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Foraker v. USAA Casualty Insurance Co.

United States District Court, D. Oregon

July 26, 2017

PEGGY FORAKER, Plaintiff,
v.
USAA CASUALTY INSURANCE COMPANY, Defendant.

          Stephen Hendricks, Hendricks Law Firm, Heather A. Brann, Heather A. Brann, Attorney at Law, James R. Jennings, James R. Jennings, P.C., Of Attorneys for Plaintiff Peggy Foraker.

          Robert S. McLay and Joshua N. Kastan, Hayes Scott Bonino Ellingson & McLay, LLP, Matthew C. Casey, Bullivant Houser Bailey, PC, Of Attorneys for Defendant USAA Casualty Insurance Comapny.

          OPINION AND ORDER

          Michael H. Simon United States District Judge

         In this lawsuit, Plaintiff Peggy Foraker asserted three claims against her automobile insurance carrier, Defendant USAA Casualty Insurance Company, arising out of a January 2012 car accident with an uninsured driver. Under Oregon common law, Plaintiff alleged breach of express contract and breach of the implied covenant of good faith and fair dealing. Plaintiff also alleged financial abuse of a vulnerable person, in violation of Oregon Revised Statutes (“ORS”) §§ 124.005, et seq. Earlier in this action, the Court dismissed Plaintiff's claims of breach of express contract and financial abuse of a vulnerable person. On March 23, 2017, the Court held that Plaintiff may seek noneconomic damages from her claim of breach of the implied covenant of good faith and fair dealing if she properly alleges and proves physical injury resulting from Defendant's alleged breach. The Court also denied Plaintiff's motion to reinstate her claim for financial abuse of a vulnerable person and granted Plaintiff leave to file a Second Amended Complaint.

         Plaintiff filed her Second Amended Complaint (“Complaint”) on April 21, 2017. In her Complaint, Plaintiff asserts her original three claims, plus two new claims: a claim for declaratory relief and money judgment for uninsured motorist benefits and a common law negligence per se claim for negligent performance of an insurance contract. Defendant moves to dismiss Plaintiff's two new claims and Plaintiff moves for leave to amend. For the reasons discussed below, Defendant's motion is granted and Plaintiff's motion is denied.

         BACKGROUND

         On January 4, 2012, Plaintiff was injured in an automobile collision caused by an intoxicated, uninsured motorist. The next day, Plaintiff reported the accident to Defendant, her insurer. By February 2013, more than a year later, Defendant had paid Plaintiff $159, 329.76 for covered medical expenses. On April 8, 2013, Plaintiff made a policy-limits demand against Defendant for $1 million, which was the limit of Plaintiff's uninsured motorist (“UM”) coverage with Defendant. On May 30, 2013, Plaintiff and Defendant agreed to an “open extension” of time for Defendant to respond to Plaintiff's demand.

         On November 14, 2013, Defendant offered to pay Plaintiff $250, 000 to resolve Plaintiff's UM claim. Plaintiff rejected Defendant's offer. On December 16, 2013, Plaintiff sued Defendant in Oregon state court, and Defendant removed the action to federal court, asserting diversity jurisdiction. The case was assigned to U.S. District Judge Anna Brown.

         Defendant moved to dismiss Plaintiff's financial abuse claim as premature, and the Court granted the motion. The Court then bifurcated Plaintiff's implied covenant claim from her claim for breach of express contract. The parties stipulated to a bench trial and waived their rights to a jury. Plaintiff also moved for partial summary judgment, which the Court granted in part and denied in part, determining, among other things, that the other driver was 100 percent at fault for the accident. ECF 139. The issues of causation and damages, however, still needed to be determined.

         The Court held an eight-day bench trial from January 25 to February 3, 2016. The Court found that the other driver's negligence was a substantial contributing factor that caused Plaintiff's injuries and “awarded” Plaintiff $1, 172, 338.04 in economic damages and $750, 000.00 in non-economic damages as a result of the uninsured motorist's conduct. ECF 237. On February 19, 2016, Defendant paid Plaintiff $1 million, which was the policy limit of her UM coverage.

         The parties then cross-moved for summary judgment on Plaintiff's claim of breach of express contract. The Court granted Defendant's motion and denied Plaintiff's motion. The Court explained that because Defendant never actually denied Plaintiff's UM claim and because Defendant paid Plaintiff $1 million promptly after the Court rendered its decision regarding causation and the amount of Plaintiff's damages, Defendant did not breach any express term of its contract with Plaintiff. ECF 315. The Court also determined that because Plaintiff initiated litigation during the claims negotiation process, Plaintiff “effectively short-circuited the claims process before the expiration of the open-ended time extension for Defendant to state a final position on Plaintiff's policy-limits demand.” Id. at 11.

         On November 4, 2016, Judge Brown sua sponte recused herself from the remainder of this case. ECF 325. On November 8, 2016, the lawsuit was reassigned to the undersigned judicial officer. At that time, certain motions were pending, which the Court denied without prejudice. On January 20, 2017, Plaintiff moved to reinstate her statutory claim for financial abuse of a vulnerable person. ECF 333.

         At the request of the Court, the parties briefed the following legal questions:

1. Under the circumstances of this case, are non-economic damages available under Oregon law for Plaintiff's claim of breach of the implied covenant of good faith and fair dealing?
2. Under the circumstances of this case, what is the proper measure of economic damages for Plaintiff's claim of breach of the implied covenant of good faith and fair dealing?
3. Should Plaintiff be permitted to reinstate her statutory claim for financial abuse of a vulnerable person, or would such a claim be futile under the circumstances of this case?

         The Court issued its opinion answering the three questions on March 29, 2017. The Court determined that non-economic damages could be available for Plaintiff's claim of breach of the implied covenant if she could plead and prove physical injury as a result of Defendant's alleged breach. The Court also determined that the measure of damages for such breach is traditional expectation damages and are not subject to the $1 million bodily injury policy limit contained in the insurance policy issued by Defendant. Finally, the Court concluded that Plaintiff could not assert her claim for financial abuse of a vulnerable person under Oregon law, but granted Plaintiff leave to seek reconsideration if Oregon law were to change, because the Ninth Circuit recently had certified a question to the Oregon Supreme Court that could have implications on this claim.

         DISCUSSION

         A. Plaintiff's Claim for ...


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