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Emrys v. Farmers Insurance Company of Oregon

Court of Appeals of Oregon

September 12, 2018

Wendilyn EMRYS, a Personal Representative of the Estate of Barbara Caballero, Plaintiff-Appellant,
v.
FARMERS INSURANCE COMPANY OF OREGON, Defendant-Respondent.

          Argued and submitted August 2, 2017.

          Douglas County Circuit Court 11CV0557CC; William A. Marshall, Judge.

          George W. Kelly argued the cause and fled the briefs for appellant.

          Francis J. Maloney, III, argued the cause for respondent. Also on the brief were Janis C. Puracal and Maloney Lauersdorf Reiner PC.

          Before Ortega, Presiding Judge, and Garrett, Judge, and Powers, Judge.

         Case Summary: In this action to enforce an insurance contract, which is before the Court of Appeals for the second time, plaintiff seeks reformation of the contract to reflect the correct identity of the insured property. On appeal, plaintiff argues that the trial court, on remand, misapplied the legal standard for determining whether an antecedent agreement existed and erred by finding that an antecedent agreement did not exist regarding the identity of the insured property. Held: The trial court erred on remand by applying an incorrect legal standard. The Court of Appeals exercised its discretion to review the case de novo and found that plaintiff had established that an antecedent agreement existed regarding the identity of the insured property.

         [294 Or.App. 108] GARRETT, J.

         In this case, which is before us for the second time, plaintiff seeks reformation of an insurance contract.

         In plaintiff's first appeal, we concluded that the trial court had applied the wrong legal standard in assessing whether plaintiff had proved the existence of an antecedent agreement. Emrys v. Farmers Ins. Co., 275 Or.App. 691, 698, 365 P.3d 1119 (2015) (Emrys I) (vacating and remanding for reconsideration). On remand, the trial court again concluded that plaintiff had failed to prove the existence of an antecedent agreement by clear and convincing evidence. In this second appeal, plaintiff argues that the trial court again erred in ruling that she had failed to prove the existence of an antecedent agreement regarding the identity of the insured property. We agree with plaintiff. Moreover, as explained below, we exercise our discretion to review the case de novo[1] and, having done so, we find that plaintiff and defendant agreed that the insurance policy would cover the property that was actively being rented and was managed by North County Realty. Based on that finding, we conclude that plaintiff and defendant entered into an antecedent agreement to cover the rental property located at 106 Cofey Crossing Lane in Yoncalla and that the policy can be reformed to match the parties' intent.

         The operative facts are set out in Emrys I:

"Plaintiff is the personal representative of Caballero's estate, which owned five parcels of land near Yoncalla in Douglas County, two of which had houses on them. The two houses were located next to each other at 106 and 108 Cofey Crossing Lane, respectively. Caballero purchased two landlord insurance policies from defendant in 2001, one for each house. The policies covered, among other things, fire damage to the houses. However, both policies contained inaccurate legal descriptions for the insured properties, and neither policy included street addresses for the properties.
[294 Or.App. 109] The policies were renewable on a yearly basis. Through its agents, defendant contacted the Douglas County Planning Department in 2004 and asked the department to provide it with the street addresses for the properties covered by the policies. A year later, before defendant's agents had heard back from the county, Caballero allowed one of the policies to lapse. The Douglas County Planning Department subsequently told defendant's agents that the address for the property covered by the remaining insurance policy was 108 Cofey Crossing Lane, and defendant amended the policy to identify the property by that address. Caballero died in 2006, and plaintiff, Caballero's niece, was appointed personal representative of Caballero's estate. The house at 106 Cofey Crossing Lane was being leased by a tenant at the time that Caballero died; the house at 108 Cofey Crossing Lane was uninhabited.
"When plaintiff became personal representative of Caballero's estate, she did not know that Caballero had owned property in Yoncalla. Plaintiff first became aware of the property when, in going through Caballero's belongings, she found a card that defendant's agents had sent to Caballero, asking her to call them about the property. Plaintiff investigated and learned of the five Yoncalla parcels, acquiring in the process the tax identification numbers for them. Plaintiff also learned that Caballero had hired a property management company, North County Realty, to lease one of the houses on the Yoncalla property. Plaintiff called North County Realty and was told that a tenant was still renting the house. Plaintiff then called defendant in April 2006 and asked one of defendant's agents 'if they insured the properties in Yoncalla for the Caballeros.' She was told that they did, and she agreed during the telephone call to purchase a landlord insurance policy for the Yoncalla property from defendant, telling defendant's agent that she wanted to continue the existing policy for the leased property. She also told defendant's agent that she had little knowledge of the property, giving the agent the tax identification numbers for the parcels and telling the agent to contact North County Realty for any additional information that it needed about the location of the leased house. Thereafter, defendant's agents sent plaintiff invoices listing the property covered by the policy as '108 Coffee Crossing.' The estate paid the premiums for the policy. Plaintiff testified that she believed that the policy covered the leased property. It was defendant's practice not to [294 Or.App. 110] provide a landlord insurance policy for properties that were not rented by a tenant.
"The house at 106 Cofey Crossing Lane-the property rented by a tenant-was damaged by fire in 2010. Plaintiff filed a claim with defendant on behalf of Caballero's estate, seeking compensation for the damage to the house. Defendant denied the claim on the ground that its insurance policy covered the house at 108 Cofey Crossing Lane, not the house at 106 Cofey Crossing Lane. Plaintiff responded by filing an action against defendant seeking reformation of the ...

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