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If your SIL (reguardless of his being a LEO) filed a false report, he is the one that is liable. (under liable law). As is was not in the performence of his offical duties he will not be able to have the city/county/state defend him. You should be able to recover your costs, maybe more. It is a tort to liable someone, and if that liable costs the liabled person reputation or funds, they are recoverable under civil tort law.
Correct, except I think you meant he's liable under "libel" law. That's written defamation. He's also guilty of slander which is spoken defamation. I'm not going for that. I'm going for "intentional infliction of severe emotional distress" because he not only libeled and slandered me, he's caused me great worry and distress about whether I would be prosecuted (he's a leo) and whether I would ever get my CHL back.
We could amend the complaint with alternative theories, charging exactly the same facts three times, but heading the new causes of action as first libel and then slander. We'd just have to be sure that all of the elements of those charges were alleged. Otherwise it would be cut and paste.
Oregon Rules of Civil Procedure (ORCP) actually encourage alternative theories, even if they contradict themselves.