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Daniels v. Allstate Fire & Casualty Co.

Court of Appeals of Oregon

January 4, 2018

Danny DANIELS, Plaintiff-Appellant,
v.
ALLSTATE FIRE AND CASUALTY COMPANY, an Illinois corporation, Defendant-Respondent.

          Argued and Submitted April 20, 2017

         Multnomah County Circuit Court 110405348; Cheryl A. Albrecht, Judge.

          Willard E. Merkel argued the cause for appellant. With him on the briefs was Merkel & Associates.

          Jay R. Chock argued the cause for respondent. With him on the brief were Jeffrey W. Hansen and Chock Barhoum LLP.

          Before Ortega, Presiding Judge, and Egan, Chief Judge, and Lagesen, Judge.

         Case Summary: Plaintiff appeals, assigning error to the trial court's denial of his request for attorney fees and its decision to offset PIP benefits against the damages awarded by the jury in the tort action he brought against defendant, his insurer, for under insured motorist benefits. Held: The trial court erred with respect to the denial of plaintiff's request for attorney fees. An insurer's commitment merely to concentrate on the issues of liability and damages is not enough to invoke the statutory safe harbor from attorney fees afforded to insurers, ORS 742.061(3), because the insurer must commit that those are the only issues, to the exclusion of all other issues. As to the offset of PIP benefits, the trial court did not err under Cooksley v. Lofand, 289 Or.App. 103, 107-08, P.3d (2017).

         [289 Or.App. 699] LAGESEN, J.

         Plaintiff was injured in a car accident. After settling his tort claim against the motorist who caused the accident, he brought this action for underinsured motorist (UIM) benefits against his insurer, defendant Allstate Fire and Casualty Company. The case went to trial and the jury returned a verdict of $162, 484.35 in plaintiffs favor. Pursuant to ORS 31.555, the trial court offset personal injury protection (PIP) benefits that defendant previously paid to plaintiff against the verdict and entered judgment for plaintiff in the amount of $57, 521.78. Later, the court denied plaintiff's request for attorney fees, concluding that defendant was entitled to the statutory "safe harbor" protection of ORS 742.061(3). Plaintiff appeals, assigning error to (1) the trial court's denial of his attorney fees request and (2) the trial court's decision to offset PIP benefits against the damages awarded by the jury. We agree with plaintiff as to the attorney fees but not as to the offset. We therefore reverse and remand for reconsideration of plaintiffs request for attorney fees but otherwise affirm.

         We start with the issue of attorney fees. The trial court denied plaintiff's request for fees based on its conclusion that defendant had sent a letter to plaintiff that was adequate to invoke the statutory safe harbor from attorney fees afforded to insurers by ORS 742.06K3).[1] Under ORS 742.061(1), a plaintiff in an action on an insurance policy generally is entitled to recover attorney fees if "the plaintiff's recovery exceeds the amount of any tender made by the defendant in such action." ORS 742.061(3), however, creates an exception-or safe harbor-to that entitlement in an action for UIM benefits

"if, in writing, not later than six months from the date proof of loss is filed with the insurer:
"(a) The insurer has accepted coverage and the only issues are the liability of the * * * underinsured motorist and the damages due the insured; and
[289 Or.App. 700] "(b) The insurer has consented to submit the case to binding arbitration."

See generally Kiryuta v. Country Preferred Ins. Co., 360 Or. 1, 376 P.3d 284 (2016) (discussing operation of statutory safe harbor provision). Whether an insurer's letter is sufficient to invoke the safe harbor provision is a question of law, and we review the trial court's ruling for legal error. See Zimmerman v. Allstate Property and Casualty Ins., 354 Or. 271, 292-94, 311 P.3d 497 (2013) (so doing); see also Robinson v. Tri-Met. 277 Or.App. 60, 61, 370 P.3d 864 (2016) (reviewing a ruling on an entitlement to attorney fees for legal error).

         Here, the trial court erred. ORS 742.061(3) is unequivocal. To invoke the safe harbor, an insurer must have, in writing, "accepted coverage and the only issues are the liability of the * * * underinsured motorist and the damages due the insured." ORS 742.061(3) (emphasis added). Although an insurer's written communication need not necessarily recite the statutory wording, it must demonstrate that the statutory prerequisites for the safe harbor protection are met. See, e.g., Grisby v. Progressive Preferred Ins. Co..343 Or. 175, 180, 166 P.3d 519, adh'd to as modified on recons.343 Or. 394, 171 P.3d 352 (2007); Zimmerman, 354 Or at 293 (concluding that insurer's statement that it was '"willing to ...


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