Susann M. THOENS, Plaintiff-Appellant,
SAFECO INSURANCE COMPANY OF OREGON, Defendant-Respondent
Argued and Submitted February 12, 2015
[Copyrighted Material Omitted]
091116530. Multnomah County Circuit Court. Marilyn E. Litzenberger, Judge.
Judgment on claim for UIM benefits reversed and remanded, otherwise affirmed.
Shenoa L. Payne argued the cause for appellant. On the briefs were Meagan A. Flynn and Preston Bunnell & Flynn, LLP.
Thomas M. Christ argued the cause and filed the brief for respondent. With him on the brief were Julie A. Smith and Cosgrave Vergeer Kester LLP.
Before Nakamoto, Presiding Judge, and Egan, Judge, and Wilson, Senior Judge.
[272 Or.App. 513] WILSON, S. J.
Plaintiff appeals a judgment in an action for personal injury protection (PIP) and underinsured motorist (UIM) benefits arising from a motor vehicle collision in which plaintiff's car was rear-ended. After the collision, plaintiff complained of injuries and received medical care. Defendant, plaintiff's insurer, paid PIP benefits for some of plaintiff's medical care after the collision, but it cut off those benefits after an independent medical examiner concluded that additional treatment that plaintiff received was not reasonable or necessary for injuries sustained in the collision. Plaintiff settled with the driver who rear-ended her for that driver's liability insurance policy limits and sought additional payments from defendant under her own UIM coverage, which had higher limits. When defendant refused to pay anything under plaintiff's UIM coverage, she brought this action alleging breach of contract with separate claims for failure to pay PIP benefits and failure to pay UIM benefits. The jury found for plaintiff on the PIP claim and for defendant on the UIM claim. Plaintiff appeals the general judgment, seeking reversal of the judgment and a remand for a new trial on her UIM claim.
On appeal, plaintiff makes four assignments of error. In her first two assignments, she argues that the trial court erred in excluding evidence both of the liability policy limits of the driver who rear-ended her and her own UIM policy coverage limits. In her third assignment of error, plaintiff argues that the trial court erred in allowing one of defendant's expert witnesses to give testimony that she contends amounted to a comment on her credibility. Plaintiff's fourth assignment of error challenges the trial court's decision to admit the testimony of a biomechanical engineer that the forces in the collision were insufficient to cause plaintiff's alleged injuries. As explained below, we conclude that, given the way the issues were framed in the trial, the trial court erred in excluding evidence that would have allowed the jury to determine that the driver who rear-ended plaintiff was " underinsured." Accordingly, we reverse and remand for a new trial on plaintiff's UIM claim. We [272 Or.App. 514] address plaintiff's other assignments of error because those issues may arise on retrial.
We begin by stating the general facts regarding the collision and the subsequent dispute regarding plaintiff's insurance benefits. We later supplement those facts as necessary in our discussion of plaintiff's assignments of error.
Plaintiff and her husband purchased a motor vehicle insurance policy from defendant Safeco. The policy provided UIM coverage in the amount of $500,000. On November 28, 2007, plaintiff was stopped behind a school bus when another driver (Naylin) rear-ended her car. Following the collision, plaintiff received medical care for headaches, neck pain, pain down her right arm, blurred vision, and balance problems. Her initial treatment was provided by her husband, a chiropractor in whose office she worked. Plaintiff ultimately saw several other doctors and had surgery on four levels of her cervical spine. In addition to the spinal injury, at least some of her treating doctors attributed plaintiff's vision and balance problems to a brain injury and inner ear concussion sustained in the collision. Plaintiff's medical bills following the collision exceeded $200,000.
The liability insurer for Naylin paid plaintiff its policy limits of $50,000 in settlement of her claims against him. As previously noted, plaintiff sought additional payment under her UIM coverage from defendant Safeco, which denied payment. Defendant admitted that Naylin had been negligent and that his negligence caused the collision. It denied, however, that plaintiff had been injured in the collision as she alleged. Plaintiff thereafter filed this action to recover those and other benefits under her policy. As noted above, the jury returned a verdict for plaintiff on her PIP claim and for defendant on her UIM claim. Plaintiff now appeals.
A. Rulings at trial on insurance coverage
In her first two assignments of error, plaintiff argues that the trial court erred in excluding evidence of Naylin's [272 Or.App. 515] liability policy limits and evidence of her own UIM policy coverage limits. For the reasons stated below, we agree.
At trial, defendant moved in limine to exclude any evidence of the amount of plaintiff's UIM coverage limits on multiple grounds. First, defendant asserted that such evidence was irrelevant because the jury needed to determine only what damages plaintiff incurred as a result of the collision, leaving to the court the calculation of the net judgment as a matter of law. Second, defendant argued that disclosure to the jury of the amount of plaintiff's UIM coverage would be unfairly prejudicial because it would emphasize the presence of insurance in the case (beyond Safeco's presence as a party) and the amount of the coverage would produce an " anchoring" effect that would tend to drive the jury's verdict higher than it would be without that evidence.
Defendant also moved in limine to exclude any evidence of Naylin's liability policy limits or the fact that those limits had been paid to plaintiff. Again, defendant argued both that the evidence was irrelevant and that any relevance was substantially outweighed by unfair prejudice, confusion of the issues, the potential to mislead the jury, and undue delay.
According to defendant, there are many reasons Naylin's insurer may have paid its liability limits to plaintiff apart from a determination by it that she had sustained serious injuries in the collision. If evidence of the settlement was admitted, defendant contended that it [272 Or.App. 516] would have to call witnesses to explore the other insurance company's decision-making process.
The trial court granted both of defendant's motions and excluded any evidence concerning the amount of plaintiff's UIM coverage, the amount of Naylin's liability coverage, and plaintiff's settlement with Naylin's insurer.
The trial court described the nature of the trial to the jury venire before prospective jurors were questioned. With regard to the UIM claim, the court said:
" The plaintiff's second claim for breach of contract alleges that Safeco promised to pay her the uninsured motorist benefits because the driver of the vehicle that collided with her didn't have adequate insurance himself to fully compensate plaintiff for her alleged damages.
" [S]he alleges that as a result of Safeco's breach of that policy agreement, she's been damaged in the full amount of the underinsured motorist benefits that are available to her under her automobile liability policy with Safeco." 
The trial court gave a similar description of the UIM claim in its preliminary instructions to the jury before opening statements:
" Plaintiff's second breach of contract claim alleges that Safeco promised to pay her underinsured, UIM benefits, because the driver of the vehicle that collided with [plaintiff] * * * did not possess adequate automobile liability insurance coverage to fully compensate plaintiff for her damages.
" As a result of Safeco's alleged breach, plaintiff alleges she has been damaged in the full amount of the uninsured motorist benefits available under her insurance policy with Safeco.
" * * * * *
" In order to resolve the plaintiff's breach of contract claims, the jury must determine the amount of the plaintiff's health and medical expenses that were reasonably and necessarily incurred during the first 12 months following the accident; whether Safeco conducted a reasonable [272 Or.App. 517] investigation before denying plaintiff's claim for PIP benefits; and, three, the total amount of damages that the plaintiff suffered as a result of Cody Naylin's negligence in causing the motor vehicle accident.
" The jury's answer to these three questions will determine if the plaintiff is entitled to prevail on one or both of her breach of contract claims against Safeco."
Among the exhibits received in evidence was a letter from Safeco to plaintiff's attorney. The letter stated, in part, that Safeco could not determine whether plaintiff was entitled to UIM benefits because it did not know the amount of Naylin's policy limits. It also said, " If [Naylin's] policy limit does match or exceed [plaintiff's] UIM limit of [redacted] single limit per occurrence, [plaintiff] would not be entitled to recover any UIM benefits." 
At the end of the trial, the trial court proposed to instruct the jury that defendant stipulated both that Naylin was negligent in causing the collision and that he was underinsured. Defendant objected to the second half of that proposition and the court did not give its proposed instruction. It appears that defense counsel was using a comparison of Naylin's liability coverage and plaintiff's damages to determine whether Naylin was " underinsured." Thus, defendant took the position that Naylin was not underinsured if his liability coverage was sufficient to compensate plaintiff for any injuries she sustained in the collision. That analytic framework, although common, was incorrect.
As the Oregon Supreme Court explained in Mid-Century Ins. Co. v. Perkins,
344 Or. 196, 179 P.3d 633, modified on recons, 345 Or. 373, 195 P.3d 59 (2008), under ORS 742.502, whether a negligent driver is underinsured is determined by comparing that driver's liability coverage and the plaintiff's UIM coverage, not her damages. Plaintiff was not entitled to any benefits under her UIM coverage unless the damages she sustained as a result of the collision exceeded [272 Or.App. 518] Naylin's liability limits. Naylin was nevertheless " underinsured" in this case regardless of the extent of plaintiff's injuries and damages, because his liability limits were lower than plaintiff's UIM limits.
In its final instructions, the trial court described UIM coverage:
" Underinsured motorist benefits are paid if any person covered by the policy is injured as a result of the negligence or fault of an underinsured driver. When that is the case, the injured person's own insurance company is required to pay the UIM benefits.
" The amount of UIM benefits the insurance company must pay depends on the amount of damage the injured person is legally entitled to recover as economic and noneconomic damages from the owner or operator of an underinsured vehicle."
The trial court again described plaintiff's UIM claim:
" [Plaintiff] alleges that Safeco promised to pay her UIM benefits if the person who was at fault for the motor vehicle collision did not have sufficient insurance to compensate [her] for all of the economic and noneconomic damages she sustained as a result of the November 28, 2007, collision.
" Plaintiff further alleges that Safeco breached its insurance company contract with her by refusing to pay her any or all of the UIM benefits she was entitled to receive.
" Based on the admissions of Safeco Insurance Company, plaintiff has met her burden of proving the following facts: One, that plaintiff had a valid, enforceable contract with Safeco.
" Two, the plaintiff fulfilled all of her promises to Safeco under that contract.
" Three, that Cody Naylin's negligent conduct caused the motor vehicle * * * collision that involved plaintiff * * *.
" Therefore, in order for plaintiff * * * to prevail on her second breach of contract claim against Safeco, she must prove each of the following facts by a preponderance of the evidence:
[272 Or.App. 519] " Number one, plaintiff suffered economic and noneconomic damages as a result of the negligence demonstrated by Cody Naylin on [the date of the collision].
" Two, Safeco did not fulfill its promise to pay plaintiff UIM, underinsured motorist benefits, if she was injured in a motor vehicle collision that was the fault of an underinsured driver.
" Three, plaintiff was damaged as a result of Safeco's breach of the parties' insurance contract.
" * * * * *
" This question can only be answered after you have decided whether plaintiff's alleged injuries and damages were caused by the November 28th, 2007, motor vehicle collision. And if so, A, the amount of economic damage she sustained and, B, the amount of noneconomic damage she sustained."
In its instructions on causation, the trial court referred twice to the " underinsured motorist's" or " underinsured driver's" negligence.
In the hybrid contract-tort fashion that the claims were presented to the jury, the trial court also told the jury that it need not determine whether Naylin was underinsured:
" On the second claim for UIM benefits, if you find that [plaintiff] is entitled to prevail on her second claim for breach of contract related to UIM benefits, then you must decide how much she has been damaged
as a result of Safeco's breach and denial of ...