is an agreement between the parties that collateralizes a debt of the defendant owed to plaintiffs with specific items.

The key terms to this document are: a) there is a debt between the parties; b) defendant provides plaintiffs specific items as collateral for the debt for plaintiffs to hold in their possession; c) plaintiffs cannot sell the collateral for between 12 and 13 months, depending on conditions that are no longer relevant. Both parties agree to these general terms as per the face of the written agreement. Both parties agree that the agreement expired prior to bringing this action. Both parties agree plaintiffs retain possession of the collateral. Defendant claims the agreement, exhibit 12 / 101, is an accord and satisfaction extinguishing the underlying debt, and as such plaintiffs have no claim. Plaintiffs claim the document is an expired forbearance agreement to collateralize the debt in lieu of immediate collection and that collection is now ripe, and thus the instant action. While defendants intent and belief that the agreement is an accord and satisfaction may be true, the plain language of the document on the whole cannot support this claim. The agreement more closely reflects the position of the plaintiffs. As such, based on the testimony of the parties and the plain language of the agreement, I find the agreement between the parties is a collateralized forbearance agreement that has expired leaving plaintiffs with secured debt in default.1 Principal guidance for this interpretation can be found in UCC Article 9, adopted in ORS Chapter 79. Once the defendant defaulted at the expiration of the forbearance agreement plaintiffs were properly left with the ability to liquidate the collateral in a commercially reasonable manner, the sale of the collateral being expressly provided for in the agreement. Ferrous Financial Services Co. v. Wagnon, 70 Or.App. 285 (1985); All-States Leasing v. Ochs, 42 Or.App. 319, 328 (1979) (Both cases pre-dating 2001 ORS Chapter 79 revision, but still providing guidance). The plaintiffs would then likely be under a duty to account to defendant and pay any surplus, or pursue any deficiency. UCC 9-608; 79.0608(1)(d). Should plaintiffs fail to sell the collateral in a commercially reasonable manner there would be a presumption the collateral fully satisfied the debt. All-States Leasing at 328; ORS 79.0607; UCC 9-607. In this case there has been no sale of the collateral. Similarly, there has been no acceptance of the collateral in satisfaction of the debt, the instant litigation appearing to be an express rejection of such. See generally, ORS 79.0622, and note ORS 79.0620(7) which prohibits a secured party from accepting collateral as a partial satisfaction in consumer transactions. While it may be plaintiffs have valid claims against defendant, by both retaining the collateral and rejecting the acceptance of the collateral as a full satisfaction of the debt, plaintiffs claim is not ripe. Whether or not there was been any waiver, whether this is a consumer transaction under the statute, and what notice requirements may be necessary to accept or sell the collateral are not relevant to this finding. See also, Federal Deposit Ins. Corp. v. Tempest Fugat, 75 Or.App. 536, 540-41 (1985), rev. den. 300 Or. 546 (1986) (Discussing consequences of an extended delay in the sale of collateral.)
1

Supplemental evidence, including letters of the plaintiff need not be considered to reach this conclusion.
CROWELL LAW
943 Liberty Street SE - P.O. Box 923 Salem, Oregon 97308-0923
Page 2 of 4

The arbitrator finds plaintiffs cause of action on the underlying secured debt is not ripe due to the retention of the collateral and as such PLAINTIFFS CLAIM IS DENIED. Defendants Counterclaim: Defendants counterclaim for damages pursuant to ORS 646.641 requires a finding of an unlawful collection practice under 646.639(2). 646.639(2) applies to debt collectors attempting to collect a debt. Under 646.639(1)(e), a debt means any obligation or alleged obligation arising out of a consumer transaction. Consumer transaction means a transaction between a consumer and a person who sells, leases or provides property, services or credit to consumers. 646.639(1)(b). Under the statute a consumer is defined as a natural person who purchases or acquires property, services or credit for personal, family or household purposes. 646.639(1)(a). For there to be any right of recovery under 646.641, there must be a violation of 646.639(2), which is limited to consumer debts "for personal, family or household purposes. 646.639(1)(a). In this case the debt is for plaintiffs work as professional licensed accountants to assist defendant's business with a series of IRS Audits and provide related commercial services of a CPA in what most closely resembles a business-to-business transaction. No matter how this may be invoiced, this is not a debt for personal, family or household services. Searle v. Exley Express, 278 Or 535 (1977). To the extent there may have been incidental personal services provided by the plaintiffs the testimony indicates the debt for all personal services was paid for and satisfied. To the extent there may be some residual personal debt, the principal quality of the services at issue governs. As the underlying debt was not a consumer debt related to services for personal, family or household use, no cause of action under ORS 646.639(2) or right to recovery under ORS 646.641 could arise. The arbitrator finds defendant has not stated a claim for relief under ORS 646.641 and DEFENDANTS CLAIM IS DENIED. Attorney fees: Both parties have moved for attorney fees, plaintiffs pursuant to ORS 20.082(2) and defendant pursuant to ORS 646.641(2). Both parties similarly claim reciprocal fees as the prevailing party under each statute. ORS 20.082(2) directs that a court shall award reasonable attorney fees to a prevailing party. ORS 646.641(2) uses the more permissive may award reasonable attorney fees language. While the language differs, absent compelling circumstances attorney fees are to be awarded under either standard. Stocker v. Keith, 178 Or App 544 (2002), citing McKenzie v. Zaklan, 139 Or.App. 509, 510, (1996); Barbara Parmenter Living Trust v. Lemon, 194 P.3d 796, 345 Or. 334 (Or. 2008). And while it is apparently common in such situations where both

CROWELL LAW
943 Liberty Street SE - P.O. Box 923 Salem, Oregon 97308-0923
11/27/13 Page 3 of 4

parties are entitled to attorney fees for a court to consider matters a wash, such is error and has been corrected by the appellate courts numerous times. Id. passim. As such it is proper for there to be an award of attorney fees to both parties evaluated under the standards of ORS 20.075. PLAINTIFFS AND DEFENDANT ARE EACH DIRECTED TO SUBMIT PETITIONS FOR COSTS AND FEES IN CONFORMITY TO WITH ORCP 68 WITHIN FOURTEEN (14) DAYS. On submissions pursuant to ORCP 68, a subsequent hearing if necessary will be scheduled and a final award of the arbitrator will issue.

So ORDERED this

day of

, 2013.

Carl D. Crowell Sole Arbitrator

c:

CROWELL LAW
943 Liberty Street SE - P.O. Box 923 Salem, Oregon 97308-0923
11/27/13 Page 4 of 4