UNITED STATES DISTRICT COURT

DISTRICT OF OREGON

PORTLAND DIVISION

GRETCHEN BROOKS, an individual, Case No.: 3:14-cv-1232-AC

Plaintiff, OPINION AND ORDER

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.

___________________________________

ACOSTA, Magistrate Judge:

Introduction

Plaintiff Gretchen Brooks (“Brooks”) filed this action against defendantsHarlonRip Caswell

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(“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. )

/ / / / /

/ / / / /

1The parties have consented to jurisdiction bymagistrate judge in accordance with 28 U.S.C.

§ 636(c)(1).

2The factual background summaryis derived from declarations and evidence associated with

motions for summary judgment previously filed by the parties as well as those filed with the present

motion.

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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:

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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 securityfor 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.)

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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 byBrooks, Defendants retained the right to cast and sell sculptures

from the Molds to third parties on commerciallyreasonable 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.

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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.)

3Defendants dispute Brooks’s representation that she was denied access to the Molds for the

first time in the declaration of Andrew Hahs dated November 19, 2016, and filed with the court in

opposition to Brooks’s motion for summary judgment on Defendants’s counterclaim. (Hahs Decl.

dated November 29, 2016, ECF No. 192, ¶¶ 24-27.)

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

contacted Brooks to reiterate their offer to purchase the Molds and discuss the transfer of possession

of the Molds. (Hahs 2014 Decl. ¶ 18.) Brooks formally rejected the offer on April 8, 2013, and

advised Defendants she intended to take possession of the Molds at a later date. (Hahs 2014 Decl.

¶ 19, Ex. H.) The Molds remained at Parks and were fully accounted for as of October 27, 2015. 

(Honore Decl. Ex. 14 at 3.)

Brooks filed this lawsuit on July 31, 2014, asserting claims for fraud, negligent

misrepresentation, breach of contract, breach of the duty of good faith and fair dealing, conversion,

and elder financial abuse based on allegations Caswell never intended to pay the Note and converted

the Molds to his use. Brooks filed a First Amended Complaint on June 30, 2015, alleging the same

claims but including additional factual support (the “Complaint”). On April 6, 2016, Defendants

filed their Answer, Affirmative Defenses, and Counterclaims to the Complaint asserting

counterclaims under Oregon’s UniformCommercialCode (the “UCC”),specificallyOR. REV. STAT.

79.0625, and for restitution or disgorgement (the “Answer”). 

All of Brooks’s claims have been dismissed voluntarily or through motion practice. On July

16, 2015, Brooks filed a notice of limited dismissal of her Third Claim for Relief for breach of

contract to the extent it relied on OR. REV. STAT. 72.7190. (Notice of Limited Partial Dismissal of

Pl.’s Third Claim for Relief, ECF No. 83.) In an Opinion and Order entered March 14, 2016, the

court granted Defendants’ Motion for Partial Summary Judgment Re: Claim of Missing Molds,

finding Defendants had materially complied with the terms of the Settlement requiring delivery of

the Molds to Parks for storage and properlymaintained the Molds while theywere in storage, at least

through April 2015. Brooks v. Caswell, Case No. 3:14-cv-01232-AC, 2016 WL 1056977, at *5, *6

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(D. Or. March 14, 2016)(“Brooks I”). As a result, the court dismissed the remaining claims alleged

in Brooks’s Third Claim for Relief for breach of contract and the entirety of Brooks’s Fifth Claim

for Relief for conversion, and dismissed Brooks’s First Claim for Relief for fraud, Second Claim for

Relief for negligent misrepresentation, and Sixth Claim for Relief for elder financial abuse to the

extent those claims relied on allegations of missing or damaged Molds. Id. at *5,*7. Finally, the

court granted Defendants’ Motions for Summary Judgment on the remaining claims in an Opinion

and Order entered October 27, 2016. Brooks v. Caswell, Case No. 3:14-cv-01232-AC, 2016 WL

6305980 (D. Or. Oct. 27, 2016)(“Brooks II”). The court found the evidence Brooks offered was

insufficient to establish Defendants made any false representations regard to their duty to pay or the

value of the Molds, a breach of the statutory duty of good faith with regard to terms of the settlement

documents, or improper motive at the time of negotiation and execution of the Settlement. Id. at *1. 

With Brooks’s claims fully resolved, only the counterclaims alleged by Defendants in the

Answer remain at issue. Defendants represented their intent to dismiss their Second Counterclaim

for restitution and disgorgement at a scheduling conference on November 4, 2016, leaving only

Caswell Sculptures’s First Counterclaim under OR. REV. STAT. 79.0625 at issue. Brooks now

moves for summary judgment on this counterclaim.

Legal Standard

Summary judgment is appropriate where the “movant shows that there is no genuine dispute

as to any material fact and the movant is entitled to judgment as a matter of law.” FED. R. CIV. P.

56(a) (2016). Summary judgment is not proper if material factual issues exist for trial. Warren v.

City of Carlsbad, 58 F.3d 439, 441 (9th Cir. 1995). 

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The moving party has the burden of establishing the absence of a genuine issue of material

fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). If the moving party shows the absence of

a genuine issue of material fact, the nonmoving partymust go beyond the pleadings and identify facts

which show a genuine issue for trial. Id. at 324. A nonmoving party cannot defeat summary

judgment by relying on the allegations in the complaint, or with unsupported conjecture or

conclusory statements. Hernandez v. Spacelabs Medical, Inc., 343 F.3d 1107, 1112 (9th Cir. 2003). 

Thus, summary judgment should be entered against “a party who fails to make a showing sufficient

to establish the existence of an element essential to that party’s case, and on which that party will

bear the burden of proof at trial.” Celotex, 477 U.S. at 322.

The court must view the evidence in the light most favorable to the nonmoving party. Bell

v. Cameron Meadows Land Co., 669 F.2d 1278, 1284 (9th Cir. 1982). All reasonable doubt as to

the existence of a genuine issue of fact should be resolved against the moving party. Hector v.

Wiens, 533 F.2d 429, 432 (9th Cir. 1976). Where different ultimate inferences may be drawn,

summary judgment is inappropriate. Sankovich v. Life Ins. Co. of North America, 638 F.2d 136, 140

(9th Cir. 1981).

However, deference to the nonmoving party has limits. A party asserting that a fact cannot

be true or is genuinely disputed must support the assertion with admissible evidence. FED. R. CIV.

P. 56(c) (2013). The “mere existence of a scintilla of evidence in support of the [party’s] position

[is] insufficient.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986). Therefore, where “the

record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there

is no genuine issue for trial.” Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574,

587 (1986) (internal quotations marks omitted).

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Discussion

In the First Counterclaim, Caswell Sculptures alleges Brooks, as a secured creditor, “violated

the obligation of good faith in the performance of enforcement of the Non-Recourse Promissory

Note and Security Agreement” imposed in the UCC. (Defs.’ Answer, Affirmative Defenses, and

Countercls. to First Am. Compl., ECF No. 138 (“Defs.’ Answer”), ¶ 88.) Specifically, Caswell

Sculptures alleges Brooks breached her duty of good faith by: (1) filing this lawsuit in an attempt

to avoid the terms of the Note; and (2) failing to immediately accept the Molds as the sole remedy

for breach of the Note. (Defs.’ Answer ¶¶ 90, 91. ) Defendants seek “judgment against Brooks

ordering that she accept the collateral in full and final satisfaction of the obligation,” “an award of

losses sustained as a result of Brooks’ failure to comply with her duties under the UCC including,

without limitation, the reasonable value of Defendants’ staff time required by this litigation,” and

“an award of its reasonable attorney fees and litigation expenses.”4(Defs.’ Answer ¶¶ 92, 94, 95.)

The court has previously found, and the parties agree, the Note and Agreement are subject

to the UCC. Brooks II, 2016 WL 1056977, at *11. OR. REV. STAT. 79.0625(1) provides, in

pertinent part: “[i]f it is established that a secured party is not proceeding in accordance with this

chapter, a court may order or restrain collections, enforcement or disposition of the collateral on

appropriate terms and conditions.” A person who fails to comply with Chapter 9 may also be liable

for damages resulting from such failure. OR. REV. STAT. 79.0625(2). Finally, the prevailing party

in an action brought under OR. REV. STAT. 79.0625 may be entitled to an award of reasonable

4Caswell Sculptures also requested a “judgment against Brooks restraining her from

collection or enforcement of the obligation against [Caswell], individually.” (Defs.’ Answer ¶ 93.) 

In its response to Brooks’s motion for summaryjudgment, Defendants’ concede Caswell Sculptures, 

the obligor under the Note and Agreement, is the only defendant entitled to relief under OR. REV.

STAT. 79.0625.

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attorney fees. OR. REV. STAT. 79.0625(3).

I. Filing this Lawsuit

Caswell Sculptures alleges Brooks “breached her duty of good faith by attempting to enforce

the Non-Recourse Promissory Note by means that Brooks had expressly agreed were prohibited. 

While continuing to insist upon the validity and enforcement of the Non-Recourse PromissoryNote,

Brooks filed suit claiming, without good faith, that the non-recourse provision of the Promissory

Note was not enforceable.” (Defs.’ Answer ¶ 91.) Brooks contends the express provisions of both 

the UCC and the Agreement allowed her to file this action prior to foreclosing on the Molds. 

Alternatively, Brooks claims she filed this lawsuit with the requisite good faith. 

A. The UCC

OR. REV. STAT. 79.0601 provides, in pertinent part:

(1) After default, a secured party has the rights provided in ORS 79.0601 to

79.0628 and, except as otherwise provided in ORS 79.0602, those provided by

agreement of the parties. A secured party: 

(a) May reduce a claim to judgment, foreclose, or otherwise enforce the

claim, security interest or agricultural lien by any available judicial procedure.

* * *

(3) The rights under subsection[] (1) . . . of this section are cumulative and

may be exercised simultaneously.

The Oregon courts have construed this provision and found:

under the plain text of the statute, a secured party may, among other things, pursue

a claim on the debt or seek to foreclose on the underlying security interest. Further,

the text provides that those rights are cumulative such that the creditor may seek to

enforce one remedy and ignore another or seek to enforce more than one remedy at

the same time.

VFS Financing, Inc. v. Shilo Mgmt. Corp., 277 Or. App. 698, 702-03 (2016). The Shilo Mgmt. court

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then analyzed whether the secured party’s filing of an lawsuit seeking damages on a note or guaranty

while retaining possession of the collateral was commerciallyreasonable or honest in fact and found,

based on existing New York law, the secured party’s actions were in good faith and authorized under

the UCC. Id. at 703-04, 707. Accordingly, the court impliedly found OR. REV. STAT. 79.0601 did

not authorize a secured creditor to pursue any and all cumulative remedies, but rather only those that

were valid and could be brought in good faith. Id. at 703 (“The specific issue here, however, is

whether a plaintiff acts in bad faith or in a commercially unreasonabl[e] manner when it pursues a

valid note or guaranty claim, but does not also move quickly to sell the collateral that secures the

note or guaranty.”)

Moreover, the express language of OR. REV. STAT. 79.0601 limits a secured party’s allowed

cumulative remedies to actions reducing a claim to judgment, foreclosing, or otherwise enforcing

the security interest by any available judicial proceeding. The statute, as evidenced by the cases

Brooks relies on, allows a secured party to attempt to enforce the parties’ agreement by concurrently

seeking claims for damages on the note or underlying guaranty, levying or judicially foreclosing on

the collateral, or selling the collateral, all pursuant to the terms of the agreement. See Shilo Mgmt.,

277 Or. App. at 707 (secured creditor allowed to sue for damages on a note and guaranty while

retaining possession of the collateral); In Re King, No. 08-61922, 2010 WL 4290527, at *3 (Bankr.

N.D.N.Y. Oct. 20, 2010)(secured creditor allowed to sue on debt while retaining security interest in

collateral remaining in possession of debtor); Snake River Equip. Co. v. Christensen, 107 Idaho 541,

545 (1984) (secured creditor allowed to pursue judicial remedyto obtain judgment on the underlying

notes before repossessing and selling collateral); Peoples Nat. Bank of Wash v. Peterson, 7 Wash.

App. 196, 199 (1972) (“[W]e believe plaintiff was entitled: to institute an action on the promissory

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notes and obtain judgment for the unpaid balance thereof; to hold a private or public sale of the

property in the secured party’s possession and credit the moneys received therefrom against the total

of defendants’ indebtedness; and in addition thereto, to judicially foreclose upon the security in the

event the private or public sale is abandoned without prejudice to the debtor or fails to dispose of all

the property described in the security instruments.”)

Here, Brooks claims Defendants breached the Settlement and attacks the validity of the

Agreement and Note based on allegations of misrepresentations made byDefendants which induced

her to enter into the Settlement. She is not pursuing a judgment on the debt or seeking to enforce

the foreclosure rights afforded her in the Settlement, Note, and Agreement. The court is not

convinced OR. REV. STAT. 79.0601 provides Brooks the protection to which she claims she is

entitled – the unequivocal right to pursue any legal action prior to foreclosing on or accepting

possession of the Molds.

Shilo Mgmt. establishes the mere pursuit of alternative or cumulative remedies by secured

creditor is not, in and of itself, a bad faith action. But, a secured creditor is not entitled to pursue any

and all remedies, regardless of their merit. Consequently, OR. REV. STAT. 79.0601 does not relieve

a secured party seeking alternative or cumulative remedies from the obligation of pursuing such

remedies in good faith.

B. The Agreement

Brooks argues the Agreement expressly grants her the right to pursue alternate remedies

relating to the formation of the Agreement before foreclosing on the Molds. Specifically, Brooks

references Section 7.4 of the Agreement, which provides: “Upon default and at any time after

default, Secured Party may declare the entire amount secured immediately due and payable and, in

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addition to the remedies described in Sections 7.1-7.3 above, shall have all the rights and remedies

of a secured creditor under the Uniform Commercial Code, at law, in equity or otherwise,” and

Section 8.2, which provides: “All Secured Party’s rights and remedies, whether evidenced here or

by other writing, shall be cumulative and may be exercised singularly or concurrently.” 

The Agreement gives Brooks no more rights than those afforded her by the UCC. For the

reasons stated above, Brooks was not expressly entitled to pursue claims attacking the validity of the

Note and Agreement without consideration of whether her actions were in compliance with the good

faith requirement applicable to commercial transactions.

C. Good Faith

1. Proper Standard 

OR. REV. STAT. 71.3040 provides “[e]verycontract or dutywithin the Uniform Commercial

Code imposes an obligation of good faith in its performance and enforcement.” “Good faith” is

defined as “honesty in fact and the observance of reasonable commercial standards of fair dealing.” 

OR. REV. STAT. 71.2101(t) (2016). This provision encompasses “both a subjective standard

(honestyin fact), as well as an objective standard (reasonable commercial standards of fair dealing).” 

Wanke Cascade Distribution Ltd. v. Forbo Flooring Inc., No. 3:13-cv-768-AC, 2013 WL 6493099,

at *4 (D. Or. Aug. 20, 2013). “The obligation of good faith does not vary the substantive terms of

the bargain or of the statute, nor does it provide a remedy for an unpleasantly motivated act that is

expressly permitted by contract or statute.” U.S. Nat’l Bank of Oregon v. Boge, 311 Or. 550, 567

(1991). Moreover, “[t]he obligation to act in good faith does not bar a party from enforcingwhatever

legal rights he possesses.” Id. at 568 (citation omitted).

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Caswell Sculptures asserts Brooks filed this action in violation of her good faith duty under

the UCC. It claims Brooks did not have sufficient facts to support her claims and that her claims are

legally barred.

2. Factual Basis 

While the court granted summary judgment in favor of Defendants on all of Brooks’s claims,

this does not automatically equate to a finding Brooks’s filing of this action was dishonest or

commercially unreasonable. Brooks predicated her lawsuit on two primary issues: 1) Defendants’

misrepresentations with regard to their intent to pay the Note and the value of the Molds; and 2)

Defendants’ actions with regard to the Molds.

At the time she filed this lawsuit, Brooks felt Defendants tricked her into agreeing to the

Settlement by falsely representing their intent to pay the full amount of the Note and the value of

Molds securing such payment. Brooks had received assurances from an unidentified individual that

Defendants would pay the Note if the amount initially requested was reduced. Additionally, Brooks

agreed to defer payments and accept minimal monthly payments during the first year of the Note to

accommodate Caswell’s desire to keep his promises and not immediately default on the Note. 

Brooks believed Caswell had fraudulentlyinduced her to enter into a prior loan arrangement and had

previously testified Caswell has a habit of lying, is not noted for his truthfulness, and is not highly

valued or regarded. Based on this evidence, any reasonable trier of fact would find Brooks honestly

believed she had a valid claim against Defendants for fraud and misrepresentation based both on

Defendants’ intent to pay the Note and the value of the Molds when she filed this lawsuit especially

within the context of the parties’ acrimonious failed business relationship and state court lawsuit.. 

Evidence discovered byBrooks after she filed the lawsuit and arguments made byDefendants which

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resulted in summary judgment in their favor does not refute the only reasonable finding that Brooks

acted with “honesty in fact” in filing this action.

Additionally, Brooks questioned whether all of the Molds had been delivered to Parks and

properly maintained as required under the Settlement. The evidence presented established Brooks

requested access to the Molds in early 2013, but Defendants were unwilling to allow such access

until a collateral surrender agreement releasing Defendants from liability had been signed.

5

Accordingly, she filed this action without the ability to inspect the Molds. Defendants can not

reasonably claim Brooks filed this action in bad faith because she had no facts to support this theory

when Defendants themselves deprived her of access to the Molds and to the necessary facts. In any

event, Defendants admit part of the “Fighting Back” mold was not timely transferred to Park, a

discrepancy the court subsequently found to be inconsequential and without resulting damages. 

Brooks I, 2016 WL 1056977, at *5. However, Defendants’ failure to transfer possession of all of

the Molds to Parks by November 16, 2011, was a breach of the Settlement and unequivocally

establishes Brooks was justified in filing her claims based on missing Molds.

The court finds the evidence establishes there is no genuine issue of material fact that Brooks

honestly believed she had legitimate grounds for filing this lawsuit and was, in fact, so justified. 

Additionally, the court finds it commercially reasonable for a secured party to challenge agreements

through which a security interest is created where evidence supporting such challenge exists. 

Accordingly, the court finds, as a matter of law, Brooks filed this lawsuit in good faith and did not

violate Chapter 9 of the UCC by doing so. 

5This was in violation of the Settlement which required Defendants to authorize and direct

Parks to “provide Brooks (or her designated agent) with access to view and inspect the Molds at any

time during business hours.” (Hahs 2014 Decl. Ex. A at 12.)

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3. Legally Barred

Caswell Sculptures contends Brooks’s claims were legally barred by the doctrine of election

of remedies, as well as the release and waiver of the claims found in paragraph 18 of the Settlement,

and therefore, could not have been filed in good faith. The mere existence of a defense does not

make the filing of a claim in bad faith.

The defenses Caswell Sculptures relies on are based on Brooks’s claims and the terms of the

Settlement, Note, and Agreement. While Caswell Sculptures asserts these defenses clearly barred

Brooks’s claims from the time the action was filed, they failed to move for dismissal of the lawsuit

on these grounds.

Caswell Sculpture asserts the doctrine of election of remedies bars a party from seeking to

set aside a contract while retaining the benefits of the contract. However, Brooks alleged, in part,

that Defendants violated the terms of the Settlement by failing to transfer all of the Molds to Parks

in a timely manner and sought damages related thereto. This claim does not violate the election of

remedies doctrine. Additionally, Brooks alleged a tort claim and statutory claim which do not

directly implicate the election of remedies doctrine. Finally, the defenses of release and waiver are

based on the terms of the Settlement, a document Brooks claims she was fraudulently induced to

sign. To the extent Brooks’s claims for fraud and misrepresentation were filed in good faith, the

defenses of release and waiver could not serve to bar the lawsuit until Brooks’s claims, and the

validity of the Settlement, were resolved.

The UCC authorizes a secured party to initiate cumulative remedies concurrently or in

whatever order they deem appropriate. However, the initiation of such remedies must still be made

in good faith. Any reasonable trier of fact would find, based on the information available to Brooks

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at the time she filed this lawsuit, that Brooks acted with honesty in fact and in a commercially

reasonably manner.6 Caswell Sculptures’s assertion of defenses which related to only some of

Brooks’s claims or required resolution of Brooks’s fraud and misrepresentation claims did not

legally bar this lawsuit ab initio or alter the conclusion this lawsuit was filed in good faith and in

accordance with the provisions of the UCC. 

II. Failure to Accept Molds

Caswell Sculptures alleges “Brooks breached her obligation of good faith, as the secured

creditor and she acted in a commercially unreasonable manner, when she refused, without excuse,

to accept the collateral serving as the sole remedy for the payment default.” (Defs.’ Answer ¶ 90.) 

Brooks argues her obligation of good faith under the UCC with regard to the Molds is not triggered

until, and unless, she possesses or attempts to sell the Molds. Alternatively, Brooks claims her

refusal to accept possession of the Molds prior to resolution of this lawsuit complies with her good

faith obligations under the UCC.

Brooks’s argument that she had no obligation with regard to the Molds until she took

possession of them is grounded primarily in OR. REV. STAT. 79.0207, which requires a secured party

to “use reasonable care in the custody and preservation of collateral in the secured party’s

possession.” Brooks also references other provisions which govern a secured party’s disposition of

collateral. See OR. REV. STAT. 79.0610 (2016) (every aspect of disposition of collateral must be

commercially reasonable); OR. REV. STAT. 79.0627 (2016) (setting forth factors used to determine

if disposition of collateral was commerciallyreasonable). These provisions relate solelyto a secured

6This finding is limited to a good faith analysis under the UCC and is not applicable to any

claim under OR. REV. STAT. 31.230 or Rule 11 of the Federal Rules of Civil Procedure.

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party’s obligations with regard to collateral already in its possession.

Caswell Sculptures impliedly concedes Brooks does not have actual possession of the Molds

by arguing Brooks has had the functional equivalent of possession since the default in September

2012. Caswell Sculptures contends once the default occurred, it had no right to move the Molds or

use them in any way, giving Brooks constructive possession of the Molds. This contention is belied

by the express provisions of the Agreement,7 which provide that despite the requirement the Molds

be stored at Parks, Caswell Sculptures retained sole ownership in the Molds with the exclusive right

to use, but not sell or otherwise encumber, the Molds. Additionally, Caswell Sculptures retained the

right to cast sculptures from the Molds. The net proceeds derived from the sale of such sculptures

would be paid to Brooks and credited to the amount due under the Note. Caswell Sculptures retained

these rights even after default until such time as Brooks enforced her rights under the Agreement or

foreclosed on her security interest. In other words, Caswell Sculptures retained the right to cast

sculptures from the Molds despite the payment default. The court finds Brooks is not in constructive

possession of the Molds and the provisions in Chapter 9 governing the disposition and sale of

collateral are not applicable here. 

While the provisions Brooks relies on set forth a secured party’s obligation to preserve and

care for collateral in its possession, they do not address the issue currently before the court: a

secured party’s responsibility to exercise its rights with regard to the collateral – specificallythe right

to take possession – within a reasonable period of time. Neither party has identified a provision in

Chapter 9 that requires a secured party to take possession of collateral within a reasonable time.

7The Agreement expressly referenced and incorporated the Settlement provisions in which

some of this language is found.

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The language of OR. REV. STAT. 79.0625 expressly applies only when “a secured party is

not proceeding in accordance with this chapter.” In the absence of a provision in Chapter 9 requiring

a secured creditor to take possession of collateral in a timely manner, Caswell Sculptures has no

claim under OR. REV. STAT. 79.0625 based Brooks’s failure to accept possession of the Molds. 

Caswell Sculptures argues the language of OR. REV. STAT. 79.0625 authorizing a court to order the

“collection” of collateral is clear evidence the provision applies to situations where a secured party

has not taken possession of the collateral. However, Caswell Sculptures ignores possible scenarios

in which a court could order collection of the collateral on behalf of a debtor. For example, OR.

REV. STAT. 79.0623 provides debtors a right to redeem collateral by fulfilling their underlying

obligation. In the event the secured party failed to return possession of the collateral to the debtor

after fulfillment of the debt, the court could, under OR. REV. STAT. 79.0625, enter an order allowing

the debtor to collect the collateral from the secured party. In light of this alternative scenario, the

court finds the use of the word “collect” in OR. REV. STAT. 79.0625 does not necessarily impose a

duty on a secured party to collect the collateral. Moreover, Chapter 9 provides that upon default, a

secured party “may take possession of the collateral” implying the absence of a duty to take such

possession. OR. REV. STAT. 79.0609. Had the legislature intended to create such a duty, it would

have used the mandatory term “shall” rather then the permissive term “may.” 

Caswell Sculptures offers case law which it claims establishes a requirement a secured party

take possession of collateral in a timely manner under Chapter 9. The cases cited by Caswell

Sculptures all involved secured parties who obtained possession of the collateral but subsequently

failed to handle the collateral in a commercially reasonable manner and are inapposite to the issue

here. Jefferson Loan Co., Inc. v. Session, 397 N.J. Super. 520, 543 (2008)(auto finance company

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repossession of automobile upon purchaser’s default and delivery to dealer rather than sale was

commercially unreasonable); United States v. R.T. Enterprises, Inc., No. 97-1118-WEB, 1998 WL

166568, at *3 (D. Kan. Jan. 6, 1998)(debtor may assert as defense to secured party’s action for

unpaid balance of note and guaranty secured party’s failure to liquidate seized accounts receivable

commercially reasonable manner); John Deere Leasing Co. v. Fraker, 395 N.W.2d 885, 886

(1986)(genuine issue of fact existed with regard to commercial reasonableness of secured party’s

delay of sale of harvester combine repossessed in May 1983 to January 1984, when combines were

difficult to sell and generated reduced prices); Matter of Deephouse Equip. Co., Inc., 38 B.R. 400,

405 (1984)(secured party’s repossession and retention of collateral for over three years with no

serious attempts to sell the collateral was not commercially reasonable.)

Brooks did not take possession of the Molds and has no obligation to maintain or dispose of

the Molds in a timely manner. Inclusion of the word “collect” in OR. REV. STAT. 79.0625 does not

necessarily impose a duty on a secured party to collect the collateral in light of other possible

scenarios giving effect to the word and the use of the permissive term “may” in Chapter 9 with

regard to a secured party’s ability to possess collateral upon default. The cases relied on by Caswell

Sculptures address scenarios in which the secured party repossessed or seized the collateral and do

not provide the court with any guidance on the issue at hand, and Caswell Sculptures has failed to

offer any cases finding a secured party has an obligation under Chapter 9 to take possession of

collateral in a timely manner. Consequently, the court finds Chapter 9 does not impose such

requirement. Caswell Sculptures has no action under OR. REV. STAT. 79.0625 for Brooks’s failure

to take possession of the Molds. In the absence of such action, the court need not consider whether

Brooks’s actions with regard to the Molds were in good faith.

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Conclusion

Brooks’s motion for summary judgment on Caswell Sculptures’s counterclaim under the

UCC (ECF No. 185) is GRANTED.

DATED this 28th

 day of December, 2016.

 /s/ John V. Acosta 

 JOHN V. ACOSTA

United States Magistrate Judge

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