Sinio v. Bledsoe

18 P.3d 410, 172 Or. App. 254, 2001 Ore. App. LEXIS 73

• Court: Court of Appeals of Oregon
• Decided: January 31, 2001
• Docket: P96-11-05; CA A100219
• Status: Published

Opinions

KISTLER, J.

The trial court imposed sanctions on appellant, an attorney, for filing an affidavit that was designed to make the court think that her client had little or no assets when her client in fact had $60,000 to $70,000 in assets. We affirm.

Bess Sinio is the beneficiary of a trust created by her mother’s will. Sinio’s son, Frank Bledsoe, is the trustee. Sinio concluded that her son had breached his fiduciary duties. Sinio’s first attorney filed an action in circuit court to recover the damages that Sinio had allegedly suffered as a result of her son’s actions. Sinio discharged her first attorney and hired appellant to represent her. Appellant concluded that Sinio should file a second, concurrent action against her son and daughter-in-law concerning the administration of the trust. See ORS 128.135. ORS 128.155 required Sinio to post a bond in the trust action to cover any attorney fees and other costs that the court might order Sinio to pay.¹ Appellant filed a motion to waive that requirement. She also filed an affidavit from Sinio in support of the motion.

Sinio’s affidavit stated:

“I, BESS K. SINIO, having been first duly sworn on oath, do hereby depose and say that:

“I am the Petitioner in the above captioned case.

“I am the current beneficiary for the Sibyl J. Kiersey Trust. The trust was set up by my deceased mother for my support and benefit. The trust instrument requires by [sic] son, as Trustee, to pay support for me to allow me to continue the lifestyle I enjoyed during my mother’s lifetime.

“Because I have never received any significant amount of money, and no money at all for over a year from the Trust, I do not have sufficient assets to post a bond in this case.

“Requiring me to post a bond would create an impossible financial hardship and disallow me the relief to which I am entitled.”

The trial court initially granted Sinio’s motion, which was unopposed. At a later hearing, the court reconsidered and ruled that the statutory bond requirement could not be waived. In that hearing, the court learned that Sinio had recently received approximately $41,000 from the sale of her late husband’s home and that she had approximately $60,000 to $70,000 in total assets. The court ordered Sinio to post a $25,000 bond.

Approximately a month later, Sinio’s son, Frank Bledsoe, and his wife filed a motion for sanctions under ORCP 17 against appellant. Among other things, the Bledsoes argued that appellant had knowingly submitted a false affidavit to the court in violation of ORCP 17 C(4). The court agreed. Its letter opinion states:

“Bledsoes complain that [appellant] filed pleadings containing statements which she knew were false. They primarily complain about the Affidavit of Sinio dated October 31,1996. This Affidavit was submitted to the Court in connection with [appellant’s] ex parte application for a waiver of the bond required by ORS 128.155. * * *

“The Affidavit was carefully crafted to give the impression that Sinio had no significant funds. It can, however, be argued that the only thing the Affidavit actually says is that Sinio had received no significant amount of money from the Trust.

“It developed, after discovery, that Sinio had received $41,753.98 as the proceeds of the sale of property in Sweet Home, Oregon on or shortly after September 5, 1996. [Appellant] does not seriously dispute the fact that she knew that Sinio had, at the time of the filing of the Affidavit, $60,000 to $70,000 of available funds. [Appellant] says that she was operating under instructions from Sinio, who felt that she did not have sufficient funds to post the required bond.

“The Court finds [appellant’s] explanations regarding this Affidavit to be inadequate. The Affidavit, printed on [appellant’s] stationery and presumably prepared by her or at her direction, is designed to lead the Court to think that Sinio had little or no assets. ORCP 17 requires a higher degree of candor on the part of an attorney presenting such a document to the Court.

“The Court further finds that the Bledsoes were substantially damaged by this violation of Rule 17. Had Judge Selander been candidly advised of all of the facts, he would not have allowed the ex parte motion to waive the bond. This is demonstrated by the fact that, when the facts later came to his attention, he ordered Sinio to post the required bond before the case could proceed.”

The trial court ordered appellant to pay the Bledsoes $3,000 for the attorney fees that they had incurred as a result of her submission.

Appellant moved for reconsideration. Although the court withdrew a finding on another matter, it reaffirmed its ruling concerning the affidavit. It stated:

“Pursuant to ORCP 17D, the Court finds that [appellant] should be sanctioned for filing pleading[s] which were designed to lead the Court to believe that Petitioner Bess Sinio (‘Petitioner’) had little or no assets, when [appellant] knew that Petitioner had $60,000 to $70,000 in assets at the time of filing. In particular, [appellant] filed a Motion, Affidavit and Order for Waiver of Posting Bond on behalf of Petitioner, on November 4, 1996, (the ‘Motion to Waive Bond’). Petitioner’s Affidavit provides in part:

“ ‘Because I have never received any significant amount of money, and no money at all for over a year from the Trust, I do not have sufficient assets to post a bond in this case.’

“Affidavit of Petitioner, Bess Sinio, paragraph 2. [Appellant] knew that Petitioner had recently received $41,753.98 from the proceeds of the sale of property in Sweet Home, Oregon, and had total assets of $60,000 - $70,000. [Appellant] filed the pleading without disclosing these facts to Judge Selander.”

ORCP 17 C provides that an attorney who “signs, files, or otherwise submits” a pleading, motion, or other paper certifies, “after the making of such inquiry as is reasonable under the circumstances”:

“that the allegations or other factual assertions in the pleading, motion, or other paper are supported by evidence. Any allegation or other factual assertion that the party or other attorney does not wish to certify to be supported by evidence must be specifically identified. The attorney or party certifies that the attorney or party reasonably believes that an allegation or other factual assertion so identified will be supported by evidence after further investigation and discovery.”

ORCP 17 C(l), (4). ORCP 17 D provides that the trial court “may impose sanctions against a person or party who is found to have made a false certification under section C of this rule, or who is found to be responsible for a false certification under section C of this rule.” Read together, ORCP 17 C(4) and D establish that, if an attorney or party does not reasonably believe that a factual assertion is or will be supported by evidence, the attorney has made a false certification for which the trial court may impose sanctions.

A trial court faced with a motion for sanctions under ORCP 17 C(4) must answer two questions. The first is what is the factual assertion that is being challenged. In most cases, there will be little question about what the party said. When, however, a factual assertion is ambiguous, a court must resolve the ambiguity in order to rule on the motion for sanctions. As explained more fully below, the question of what a party said presents a question of fact for the trial court. The second question is whether the factual assertion is “supported by evidence.” ORCP 17 C(4). In answering that question, the issue is not whether the factual assertion is correct. Rather, the question is whether the person making the allegation or assertion reasonably believed that there either was or would be some evidence to support the assertion. See ORCP 17 C(l) (specifying that the certification is based “on the person’s reasonable knowledge, information and belief, formed after the making of such inquiry as is reasonable under the circumstances”); cf. Mars Steel Corp. v. Continental Bank N.A., 880 F2d 928, 932-33 (7th Cir 1989) (en banc) (drawing a distinction, in considering sanctions under FRCP 11, between the reasonableness of an attorney’s inquiry and the accuracy of his or her conclusions); American Judicature Society, Rule 11 in Transition, the Report of the Third Circuit Task Force on Federal Rule of Civil Procedure 11, 15-23 (Stephen B. Burbank reporter) (same).

In this case, appellant advances two arguments why the trial court erred. She argues initially that ORCP 17 C(4) does not require that lawyers make complete disclosure; it only requires that any factual assertion that they do make be supported by evidence. Appellant’s first argument assumes that all the factual assertions in Sinio’s affidavit are supported by evidence, and that the court imposed sanctions because the affidavit did not set out all the relevant facts. Appellant’s second argument is potentially at odds with her first. She acknowledges that a sentence in the affidavit is ambiguous, and she does not dispute that, depending on how the ambiguity is resolved, a critical factual assertion may not be supported by evidence. She reasons, however, that any ambiguity in what Sinio intended to say should be resolved in Sinio’s favor and that, interpreted in that fashion, the factual assertions in the affidavit are supported by evidence.

We begin with appellant’s second argument. We agree with appellant that the affidavit contains an ambiguity. In her affidavit, Sinio states: “Because I have never received any significant amount of money, and no money at all for over a year from the Trust, I do not have sufficient assets to post a bond in this case.” That statement could be interpreted to mean that Sinio had received no significant assets from the trust within the past year, or it could be interpreted to mean that Sinio had little or no assets. The trial court recognized that both interpretations were possible. It found, however, that while the former interpretation was “argu[ablej,” the latter was the meaning that appellant had intended to convey. The court found that the “[affidavit was carefully crafted to give the impression that Sinio had no significant funds.” It later reaffirmed that appellant had filed pleadings that “were designed to lead the Court to believe that [Sinio] had little or no assets, when [appellant] knew that [Sinio] had $60,000 to $70,000 in assets at the time of filing.”

If a statement is ambiguous, what the speaker intended to say ordinarily presents a question of fact for the trial court. See Taylor v. Kerber, 171 Or App 301, 15 P3d 93 (2000); Thompson v. Bolliger, Hampton & Tarlow, 118 Or App 700, 709, 849 P2d 526, rev den 317 Or 163 (1993). Here, the trial court resolved the ambiguity against Sinio. It found that her affidavit was both “carefully crafted” and “designed” to lead the court to conclude that she had little or no assets. Appellant does not argue that the record is not sufficient to permit the trial court to interpret the affidavit the way it did. Nor does she argue that there is evidence to support the statement that Sinio had little or no assets.² Rather, appellant reasons:

“[The existence of the ambiguity] alone should have led [the trial court] to deny the motion for sanctions, because the meaning of an ambiguous affidavit, no less than the meaning of an ambiguous contract, see, e.g., Thompson v. Bolliger, Hampton & Tarlow, 118 Or App 700, 709, 849 P2d 526 (1993), always presents a question of fact. And if one construes Ms. Sinio’s affidavit to state only that she never received a substantial amount of money from the trust — a permissible construction — then the ‘factual assertion’ necessarily is ‘supported by evidence,’ because Ms. Sinio never did.”

As we understand appellant’s argument, it turns on the proposition that, in ruling on an ORCP 17 C(4) motion, the trial court should not determine what an ambiguous statement was intended to say before it asks whether that statement is supported by evidence. Rather, it should construe the ambiguity in the light most favorable to the person opposing the motion for sanctions and ask whether the statement, so construed, is supported by evidence.

Appellant’s argument does not find support in either the text of ORCP 17 C(4) or the federal commentary on which she relies. The text of ORCP 17 C(4) says that a party certifies “that the allegations and other factual assertions in the pleading, motion or other paper are supported by evidence.” Nothing in the text of that rule suggests that, if what a party said is ambiguous, a trial court may not determine what a party intended to say before it asks whether there is some evidence to support the statement.

Appellant appears to rely on the commentary to the 1993 amendments to FRCP 11 to reach a different conclusion. As appellant correctly notes, the commentary to the federal rule uses the summary judgment standard to illustrate when a party’s assertion will be “supported by evidence.”³ Appellant’s argument assumes that the same standard should be used in determining what the party meant to say when his or her factual assertion is ambiguous. The commentary, however, does not say that, and nothing in the text of ORCP 17 C(4) suggests that, in ruling on a motion under that subsection, a court should not follow the ordinary procedural rules and first determine what the party intended to say before it asks whether there is evidence to support that statement. Put in the context of this case, ORCP 17 C(4) does not require us to decide whether there is evidence to support a statement that the trial court found Sinio did not intend to make.

Appellant argues alternatively that ORCP 17 C(4) does not require a party, on pain of sanctions, to disclose all relevant facts. It requires only that any factual assertion that a party does make be supported by evidence. The legal premise of appellant’s argument is consistent with the text of the Oregon rule and the cases interpreting its federal counterpart. See Golden Eagle Distributing Corp. v. Burroughs Corp., 801 F2d 1531, 1539-40 (9th Cir 1986). The difficulty with appellant’s argument is that, in this case, the trial court found that a critical sentence in Sinio’s affidavit was ambiguous and that the sentence was “designed to lead the Court to believe that [Sinio] had little or no assets, when [appellant] knew that [Sinio] had $60,000 to $70,000 in assets at the time of filing.” In light of that finding, Sinio’s affidavit was not simply incomplete. It was instead based on a factual assertion that was not supported by evidence.

The dissent advances three additional reasons why, in its view, the trial court erred. First, the dissent reasons that “there is no compelling need to resolve the ambiguity in this affidavit.” Resolution of what an ambiguous statement was intended to say is, however, the necessary predicate to deciding whether there is some evidence to support the statement that was made. When that issue is presented by a party’s ORCP 17 C(4) motion, a court may not avoid its obligation to decide it.

Second, the dissent reasons that there was no factual basis in the record that would permit the court to find that Sinio’s affidavit “was carefully crafted to give the impression that Sinio had no funds.” The trial court’s two letter opinions, however, identify the factual basis for its resolution of the ambiguity. The trial court noted initially that if the previous trial judge had “been candidly advised of all the facts, he would not have allowed the ex parte motion to waive the bond.” The trial court reasonably could conclude, from the record before it, that appellant had a motive for crafting the affidavit to lead the court to believe that Sinio had little or no assets. Similarly, the trial court explained in its opinion on reconsideration that appellant knew that Simo had total assets of $60,000 to $70,000 but “filed the pleading without disclosing those facts to [the trial court judge].” The trial court could rely on the omission of what would appear to be a critical fact to conclude that the ambiguity was not accidental and that the affidavit was, in fact, intended to say that Sinio had little or no funds. We do not suggest that the trial court was required to resolve the ambiguity this way. There is, however, a basis in this record to support its resolution of the ambiguity.

Finally, a theme runs through the dissent that, if trial courts are allowed to decide what an ambiguous statement means in the course of resolving a motion under ORCP 17 C(4), attorneys will be subject to the risk of sanctions on an arbitrary basis. There is no basis, however, for assuming that trial courts will resolve these factual issues arbitrarily. Trial courts are far better situated than we are to decide what an ambiguous statement means. See Cooter & Gell v. Hartmarx Corp., 496 US 384, 403-04, 110 S Ct 2447, 110 L Ed 2d 359 (1990) (addressing a related issue under FRCP 11). Not only is the responsibility to find facts generally allocated to trial courts, but the trial courts will almost always be more familiar with both the litigants and the course of the litigation than we will. See id. They are in a better position to decide whether an ambiguity was inadvertent or intentional and, if it were intentional, what a litigant intended to say.

ORCP 17 D gives the trial court discretion to impose sanctions if a party or an attorney has made a false certification in violation of ORCP 17 C. See Fernley v. Lloyd, 164 Or App 109, 113, 988 P2d 930 (1999). Given the trial court’s findings, we cannot say that it abused its discretion.

Affirmed.

1 ORS 128.155 provides:

“A beneficiary who petitions the court under ORS 128.135 or 128.145 shall file with the petition an irrevocable letter of credit * * * or an undertaking with one or more sureties to the effect that the beneficiary will pay all costs, disbursements and reasonable attorneys’ fees that may be ordered against the beneficiary in the proceeding.”

2 The trial court found that “[appellant! knew that [Sinio! had $60,000 to $70,000 in assets at the time of the filing,” and appellant has not questioned that finding on appeal.

3 The commentary states, in relevant part:

“The certification f concerning allegations and other factual contentions! is that there is (or will likely be) ‘evidentiary support’ for the allegation, not that the party will prevail with respect to its contention regarding the fact. That summary judgment is rendered against a party does not necessarily mean, for the purposes of this certification, that it had no evidentiary support for its position. On the other hand, if a party has evidence with respect to a contention that would suffice to defeat a motion for summary judgment based thereon, it would be sufficient ‘evidentiary support’ for purposes of Rule 11.”

Commentary on FRCP 11 (1994).