SPS Of Oregon, Inc. v. GDH, LLC

(1) Elements under wrongful initiation of a civil proceeding are not identical to those necessary for proving enhanced prevailing party fees under ORS 20.190, thus issue preclusion does not apply; (2) a party's reliance upon his or her attorney's advice, and the reasonableness of such reliance after a full and frank disclosure of pertinent facts, are all issues of fact to be determined by a jury; and (3) an attorney's malice requires a purpose other than recovery of damages, which is a question of law.

SPS and Vern Spaur, plaintiffs (collectively “Spaur”) appealed a general judgment dismissing their claim for wrongful initiation of civil proceedings and two supplemental judgments awarding defendants, GDH, LLC and George Hansen (collectively “Hansen”) costs and fees. The action resulted from a conversion action that Hansen and his attorney, Comstock, filed against Spaur. Spaur asserted five assignments of error on the issuance of the general and supplement judgments. The Court of Appeals first found that the trial court correctly denied the portion of plaintiffs’ motion in limine that sought a determination that both probable cause and malice had been conclusively determined as to Hansen in the underlying conversion action. Next, the Court found that the determination of “reckless and malicious” necessary for a judgment of prevailing party fees is an entirely different application than “probable cause and malice” needed in a wrongful initiation action. Consequently, Spaur’s motion in limine was denied because issue preclusion did not apply because the issues were not identical and, therefore, Hansen’s good-faith reliance on advice of counsel was an affirmative defense in regards to wrongful initiation “malice.” In relation to Spaur’s wrongful initiation action against Comstock, Spaur failed to produce any evidence that Comstock acted with malice. Thus, the trial court correctly entered a directed verdict for Comstock. Third, Spaur contested the directed verdict for Hansen regarding the wrongful initiation action, based upon Hansen’s misplaced reliance on the advice of counsel after a purported “full and frank disclosure of the pertinent facts.” The Court found that these determinations were issues of fact for the jury, and, therefore, the trial court erred. Spaur’s fourth argument that a letter from Comstock to plaintiff’s attorney was improperly-admitted hearsay lacked merit because it was not offered for the truth of the matter asserted. Neither party disputed Spaur's fifth argument regarding the application of ORS 20.220(3)(a). Consequently, the general judgment was reversed and remanded as to Hansen; supplemental judgment awarding costs and disbursements to Hansen, reversed; otherwise affirmed.