Blunck & Walhood

News & Updates


Lawrence Recognized by America's Top 100 Attorneys
November 2016

Announcing the Lifetime Achievement selection of Lawrence P. Blunck among American’s Top 100 Attorneys. This selection is by invitation only and reflects Lawrence’s lifetime of hard work, ethical standards, and community enriching accomplishments that are inspiring among the legal profession.

To see Lawrence's profile on the ATA website, click here.

Lawrence Recognized by The American Academy of Trial Attorneys
September 18, 2015

The American Academy of Trial Attorneys (AATA) has recently recognized Lawrence P. Blunck as one of 100 premier trial attorneys in the state of Oregon. This is a distinction reserved for attorneys who have established themselves through their professionalism and excellence in service. Congratulations Lawrence!

To see Lawrence's profile on the AATA website, click here.

Homeowner Claims in the Pacific Northwest
October 15, 2014

Covering an area of about 1 square mile, the March 2014 Oso, Washington landslide claimed 42 lives and one victim remains missing. The mudslide also destroyed 49 homes and other structures.

There have been many discussions and articles published about the cause of the slide. As of July 14, 2014, the Geotechnical Extreme Events Reconnaissance Association continues to write its causation report of the Oso landslide.

In general, mudslides or landslides occur because of erosion, earthquakes, mining, heavy rains, snowmelt, or excess groundwater. Heavy rains are common in the Pacific Northwest and are often the cause of significant property damage.

We understand at Blunck & Walhood that it can be challenging as a homeowner or tenant to know what to do after experiencing a sudden loss because of a landslide, fire, flood or earthquake. Our goal is to provide homeowners with the best legal support available after sustaining such losses. We do this by listening to our clients, working proactively, and abiding by best legal practices.

Snohomish County Sheriff’s Office (May 28, 2014). “SR 530 Slide Area Missing Person List”. Article accessed July 14, 2014 at wa-snohomishcounty.civicplus.com

Oregon Court of Appeals Addresses Whether Insurance Policy of Sider is Garnishable Property and Whether the Garnishor is Entitled to Attorney Fees
October 1, 2014

FountainCourt Homeowners’ Association v. FountainCourt Development, LLC, et al., 264 Or App 468 (2014). This appeal arises from a garnishment proceeding in which a homeowners’ association and condominium owners’ association (collectively, “FountainCourt”) alleged that a sider’s insurer was legally obligated to pay the judgment that FountainCourt had obtained against the sider in an underlying construction defect action. Sideco was the sider. American Family was Sideco’s insurer. FountainCourt obtained a judgment in the amount of $433,958.16 against Sideco.

FountainCourt sought to garnish Sideco’s insurance policy with American Family after the trial court entered the judgment in the underlying construction defect action. American Family responded by arguing that it held no property belonging to Sideco and denied owing any debt to Sideco. FountainCourt moved for an order to show cause on the writ of garnishment and requested a hearing to determine whether American Family should be liable under ORS 18.775 for the amount necessary to satisfy the garnishment, “along with an award of costs.” The trial court held a hearing under ORS 18.782 and found that: (1) FountainCourt had met its prima facie burden of proving coverage under the policies of insurance issued by American Family; (2) the burden of proof was on American Family to prove what portions, if any, of the judgment entered against Sideco are excluded by the policies; (3) American Family was unable to meet its burden of proving that any portion of the damages awarded against Sideco for property damage were not covered by the policies; and (4) American Family was unable to show whether or how the jury apportioned damaged among the FountainCourt buildings, and as such, its multi-unit exclusion was inapplicable and it was liable for the entire amount of the unsatisfied judgment entered against Sideco. The trial court then entered a supplemental judgment against American Family for $433,958.16, together with such amount of FountainCourt’s attorney fees, costs, and disbursements as may be determined pursuant to ORCP 68.

FountainCourt filed an ORCP 68 motion and petition for attorney fees and costs, asserting an entitlement to attorney fees under ORS 742.061 (allowing reasonable attorney fees in actions upon a policy of insurance). American Family opposed that motion, arguing that ORS 742.061 was inapplicable in a garnishment proceeding and, in all events, that FountainCourt had failed to allege an entitlement to attorney fees under that statute in its motion for an order to show cause. After a hearing, the trial court concluded that FountainCourt was entitled to recover its attorney fees and gave FountainCourt leave to amend its show-cause motion to include a claim for attorney fees, which FountainCourt did. The trial court then entered a supplemental judgment awarding FountainCourt attorney fees in the amount of $68,538, along with costs and disbursements. American Family appealed.

American Family asserted three assignments of error on appeal: (1) the trial court erred in concluding that American Family held garnishable property of Sideco, and denying American Family’s request to be released from the Writ of Garnishment; (2) the trial court’s finding that FountainCourt had met its prima facie burden of providing coverage under the policy was not supported by evidence in the record; and (3) the trial court erred in denying American Family’s request for a jury trial. Regarding the first assignment of error, American Family contended that FountainCourt failed to satisfy its burden of proving coverage in either of two ways: (1) it did not show that the judgment awarded compensation only for “property damage” as provided in the insuring agreement; or (2) it did not show that the judgment was for property damage that occurred solely during the American Family policy period, or while it was “on the risk.”

The Court of Appeals ultimately concluded that (1) FountainCourt had satisfied its prima facie burden; (2) the burden then shifted to American Family to prove that any portion of the damages awarded by the jury was not covered by the policy by reason of any exclusion, and American Family had failed to meet that burden; (3) the judgment represented a determination of liability of the type that is subject to American Family’s insurance obligation as a contractual – not a factual – matter; (4) that the trial court did not make a “factual determination” but rather determined as a “matter of law” whether FountainCourt satisfied its prima facie burden; (5) the question before the trial court in the garnishment proceeding was not – as a matter of fact – whether Sideco had been found liable on a basis for which it has insurance coverage, and in what amount, but rather, whether the judgment reflects a determination of applicable liability – that is, because the entry of the judgment triggered American Family’s obligation to pay a covered debt, the court was called upon to determine the import of that judgment under the parties’ contact as a legal matter; and (6) FountainCourt did not properly plead an entitlement to attorney fees as required by ORCP 68C(2) because FountainCourt did not allege a right to recover attorney fees under ORS 742.061 in its motion for an order to show cause.

In reaching its conclusion, the Court of Appeals made a number of key determinations relating to insurance coverage, such as the following.

1. Since American Family chose to structure its insurance policy as a broad grant of coverage, subject to a list of exclusions, including an exclusion for “Damage to Your Work,” the Court of Appeals rejected American Family’s proposition that the “your work” distinction is one inherent in the definition of “property damage,” rather than an exclusion under the policy.

2. The construction defect case went to the jury on the sole theory of negligence causing physical property damage, since (a) negligent construction causing property damage was the only viable claim for FountainCourt against Sideco, citing Harris v. Suniga, 344 Or 301 (2008); (b) the trial court instructed the jury that FountainCourt must allege and prove physical damage to its property and that the jury shall determine the amount of physical damage to FountainCourt’s real property, if any, that was caused by the defendants’ fault or negligence; (c) the testimony of FountainCourt’s expert at the garnishment hearing evidenced that there was physical damage, due to Sideco’s defective work, to underlying materials in all of the FountainCourt buildings; and (d) the testimony of FountainCourt’s expert at that hearing also evidenced that Sideco’s allocation was approximately $1.5 million and the amount of $485,000 awarded by the jury against Sideco could have been to repair that resulting damage.

3. Since FountainCourt’s expert testified at the garnishment hearing that (a) the damage to the buildings from the water intrusion occurred after the construction on each building was completed and that the damage would continue to occur, or progress, until it was repaired and (b) every building in the project sustained water damage because of defects in Sideco’s work while the American Family policies were in effect, the Court of Appeals determined that:

[G]iven the progressive and continuing nature of the harm alleged by FountainCourt and found by the jury – water intrusion causing property damage – the award of damages reflected in the judgment against Sideco could represent an award of damages for property damage – that is, “[p]hysical injury to tangible property” – that occurred entirely during the American Family policy period[; and]

Stated in the converse, because of the harm alleged – ongoing and progressive property damage caused by water intrusion resulting from Sideco’s negligence – and the case that was presented to the jury, there is nothing in the record that would require a conclusion that any portion of the damages awarded by the jury represents damages for repairing property damage that occurred outside of American Family’s policy period.

4. “In the case of continuing and progressive water damage, the award of damages is not tied to discrete instances of property damage along a time continuum; instead the liability for property damage may be the same in every triggered policy period. That is so because the scope of repair – to replace the damaged structural components and eliminate the water intrusion – does not necessarily change depending on the year in which the damage occurred. Accordingly, given the nature of the injury, it is possible that both [another insurer for Sideco] and American Family could be liable for the same damage.”

5. The Court of Appeals rejected American Family’s theory that, in order to establish a prima facie case for coverage in the context of ongoing and progressive property damage, FountainCourt was required to exclude the possibility that the jury’s verdict includes damages for repairing property damage that occurred outside the American Family policy period. Rather, once FountainCourt established that the judgment reflects damages for property damage that occurred during American Family’s policy period, and that all of the damages awarded could have been for property damage sustained during that policy period, FountainCourt satisfied its burden of proving coverage under the insuring agreement, and it fell to American Family to establish that some portion of the damages included in the judgment did not reflect property damage occurring during its policy period.

6. The Court of Appeals did not determine, but also did not reject, that Oregon has essentially adopted an “all sums” approach, by which, once a policy is triggered under the insuring agreement, any one insurer whose policy is thus triggered has a duty to make its insured whole, absent an applicable exclusion, up to available policy limits.

7. The question of whether the judgment against Sideco can be understood as embodying a determination of liability to which the policy applies is not a question of whether American Family is legally bound by a prior determination but, rather, whether it is bound by its contract to pay the amount reflected in the judgment, which is a “purely legal question.”

8. American Family was not entitled to a jury trial, as the question before the trial court in the garnishment proceeding was not – as a matter of fact – whether Sideco had been found liable on a basis for which it has insurance coverage, and in what amount, but, rather, whether the judgment reflects a determination of applicable liability – that is, because the entry of the judgment triggered American Family’s obligation to pay a covered debt, the court was called upon to determine the import of that judgment under the parties’ contract as a legal matter.

9. The Court of Appeals did not determine, but also did not reject, whether ORS 742.061 applies in a garnishment proceeding.

Ventilation and Air Quality
September 15, 2014

A recent article published in The Oregonian discusses the green building market in metropolitan Portland and the difficulty of calculating listing prices for these specialty homes. Many features that increase the value of these homes, such as “advanced ventilation systems,” are not visible but serve important functions. The air-purification systems, for example, “keep fresh air circulating in the tightly sealed [homes].”

The Wall Street Journal explains in a related article that “though draft-free homes use less energy to heat and cool, they can lack the natural coming and going of air and in certain conditions (like use of exhaust fans) can result in a depressurization if a proper ventilation system hasn’t been installed.”

These articles are specific to green buildings, but air ventilation is needed in all dwellings and businesses. Lack of ventilation can lead to problems such as elevated humidity and mold growth. At Blunck & Walhood, we have represented clients with diverse environmental claims, many of which have been caused by lack of proper ventilation.

“Putting price tag on green building a challenge, even for the pros.” The Oregonian. Article published on June 27, 2014. Accessed June 27, 2014. Click here to access.

“High-end homes with high-end air purification systems.” The Wall Street Journal. Article published on June 27, 2013. Article accessed June 27, 2014. Click here to access.

Oregon Court of Appeals Confirms that Statutory Cap on Noneconomic Damages Applies to Injured Party’s Strict Product Liability Claim but Not to His Wife’s Loss of Consortium Claim
September 2, 2014

In the recent Court of Appeals’ decision of Rains v. Stayton Builders Mart v. Weyerhaeuser Company (filed August 13, 2014),the Court provided three key opinions. Following a jury trial the plaintiffs, husband and wife, were awarded $7,031,400 after reducing the total verdict of $9,374,500 by plaintiff Kevin Rains’ comparative negligence of 25%. The case arose from a fall at a worksite, which rendered plaintiff Kevin Rains a paraplegic.

One of the key rulings by the Court was that the strict products liability claim had a cap of $500,000 for noneconomic damages. The jury had awarded $3,125,000 for noneconomic damages to Kevin Rains, and with the court’s ruling the total damages were reduced by $2,625,000. A second key ruling by the Court was that there is no cap for noneconomic damages for a spouse’s claim based on loss of consortium (meaning loss of the society and companionship of the injured spouse). Consequently, plaintiff Mitzi Rains’ award of $1,012,500 for noneconomic damages was upheld.

A third key ruling was that Weyerhaeuser was not obligated to indemnify Stayton for Stayton’s $1,500,000-$2,000,000 agreed upon settlement amount with the plaintiffs. The Court ruled that Weyerhaeuser did not have to indemnify Stayton because Stayton did not “discharge a legal obligation” owed by Weyerhaeuser to the plaintiffs or “buy peace” for Weyerhaeuser to the extent of the $1,500,000-$2,000,000 that Stayton agreed to pay the plaintiffs.

Larry’s Induction to the American Society of Legal Advocates
August 18, 2014

The American Association of Legal Advocates (ASLA) recently announced Larry’s induction to the society’s Top 100 Lawyers listing. According to their website, “The American Society of Legal Advocates is an invitation-only, nationwide organization of elite lawyers in practice today who combine stellar legal credentials with a proven commitment to community engagement and the highest professional standards.” Congratulations Larry!

Click here to view his profile on the ASLA website.

Unemployment and Small Business Formation
July 31, 2014

Oregon’s unemployment rate jumped from 5.7% in May 2008 to 11.6% in May 2009. Since that jump, unemployment has steadily decreased by about one percent each year. Now it is around 6.9%.

Many factors contribute to the rise and fall of unemployment in Oregon and on a national level. Individuals and families are affected differently by the challenges unemployment presents. We have seen at Blunck & Walhood that some individuals modify or improve their financial situations amidst unemployment challenges by starting their own businesses.

Forbes published in a September 2009 article about small businesses that “75% of all U.S. businesses are nonemployer businesses.” A nonemployer business is one the does not include employees on payroll, makes more than $1,000 per year, and qualifies for federal income tax. Some businesses are large but an even greater number are small entities, formed by individuals.

In addition to civil litigation, we also provide business law legal services at Blunck & Walhood. We have provided services in the past ranging from small business formations to breach of contract litigation. Please call our office if you have any questions about how we can help with your business law needs.

Bureau of Labor Statistics. Accessed June 25, 2014 at data.bls.gov
Forbes. Article published on September 9, 2013. Article accessed June 25, 2014 at forbes.com

Oregon Court of Appeals Determines That ORS 31.825 Does Not Apply When the Assignment in the Settlement Agreement Predates the Stipulated Judgment
May 14, 2013

On February 27, 2013, the Court of Appeals in Brownstone Homes Condominium Ass’n v. Brownstone Forest Heights, LLC, et al., 2013 WL 707919 (2013) determined that (1) in the context of a settlement and a stipulated judgment, ORS 31.825 (regarding a defendant’s assignment of a cause of action against its insurer) does not apply when the assignment in the settlement agreement predates the stipulated judgment that was entered; and (2) when the nonexecution covenant in the settlement agreement is unqualified, and not conditioned upon continued cooperation or otherwise, the rule in Stubblefield v. St. Paul Fire & Marine, 267 Or 397 (1973) applies, which states as follows: (a) given the operation of the nonexecution covenant, the insurer assignor was no longer “legally obligated to pay” the plaintiff assignee; (b) thus, the insurer had no payment obligation to the assignor insured; and (c) consequently, the plaintiff assignee “acquired no rights which are enforceable by it” against the insurer.

Oregon Court of Appeals Enforces Accrual Clause in Construction Contract, Despite Argument That It Deprived Plaintiff of Negligence Remedy
April 12, 2013

On January 20, 2013, the Court of Appeals in Wood Park Terrace Apartments Limited Partnership v. Tri-Vest, LLC, 254 Or App 690 (2013) determined that (1) an accrual clause in a construction contract that establishes that the statute of limitations for all claims begins to run on the date when the project is substantially complete did not deprive plaintiff of a negligence remedy; (2) since the accrual clause did not operate as a broad waiver of negligence remedies, the contract need not have clearly and unequivocally spelled out the (nonexistent) waiver; and (3) since the parties agreed that ORS 12.080(3) provides the applicable limitation period (six years) for plaintiff’s negligence, negligence per se, and nuisance claims, the court did not consider whether the two-year period in ORS 12.110 may apply to such claims.

Oregon Court of Appeals Determines That the Filing of a Notice of Completion Pursuant to ORS 87.045 Does Not Constitute “Written Acceptance” Under ORS 12.135
March 10, 2013

On January 9, 2013, the Court of Appeals in PIH Beaverton, LLC v. Super One, Inc., et al., 254 Or App 486 (2013), (1) reaffirmed the holding in Sunset Presbyterian that the statute of ultimate repose in ORS 12.135 controls over that in ORS 12.115; (2) determined that the filing of a notice of completion pursuant to ORS 87.045 (which triggers the 75-day period for perfecting construction liens) does not constitute “written acceptance” under ORS 12.135 that the improvement has reached that state of completion when it may be used or occupied for its intended purpose and, thus, that it is substantially completed; (3) reaffirmed the holding in Sunset Presbyterian that, in the absence of written acceptance, substantial completion is not reached until “the contractee takes from the contractor the responsibility for the maintenance, alteration, and repair of the improvement, which typically, if not invariably, will be the point at which little or no work remains to be done by the contractor”; (4) determined that – in the absence of written acceptance – a project can only be considered substantially completed “when a contractee has accepted construction that actually has been completed”; and (5) held that ORS 12.135 does apply to a general contractor’s indemnity claims against its subcontractors, and the reasoning in Huff v. Shiomi, 73 Or App 605 (1985) (that a party’s common-law indemnity claim was not barred by the product liability statute of ultimate repose) does not apply in this case because ORS 12.135 applies to any action, “in contract, tort, or otherwise,” and was not limited to “damage for personal injury, death or property damages,” as was the case in Huff.

Oregon Court of Appeals (1) Upholds an Accrual Clause in Construction Contract That States That All Statutes of Limitation (Even for Non-Contract Claims, Such as Negligence and Negligence Per Se) Will Run From the Date of Substantial Completion and (2) Determines That the 10-Year Statute of Ultimate Repose in ORS 12.135 Controls Over the More General Repose Statute in ORS 12.115
March 9, 2013

On December 12, 2012, the Oregon Court of Appeals in Sunset Presbyterian Church v. Bockamp & Jaeger, Inc., et al., 254 Or App 24 (2012) upheld an accrual clause in a construction contract that states that all statutes of limitation (even for non-contract claims, such as negligence and negligence per se) will run from the date of substantial completion. In doing so, the court determined that if the construction contract defines the “date of substantial completion” as the “date certified by the Architect” and if the architect – per the terms of the contract – is to certify the date by preparing a Certificate of Substantial Completion, then the general contractor to the construction contract must submit evidence that the architect prepared a Certificate of Substantial Completion establishing the date of substantial completion in order to benefit from that date and the accrual clause stating that all statutes of limitation will run from that date. The Court of Appeals ended up reversing the trial court’s grant of the general contractor’s motions for summary judgment because the general contractor submitted no evidence establishing that the architect certified the date of substantial completion.

Also, in Sunset Presbyterian, the Court of Appeals interpreted ORS 12.135, concerning legal actions for damages from construction. In so doing, the court determined that (1) in cases involving the construction of an improvement to real property, the 10-year statute of ultimate repose in ORS 12.135 controls over the more general repose statute, ORS 12.115; (2) the reference to “contractee” in ORS 12.135 does not encompass a general contractor that has entered into contracts with subcontractors, but instead, the “contractee” to whom the statute refers is the person, typically the owner or developer, for whom the improvement is constructed, altered, or repaired; (3) in applying ORS 12.135, when there is no written acceptance of the construction, the statute of repose period under the statute would run from the date on which a general contractor transfers control of a completed improvement to the person who had contracted for its construction and that such a transfer occurs when the person takes responsibility from the contractor for the maintenance, alteration, and repair of the improvement; and (4) in this case, the point when the person takes from the contractor responsibility for the maintenance, alteration, and repair of the improvement will “typically, if not invariably,... be the point at which little or no work remains to be done by the contractor” or “when there is no shared responsibility for those tasks.”

Since the subcontractors did not submit evidence establishing that there was no disputed issue of fact about whether plaintiff took from the general contractor responsibility for the maintenance, alteration, and repair of the facility more than 10 years before plaintiff filed this action, and since plaintiff submitted evidence that construction work continued within 10 years of plaintiff filing this action (specifically identifying changes to the electrical system, fire-alarm system, and landscaping), the Court of Appeals concluded that a genuine issue of material fact existed, and it was error for the trial court to grant summary judgment to the subcontractors.

Oregon Supreme Court Decides That Plaintiffs are Required to Produce Expert Psychological Reports Prepared in Anticipation of Litigation
April 26, 2012

The Oregon Supreme Court’s December 30, 2011 decision, A.G. v. Robert Guitron and Aerobic and Dancewear Shoppe, LLC, addressed whether plaintiffs are required to produce written reports of psychological examinations made for the purpose of litigation. In this case, plaintiff alleged she was sexually abused by her dance instructor and sought damages for psychological injuries. Before trial, defendants requested that plaintiff produce “copies of any and all detailed written narrative reports of all treatments and examinations of the plaintiff which have been conducted by any healthcare professional setting forth the examiner’s finding.” In response, plaintiff produced the reports of her treating psychologist, but did not produce the reports of Dr. Green, a psychologist whom plaintiff’s counsel had retained for the purposes of litigation. At trial, plaintiff called Green to testify. Defendants objected on the grounds that Green had conducted an examination of plaintiff and plaintiff had failed to provide reports of that examination, and therefore plaintiff was precluded from calling Green as a witness. The trial court agreed and excluded Green’s testimony. The Court of Appeals affirmed, and the Supreme Court allowed plaintiff’s petition for review on this issue.

The Supreme Court framed the issues as whether ORCP 44 C required plaintiff to produce the report of an expert who examined plaintiff for the purposes of litigation and not for the purposes of treatment. ORCP 44 C provides, “[i]n a civil action where a claim is made for damages for injuries to the party, upon the request of the party against whom the claim is pending, the claimant shall deliver to the requesting party a copy of all written reports and existing notations of any examinations relating to injuries for which recovery is sought.” The Court reviewed the legislative history of the statute and concluded that meeting minutes from House Judiciary Subcommittee meetings reveal that it had been decided that the exchange of any doctor’s report dealing with the claims alleged would promote settlement and reduce the costs of litigation. Applying the usual method of statutory interpretation, the Court found that the plain language of ORCP 44 C required the plaintiff in this case, as the party making a claim for injuries, to deliver to defendants a copy of all written reports of any examinations relating to plaintiff’s injuries.

Oregon Court of Appeals Determines That the Terms of an Insurance Policy Can Be Superseded by a “Clear and Express” Oral Binder
May 12, 2010

The Oregon Court of Appeals, in its May 5, 2010 Stuart v. Pittman and Country Mutual Insurance Co. decision, addressed the ability of an oral binder to exceed the scope of the written policy. The defendant, Country Mutual Insurance Company, appealed a judgment against it on an action for breach of an oral insurance binder. An insurance binder is a contract for temporary insurance that is to be effective pending approval or disapproval of permanent insurance. An oral insurance binder is enforceable in Oregon under ORS 742.043(1).

The plaintiff asked the defendant insurance agent for “course of construction” coverage that would provide a “safety net” of coverage “in all instances that something goes wrong during construction.” The oral binder became effective September 1, 2003, and written documentation was received by the plaintiff in March 2004. In the interim, a severe snow and ice storm caused the interior sheathing of the house to split, water to accumulate, and mold to develop. After receiving judgment against the insolvent builder for faulty workmanship, the plaintiff filed a claim on his policy. That claim was denied as being outside the scope of his “course of construction” coverage.

The Court of Appeals found that “there is a presumption that a binder includes those terms that are usually contained in the policy for which the binder was issued,” and reinforced that the terms of the policy could only be superseded by the “clear and express terms of the binder.” The court held that even if the insurance agent agreed to provide a “safety net” of coverage “in all instances that something goes wrong,” such a binder is “too vague and obscure” to satisfy the “clear and express” requirement.

Oregon Court of Appeals Addresses Whether an Insurer’s Right to Contribution from Other Insurers Exist Independently of the Rights of the Insured
April 30, 2010

The Oregon Court of Appeals’ April 28, 2010 decision, Certain Underwriters at Lloyd’s London v. Mass. Bonding & Ins. Co., addressed, for the first time, the issue of whether an insurance issuer’s right to contribution from other issuers exists independently of the rights of the insured. In this case, the defendant issuers had settled with the common insured, while the plaintiff issuers, who were subject to an adverse judgment from the common insured, brought a claim of equitable contribution against the defendants. The court found that “the right to equitable contribution among insurers is not based on a subrogation or contract theory,” but is a right that “inures to the benefit of the insurer and not the insured.” Therefore, the court held that the defendants’ settlement with the insured did not operate to extinguish the rights of the plaintiff issuers to equitable contribution; instead, the settlement only operated to release the insured’s own claims against the defendant issuers.

UIM Benefits Made Clear: Oregon Supreme Court Determines UIM Benefits by Subtracting Tortfeasor’s Liability Payment from the Insured’s UM Policy Limit
October 5, 2009

In Vogelin v. American Family Mutual Ins. Co., SC S056655 (July 16, 2009), the Oregon Supreme Court held that UIM benefits are calculated by subtracting the tortfeasor’s liability payment from the insured’s UM policy limit.

In 2003, plaintiff was injured in an automobile collision where she sustained damages over $300,000. The driver who collided with plaintiff had liability insurance up to $25,000, which was paid to plaintiff. Plaintiff then made a claim against her insurance company for UIM benefits. Plaintiff’s UM liability limit under her own policy was $100,000. Plaintiff believed that she was entitled to the full $100,000 because her damages, less the tortfeasor’s payment, were well over $100,000. Plaintiff’s insurance company believed that she was entitled to $75,000, since plaintiff’s policy provided that the $25,000 would be deducted from her UM liability limit of $100,000.

Plaintiff filed a breach of contract claim against her insurance company in 2005. Plaintiff argued that ORS 742.504 establishes the minimum policy terms for UM and UIM insurance coverage. Plaintiff contended that under the worker’s compensation case of Bergmann v. Hutton, 337 Or 596, 101 P3d 353 (2004), ORS 742.504(7)(c) requires insurers to pay their insureds the total amount of damages they incur, less any amount paid by the tortfeasor, up to the insured’s UM liability limit. Plaintiff argued that ORS 742.502(2)(a), which mandates UIM coverage, must be read consistently with ORS 742.504(7)(c), to compel the same result. Despite the fact that her policy provided that the $25,000 would be deducted from her UM liability limit of $100,000, plaintiff argued that the $25,000 liability payment should be deducted from her total amount of damages. Because her total damages, less the $25,000 liability payment, was well over $100,000, plaintiff reasoned that she was entitled to receive her full UIM benefit of $100,000 from defendant. Defendant responded that ORS 742.502(2)(a) controlled, and as such, the $25,000 liability payment must be deducted from the amount of plaintiff’s UM policy limit of $100,000, leaving defendant to pay $75,000.

After a thorough analysis of the legislative history surrounding UIM legislation, the Oregon Supreme Court determined that the legislature intended that insurers be permitted to offset tortfeasor liability payments against the UM liability limits. The Oregon Supreme Court affirmed the court of appeals decision, and upheld the trial court’s entry of judgment for $75,000 to plaintiff.

Oregon Court of Appeals Addresses Negligence Claims Against Contractors
September 2, 2009

On September 2, 2009, the Oregon Court of Appeals in Abraham v. T. Henry Constr., Inc., et al. determined that homeowners could maintain a negligence claim against a contractor even though the homeowners entered into a contract with the contractor for the construction of a home and the statute of limitations had run on the contract. The court did not allow the negligence claim based upon a “special relationship” between the homeowners and contractor, but rather based upon a “standard of care independent of the contract” derived from the Oregon Building Code.

Oregon House Bill 2434 Reducing Statute of Limitations in Defect Claims Against "Large Commercial Structures" Becomes Law
July 19, 2009

The Oregon legislature passed House Bill 2434 this session amending ORS 12.135, which establishes the statutes of limitations and statute of ultimate repose for construction claims. Governor Kulongoski signed the House Bill 2434 into law on July 16, 2009. 2009 Oregon Laws Chapter 217 (“Chapter 217”) will put House Bill 2434 into effect on January 1, 2010. Chapter 217 will reduce the statute of ultimate repose in ORS 12.135 from 10 years to six years for a “large commercial structure.”