SERCOMBE, J.
Plaintiff, the beneficiary of a trust, filed a declaratory judgment action against defendant, a purchaser of real property held in the trust. Plaintiff sought a declaration that defendant did not possess any right, title, or interest in the property sold to him by the trustee; plaintiff also asked for equitable relief to unwind the transaction. The trustee and other trust beneficiaries were named parties to the case. On motions by trustee, the trial court struck portions of plaintiff's first and second amended complaints pertaining to the trustee's conduct. After plaintiff refused to plead further, the court entered a judgment dismissing the case. Plaintiff appeals that judgment. Plaintiff also appeals a supplemental judgment awarding attorney fees to defendant. We affirm the judgment of dismissal and reverse the supplemental judgment awarding attorney fees.
Plaintiff contends that the court erred in dismissing the case because his pleadings sufficiently stated a claim for relief. The allegations of the first and second amended complaints stated the following facts. Plaintiff's grandfather, Resser, owned rural property that was improved with a dwelling. Resser established a family trust for the benefit of plaintiff and others, including Jerry Howard (Howard). Resser made himself the trustee of the trust and transferred the property to the trust. Resser later appointed Howard as successor trustee of the trust; the trust provided that Howard would become the trustee on Resser's death, resignation, or a finding of his incompetence.
Howard, purporting to act as successor trustee, sold the property to defendant for $55,000. Defendant is Howard's son, Jarrod Howard. Defendant borrowed $55,000 from his father and mother in order to purchase the property. Plaintiff alleged that, at the time of sale, the fair market value of the property was at least $122,760. At that time, Resser had not resigned as trustee and had not been declared incompetent. Resser died a few weeks later.
Over seven years after that sale and the distribution of the trust proceeds to plaintiff and others, plaintiff brought a declaratory judgment action against defendant, Howard, and the other trust beneficiaries. ORS 28.010-28.160 (Uniform Declaratory Judgments Act).
Plaintiff's second amended complaint reframed the allegations against Howard. It alleged that Howard acted "unlawfully" and "essentially sold the Resser home place to himself for grossly inadequate consideration with [defendant] knowingly and willingly acting as a `strawman.'" The allegations against Howard and defendant were intertwined in many respects. Howard's alleged actions (the sale of the property without authority, a loan of the purchase price to defendant, the sale to himself for "grossly inadequate consideration" through a "strawman," and a share of timber sale proceeds from the property) formed the basis for plaintiff's claim against defendant for a constructive trust.
Plaintiff's second amended complaint, however, stated that "[n]o affirmative relief is sought as to [Howard]" or the other trust beneficiaries. It asked for a declaration that defendant has no interest in the property and holds the property "in constructive trust for the benefit of the * * * [t]rust," and that defendant was not entitled to be repaid the purchase price. The prayer requested sale of the property and distribution of the resulting proceedings to the trust beneficiaries, and offsets to any repayment of the purchase price.
In response to the second amended complaint, Howard again moved to strike the allegations of his misconduct or to make the claim against him more definite and certain, arguing that "all allegations of misconduct by [Howard] should be stricken" or Howard should be "dismissed from the case." At the hearing on the motions, the court ruled, "I'm ordering that the complaint be stricken pursuant to your motion to strike and then you could plead further." In its written order, after noting that "the relief Plaintiff seeks implicates the provisions of ORS 128.115 [to 128.185] because Plaintiff is challenging the administration of the trust and seeking relief directing the administration of the trust," relief that "requires a bond to be posted," the court directed that "Howard's Motion to Strike, and Motion to Make More Definite and Certain is hereby granted. Plaintiff shall have leave to replead." Plaintiff did not file a new complaint. Plaintiff later filed a notice dismissing without prejudice any claims under former ORS 128.115 to 128.155 (2003), repealed by Or. Laws 2005, ch. 348, § 128, against Howard.
After several months, defendant filed a motion for entry of judgment and a motion to dismiss, arguing that there was no longer any operative complaint and, alternatively, that the court had lost subject matter jurisdiction when plaintiff dismissed Howard, because Howard was a necessary party to claims about the trust and its distribution. The trial court granted the motions and entered a judgment dismissing plaintiff's claims against defendant. The court explained, "I told plaintiff several times here that this can't proceed as they proposed. So whether
On appeal, plaintiff argues that his pleadings stated a claim for relief and that the trial court erred in dismissing the case. Plaintiff points to the court's denial of defendant's original motion to dismiss, in which the court ruled that plaintiff's pleadings at that time stated a claim for declaratory relief. Plaintiff argues that his second amended complaint, substantially the same as his earlier pleading, likewise states a claim for relief against defendant. Defendant, in contrast, argues that, because plaintiff did not file a third amended complaint after the trial court granted Howard's motion to strike or make more definite and certain, there was no complaint in effect and therefore plaintiff had no claim for relief to pursue.
We conclude that the effect of the court's order striking portions of the second amended complaint was to require plaintiff to file another complaint and that the failure to do so allowed a judgment in defendant's favor. We begin with the applicable rules of civil procedure. ORCP 25 A pertains to the effect of proceeding after allowance of a motion to strike and provides:
(Emphases added.) When the court grants a motion striking part of a pleading, a party must amend the pleading following the procedures set out in ORCP 23. ORCP 23 D, in turn, requires that, when a pleading is amended before trial, "it shall be done by filing a new pleading, to be called the amended pleading, or by interlineation, deletion, or otherwise. Such amended pleading shall be complete in itself, without reference to the original or any preceding amended one." Thus, if the trial court struck any part of plaintiff's second amended complaint, plaintiff was required to file a new pleading that was complete on its face, or modify the pleading by interlineation, deletion, or otherwise. Plaintiff did not do anything to file a new pleading despite the court's leave to do so. The court's order did not approve any interlineation or identify specific deletions from the pleading. The issue becomes, then, whether the trial court's order granting Howard's motion to strike or make more definite and certain struck part of plaintiff's second amended complaint. We conclude that it did.
The record demonstrates that the trial court granted the motion to strike portions of plaintiff's second amended complaint. Howard moved, in the alternative, asking the court to strike plaintiff's allegations related to him or to order plaintiff to make his pleading more definite and certain by explaining his claim for relief against Howard. The trial court simply granted the motion. Although the written order does not explicitly specify whether it struck portions of plaintiff's second amended complaint, the record shows that some of the second amended complaint was stricken. Again, at the hearing on Howard's motion, the trial court stated, "I'm ordering that the complaint be stricken pursuant to your motion to strike and then you could plead further." The order on the motions gave plaintiff "leave to replead" as opposed to directing specific changes to the second amended complaint. Later, at the hearing where it discussed plaintiff's notice of dismissal of claims against Howard, the trial court addressed whether it had previously struck part of plaintiff's second amended complaint, stating:
Plaintiff remonstrates, nevertheless, that the allowance of the motion to dismiss was erroneous because (plaintiff asserts) the court's allowance of the prior motion to strike was erroneous. However, plaintiff forfeited any ability to challenge any error with respect to the allowance of the motion to strike by failing to replead as required under ORCP 25 A after that earlier ruling. Oregon's Rules of Civil Procedure do not countenance any interlocutory appeal of the allowance of a motion to strike part of a pleading. Rather, under ORCP 25 A, a plaintiff has an obligation to move the case forward by "amend[ing] in accordance with Rule 23 D"— an obligation that is independent of the merits of the motion to strike; indeed, the rule specifically provides that a plaintiff who amends the complaint as required "shall not be deemed thereby to have waived the right to challenge the correctness of the court's ruling" on the motion to strike. ORCP 25 A. Here, however, plaintiff did not amend his pleading as required by the rule and, having failed to do so, cannot now undo the court's later—and, by that point, correct—judgment dismissing the case for lack of a complaint.
What remains is plaintiff's appeal from the supplemental judgment allowing attorney fees. Plaintiff assigns error to the trial court's award of attorney fees, arguing that (1) defendant waived his claim for fees by failing to timely submit proposed special findings of fact, (2) the court erred in allowing fees under ORS 20.105(1),
Whether a statute authorizes attorney fees is reviewed as a question of law. Lovejoy Specialty Hospital v. Advocates for Life, 121 Or.App. 160, 167, 855 P.2d 159, rev. den., 318 Or. 97, 863 P.2d 1267 (1993), cert. den., 511 U.S. 1070, 114 S.Ct. 1647, 128 L.Ed.2d 367 (1994). More specifically, we review a trial court's determination that a party has "no objectively reasonable basis" for asserting a claim, for purposes of an award for attorney fees under ORS 20.105(1), for its legal correctness. Secor Investments, LLC v. Anderegg, 188 Or.App. 154, 175, 71 P.3d 538, rev. den., 336 Or. 146, 82 P.3d 162 (2003) (determination of whether plaintiff's claims were not "objectively reasonable" is a "matter of law").
An evidentiary record was created and a hearing was held on defendant's petition for an award of attorney fees and costs under ORS 20.105(1) and ORS 105.810. Based on that record, the trial court entered findings
The trial court's findings went on to detail the particulars of a boundary dispute case between defendant and a neighbor. In that litigation, the court rejected the neighbor's affirmative defense that defendant did not own the property because Howard did not have the authority to transfer it to him. The trial court also made findings with respect to earlier litigation by a trust beneficiary that made the same claims as those advanced by plaintiff. That case was brought by plaintiff's mother, Patricia Olson:
The trial court also made findings regarding the procedural history of plaintiff's case, as follows:
The trial court ultimately concluded that plaintiff's complaint "was not objectively reasonable" under ORS 20.105 because the court agreed with defendant that the sale of the property occurred between Redinger and defendant, the sale was for "reasonably sufficient value," and because plaintiff "presented no evidence or argument to suggest that the transaction between Redinger and [defendant] was anything other than arms length and appropriate." The trial court also determined that, because plaintiff "sought a setoff against amounts that Defendant would have otherwise received in this restitution action for timber trespass[,]" and because "claims of timber trespass inextricably intertwine
We conclude, as a preliminary matter, that defendant is not entitled to fees under ORS 105.810(2). That statute provides for payment of the "reasonable costs of litigation," including attorney fees, to a prevailing party under ORS 105.810(1). ORS 105.810(1) provides for a timber trespass claim, stated as one brought "against the person committing such trespasses" where "judgment is given for the plaintiff * * * for treble the amount of damages claimed, or assessed for the trespass" in certain circumstances. ORS 105.815(1) allows for "judgment [to be] given for double damages" in other circumstances. Defendant did not "prevail" in defending such a claim for damages. As pleaded, plaintiff's contingent request for an equitable offset from any return of defendant's purchase price was not a timber trespass claim within the purview of ORS 105.810(2). The trial court erred in determining that ORS 105.810(2) allowed an award of attorney fees to defendant.
Plaintiff's remaining argument is that, as a matter of law, fees were not authorized by ORS 20.105(1), because plaintiff's claim had an objectively reasonable basis and was supported by fact and law. Plaintiff first notes that the following facts are undisputed: Howard is defendant's father; Howard executed the deed conveying the trust property to defendant at a time when Howard had no authority to do so; the $55,000 consideration for the purchase was below the $122,760 tax assessed value of the property; and Howard financed defendant's purchase of the property. Plaintiff posits that Howard engaged in self-dealing. Plaintiff argues that "[i]t is true that [defendant] has an explanation as to why all of these facts add up to nothing and why the sale of the property was on the level and was for fair market value. However, any reasonable person would look at these facts and conclude that there is an objectively reasonable basis to believe that the sale should be set aside." (Emphasis in original.)
Defendant counters that the evidentiary record of the attorney fees hearing undercuts plaintiff's claim of self-dealing in a number of ways. Defendant argues that plaintiff's allegation that Howard sold the property to defendant is baseless because the evidence shows that the transaction actually was negotiated and agreed on between Redinger, who was Resser's attorney-in-fact, and defendant. According to defendant, Howard's execution of the deed was a formality that was demanded by the title company. Defendant also argues that appraisals in the record establish that the property was sold for its fair market value and that plaintiff's evidence of its established real market value for purposes of property tax assessment was immaterial as a matter of law. Finally, defendant argues that the evidence proves that plaintiff accepted proceeds from the sale of the property as a trust beneficiary and signed a release relinquishing any and all claims against the trustee or the trust and, therefore, that he waived the claim that he brought. The trial court found plaintiff's claim not to be "objectively reasonable" for each of those reasons.
We are required to affirm the trial court's determination of no "objectively reasonable" basis for plaintiff's claim if it is supported by any of those alternative bases. For example, in Benaman v. Andrews, 213 Or.App. 467, 478, 162 P.3d 280 (2007), we noted that there were two possible bases for the court's award of fees and reversed only after concluding that both bases failed to meet the standard of showing that plaintiff's claims had no objectively reasonable basis.
"Whether a party has an objectively reasonable basis for asserting a claim is a function of the substantive law governing the claim." Id. at 369, 98 P.3d 397. Plaintiff's declaratory judgment claim sought restitution from defendant by imposition of a constructive trust. See ORS 28.080 (allowing supplemental relief in declaratory judgment proceedings). That equitable remedy is available "`where money or property identified as belonging in good conscience to the plaintiff could be traced to particular funds or property in the defendant's possession.'" Liberty Northwest Ins. Corp. v. Kemp, 192 Or.App. 181, 197, 85 P.3d 871, rev. den., 337 Or. 34, 93 P.3d 71 (2004) (quoting Great-West Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204, 213, 122 S.Ct. 708, 151 L.Ed.2d 635 (2002)). That relief lies where a person holds trust funds or property that has been misappropriated. Plaintiff alleged that defendant possessed property that should belong to the trust because the property was transferred without authority, by a self-interested party, and without sufficient consideration. There was factual evidence to support those contentions.
Finally, plaintiff signed a release as a trust beneficiary relinquishing any and all claims against the trustee or the trust. The release, by its terms, provided:
The release was for claims against the trust or the trustee, not claims against other persons, including defendant. We are not persuaded that the release makes plaintiff's claim against defendant objectively unreasonable. We thus conclude that the trial court erred in allowing attorney fees under ORS 20.105(1), because plaintiff's claim was not devoid of any factual or legal basis.
Judgment affirmed; supplemental judgment reversed.
213 Or.App. at 478-79, 162 P.3d 280.