Brooks v. Harlon Rip Caswell, an Individual, Rip Caswell Sculptures, Inc.

GRETCHEN BROOKS, an individual, Plaintiff, v. HARLON RIP CASWELL, an individual, RIP CASWELL SCULPTURES, INC.,an Oregon corporation d/b/a CASWELL GALLERY,an Oregon assumed business name, CASWELL PROPERTIES, INC.,a Washington limited liability company, and DOES 1-5, Defendants.

Case No.: 3:14-cv-1232-AC

UNITED STATES DISTRICT COURT DISTRICT OF OREGON PORTLAND DIVISION

December 28, 2016

OPINION AND ORDER

ACOSTA, Magistrate Judge:

Introduction

Plaintiff Gretchen Brooks ("Brooks") filed this action against defendants Harlon Rip Caswell ("Caswell"), Rip Caswell Sculptures, Inc., dba Caswell Gallery ("Caswell Sculptures"), and Caswell Properties, LLC ("Caswell Properties")(collectively "Defendants") seeking damages related to Defendants' alleged wrongful conduct with regard to the settlement of a prior lawsuit. The sole claim remaining in this lawsuit is Caswell Sculptures's counterclaim under OR. REV. STAT. 79.0625. Currently before the court is Brooks's motion for summary judgment on this counterclaim.

The court finds Brooks acted in good faith in filing this lawsuit and had no duty to take possession of the Molds in a timely manner. Accordingly, Brooks's motion for summary judgment on Caswell Scupltures's counterclaim under OR. REV. STAT. 79.0625 is granted.¹

Background²

From 2006 to 2009, Brooks advanced more than $5,000,000 to Caswell Sculptures and Caswell Properties to facilitate development of Caswell's sculpture business. (Hahs Decl. dated December 10, 2014, ECF No. 16 ("Hahs 2014 Decl."), Ex. A at 1; Seidl Decl. dated May 9, 2016, ECF No. 144 ("Seidl May Decl."), Ex. 1 at 9-11. ) The relationship between Brooks and Caswell deteriorated, and in January 2010 Brooks filed a lawsuit in state court seeking recovery of her advances and alleging breach of implied and express contract, money had and received, fraud, misrepresentation, and claim and delivery. (Hahs 2014 Decl. Ex. A, at 1. )

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/ / / / / In August, 2011, Brooks initiated settlement discussions with Defendants to resolve complicated issues remaining for the court after a jury trial. (Seidl May Decl. Ex. 6 at 1; Hahs 2014 Decl. ¶ 4; Hahs Decl. dated February 23, 2015, ECF No. 31 ("Hahs 2015 Decl."), ¶ 9.) Brooks's initial proposal included a promissory note from Defendants to Brooks in the amount of $850,000 payable in graduated payments over a seven-year term with interest accruing at a rate of four per cent per annum. (Hahs 2015 Decl. Ex. 13 at 4.) Caswell requested a decrease in the note from $850,000 to $650,000. (Brooks Dep. dated July 2, 2015 ("First Brooks Dep.") 41:1-422.) He also refused to be personally liable on the note, but suggested the note be secured solely by identified collateral. (Monson Dep. dated February 18, 2015 ("Monson Dep.") 59:3-17.) Brooks agreed to Caswell's demands based, in part, on assurances from an unidentified source Caswell Sculptures would pay the note if the principal was reduced. (Monson Dep. 59:3-20; First Brooks Dep. 41:1-44:5, 48:0-49:4.)

The parties executed a Settlement Agreement and Mutual Release on September 21, 2011 (the "Settlement"). (Hahs 2014 Decl. Ex. A.) As part of the Settlement, Brooks released Defendants:

from any and all claims, rights demands, actions, causes of action, suits, damages, liabilities, costs, expenses, and losses of any kind or character whatsoever, whether presently known or unknown, asserted or unasserted, contingent or noncontingent, that any of the Brooks Releasors have, may have had, or may claim to have against any of the Defendant Releasees for any "Released Claim," defined as any claim arising from or related to acts, events, or omissions by any Party occurring on or before the Effective Date of this Agreement, including but not limited to, the Disputed Claims and all claims of any kind that could have been alleged by or on behalf of any Party.

(Hahs 2014 Decl. Ex. A, at 20.) The parties further acknowledged:

that they may hereafter discover facts in addition to or different from those which they now believe to be true with respect to the subject matter released herein, but agree that they have taken that possibility into account in reaching this Agreement and that, notwithstanding the discovery or existence of any such additional or different facts, as to which they expressly assume the risk, and in consideration for the mutual covenants, promises, and releases set forth in this Agreement, they fully, finally, and forever settle and release any and all such claims, known or unknown, suspected or unsuspected, contingent, or non-contingent, whether or not concealed or hidden, which now exist, or heretofore have existed upon any theory of law or equity, including but not limited to conduct which is negligent, intentional, with or without malice, or a breach of any duty, law, or rule, without regard to the subsequent discovery or existence of such different or additional facts.

(Hahs 2014 Decl. Ex. A, at 21.) However, the Agreement did not "affect, inhibit, or limit" a party's right to assert claims for conduct arising after the signing of the Agreement, specifically including Brooks's right to enforce the Agreement or her security interests in the Molds, or allege claims for breach of the Agreement. (Hahs 2014 Decl. Ex. A, at 21.)

Pursuant to the Settlement, Caswell Sculptures executed a promissory note in the amount of $650,000 payable to Brooks (the "Note") and a Security Agreement (the "Agreement") identifying fifty-five sculpture molds (the "Molds") servings as security for the payment of the Note. (Hahs 2014 Decl. Exs. A, B, and C.) Payments under the Note were deferred until March 1, 2012, when minimum monthly payments of $2,500 became due for three consecutive months. (Hahs 2014 Decl. Ex. A, at 10.) In June 2012, the minimum monthly payments increased to $4,000 for a year, with reamortization of the Note in July 2013, to ensure payment in full by the end of the seven-year term. (Hahs 2014 Decl. Ex. A, at 10.) Brooks agreed to the payment schedule in response to Caswell's desire to not make a promise he could not keep or to immediately default on the Note. (Walker Dep. dated February 16, 2015 ("Walker Dep.") 73:23-74:7.)

In the event of default on the Note, Caswell Sculptures had fifteen days to cure such default after written notice from Brooks. (Hahs 2014 Decl. Ex. B, at 1.) Brooks's sole remedy for an uncured default was to foreclose on and take possession of the Molds. (Hahs 2014 Decl. Ex. A, at 10-11, Ex. B, and Ex C. ) Based on her extensive experience with Caswell, Brooks "believed he assigned significant value to these molds and would not want to lose them." (Brooks Decl. ¶ 11.)

The Molds were to be delivered to Parks Bronze ("Parks") by November 16, 2011, for storage and remain there until the Note was satisfied or Brooks enforced her rights under the Agreement following a payment default. (Hahs 2014 Decl. Ex. A, at 12.) Prior to a foreclosure of her security interest in the Molds by Brooks, Defendants retained the right to cast and sell sculptures from the Molds to third parties on commercially reasonable terms with the net proceeds from the sale of any such sculpture paid to Brooks. (Hahs 2014 Decl. Ex. A, at 13.) Any funds received by Brooks for such sales would be credited to Caswell Sculptures as a payment on the Note. (Hahs 2014 Decl. Ex. A, at 13.)

On August 3, 2012, Brooks emailed a notice of default on the Note to Defendants based, primarily, on Caswell Sculptures failure to pay the $4,000 due under the Note on August 2, 2012. (Hahs 2014 Decl. Ex. D.) In response, Defendants advised Brooks that Caswell Sculptures would not be making the August payment and Brooks was free to exercise her rights to the Molds. (Hahs 2014 Decl. Ex. E at 1.)

In September 2012, the parties discussed the transfer of possession of the Molds to Brooks, who had yet to decide how, when, or where to transfer the Molds. (Hahs 2014 Decl. ¶ 13.) On October 4, 2012, Defendants informed Brooks of Caswell's intent to move sculpture molds he owned from Parks, where they were stored with the Molds, to another location. (Hahs 2014 Decl.Ex. F.) Caswell would leave the Molds securing the Note at Parks and recommended Brooks contact Parks to arrange payment for future storage fees relating to the Molds. (Hahs 2014 Decl. Ex. F.)

Brooks's counsel, Laura Walker ("Walker"), indicated she was not sure if Brooks even wanted the Molds and suggested Caswell make Brooks an offer to purchase the Molds. (Caswell Dep. dated August 19, 2015 ("Caswell Dep.") 80:15-20; Hahs Dep. dated April 17, 2015 ("Hahs Dep.") 50:8-12.) Andrew Hahs, Caswell's legal counsel ("Hahs") responded:

Rip has received no interest in castings from the molds in which Gretchen has the security interest and he believes they have little value. However, as a one-time offer, Rip is willing to pay Gretchen $10,000 to release her security interest in all the molds. Let me know in the next seven days if she is interested in this offer. If not, Rip will proceed to unload the molds and leave them at Parks. We can then finalize the surrender agreement.

(Hahs 2014 Decl. Ex. F at 1.)

In January 2013, Brooks drafted a collateral surrender agreement detailing the transfer of the Molds and forwarded the draft to Defendants in February 2013. (Hahs 2014 Decl. ¶¶ 16, 17.) Defendants returned the draft to Brooks with requested changes, including a demand the surrender agreement include a release of liability. (Hahs 2014 Decl. ¶ 17; Walker Decl. dated July 14, 2016, ECF No. 163 ("Walker Decl.") ¶ 4.) Brooks was unwilling to release Defendants from liability under the Note before having the opportunity to inspect the Molds and Caswell was unwilling to allow Brooks access to the Molds until a collateral surrender agreement releasing Defendants from liability had been signed.³ (Walker Decl. ¶ 4; Brooks Decl. dated July 15, 2016, ECF No. 161 ("Brooks Decl."), ¶ 20.)

In April 2013, after hearing nothing more about the Molds from Brooks, Defendants...