Court Opinion

ID: 9905086
Source: CourtListenerOpinion
Date Created: 2023-11-28 18:11:13.916502+00
Date Added: 2024-06-11T09:21:24.352349
License: Public Domain

No. 28                        October 12, 2023                                457

               IN THE SUPREME COURT OF THE
                     STATE OF OREGON

                    Pattyann LARSEN,
                    Petitioner on Review,
                              v.
                      SELMET, INC.,
                   Respondent on Review.
          (CC 19CV34867) (CA A175393) (SC S069895)

    On review from the Court of Appeals.*
    Argued and submitted June 22, 2023.
  Kevin T. Lafky, Lafky & Lafky, Salem, argued the cause
and filed the brief for petitioner on review. Also on the brief
was James P. Francis, Salem.
   Mark A. Crabtree, Jackson Lewis, P.C., Portland, argued
the cause and filed the brief for respondent on review.
    Stephen A. Raher, Leonard Law Group LLC, Portland,
filed the brief for amici curiae Oregon’s Chapter 7 Bankruptcy
Trustees. Also on the brief was Justin D. Leonard, Portland.
  Before Flynn, Chief Justice, and Duncan, Garrett, DeHoog,
Bushong, and Masih, Justices, and Nakamoto, Senior Judge,
Justice pro tempore.**
    BUSHONG, J.
   The decision of the Court of Appeals is reversed. The
judgment of the circuit court is reversed, and the case is
remanded to the circuit court for further proceedings.

______________
    * Appeal from Linn County Circuit Court, Michael B. Wynhausen, Judge.
322 Or App 227, 519 P3d 164 (2022).
    ** James, J., did not participate in the consideration or decision of this case.
Walters, Senior Judge, Justice pro tempore, participated in oral argument, but
did not participate in the consideration or decision of this case.
458   Larsen v. Selmet, Inc.
Cite as 371 Or 457 (2023)                                  459

        BUSHONG, J.
          In this civil case, we must determine the appropri-
ate standard for deciding a motion to substitute the real
party in interest as the plaintiff under ORCP 26. Plaintiff
filed employment discrimination and other claims against
her former employer shortly after her debts had been dis-
charged by the federal bankruptcy court, but she had failed
to list those claims as assets in her bankruptcy case. The trial
court granted defendant’s motion for summary judgment,
concluding that the bankruptcy trustee—not plaintiff—
was the real party in interest. The court then denied plain-
tiff’s motion to substitute the bankruptcy trustee as the
plaintiff and dismissed the case based on its conclusion that
plaintiff’s attempt to pursue this action in her own name
was not an “honest and understandable mistake.” The Court
of Appeals affirmed, concluding that the trial court had
not abused its discretion in denying substitution. Larsen v.
Selmet, Inc., 322 Or App 227, 242, 519 P3d 164 (2022).
         We allowed review and now reverse. Under ORCP
26 A, a motion to substitute the real party in interest as
the plaintiff, if granted, would require plaintiff to amend
the complaint under ORCP 23 A. We have interpreted the
standard specified in that rule—leave to amend “shall be
freely given when justice so requires”—to mean that leave
to amend should be granted absent any unfair prejudice to
the nonmoving party. The text, context, and legislative his-
tory of ORCP 26 A confirm that the standards governing
leave to amend the pleadings under ORCP 23 A also apply
in deciding whether to allow substitution of the real party in
interest under ORCP 26 A. Defendant does not contend that
it would be unfairly prejudiced if the bankruptcy trustee
were to be substituted as the plaintiff in this case. We con-
clude that, because the trial court applied the wrong legal
standard, it abused its discretion in denying substitution
and dismissing this case.
        I. FACTS AND PROCEEDINGS BELOW
        We take the historical facts from the trial court’s
findings and from the undisputed facts contained in the
record on defendant’s summary judgment motion and
460                                    Larsen v. Selmet, Inc.

plaintiff’s motion to substitute, as summarized by the Court
of Appeals.
A. Historical Facts
         Plaintiff, who is allergic to latex, alleged that she
was repeatedly exposed to the material while working for
defendant. Larsen, 322 Or App at 228. On February 24, 2019,
plaintiff decided to pursue a civil action against defendant,
and she stopped working for defendant the following day.
Plaintiff consulted with a law firm specializing in employ-
ment law and entered into an official representation agree-
ment with the firm in March. Id.
         On April 12, 2019, plaintiff—represented by a dif-
ferent lawyer, one who specializes in bankruptcy law—filed
a petition for Chapter 7 bankruptcy. Under federal bank-
ruptcy rules, plaintiff was required to disclose on her asset
schedule any existing claims that she had against third
parties, regardless of whether litigation had been filed
or demands had been made, but she did not disclose her
employment claims against defendant. Id. at 228-29.
         On April 17, 2019—five days after plaintiff had
filed the bankruptcy petition—plaintiff’s employment coun-
sel sent a demand letter to defendant, stating that plaintiff
intended to file an action in state court alleging numerous
claims, including disability discrimination and workers’
compensation retaliation. Id. at 229.
         On July 15, 2019, the federal bankruptcy court dis-
charged plaintiff’s debts and closed her bankruptcy case.
Shortly thereafter, on August 8, 2019, plaintiff filed the cur-
rent action against defendant in circuit court, alleging three
claims of disability discrimination and one claim of workers’
compensation retaliation. Id.
         Six months later, the United States Trustee moved
to reopen plaintiff’s bankruptcy case to allow for adminis-
tration of the claims against defendant. The federal bank-
ruptcy court granted the motion and appointed Vanesa
Pancic as trustee. On February 20, 2020, plaintiff amended
her bankruptcy asset schedule to list her claims against
defendant as assets. Id.
Cite as 371 Or 457 (2023)                                                     461

B.       Procedural Facts
         In this case, defendant moved for summary judg-
ment on August 21, 2020—six months after plaintiff had
amended her bankruptcy schedule—contending, among
other things, that plaintiff’s bankruptcy filing had divested
her of standing to pursue the claims in her complaint, that
plaintiff was not the real party in interest, and that plain-
tiff was judicially estopped from bringing claims that she
had not disclosed in the original asset schedule filed in the
bankruptcy court. Id.
         Plaintiff responded by arguing against judicial
estoppel and claiming that, because she had amended her
bankruptcy schedule, she “[was] a real party in interest in
this case” and “ha[d] standing to proceed.” Plaintiff also
filed a declaration by Pancic, the bankruptcy trustee, in
which Pancic asserted that the claims were the property of
the bankruptcy estate. Id. at 229-30.
         The trial court granted summary judgment, con-
cluding that plaintiff was not the real party in interest
and lacked standing. The court granted plaintiff’s request
for leave to file a motion to substitute, and plaintiff filed
a motion to substitute the bankruptcy trustee as plaintiff
in this action. After defendant responded, opposing the
motion, plaintiff filed a supplemental declaration in reply,
in which she attested that she “did not realize that the law-
suit against Defendant was an asset when [she] filed [her]
bankruptcy petition” and that she had “made an honest and
understandable mistake” and “did not have the intent to
deceive the Court.” Id. at 230.
         The trial court denied plaintiff’s motion to substi-
tute. In doing so, the court interpreted ORCP 26 A1—which
     1
       ORCP 26 A provides:
     “Every action shall be prosecuted in the name of the real party in inter-
     est. An executor, administrator, guardian, conservator, bailee, trustee of an
     express trust, a party with whom or in whose name a contract has been made
     for the benefit of another, or a party authorized by statute may sue in that
     party’s own name without joining the party for whose benefit the action is
     brought; and when a statute of this state so provides, an action for the use or
     benefit of another shall be brought in the name of the state. No action shall
     be dismissed on the ground that it is not prosecuted in the name of the real
     party in interest until a reasonable time has been allowed after objection for
462                                                 Larsen v. Selmet, Inc.

requires that every action be prosecuted in the name of the
real party in interest—as allowing the court to deny substi-
tution of the real party in interest if the court was not per-
suaded that the plaintiff made “an honest and understand-
able mistake.” Id. The court decided not to allow substitution
because it believed that plaintiff’s filing of the action in her
own name was “a calculation to discharge her debts prior
to going forward with the lawsuit, and to allow herself to
reap the benefits of the lawsuit while at the same time dis-
charging her debts.” The court entered a general judgment
dismissing plaintiff’s claims. Id. at 231.
        Plaintiff appealed. Her sole assignment of error on
appeal addressed the denial of her ORCP 26 A motion to
substitute the bankruptcy trustee as the plaintiff, and she
contended that the trial court abused its discretion by deny-
ing substitution and dismissing the case. Plaintiff argued
that she had made an honest and understandable mistake
when she did not include her employment claims as assets
in her bankruptcy schedules.
         In response, defendant argued that the trial court’s
determination was an appropriate exercise of the court’s
discretion under ORCP 34, which provides the trial court
with discretion to allow party substitutions. Defendant
argued that it would not have been objectively difficult for
plaintiff to determine that the bankruptcy estate was the
correct party to bring the employment action, particularly
given that plaintiff was represented by counsel at every step
and had an affirmative duty to disclose potential claims in
her bankruptcy petition.
         Plaintiff replied, arguing that the trial court had
applied an incorrect legal standard in denying substitution.
She also contended that the trial court had failed to focus
its inquiry on whether she had engaged in deliberate tacti-
cal maneuvering and that the court failed to consider that
she had reopened her bankruptcy matter before defendant
raised the issue of standing without gaining any benefits

   ratification of commencement of the action by, or joinder or substitution of,
   the real party in interest; and such ratification, joinder, or substitution shall
   have the same effect as if the action had been commenced in the name of the
   real party in interest.”
Cite as 371 Or 457 (2023)                                                       463

from her omission. Plaintiff contended that that proved that
her omission had been an honest mistake.
C. The Court of Appeals Decision
        The Court of Appeals affirmed the trial court, apply-
ing ORCP 26 A without reaching defendant’s arguments
under ORCP 34 or the issue of judicial estoppel. Larsen, 322
Or App at 232. After broadly surveying federal case law and
applying the standard articulated in Feist v. Consolidated
Freightways Corp., 100 F Supp 2d 273 (ED Pa 1999), aff’d,
216 F3d 1075 (3d Cir 2000), cert den, 532 US 920 (2001), in
addressing the analogous federal rule, FRCP 17(a)(3),2 the
court concluded that the trial court had discretion to deny
substitution and dismiss the action if it was not persuaded
that the plaintiff had made an “honest mistake.” Larsen,
322 Or App at 233-35, 239.
         The court affirmed the trial court’s conclusion that
plaintiff in this case had not made an honest mistake, and
concluded that, when a plaintiff acts “dishonestly” in bring-
ing an action in her own name, the trial court has discretion
under ORCP 26 A to deny substitution and dismiss the case
“even in the absence of established prejudice to the defen-
dant.” Id. at 240-41. Plaintiff petitioned for review, which we
allowed.
                               II. ANALYSIS
         At the threshold, we must determine the applicable
standard of review. In reviewing a court’s denial of leave
to amend under ORCP 23 A, we have applied an abuse of
discretion standard. Eklof v. Persson, 369 Or 531, 537, 508
P3d 468 (2022). Under ORCP 26 A, a motion to substitute
the real party in interest as the plaintiff, if granted, would
require a plaintiff to amend the complaint under ORCP
23 A. Thus, because ORCP 23 A is implicated through a
    2
     FRCP 17(a)(3) provides:
        “Joinder of the Real Party in Interest. The court may not dismiss an action
   for failure to prosecute in the name of the real party in interest until, after
   an objection, a reasonable time has been allowed for the real party in interest
   to ratify, join, or be substituted into the action. After ratification, joinder, or
   substitution, the action proceeds as if it had been originally commenced by
   the real party in interest.”
(Emphases added.)
464                                    Larsen v. Selmet, Inc.

plaintiff’s ORCP 26 A motion to substitute, we review a
court’s denial of leave to substitute a real party in interest
as plaintiff for abuse of discretion, just as we would review a
court’s denial of leave to amend. That discretion is bounded
by the text of ORCP 26 A, which directs that “[n]o action
shall be dismissed on the ground that it is not prosecuted
in the name of the real party in interest until a reasonable
time has been allowed after objection for * * * substitution
of[ ] the real party in interest[.]” The meaning of the text of
ORCP 26 A is an issue of statutory interpretation, which we
resolve by our usual method, looking to the rule’s text and
context, along with its legislative history to the extent we
deem appropriate. Eklof, 369 Or at 539 (applying standard
in interpreting ORCP 23 A). We begin with the text of ORCP
26 A.
A.    Textual Analysis and the Parties’ Contentions
         The critical text of ORCP 26 A, quoted above, pre-
cludes dismissal of an action on the ground that it has not
been brought in the name of the real party in interest until
“a reasonable time” is given for substitution of the real party
in interest. Defendant did not seek dismissal on the ground
that plaintiff did not seek substitution within a “reasonable
time,” and the courts below did not address the timing of
plaintiff’s request. Aside from the timing of the request,
ORCP 26 A does not specify the standards a court must
apply in deciding whether to dismiss or allow substitution
of the real party in interest. And notably, the rule does not
describe the procedural steps a party must follow if a court
decides to allow substitution of the real party in interest.
         Plaintiff and amici bankruptcy trustees contend
that the absence of a standard in ORCP 26 A means that a
trial court must grant a request for substitution as a matter
of course if the request is made within a “reasonable time.”
Alternatively, they contend that we should adopt the test
used by the Second Circuit in Klein v. Qlik Technologies,
Inc., 906 F3d 215 (2d Cir 2018), in applying FRCP 17(a)(3),
and the judicial estoppel principles articulated by the Ninth
Circuit in Ah Quin v. County of Kauai Dept. of Transp., 733
F3d 267 (9th Cir 2013). Those federal cases, they argue,
require the court to focus on whether substitution would be
Cite as 371 Or 457 (2023)                                 465

prejudicial to defendant, not on whether plaintiff had made
an honest or understandable mistake.
         In response, defendant agrees that we should inter-
pret ORCP 26 A in the same way the federal courts have
interpreted FRCP 17(a)(3), but defendant contends that the
test applied by the federal district court in Feist and adopted
by the courts below in this case is the appropriate standard,
and that judicial estoppel principles are irrelevant to the
inquiry under ORCP 26 A.
         We disagree with the contention by plaintiff and
amici that a timely request for substitution must be granted
as a matter of course, because, as explained below, ORCP 26 A,
read in context of the Oregon Rules of Civil Procedure,
allows courts, in their discretion, to deny substitution and
dismiss the case if granting leave to substitute would be
unfairly prejudicial to the opposing party. It is not necessary
for us to address the standards applied by federal courts in
deciding whether to allow substitution of the real party in
interest under FRCP 17(a), because our analysis of the text,
context, and legislative history of ORCP 26 A leads us to
resolve this case under existing Oregon law. We turn to the
rule’s context.
B.   Context of ORCP 26 A
         In construing ORCP 23 A in Eklof, we noted that
that rule “operates within the context of a larger structure of
pleading standards and procedures set forth in the Oregon
Rules of Civil Procedure.” 369 Or at 540. The same is true of
ORCP 26 A. Because ORCP 26 A does not specify the stan-
dards or procedural steps for substituting the real party in
interest as the plaintiff, we begin by looking to other rules
within that “larger structure.”
         Under ORCP 13 B, the complaint is a required
pleading, and ORCP 16 A requires the caption of the com-
plaint to include “the names of all the parties[.]” See also
ORCP 16 B (stating that, unless a party is allowed to use
a pseudonym, each party “must be identified [in a plead-
ing] by the party’s name”). Thus, if the real party in inter-
est—here, the bankruptcy trustee—is to be substituted for
the plaintiff named in the original complaint, the complaint
466                                    Larsen v. Selmet, Inc.

must be amended to name the bankruptcy trustee as the
new plaintiff. Amending a complaint is governed by ORCP
23 A, which states that a party can amend a pleading once
as a matter of course before a responsive pleading is served
or within 20 days if no responsive pleading is permitted.
Otherwise, “a party may amend the pleading only by leave
of court or by written consent of the adverse party[.]” ORCP
23 A. That rule states the standard for deciding whether to
grant leave to amend absent consent of the adverse party:
“[L]eave shall be freely given when justice so requires.”
         We have interpreted that standard to mean that
leave to amend should be granted unless allowing the
amendment would be unfairly prejudicial to the nonmoving
party. See Eklof, 369 Or at 538 (stating that “the key inquiry
driving the exercise of discretion under ORCP 23 A is the
extent of prejudice to the adverse party”); C.O. Homes, LLC
v. Cleveland, 366 Or 207, 216, 460 P3d 494 (2020) (“[T]he gra-
vamen of the inquiry is whether allowing a pretrial amend-
ment would unduly prejudice the opposing party.”). Focusing
on prejudice to the adverse party is consistent with ORCP
12 B (“The court shall, in every stage of an action, disregard
any error or defect in the pleadings or proceedings which
does not affect the substantial rights of the adverse party.”),
and allowing substitution absent unfair prejudice instead of
dismissing the action is consistent with ORCP 1 B (“These
rules shall be construed to secure the just, speedy, and inex-
pensive determination of every action.”).
         Other rules are somewhat helpful as context even
though they do not directly apply to the situation presented
here. For example, the rules governing joinder demonstrate
a preference for amending the pleadings over dismissal.
ORCP 28 A describes the circumstances in which persons
“may join in one action as plaintiffs”; ORCP 29 A describes
the circumstances in which joinder is required; and
ORCP 30—which addresses misjoinder and nonjoinder of
parties—provides that misjoinder “is not ground for dis-
missal” and that parties “may be dropped or added by order
of the court * * * on such terms as are just.” Those rules are
not directly applicable because the issue in this case is sub-
stitution of a party, not joinder (or misjoinder or nonjoinder)
Cite as 371 Or 457 (2023)                                                    467

of a party.3 But they do suggest that substitution, like join-
der, is preferred over dismissal of the action.
          The rule that addresses substitution of parties
(including a substitution based on a transfer of the origi-
nal party’s interests), ORCP 34, provides similar guidance.
ORCP 34 E states that, “[i]n case of any transfer of interest,
the action may be continued by or against the original party,
unless the court upon motion directs the person to whom
the interest is transferred to be substituted in the action or
joined with the original party.” By filing a petition in bank-
ruptcy, plaintiff’s “interest” in the action is, as a matter of
federal law, effectively transferred to the bankruptcy trustee
by operation of bankruptcy law. See 11 USC § 541(a)(1)
(upon filing petition in bankruptcy, claims become prop-
erty of the bankruptcy estate); 11 USC § 323(a), (b) (trustee
becomes real party in interest of claims upon filing a bank-
ruptcy petition). That suggests that the bankruptcy trustee
could be “substituted in the action” under either ORCP 26 A
or ORCP 34 E. ORCP 34 G describes, in part, the procedure
to be followed, stating that a motion for substitution “may be
made by any party, * * * or the successors in interest of the
transferor[,]” but the rule itself does not describe the stan-
dards by which a motion for substitution should be decided.
         Again, however, substitution of a party as plaintiff—
whether it is an ORCP 26 A substitution of the bankruptcy
trustee as the real party in interest or an ORCP 34 E substi-
tution of the bankruptcy trustee as the successor in interest
by operation of law—would require the filing of an amended
complaint. Thus, the text and context of ORCP 26 A sug-
gest that the standard for addressing a motion for leave to
amend the complaint under ORCP 23 A should also apply
to a request to substitute the real party in interest as the
plaintiff. We turn to the legislative history of ORCP 26 A to
see whether that sheds any additional light on the intent of
the drafters of that rule.
    3
      “Joinder” under ORCP 28 refers to multiple persons who “join in one action”
as either plaintiffs or defendants, while “substitution” under ORCP 34 involves
replacing an existing party with a new party. Similarly, “misjoinder” under
ORCP 30 refers to the joinder of a party who should not have been joined, while
“nonjoinder” refers to the failure to join a party who should have been joined. See
Charles Alan Wright et al, 7 Federal Practice and Procedure § 1683, 509 (4th ed
2019) (defining “misjoinder” and “nonjoinder”).
468                                                Larsen v. Selmet, Inc.

C. Legislative History
         ORCP 26 A was drafted by the Council on Court
Procedures (CCP) as part of the promulgation of the Oregon
Rules of Civil Procedure in 1978. Those rules were adopted
by the legislature in 1979 and took effect on January 1,
1980. ORCP 26 replaced and expanded on former ORS
13.030 (1979), repealed by Or Laws 1979, ch 284, § 199.4 In
describing ORCP 26 A, the CCP stated that “[a]n objection
of lack of a real party in interest is raised by a motion to
dismiss or responsive pleading under Rule 21, but this rule
directs the court to allow any defect to be cured by ratifica-
tion, joinder, or amendment rather than dismiss the case.”
Exhibit D, House Committee on Judiciary, HB 3131, Mar 1,
1979 (Council on Court Procedures: Summary of Rules 22
and 24-34) (emphasis added). CCP later confirmed that the
rule “is based upon Federal Rule 17(a) but is generally the
same as [former] ORS 13.030.” Council on Court Procedures,
Staff Comment to Rule 26, reprinted in Frederic R. Merrill,
Oregon Rules of Civil Procedure: A Handbook 51 (1981).
         Professor Frederic Merrill from the CCP testified
in the legislature that ORCP 26 was based on “the federal
version of the real party in interest rule.” Tape Recording,
House Committee on Judiciary, HB 3131, Mar 1, 1979, Tape
15, Side 2 (statement of Professor Frederic Merrill). He also
stated that
   “the reason the federal version was used was primarily the
   last sentence, which provides a rational way of dealing with
   real party in interest objections. Under the existing law,
   you can have a real party in interest objection leading to
   a dismissal of a case. Although it is raised by a motion to
   dismiss under Rule 21, the treatment of it is under this
   rule and the court is required to allow reasonable time to

   4
     Former ORS 13.030 (1979) stated:
   “Every action or suit shall be prosecuted in the name of the real party in
   interest, except that an executor or an administrator, a trustee of an express
   trust, or a person expressly authorized to sue by statute, may sue without
   joining with him the person for whose benefit the action or suit is prosecuted.
   A person with whom, or in whose name a contract is made for the benefit of
   another, is a trustee of an express trust within the meaning of this section.
   This section does not authorize the assignment of a thing in action not aris-
   ing out of contract.”
Cite as 371 Or 457 (2023)                                              469

   correct what is essentially a technical defect rather than dis-
   miss the case. The problem, of course, being that if a case
   got dismissed on this basis you may have a limitations dif-
   ficulty, and it would be rather unfair to have someone lose
   their rights because of a technical deficiency in naming the
   plaintiff.”
Id. (emphases added). That statement shows that the CCP
intended that courts apply ORCP 26 leniently and liberally
to substitute real parties in interest instead of dismissing
cases altogether.
        In Eklof, we noted that the legislative history of
ORCP 23 A showed that that rule had been modeled in
part on FRCP 15(a) (1976). 369 Or at 540. Accordingly, in
interpreting ORCP 23 A, we “turn[ed] to Supreme Court
cases interpreting FRCP 15(a) prior to the promulgation of
the Oregon Rules of Civil Procedure in 1978.” Id. at 541.
The same analytical approach leads us to look to Supreme
Court cases interpreting FRCP 17(a)—the federal rule that
is analogous to ORCP 26 A—before the promulgation of the
Oregon Rules of Civil Procedure in 1978. Two cases provide
some guidance.
        In United States v. Aetna Casualty & Surety Co., 338
US 366, 381, 70 S Ct 207, 94 L Ed 171 (1949), the Court
stated that FRCP 17(a), promulgated in 1937, “was taken
almost verbatim from Equity Rule 37.”5 However, the provi-
sion prohibiting dismissal until a reasonable time has been
allowed for substituting the real party in interest was not
included in the original rule; that provision was added in
1966 “simply in the interests of justice.” FRCP 17(a) Notes
of Advisory Committee on 1966 amendments, reprinted in
James Wm. Moore, 4 Moore’s Federal Practice, § 17App04[2],
§ 17App-5 (3d ed 2018). That provision was meant to “keep[ ]
pace with the law as it [was] actually developing,” because
decisions around that time were becoming more lenient
when an honest mistake was made in choosing the party
    5
      FRCP 17(a) differs from Equity Rule 37 in one respect. Equity Rule 37
stated that a party had to be “expressly” authorized by statute to sue in its
own name without joining the person for whose benefit the action was brought,
whereas FRCP 17(a) does not require “express” authorization. FRCP 17(a) 1937
Notes of Advisory Committee on Rules, reprinted in James Wm. Moore, 4 Moore’s
Federal Practice, § 17App01[2], § 17App-1 (3d ed 2018).
470                                                Larsen v. Selmet, Inc.

in whose name the action was to be filed. Id. The Advisory
Committee also stated that the 1966 addition was “intended
to insure against forfeiture and injustice—in short, to codify
in broad terms the salutary principle of Levinson v. Deupree,
345 US 648, [73 S Ct 914,] 97 L Ed [2d] 1319 (1953).” Id.
         In Levinson, the administrator of the decedent’s
estate filed a wrongful death action in federal court sitting
in admiralty after the decedent was killed in a boat collision.
The district court dismissed the action because the adminis-
trator had filed the lawsuit at a time when his appointment
was void, and the court declined to allow the administrator
to amend the complaint after the administrator’s appoint-
ment became valid, concluding that, under Kentucky law,
such an amendment would not relate back so the claim was
barred by the applicable statute of limitations. 345 US at
649-50. The Court of Appeals reversed, and the Supreme
Court affirmed the Court of Appeals, holding that the motion
to amend was governed not by Kentucky law, but by Rule 23
of the Rules of Practice in Admiralty and Maritime Cases,
which would have allowed the amendment.6 Id. at 652. The
Court explained that a federal court sitting in admiralty was
not “imprisoned by procedural niceties [of state law] relating
to amendments of pleadings.” Id. at 651.
         The history of FRCP 17(a) before the promulga-
tion of the Oregon Rules of Civil Procedure in 1978 pro-
vides some helpful, but somewhat conflicting, guidance. On
the one hand, the Advisory Committee notes to the 1966
amendments suggest that the federal rule was designed to
prevent dismissal “when an honest mistake has been made.”
On the other hand, by stating that the rule was intended to
“codify in broad terms the salutary principle” of Levinson—
which involved leave to amend a pleading—the Advisory
    6
     Rule 23 of the Admiralty Rules stated:
        “In all informations and libels in causes of admiralty and maritime juris-
   diction, amendments in matters of form may be made at any time, on motion
   to the court, as of course. New counts may be filed, and amendments in mat-
   ters of substance may be made, on motion, at any time before the final decree,
   on such terms as the court shall impose. Where any defect of form is set down
   by the respondent or claimant upon special exceptions, and is allowed, the
   court may, in granting leave to amend, impose terms on the libellant.”
Rule 23, Rules of Practice in Admiralty and Maritime Cases, reprinted in James
Wm. Moore, 29 Moore’s Federal Practice, § 701.04[3], § 701-59 (3d ed 2018).
Cite as 371 Or 457 (2023)                                       471

Committee may have intended that the standards govern-
ing leave to amend should be applied in addressing a motion
to substitute the real party in interest.
         The Advisory Committee note to the 1966 amend-
ments to FRCP 15—which, like ORCP 23, addresses amend-
ments to pleadings—provides some additional support for
lenient amendment over dismissal. That note states:
   “The relation back of amendments changing plaintiffs is
   not expressly treated in revised Rule 15(c) since the prob-
   lem is generally easier. Again the chief consideration of
   policy is that of the statute of limitations, and the attitude
   taken in revised Rule 15(c) toward change of defendants
   extends by analogy to amendments changing plaintiffs.
   Also relevant is the amendment of Rule 17(a) (real party in
   interest). To avoid forfeitures of just claims, revised Rule
   17(a) would provide that no action shall be dismissed on
   the ground that it is not prosecuted in the name of the real
   party in interest until a reasonable time has been allowed
   for correction of the defect in the manner there stated.”

FRCP 15 Notes of Advisory Committee on 1966 amend-
ments, reprinted in James Wm. Moore, 3 Moore’s Federal
Practice, § 15App04[2], § 15App-7 (3d ed 2018). Thus, the
Advisory Committee that proposed amendments to the fed-
eral rules in 1966 saw the connection between the rule on
amending the pleadings (FRCP 15) and the real party in
interest rule (FRCP 17(a)) and suggested that correcting
a “defect” in naming the real party in interest should be
allowed to “avoid forfeitures of just claims.”
         In sum, the legislative history of ORCP 26 A, the
Supreme Court cases interpreting the analogous federal
rule (FRCP 17(a)) before ORCP 26 A was adopted, and the
Advisory Committee notes on amendments to the analo-
gous federal rules adopted before the Oregon Rules of Civil
Procedure were promulgated in 1978, all support the propo-
sition that a request to substitute the real party in interest
requires an amendment to the pleadings, and that such a
request should be governed by the lenient standards gov-
erning leave to amend the pleadings to avoid dismissal or
forfeiture of just claims.
472                                                 Larsen v. Selmet, Inc.

D. Summary and Application to This Case
         The foregoing analysis of the text, context, and
legislative history of ORCP 26 A leads us to conclude that,
because a motion to substitute the real party in interest as
the plaintiff under ORCP 26 A, if granted, would require
plaintiff to amend her pleadings under ORCP 23 A, the stan-
dards governing a request for leave to amend under ORCP
23 A should apply. It is settled in Oregon that the main
inquiry in applying the standard stated in ORCP 23 A—
leave shall be freely granted when justice so requires—is
whether allowing the amendment would cause unfair preju-
dice to the nonmoving party. Applying that same standard
in determining whether to allow the real party in interest to
be substituted as the plaintiff makes sense in this context.
         The trial court and Court of Appeals, taking guid-
ance from some of the general principles federal courts have
articulated in addressing FRCP 17(a), focused on whether
plaintiff acted honestly and in good faith, and whether
her actions amounted to an understandable mistake.
Dismissing the case for what the trial court believed to be
plaintiff’s calculated decision to attempt to discharge her
debts in bankruptcy and then reap the benefits of pursuing
her employment claims attempts to punish the plaintiff for
dishonest conduct regardless of whether that conduct was
unfairly prejudicial to the defendant.
         The federal appellate courts addressing that spe-
cific scenario—a debtor failing to disclose or wrongly con-
cealing a claim during bankruptcy proceedings—have typ-
ically addressed the issue in deciding a motion to dismiss
or for summary judgment on judicial estoppel grounds, not
in deciding whether to allow substitution of the bankruptcy
trustee as the real party in interest.7 And the federal appel-
late courts have taken somewhat different approaches on
judicial estoppel in this context. In Ah Quin, for example,
    7
      The Second Circuit case cited by plaintiff stated in a different context—not
a claim concealed in a bankruptcy filing—that substitution of the real party in
interest under FRCP 17(a) “should be liberally allowed when the change is merely
formal and in no way alters the original complaint’s factual allegations” and that
substitution should be denied “if it is being proposed in bad faith or in an effort
to deceive or prejudice the defendants.” Klein, 906 F3d at 226 (internal quotation
marks omitted).
Cite as 371 Or 457 (2023)                                   473

the plaintiff brought employment discrimination claims
against her employer, filed for Chapter 7 bankruptcy protec-
tion while her employment action was pending, and failed
to list her employment discrimination claims in her bank-
ruptcy schedules. 733 F3d at 269. The district court granted
summary judgment to the defendant on judicial estop-
pel grounds, but the Ninth Circuit reversed. Id. The court
explained that, under New Hampshire v. Maine, 532 US 742,
753, 121 S Ct 1808, 149 L Ed 2d 968 (2001), judicial estoppel
may not apply “when a party’s prior position was based on
inadvertence or mistake,” Ah Quin, 733 F3d at 271, and a
“key factor” in determining what constituted “inadvertence
or mistake” in a bankruptcy filing was the fact that plaintiff
“reopened her bankruptcy proceedings and filed amended
bankruptcy schedules that properly listed [her employment]
claim as an asset.” Id. at 272.
          The Ninth Circuit acknowledged that its test for
determining whether the filing constituted “inadvertence
or mistake” “differ[ed] from the test articulated by most of
[its] sister circuits.” Id. at 277. The court explained that the
other circuits “have asked not whether the debtor’s omis-
sion of the pending claim from the bankruptcy schedules
was inadvertent or mistaken; instead, they have asked only
whether the debtor knew about the claim when he or she
filed the bankruptcy schedules and whether the debtor had
a motive to conceal the claim.” Id. at 271 (citing Eastman
v. Union Pacific R. Co., 493 F3d 1151, 1157 (10th Cir 2007),
and other cases). The court remanded the case to the trial
court to decide whether the debtor’s action was inadvertent
or mistaken under the Ninth Circuit’s standard. Ah Quin,
733 F3d at 279.
          The Fifth Circuit took a different approach in Reed v.
City of Arlington, 650 F3d 571, 579 (5th Cir 2011), holding that,
although judicial estoppel may preclude a debtor from bene-
fitting from a concealed claim, judicial estoppel simply did
not apply against a bankruptcy trustee who was substituted
as the real party in interest because “an innocent bankruptcy
trustee may pursue for the benefit of creditors a judgment or
cause of action that the debtor—having concealed that asset
during bankruptcy—is himself estopped from pursuing.” The
474                                    Larsen v. Selmet, Inc.

court explained that “estopping the trustee would unneces-
sarily deny the estate’s innocent creditors their right to seek
some share of the recovery.” Id. at 577.
         The Eleventh Circuit took another approach in
Parker v. Wendy’s Intern., Inc., 365 F3d 1268 (11th Cir
2004). In that case, the defendant moved to dismiss plain-
tiff Parker’s employment discrimination claim on judicial
estoppel grounds after discovering that Parker had failed to
disclose the claim in her Chapter 7 bankruptcy filings. Id.
at 1270. The trial court granted the motion, and the bank-
ruptcy trustee—who had intervened in the case—appealed,
contending that, even if judicial estoppel precluded Parker
from pursuing the claim, it should not bar the trustee from
pursuing the claim on behalf of Parker’s creditors. Id. at
1272. The Eleventh Circuit concluded that “judicial estoppel
should not be applied at all” because the bankruptcy trustee
“became the real party in interest in Parker’s discrimination
suit” when Parker filed her bankruptcy petition, so Parker
could not personally benefit from the claim and the trustee
“cannot now be judicially estopped from pursuing it.” Id.
          In any event, regardless of the approaches taken
by the various federal circuit courts on the issue of judicial
estoppel and even if estoppel might be available against
plaintiff under these facts, any need to penalize plaintiff
for conduct that the trial court believed was “calculated” or
otherwise “dishonest” or in bad faith could and should be
accomplished by preventing her from benefitting from her
conduct, rather than by denying substitution of the trustee
as the real party in interest. Although denying substitution
in this context might penalize plaintiff if resolution of her
claims yielded a surplus that went to her, denial primarily
penalizes plaintiff’s creditors by denying them any opportu-
nity for recovery. Dismissing the action based on the plain-
tiff’s “dishonesty” rather than allowing substitution thus
benefits defendant, thereby avoiding the resolution of poten-
tially just claims on the merits—contrary to the policy in
ORCP 1 B—even though defendant does not contend that it
would be unfairly prejudiced by substitution on these facts.
       As explained above, when addressing a motion to
amend a complaint to substitute the real party in interest,
Cite as 371 Or 457 (2023)                                 475

the intended focus of ORCP 26 A—like that of ORCP 23 A,
as we stated in Eklof—is whether substitution would be
unfairly prejudicial to the defendant, not whether the plain-
tiff’s conduct was “honest,” “understandable,” or otherwise
worthy of punishment. Depending on the context, whether a
plaintiff’s conduct was “honest” or “understandable” may be
a consideration for judicial estoppel or other mechanisms to
ensure that a plaintiff does not personally benefit from dis-
honest conduct, but it is not germane to deciding whether to
allow substitution of the real party in interest under ORCP
26 A. Because the trial court did not apply the correct stan-
dard, it abused its discretion in denying substitution of the
bankruptcy trustee as the plaintiff and dismissing this
action. See Espinoza v. Evergreen Helicopters, Inc., 359 Or
63, 116-17, 376 P3d 960 (2016) (trial court abuses its dis-
cretion if its decision is “guided by the wrong substantive
standard”).
                    III. CONCLUSION
         The primary consideration driving the exercise of
discretion in addressing a request to substitute the real
party in interest as the named plaintiff under ORCP 26 A
is determining whether allowing substitution would be
unfairly prejudicial to the adverse party. Here, the adverse
party is defendant. Defendant does not contend that it would
be unfairly prejudiced if substitution had been granted in
this case. Thus, because the trial court applied the wrong
standard, and because defendant would not be unfairly
prejudiced by substitution, the court abused its discretion in
denying substitution and dismissing this case.
        The decision of the Court of Appeals is reversed.
The judgment of the circuit court is reversed, and the case
is remanded to the circuit court for further proceedings.