S054012, Opinion — Dept. of Rev. v. Croslin

620
Argued and submitted September 6, 2007, judgment of Tax Court reversed, and
case remanded to that court for further proceedings January 29, 2009
DEPARTMENT OF REVENUE,
Plaintiff-Respondent,
v.
Oscar A. CROSLIN
and Gloria J. Bas-Croslin,
Defendants-Appellants.
(OTC 4728; SC 8054012)
201 P3d 900
CJS, Taxation § 1105.
En Banc
On appeal from a judgment of the Oregon Tax Court.*
* 19 OTR 69 (2006).

Cite as 345 Or 620 (2009) 	621
Henry C. Breithaupt, Judge.
Kevin Keaney, Portland, argued the cause and filed the
brief for defendant-appellants.
Rochelle Nedeau, Assistant Attorney General, Salem,
argued the cause and filed the brief for plaintiff-respondent.
With her on the brief were Hardy Myers, Attorney General,
and Mary H. Williams, Solicitor General.
DURHAM,J.
The judgment of the Tax Court is reversed, and the case is
remanded to that court for further proceedings.

622 	Dept. of Rev. v. Croslin
DURHAM,J.
Taxpayers appeal from a judgment of the Oregon
Tax Court. 1 The tax court determined that, because tax-
payers' position in the magistrate division was frivolous,
ORS 305.437, which we quote below, obligated the magis-
trate to award damages to the Department of Revenue
(department) and that the magistrate had erred in declining
to do so. The tax court also determined that taxpayers' posi-
tion on appeal in that court was frivolous. Accordingly, the
tax court awarded damages to the department under ORS
305.437 on the basis of taxpayers' position in both divisions.
The tax court also awarded attorney fees to the department
under ORS 20.105, quoted below, because the department
had prevailed on its claim for damages and because the court
determined that taxpayers' arguments in the regular divi-
sion, with one exception that we will discuss, were frivolous. 2
Dept. of Rev. v. Croslin, 19 OTR 69 (2006).
For the reasons discussed below, we conclude that
ORS 305.437 did not require the magistrate, under the facts
shown here, to award damages to the department. The tax
court erred in concluding otherwise. The tax court also erred
in awarding damages under ORS 305.437, because tax-
payers' position in the regular division was not frivolous.
Finally, because taxpayers prevailed on the department's
claim for damages against them-and the tax court should
have so concluded-ORS 20.105 does not authorize an award
1 ORS 305.405 created the Oregon Tax Court, which consists of a "regular divi-
sion" and a "magistrate division." See ORS 305.404 (providing in part, "[i]n an
appropriate case, 'tax court' may include either the regular division or the magis-
trate division of the Oregon Tax Court, or both, or the judge or judges of the tax
court or its magistrates or a combination"); see also ORS 305.498(1) (establishing
magistrate division in Oregon Tax Court). Subject to certain exceptions that are
not pertinent here, an appeal to the tax court is heard by a tax court magistrate.
ORS 305.501(1). Any party dissatisfied with the magistrate's decision "may appeal
the decision to the judge of the tax court by filing a complaint in the regular division
of the tax court***." ORS 305.501(5)(a). ORS 305.425(1) provides:
"All proceedings before the judge of the tax court shall be original, inde-
pendent proceedings and shall be tried without a jury and de nova."
For ease of reference, in this opinion, "tax court" refers to the regular division
of the Oregon Tax Court.
2 The department did not seek an award of attorney fees from the tax court for
its advocacy in the magistrate division, because the department was not repre-
sented by an attorney in the magistrate division.

Cite as 345 Or 620 (2009) 	623
of attorney fees against taxpayers. Therefore, we reverse the
judgment of the tax court.
I. 	STATUTES AND PROCEDURAL BACKGROUND
An understanding of the text of the statutes that
authorize awards of damages and attorney fees by the tax
court will aid our discussion of the procedural context and
decision below. Accordingly, we quote those statutes at this
point.
ORS 305.437 provides:
"(l) 	Whenever it appears to the Oregon Tax Court that
proceedings before it have been instituted or maintained by
a taxpayer primarily for delay or that the taxpayer's posi-
tion in such proceeding is frivolous or groundless, damages
in an amount not to exceed $5,000 shall be awarded to the
Department of Revenue by the Oregon Tax Court in its
judgment. Damages so awarded shall be paid within
10 days after the judgment becomes final. If the damages
remain unpaid, the department may collect the amount
awarded in the same manner as income taxes are collected
under ORS 314.430.
"(2) 	As used in this section, a taxpayer's position is
'frivolous' if there was no objectively reasonable basis for
asserting the position."
ORS 20.105 provides, in part:
"(l) 	In any civil action, suit or other proceeding in a
circuit court or the Oregon Tax Court, or in any civil appeal
to or review by the Court of Appeals or Supreme Court, the
court shall award reasonable attorney fees to a party
against whom a claim, defense or ground for appeal or
review is asserted, if that party is a prevailing party in the
proceeding and to be paid by the party asserting the claim,
defense or ground, upon a finding by the court that the
party willfully disobeyed a court order or that there was no
objectively reasonable basis for asserting the claim, defense
or ground for appeal."
With those provisions in mind, we turn to the proce-
dural history that gives rise to this appeal. Taxpayers filed
an income tax return for the year 2002, in which they
claimed that they had received no income. The department
disagreed and issued a notice of assessment to taxpayers. On

624 	Dept. of Rev. v. Croslin
November 15, 2004, taxpayers, proceeding prose, filed a com-
plaint in the magistrate division of the Oregon Tax Court,
making arguments that, as they now concede, lacked an
objectively reasonable basis. 3 The department defended its
assessment and requested an award of damages under ORS
305.437. The department, however, offered no evidence of the
nature or the extent of its damages resulting from taxpayers'
frivolous arguments. On February 22, 2005, the magistrate
issued a decision that upheld the assessment and agreed that
taxpayers' arguments were frivolous. However, in a later
order dated March 24, 2005, the magistrate declined to
award damages to the department, stating:
"The court's sticking point, however, is that [the depart-
ment's] actual damages are trivial. The court has made an
economical use of its resources. [The department's] partici-
pation to date has consisted of filing a routine pleading and
participating in a brief telephone hearing. Under the think-
ing that any award would be de minimus [sic], the court will
not revise its Decision to allow damages."
Taxpayers paid the assessed tax, together with penalties and
interest, on or around April 4, 2005.
On April 22, 2005, the department appealed to the
regular division of the Oregon Tax Court, seeking an order
remanding the case to the magistrate with instructions to
award damages under ORS 305.437, because taxpayers had
asserted a frivolous position before the magistrate. In their
answer, taxpayers argued that their position was not frivo-
lous. In particular, taxpayers pointed out that "[t]he order
from [the magistrate] was clear in that it stated that the
damages were 'trivial.' "
The department then moved for summary judgment,
asking the tax court to uphold the assessment of taxes and
award damages under ORS 305.437. The department sought
to dispute the magistrate's conclusion that the department
3 For example, taxpayers asserted that they had earned no "income" because
they were not "employees" and also had earned no "wages." However, they arrived
at their position only by seriously misinterpreting the pertinent statutory defini-
tions of those and other terms, and by ignoring clear evidence of their liability. Tax-
payers, as they now acknowledge, cannot rely on their plainly incorrect view of the
facts and the tax statutes to avoid paying their taxes.

Cite as 345 Or 620 (2009) 	625
had incurred only "trivial" damages by attaching an affidavit
averring that the department had paid approximately $285
to two employees to audit taxpayers' return. The department
argued that, notwithstanding that expense, the court was not
limited to that sum in determining damages under ORS
305.437 and that it could consider other factors, such as
resources expended by the department and by the court, and
taxpayers' "defiant attitude." In their response, taxpayers
repeated several arguments that the magistrate had found
frivolous, 	but 	also 	expressly relied 	on the 	magistrate's
description of the department's actual damages as "trivial."
The tax court denied summary judgment. Each party filed
amended pleadings, and the matter proceeded toward trial
on the department's claim for damages. 4
Prior to trial, taxpayers retained legal counsel. On
the eve of the trial, taxpayers moved to withdraw their origi-
nal complaint in the magistrate division and explained that
they "ha[d] accepted, and do now accept," the magistrate's
decision, that they had not appealed from the magistrate's
decision, and that they had paid the tax deficiency 10 months
earlier. The tax court denied the motion, stating that it had
no authority to allow withdrawal of the complaint from a sep-
arate proceeding before the magistrate division. Croslin, 19
OTR at 73.
At trial before the tax court, the department main-
tained that ORS 305.437 mandated an award of damages
because taxpayers had asserted frivolous arguments before
the magistrate and also in the regular division, at least until
they withdrew them before trial. The department asserted
that it was not required to prove its damages with evidence.
Finally, the department contended that the court's authority
4 The department argued to the tax court that taxpayers' reference in their
answer to some of their earlier arguments, such as the purported nontaxability of
wages, meant that taxpayers were seeking to overturn the magistrate's decision
and obtain a refund of their taxes, and were not attempting only to justify the mag-
istrate's decision not to award damages. However, taxpayers did not appeal the
magistrate's decision to the regular division, and their answers to the department's
complaint contain no counterclaim or other request for relief from the magistrate's
decision. Taxpayers' answer to the department's amended complaint stated, in per-
tinent part: "Defendants feel that there are issues that have been repeatedly
addressed, that at this point are irrelevant to the real issue at hand. Damages."
Taxpayers' arguments were not so broad as the department contended.

626 	Dept. of Rev. v. Croslin
to award damages under ORS 305.437 was not limited to the
department's expenses. In the department's view, that stat-
ute also permitted the court to award an amount that would
punish taxpayers, prevent a waste of resources, and send a
message of deterrence to other taxpayers.
Taxpayers again confirmed that they had aban-
doned their earlier frivolous arguments. They argued that
they were not liable for damages under ORS 305.437 because
they had not "instituted or maintained" the proceeding in the
regular division, within the meaning of that statute. Taxpay-
ers defended the magistrate's decision declining to award
damages on the ground that the record before the magistrate
had lacked any evidence of the department's damages. They
pointed out that the department had introduced evidence of
its approximately $285 auditing expense for the first time in
the regular division. They asserted that there was no evi-
dence establishing a causal link between taxpayers' frivolous
arguments and the department's auditing expense. Finally,
taxpayers asserted that the department was not entitled to
an award of attorney fees.
The tax court acknowledged taxpayers' concession
that their arguments before the magistrate division had been
frivolous and also determined that taxpayers had continued
to assert those arguments in the regular division before
abandoning them prior to trial. Their abandonment of those
arguments was "of limited help," the court stated, and
amounted to an "attempt to extend the white flag of surren-
der at the eleventh hour in order to stave off an award of
attorney fees and damages." Croslin, 19 OTR at 75 (quoting
Masse II v. Dept. of Rev., 18 OTR 240, 253 (2005) (internal
quotation marks omitted)).
Next, the tax court rejected taxpayers' argument
that ORS 305.437 did not apply to the proceeding in the reg-
ular division because taxpayers had not "instituted or main-
tained" it. The tax court concluded that ORS 305.437 applied
to all proceedings "regardless of which party instituted or
maintained the action," id. at 77, and that taxpayers' argu-
ment on that point was not only wrong, but was frivolous
itself. Id. at 78.
The tax court then turned to taxpayers' argument
that the department had failed to prove its damages. The tax

Cite as 345 Or 620 	627
court opined that it was authorized by ORS 305.437 to award
damages for any of three purposes-punishment, deterrence,
and 	compensation-and 	that 	that 	statute 	imposed 	no
requirements of pleading or proof as predicates for an award
of damages. Nonetheless, the tax court held that taxpayers'
argument on that point was not frivolous, because they
"might have relied on statements in the magistrate's deci-
sion." Croslin, 19 OTR at 80. In sum, the tax court held that
taxpayers' arguments before both the magistrate division
and the regular division were frivolous, with the one excep-
tion of taxpayers' argument regarding proof of the appropri-
ate amount of damages. On the basis of the arguments that
the tax court deemed frivolous, the court awarded damages
to the department under ORS 305.437 in the sum of$1,000.
The tax court next addressed the 	department's
request for attorney fees under ORS 20.105. First, the court
determined that the department was the prevailing party.
The court then stated that a single nonfrivolous "claim,
defense or ground for appeal" ordinarily would enable tax-
payers to avoid an award of attorney fees. Id. at 81 (citing
Patton II v. Dept. of Rev., 18 OTR 256, 262 (2005)). However,
the court held that the statutory phrase "claim, defense or
ground for appeal" referred solely to arguments raised in the
pleadings. According to the tax court, taxpayers had not
advanced their one nonfrivolous argument, that the magis-
trate correctly declined to award damages, until the eve of
trial. The tax court held that taxpayers could not "avoid an
award of attorney fees simply by throwing a nonfrivolous
argument into the mix at the last minute." Id. at 82. Accord-
ingly, the tax court awarded attorney fees to the department
in the amount of $6,000.
On appeal to this court, taxpayers challenge the
awards of damages and attorney fees by the tax court.
IL 	ANALYSIS
Like the tax court, we address three separate issues
that this case poses:
L 	Does ORS 305.437 require the magistrate to award
damages against taxpayers?
2. 	Does ORS 305.437 require or permit the tax court to
award damages against taxpayers?

628 	Dept. of Rev. v. Croslin
3. 	Does ORS 20.105 authorize the tax court to award
attorney fees against taxpayers?
A. 	The Claim for Damages in the Magistrate Division
The regular division proceeding is an "original, inde-
pendent proceeding[ ] and [is] tried * * * de nouo." ORS
305.425(1). Despite the independent and de nouo character of
the regular division proceeding, we see nothing inappropri-
ate in the decision of the tax court to examine whether the
magistrate had erred in applying ORS 305.437. The answer
to that inquiry potentially could affect the extent of any
award of damages that the tax court might make. We turn,
then, to the magistrate's application of ORS 305.437.
At the outset, we note that we have no disagreement
with the magistrate's conclusion, with which taxpayers now
agree, that taxpayers' original justifications for denying that
they had earned income in 2002 were frivolous. This court
rejected similar justifications by a taxpayer as frivolous in
Combs v. Dept. of Rev., 331 Or 245, 248, 14 P3d 584 (2000),
and affirmed an award of damages under ORS 305.437. The
sole legal question here concerns the magistrate's refusal to
award damages to the department. To resolve that question,
we must interpret ORS 305.437. In the words of that statute,
we must determine the legislature's intent in requiring an
award of "damages" to the department when "the taxpayer's
position in such proceeding is frivolous." 5
No statute specially defines "damages," as ORS
305.437 uses that term. However, the term "damages" has an
established legal meaning. 6 Black's Law Dictionary 351-52
(5th ed 	1979) provides 	the following legal definition of
"damages":
"A pecuniary compensation or indemnity, which may be
recovered in the courts by any person who has suffered loss,
detriment, or injury, whether to his person, property, or
" Combs did not explore the meaning of the statutory term "damages," because
the taxpayer in that case asserted no challenge to the amount of damages that the
tax court had awarded.
6 ORS 31.710(2) contains special definitions of the phrases "economic dam-
ages" and "noneconomic damages" that apply to certain civil proceedings for bodily
injury, death, or property damage described in ORS 31. 710(1). Those statutory def-
initions do not apply to ORS 305.437.

Cite as 345 Or 620 	629
rights, through the unlawful act or omission or negligence
of another. A sum of money awarded to a person injured by
the tort of another. Restatement, Second, Torts, § 12A."
Under that legal definition, a "damages" award, in
its essence, compensates a party for the injury caused to that
party by a wrong or injury. The extent of a party's "damages"
typically depends on proof of a loss or injury that flows as a
direct consequence of the wrongful act or omission in ques-
tion. We conclude that ORS 305.437 incorporates at least
that compensatory principle in referring to a "damages"
award in favor of the department.
Courts also are familiar with another form of dam-
ages, "punitive" or "exemplary" damages. Courts award that
form of damages over and above compensation for loss or
injury to punish an actor for aggravated or oppressive behav-
ior and to deter or set an example for similar wrongdoers.
"In cases in which it is proved that a defendant has
acted willfully, maliciously, or fraudulently, a plaintiff may
be awarded exemplary damages in addition to compensa-
tory or actual damages."
Id. at 352. Whether ORS 305.437 requires (or even permits) a
damages award not only to compensate the department for
loss but also to punish taxpayers is a question that the text of
that statute does not answer.
In other statutes that govern the administration of
tax laws, the legislature has used a different term, i.e., "pen-
alty," to describe a monetary fine that is designed to inflict
punishment for wrongful conduct. See ORS 305.228(1), (2); 7
7 ORS 305.228 provides, in part:
"(1) The Department of Revenue shall assess a penalty against any person
who has previously tendered a dishonored check, draft, order or electronic
funds transfer for the payment of any amount collected by the department and
who subsequently makes and tenders to the department any check, draft,
order or electronic funds transfer for the payment of any tax or any other
amount collected by the department, including amounts assigned for collection
under ORS 293.250, that is dishonored by the drawee for the following reasons:
"(a) Lack offunds;
"(b) Lack of credit;
"(c) Because the maker has no account with the drawee; or
"(d) Because the maker has ordered payment stopped on the check, draft,
order or electronic funds transfer.

630 	Dept. of Rev. v. Croslin
ORS 316.992(1), (2). 8 The term "penalty" also is a familiar
legal concept; it "involves [the] idea of punishment, corporeal
or pecuniary, or civil or criminal, although its meaning is
generally confined to pecuniary punishment." See Black's at
1020 (defining "penalty").
From the foregoing, it appears that the legislature's
use of the word "damages," rather than "penalty," in ORS
305.437 indicates that the legislature intended an award of
damages under that statute to serve the objective of compen-
sation for proven loss, but not punishment. Two additional
aspects of statutory text reinforce that view.
First, each of the penalty statutes quoted above
incorporates a mathematical formula that governs calcula-
tion of the penalty. Under ORS 305.228(2), the penalty for
tendering a dishonored check or other negotiable instrument
is "the greater of $25 or three times the amount of the dishon-
ored check, draft, order or electronic funds transfer. The
amount of the penalty shall not be greater than $500." Under
ORS 316.992(1), the penalty for filing an incomplete or incor-
rect return is a specific sum, $250. Those statutes leave no
discretion for the calculation of a "penalty." ORS 305.437, by
contrast, contains no formula for calculating "damages,"
except that the award may not exceed $5,000.
"(2) The amount of the penalty assessed under subsection (1) of this sec-
tion shall be equal to the greater of$25 or three times the amount of the dis-
honored check, draft, order or electronic funds transfer. The amount of the pen-
alty shall not be greater than $500."
(Emphasis added.)
"ORS 316.992 provides, in part:
"( 1) The Department of Revenue shall assess a penalty of$250 against any
individual who files what purports to be a return of the tax imposed by this
chapter but which:
"(a) Does not contain information on which the substantial correctness of
the self-assessment may be judged; or
"(b) Contains information that on its face indicates that the self·
assessment is substantially incorrect.
"(2) A penalty may be imposed under subsection ( 1) of this section only if
the conduct referred to in subsection (1) of this section is due to:
"(a) A position which is frivolous; or
"(b) An intention, apparent on the face of the purported return, to delay or
impede the administration of the income tax laws of this state.
(Emphasis added.)

Cite as 345 Or 620 (2009) 	631
Second, ORS 316.992(2) permits imposition of a pen-
alty for filing an incomplete or incorrect return only if the
improper filing is due to "[a] position which is frivolous" or an
intention "to delay or impede the administration of the
income tax laws of this state." ORS 305.437 addresses frivo-
lous and delay-motivated litigation, but does so through an
award of "damages," not a penalty. The distinctive textual
elements 	discussed 	above 	indicate 	that 	the 	legislature
intended ORS 305.437 to incorporate a policy of compensa-
tion for the department's proven losses caused by a tax-
payer's frivolous litigation, but not an additional policy of
financial recovery beyond compensation to punish the tax-
payer. We reach that conclusion to give effect, as we must, to
the legislature's use in the tax statutes of different terms,
each with well-known definitions, to describe different con-
sequences for frivolous litigation. The department cites no
authority supporting a contrary statutory construction.
Although not cited by the parties or the court below,
one case is relevant to our discussion. In Stirling v. Dari-
Delite, 	Inc., 	262 	Or 359, 491 	P2d 1168, on 	motion for
damages, 494 P2d 252, on motion to recall mandate, 498 P2d
753 	(1972), 	this 	court 	had 	awarded 	a 	monetary 	sum
against an unsuccessful defendant who, on appeal, had failed
to obtain reversal of a default judgment for damages in the
sum of $84, 700. A statute, former ORS 19.160 (1953), renum-
bered as ORS 19.445 (1997), 9 required the appellate court,
on affirming a judgment for recovery of money, to give judg-
ment for an additional specific sum-10 percent of the
amount of the trial court judgment-"for damages for the
delay," unless there was probable cause for taking the
appeal. After the court made that award on appeal, the
defendant's surety, an insurance company, challenged its
liability for 	the 	additional 	award 	of "damages 	for 	the
delay." This court declined to relieve the surety company of
its liability, because the legislature had used the same word,
9 ORS 19.445 provides:
"Whenever a judgment is affirmed on appeal, and it is for recovery of
money, or personal property or the value thereof, the judgment shall be given
for 10 percent of the amount thereof, for damages for the delay, unless it
appears evident to the appellate court that there was probable cause for taking
the appeal."

632 	Dept. of Rev. v. Croslin
"damages," to describe the amounts for which a surety was
liable on appeal.
In dictum, this court in Stirling described the statu-
tory award for "damages for the delay" under former ORS
19.160 as a "penalty to discourage frivolous appeals taken
without probable cause for the purpose of delay***." Id. at
370. We agree with that characterization. Like the penalty
statutes regarding tax law administration discussed above,
the statute in Stirling required imposition of a judgment for
a specific amount of money as the price for identified miscon-
duct on appeal. As the court explained in Stirling, the legis-
lature's specification of the required amount of the award on
appeal defeated any inference that the amount of "damages
for the delay" depended on a showing of actual damages.
That circumstance, and the legislature's distinctive use of the
terms "damages" and "penalty" in the tax statutes, distin-
guish Stirling for purposes of this discussion.
In addition to the term "penalty," the legislature also
has used the word "sanction" to describe, among other things,
a monetary award, in favor of either a party or the court, that
results from certain misconduct during litigation. ORCP 17 D
provides, in part:
"(1) 	The 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 responsi-
ble for a false certification under section C of this rule.
"* * * * *
"(4) 	Sanctions under this section must be limited to
amounts sufficient to reimburse the moving party for attor-
ney fees and other expenses incurred by reason of the false
certification, 	including 	reasonable 	attorney 	fees 	and
expenses incurred by reason of the motion for sanctions,
and upon clear and convincing evidence of wanton miscon-
duct amounts sufficient to deter future false certification by
the party or attorney and by other parties and attorneys.
The sanction may include monetary penalties payable to
the court. The sanction must include an order requiring
payment of reasonable attorney fees and expenses incurred
by the moving party by reason of the false certification."
(Emphasis added.)

Cite as 345 Or 620 (2009) 	633
Sanctions 	awarded 	under 	ORCP 	17 	D(4) 	carry
express compensatory and punitive consequences. We think
that it is significant that the legislature, in referring to "dam-
ages" in ORS 305.437, incorporated no wording, similar to
that in ORCP 17 D(4), confirming that a damages award
should reflect the amount necessary to deter misconduct by a
party or attorney.
We conclude from the foregoing that the legislature
clearly intended an award of "damages" under ORS 305.437
to compensate the department for its actual losses caused by
a taxpayer's pursuit of a frivolous position in proceedings
before the Oregon Tax Court. No party contends that that
statute has no application in the magistrate division, so the
magistrate properly considered its application to the facts
before him. The record before the magistrate contained no
evidence of any actual losses, costs, or expenses to the depart-
ment caused by taxpayers' frivolous position in that tribunal.
The magistrate noted that the department's "actual damages
are trivial" and that "any award would be de minimus [sic]"
because the department's effort in the magistrate division
was so limited. In light of the compensatory policy that
underlies ORS 305.437, as discussed above, and the magis-
trate's findings concerning the lack of evidence of damages,
we conclude that the magistrate did not err in declining to
award damages.
B. 	The Claim for Damages in the Regular Division
The department's complaint in the regular division,
as already noted, sought an award of damages under ORS
305.437, because, in the statute's terms, "the taxpayer's posi-
tion in such proceeding is frivolous." (The other bases for an
award under ORS 305.437, i.e., asserting a position that is
"groundless" or instituting or maintaining proceedings "pri-
marily for delay," are not in issue here.) In determining
whether a taxpayer's "position" is frivolous, we apply the leg-
islature's special definition of "frivolous" in ORS 305.437(2)
("[a]s used in this section, a taxpayer's position is 'frivolous' if
there was no objectively reasonable basis for asserting the
position").
We turn first to the meaning of the term "position."
The legislature did not enact a special definition of that term.

634 	Dept. of Rev. v. Croslin
The ordinary definition, in this context, is "a proposition or
thesis laid down: ASSERTION, STATEMENT*** the ground or
point of view adopted with reference to a particular subject
* * *."Webster's Third New Int'! Dictionary 1769 (unabridged
ed 2002). The legislature's use of the singular term "position"
indicates an intent to use that term to denote the entirety of
a taxpayer's assertions, that is, all the taxpayer's claims,
defenses, and supporting arguments in the proceeding. In
this context, "position" refers to the arguments, in their
entirety, that taxpayers asserted in opposition to the depart-
ment's complaint for damages under ORS 305.437. 10
This court's case law supports that view. In Detrick
v. Dept. of Rev., 311 Or 152, 806 P2d 682 (1991), this court
upheld an award of damages under ORS 305.437(1). The
court stated:
"We consider whether the taxpayers' position is 'ground-
less.' Consonant with our interpretation in Mattiza [u.
Foster, 311Or1, 803 P2d 723 (1990)] of what constitutes a
'meritless' claim or defense, we interpret 'groundless' to
mean that the taxpayer's position be entirely devoid of fac-
tual or legal support. By 'entirely devoid of factual or legal
support,' we mean this: As to factual support, no evidence is
offered that, if believed, would support a finding and a
resulting judgment for the taxpayer in the Tax Court. As to
legal support, there is no law-case law, statute, rule or
regulation-that supports the taxpayer's claim to relief in
the Tax Court."
Id. at 157 (footnote and internal citations omitted). The court
then examined each of the two contentions that the taxpay-
ers raised in the tax court and on appeal, determined that
each contention was entirely devoid of legal and factual sup-
port, and ultimately concluded that "the taxpayers' position
is groundless because there is no legal support for either of
10 An interpretive question arises from the legislature's use of the present
tense verb "is" in the statutory phrase "the taxpayer's position in such proceeding
is frivolous or groundless***." ORS 305.437(1). That term suggests that the leg-
islature intended the Oregon Tax Court to determine whether the taxpayer's posi-
tion "is frivolous or groundless" at the time when the court determines the damage
claim, and that the inquiry does not extend to arguments that a taxpayer asserted
earlier but has abandoned. Abandoned frivolous arguments arguably are no longer
part of a taxpayer's "position." In light of our disposition here, we need not resolve
that issue.

Cite as 345 Or 620 	635
their assertions." Id. at 158 (emphasis added). The court's
construction of the term "position" in Detrick as the aggre-
gate of the taxpayers' two arguments is pertinent to our
interpretive inquiry here, because, in applying either statu-
tory criterion-frivolousness or groundlessness-the court's
analytical focus is on the taxpayer's "position."
We conclude that taxpayers' position in the regular
division was not entirely devoid of factual or legal support, in
the Detrick sense. Before the tax court, taxpayers asserted
the factual and legal argument on which the magistrate had
relied, that is, that the department had not shown any "dam-
ages" that were more than trivial and that proof of actual
damages was required. The tax court rejected that argument
but determined that it was not a frivolous argument. We
agree that the argument was not frivolous, because, for rea-
sons already discussed, that argument, expressed by the
magistrate and adopted by taxpayers, was correct.
The observation by the tax court that taxpayers had
not 	made 	the 	argument 	that 	the 	magistrate 	correctly
declined to award damages until the eve of the trial is not
supported by the record. Taxpayers had asserted that conten-
tion consistently in their answers in the regular division.
Other aspects of taxpayers' position also were not
frivolous. Taxpayers argued that the department offered an
insufficient causal link between taxpayers' frivolous argu-
ments and any claimed loss or expense by the department.
That argument has some merit. There was little evidence to
show, for example, that all the department's auditing activi-
ties were causally linked to frivolous claims, as opposed to
the need to review taxpayers' returns and paperwork for
other purposes.
Taxpayers also raised an argument about the mean-
ing of the phrase "instituted or maintained" in ORS 305.437.
Taxpayers claimed that they had not "instituted or main-
tained" the proceeding before the regular division and that
the statutory phrase "the taxpayer's position in such proceed-
ing is frivolous" referred to a proceeding instituted or main-
tained by the taxpayer. (Emphasis added.) The tax court
noted that taxpayers had asserted that a rule of legal inter-
pretation-the rule of the last antecedent-supported their

636 	Dept. of Rev. v. Croslin
construction of the statute and that they had cited a case,
State v. Webb, 324 Or 380, 386-88, 927 P2d 79 (1996), that
described the rule of the last antecedent. The tax court
decided that that contention was both legally incorrect and
frivolous. According to the court, the statutory phrase "such
proceeding" necessarily applied to "all proceedings before the
court, regardless of which party institutes or maintains
them." Croslin, 19 OTR at 77.
We need not decide here whether the tax court was
correct in concluding that the statutory phrase "such pro-
ceeding" refers to any proceeding whether or not a taxpayer
institutes or maintains it. Taxpayers asserted a view of the
statute that they justified with a familiar legal principle, a
supporting case, and a clear discussion of and reliance on
statutory text. Whether or not taxpayers were legally correct,
we cannot conclude, as Detrick discussed, that taxpayers'
argument in that regard was devoid of legal or factual sup-
port. The tax court erred in concluding otherwise.
In summary, we hold that the tax court erred in con-
cluding 	that 	taxpayers' 	"position" lacked 	an objectively
reasonable basis in each division, and it should have dis-
missed the department's complaint for damages under ORS
305.437.
C. 	The Claim for Attorney Fees
ORS 20.105 authorizes an award of attorney fees in
favor of a "prevailing party." The tax court granted an award
of attorney fees to the department, because it concluded that
the department had prevailed on its damages claim against
taxpayers under ORS 305.437. For reasons already dis-
cussed, the department was not entitled to an award of dam-
ages, and the tax court's contrary determination was errone-
ous. Taxpayers were the prevailing party regarding the
department's damages claim; the tax court should have dis-
missed that claim. Because the department does not satisfy
the prevailing party requirement in ORS 20.105, that statute
does not authorize the tax court to award attorney fees to the
department.

Cite as 345 Or 620 	637
The judgment of the Oregon Tax Court is reversed,
and the case is remanded to that court for further pro-
ceedings.