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Miller v. American Family Mutual Ins. Co.

Court of Appeals of Oregon

May 14, 2014

ERIC MILLER, Plaintiff-Respondent,
v.
AMERICAN FAMILY MUTUAL INSURANCE COMPANY, a Wisconsin corporation, Defendant-Appellant

Argued and Submitted May 20, 2013.

Multnomah County Circuit Court. 101014862. Christopher J. Marshall, Judge.

R. Daniel Lindahl argued the cause for appellant. With him on the opening brief were Lindahl Law Firm PC, Mark E. Olmsted, and Mark E. Olmsted, PC. With him on the reply brief were R. Daniel Lindahl, Lindahl Kaempf PC, Mark E. Olmsted, and Mark E. Olmsted, PC.

Willard E. Merkel argued the cause for respondent. With him on the brief was Merkel & Associates.

Before Armstrong, Presiding Judge, and Nakamoto, Judge, and Egan, Judge.

OPINION

Page 632

[262 Or.App. 732] NAKAMOTO, J.

In this breach of insurance contract case, defendant American Family Mutual Insurance Company appeals a general judgment and money award in plaintiff's favor on his claims for personal injury protection (PIP) benefits and uninsured motorist (UIM) benefits. Pursuant to ORCP 54 E, defendant served plaintiff with an offer of judgment on the PIP claim before trial, which plaintiff accepted. On appeal, defendant raises two assignments of error. It first contends that the trial court erred by ruling that defendant's offer of judgment, once accepted, necessarily included an admission of, and precluded defendant from contesting, its obligation to pay for plaintiff's surgery--the key issue that then remained for trial on the UIM claim. Defendant also contests the trial court's award of attorney fees to plaintiff. We reverse and remand.

Page 633

Plaintiff was involved in an automobile accident with an uninsured driver and initiated this suit against defendant, his automobile insurer, to recover PIP and UIM benefits under his insurance policy. Plaintiff's policy provided for a $15,000 limit on PIP benefits and a $50,000 limit on UIM benefits. Plaintiff alleged over $90,000 in medical expenses, approximately $80,000 of which was attributable to a spinal surgery that plaintiff had undergone several months after the accident. Defendant had paid some of plaintiff's nonsurgical medical expenses related to the accident ($6,960.11) under plaintiff's PIP coverage, but defendant refused to pay any of plaintiff's surgery-related expenses because defendant contested the necessity of the surgery. In his complaint, plaintiff sought a judgment for the balance of the PIP policy limit and the $50,000 UIM policy limit, as well as his costs and reasonable attorney fees.

Approximately one month before the 2011 trial date, defendant served plaintiff with an offer of judgment pursuant to ORCP 54 E.[1] Under ORCP 54 E(1), " any party against whom a claim is asserted may * * * serve upon any other party asserting the claim an offer to allow judgment to be [262 Or.App. 733] entered against the party making the offer for the sum, or the property, or to the effect therein specified." If the party asserting the claim accepts the offer, " judgment shall be given accordingly as a stipulated judgment." ORCP 54 E(2).

Defendant offered to allow judgment on plaintiff's PIP claim for what amounted to the balance of plaintiff's PIP policy limits. That offer of judgment provided:

" Pursuant to ORCP 54 E, defendant offers to allow limited judgment on plaintiff's claim for PIP benefits in the amount of $8,039.89. This offer does not apply to plaintiff's claim for Uninsured Motorist benefits and should plaintiff accept this Offer to Allow Judgment, the Uninsured Motorist benefits claim will remain at issue. If this Offer to Allow [J]udgment is not accepted and filed within the time and manner allowed under ORCP [54 E], it shall be deemed automatically withdrawn."

Plaintiff timely accepted defendant's offer of judgment on the PIP benefits claim. No limited judgment was entered.

Then, on the day before trial, plaintiff filed a trial memorandom containing a motion in limine seeking an order to prevent defendant from offering evidence at trial that plaintiff's surgery was not necessary, the key disputed issue remaining for trial on the UIM claim.[2] The trial court held a hearing on the motion that same day.

At the hearing, plaintiff argued that, by offering to allow judgment with regard to at least some of the surgery expenses, defendant had admitted that the surgery was necessary and could not contest that issue in the trial on plaintiff's UIM claim. Plaintiff's argument was based on the fact that only approximately $10,000 of his medical expenses were unrelated to the surgery, meaning that, when defendant offered to pay the balance of the $15,000 PIP policy, some portion of the surgery expenses was necessarily included within that payment. According to plaintiff, his acceptance of the offer of judgment effectively meant that a judgment had been entered against defendant on plaintiff's PIP claim, and, as a result, it had the same effect as any [262 Or.App. 734] other judgment, i.e., it resolved issues that were necessarily concluded by that judgment, including the issue of whether the surgery was necessary. Accordingly, plaintiff argued, defendant was precluded from contesting the necessity of the surgery. Plaintiff explained his position:

" Well, you can't have it both ways. You can't pay for surgical bills that are being reasonably and necessarily incurred and then say that surgery wasn't reasonable or necessary, and that's the conundrum that ...

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