Court Opinion

ID: 9786240
Source: CourtListenerOpinion
Date Created: 2023-08-30 23:51:34.791913+00
Date Added: 2024-06-11T07:36:43.187100
License: Public Domain

ORTEGA, J.,
concurring.
Despite my disagreement with the result reached by the majority, I concur because I believe we are bound by our decision in Perry v. Rein, 187 Or App 572, 582-83, 71 P3d 81 (2003) (Perry I), in which we treated the disposition of the underlying claim against plaintiff as a voluntary dismissal, rather than a settlement, despite the fact that the dismissal occurred in the context of a settlement. As a matter of law, a settlement is not a favorable termination for purposes of a wrongful initiation action. Gowin v. Heider, 237 Or 266, 279, 386 P2d 1 (1963), on reh’g, 391 P2d 630 (1964). Nevertheless, in Perry I, we applied the rule that the voluntary dismissal of an underlying action is favorable to the plaintiff in a wrongful initiation action if it reflects adversely on the merits of the underlying action, a determination that requires examination of the circumstances resulting in termination. Perry I, 187 Or App at 582. We concluded that the summary judgment record permitted competing inferences about the motivation for dismissing the claim against plaintiff, thereby creating issues of fact about whether the underlying action *135terminated in plaintiffs favor. Id. at 583. The majority opinion applies that same rule here.
If we were writing on a blank slate, however, I would hold as a matter of law that a dismissal that is required under a settlement agreement cannot qualify as a favorable termination, even when the wrongful initiation plaintiff was not a participant in the settlement. I write briefly to identify my concerns with the rule that a dismissal pursuant to a settlement such as the one at issue here may be treated as a favorable termination.
First, examining the motivation for a settlement conflicts with the strong policy in favor of settlements,1 particularly as that policy is embodied in OEC 408(1):
“(a) Evidence of furnishing or offering or promising to furnish, or accepting or offering or promising to accept, a valuable consideration in compromising or attempting to compromise a claim which was disputed as to either validity or amount, is not admissible to prove liability for or invalidity of the claim or its amount.
“(b) Evidence of conduct or statements made in compromise negotiations is likewise not admissible.”2
The purpose of that rule is to promote the public policy favoring the settlement of disputes. Cyberco Holdings, Inc. v. Con-Way Transportation, 212 Or App 576, 589, 159 P3d 359 (2007). OEC 408 demonstrates the policy against the use of settlement agreements to prove the “invalidity of the *136claim” — the very fact at issue in a wrongful initiation of civil proceedings claim. See Charles Alan Wright and Kenneth W. Graham, Jr., 23 Federal Practice and Procedure § 5308, 244 (1980) (“[W]here in an action for abuse of process, the present plaintiff uses evidence of an offer by the present defendant to settle the prior action for a pittance to show that the defendant had brought the prior action in bad faith, the jury must make an inference as to the offeror’s belief in the invalidity of his claim in order to reach the desired conclusion. Therefore, [federal] Rule 408 would prohibit the introduction of compromise evidence for this purpose.”).
It is theoretically possible, unfortunately, for a plaintiff in an underlying action to name some defendants— despite the lack of meritorious claims against them — and then rely on settlement with all defendants, including other, more appropriate defendants, to protect the plaintiff from future claims for wrongful use of civil proceedings. As a practical matter, however, that risk is likely to be low, given that attorneys are subject to sanctions for filing unfounded claims and that, normally, settling defendants will not require dismissal of claims against other, nonsettling defendants. The relatively small risk of meritless claims being brought against one defendant as part of a suit against multiple defendants is outweighed, in my view, by the chilling effect on settlements that may result from treating a settlement as a termination favorable to the defendant in an underlying action.
Second, I note the danger of creating conflicts of interest between attorneys and their clients in situations such as this, where a settlement of the underlying action is in the client’s economic interest but may expose her attorneys to later claims of wrongful initiation. In such situations, the client is protected from any wrongful initiation claim by reliance on the advice of counsel. Roop v. Parker Northwest Paving Co., 194 Or App 219, 238, 94 P3d 885 (2004), rev den, 338 Or 374 (2005) (“Evidence that the underlying action was undertaken upon the advice of counsel, relied on in good faith, that the action had a reasonable probability of success is enough to establish probable cause.” (Citation omitted.)). The attorneys, however, have no such protection when they recommend settlement. If a settlement is or may be treated *137as a termination favorable to the plaintiff in a later wrongful initiation action, then the settlement that protects the client’s interests is contrary to the attorneys’ interests.
In short, although I concur with the majority’s application of our rule from Perry I, I do so with significant misgivings about the rule itself.

 See, e.g., ORS 36.100 (declaring the policy for mediation “that, when two or more persons cannot settle a dispute directly between themselves, it is preferable that the disputants be encouraged and assisted to resolve their dispute with the assistance of a trusted and competent third party mediator, whenever possible, rather than the dispute remaining unresolved or resulting in litigation”); see also Davis v. Brown, 280 Or 561, 564, 571 P2d 912 (1977) (observing that “settlement agreements are favored by the law”).

 OEC 408(2) goes on to provide circumstances in which such evidence may nevertheless be admissible:
“(a) Subsection (1) of this section does not require the exclusion of any evidence otherwise discoverable merely because it is presented in the course of compromise negotiations.
“(b) Subsection (1) of this section also does not require exclusion when the evidence is offered for another purpose, such as proving bias or prejudice of a witness, negating a contention of undue delay, or proving an effort to obstruct a criminal investigation or prosecution.”