Tyler Fuqua Creations, Inc. v. Dept. of Rev.

382 May 7, 2019 No. 17

IN THE OREGON TAX COURT

REGULAR DIVISION

TYLER FUQUA CREATIONS, INC.,

Tyler Fuqua, and Jennifer Phipps,

Plaintiffs,

v.

DEPARTMENT OF REVENUE,

State of Oregon,

Defendant.

(TC 5345)

Plaintiffs appealed to the Regular Division after the Magistrate Division dis-

missed the case for failure to sign the complaint. The Regular Division dismissed

the case after Plaintiffs failed to appear at the initial case management confer-

ence. The court granted Defendant’s request for an award of attorney fees, hold-

ing that, under ORS 20.105, (1) Defendant was the prevailing party, (2) Plaintiffs

did not have an objectively reasonable basis for their claim because the magis-

trate correctly dismissed their complaint and Plaintiffs failed to pursue their

appeal, and (3) after adjustment by the court, the amount of fees was reasonable

under ORS 20.075.

Submitted on Defendant’s Motion for Attorney Fee Award.

Tyler Fuqua, Plaintiff, filed a response pro se.

James C. Wallace, Senior Assistant Attorney General,

Department of Justice, Salem, filed the motion for Defendant.

Decision for Defendant rendered May 7, 2019.

ROBERT T. MANICKE, Judge.

I. INTRODUCTION

This matter comes before the court on Defendant

Department of Revenue’s Motion for Attorney Fee Award

and Statement for Attorney Fees for Defendant, filed

January 28, 2019. Plaintiff Tyler Fuqua filed a response to

the motion on March 4, 2019, and Defendant filed a reply

and additional declarations on March 11 and 12, 2019.

Defendant has asked the court to order Plaintiffs

to pay $1,474.20 in attorney fees that Defendant claims it

incurred in defending this lawsuit. (Def’s Stmt Atty Fees

at 2.) State law requires the court to do so (1) if Defendant

Cite as 23 OTR 382 (2019) 383

is the “prevailing party” in the suit; if (2) there was “no

objectively reasonable basis” for Plaintiffs’ claim; and (3) to

the extent that the amount of the fees is “reasonable.” ORS

20.105.1

As to the first question, in this case there is no doubt

that Defendant is the prevailing party, as the court issued a

Judgment of Dismissal on January 18, 2019, dismissing the

complaint that Plaintiffs had filed against Defendant.

The second question is whether Plaintiffs had an

“objectively reasonable basis” for suing Defendant.

II. FACTS

Defendant filed a number of documents with the

court; Plaintiffs did not comment on any of them. From

these documents, the court constructs the following chronol-

ogy of facts:

(1) Plaintiffs filed a complaint in the Magistrate

Division, to which the court assigned case number TC-MD

180292G.

(2) In the Magistrate Division, on August 21, 2018,

Defendant filed its Motion to Dismiss Plaintiffs’ complaint,

stating:

“The Plaintiff is appealing an audit from the Oregon

Department of Employment, not the Oregon Department

of Revenue. Plaintiff has filed a case with the Magistrate

Division in error and should have filed a claim with the

Department of Employment’s Administrative Hearings

Division. In support of this motion, defendant relies on the

following points an authorities. * * *

“I. Facts

“Defendant, Department of Revenue, does not have

a balance on the Plaintiff’s account. Defendant has not

audited the Plaintiffs returns. The Plaintiff underwent an

audit with the Department of Employment.

“II. No grounds for appeal

“An appeal to the Magistrate Division of the Oregon Tax

Court should have merit follows an audit or adjustment

1

Unless otherwise noted, the court’s references to the Oregon Revised

Statutes (ORS) are to 2017.

384 Tyler Fuqua Creations, Inc. v. Dept. of Rev.

from the Department of Revenue, not the Department of

Employment.

“III. Conclusion

“The Department of Employment handles their own cases

in-house. The Plaintiff should contact the Administrative

Hearings Division, specifically Sarah Wolfe, at (503) 947-

1523. Therefore, this court should grant defendant’s motion

and dismiss the complaint.”

(Emphasis added.)

(3) After Defendant moved to dismiss Plaintiffs’

complaint, the magistrate issued an order “notifying

Plaintiffs that their Complaint did not bear the signature

of an authorized representative and so was ‘not signed’ and

subject to dismissal pursuant to Tax Court Rule 17 B.” The

court’s order gave Plaintiffs a deadline to correct the prob-

lem. Plaintiffs did not file a response to the court’s order,

nor did they respond to Defendant’s motion to dismiss. On

October 1, 2018, the Magistrate Division issued a “Final

Decision of Dismissal” dismissing Plaintiffs’ complaint

because Plaintiffs had “abandoned” their appeal.

(4) On October 15, 2018, Defendant’s representa-

tive who had signed the motion to dismiss, Nichol Schauer,

received a copy of a letter from Plaintiffs asking the mag-

istrate to not dismiss the case for lack of signature on the

complaint. Schauer’s notes state: “Tried to contact Plaintiff

but got voicemail. Left a message telling him his appeal to

Magistrate is moot that he needs to appeal to DOE.” Later

that day, Plaintiff Tyler Fuqua returned Schauer’s call.2

Schauer’s notes state: “Discussed the fact that his appeal

is not necessary and that he should be appealing to DOE

Administrative Hearings Division. Tp asked if I could send

him the information in an email to [email address redacted].

Sent email explaining the same thing and giving him Sarah

Wolfe’s number to file an appeal.” (Emphases added.)

(5) On October 18, 2018, Plaintiffs filed their com-

plaint in the Regular Division. Their sole allegation of error

2

Schauer’s notes indicate conversations with “tp” or “Plaintiff.” The court

infers that the calls were with Tyler Fuqua, as Schauer’s notes refer to the person

on the call as “he.”

Cite as 23 OTR 382 (2019) 385

was: “[D]ue to lack of communication with my tax accoun-

tant, we missed a signature on one form.” Plaintiffs Tyler

Fuqua and Jennifer Phipps signed the complaint.

(6) On October 23, 2018, Schauer called Tyler

Fuqua after receiving a copy of the complaint filed in the

Regular Division. Schauer’s notes state: “He stated that we

audited him and that his tax preparer was filing an appeal.

Advised him he should be appealing with DOE not DOR as the

audit was performed by them. Gave him the Administrative

Hearings Division contact Sarah Wolfe and her phone number.

Suggested he give her a call to discuss.” (Emphasis added.)

(7) On November 14, 2018, Defendant filed an

Answer in the Regular Division, which was only served, in

error, on Plaintiffs’ purported Magistrate Division represen-

tative Stacey Creighton, of Portland, Oregon. Defendant’s

Answer stated, as an affirmative defense: “Plaintiffs are not

aggrieved by the Defendant and, therefore, have no stand-

ing to appeal to the Oregon Tax Court. Defendant has not

audited and adjusted any of Plaintiffs’ tax returns or denied

Plaintiffs a request for a refund. To the best of Defendant’s

knowledge, Tyler Fuqua Creations, Inc. may have been

audited by the Oregon Department of Employment.” Court

staff notified Defendant’s counsel that Plaintiffs had filed

their complaint as pro se litigants.

(8) On November 15, 2018, Defendant filed a sec-

ond, correctly served Answer in the Regular Division matter.

(9) On November 19, 2018, the Regular Division

sent notices to all parties, scheduling an initial case manage-

ment conference (CMC) for December 19, 2018. The notices

stated: “THIS IS AN IN-PERSON HEARING” and provided

directions to the courtroom. The court set the conference as

an in-person hearing in an effort to clarify apparent con-

fusion in the case. Fuqua, et al. v. Dept. of Rev., TC 5345

(Dec 20, 2018) (slip op at 1). The notices stated further: “IF

YOU DO NOT APPEAR, YOUR CASE MAY BE DISMISSED

OR A DECISION MAY BE ENTERED AGAINST YOU.”

(Uppercase in original.)

(10) Creighton sent a letter dated November 20,

2018, that purports to be addressed to the Department of

Justice, the Regular Division and the Magistrate Division.

386 Tyler Fuqua Creations, Inc. v. Dept. of Rev.

The following appears beneath Creighton’s signature:

“EA 124068, LTC 35263-C.”

a. The November 20, 2018, letter identifies

Plaintiffs as Creighton’s “clients” and purports to respond to

Defendant’s Answer in this case.

b. Among other statements, Creighton declares:

“Please note that the Oregon Employment Department is a

department within the Oregon Department of Revenue.”

c. The letter states that “OED made changes to the

taxpayers’ payroll tax assessments, which had an effect on

the taxpayers’ business and individual tax returns, an area

that falls within the jurisdiction of the Oregon Department

of Revenue. * * * I am requesting that the Oregon Tax Court

advise the Oregon Department of Revenue to take extreme

caution with this case.”

d. The letter concludes: “While I would typi-

cally request that this case be referred to Oregon Complex

Litigation Court, I have serious doubts about the Court’s

qualifications to consider the case. None of the individu-

als who serve the Oregon Complex Litigation Court have

the collective credentials required to make decisions about

tax cases in the State of Oregon as required by the Oregon

Board of Tax Professionals and the Internal Revenue

Service.”

(11) On November 29, 2018, Creighton participated

in a telephone hearing before administrative law judge

Ehren Vaughn in the Office of Administrative Hearings.

Defendant submitted a three-page document that purports

to be Creighton’s notes of that hearing. The notes show that

Tyler Fuqua also participated in the hearing. The notes

state in part: “I also stated that I don’t understand why the

case was referred to OAH to be heard by an Administrative

Judge. I stated that Mr. Vaughn likely doesn’t have the

authority to make decisions with regard tax cases. * * * I

interpreted Sarah’s comment to indicate that the taxpayer

does not have appeal rights before the Oregon Tax Court.

Sarah confirmed, stating that this taxpayer has no appeal

rights before the Oregon Tax Court.”

Cite as 23 OTR 382 (2019) 387

(12) Creighton sent a second letter dated December 3,

2018, naming the same addressees. The December 3, 2018,

letter states in part:

“Despite my letter to the Oregon Tax Court dated 11/14/18,

which advised of malicious and illegal behavior by ODR and

OED, those Organizations were allowed to proceed with

their pursuit of my client. Because the Court has demon-

strated that it cannot apply and protect the law in a fair

and impartial manner, I am requesting that the Oregon

Tax Court immediately remove itself from service.

“In an effort to protect consumers from incompetent

and unethical activities, complaints have been filed with

Oregon Board of Tax Practitioners against all of the follow-

ing individuals:”

(13) There follows a list of individuals, by name,

including the Oregon Attorney General and a magis-

trate in this court, as well as individuals in the Office of

Administrative Hearings, Defendant, and the Employment

Department, among others. The letter “recommend[s]” that

the court “cancel the additional tax and interest that was

assessed by the OED on 5/14/18,” refund the court’s filing fee

and “release any lien that may have been filed and entered

against the taxpayer.”

(14) Plaintiff Tyler Fuqua called the court on

December 13, 2018, regarding the upcoming CMC. Court

staff confirmed the conference would be held in person at

the date and time stated in the notice. Fuqua, et al. v. Dept.

of Rev., TC 5345 (Dec 20, 2018) (slip op at 1).

(15) At the CMC on December 19, 2018, the attor-

ney for Defendant appeared. No one appeared on behalf of

Plaintiffs. Court staff called, left a voicemail message, and

sent a text message to Tyler Fuqua at the number he had

provided to the court, asking if he was going to attend the

CMC. Fuqua returned a text message that stated: “Hi there,

unfortunately I am not. I sent an email yesterday regarding

this but I guess I didn’t sent it to the right place. Sorry about

that. I’m not in the business of wasting peoples time.” Fuqua

also left a voicemail message on the court’s main line, in

response to the court’s messages, that also stated that he

would not attend the CMC.

388 Tyler Fuqua Creations, Inc. v. Dept. of Rev.

III. ANALYSIS

Based on these findings, the court now considers

whether Plaintiffs’ claim in this division of the court was

objectively unreasonable. The court’s first task is to identify

the relevant “claim,” the reasonableness of which is at issue.

In all aspects of its decision-making under ORS 20.105, the

Regular Division considers only the record before it, which

includes documents from Magistrate Division proceedings

or other prior proceedings only to the extent that a party

places those documents into the record in the Regular

Division. See ORS 305.425(1); Patton II v. Dept. of Rev., 18

OTR 256, 261 & n 7 (2005).

Here, Plaintiffs’ complaint filed in this division

states only: “[D]ue to lack of communication with my tax

accountant, we missed a signature on one form.” When read

together with the magistrate’s Final Decision of Dismissal,

the court concludes that the only claim Plaintiffs have

articulated in this division is that the magistrate erred by

dismissing their case because no valid signature appeared

on the complaint they filed in the Magistrate Division.

The exact nature of the signature defect in the Magistrate

Division complaint is unclear because neither party intro-

duced that complaint into evidence in this division.3 What

is clear is that the magistrate ordered Plaintiffs to correct

the defect by a certain deadline, and Plaintiffs failed to do

so. Plaintiffs also did not respond to Defendant’s Motion to

Dismiss in the Magistrate Division. Both failures led the

magistrate to observe that Plaintiffs had abandoned their

appeal, but the failure to correct the signature defect by the

date ordered was, by itself, sufficient grounds for dismissal.

See former Tax Court Rule (TCR) 17 B (2018).

This court’s prior opinions make clear that, when

the Magistrate Division dismisses a plaintiff’s claim for fail-

ure to pursue it, and the plaintiff then appeals, the Regular

Division will determine anew and independently whether

3

Three logical possibilities include: (1) no Plaintiff signed the Magistrate

Division complaint; (2) fewer than all Plaintiffs signed; (3) a person, other than

an attorney, claiming to represent one or more Plaintiffs signed the Magistrate

Division complaint but failed to also file an authorization signed by Plaintiffs; or

(4) some combination of possibilities (1) through (3). See ORS 305.230(3).

Cite as 23 OTR 382 (2019) 389

the magistrate’s decision was correct. Norpac Foods, Inc. v.

Dept. of Rev., 15 OTR 331, 334 (2001). That is what Plaintiffs

in this case asked the Regular Division to do when they filed

their complaint in this division. Setting aside momentar-

ily the fact that Plaintiffs then proceeded to abandon this

appeal as well, by ignoring the court in much the same man-

ner as they had in the Magistrate Division, the court’s case

law indicates that, if the Regular Division had decided the

procedural issue of the magistrate’s dismissal in Plaintiffs’

favor, the Regular Division then would have proceeded to

hear Plaintiffs’ substantive claims de novo. See Spears v.

Dept. of Rev., 20 OTR 229 (2010).

The court concludes, therefore, that the “claim”

whose reasonableness must be tested for purposes of ORS

20.105 has two parts: (1) Plaintiffs’ claim to overturn the

magistrate’s dismissal for failure to pursue the appeal; and

(2) Plaintiffs’ substantive claim or claims against Defendant.

A. Plaintiffs’ Regular Division Claim, Part One: Dismissal

from Magistrate Division

As to the first part of Plaintiffs’ claim, the court

concludes that the magistrate’s decision to dismiss the com-

plaint was entirely correct. The magistrate cited TCR 17 B,

which at that time stated: “If a pleading, motion, or other

paper is not signed, it will be stricken unless it is signed

promptly after the omission is called to the attention of the

pleader or movant.” Former TCR 17 B (2018). Plaintiffs filed

a lawsuit, made a mistake in doing so, were told about the

mistake and directed to fix it, but apparently did not bother

to interact with the court. The magistrate correctly did not

reach the merits of Defendant’s Motion to Dismiss, except to

note Plaintiffs’ lack of response.

Against that backdrop, the court now examines

whether the first part of Plaintiffs’ claim in this division

was objectively reasonable. In this division, Plaintiffs sought

relief from the magistrate’s dismissal by filing their com-

plaint on October 18, 2018, alleging that “lack of commu-

nication with [Plaintiffs’] tax accountant” had caused them

to “miss[ ] a signature on one form.” However, Plaintiffs’

allegation ignores the fact that they not only “missed” the

390 Tyler Fuqua Creations, Inc. v. Dept. of Rev.

signature on the complaint,4 they also failed to even respond

to, much less comply with, the magistrate’s specific order

to address the problem. The allegation also ignores the

fact that the law squarely places responsibility directly on

a taxpayer as principal to manage the relationship with a

taxpayer’s representative. ORS 305.230(3) provides: “A tax-

payer represented by someone other than an attorney is

bound by all things done by the authorized representative,

and may not thereafter claim any proceeding was legally

defective because the taxpayer was not represented by an

attorney.” The court takes judicial notice that this statute

was reprinted on the face of the authorization form that a

plaintiff must sign in order to be represented by someone

other than an attorney.

But even if the court overlooks Plaintiffs’ failure, in

their complaint in this division, to acknowledge their con-

duct that had led to dismissal in the Magistrate Division

and to state any ultimate fact justifying relief in this divi-

sion, Plaintiffs’ failure—without notice5 —to appear for their

only scheduled hearing in this division stripped their claim

of any vestige of reasonableness. A reasonable plaintiff

4

The court’s signature requirements are not mere formalities but serve

important functions, as this case illustrates. First, the requirement to sign any

document filed with the court compels the signer to promise that he or she is

proceeding in good faith. See TCR 17 C(2) (“A party or attorney certifies that

the pleading, motion, or other document is not being presented for any improper

purpose, such as to harass or to cause unnecessary delay or needless increase

in the cost of litigation.”). The rules allow the court to enforce a signer’s promise

by ordering monetary or other sanctions. See TCR 17 D. For this reason, the

court’s rules allowed it to “strike” (delete or ignore) an unsigned document, as

the magistrate did here. Second, the requirement that a taxpayer who wants to

be represented by someone other than a lawyer in the Magistrate Division sign

the court’s form of authorization for that representative ensures that both the

taxpayer and the representative know who is responsible to speak for the tax-

payer, presumably reducing miscommunications between them. See Tax Court

Rule-Magistrate Division (TCR-MD) 1 A(1)(a) (referring to “signed written com-

plaint”); TCR-MD 1 D (referring to “signed Authorization to Represent form”);

TCR-MD 1 E(3)(a) (“A document is not signed unless it bears the signature of

an authorized representative.”); see also TCR-MD Preface (“If circumstances

arise that are not covered by a Magistrate Division rule, the rules of the Regular

Division may be used as a guide to the extent relevant.”).

5

The court gives no weight to Tyler Fuqua’s statement via text message, after

the hearing, that he had attempted to notify court staff the day before the hear-

ing that he did not intend to attend. He offered no proof that he had attempted to

send such a message, and even if his statement is accurate he acknowledged that

he used the wrong address and did not attempt to correct his error.

Cite as 23 OTR 382 (2019) 391

would have learned from the experience in the Magistrate

Division that failure to respond to the court would bring

about adverse consequences. A reasonable plaintiff would

heed the statement on the notice of the CMC that states: “IF

YOU DO NOT APPEAR, YOUR CASE MAY BE DISMISSED

OR A DECISION MAY BE ENTERED AGAINST YOU.”

(Uppercase in original.) Yet Plaintiffs repeated their behav-

ior when they failed to appear for their CMC on December

19, 2018, despite having called court staff about the confer-

ence a week before. Plaintiffs essentially started a car, put

it in gear, set it rolling downhill, and then decided, without

telling anyone, to bail out. Having done so, they must live

with the collateral consequences.

Plaintiffs’ conduct in this case is similar to that of

the plaintiff in Masse II v. Dept. of Rev., 18 OTR 240 (2005).

There, a self-represented taxpayer filed two complaints in

the Magistrate Division in response to personal income tax

assessments. One complaint involved tax years 1990 and

1991 (TC 4673), and the taxpayer actively litigated that case

for a time in the Magistrate Division. The second complaint

involved income tax year 2001 (TC 4674). The taxpayer’s

sole allegation in TC 4674 was that he “d[id] not owe the

amount claimed by the D.O.R.” Masse II, 18 OTR at 245. He

asked that the court determine the correct amount, but he

submitted no evidence of the amount he thought he owed,

and he made no assertions about the case in the Magistrate

Division.

The Regular Division took jurisdiction over both

cases pursuant to ORS 305.501(1) and consolidated them

for purposes of case management conferences and trial.

Although the taxpayer continued to litigate his claims in TC

4673 in the Regular Division, he submitted no evidence and

made no assertions about TC 4674 during joint case man-

agement conferences at which TC 4674 was discussed tan-

gentially. Ultimately, despite multiple notices, the taxpayer

failed to appear for trial in the consolidated cases. Defendant

sought attorney fees pursuant to ORS 20.105, and the court

considered each of the two cases separately. In TC 4674, the

court held that “the trial record establishes that taxpayer’s

claims were not objectively reasonable. Taxpayer made no

showing of facts or law that ran counter to the department’s

392 Tyler Fuqua Creations, Inc. v. Dept. of Rev.

assessments.” Masse II, 18 OTR at 254. The court ordered

the taxpayer to reimburse a portion of Defendant’s attorney

fees to the extent reasonable and attributable to TC 4674.

Like the taxpayer in Masse, Plaintiffs here chose not to take

predicate steps necessary to put on their case, even when

ordered to do so. Their claim to be relieved of the conse-

quences was objectively unreasonable.

B. Plaintiffs’ Regular Division Claim, Part Two: Plaintiffs’

Substantive Claim Against Defendant

As to the second part of Plaintiffs’ claim, Plaintiffs

have prevented the court from considering it.6 By failing to

attend the initial CMC, and thereafter declaring that they

had no intention of attending, they “fail[ed] * * * to prose-

cute” their case, causing the court to dismiss their appeal on

its own motion pursuant to TCR 54 B(1). At least in theory,

a finding that Plaintiffs’ underlying claim included even one

reasonable argument might have prevented the court from

awarding attorney fees. See Patton II v. Dept. of Rev., 18 OTR

256, 263 (2005) (“[T]he court will not award attorney fees

in any situation in which the nonprevailing taxpayer has

advanced, throughout the proceedings, at least one objec-

tively reasonable claim, defense, or ground for appeal.”). The

court concludes that Plaintiffs’ claim was, in both parts and

on the whole, objectively unreasonable.

C. Amount of Attorney Fees

In setting the amount of attorney fees to award,

ORS 20.075(2) requires the court to consider the following

two sets of factors:

Factors under ORS 20.075(1):

“(a) The conduct of the parties in the transactions or

occurrences that gave rise to the litigation, including any

conduct of a party that was reckless, willful, malicious, in

bad faith or illegal.

“(b) The objective reasonableness of the claims and

defenses asserted by the parties.

6

The court also cannot articulate Plaintiffs’ substantive claim against Defen-

dant because, as noted earlier, neither party has placed Plaintiffs’ Magistrate

Division complaint in the record in this division.

Cite as 23 OTR 382 (2019) 393

“(c) The extent to which an award of an attorney fee

in the case would deter others from asserting good faith

claims or defenses in similar cases.

“(d) The extent to which an award of an attorney fee

in the case would deter others from asserting meritless

claims and defenses.

“(e) The objective reasonableness of the parties and

the diligence of the parties and their attorneys during the

proceedings.

“(f) The objective reasonableness of the parties and

the diligence of the parties in pursuing settlement of the

dispute.

“(g) The amount that the court has awarded as a pre-

vailing party fee under ORS 20.190.

“(h) Such other factors as the court may consider

appropriate under the circumstances of the case.”

Factors under ORS 20.075(2):

“(a) The time and labor required in the proceeding, the

novelty and difficulty of the questions involved in the pro-

ceeding and the skill needed to properly perform the legal

services.

“(b) The likelihood, if apparent to the client, that the

acceptance of the particular employment by the attorney

would preclude the attorney from taking other cases.

“(c) The fee customarily charged in the locality for

similar legal services.

“(d) The amount involved in the controversy and the

results obtained.

“(e) The time limitations imposed by the client or the

circumstances of the case.

“(f) The nature and length of the attorney’s profes-

sional relationship with the client.

“(g) The experience, reputation and ability of the attor-

ney performing the services.

“(h) Whether the fee of the attorney is fixed or

contingent.”

394 Tyler Fuqua Creations, Inc. v. Dept. of Rev.

The factors under ORS 20.075(1) relate generally

to the parties’ conduct and the potential deterrent effect of

an award. Regarding paragraph (a), the limited informa-

tion in the record is that Defendant did literally nothing

to bring about Plaintiffs’ two lawsuits. Defendant asserted

in its Answers in both divisions of this court that it had

not audited or assessed Plaintiffs, and there is no evidence

that it had any contact with Plaintiffs before they sued.

Regarding paragraph (b), Defendant’s defenses were that

the court lacks jurisdiction because Plaintiffs were assessed

by the Employment Department, not Defendant. The court

concludes that these defenses were objectively reasonable,

while Plaintiffs’ claim to have this division of the court hear

their case despite their failure to comply and communicate

with the magistrate was not objectively reasonable.

Regarding the deterrence factors in paragraphs (c)

and (d) of ORS 20.075(1), the court emphasizes that its award

of attorney fees is due to serial failures by Plaintiffs, namely,

(1) Plaintiffs’ failure to comply with the magistrate’s order to

correct the signature deficiency in their complaint; (2) their

failure to communicate with the Magistrate Division; and

(3) their decision, without notice, to intentionally not appear

for their CMC in this division of the court. By that conduct,

Plaintiffs have failed to put forward any evidence support-

ing their case and have rendered any claims objectively

unreasonable. Plaintiffs who do not replicate that behav-

ior and who proceed in good faith should not be deterred

by this fee award. On the other hand, any plaintiffs who

file an appeal in the Magistrate Division, abandon that ini-

tial appeal, then appeal to the Regular Division and inten-

tionally abandon that appeal, should be on notice that they

may be required to pay the reasonable attorney fees of the

party they have sued. The court emphasizes further that

Defendant has requested attorney fees only to the extent

incurred in defending the appeal to the Regular Division.

Paragraph (e) of ORS 20.075(1) directs the court to

consider the parties’ conduct during the proceedings, spe-

cifically, their objective reasonableness and their diligence.

The court first considers the conduct of Defendant. On this

record, the court finds that Defendant’s conduct was entirely

Cite as 23 OTR 382 (2019) 395

reasonable and diligent, indeed helpful. First, Defendant

affirmatively alleged in both initial pleadings (the Answers)

that it had not assessed Plaintiffs but that the Employment

Department apparently had issued an assessment. Second,

Defendant’s representative on multiple occasions spoke to

and emailed Plaintiff Tyler Fuqua in an attempt to redirect

Plaintiffs to the Employment Department, which clearly did

audit and assess Plaintiffs, according to the notes that Stacey

Creighton took of the Employment Department administra-

tive conference that Fuqua attended on November 29, 2018.

In fact, Defendant went out of its way on more than one

occasion to ensure that Plaintiffs had the name and tele-

phone number of a particular individual at the Employment

Department who, based on Creighton’s notes, clearly did

have specific knowledge of Plaintiffs’ assessment by the

Employment Department.

The court next considers Plaintiffs’ conduct and

will not belabor the facts recounted above. As additional

facts, Defendant has placed in the record two letters from

Stacey Creighton and her set of hearing notes. Although

Creighton describes her relationship with Plaintiffs as that

of representative and client, and Plaintiff Tyler Fuqua at

times referred to his “tax accountant” or “tax preparer,” the

court has no record indicating that Plaintiffs authorized her

to represent them in the Magistrate Division as required,

nor does she appear to be an Oregon attorney allowed to

represent Plaintiffs in either division of the court. The

court therefore does not attribute Creighton’s statements to

Plaintiffs and assigns no weight to the statements for pur-

poses of determining the amount of attorney fees to award.

For the benefit of future litigants, however, the court

observes that some of Creighton’s statements in the record

are objectively unreasonable. The court fully understands

that a taxpayer might be confused about the respective roles

and administrative appeals procedures of the Department

of Revenue and the Employment Department in administer-

ing Oregon’s multiple employment taxes, not to mention the

scope of the Tax Court’s independent jurisdiction as a part

of the judicial branch. Indeed, publicly available decisions in

the Magistrate Division indicate that taxpayers occasionally

396 Tyler Fuqua Creations, Inc. v. Dept. of Rev.

bring disputes in this court involving assessments by the

Employment Department of unemployment insurance tax,

only to discover that this court lacks jurisdiction to hear

the dispute. E.g., Danielson Contractors Inc. v. Dept. of Rev.

and Employment Dept., TC-MD 091470C, WL 11020 at *1

(Or Tax M Div, Jan 4, 2011). However, Creighton’s assertion,

as a purported representative, that “the Oregon Employment

Department is a department within the Oregon Department

of Revenue,” and her comments about “typically” referring

matters such as Plaintiffs’ case to the “Complex Litigation

Court” suggest a lack of understanding of the structure of

Oregon government and of the tax appeals process that the

court finds disturbing. Her statement that she filed “com-

plaints” with the Board of Tax Practitioners against the

Oregon Attorney General, a magistrate in this court, and

eight other public officials, and her request “that the Oregon

Tax Court immediately remove itself from service,” are not

rational, let alone reasonable. If the court were to attribute

these statements to Plaintiffs pursuant to ORS 305.230(3),

they would weigh heavily against Plaintiffs’ effort to defend

against imposition of attorney fees.

The court considers paragraphs (f) and (g) of ORS

20.075(1) inapplicable in this case. Nothing in the record

indicates that settlement was or should have been discussed.

Defendant has not requested a prevailing party fee.

As an additional factor or factors under paragraph

(h) of ORS 20.075(1), the court considers Plaintiffs’ March 4,

2019, response to Defendant’s motion. Plaintiffs “ask for leni-

ency” and for dismissal of attorney fees on the grounds that

Plaintiffs experienced “bad advice and lack of communica-

tion.” Plaintiffs note that they have severed their relation-

ship with their tax preparer and hired a new one “so that

everything from here on out is done correctly and that I am

paying the right amount in taxes.” Plaintiffs explain that

they cannot afford the additional “financial hit” of paying

Defendant’s attorney fees. Finally, Plaintiffs assert that their

tax preparer charged “almost $6000 in fees to fight a $3500

audit judgement,” and that they never would have approved

the preparer’s starting the appeal if they had known that

the fees would exceed the amount at issue. Plaintiffs have

Cite as 23 OTR 382 (2019) 397

made their frustration clear to the court, and the court has

no desire to impose financial hardship on Plaintiffs or their

business. However, the Tax Court has no jurisdiction to adju-

dicate the quality of advice Plaintiffs may have received,

nor does the court have any evidence of hardship beyond

Plaintiffs’ bare statement. The record indicates that Tyler

Fuqua and Jennifer Phipps signed the complaint in this

division themselves. The court commends taxpayers’ desire

to ensure that they meet all future tax obligations, but the

court is bound by a statute that requires the court to award

fees based on the facts of this case, and Plaintiffs’ March 4,

2019, response is insufficient to change the court’s view of

the amount to award.

Turning to the factors under ORS 20.075(2), the

court observes that these factors generally relate to the rea-

sonableness of the particular fee amount according to var-

ious metrics and comparisons. Because Plaintiffs have not

contested the amount, except for their general request for

leniency, the court focuses on the time required in the pro-

ceeding and Defendant’s arguments.7 The court sees nothing

of note in Defendant’s itemized time entries, with one excep-

tion: Defendant’s motion states that “the fees charged by the

Department of Justice in this case do not include Counsel’s

work in preparing this motion of the statement of fees.” Yet

the itemization includes two entries in early January 2019

for a total of 3.1 hours, with the following narrative: “Emails

from DOR requesting atty fee application, tele conf w/ Rocco,

emails re atty fee requests, and prep of jdmt of dismissal

and atty fee request; Prep of jdmt of dismissal and app for

atty fees.” The total amount of attorney fees ($1,474.20)

is the same on both the itemization and in the statement

that accompanied the formal request in the department’s

motion. The form of judgment of dismissal that Defendant

submitted to the court consisted of three sentences on one

page, while the motion for attorney fees, three witness

7

Counsel for Defendant asserted that the rate charged for each attorney in

this matter was $182 per hour, and that that rate was legislatively approved. The

court observes that the rate is significantly less than the 25th percentile rate for

the Tri-County area in 2016. See Oregon State Bar economic survey at https://

www.osbar.org/_docs/resources/Econsurveys/17EconomicSurvey.pdf (accessed

Apr 30, 2019).

398 Tyler Fuqua Creations, Inc. v. Dept. of Rev.

declarations and supporting documents comprise numerous

pages. Without deciding whether a fee award could include

the cost of preparing an application for a fee award, consis-

tent with Defendant’s motion the court reduces the amount

of the award in this case by $564.20 (3.1 hours × $182), leav-

ing a total fee award of $910.00.

IV. CONCLUSION

After reviewing the motion and response, as well as

additional documents placed in the record, and being fully

advised of the premises, the court finds that such request

should be granted in part and denied in part. Now, therefore,

IT IS ORDERED that Defendant’s Motion for

Attorney Fee Award is granted to the extent of $910.00.

Counsel for Defendant is directed to submit a form of sup-

plemental judgment.