United States District Court, D. Oregon, Portland Division
OPINION AND ORDER
V. ACOSTA UNITED STATES MAGISTRATE JUDGE
Gerald Scheel (“Scheel”) filed suit against
Defendant GuideOne Mutual Insurance Company
(“GuideOne”) for breach of an automobile
insurance policy (“Policy”). Following a bench
trial, judgment was entered in Scheel's favor. Currently
before the court is Scheel's Motion for Attorney Fees
(“Motion”). The parties disagree both on whether
Scheel is entitled to attorney fees and on the reasonableness
of the fees sought. Upon review and consideration,
Scheel's Motion for Attorney Fees is granted in part, as
he is entitled to recover some, but not all, of the attorney
2002, Scheel purchased an automobile insurance policy from
GuideOne. (Order and Op., ECF No. 28, at 2.) The Policy
provided personal injury protection coverage for bodily
injuries arising from automobile collisions. (Findings of
Facts and Conclusions of Law (“Findings and
Conclusions), ECF No. 57, at 3.) On July 25, 2013, Scheel was
injured in an automobile collision (“Collision”).
(Id. at 4.) After the Collision, Scheel's
primary-care physician observed a disc herniation between the
L2 and L3 vertebra, and referred him to a neurosurgeon.
(Id. at 4.) Scheel underwent surgery in February,
14, 2015, Scheel filed this lawsuit for breach of contract in
Marion County Circuit Court, and GuideOne timely removed to
this court. (Id. at 6.) No. tender of settlement was
made in the six months after Scheel filed his complaint.
(Pl.'s Memo. in Supp. of Mot. for Att'y Fees, ECF No.
59, Ex. 1 (“Motion”), at 2-3.)
a bench trial, on August 15, 2017, the court issued Findings
of Fact and Conclusions of Law stating that GuideOne
materially breached its obligation under the Policy.
(Findings and Conclusions at 9.) The court found the
Collision had caused Scheel's herniation and awarded
damages of $76, 266.27. (Findings and Conclusions at 7, 13.)
However, the court concluded that the evidentiary record was
insufficient at the time to determine whether Scheel was
entitled to attorney fees under ORS 742.061, and if so, the
amount of such fees. (Findings and Conclusions at 13).
August 28, 2015, Scheel timely filed the instant motion for
to Federal Rule of Civil Procedure 54, attorney fees must be
requested by motion. Fed.R.Civ.P. 54(d)(2)(A) (2018). In
diversity cases, state law governs a party's entitlement
to attorney fees. Riordan v. State Farm Mut. Auto. Ins.
Co., 589 F.3d 999, 1004 (9th Cir. 2009). In an insurance
coverage dispute, Oregon law provides:
[I]f settlement is not made within six months from the date
proof of loss is filed with an insurer and an action is
brought in any court of this state upon any policy of
insurance of any kind or nature, and the plaintiff's
recovery exceeds the amount of any tender made by the
defendant in such action, a reasonable amount to be fixed by
the court as attorney fees shall be taxed as part of the cost
of the action and any appeal thereon.
Or. Rev. Stat. § 742.061(1) (2018). Thus, ORS 742.061
sets forth four elements: (1) a plaintiff must have filed a
proof of loss with its insurer; (2) settlement must not have
occurred within six months of filing of that proof of loss;
(3) the plaintiff must have brought a court action upon the
policy; and (4) the plaintiff ultimately must have recovered
more than the amount of any tender made by defendant in the
action. Precision Seed Cleaners v. County Mut. Ins.
Co., 976 F.Supp.2d 1228, 1236 (D. Or. 2013). If the
statutory elements are met, the court “shall”
award attorney fees. Id. (citing Petersen v.
Farmers Ins. Co. of Or., 162 Or.App. 462, 466 (1999)).
Entitlement to Fees.
argues Scheel is not entitled to attorney fees because he
failed to submit “proof of loss” under ORS
742.061 and because he did not comply with provisions of the
Policy. Scheel responds that proof of loss was made through
the complaint because GuideOne was able to estimate and
investigate Scheel's claim, and that the policy
provisions are irrelevant in light of state law.
Proof of Loss.
specifically argues that without evidence that the Collision
caused the herniation and necessitated the surgery, Scheel
failed to submit a sufficient proof of loss. Scheel responds
that the complaint contains sufficient information for
GuideOne to estimate its obligations.
ORS742.061, the “sufficiency of information” that
constitutes a “proof of loss is evaluated in terms of
the purpose of the requirement: to enable the insurer to
estimate its rights and liabilities under the policy.”
Zimmerman v. Allstate Property and Cas. Ins. Co.,
354 Or. 271, 280 (2013). “If a submission, by itself,
is ambiguous or insufficient to allow the insurer to estimate
its obligations, it nevertheless will be deemed sufficient if
it provides enough information to allow the insurer ‘to
investigate and clarify uncertain claims.'”
Id. at 281-282 (citing Dockins v. State Farm
Ins. Co., 329 Or. 20, 29 (1999)). An insured's
complaint may qualify as proof of loss when it “would
permit an insurer to estimate its obligations.”
Parks v. Farmers Ins. Co. of Or., 347 Or. 374,
382-84 (2009). “Proof of loss does not require that the
insured calculate the loss with sufficient specificity to
enable the insurer to make a settlement offer.”
Precision Seed Cleaners, 976 F.Supp.2d at 1238. If,
through a reasonable inquiry, the insurer can make the
necessary calculation for a settlement offer, proof of loss
is established. Id.
Dockins v. State Farm Ins. Co., for example, the
plaintiffs discovered oil seeping into their basement and
notified their homeowner's insurance carrier, State Farm.
Dockins, 329 Or. at 22. State Farm denied coverage,
stating that, under the terms of the policy, it was not
obligated to provide coverage for such seepage unless it
contaminated groundwater. Id. Weeks later, the state
department of environmental quality (“DEQ”)
initiated an administrative action against the plaintiffs for
the leak, which had contaminated the groundwater.
Id. at 22-23.
plaintiffs sued State Farm for breach of contract. The
parties subsequently settled and the plaintiffs moved for an
award of attorney fees under ORS 742.061, arguing their
complaint constituted proof of loss. Id. at 26.
State Farm responded the complaint was insufficient because
it failed to substantiate its allegation that there had been
groundwater contamination and did not allege the remediation
costs with adequate specificity. Id. at 30.
Supreme Court of Oregon concluded that the complaint sufficed
to constitute a proof of loss within the meaning of the
statute, explaining that the allegations provided enough
information to enable State Farm to determine its existing
In our view, those allegations in plaintiffs' complaint
were sufficient to qualify as a proof of loss under ORS
742.061. State Farm acknowledges that its duty to defend
would be triggered if there were a claim against plaintiffs
based on groundwater contamination. The complaint alleges
such a claim. Although it is true that the DEQ demand was not
attached to the complaint and that State Farm was not
required to accept plaintiffs' characterization of the
DEQ demand at face value, it also is true that State Farm
easily could have ascertained whether plaintiffs'
characterization was accurate.
Id. The court rejected State Farm's contention
that the complaint did not provide enough information on
which to base a settlement offer, concluding it
“ignore[d] [State Farm']s duty of inquiry.”
asserts Scheel's complaint does not meet the minimum
requirements that would permit an insurer to estimate its
rights and liabilities under the Policy, because the
complaint did not provide direct evidence that the surgery
was related to the Collision. However, proof of loss does not
require direct evidence of causation, but only sufficient
information that permits an insurer to estimate its
obligations. As in Dockins, in his complaint, Scheel
alleged sufficient information to trigger GuideOne's duty
of inquiry. The complaint alleges what the Policy covered,
why the Policy applied to the Collision, that the Collision
was related to the Surgery, and that GuideOne was obligated
to pay for $89, 456.33 in medical benefits. (Complaint, ECF
No.1, at 3-6.) The complaint directly states, “As a
result of this collision, Scheel sustained serious injuries
requiring back surgery.” (Complaint at 9.) Just as the
plaintiff in Dockins was not required to attach the
DEQ demand to the complaint, Scheel was not required to
include evidence relating the surgery and Collision in his
complaint. Here too, GuideOne did not have to accept
Scheel's characterization at face value; rather, it was
given sufficient information to investigate and clarify any
uncertain claims under its duty of inquiry. Therefore,
Scheel's complaint qualifies as proof of loss under ORS
Provisions of the Policy.
next contends Scheel is barred from receiving attorney fees
because he breached the Policy by filing suit before he had
complied fully with its terms - specifically, by not
establishing sufficiently the relationship between the
surgery and the Collision until after filing this suit.
GuideOne alleges Scheel did not adhere to the proof of loss
provision of the policy.
points to Part F of the Policy, which states:
A. No legal action may be brought against us until there has
been full compliance with all the terms of this policy. In
addition, under part A, no legal action ...