TARYN M. EMERSON, Plaintiff-Respondent,
AARON S. KUSANO, Defendant-Appellant
Argued and Submitted: December 11, 2012.
Multnomah County Circuit Court. 100812086. Marilyn E. Litzenberger, Judge.
Douglas F. Foley argued the cause for appellant. With him on the briefs were Vernon S. Finley and Douglas Foley & Associates, PLLC.
Robert Wolf argued the cause and filed the brief for respondent.
Before Schuman, Presiding Judge, and Wollheim, Judge, and Nakamoto, Judge.
[260 Or.App. 578] WOLLHEIM, J.
Defendant appeals from a judgment entered after the trial court granted plaintiff's motion to reform the terms of an agreement settling plaintiff's personal injury action. Defendant contends that the trial court should have rescinded, rather than reformed, the agreement. We conclude that the trial court erred in reforming the contract and therefore reverse and remand.
The facts are undisputed. Plaintiff brought an action against defendant for personal injuries she sustained in an automobile accident, alleging damages of $171,000. The parties entered into settlement negotiations. On July 22, 2011, about one week before the scheduled trial date, an adjuster for defendant's insurer, Allstate Insurance, telephoned plaintiff's attorney and offered to settle the case for policy limits. In an e-mail to plaintiff's attorney on that same date, defendant's counsel stated, " just confirmed [with the Allstate adjuster] we are tendering policy limits. " (Emphasis added.) Also on July 22, 2011, the adjuster wrote to plaintiff's counsel:
" I have completed an evaluation with regards to the above referenced party. Please be advised that Allstate Insurance is tendering our policy limits of $50,000 inclusive of all. Please let me know how you wish to proceed on this matter."
(Emphasis added.) Plaintiff's counsel does not recall seeing that letter but does not dispute that he received it.
Two days later, on July 24, 2011, plaintiff's counsel emailed defendant's counsel, asking, " Do you remember limits off hand?" Defendant's counsel responded by e-mail, " 50." On July 26, plaintiff's counsel telephoned defendant's counsel and told him that plaintiff accepted Allstate's offer, but requested a 60-day set over of the trial date to obtain consent to the settlement from plaintiff's underinsurance (UIM) carrier. In response to plaintiff's counsel's request, [260 Or.App. 579] on August 8, 2011, defendant's counsel e-mailed a copy of defendant's policy declarations sheet to plaintiff's counsel. It was at that time that plaintiff's counsel discovered that defendant's policy limits were in fact $100,000. Plaintiff's counsel sent an e-mail to defendant's counsel stating, " [W]e have a big problem."
It is not disputed that Allstate's misstatement of the policy limits was a good faith mistake and that both parties were mistaken as to policy limits. It is also undisputed that defendant was aware that plaintiff would present a claim to plaintiff's UIM carrier and would be seeking UIM benefits. Defendant was also aware that plaintiff's medical expenses exceeded $100,000. But the practical effect of a settlement below Allstate's policy limits is that ...