLC, a Washington limited liability company; and MARK COMSTOCK, Defendants-Respondents.

Argued and submitted on May 15, 2012.

Wallowa County Circuit Court 070512862 Gregory L. Baxter, Judge.

D. Zachary Hostetter argued the cause for appellants. With him on the briefs were Rebecca J. Knapp and Hostetter Knapp, LLP.

R. Scott Jerger argued the cause for respondent GDH, LLC. With him on the brief was Field Jerger LLP.

Douglas E. Hojem argued the cause for respondent Mark Comstock. With him on the brief was Corey, Byler, Rew, Lorenzen & Hojem.

Before Armstrong, Presiding Judge, and Duncan, Judge, and Brewer, Judge pro tempore.


Plaintiff appeals a general judgment dismissing his claim for wrongful initiation of civil proceedings and two supplemental judgments awarding defendants costs and prevailing-party fees. He raises five assignments of error, which we address in turn. We affirm the trial court on each of plaintiff's assignments of error, with one exception: we conclude that the trial court erred when it entered a directed verdict in favor of defendant Hansen.[1] Accordingly, we reverse and remand.

This action arose as a consequence of a conversion action that defendant Hansen and his attorney, defendant Comstock, filed against plaintiff, concerning a number of cattle in plaintiff's possession. Plaintiff contends that defendants wrongfully initiated the conversion action in order to recover a debt owed to Hansen by a third party, Garnett. In support of that claim, plaintiff offered evidence detailing Hansen's history of dealings with Garnett--a litigious relationship spanning nearly 20 years--as well as evidence about the parties' conduct and communications during the lead-up to the conversion action. Much of that evidence does not affect our analysis of the issues on appeal. We address it only to the extent necessary to provide context for our discussion of the conversion action and the current action.

In 1995, Hansen loaned Garnett $170, 000, which he secured with a mortgage on Garnett's ranch and a security interest in Garnett's farm equipment and livestock. Hansen also purportedly loaned Garnett an additional $29, 000 for the purpose of purchasing cattle, although Hansen has since been unable to locate any documentation of the second loan. Garnett thereafter defaulted on his payment obligations, and Hansen obtained a foreclosure judgment granting him a "valid, subsisting, and prior lien" in Garnett's ranch and the remaining collateral, including Garnett's cattle. A foreclosure sale was held in March 2001 for Garnett's ranch. Comstock represented Hansen in the foreclosure proceeding and in other matters relating to the defaulted Garnett loan.

In the interim between the foreclosure judgment and sale, Garnett and plaintiff agreed to a trade, in which Garnett would exchange $8, 000 and a number of cattle for a pickup truck and hay from plaintiff. Despite Garnett's assurances that the cattle were not subject to any lien, shortly after the deal was struck, plaintiff performed a search and located a record of Hansen's security interest in Garnett's cattle and calves. Plaintiff promptly contacted Hansen, notified him of the pending trade, and asked him to confirm that the cattle would have clear title. Plaintiff also indicated that no money would be exchanged without Hansen's approval.

Hansen and plaintiff had a number of telephone conversations, but they were unable to agree on the import of Hansen's lien or, consequently, on terms for the sale of the cattle. At various times during those conversations, Hansen would get heated, yell, or abruptly terminate the phone call--on one occasion threatening to "kick [plaintiff's] ass." Plaintiff, in turn, repeatedly offered to purchase the cattle from Hansen if Hansen could "prove ownership." Because he represented Hansen in the underlying dispute with Garnett, Comstock was eventually brought in to help resolve the disagreement. Following a series of conversations in which plaintiff explained that he felt "torn between" Hansen and Garnett, who also claimed to own the cattle, and that he could easily gather the cattle for identification, plaintiff and Comstock agreed that the simplest manner of resolving the dispute would be a private sheriff's sale.

However, before that sale could occur, Garnett contacted Comstock, claiming that the cattle in fact belonged to his daughter and, thus, were not subject to Hansen's security interest. He further contended that the obligation that he owed Hansen had been satisfied. Thereafter, Comstock cancelled the sale, later testifying that he did not want to subject Hansen to liability by inadvertently selling cattle in which Hansen had no interest. The dispute remained ongoing, and eventually Comstock sent plaintiff a letter, demanding that plaintiff either "return the cattle and account for all of the progeny of the cattle since they were placed with [plaintiff] by [Garnett], or make an offer to purchase the cattle if he wishe[d] to keep them." Plaintiff did not respond.

Thereafter, Comstock, acting on behalf of Hansen, filed a conversion action against plaintiff, alleging that Garnett had transferred the cattle to plaintiff "in an effort to hinder and prevent the recovery of the collateral subject to the security interests of [Hansen]" and that plaintiff and Garnett had "acted in concert in depriving [Hansen] of the possession of the cattle and livestock subject to the valid security interest." As a result, it alleged, Hansen

"was unable to find the livestock to levy and assemble the livestock for sale by the sheriff of Wallowa County, Oregon, in execution of the Judgment and Decree of Foreclosure, because [Hansen] did not know of the location of the livestock."

Further, it alleged that plaintiff had "wrongfully withheld the possession" of the cattle and that he had denied Hansen his "current legal right to possess, for judicial sale, " the cattle, "despite demand for return and turnover of the livestock and progeny." Finally, the action alleged damages of $30, 000.

Plaintiff responded to those allegations in its answer by contending, among other things, that

"[Hansen] is estopped from asserting [his conversion claim against plaintiff]. [Plaintiff] did not deny [Hansen] possession of any cattle. Upon [Hansen's] request, [plaintiff] agreed to allow [Hansen] to gather cattle on [plaintiff's] property and take possession thereof. [Hansen] never made arrangements with [plaintiff] to gather any cattle on [plaintiff's] property and to take possession therof."

Shortly afterwards, Comstock sent a letter to plaintiff (the "Comstock letter") addressing ...

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