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									DIGEST OF INSURANCE LAW OREGON
Courtesy of

Bullivant Houser Bailey PC Portland, Oregon ________________________
CIVIL JUDICIAL SYSTEM Courts of Original Jurisdiction Oregon has a number of inferior courts of limited original civil and criminal jurisdiction. These include justice courts (Or. Rev. Stat. Chapters 51, 156), municipal courts (Or. Rev. Stat. §221.339), and county courts (Or. Rev. Stat. Ch. 5). Oregon has thirty-six counties divided into twentyseven judicial districts. There is one circuit court for each of Oregon’s twenty-seven judicial districts. Or. Rev. Stat. §3.012. Circuit courts have jurisdiction over all civil and criminal matters not vested exclusively in some other court. Or. Const. Art. VII, §9. Circuit courts have concurrent jurisdiction with justice and municipal courts over certain criminal and civil matters. Or. Rev. Stat. §3.132. Circuit courts have appellate jurisdiction from justice, county and municipal courts. Or. Const. Art. VII, §9. Appeal from circuit courts is to court of appeals. Tax Court Oregon Tax Court is a court of record and of general jurisdiction. Tax Court has same powers as a circuit court. Or. Rev. Stat. §305.405. Tax court and circuit courts have concurrent jurisdiction to try actions or suits to determine priority of tax liens in relation to other liens and the validity of certain deeds, conveyances, transfer, or assignment of real or person property where the Oregon Department of Revenue has or claims a lien or other interest in the property. Or. Rev. Stat. §305.410(2). Tax Court has “sole, exclusive and final judicial authority” for all questions of law and fact arising under tax laws of Oregon. Or. Rev. Stat. §305.410(1). Decisions of tax court are binding on all parties until changed, if at all, by the decision of the Oregon Supreme Court on appeal. Or. Rev. Stat. §305.440(1). The “sole and exclusive remedy” for review of tax court decisions or orders is by appeal to the Oregon Supreme Court. Or. Rev. Stat. §305.445. Appellate Courts Oregon has two appellate courts. The Oregon Court of Appeals has exclusive jurisdiction over all appeals except those where original jurisdiction is conferred upon the Oregon Supreme Court, and except as provided for by statute. The court of appeals is composed of one chief judge and nine associate judges elected from state at large. Supreme court is court of last resort and is composed of one chief justice and six associate justices elected from state at large. See generally Or. Rev. Stat. Ch. 2.

LAW
Abbreviations

OAS – Oregon Advance Sheets. Or. – Oregon Reports. Or. App. – Oregon Appellate Reports. Or. R. Civ. P. – Oregon Rules of Civil Procedure. Or. Rev. Stat. – Oregon Revised Statutes. P. – Pacific Reporter. P.2d – Pacific Reporter, Second Series. P.3d – Pacific Reporter, Third Series. ________________________ ACCIDENT See “ACCIDENTAL MEANS.” Term “accident” means “unforeseen, unexpected, unintended or the like.” SAFECO Ins. v. House, 80 Or. App. 89, 96, 721 P.2d 862 (1986). Where accident results in injury that brings on subsequent disease, disease may be considered part of injury by “accident.” Dondeneau v. State Indus., 119 Or. 357, 249 P. 820 (1926) (glaucoma of eye caused by injury to eye caused by fire fighting, accidental injury). On-the-job heart attack is “accidental” for purposes of disability insurance coverage if job-related activity leading to heart attack was “abnormal and unusual.” Botts v. Hartford Acc. & Indem. Co., 284 Or. 95, 585 P.2d 657 (1978).
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Damages resulting from breach of contract not damages caused by “accident” within meaning of commercial liability policy. Kisle v. St. Paul Fire Ins., 262 Or. 1, 495 P.2d 1198 (1972); see also Oak Crest Const. Co. v. Austin Mut. Ins. Co., 329 Or. 620, 998 P.2d 1254 (2000). ACCIDENTAL MEANS In St. Paul Fire & Marine v. McCormick & Baxter Creosoting, 324 Or. 184, 923 P.2d 1200 (1996), Oregon Supreme Court rejected a distinction between accidental means and accidental results when determining whether injury is caused “by an accident.” Court held that “an ‘accident’ is an incident or occurrence that happened by chance, without design and contrary to intention and expectations.” Id. at 206. Cf. Stuart v. Occidental Life Ins. Co., 156 Or. 522, 535-36, 68 P.2d 1037 (1937) (insured fireman was caught by falling ceiling, was enveloped in smoke, soot, and burning debris, was injured, developed pneumonia a few days later and died; holding question for jury as to whether insured’s death resulted from injury solely through “accidental means” within double indemnity contract of life policy). ADJUSTERS Definition. An adjuster adjusts losses claimed under insurance policies and can act for the insured or the insurer. Or. Rev. Stat. §744.505. An adjuster may also adjust a loss claimed under an insurance policy issued by an unauthorized insurer other than a surplus line insurer. Or. Rev. Stat. §744.541. Adjuster has no affirmative obligation to advise insured, but once adjuster undertakes to offer information to a claimant about the value of his or her injuries, adjuster must be truthful. Kim v. Allstate Ins. Co., 102 Or. App. 529, 535, 795 P.2d 582 (1990). Insurer, by failing to repudiate adjuster’s acts, is bound thereby. Western Loggers Mach. Co. v. National Union Fire Ins. Co., 136 Or. 549, 299 P. 311 (1931). But note, court held insurer was not liable under liability policy for negligence of driver taking automobile to another city for repairs pursuant to unauthorized contracts of “adjuster.” Roemhild v. Home Ins. Co., 130 Or. 50, 278 P. 87 (1929). Licensing Requirements. Resident adjusters must be licensed and pay fee, except employees of authorized insurer may adjust losses for insurer without license. Or. Rev. Stat. §744.505 et seq. Each applicant for an adjuster’s license must take an examination. Examination tests qualifications and

competence of the applicant and applicant’s knowledge with respect to the classes of insurance that may be dealt with under the license and with respect to the duties and responsibilities of an adjuster under the laws of Oregon. Or. Rev. Stat. §744.535. License is good for two years. See Or. Admin. Rule §836-071-0130. (“Adjuster or Insurance Consultant License Renewal”). License renewal requires continuing education. See generally Or. Admin. Rule §836-071 0101 to -0160 (“Insurance Licensing “). Person who resides in another state or province of Canada and is licensed as an adjuster may obtain license to act as a nonresident adjuster in Oregon if state or province in which person resides gives same privilege to resident adjuster of Oregon (i.e., reciprocity). Or. Rev. Stat. §744.528. Temporary permit without fee may be issued in catastrophe area to any person authorized in another state to adjust losses claimed under insurance policies. Or. Rev. Stat. §744.555. Licensee must pass examination and meet other requirements. Or. Rev. Stat. §744.525. AGE See “AUTOMOBILES, Age”; “CONSTRUCTION OF POLICY, Capacity – Infants”; “NEGLIGENCE, Age.” Age of majority is 18. Thereafter, person has control over his or her own actions and has all the rights and is subject to all the liabilities of a citizen of full age. Or. Rev. Stat. §109.510. AGENTS AND BROKERS Definitions. Agent. An “insurance producer” is “a person required to be licensed under the laws of this state to sell, solicit or negotiate insurance.” Or. Rev. Stat. §731.104. Representative of insurer’s general agent has ostensible authority to interpret insurance contract. Insurer is bound unless agent’s interpretation is “‘patently absurd.’” Farley v. United Pacific Ins. Co., 269 Or. 549, 557, 525 P.2d 1003 (1974) (superseded on other grounds). Where agent exceeds conditional authority when dealing with third party, principal is nevertheless bound unless third party knew or should have known that agent was exceeding his authority. Hiransomboon v. Unigard Mut. Ins., 46 Or. App. 493, 498, 612 P.2d 306 (1980). Insurer may be vicariously liable for the actions of its agents, including counsel insurer hires to defend its

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insured. Stumpf v. Continental Casualty Co., 102 Or. App. 302, 308, 794 P.2d 1228 (1990). Broker. An insurance “broker,” as distinguished from an insurance “agent,” does not represent an insurance company, but is generally considered the “agent” of the person seeking insurance. Arley v. United Pacific Ins. Co., 379 F.2d 183, 187 n.5 (9th Cir. 1967) (Oregon law). However, unlike “agents,” “brokers” are not formally recognized or regulated by Oregon statutes. Nevertheless, “brokers” may exist in Oregon. Arley, supra, 379 F.2d at 187-88,188 n.5. Duty. Insurance agent owes duty of “reasonable care” to insured in procuring and, in some cases, maintaining appropriate coverage. Richardson v. Guardian Life Ins. Co., 161 Or. App. 615, 628, 984 P.2d 917 (1999). Fraud. Insured is not bound by false representations made in application by insurer’s agent. Rather, the insurer is bound by the acts of its agent. Bunn v. Monarch Life Ins. Co., 257 Or. 409, 416-17, 478 P.2d 363 (1970). Where an unsophisticated insured alleged that she relied upon misrepresentations of insurer’s agent that he had procured the insurance requested, when he had not, and that she was injured, trial court improperly dismissed insured’s fraud claim. Court of appeals rejected insurer’s contention that insured’s allegations did not show that she had a right to rely on the agent’s misrepresentations. Court stated right to rely is an element of a fraud claim, but is a conclusion of law, and court concluded that plaintiff had adequately plead her fraud claim: “As pleaded, plaintiff had asked [agent] to procure specified amounts of insurance for her. He represented that, with defendant’s authorization, he had done so. He was an experienced insurance agent. She was ignorant of the truth. The relationship between her and [agent] was not that of strangers dealing at arm’s length…She had a right to rely on [agent’s] representation that he had obeyed her instructions.” Hansen v. Western Home Ins. Co., 89 Or. App. 68, 74, 747 P.2d 1007 (1987). Under special circumstances, where agent’s representation to insured is inconsistent with express terms of policy and insured reasonably relies on the representation, there may be coverage by estoppel. Kabban v. Mackin, 104 Or. App. 422, 801 P.2d 883 (1990), called into doubt on other grounds, Prudential Prop. & Cas. Ins. Co. v. Lillard-Roberts, 2002 WL 31495830, at *24 (D. Or. June 18, 2002); see also Peery-Rogers Thrifty Drug Co. v. North Pacific Ins. Co., 71 Or. App. 181, 691 P.2d 917 (1984).

See generally Richardson v. Guardian Life Ins. Co., 161 Or. App. 615, 624-27, 984 P.2d 917 (1999) (discussing agent’s representations and coverage by estoppel). Knowledge. Insurer is charged with knowledge of its agent and may not rescind a policy based on a false application if agent has knowledge of misrepresentation. Seidel v. Time Ins. Co., 157 Or. App. 556, 970 P.2d 255 (1998). Agent’s knowledge of insured’s state of health binds insurer unless agency had ended when agent received knowledge. State Mut. Life Assur. Co. v. Schultz, 111 F.2d 1009 (9th Cir. 1940) (Oregon law). Liability. “‘Under the general principles of agency law, the insurer’s agent is not personally liable to the insured if, with authority to do so, he effects a binding contract of insurance between his disclosed principal and the insured which contract of insurance conforms to the agreement between the agent and the insured. Where an agent is duly authorized and names his principal and contracts in his name and does not exceed his authority, only the insurance company and not the agent may be held liable for the latter’s negligence in failing to procure an adequate policy of insurance.’” Leavens v. Northwestern Mut. Ins. Co., 249 Or. 418, 420-21, 439 P.2d 17 (1968) (quoting, 4 Couch, Insurance (2d 1960) §26:457, pp. 454, 455 (footnotes omitted)). Compare Arley v. Chaney, 262 Or. 69, 73, 496 P.2d 202 (1972), in which plaintiffs brought an action against insurance agent and one of agent’s insurance salesman for breach of contract to procure a fire policy pursuant to an oral binder. Court held agent could be found personally liable for breach of contract to procure insurance because action only involved contract with persons for whom agent agreed to procure insurance and insurer was not party to that contract. Licensing and Regulation. Oregon has comprehensive licensing and regulation provisions for resident and nonresident insurance agents, adjusters, and insurance consultants. See generally Or. Rev. Stat. Ch. 744. Insolvent Company. In absence of statute or agreement to the contrary, where insurer issued policies in exclusive reliance on credit of agent who produced the business and looked solely to that agent for payment of premiums, agent was general creditor of insolvent, debtor insurer. Insolvency, alone, did not change agent’s relationship with the insurer or with the policyholders. Korlann v. E-Z Pay Plan, Inc., 247 Or. 170, 178, 428 P.2d 172 (1967). ARBITRATION By statute, a mandatory arbitration program is established in each circuit court. Or. Rev. Stat. §36.400. Each circuit court (there is one circuit court for each of
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Oregon’s twenty-seven judicial districts, Or. Rev. Stat. §3.012) shall establish whether arbitration is required in matters involving less than $50,000. The decision as to whether arbitration is required is made by an affirmative vote of a majority of the judges of the circuit court, subject to approval by the Chief Justice of the Oregon Supreme Court. Or. Rev. Stat. §36.400. Mandatory arbitration applies where the only relief claimed is recovery of money or damages or the action is a domestic relations suit in which the only contested issue is division or disposition of property between the parties. Or. Rev. Stat. §36.405(1). “An executed common law award is accorded the benefits of the doctrine of res judicata in much the same manner as the judgment of a court” unless the specific agreement is “essentially unfair.” Rueda v. Union Pacific Railroad Co., 180 Or. 133, 163, 168, 175 P.2d 778 (1946). That is, an arbitration award is conclusive between the parties with respect to all private disputes submitted to an arbitrator. Andrews v. May Dept. Stores, 96 Or. App. 305, 312, 773 P.2d 1324, rev. denied, 308 Or. 465, 781 P.2d 1214 (1979); see, e.g., Barackman v. Anderson, 192 Or. App. 176, 180, 84 P.3d 830 (2004) (holding that binding arbitration decisions in disputes between plaintiffs and insurers over auto insurance benefits “can” be given preclusive effect in subsequent proceedings against alleged tortfeasors). However, a prior binding arbitration pursuant to a collective bargaining agreement does not bar plaintiff’s claims pursuant to a statutory right (e.g., discrimination claims) on principles of res judicata, and the parties are not collaterally estopped from relitigating factual issues decided in the arbitration. Andrews, supra, 96 Or. App. at 313. See Faris v. Gamble, Inc., 133 Or. App. 221, 228, 889 P.2d 1363 (1995) (holding that Andrews remains binding precedent). Under Oregon law, “it is preferable that disputants be encouraged and assisted to resolve their dispute with the assistance of a trusted and competent third party mediator, whenever possible, rather than the dispute remaining unresolved or resulting in litigation.” Or. Rev. Stat. §36.100. Oregon courts have recognized the distinction between “arbitration” and “appraisal.” See e.g., Shepard & Morse Lumber Co. v. Collins, 198 Or. 290, 295, 256 P.2d 500 (1953) (quoting, 6 Williston on Contracts (rev. ed.) 5375, §1921A. “‘The distinction between appraisal and arbitration’, says Professor Williston, ‘is of great importance, as appraisals are subject at common law to rules different in many respects from those applied to arbitrations, and the modern arbitration statutes are held not to apply to appraisals.’”).

ATTORNEYS Appointment and Authority. Where insurer decides to defend insured in case brought by third party, insurer selects attorney, and insured must accept appointee, regardless of personal preferences. Appointed attorney maps out defense, and insured is relegated to role of cooperating with attorney. Radcliffe v. Franklin Nat. Ins. Co. of New York, 208 Or. 1, 21, 298 P.2d 1002 (1956). Conflict of Interest. Where insurer accepts tender of defense and hires attorney, both insured and insurer are attorney’s clients, even though action is brought only in insured’s name. Oregon State Bar Ethics Op. 1991-30. Therefore, attorney must comply with disciplinary rules applicable to multiple client conflicts of interest. Oregon State Bar Formal Ethics Op. 1991-121. Where insurer defends without a reservation of rights, a conflict is unlikely. However, where insurer defends subject to a reservation of rights, there is a risk of conflict. In that situation, attorney must treat insured as “‘the primary client,’” whose protection must be attorney’s “‘dominant’” concern. Attorney cannot file a motion adversely affecting insured’s right to a defense or coverage, but must act in manner consistent with insured’s interest. Id. Where insurer asks for coverage opinion from attorney with respect to complaint filed against its insured and then asks attorney to represent insurer and insured subject to reservation of rights, conflict is likely. Therefore, attorney cannot represent both insurer and insured in underlying action without full disclosure to, and consent from, insurer and insured under appropriate disciplinary rules. Attorney must disclose to insured prior work for insurer on coverage question and potential significance. Oregon State Bar Formal Ethics Op. 1991-77. Fees–General rule is that attorney fees are not recoverable in breach of contract action unless authorized by statute or by the contract. Raymond v. Feldmann, 124 Or. App. 543, 863 P.2d 1269 (1993). “Whether a particular statute entitles a party to recover attorney fees is a question of law.” Mosley v. Allstate Ins. Co., 165 Or. App. 304, 307, 996 P.2d 513 (2000) (citations omitted). See also Or. Rev. Stat. §20.220(1). There is an exception to general rule: where a party’s breach of contract involves a non-breaching party in litigation with a third party, the non-breaching party may recover its litigation costs resulting from the separate action. Raymond, supra. Fees–Action on Insurance Contract. Except as otherwise provided for, if settlement is not made within six months from the date “proof of loss” is filed with an insurer and 1) an action is brought on “any” policy of in---- For Current Listings access www.ambest.com/legal---Last Update August, 2008

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surance; and 2) the insured’s recovery exceeds the amount of any tender made by the insurer in such action, a reasonable amount to be fixed by the court as attorney fees “shall be taxed as part of the costs of the action and any appeal thereon.” Or. Rev. Stat. §742.061(1). In determining what would be a reasonable attorney fee, a court may consider the insured’s contingent fee agreement with its attorney. Erickson v. Farmers Ins. Co., 331 Or. 681, 21 P.3d 90, on remand, 175 Or. App. 548, 29 P.3d 1143 (2001). For insurer’s tender to defeat insured’s right to attorney fees under Or. Rev. Stat. §742.061, tender must be made within six months after insured submits adequate proof of loss. Dockins v. State Farm Ins. Co., 329 Or. 20, 985 P.2d 796 (1999); see, e.g., Mosley v. Allstate Ins. Co., 165 Or. App. 304, 996 P.2d 513 (2000) (letter from insured’s attorney to uninsured motorist (“UM”) insurer stating that the insureds’ injuries were stationary, seeking a fixed amount for those injuries, and enclosing all relevant medical records. constituted a proof of claim under Or. Rev. Stat. §742.504(5)(a) for purposes of attorney fees under Or. Rev. Stat. §742.061). Insured is entitled to attorney fees under Or. Rev. Stat. §742.061 (formerly Or. Rev. Stat. §743.114) only if insured recovers on the policy. Stanford v. American Guaranty Life Ins. Co., 281 Or. 325, 574 P.2d 646 (1978). Insured must recover a money judgment against the insurer; it is not sufficient that insured establish coverage in a declaratory judgment, which may lead to a subsequent return of money. McGraw v. Gwinner, 282 Or. 393, 578 P.2d 1250 (1978); Becker v. DeLeone, 78 Or. App. 530, 717 P.2d 1185 (1986). Excess insurer is entitled to attorney fees under Or. Rev. Stat. §742.061 where primary insurer refuses in bad faith to settle and an excess judgment results. Portland Gen. Elec. v. Pacific Indem., 574 F.2d 469 (9th Cir. 1978) (Oregon law). Co-insurer entitled to attorney fees under Or. Rev. Stat. §742.061 for suing to enforce other co-insurer’s compliance under terms of its own insurance policy. Webb v. National Union Fire Ins. Co. of Pittsburgh, 207 F.3d 579, 583-84 (9th Cir. 2000) (Oregon law), rejected on other grounds, OTECC v. Co-Gen, 168 Or. App. 466, 476 n. 8, 7 P.3d 594 (2000) (noting that nothing in statute prevents insurers from receiving attorney fees or requires that only insureds can recover attorney fees). Self-insurers also liable for attorney fees under Or. Rev. Stat. §742.061. Haynes v. Tri-County Metropolitan Trans. Dist. of Oregon, 337 Or. 659, 664, 103 P.3d 101 (2004)

Fees–Actions for Personal or Property Injury. Prevailing plaintiff is entitled to attorney fees in actions for personal or property injury where the amount pled is $5,500 or less and plaintiff has made a “written demand for the payment of such claim” on defendant not less than 10 days before commencement of action or the filing of a formal complaint under Or. Rev. Stat. §46.465, or not more than 10 days after the transfer of the action under Or. Rev. Stat. §46.461. Or. Rev. Stat. §20.080(1). Offer to pay conditioned “solely” upon full discharge of disputed claim is legally sufficient preclusive “tender” for purposes of Or. Rev. Stat. §20.080(1). Fresk v. Kraemer, 185 Or. App. 582, 588, 60 P.3d 1147 (2003), aff’d, 337 Or. 513, 99 P.3d 282 (2004). Under Or. Rev. Stat. §20.080, written demand may be made on an insurer who is acting as insured defendant’s agent for purposes of defending or settling a claim. Schwartzkopf v. Shannon the Cannon’s Window & Other Works, Inc., 166 Or. App. 466, 998 P.2d 244 (2000). Attorney fees are not allowed to plaintiff if court finds defendant tendered to plaintiff, prior to commencement of action or the filing of a formal complaint under Or. Rev. Stat. §46.465, or not more than 10 days after the transfer of the action under Or. Rev. Stat. §46.461, an amount not less than the damages awarded to plaintiff. Or. Rev. Stat. §20.080(1). If defendant pleads a counterclaim not exceeding $5,500, and defendant prevails in the action, defendant is entitled to reasonable attorney fees, at trial and on appeal, for defendant’s prosecution of the counterclaim. Or. Rev. Stat. §20.080(2). Or. Rev. Stat. §20.080 does not to apply to “any action based on contract.” Or. Rev. Stat. §20.080(3). Fees–Contract Claims of $5,500 or Less. Reasonable attorney fees are available to the prevailing party on any contract claim if the amount of the principal, together with the interest, due on the contract at the time the claim is filed is $5,500 or less, and the contract does not contain a clause that authorizes or requires the award of attorney fees. Or. Rev. Stat. §20.082(2). Attorney fees may not be awarded to a plaintiff under this statute “unless written demand for payment of the claim was made on the defendant not less than ten days before the commencement of the action of the filing of a formal complaint under Or. Rev. Stat. §46.465, or not more than ten days after the transfer of the action under Or. Rev. Stat. §46.461. Or. Rev. Stat. §20.082(3). However, the failure of a plaintiff to give notice under this statute “does not affect the ability of a defendant to claim attorney fees under the provision of this section.” Or. Rev. Stat. §20.082(3). Attorney fees will not be awarded to the plaintiff if the defendant tendered to the plaintiff,
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prior to the commencement of the action or the filing of a formal complaint under Or. Rev. Stat. §46.465, or not more than ten days after the transfer of the action under Or. Rev. Stat. §46.461, an amount not less than the amount awarded to the plaintiff. Or. Rev. Stat. §20.082(4). This statute does not apply to contracts for insurance. Or. Rev. Stat. §20.082(5)(a). Fees–Actions for Workers’ Compensation. In all cases involving denied claims for workers’ compensation, reasonable attorney fee is allowed to claimant’s attorney where claimant finally prevails against the denial 1) in appeal to the Court of Appeals; 2) on petition for review to the Supreme Court; 3) in a hearing before an Administrative Law Judge; 4) in a review by the Workers’ Compensation Board; or 5) where the attorney “is instrumental in obtaining a rescission of the denial prior to a decision by the Administrative Law Judge.” Or. Rev. Stat. §656.386(1)(a). See e.g., Mission Ins. v. Miller, 73 Or. App. 159, 163, 697 P.2d 1382 (1985) (allowing attorney fees under Or. Rev. Stat. §656.386(1) for “successfully defending” award for compensable injury). Fees–Pleading. In general, right to attorney fees must be pled and may be sought before substantive right to recover fees accrues. Or. R. Civ. P. 68C(2)(a). Attorney fees need not be proved at trial. Or. R. Civ. P. 68C(3). Attorney fees are generally entered as part of judgment pursuant to Or. R. Civ. P. 68C(5)(a). Malpractice – Assignment. Depending on the circumstances, a voluntary assignment of a legal malpractice claim is not barred as a matter of law. Gregory v. Lovlien, 174 Or. App. 483, 492, 26 P.3d 180 (2001). Malpractice – Damages. Damages arising from legal malpractice claims are typically based on “purely economic loss.” Hale v. Groce, 304 Or. 281, 284, 744 P.2d 1289 (1987). Malpractice –Disciplinary Rules. The violation of a disciplinary rule of the Code of Professional Responsibility does not give rise to a private right of action or provide a defense to a cause of action. Disciplinary rules, as well as statutes and common-law principles implicated in fiduciary relationships, “all help define the duty component of the fiduciary duty owed by a lawyer to a client.” Welsh v. Case, 180 Or. App. 370, 382, 43 P.3d 445 (2002) (holding that DR 5-104(A) prohibits a lawyer from entering into a “business transaction” with a client where the lawyer and the client have “differing interests” and the client expects the lawyer “to exercise the lawyer’s professional judgment therein for the protection of the client” absent the consent of the client after full disclosure; attorneys did not violate DR 5-104(A) by obtaining from clients mortgage securing attorneys’ fees

because clients did not believe purpose of mortgage was to protect clients from adversaries). Malpractice – Elements of Claim. In a legal malpractice claim, client must establish, in addition to negligence, that, had attorney not been negligent, client would have prevailed in the underlying action. Bennett v. Boyd, 89 Or. App. 659, 750 P.2d 531 (1988); see, e.g., Machado-Miller v. Mersereau & Shannon, LLP, 180 Or. App. 586, 43 P.3d 1207 (2002) (plaintiff could not have prevailed had her attorney raised and argued for application of California, rather than Oregon law; holding that failure to raise California law did not cause plaintiff to lose in underlying case and therefore attorney not liable for legal malpractice). For non-client plaintiffs to assert a claim against client’s attorney for negligent misrepresentation, plaintiffs must plead that they have an interest that is protected against the attorney’s alleged conduct and that the interest was harmed. Tipton v. Willamette Subscription Television, 85 Or. App. 79, 83, 735 P.2d 1250 (1987). Malpractice – Expert Testimony. Degree of skill and care attorney must use in preparing and trying case generally not within knowledge or experience of lay juror and expert testimony on standard of care required. Butler v. Thorpe, 95 Or. App. 414, 416, 769 P.2d 241 (1989). Malpractice – Liability. General rule is that an attorney can be liable for malpractice only to those with whom attorney is in privity. Conversely, attorney is not ordinarily liable to those outside attorney-client relationship because attorney has no obligation to protect those outside from economic losses. To date, Oregon courts have not adopted a particular test to determine whether a case should be taken out of the general privity rule. Rather, Oregon courts have applied a case-by-case analysis, focusing on whether there is a de facto relationship between the attorney and the injured non-client that justifies imposing a special duty on attorney to protect the non-client from economic losses. Roberts v. Fearey, 162 Or. App. 546, 986 P.2d 690 (1999). Oregon courts have extended attorney’s duty to third parties in only three situations: 1) where attorney purported to act as third party’s attorney by filing a motion on behalf of plaintiff; 2) where plaintiff was intended third-party beneficiary of attorney-client relationship; and 3) where attorney stipulated to perform a service for opposing party. See, e.g., Roberts, supra (declining to extend duty of attorney who represents fiduciary to those to whom fiduciary owes a duty); Hale v. Groce, 304 Or. 281, 744 P.2d 1289 (1987) (attorney’s promise to client to include in client’s testamentary instrument a specific bequest to a third person creates a duty to the
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third person as well as to the client, and negligent nonperformance of that duty may give rise to a negligence action). Malpractice – Standard of Care. Standard of care “that care, skill and diligence which would ordinarily be used by lawyers in his community or similar community under similar circumstances.” Arp v. Kerrigan, 287 Or. 73, 88, 597 P.2d 813 (1979). Defense of comparative fault is available in a legal malpractice action in which client’s alleged negligence relates to: 1) matters that are within the client’s knowledge and do not implicate the attorney’s legal advice; or 2) other matters that are peculiarly subject to attorney’s legal expertise. Becker v. Port Dock Four, Inc., 90 Or. App. 384, 752 P.2d 1235 (1988). Malpractice – Statute of Limitations. Statute of limitations does not begin to run in legal malpractice case until plaintiff has been damaged and becomes aware, or reasonably should have become aware, that defendant’s negligence caused the damage. U.S. National Bank v. Davies, 274 Or. 663, 548 P.2d 966 (1976). Generally, statute of limitations does not begin to run in legal malpractice case until final disposition of litigation precipitated by attorney’s allegedly bad advice. Jaquith v. Ferris, 297 Or. 783, 787, 687 P.2d 1083 (1984); Fliegel v. Davis, 73 Or. App. 546, 699 P.2d 674 (1985); cf. Godfrey v. Bick & Monte, P.C., 77 Or. App. 429, 713 P.2d 655 (1986) (in case involving structure of stock transaction, plaintiff admitted he knew malpractice action against attorneys and accountants could have been avoided had transaction been structured differently; holding that plaintiff knew of harm without having to wait for resolution of litigation). AUTOMOBILES See Law Digest Tables. Coverage in every motor vehicle liability insurance policy issued for delivery in state of Oregon is controlled by statute and policy may not provide lesser coverage than that required by statute. However, coverage exclusions above the minimum limits are enforceable. Collins v. Farmers Ins. Co., 312 Or. 337, 822 P.2d 1146 (1991); see Or. Rev. Stat. §742.450. Umbrella policies are generally exempt from the statutory requirements for motor vehicle liability policies. Or. Rev. Stat. §742.468; Wright v. State Farm Mutual Auto. Ins. Co., 332 Or. 1, 11, 22 P.3d 744 (2001). Accident reports to local police authorities are required within 72 hours, by driver or owner, if bodily injury or death to any person or property damage in excess of $1,500 results. See Or. Rev. Stat. §§811.720-811.740.

“Accident” under Or. Rev. Stat. §483.602 (see now Or. Rev. Stat. §811.700) requires certain duties of driver involved in accident and includes intentional as well as unintentional vehicular collisions. State v. Parker, 70 Or. App. 397, 689 P.2d 1035 (1984), aff’d, 299 Or. 534, 704 P.2d 1144 (1985) (en banc). Age. No person can lawfully operate motor vehicle who is less than sixteen years of age. Or. Rev. Stat. §807.060(1). An unemancipated minor under eighteen years of age cannot obtain a driver’s license unless application is signed by person’s mother, father, or guardian. Or. Rev. Stat. §807.060(2)(a). A person under eighteen years of age who has not met the requirements of Or. Rev. Stat. §807.065 (“Additional Eligibility Requirements for Persons under 18 Years of Age; Provisional Driver License”) is not eligible for a driver license. Or. Rev. Stat. §807.060(2)(b). Child fourteen or older upon making special application may be permitted to lawfully operate motor vehicle as means of transportation to and from school. Or. Rev. Stat. §807.230. “Instruction drive permit” obtainable at age fifteen. Or. Rev. Stat. §807.280(2)(a). Agency. Common law doctrine of respondeat superior applies to create agency relationship. Proof of ownership of automobile is sufficient to justify inference of agency of driver for owner, but inference may be overcome by other evidence. Bunnell v. Parelius, 160 Or. 673, 87 P.2d 230 (1939). Co-ownership of automobile refutes existence of agency relationship. Parker v. McCartney, 216 Or. 283, 338 P.2d 371 (1959). Agency – Negligent Entrustment. Because insured encouraged his 14 year-old friend to drive his vehicle, had previously stated that he would not have minded had she moved his car, knew that she could not obtain a driver’s license, and knew that she had limited driving experience, trial court did not err in finding it foreseeable that friend would take car on public roads and might drive negligently after being entrusted with the keys. Mutual of Enumclaw Ins. v. Hambleton, 84 Or. App. 343, 733 P.2d 948 (1987). Plaintiff proved prima facie case of negligence against defendant-passenger who repeatedly filled pipe with marijuana and passed it to driver, when he should have known that it would contribute to driver’s intoxication and impair his ability to drive; defendant’s conduct constituted substantial encouragement or assistance to driver’s negligence, which was proximate cause of plaintiff’s injury. Aebischer v. Reidt, 74 Or. App. 692, 704 P.2d 531 (1985). Alcohol/DUI. A person commits the offense of driving while under the influence of intoxicants if the person drives a vehicle while the person has .08 percent
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or more by weight of alcohol in the blood. Or. Rev. Stat. §813.010(1)(a). See generally Or. Rev. Stat. Chapter 813 (“Driving Under the Influence of Intoxicants”). Plaintiff beneficiary was entitled to recover accidental death benefits under insurance policy when insured was killed as result of crash that occurred when he was operating his automobile while intoxicated. Harbeintner v. Crown Life Ins., 46 Or. App 579, 612 P.2d 334 (1980). Cancellation. Or. Rev. Stat. §§742.560-572 govern cancellation and nonrenewal by insurers of most motor vehicle liability insurance policies. Motor vehicle policies covered by this statutory scheme that have been in effect for 60 days or more may be cancelled only for the stated, statutory reasons. Or. Rev. Stat. §742.562. Notice of cancellation must be mailed or delivered to the named insured at least 30 days before the effective date of the cancellation and must be accompanied by a statement of reasons, except, when the cancellation is for nonpayment of premium, only ten days’ notice is required. Or. Rev. Stat. §742.564(1). Statutory grounds for cancellation and manner of giving cancellation do not apply to nonrenewal. Or. Rev. Stat. §§742.562(3), .564(2). Courts will enforce stricter requirements of notice of cancellation if provided for in the policy. Chrysler Credit Corp. v. MidCentury Ins. Co., 110 Or. App. 343, 822 P.2d 744 (1991). Under loss payable provisions of an automobile insurance policy, Oregon Court of Appeals has held that, where insurers promise to give lienholders advance notice of cancellation, such notice is not effective until it is received. Chrysler Credit Corp., Supra. Comparative/Contributory Negligence. See “NEGLIGENCE, Comparative/Contributory Negligence.” Compulsory Insurance Coverage – Financial Responsibility Law. See generally Or. Rev. Stat. Chapter 806. To meet the financial responsibility requirements, a person may either obtain a motor vehicle liability policy or become self-insured. Or. Rev. Stat. §806.060(2). Minimum coverage is $25,000 because of bodily injury to or death of one person in any one accident; $50,000 because of bodily injury to or death of two or more persons in any one accident; and $10,000 for damage to the property of others in any one accident. Or. Rev. Stat. §806.070(2). To be self-insured for purposes of financial responsibility requirements, self-insurers must have more than 25 motor vehicles (including commercial buses). Or. Rev. Stat. §806.130(d); see generally Or. Rev. Stat.

§806.130 (“Self-Insurance”). NOTE: Some sections of Or. Rev. Stat. §806.130 amended June, 2007. A person convicted of driving under the influence of intoxicants must file a certificate of insurance showing liability coverage in an amount of $50,000 per person in any one accident, $100,000 per accident for injuries or death of two or more persons in any one accident, and $10,000 for property damage. Or. Rev. Stat. §806.075(1). Motor vehicle liability insurance policy used to comply with financial responsibility requirements under Or. Rev. Stat. §806.060 must meet specified requirements. Requirements may be fulfilled “by the policies of one or more insurance carriers which policies together meet such requirements.” Or. Rev. Stat. §806.080(2). Oregon Court of Appeals has construed language to authorize an insurer who has already met the requirements of the Financial Responsibility Law to share responsibility with another insurer for its insured’s liability and to permit insureds to satisfy the Financial Responsibility Law through more than one policy. SAFECO Inc. Co. of America v. American Hardware Mut. Ins. Co., 169 Or. App. 405, 415, 9 P.3d 749 (2000). Financial responsibility provisions require specified minimum coverage. For amounts and other coverage apart from that minimum, lawful for insurer to restrict that additional coverage by an exclusion. Exclusion in policy for injury to a “family member” could exclude coverage only in excess of minimum prescribed in Financial Responsibility Law. Collins v. Farmers Ins. Co., 312 Or. 337, 347, 822 P.2d 1146 (1991). Auto policy provided: “[We do not provide coverage for] bodily injury or property damage to you or any family member to the extent that the limits of liability for this coverage exceed the limits of liability required by the Oregon Financial Responsibility Law.” Policy language held ambiguous because it failed to provide proper notice to insureds that liability coverage was reduced from amount that appeared on declarations page to statutorily required minimum coverage for injured insureds and their family members. North Pacific Ins. Co. v. Hamilton, 332 Or. 20, 22 P.3d 739 (2001); Wright v. State Farm Mut. Ins. Co., 332 Or. 1, 22 P.3d 744 (2001); Medyanikov v. Continental Ins. Co., 176 Or. App. 297, 31 P.3d 495 (2001). Policy specifically excluding coverage for named individual, but which carried financial responsibility endorsement afforded coverage under such endorsement’s omnibus provision to extent of minimum requirements of financial responsibility law to both named insured and excluded individual. Financial responsibility coverage was within scope of insurer’s obligation to defend. Hart---- For Current Listings access www.ambest.com/legal---Last Update August, 2008

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ford Acc. & Indem. Co. v. Kaiser, 242 Or. 123, 407 P.2d 899 (1965). Purchase of vehicle by insured who had operator’s policy limiting coverage to vehicles not owned does not impose liability on insurer as to vehicle owned by insured, notwithstanding requirements of Financial Responsibility Law. Ohm v. Fireman’s Fund Indem. Co., 211 Or. 596, 317 P.2d 575 (1957). Compulsory Insurance Coverage – Future Financial Responsibility. Driver or owner of vehicle involved in accident causing injury or death to any person or more than $1,500 property damage must file a future responsibility filing within 30 days of filing accident report required under Or. Rev. Stat. §811.725 and must maintain proof of financial responsibility for three years. Or. Rev. Stat. §806.245(2). There is exemption for operators of government vehicles, those carrying liability insurance, and others. Or. Rev. Stat. §806.210. Violation of future responsibility requirements subjects violator to suspension of driving privileges under Or. Rev. Stat. §809.415. Or. Rev. Stat. §806.200(4). Statute requiring uninsured drivers and owners of motor vehicles involved in certain accidents to prove “future financial responsibility” by e.g., purchasing insurance held (a) to apply irrespective of fault of driver or owner; (b) not to be unconstitutional on due process or equal protection grounds. Boykin v. Ott, 10 Or. App. 210, 498 P.2d 815 (1972), appeal dismissed, 411 U.S. 912, 93 S. Ct. 1554, 36 L. Ed. 2d 304 (1973). If employer is required to, but fails, to make a future responsibility filing, registration of employer’s vehicles “may” be suspended. Or. Rev. Stat. §§806.200(3), 809.050. Contract Terms. Financial Responsibility Law requires motor vehicle liability insurance policy to include as insureds “all persons who, with the consent of the named insured, use the motor vehicles insured under the policy…” Or. Rev. Stat. §806.080(1)(b). Person does not “use” a motor vehicle if person does not put vehicle into action, employ it, apply to his or her employer’s advantage, or utilize it. Where person was not employee of insured and merely assisted in loading of insured’s truck, person was not permissive user for purposes of insurer’s duty to defend. Trus Joist MacMillan v. John Deere Ins. Co., 171 Or. App. 476, 482-84, 15 P.3d 995 (2000). Provision “arising out of ownership, maintenance or use of owned automobile” has broader meaning than term “caused by” and covers injury that originates from, is incident to, or has connection with use of vehicle. Jordan v. Lee, 76 Or. App. 472, 709 P.2d 752 (1985). Plain-

tiff shot by carjacker, after leaving vehicle when ordered to do so, sustained injury “resulting from the use” of vehicle. Carrigan v. State Farm Mut. Auto Ins., 326 Or. 97, 949 P.2d 705 (1997). Damages – Compensatory. Loss of profits is acceptable measure of loss of use of commercial vehicle. Bullock v. Hass, 280 Or. 501, 571 P.2d 902 (1977). Damages – Excess over Verdict. Where liability insurer undertakes to defend its insured, it may be liable to the insured for amount of any excess verdict over the policy limits if insurer “did not reasonably attempt to settle the claim within the policy limits, or if it conducted the defense of its insured in a manner that was otherwise negligent.” Goddard ex rel. Estate of Goddard v. Farmers Ins. Co. of Oregon, 173 Or. App. 633, 637, 22 P.3d 1224 (2001), rev. granted, 341 Or. 366, 143 P.3d 239 (2006) (finding genuine issue of material fact as to whether excess judgment resulted from auto liability insurer’s failure to seek settlement of action for policy limits to avoid excess judgment); see generally “LIABILITY INSURANCE, Duty to Settle.” Damages – Noneconomic. Or. Rev. Stat. §31.715(1) bars recovery of noneconomic damages in any action for injury or death arising out of the operation of a motor vehicle if the plaintiff does not have liability insurance or is driving while intoxicated. Or. Rev. Stat. §31.715(1) does not violate Article I, section 10, of the Oregon Constitution (right to a remedy) or Article I, section 17 (right to jury trial). Lawson v. Hoke, 190 Or. App. 92, 77 P.3d 1160 (2003), aff’d, 339 Or. 253, 119 P.3d 210 (2005). Damages – Punitive. Punitive damages recoverable for personal injury caused by intoxicated driver. Dorn v. Wilmarth, 254 Or. 236, 458 P.2d 942 (1969); Harrell v. Ames, 265 Or. 183, 508 P.2d 211 (1973). Family Purpose Doctrine. Oregon recognizes the “family purpose” doctrine, which is part of agency law. Under doctrine, where automobile is owned for pleasure or convenience of owner’s family, family member who uses it for his or her own pleasure or convenience with knowledge and consent of owner is agent of owner and owner is responsible for family member’s negligence. Kraxberger v. Rogers, 231 Or. 440, 373 P.2d 647 (1962). Where family member is not negligent, owner cannot be held liable under family purpose doctrine. Nord v. Wetmore, 105 Or. App. 246, 804 P.2d 501 (1991) (finding that, where child driver was found not negligent for aiding and abetting assault and battery, parent owners of automobile could not be held liable under family purpose doctrine). Co-ownership of an automobile defeats application of family purpose doc-

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trine. Sheppard v. Weekly, 72 Or. App. 86, 695 P.2d 53 (1985). A prima facie case of agency is made where ownership of automobile is admitted and family member was driving at time of accident. Prima facie case may be overcome by showing that auto was driven without express or implied permission of owner. For prima facie case to be overcome as a matter of law, evidence must be “uncontradicted and free from doubt or suspicion.” Kraxberger, 231 Or. at 450; cf. Gossett v. Van Egmond, 176 Or. 134, 155 P.2d 304 (1945) (holding there was question of fact as to whether father had impliedly consented to use of car by his son); Steele v. Hemmers, 149 Or. 381, 386, 40 P.2d 1022 (1935) (holding that father’s uncontradicted testimony that he had forbidden son from using automobile at night did “not necessarily preclude recovery”; “If such testimony were to be received as conclusive, the ‘family purpose’ doctrine would be practically nullified.”). Doctrine has been extended to negligent driving of person not related to driver by blood or marriage if circumstances surrounding parties’ relationship make driver a “family member.” French v. Barrett, 84 Or. App. 52, 55-56, 733 P.2d 89 (1987), rev’d on other grounds, Madrid v. Robinson, 324 Or. 561, 563, 931 P.2d 791 (1997) (question of fact as to whether daughter’s fiancé, who lived in home of daughter’s parents, was “family member” for purposes of family purpose doctrine); cf. Hawes v. Taylor, 246 Or. 32, 423 P.2d 775 (1967) (“‘It is not necessary, in order to fix liability upon the owner under the [family purpose] doctrine, that the automobile be driven by a person for whose use it is kept so long, at least, as such person was present in the car at the time of the accident.’”) (quoting 2 Harper & James, Torts, §26.15, p. 1423 (1956)) (emphasis in original). Family Purpose Doctrine – Household Members. Whether a person is a member of insured’s household is a question of fact, unless only one inference can be drawn from facts. Farmers Ins. Co. v. Jeske, 157 Or. App. 362, 971 P.2d 422 (1998). Relevant factors to consider in determining whether two persons are members of same “household” for purposes of non-owned automobile clause in automobile insurance policy include whether they live under one roof, length of time they have lived there, whether residence is intended to be permanent or temporary, and whether they are financially dependent upon one another. Farmers Ins. v. Stout, 82 Or. App. 589, 728 P.2d 937 (1986); Jordan v. Farmers Ins., 123 Or. App. 109, 858 P.2d 919 (1993); cf. State Farm Mut. Auto. Ins. Co. v. McCormick, 171 Or. App. 657, 17 P.3d 1083 (2000) (question of fact as to whether daughter was “resident of

same household” as insureds for purposes of UIM benefits, precluding summary judgment). A child’s status as an unemancipated minor in insured’s legal custody is relevant to whether child is a permanent resident in insured’s household, but not controlling. Jeske, supra. Parents of adult son who was involved in automobile accident could not be held liable under family purpose doctrine, although son lived with parents and they made care and insurance payments on his behalf– ownership of vehicle was dispositive issue; son was owner because car was titled under son’s name, used exclusively by him, and all parties had good faith belief that son owned car. Arizpe v. Vankirk, 204 Or. App. 372, 376, 129 P.3d 718 (2006). Inquiry as to whether children away from home attending school or serving in military are residents of insured’s household is whether they intend to return home. “Unless and until they form the intent not to return home, they remain residents of their parents’ homes for purposes of insurance coverage.” Waller v. Auto-Owners Ins. Co., 174 Or. App. 471, 481, 26 P.3d 845 (2001) (court’s emphasis) (UIM benefits). Son who was temporarily living away from home while attending college held to be covered under father’s “Family Automobile Policy.” Federated American Ins. v. Childers, 45 Or. App. 379, 608 P.2d 584 (1980). Family member/household exclusion in motor vehicle liability policy limited liability coverage for bodily injury or property damage to insured or any family member “to the extent that the limits of liability for this coverage exceed the limits of liability required by the Oregon financial responsibility law.” North Pacific Ins. Co. v. Hamilton, 332 Or. 20, 26, 22 P.3d 739 (2001). Exclusion was supposed to notify insured that liability coverage under policy was limited to the statutorilyrequired minimum coverage for injured insureds and their family members. Oregon Supreme Court held provision ambiguous, that ambiguity could not be resolved, and therefore that provision was unenforceable. Id. at 29; see also Wright v. State Farm Mutual Auto. Inc. Co., 332 Or. 1, 22 P.3d 744 (2001), in which family member/household exclusion limited liability coverage to insured or members of insured’s household “to the extent the limits of liability of this policy exceed the limits of liability required by law.” Oregon Supreme Court found reference to “the limits of liability required by law” not to inform insured what limit, if any, would be applicable and therefore concluded provision was unenforceable. Wright, 332 Or. at 8. Guests. Oregon’s guest statute is applicable only to passengers in watercraft and aircraft. No person trans---- For Current Listings access www.ambest.com/legal---Last Update August, 2008

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ported by owner or operator of aircraft or watercraft, as his guest without payment for such transportation, shall have cause of action for damages against owner or operator for injury, death or loss, in case of accident, unless accident was intentional on part of owner or operator or caused by his or her gross negligence or intoxication. Statute defines term “payment” as substantial benefit in material or business sense conferred upon owner or operator of conveyance and which is substantial motivating factor for transportation, and does not include mere gratuity or social amenity. “Gross negligence” refers to negligence that is materially greater than mere absence of reasonable care under circumstance, and that is characterized by conscious indifference to or reckless disregard of rights of others. Or. Rev. Stat. §30.115(1), (2). Imputed Negligence/Joint Enterprise. Driver’s negligence will not be imputed to passenger without showing of actual control by passenger or showing community of pecuniary interest. Adams v. Treat, 256 Or. 239, 472 P.2d 270 (1970). Joint ownership, marital relationship, and common purpose not enough. Id. Johnson v. L.A.-Seattle Mtr. Exp., 222 Or. 377, 352 P.2d 1091 (1960) (driver’s negligence not imputed to ownerpassenger asleep in back seat). Co-ownership is not sufficient to impute negligence of one such owner to another as a matter of law. Parker v. McCartney, 216 Or. 283, 338 P.2d 371 (1959). Last Clear Chance. Oregon has abolished doctrines of last clear chance and implied assumption of risk. Or. Rev. Stat. §31.620. Ownership/Title. A certificate of title is prima facie evidence of the ownership of a vehicle or an interest in a vehicle. Or. Rev. Stat. §803.010; see generally Or. Rev. Stat. Chapter 803 (“Vehicle Title and Registration”). No-Fault Insurance. Oregon motor vehicle liability policies covering private passenger motor vehicles must provide personal injury protection benefits (PIP) for the insured, family members residing in same household, children not related to the insured by blood, marriage, or adoption who are residing in the same household and being reared as insured’s own, passengers, and pedestrians struck by the insured vehicle. Or. Rev. Stat. §742.520(1). PIP benefits “shall be primary” with respect to insured, members of family of insured residing in same household injured while occupying insured motor vehicle. Or. Rev. Stat. §742.526(1)(a). Also PIP benefits are primary with respect to passengers injured while occupying insured vehicle and insured and family members residing in same household injured as pedestrians. Or. Rev. Stat. §742.526(1)(b), (c). However, PIP benefits are excess with respect to insured and family members reCopyright © 2009 by A.M. Best Company, Inc.

siding in same household injured while occupying a vehicle not insured under policy. Or. Rev. Stat. §742.526(1)(d). In addition, PIP benefits with respect to pedestrians injured by insured vehicle are excess over any other collateral benefits to which injured person is entitled. Or. Rev. Stat. §742.526(1)(e). Where there is more than one policy with PIP benefits exceeding statutory minimum, no statute permits insurer to limit PIP liability to the upper limits of one policy. Anderson v. Farmers Ins. Co. of Oregon, 188 Or. App. 179, 185, 71 P.3d 144 (2003) (concluding that no statutory or policy provision authorized enforcement of policy’s antistacking provision for coverage exceeding statutorilyrequired minimum PIP coverage). Definition of “insured vehicle” for purposes of uninsured motorist coverage, see Or. Rev. Stat. §742.504(2)(d), also applies to PIP coverage. Utah Home Fire v. Colonial, 300 Or. 564, 715 P.2d 1112 (1986). PIP endorsement that more narrowly defined “insured vehicle” held invalid. Id. Oregon Rev. Stat. §12.155, which requires person making advance payment to give written notice of when applicable statute of limitations will run before determining tort liability, is not applicable to PIP payments made under Or. Rev. Stat. §742.520. Smith v. Riker, 88 Or. App. 579, 746 P.2d 247 (1987). Auto policy provision purporting to exclude coverage for bodily injuries sustained by relative while occupying any automobile owned by such relative and not insured for Oregon personal injury protection benefits held ineffective. Garrow v. Pennsylvania Gen. Ins., 288 Or. 215, 603 P.2d 1175 (1979); Or. Rev. Stat. §742.520. No-Fault Insurance – Arbitration. Disputes between insurers and beneficiaries about the amount of PIP benefits or about the denial of PIP benefits shall be decided by arbitration if mutually agreed to at the time of dispute. Or. Rev. Stat. §742.520(6). The insured bears costs not to exceed $100, and all other costs of arbitration under Or. Rev. Stat. §742.520(6) are borne by the insurer. Or. Rev. Stat. §742.522(1). Findings and awards made in an arbitration proceeding are binding only upon the parties to the arbitration proceeding and may not be used for purposes of collateral estoppel. Or. Rev. Stat. §742.521(2)(a)-(c). NOTE: 2007 Amendment to Or. Rev. Stat. §742.520(6) provides that arbitration shall proceed according to the procedure set forth in Section 3 of the Act which provides: 1) Arbitration proceedings under Or. Rev. Stat. §742.520 shall be conducted under local court rules in the county where the arbitration is held.
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2) Findings and awards made in an arbitration proceeding under this section: (a) Are binding on the parties to the arbitration proceeding; (b) Are not binding on any other party; and (c) May not be used for the purpose of collateral estoppel. No-Fault Insurance – Benefits. PIP benefits for injury and death, Or. Rev. Stat. §742.524, include: 1) Reimbursement of reasonable and necessary medical expenses incurred within one year of injury to maximum of $15,000. Or. Rev. Stat. §742.524(1)(a). PIP benefits under an automobile liability policy are limited to expenses that exceed any medical assistance payments paid by the State pursuant to Or. Rev. Stat. Chapter 414 (medical assistance to the categorically and medically needy). Farmers Ins. Co. of Oregon v. Wickham, 86 Or. App. 100, 739 P.2d 30 (1987). 2) Wage reimbursement for no more than 52 weeks of no more than $1,250 per month. Or. Rev. Stat. §742.524(1)(b). Non-wage reimbursement for no more than 52 weeks of no more than $30 per day for expenses reasonably incurred by injured person for essential services in lieu of services person would have performed. Or. Rev. Stat. §742.524(1)(c). 3) Funeral expenses to maximum of $5,000. Or. Rev. Stat. §742.524(1)(d). 4) Child care reimbursement (if injured person is parent of a minor child and has to be hospitalized) of $25 per day up to $750.00. Or. Rev. Stat. §742.524(1)(e). 5) Insurer may offer coverage for benefits described in items 1) - 3) with deductibles of up to $250.00 Or. Rev. Stat. §742.524(2). Insurer may also offer more favorable benefits than statutory PIP benefits. Or. Rev. Stat. §742.532. Insurer may reduce or eliminate PIP benefits when injured person is entitled to receive workers’ compensation benefits or any other similar medical or disability benefits. Or. Rev. Stat. §742.526(2). Motor vehicle policy provision entitling insurer to set-off PIP payments against bodily liability coverage is enforceable, Edwards v. Bonneville, 299 Or. 119, 699 P.2d 670 (1985), but is subject to Or. Rev. Stat. §742.544, which limits the amount of offset. Motor vehicle policy provision limiting PIP coverage under multiple policies to “the limits provided by the single policy with the highest limits of liability” held unenforceable for PIP coverage exceeding statutory minimum because “no statute permits an insurer to limit its PIP liability to the upper limits of one policy.” Ander-

son v. Farmers Ins. Co. of Oregon, 188 Or. App. 179, 185, 71 P.3d 144 (2003). Mopeds and Motorcycles. No person shall operate or ride on a moped motorcycle or moped unless wearing a helmet. Or. Rev. Stat. §814.260 (moped); Or. Rev. Stat. §814.269 (motorcycle). Exception: This law does not apply to any person who is operating or riding a vehicle with an enclosed cab or designed to travel with three wheels in contact with ground at speeds less than 15 miles per hour. Or. Rev. Stat. §814.290; see generally Or. Rev. Stat. §§814.200-.340. Pedestrians. Where insurance policy defined “pedestrians” for purpose of personal injury protection benefits as “a person while not occupying self-propelled vehicle,” defendant, who was ejected from car, rendered immobile and struck by plaintiff’s insured, was “pedestrian” within policy meaning. State Farm Mut. Auto Ins. v. Berg, 70 Or. App. 410, 689 P.2d 959 (1984). Permissive Use. Omnibus clause included as “insured” anyone else using vehicle with “express permission.” Because driver did not have express permission to drive vehicle, driver was not an “insured” under the policy and there was no coverage for accident. Mutual of Enumclaw Ins. v. Hambleton, 84 Or. App. 343, 733 P.2d 948 (1987). Statutory insurance policy provided liability coverage to insured for bodily injuries sustained where 1) insured was passenger and injured by negligence of driver operating insured’s auto with insured’s permission; 2) insured was riding as passenger; and 3) driver was insured under terms of policy. State Farm Fire & Casualty Co. v. Jones, 306 Or. 415, 759 P.2d 271 (1988); see Or. Rev. Stat. §806.080(1)(b). Policy Limits. Where policy of automobile liability insurance defined “bodily injury” to include “loss of services,” and woman suffered physical injury and her husband suffered loss of her consortium, court held two persons suffered “bodily injury” so that bodily injury liability limit of “$50,000 each person” was not applicable to limit total coverage of both husband’s and wife’s claims. Allstate Ins. v. Handegard, 70 Or. App. 262, 688 P.2d 1387 (1984). However, compare with Viking Ins. v. Popken, 102 Or. App. 660, 795 P.2d 1091 (1990), in which court held that, where policy covered loss of services resulting from bodily injury, claims for loss of income and services were subject to a per-person maximum liability limit of $25,000. Seat Belts. The failure of party to use a safety belt is generally admissible only to mitigate damages, and the mitigation shall not exceed 5%. Or. Rev. Stat. §31.760(1). There is a general requirement to properly
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wear a safety belt when operating a motor vehicle on state highways. Or. Rev. Stat. §811.210. Speed Limit. A person violates the basic speed rule if the person “drives a vehicle upon a highway at a speed greater than is reasonable and prudent,” considering the traffic, the surface and width of the highway, intersection hazards, weather, visibility, and any other existing conditions. Or. Rev. Stat. §811.100(1). Any speed in excess of certain designated speeds is prima facie evidence of violation of the basic speed rule, such as traveling more than 20 miles per hour in a business district. See Or. Rev. Stat. §811.105 (“Speeds that Are Evidence of Basic Rule Violation”). See generally Or. Rev. Stat. Ch. 811 (“Rules of the Road for Drivers”). Trailers/Weight Limits. A “trailer” means “every vehicle without motive power designed to be drawn by another vehicle.” Or. Rev. Stat. §801.560. A “trailer” includes, but is not limited to: 1) balance trailers; 2) bus trailers; 3) commercial bus trailers; 4) farm trailers; 5) pole trailers; 6) semi-trailers; 7) travel trailers; 8) truck trailers; 9) self-supporting trailers; and 10) special use trailers. Id; see generally Or. Rev. Stat. Chapter 801 (“General Provisions and Definitions for Oregon Vehicle Code”). See generally Or. Rev. Stat. Chapter 818 (“Vehicle Limits”), which establishes maximum allowable weight and size limits. Violation of applicable weight and/or size limits constitutes an offense subject to civil liability under Or. Rev. Stat. §818.410. Uninsured/Underinsured Motorist Coverage. Every motor vehicle liability policy insuring against loss resulting from “liability imposed by law for bodily injury or death arising out of the ownership, maintenance or use of a motor vehicle must provide…uninsured motorist coverage.” Or. Rev. Stat. §742.502(1). Motor vehicle liability policy must have same limits for uninsured motorist (UM) coverage as for bodily injury liability coverage unless named insured elects, in writing, lower limits. Or. Rev. Stat. §742.502(2)(a). UM coverage larger than required statutory amounts–see Or. Rev. Stat. §806.070 (statutory limits of $25,000/$50,000/$100,000)–must include underinsured motorist (UIM) coverage for damages or death caused by accident and arising out of ownership, maintenance, or use of motor vehicle insured for an amount less than insured’s UM motorist coverage. UIM coverage must be equal to UM coverage less amounts recovered from other automobile liability insurance policies. Or. Rev. Stat. §742.502(2)(a).

Under Or. Rev. Stat. §742.502(3), (5), in situations in which there are multiple claimants, available amount of UIM benefits is based upon injured claimants’ recovery of benefits from tortfeasor’s liability insurer, not a comparison of claimants’ UIM limits and the liability limits of the tortfeasor’s policy. Takano v. Farmers Ins. Co. of Oregon, 184 Or. App. 479, 486, 56 P.3d 491 (2002) (holding that each of five claimants entitled to UIM coverage in amount equal to difference between $100,000 per person UIM limit and amount each claimant recovered from tortfeasor’s liability insurer). Insurer’s breach of duty to provide UM/UIM coverage does not give rise “to some inchoate entitlement to seek reformation but, instead, results in the imposition of…coverage ab initio by operation of law.” Savage v. Grange Mut. Ins. Co., 158 Or. App. 86, 94-95, 970 P.2d 695 (1999); see also Buccino v. California Casualty Ins. Co., 159 Or. App. 654, 978 P.2d 441 (1999); American Economy Ins. Co. v. Canamore, 114 Or. App. 348, 834 P.2d 542 (1992). Every policy required to provide UM coverage under Or. Rev. Stat. §742.502 must provide UM coverage that is no less favorable than if the statutory provisions set forth in Or. Rev. Stat. §742.504 were set forth in the policy. However, “nothing contained in this section shall require the insurer to reproduce in such policy the particular language of any of the [statutory] provisions.” Or. Rev. Stat. §742.504. Uninsured/Underinsured Motorist Coverage – Arbitration. Arbitration of UM/UIM claims is optional. Or. Rev. Stat. §742.504(10). Where insurance policy provides for arbitration of dispute between insurer and insured, arbitrator may decide question of whether alleged tortfeasor’s vehicle is uninsured. Fawver v. Allstate Ins., 267 Or. 292, 516 P.2d 743 (1973). Uninsured/Underinsured Coverage – Direct Action against Insurer. UM/UIM coverage may provide that insurer will pay all sums injured insured is “legally entitled to recover as general and special damages” from owner or operator of uninsured vehicle. Or. Rev. Stat. §742.504(1)(a). In context of UM/UIM coverage, “legally entitled to recover” means that, in direct action against insurer, insured must show that motorist was uninsured and that uninsured motorist was legally liable for damages to insured. Insured must also establish extent of damages. Kalhar v. Transamerica Ins. Co., 129 Or. App. 38, 44, 877 P.2d 656 (1994). Uninsured/Underinsured Motorist Coverage – Limits on Coverage. Any provisions less favorable to insured than statutory provisions are unenforceable against an insured in Oregon. However, insurer may add terms to Oregon policy that are neutral or more favorable to
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insured than statutory requirements. Provisions that deny or limit amount of UM/UIM coverage are measured against statutory requirements. Erickson v. Farmers Ins. Co. of Oregon, 331 Or. 681, 685, 21 P.3d 90, on remand, 175 Or. App. 548, 29 P.3d 1143 (2001) (holding that “other insurance” provisions in policy at issue were less favorable to insured than permitted by Or. Rev. Stat. §742.504(9)(a), (b) and were therefore unenforceable; because remaining policy terms provided coverage, policy conformed to Oregon law and there was no reason to replace unenforceable provisions with the statutory provisions). Uninsured/Underinsured Coverage – Phantom Vehicles. “Uninsured” vehicle includes “phantom vehicle”– Or. Rev. Stat. §742.504(2)(g), (j), (c)–and “hit-and-run vehicle”–Or. Rev. Stat. §742.504(2)(b), (j)(B). Where policy is silent as to accidents caused by “phantom vehicles,” Or. Rev. Stat. §742.504 requires policy to be construed as providing uninsured motorist coverage. Farmers Ins. Exch. v. Colton, 264 Or. 210, 504 P.2d 1041 (1972). Uninsured three-wheeled motorcycle designed for use mainly off public roads was not an “uninsured motor vehicle” for purposes of Or. Rev. Stat. §742.504. State Farm Mut. Auto. Ins. v. Beck, 84 Or. App. 509, 734 P.2d 398 (1987). Uninsured/Underinsured Coverage – Proof of Loss. Or. Rev. Stat. §742.504(5)(a) defines what constitutes a proof of loss for UM/UIM coverage. Under Or. Rev. Stat. §742.504(5)(a), a “proof of claim”–which term is synonymous with “proof of loss”–must be: 1) a “written submission”; 2) that includes the “full particulars of the nature and extent of the injuries, treatment” and other material details; 3) on a form provided by insurer (unless insurer does not furnish a form within 15 days after receiving notice of claim). See Weatherspoon v. Allstate Ins. Co., 193 Or. App. 330, 89P.3d 1277 (2004); Mosley v. Allstate Ins. Co., 165 Or. App. 304, 311-12, 996 P.2d 513 (2000). Uninsured/Underinsured Coverage – Set Offs. UM/UIM coverage is subject to statutory set-offs. Or. Rev. Stat. §742.504(7)(b), (c). Amount of recovery for bodily injury must be reduced by amounts to which insured may be entitled to recover from another insured; all sums paid by or on behalf of owner or operator of uninsured vehicle; and amounts payable by workers’ compensation or similar laws. See, e.g., Pitchford v. State Farm Mut. Auto. Ins. Co., 147 Or. App. 9, 16, 934 P.2d 616 (1997) (holding that full amount of workers’ compensation benefits paid by insurer to plaintiff, not just insurer’s statutory lien amount, was deductible from UIM policy limits). But see Harlow v. Allstate Ins. Co., 177 Or. App. 122, 131, 33 P.3d 363 (2001) (holding that
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insurer could deduct only net amount of money that tortfeasor’s insurer and workers’ compensation insurer paid plaintiff). Amounts recovered from tortfeasor’s insurer reduce UIM limits, not defendant’s actual damages. Mutual of Enumclaw Ins. v. Key, 131 Or. App. 130, 134, 883 P.2d 875 (1994). With two tortfeasors, one of which is uninsured, insurance company may not recover amount paid when insured later collects from insured tortfeasor. American Motorists Ins. v. Thompson, 253 Or. 76, 453 P.2d 164 (1969), superseded by statute on other grounds, see Bauder v. Farmers Ins. Co., 301 Or. 715, 721, 725 P.2d 350 (1986). Cf. Williams v. American States Ins. Co., 163 Or. App. 179, 986 P.2d 1260 (1999), opinion adhered to on reconsideration, 166 Or. App. 145, 997 P.2d 892 (2000) (where arbitrator’s award was less than limits of uninsured motorist policy, workers’ compensation settlement deducted from arbitration award, not from policy limits). PIP payments to insured are deductible from total damages sustained to determine damages payable under UM coverage. However, PIP payments may not be applied in reduction of UM or UIM coverage policy limits. Or. Rev. Stat. §742.542. Uninsured/Underinsured Motorist Coverage – Stacking of Limits. Or. Rev. Stat. §742.504(9)(a)–which provides that, with respect to bodily injury to an insured in a vehicle not owned by a named insured, UM/UIM insurance is excess over other similar coverage–does not require stacking of UIM limits under multiple policies issued by same insurer. Consequently, policy provisions prohibiting stacking of UIM limits by an insured who was injured while occupying a non-owned vehicle are enforceable. VanWormer ex rel. VanWormer v. Farmers Ins. Co. of Oregon, 171 Or. App. 450, 456-57, 15 P.3d 612 (2000). Uninsured/Underinsured Coverage – Statute of Limitations. Statute of limitations for UM/UIM coverage is two years. Or. Rev. Stat. §742.504(12)(a). (“The parties to this coverage agree that no cause of action shall accrue to the insured under this coverage unless within two years from the date of the accident…”). AVIATION LAW Aircraft Operation. Or. Rev. Stat. §§837.005-.990. Subject to specific exemptions, all persons must register their aircraft pursuant to the applicable statutory requirements. Or. Rev. Stat. §837.015. No one can fly aircraft in the State of Oregon without a “pilot certificate of

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competency issued by the appropriate federal agency.” Or. Rev. Stat. §837.010. Action for Wrongful Death. Or. Rev. Stat. §30.115 governs liability to aircraft passengers and provides that no person traveling as a guest without payment for transportation shall have a cause of action for damages against the owner or operator for injury, death or loss, in case of accident, unless the accident was intentional on the part of the owner or operator or caused by the gross negligence or intoxication of the owner or operator. The Oregon Court of Appeals has upheld Or. Rev. Stat. §30.115 against state and federal constitutional challenges. Urton v. Hudson, 101 Or. App. 147, 790 P.2d 12 (1990). Limits to Liability. All risk provision covering “direct and accidental loss of or damage to aircraft” does not restrict coverage to physical damage, but extends to all consequences of insurable event that renders aircraft unairworthy. Busch v. Ranger Ins., 46 Or. App. 17, 610 P.2d 304 (1980). Exclusion in aircraft policy provided that insurance did not cover property damage to aircraft without current “airworthiness certificate.” Court held insurer could exclude liability for aircraft not bearing a valid and current airworthiness certificate and that proof of a causal connection between the policy exclusion and the cause of the accident was not required. Ochs v. Avemco Ins. Co., 54 Or. App. 768, 774, 636 P.2d 421 (1981). Exclusion in aircraft insurance policy providing that insurance did not apply during “any operation for which charge is made” held not applicable where payment made was merely noncommercial sharing of expenses among friends. Cammack v. Avemco Ins., 264 Or. 287, 505 P.2d 348 (1973). BROKERS See “AGENTS AND BROKERS.” BURGLARY INSURANCE “Casualty insurance” is defined to include insurance for burglary and theft. Or. Rev. Stat. §731.158(2); see also Or. Rev. Stat. §742.041(3) (loss by burglary or theft in auto policies); Or. Rev. Stat. §742.041(6) (physical loss or damage to property). A standard fire insurance policy does not insure against loss by theft. Or. Rev. Stat. §742.212; see, e.g., Inglis v. General Casualty Co. of America, 211 Or. 116, 316 P.2d 546 (1957) (money stolen from safe; policy covered loss of property only from locked safe that showed visible marks of forcible or violent entry on exterior doors; finding no coverage because markings showing force and violence were inside safe and therefore loss was not within policy
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coverage); Northwest Amusement Co. v. Aetna Casualty & Sur. Co., 165 Or. 284, 294, 107 P.2d 110 (1940) (holding that mercantile burglary policy covering slot machines, possession of which was forbidden by ordinance, was unenforceable and no recovery could be had under policy; “Construing the policy as if the terms of the ordinance were written therein, in effect such policy undertook to insure against the loss of a nonexistent right, namely the right of possession of slot machines in the City of Portland.”); see also Nike, Inc. v. Northwestern Pacific Indem. Co., 166 Or. App. 312, 999 P.2d 1197, opinion adhered to on reconsideration, 167 Or. App. 322, 1 P.3d 1060 (2000) (employee theft policy). Words “theft” and “robbery” in automobile policy given commonly accepted meaning as understood by average layman. Court will not change word “theft” in policy to “larceny” as defined by statute. Nugent v. Union Auto Ins., 140 Or. 61, 13 P.2d 343 (1932). Surfboards are watercraft within policy’s exclusion for theft of watercraft away from residence. Smith v. State Farm Ins. Co., 144 Or. App. 442, 927 P.2d 111 (1996). CANCELLATION See “AUTOMOBILES, Cancellation”; “FIRE INSURANCE, Contract-Policy–Cancellation”; “HEALTH INSURANCE, Cancellation; “LIABILITY INSURANCE, Cancellation.” Courts normally enforce provisions for cancellation in insurance policies where the right to rescind is reserved in the contract. Verex Assur. v. John Hanson Sav. & Loan, 816 F.2d 1296 (9th Cir. 1987) (Oregon Law). CHATTEL MORTGAGES See “FIRE INSURANCE, Chattel Mortgages.” CONSTRUCTION OF POLICY Ambiguity of Terms. “The primary and governing rule in the construction of insurance contracts is to ascertain the intent of the parties” based on policy’s terms and conditions. Totten v. New York Life Ins. Co., 298 Or. 765, 696 P.2d 1082 (1985); see also Smith v. State Farm Ins., 144 Or. App. 442, 446, 927 P.2d 111 (1996); Or. Rev. Stat. §742.043 (“Binders”). Interpretation of policy language is generally matter of law committed to court, not jury. Farmers Ins. Co. v. Munson, 145 Or. App. 512, 930 P.2d 878 (1996). However, where policy is ambiguous, evidence is admissible to establish meaning, and that is question of fact. A-1 Sandblasting v. Baiden, 53 Or. App. 890, 632 P.2d 1377 (1981), aff’d, 293 Or. 17, 643 P.2d 1260 (1982).

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In construing insurance policies, court presumes contract terms are incorporated and used in their “primary and general meaning.” California Ins. Co. v. Stimson Lumber Co., 2004 WL 1173185, at *5 (D. Or. May 26, 2004) (slip copy). Court will interpret terms and conditions according to what it perceives would be understanding of ordinary insurance purchaser. Totten v. New York Life Ins. Co., supra; Smith v. State Farm Ins., supra. In interpreting policy, court first looks to policy for definitions. Hoffman Const. Co. v. Fred S. James & Co., 313 Or. 464, 836 P.2d 703 (1992); Smith v. State Farm Ins., supra. If policy does not define crucial term, then court considers term’s plain meaning. Hoffman Const. Co. v. Fred S. James & Co., supra; Smith v. State Farm Ins., supra. If term has more than one plausible meaning, court then determines whether proposed interpretations continue to be reasonable in light of particular context in which term is used in policy and in context of policy as a whole. Hoffman Const. Co. v. Fred S. James & Co., supra; Smith v. State Farm Ins., supra. Finally, if more than one interpretation remains reasonable, term is legally ambiguous, and court construes it against insurer as drafter. Hoffman Const. Co. v. Fred S. James & Co., supra; Smith v. State Farm Ins., supra; See also Stimson, supra. (“If there is ambiguous language in the contract, first the court should examine the text and the context of the ambiguous language, giving words of common usage their plain and ordinary meaning…Second, the court should examine the context to determine whether the parties intended for the disputed language to have a meaning other than its plain and natural meaning…Third, if an examination of the text and context does not provide an answer, other aids of construction may be employed to determine the parties’ intent…The parties’ practical interpretation of the terms of the policy can be a safe guide to the intended meaning.”) (citations omitted). An “intricate, technical, and complicated” policy is “not necessarily…ambiguous.” Protection Mutual Ins. Co. v. Mitsubishi Silicon America Corp., 164 Or. App. 385, 398, 992 P.2d 479 (1999) (concluding that complex commercial property damage policy permitted “only one plausible interpretation” and was not ambiguous–”There is no ambiguity that permits us to resort to extrinsic evidence.”). Meaning of phrase or word clear in one portion will be applied throughout policy. Schweigert v. Beneficial Std. Life Ins. Co., 204 Or. 294, 282 P.2d 621 (1955). Binders. Oregon law permits oral or written binders or other contracts for temporary insurance. A binder is deemed to include all the usual terms of the bound policy and applicable endorsements, except as superseded
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by the clear and express terms of the binder. Insurer is required to issue the appropriate policy within 90 days after issuing binder, “including within its terms the identical insurance bound under the binder and the premium therefor.” See Or. Rev. Stat. §742.043 (“Binders”). Insurance binder is effective where it is a valid, temporary contract made by authorized agent. Binder specifying parties to contract, type of coverage, property covered, and liability limits held “sufficiently specific to constitute a temporary contract of insurance pending issuance or denial of a permanent and more complete policy of insurance.” U.S. Pipe and Foundry Co. v. Northwestern Agencies, Inc., 284 Or. 167, 171, 585 P.2d 691 (1978). Where coverage under a binder does not conform to the contracting parties’ intents, proper remedy is reformation. Avemco Ins. Co. v. Hill, 76 Or. App. 185, 189, 708 P.2d 640 (1985). Sufficiently definite oral agreement of insurance by general agent is valid, at least in absence of required statutory form of policy. Where agent and insured intended drive-away coverage to be effective prior to date of accident, but through mistake policy was not so written, insured was entitled to have policy reformed to conform to oral contract. Mock v. Glens Falls Indem. Co., 210 Or. 71, 309 P.2d 180 (1957). Capacity. Test of contractual capacity is whether person is able to understand nature of his or her action and to understand its consequences. Uribe v. Olson, 42 Or. App. 647, 651, 601 P.2d 818 (1979). Rule is that “neither age, sickness nor debility of body will affect the capacity to make a contract or a conveyance if enough intelligence remains to understand the transaction.” Dodd v. Mayer, 135 Or. 43, 52, 294 P. 1040 (1931). Capacity – Infants. Age of majority is 18, and thereafter person has control over his or her own actions and has all the rights and is subject to all the liabilities of a citizen of full age. Or. Rev. Stat. §109.510. Where infant purchases personal property, and on attaining majority disaffirms contract, returns property, and sues to recover consideration, amount recoverable is consideration paid less “reasonable compensation for use and depreciation” of article while held by infant. Olshen v. Kaufman, 235 Or. 423, 433, 385 P.2d 161 (1963). Conditional Receipt of Application. “Conditional Binding Receipt” for a life insurance policy is a legal contract binding on insurer if insured turned out to be insurable pursuant to conditions stated in Receipt. In Morgan v. State Farm Life Ins. Co., 240 Or. 113, 400 P.2d 223 (1965), court stated: “The literal meaning of the receipt…is that the insurer engaged to insure the insured, if he turned out to be insurable, and, in that event,
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the insurance would be in effect from the date of the application.” Morgan, 240 Or. at 117. Court noted that if insured died before policy was issued, insurer would be bound by receipt upon proof decedent was insurable when he made his application. Inconsistent Policy Terms and Endorsements. Endorsement becomes part of insurance contract and must be construed with it, and to extent of any conflict between endorsement and policy, endorsement controls. First Far West Transp. Inc. v. Carolina Casualty Ins. Co., 47 Or. App. 339, 614 P.2d 1187 (1980). Where apparently irreconcilable provisions exist in policy, if inconsistency is between clause that is general and broadly inclusive in character and one that is more limited and specific in its coverage, latter generally operates as modification and pro tanto nullification of former. Waterway Terminals Co. v. P. S. Lord Mechanical Contractors, 242 Or. 1, 406 P.2d 556 (1965). Mistake. Where insurer made a unilateral mistake in calculating premiums and insured had no actual or constructive knowledge of mistake, insurer was not entitled to cancel policy. Int’l Union of Operating Engineers, Local 701 v. Central National Life Ins. Co., 268 Or. 115, 118, 519 P.2d 85 (1974). Mutual mistake as to description of property by parties to land sale contract, which would support reformation, did not necessarily relieve title insurer of its contractual duties. Polsfoot v. Transamerica Title Ins. Co., 47 Or. App. 261, 269-70, 614 P.2d 1173 (1980). Misrepresentations in Policy Application. Statements and descriptions in policy application “by or in behalf of the insured, shall be deemed to be representations not warranties.” Or. Rev. Stat. §742.013(1). An insured’s misrepresentations, omissions, concealments of facts and incorrect statements will not prevent a recovery under the policy unless 1) the misrepresentations, omissions, concealments of facts and incorrect statements are contained in a written policy application and a copy of application is endorsed upon or attached to the policy when issued; and 2) the insurer shows that the misrepresentations, omissions, concealments of facts and incorrect statements are material and that the insurer relied on them; and 3) the misrepresentations, omissions, concealments of facts and incorrect statements are either fraudulent or material “either to the acceptance of the risk or to the hazard assumed by the insurer.” Or. Rev. Stat. §742.013(1). To prevail on rescission claim, insurer must prove by preponderance of evidence that it issued the policy in reliance on applicant’s false representations, which were material to insurer’s decision to accept the risk. Insurer must show that insured either “knowingly made false
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representations, or recklessly made false representations without any knowledge as to whether they were true or false.” Progressive Specialty Ins. Co. v. Carter, 126 Or. App. 236, 241, 868 P.2d 32 (1994). Insurer is charged with knowledge of agent and cannot rescind policy based on false application where agent had knowledge of misrepresentation. Seidel v. Time Ins. Co., 157 Or. App. 556, 562, 970 P.2d 255 (1998). Rescission – Insured. Insured may seek rescission of insurance policy based on misrepresentations by insurer’s agent. Restitution is amount of premiums paid less actual cost to insurer of carrying risk while policy was in force. See Albertus v. ICOA Life Ins. Co., 247 Or. 618, 431 P.2d 264 (1967); Bollenback v. Continental Casualty Co., 243 Or. 498, 414 P.2d 802 (1966). Reformation. Court will reform insurance contract for mutual mistake. For reformation to take place, insured must establish by a “clear” preponderance of the evidence that its understanding of the contract is “identical” with that of the insurer. Whether insured met its burden of proof is a question of fact. Spexarth v. Rhode Island Ins. Co. of Providence, R.I., 118 Or. 22, 25, 31, 245 P. 515 (1926). If consent of one party to a contract is procured by fraud, surprise, or mistake, appropriate remedy is rescission, not reformation, of the contract. Spexarth, 118 Or. at 25. Contracts cannot be reformed where one party has “uncommunicated mental reservations” at time of execution. Wheeler v. White Rock Bottling Co. of Oregon, 229 Or. 360, 365, 366 P.2d 527 (1961). Reformation is unnecessary where insurer has adequate legal remedy or if insurer is estopped to rely on a condition of the policy. Kabban v. Mackin, 104 Or. App. 422, 432, 801 P.2d 883 (1990), called into doubt on other grounds, Prudential Property & Casualty Ins. Co. v. Lillard-Roberts, 2002 WL 31495830, at *24 (D. Or. June 18, 2002). Tortious Breach. To bring tort claim based upon conduct that is also a breach of contract, plaintiff must allege that defendant violated some standard of care that is not part of defendant’s explicit or implied contractual obligations and that such standard of care arises from “special relationship” between the parties. Whether special relationship exists is “functional” rather than “formal” analysis that depends upon parties’ roles with respect to particular contract, not parties’ titles. Special relationship exists between insurer and insured where insurer has duty to defend (i.e., in context of third-party liability policy), but not where insurer refuses to settle
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within policy limits. Strader v. Grange Mut. Ins. Co., 179 Or. App. 329, 334, 39 P.3d 903 (2002). Oregon does not recognize a claim for first-party bad faith. Insurer can breach duty of good faith without also breaching insurance contract, but “any implied covenant of good faith and fair dealing must be consistent with contract terms, in this case, the scope of coverage provided by the policies.” Where insured’s bad-faith claim was based upon same facts as claim for breach of contract, court determined that covenant of good faith insured sought to imply was “inconsistent” with the policy’s coverage provisions and concluded trial court had properly dismissed insured’s bad-faith claim. Richardson v. Guardian Life Ins. Co. of America, 161 Or. App. 615, 624, 984 P.2d 917 (1999); see also Prudential Property & Casualty Ins. Co. v. Lillard-Roberts, 2002 WL 31495830 (D. Or. June 18, 2002), in which insured alleged that insurer and the insurer’s agent made misrepresentations regarding the extent of coverage without investigating in order to discourage insured from pursuing her claims. Insured asserted that misrepresentation claims sounded in tort. To bring a tort claim based upon conduct that is also a breach of contract, plaintiff must allege that defendant’s conduct violated some standard of care apart from the defendant’s contractual obligations and that the independent standard of care arose from “a particular relationship between the parties,” a “special responsibility [that] exists…in the type of situation…[when] one party has relinquished control over the subject matter of the relationship to the other party and has placed its potential monetary liability in the other’s hands.” Strader v. Grange Mut. Ins. Co., 179 Or. App. 329, 333-34, 39 P.3d 903 (2002). However, in case at bar, court found that insured had not relinquished any control of the subject matter of the relationship to insurer, nor had insurer assumed a duty to exercise independent judgment on insured’s behalf. Rather, insurer and insured were “contracting parties with competing interests.” Insured could also not base a tort claim on alleged “special responsibility” relationship with the insurer’s agent, because “[a] captive insurance agent has no special duty to a policyholder to support a tort claim.” Id. DAMAGES Damages must be reasonably probable, not merely possible, to be recoverable. Vale v. S.I.A.C., 160 Or. 569, 86 P.2d 956 (1939); McKay v. S.I.A.C., 161 Or. 191, 87 P.2d 202 (1939). Plaintiff must take reasonable steps to avoid enhancement of his or her damages, but burden of proving failure to avoid such consequences falls on defendant.

Bixler v. First Nat’l Bank, 49 Or. App. 195, 619 P.2d 895 (1980). Aggravation of Previously Existing Condition. Damages for aggravation of previously existing condition not recoverable unless specially pleaded. Dorn v. Clarke-Woodward, 65 Or. 516, 133 P. 351 (1913). However, a defendant takes a plaintiff in the condition he or she is found, even if the plaintiff is more susceptible to injury than others–the “egg-shell plaintiff rule.” Fuller v. Merten, 173 Or. App. 592, 22 P.3d 1221 (2001). Arbitration Awards. See “ARBITRATION.” Comparative/Contributory Negligence. See “NEGLIGENCE, Comparative/Contributory Negligence.” Compensatory Damages. In action to recover damages for personal injury, tortfeasor is liable for “all the natural, direct and proximate consequences of his wrongful act or omission.” Ferrante v. August, 248 Or. 16, 20, 432 P.2d 167 (1967). In assault and battery case, trial court instructed jury that defendant was to be compensated for damage to the extent of injury and that there was “no fixed or inflexible rule or standard whereby you are to measure damages”; matter was in jury’s judgment and discretion “applied to and upon evidence in this case.” However, trial court failed to give instruction that “You are instructed that evidence as to the wealth of the defendant has no bearing on your determination of compensatory damages.” Held reversible error, because, without some indication that evidence of defendant’s finances was introduced for a limited purpose, jury might well have taken evidence into consideration as part of evidence in case upon which jury was instructed to base award of compensatory damages. Brooks v. Bergholm, 256 Or. 1, 4-5, 470 P.2d 154 (1970). Future Pain and Suffering. Recovery for future pain and suffering is proper without permanent injury, but if no issue of permanent injury is presented, it is error to instruct regarding plaintiff’s life expectancy. Skultety v. Humphreys, 247 Or. 450, 431 P.2d 278 (1967). Damages for future pain and suffering should not be reduced to present value. Arnold v. Burlington Northern R.R., 89 Or. App. 245, 748 P.2d 174 (1988). Impairment of Future Earning Capacity. Evidence of loss or impairment of future earning capacity, reduced to present value, admissible in personal injury cases and wrongful death cases, following Meier v. Bray, 256 Or. 613, 475 P.2d 587 (1970); Osborne v. Bessonette, 265 Or. 224, 508 P.2d 185 (1973). Present value of lost earning capacity may be based on assumptions regarding future economic conditions–for example, course of inflation and wage and interest rates. Benjamin v. Wal-Mart
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Stores, Inc., 185 Or. App. 444, 474, 476, 61 P.3d 257 (2002) (in calculating present value of lost earnings, expert relied on decedent’s age, occupation, skills, applicable wage and income growth rates, discount rates, and other economic factors; in wrongful death case, court held expert’s testimony admissible to show damages arising out of pecuniary losses to decedent’s estate and to decedent’s beneficiaries). Evidence that plaintiff had sustained permanent injury that caused him to change careers was sufficient to entitle him to submit to jury question of whether injury impaired his future earning capacity. Fact that plaintiff earned more in his new job was relevant but not dispositive of whether injury impaired his future earning capacity. Lytle v. City of Portland, 89 Or. App. 315, 748 P.2d 1033 (1988). Where profits from a business result primarily from personal endeavors, skill, and attention of owner, those profits can be considered in determination of business owner’s impaired earning capacity. Doran v. Culver, 88 Or. App. 452, 745 P.2d 817 (1987). Evidence of past wages is a factor that is relevant to determination of impairment of future earning capacity. Id. Indemnification. Indemnity law is divided into two categories–contractual and implied-in-law. Contractual indemnity is governed by contract law. Implied-in-law indemnity is classified as quasi-contractual and is imposed by the courts based on equitable principles. Owings v. Rose, 262 Or. 247, 497 P.2d 1183 (1972). However, all indemnity claims are governed by the statute of limitations for contracts, not torts. Id. In contrast to negligence actions, a plaintiff in an indemnity action is not entitled to recover defense costs from third party whose acts required first party to successfully litigate. Kamyr, Inc. v. Boise Cascade Corp., 268 Or. 130, 519 P.2d 1031 (1974). Indemnification – Contractual. In contractual indemnity case, paramount inquiry is intent of parties. Indemnitee can legally contract for indemnity for claim based in whole or in part on his own negligence, if not “wanton or criminal” in nature. See Waggoner v. Oregon Auto Ins., 270 Or. 93, 526 P.2d 578 (1974); but see Or. Rev. Stat. §30.140(1) (“any provision in a construction agreement that requires a person or that person’s surety or insurer to indemnify another against liability for damages arising out of death or bodily injury to persons or damage to property caused in whole or in part by the negligence of the indemnitee is void”). Or. Rev. Stat. §30.140(1) prohibits “direct” indemnity arrangements between parties to construction agreements and “additional insurance arrangements” whereby one party is obligated to obtain insurance for losses arising in whole

or in part from the other party’s fault. Walsh Const. Co. v. Mutual of Enumclaw, 189 Or. App. 400, 408, 76 P.3d 164 (2003). Generally, an insurer cannot maintain an action for common-law indemnity against a tortfeasor. The insurer is limited to a subrogation action. Such an action is available only where (a) the insurer and the tortfeasor share a common duty to the insureds; (b) the insurer has discharged its legal obligation; and (c) as between the insurer and the tortfeasor, the tortfeasor should discharge the obligation. Safeco Ins. Co. v. Russell, 170 Or. App. 636, 639, 13 P.3d 519 (2000) (in auto accident case, holding that, because insurer and tortfeasor driver did not share a common duty to the insureds, there was no basis for indemnity; insurer’s right to recover against tortfeasor was limited to the right to subrogation, which was no longer available because two-year statute of limitations had expired). Indemnification – Implied-in-Law. The basis for common-law indemnity between joint tortfeasors is the “equitable distribution of responsibility,” but there is “no all-encompassing rule.” Piehl v. Dalles Gen. Hosp., 280 Or. 613, 620, 571 P.2d 149 (1977). Generally commonlaw indemnity can be had where, “‘in justice,’ whether the relationship of the parties or the quality of their respective conduct warrants that one of them should bear the full responsibility for joint liability to a third party.” Maurmann v. Del Morrow Const., Inc., 182 Or. App. 171, 178, 48 P.3d 185 (2002). In action for common-law indemnity, claimant must plead and prove that 1) claimant has discharged legal obligation owed to third party; 2) defendant was also liable to third party; and 3) as between claimant and defendant, defendant should have discharged obligation. Fulton Ins. Co. v. White Motor Corp., 261 Or. 206, 210, 493 P.2d 138 (1972), overruled in part on other grounds, Waddill v. Anchor Hocking, Inc., 330 Or. 376, 8 P.3d (2000), cert. granted and judgment vacated on other grounds, 538 U.S. 974, 123 S. Ct., 155 L. Ed. 2d (2003), on remand, 190 Or. App. 172, 78 P.3d 570 (2003). Under first requirement, proof of discharge of legal obligation owed to third party may be by formal release or by some other mechanism so long as, in any subsequent proceeding brought by third party against indemnity defendant, indemnity defendant can establish as a matter of law that its liability to third party has been extinguished. Moore Excavating, Inc. v. Consolidated Supply Co., 186 Or. App. 324, 330, 63 P.3d 592 (2003). Under third requirement, claimant must not only be legally liable to injured third party, but liability must be secondary or fault “merely passive,” whereas liability of
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defendant must be primary and fault active. Fulton, 261 Or. App. at 210. A jury’s determination that a putative indemnitee was comparatively negligent does not necessarily indicate a finding of active or primary negligence; to preclude an indemnity action, the defendant indemnitor must show that the jury’s finding of comparative negligence “necessarily rested on a finding of fact that would preclude recovery of indemnity.” Maurmann v. Del Morrow Const., Inc., 182 Or. App. 171, 185, 48 P.3d 185 (2002). Where surety has been required by judgment to pay out sums on its principal’s behalf, surety has implied right of indemnity against its principal for said sums. Oregon Auto Ins. Co. v. Bateman, 258 Or. 360, 482 P.2d 744 (1971). Indemnification – Workers’ Compensation Act. Pursuant to exclusive liability provision of Workers’ Compensation Act, Or. Rev. Stat. §656.018, express contractual agreement by employer to indemnify third party liable for injury to or death of employee is void. Roberts v. Gray’s Crane & Rigging, 73 Or. App. 29, 697 P.2d 985 (1985). However, employer may be required to indemnify third party held liable for employee’s injuries if employer breached independent duty of care owed to third party. Independent duty does not arise simply from fact that employer purchased services from third party; there must be some evidence of particular duty. Sandwell International Inc. v. American Can Co., 47 Or. App. 429, 614 P.2d 620 (1980). NOTE: Oregon Supreme Court has held that exclusive remedy provisions of Workers’ Compensation Act are unconstitutional under the remedy clause of Article I, section 10 of the Oregon Constitution for certain classes of workers. Smothers v. Gresham Transfer, Inc., 332 Or. 83, 23 P.3d 333 (2001). Codified at Or. Rev. Stat. §656.019. See “WORKERS’ COMPENSATION, Remedy.” Prejudgment Interest. Prejudgment interest available in action for breach of contract where damages are liquidated and also where damages, although unliquidated, are “ascertained or easily ascertainable.” Bollam v. Fireman’s Fund Ins. Co., 76 Or. App. 267, 275, 709 P.2d 1095 (1985), rev’d on other grounds, 302 Or. 343, 730 P.2d 542 (1986). Prejudgment interest is not available in most tort actions because damages are not usually ascertainable until entry of judgment. Erickson AirCrane Co. v. United Technologies Corp., 87 Or. App. 577, 743 P.2d 747, rev. denied, 304 Or. 680, 748 P.2d 142 (1987). Psychic Injuries. Where wrongful act constitutes infringement of legal right, damages for mental suffering may be recovered even if there is no physical injury if

the mental suffering is direct result of wrongful act. Hinish v. Meier & Frank, 166 Or. 482, 113 P.2d 438 (1941) (mental suffering direct and natural result of commission of another tort - invasion of privacy); see also Stevens v. First Interstate Bank of California, 167 Or. App. 280, 286-87, 999 P.2d 551 (2000) (noting that, in absence of physical injury, to recover emotional distress damages, plaintiff must show that relationship with defendant gave rise to some distinct “‘legally protected interest’” beyond liability based on general obligation to “‘take reasonable care not to cause a risk of… foreseeable…harm’” to plaintiff; holding that relationship between bank depositors and their bank did not give rise to required distinct “‘legally protected interest’”) (citations omitted). Psychic Injuries – Intentional Infliction of Emotional Distress. To state a claim for intentional infliction of emotional distress, plaintiff must allege that defendant intended to inflict “‘severe emotional distress’ on plaintiff; defendant’s acts caused plaintiff’s severe emotional distress; and defendant’s acts ‘constituted an extraordinary transgression of the bounds of socially tolerable conduct.’” Delaney v. Clifton, 180 Or. App. 119, 41 P.3d 1099 (2002) (citation omitted). In Delaney, supra, husband alleged that defendant therapists counseling his wife (who had voluntarily participated in the therapy) caused husband foreseeable intentional infliction of emotional distress. Court held that husband had not stated a claim for intentional infliction of emotional distress based upon: 1) husband’s status as an outsider to the confidential and privileged therapist-patient relationship; 2) wife’s voluntary participation in therapy (“At a minimum, for a nonpatient to have an IIED claim based on a therapist’s treatment of a patient, the conduct should be outrageous as to the patient.” Id. at 133); and 3) absence of intentional conduct (“If anything, the cases suggest that conduct that is negligent, mistaken, or otherwise remiss rather than deliberate, intentional, or engaged in by design will not support a claim for IIED.” Id. at 136); see also Richardson v. Guardian Life Ins. Co., 161 Or. App. 615, 630, 984 P.2d 917 (1999) (“conduct, however mistaken, did not constitute intentional infliction of emotional distress.”). Psychic Injuries – Negligent Infliction of Emotional Distress. Subject to limited exceptions, no recovery of damages for negligently inflicted emotional distress absent evidence of “some related physical injury.” Simons v. Beard, 188 Or. App. 370, 375, 72 P.3d 96 (2003); see also Chouinard v. Health Ventures, 179 Or. App. 507, 514-15, 39 P.3d 951 (2002) (exploring contours of “physical impact” requirement). Although Oregon occasionally allows recovery of damages for negligent infliction of emotional distress
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where there is “independent basis of liability,” interest upon which that independent basis of liability is based must be sufficiently important as matter of policy to merit protection from emotional impact. Hilt v. Bernstein, 75 Or. App. 502, 707 P.2d 88 (1985). A person who suffers physical injuries in an accident may recover damages for negligent infliction of emotional distress resulting from seeing a loved one suffer injuries in the same accident. Sherwood v. ODOT, 170 Or. App. 66, 11 P.3d 664 (2000) (holding that child who suffered physical injuries in an accident that also caused injury to his mother could recover damages for negligent infliction of emotional distress resulting from seeing mother injured). Where a patient does not suffer a physical injury, that patient cannot recover damages for the emotional distress resulting from medical malpractice leading to an increased risk of contracting a disease. Rustvold v. Taylor, 171 Or. App. 128, 14 P.3d 675 (2000). Plaintiff may not recover for emotional distress unaccompanied by physical harm in action based entirely on strict products liability under Or. Rev. Stat. §30.920 and Restatement (second) of Torts §402A. Mere risk of physical harm is not enough. Sease v. Taylor’s Pets, 74 Or. App. 110, 700 P.2d 1054 (1985). Punitive Damages. Punitive damages are not recoverable in a civil action unless it is proven by clear and convincing evidence that the party against whom punitive damages are sought has acted with “malice or has shown reckless and outrageous indifference to a highly unreasonable risk of harm and has acted with a conscious indifference to the health, safety, and welfare of others.” Or. Rev. Stat. §31.730(1); but see Eastwood v. Am. Fam. Mut. Ins. Co., 2006 WL 2934260 (D. Or. Oct. 12, 2006) (recognizing Or. Rev. Stat. §31.730 as preempted in federal courts on other grounds). Punitive Damages – Appellate Review. If a jury awards punitive damages, review by trial and appellate courts determines whether award meets applicable statutory and constitutional standards. Williams v. Philip Morris Inc., 340 Or. 35, 127 P.3d 1165, cert. allowed, 126 S. Ct. 2329 (2006). NOTE: In 2003 the U.S. Supreme Court granted cert. in Philip Morris, supra, vacated the judgment, and remanded the case to the Oregon Court of Appeals for further consideration in light of State Farm v. Campbell, 538 U.S. 408, 123 S. Ct. 1513, 155 L. Ed. 2d 585 (2003). Campbell addresses the standards applicable to an award of punitive damages. On remand, the Oregon Court of Appeals concluded that, under Campbell, the original punitive damages award of $79.5 million (against an award of $21,485.80 in economic damages
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and $500,000 in noneconomic damages) was not excessive under the due process clause). In Oberg v. Honda Motor Co., 320 Or. 544, 888 P.2d 8 (1995), the court held that a jury’s award of punitive damages shall not be disturbed when it is within the range that a rational juror would be entitled to award in the light of the record as a whole. Or. Rev. Stat. §31.730 codifies the Oberg standard. Parrott v. Carr Chevrolet, Inc., 331 Or. 537, 551 n. 10, 17 P.3d 473 (2001). Or. Rev. Stat. §31.730(2) provides: “If an award of punitive damages is made by a jury, the court shall review the award to determine whether the award is within the range of damages that a rational juror would be entitled to award based on the record as a whole, viewing the statutory and common-law factors that allow an award of punitive damages for the specific type of claim at issue in the proceeding.” See Williams v. Philip Morris Inc., 182 Or. App. 44, 61, 48 P.3d 824, adhered to on reconsideration, 183 Or. App. 192, 51 P.3d 670, rev. denied, 335 Or. 142, 61 P.3d 938 (2002), cert. granted, judgment vacated, and remanded, 124 S. Ct. 56, 157 L. Ed. 2d (2003), on remand, 193 Or. App. 527, 92 P.3d 126 (2004) (“The heart of the standard for reviewing awards of punitive damages…is determining whether the award is one that a rational juror could make in light of the record as a whole and the legal factors that justify an award of punitive damages on the specific type of claim.”). The Oregon Supreme Court has found Oregon’s rational juror standard for review of a punitive damages award “compatible with” the “gross excessiveness” standard set forth in BMW of North America v. Gore, 517 U.S. 559, 116 S. Ct. 1589, 134 L. Ed. 2d 809 (1996); Parrott v. Carr Chevrolet, Inc., 331 Or. 537, 554, 17 P.3d 473 (2001). Oregon’s rational juror inquiry survives Gore as the standard for post-verdict judicial review of an award of punitive damages under the Fourteenth Amendment. Parrott, 331 Or. at 555. The Parrot court held: “A jury’s punitive damages award is not ‘grossly excessive’–and therefore will not be disturbed on review–if it is within the range that a rational juror would be entitled to award in light of the record as a whole. Combining the factors announced by the Supreme Court in Gore with those announced by this court in Oberg (state), the range that a rational juror would be entitled to award depends on the following: (1) the statutory and common-law factors that allow an award of punitive damages for the specific kind of claim at issue…; (2) the state interests that a punitive damages award is designed to serve…; (3) the degree of reprehensibility of the defendant’s conduct…; (4) the disparity between the punitive damages award and the actual or potential harm inflicted…; and (5) the civil and criminal sanctions pro---- For Current Listings access www.ambest.com/legal---Last Update August, 2008

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vided for comparable misconduct.” Id. at 555 (citations omitted). A court reviewing a punitive damages award “must resolve all disputes regarding facts and factual inferences in favor of the jury’s verdict and then determine, on the facts as the jury was entitled to find them, whether the award violates the legal standard of gross excessiveness.” Parrott, 331 Or. at 556-57. The court’s review of the record as a whole is limited to the evidence before the jury. Id. at 557. NOTE: In Cooper Industries, Inc. v. Leatherman Tool Group, Inc., 532 U.S. 424, 121 S. Ct. 1678, 149 L. Ed. 2d 674 (2001), the Court held that an appellate court must review a trial court’s decision as to whether a punitive damages award is excessive as a matter of law, rather than for abuse of discretion. In reaching its conclusion, the Court stated that the amount of a punitive damages award is not a factual finding implicating the Seventh Amendment’s limitations on review of jury awards. The Oregon Court of Appeals has rejected the argument that Cooper undermines Parrot, supra, because Parrot sets forth a standard of review based, at least in part, on a jury’s factual determinations. Williams v. Philip Morris Inc., 182 Or. App. 44, 63, 48 P.3d 824, adhered to on reconsideration, 183 Or. App. 192, 51 P.3d 670, rev. denied, 335 Or. 142, 61 P.3d 938 (2002), cert. granted, judgment vacated, and remanded, 124 S. Ct. 56, 157 L. Ed. 2d (2003), on remand, 193 Or. App. 527, 92 P.3d 126 (2004). To initially challenge a jury’s award of punitive damages as unconstitutionally excessive under the Fourteenth Amendment, a party files a motion for a new trial under ORCP 64(B)(5). The reviewing court then determines whether the award is excessive under the abovediscussed standards. If the court determines the award is excessive, it should, applying the same standards and based upon the record as a whole, determine the upper limit of a range, or the highest amount, of punitive damages that a rational juror could award consistent with the Fourteenth Amendment. If the nonmoving party does not agree to the reduced amount of punitive damages determined by the reviewing court, the court must grant a new trial. Parrot, 331 Or. at 558. Punitive Damages – Reduction of Award. In addition to reduction of punitive damages award pursuant to judicial review, Or. Rev. Stat. §31.730, court may reduce award if defendant can show it has taken remedial measures that are reasonable under the circumstances to prevent reoccurrence of the conduct that gave rise to the claim for punitive damages. In reducing award, court shall consider if the same defendant has previously incurred judgments for punitive damages for the same conduct. Or. Rev. Stat. §31.730(3).
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However, punitive damages are not affected by the plaintiff’s comparative fault. In Waddill v. Anchor Hocking, Inc., 175 Or. App. 294, 27 P.3d 1092 (2001), rev. denied, 334 Or. 260, 47 P.3d 486 (2002), cert. granted and judgment vacated on other grounds, 538 U.S. 974, 123 S. Ct., 155 L. Ed. 2d (2003), on remand, 190 Or. App. 172, 78 P.3d 570 (2003), plaintiff was injured when a fishbowl that she was carrying shattered. She brought a products liability action claiming, inter alia, that defendant failed to warn of the risks associated with carrying a full fishbowl. The jury found defendant 75 percent at fault and plaintiff 25 percent at fault, and awarded plaintiff $134,472 in compensatory damages and $1 million in punitive damages. The trial court reduced the compensatory damages by 25 percent, but refused to apply comparative fault to the punitive damages award. The court of appeals agreed that punitive damages are not subject to reduction for comparative fault. Punitive damages are not awarded to compensate for the plaintiff’s injuries but, instead, to punish defendant for the reprehensibility of its conduct. The fact that, in the case at bar, the jury found plaintiff partially responsible for the events that resulted in her injuries has nothing to do with the reprehensibility of defendant’s conduct or what constitutes an appropriate punishment. Therefore, the court concluded that any contribution by plaintiff to her injuries should not affect the severity of defendant’s punishment. NOTE: On April 21, 2003, the U.S. Supreme Court granted cert. in Waddill, supra, vacated the judgment, and remanded the case to the Oregon Court of Appeals for further consideration in light of State Farm v. Campbell, 538 U.S. 408, 123 S. Ct. 1513, 155 L. Ed. 2d 585 (2003); see Waddill, 538 U.S. 974, 123 S. Ct. 1781, 155 L. Ed. 2d 662 (April 21, 2003). Campbell addresses the standards applicable to an award of punitive damages. On remand, the Oregon Court of Appeals concluded that, under Campbell, a ratio of punitive damages to compensatory damages of 4 to 1 was constitutionally permissible and therefore the maximum permissible punitive damages award was $403,416 on an award of compensatory damages of $100,854. The court ordered a new trial on punitive damages unless plaintiff agreed to a remittitur to reduce punitive damages from the $1 million awarded by the jury to $403,416. See Waddill, 190 Or. App. 172, 78 P.3d 570 (2003); see also Bocci v. Key Pharmaceuticals, Inc., 189 Or. App. 349, 76 P.3d 669, opinion adhered to as modified on reconsideration, 190 Or. App. 407, 79 P.3d 908 (2003) (in light of Campbell, supra, finding a ratio of punitive damages to compensatory damages of 7 to 1 constitutionally permissible and therefore remitting punitive damages award from $57
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million to $3.5 million against award of $500,000 in compensatory damages). Punitive Damages – Distribution. The punitive damages portion of an award is distributed as follows: 1) 40% is paid to the prevailing party; 2) the attorney for the prevailing party shall be paid in the amount agreed upon between the attorney and the prevailing party out of this 40%, however, the attorney’s fees may not exceed 20% of the amount awarded in punitive damages; 3) the remaining 60% is paid to the Criminal Injuries Compensation Account of the Department of Justice Crime Victims’ Assistance Section to be used for the purposes set forth in Or. Rev. Stat. Chapter 147. However, if the prevailing party is a public entity, this 60% shall be paid to the general fund of the public entity. Or. Rev. Stat. §31.735(1)(b). Distribution of punitive damages not to be disclosed to jury. Honeywell v. Sterling Furniture Co., 310 Or. 206, 797 P.2d 1019 (1990). Punitive Damages – Insurance. Public policy does not preclude an insurance policy from insuring against liability for punitive damages. Harrell v. Travelers Indemnity Co., 279 Or. 199, 567 P.2d 1013, 1021 (1977). However, damages for emotional suffering or punitive or “extra-contractual bad faith” damages are not recoverable by insured in action for alleged breach of insurance contract. Farris v. U.S. Fidelity & Guar. Co., 284 Or. 453, 587 P.2d 1015 (1978). Punitive Damages – Pleading. A plaintiff may not include a claim for punitive damages in an initial complaint. If a plaintiff desires to add a claim for punitive damages, the plaintiff must amend its complaint. The plaintiff can amend its complaint to add a claim for punitive damages at any time before trial. Howmar Materials, Inc. v. Peterson, 171 Or. App. 52, 14 P.3d 631 (2000), modified on reconsideration, 174 Or. App. 55, 23 P.3d 409 (2001), rev. den., 334 Or. 260 (2002). Punitive Damages – When Awarded. Punitive damages are proper only in those instances in which the violation of societal interests is sufficiently great and of a kind that sanctions would tend to prevent. Harrell v. Travelers Indem., 279 Or. 199, 567 P.2d 1013 (1977). Gross negligence or recklessness is not, in and of itself, sufficient to support award of punitive damages. Chamberlain v. Jim Fisher Motors, Inc., 282 Or. 229, 578 P.2d 1225 (1978). Punitive damages are recoverable where there is evidence of a wrongful act done intentionally, with knowledge that it would cause harm to particular person or persons. Malice, as basis for punitive damages, signifies nothing more than wrongful act done intentionally, without just cause or excuse. Intentional disregard of interest of another is equivalent of legal malice. McElCopyright © 2009 by A.M. Best Company, Inc.

wain v. Georgia-Pacific Corp., 245 Or. 247, 421 P.2d 957 (1966). Punitive damages may be awarded against an employer for employee’s conduct if act was committed while employee was acting within scope of employment. Seiders v. Hefner, 89 Or. App. 55, 747 P.2d 1003 (1987). Punitive damages may be awarded for personal injury caused by intoxicated driver. Dorn v. Wilmarth, 254 Or. 236, 458 P.2d 942 (1969); Harrell v. Ames, 265 Or. 183, 508 P.2d 211 (1973). Punitive damages may be awarded for violations of the Unlawful Trade Practices Act, see Or. Rev. Stat. §646.638(1), but only when the common law requirements for punitive damages are met. Crooks v. Pay Less Drug Stores, 285 Or. 481, 592 P.2d 196 (1979). Punitive damages may not be assessed against defendant who was acting under good faith, although mistaken, belief that he was acting within his rights. J.&J. Lumber Co. v. Oregon Fir Lumber, 203 Or. 237, 276 P.2d 394 (1954). Punitive damages are not recoverable where injury is caused solely from an “abuse” of speech. Or. Const. Art. I, §8, 10; Wheeler v. Green, 286 Or. 99, 593 P.2d 777 (1979); McGanty v. Staudenraus, 321 Or. 532, 901 P.2d 841 (1995). However, jury can consider expression as part of context in which jury assesses award of punitive damages for non-expressive conduct. Wheeler v. Marathon Printing, Inc., 157 Or. App. 290, 974 P.2d 207 (1998). Punitive damages may not be awarded against drug manufacturer where drug allegedly caused plaintiff harm, and 1) drug was manufactured and labeled in relevant and material respects in accordance with terms of approval or license issued by federal FDA; or 2) drug is generally recognized as safe and effective pursuant to conditions established by federal FDA and applicable regulations. Or. Rev. Stat. §30.927(1)(a)-(b). Exception: if defendant, “knowingly,” in violation of applicable federal FDA regulations withholds or misrepresents information known to be material and relevant to harm that plaintiff allegedly suffered. Or. Rev. Stat. §30.927(2). Punitive damages may not be awarded against a licensed, registered, or certified health practitioner if practitioner was “acting within the scope of practice for which the license, registration or certificate was issued and without malice.” Or. Rev. Stat. §31.740(2). Collateral Source Rule. Under limited circumstances and before entry of final judgment, court may deduct from award of damages amounts that personal
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injury or wrongful death plaintiff received from collateral sources. See Or. Rev. Stat. §31.580. Statutory Caps on Awards. “Economic damages” are “objectively verifiable monetary losses.” Or. Rev. Stat. §31.710(2)(a). “Non-economic damages” are “subjective, non-monetary losses” (e.g., pain, mental suffering, emotional distress). Or. Rev. Stat. §31.710(2)(b). Liability of each defendant for noneconomic damages is several only. Or. Rev. Stat. §31.610(1). Oregon Rev. Stat. §31.710(1) limits to $500,000 the amount that may be awarded for non-economic damages in civil actions seeking damages arising from bodily injury (including emotional injury or distress), death or property damage of any one person (including claims for loss of care, comfort, companionship, and society), and loss of consortium. Or. Rev. Stat. §31.710 does not apply to claims subject to Or. Rev. Stat. §§30.260-.300 (Oregon Tort Claims Act) or Or. Rev. Stat. Chapter 656 (Workers’ Compensation Act). Or. Rev. Stat. §31.710(1). Or. Rev. Stat. §31.710 does not apply to punitive damages. Or. Rev. Stat. §31.710(3). The Oregon Supreme Court has held, on state constitutional grounds, that the cap on non-economic damages may not be applied to damage awards assessed by a jury. Lakin v. Senco Products, Inc., 329 Or. 62, 987 P.2d 463, opinion clarified, 329 Or. 369, 987 P.2d 476 (1999). However, the cap does constitutionally apply to an action for wrongful death, as such a claim arises only by way of statute. Greist v. Phillips, 322 Or. 281, 906 P.2d 789 (1995). In May 2000, Oregon voters defeated a constitutional amendment referred by the 1999 Oregon Legislature that would have allowed the Legislature to impose limitations on damages recoverable in all civil actions. The statutory ban on non-economic damages to uninsured motorists under Or. Rev. Stat. §31.715 does not violate state constitutional guarantee of remedy for “absolute common law rights” that existed when the constitution was drafted. Lawson v. Hoke, 339 Or. 253, 267, 119 P.3d 210 (2005). DEATH Abatement and Survival. Claims against a tortfeasor for injury or death of a person do not abate upon the tortfeasor’s death. The claimant or the claimant’s personal representative has a claim for relief against the tortfeasor as if the tortfeasor had survived, except for punitive damages. Or. Rev. Stat. §30.080. Action for Wrongful Death. See generally Or. Rev. Stat. §§30.010-.100.

Action for Wrongful Death – Damages. Distinction between measure of damages in wrongful death and loss of services actions based upon death is discussed in Jones v. Flannigan, 270 Or. 121, 526 P.2d 543 (1974), appeal after remand, 273 Or. 563, 542 P.2d 907 (1975). Pecuniary or economic loss in wrongful death action properly includes loss of decedent-plaintiff’s contribution in moral training and guidance and other household services. Arrow Transp. Co. v. Northwest Grocery, 258 Or. 363, 482 P.2d 519 (1971). Under wrongful death statute, apportionment of damages or settlement to compensate for loss of companionship and society shall be according to the court’s determination of the beneficiary’s actual loss. Oak v. Pattle, 86 Or. App. 299, 739 P.2d 61 (1987). Damages recoverable by personal representative include: 1) reasonable charges necessarily incurred for decedent’s medical care and funeral; 2) compensation for decedent’s disability, pain, suffering and loss of income for the time period between the decedent’s injury and decedent’s death; 3) pecuniary loss to decedent’s estate; 4) pecuniary loss and compensation for loss of society, companionship, and services suffered by decedent’s spouse, children, stepchildren, stepparents and parents; and 5) punitive damages that decedent would have been entitled to recover had decedent lived. Or. Rev. Stat. §30.020(2). Damages recoverable by custodial parent for injury to child under Or. Rev. Stat. §30.010, are limited to pecuniary loss–the value of the services of the child during minority, less cost of raising child during same period. Beerbower v. State ex. Rel. Oregon Health Sciences, 85 Or. App. 330, 736 P.2d 596 (1987). Parent may recover damages for wrongful death of child only under Or. Rev. Stat. §30.020. Or. Rev. Stat. §30.010(2). Damages recoverable by a child for loss of services of a parent is a claim for economic damages and is therefore not subject to the statutory cap on non-economic damages under Or. Rev. Stat. §31.710(1). Kahn v. Pony Express Courier Corp., 173 Or. App. 127, 20 P.3d 837 (2001). Parties in Interest. Parent having custody of child may bring action for injury to child. Or. Rev. Stat. §30.010(1). Personal representative may bring wrongful death action for benefit of surviving spouse, surviving children, surviving parents, and others if decedent might have maintained an action, had the decedent lived, against the wrongdoer for an injury done by “the same act or omission.” Or. Rev. Stat. §30.020(1). Statute of Limitations. Action for wrongful death must be commenced within three years after the injury
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causing death is discovered or “reasonably” should have been discovered by decedent, by personal representative or by “a person for whose benefit the action may be brought…if that person is not the wrongdoer,” but generally no later than three years after the death. Or. Rev. Stat. §30.020(1). Time of appointment of personal representative is not relevant to determination as to whether statute of limitations has expired for wrongful death claims. Eldridge v. Eastmoreland Gen. Hosp., 307 Or. 500, 769 P.2d 775 (1989). If wrongful death action is brought against a public body, plaintiff must file a notice of claim within one year after alleged loss or injury. Or. Rev. Stat. §30.275(2)(a). The action itself must be commenced within two years after the alleged loss or injury. Or. Rev. Stat. §30.275(9). Discovery rule applies to cases under Oregon Tort Claims Act. Eldridge, supra. Wrongful death action based on product liability must be commenced not later than the earlier of the limitation provided by Or. Rev. Stat. §30.020 (wrongful death statute–generally three years), or 10 years after the date on which the product was first purchased for “use or consumption.” Or. Rev. Stat. §30.905(3). No action may be brought for death caused by a product where the death occurs more than 8 years after the product was first purchased for “use or consumption.” Or. Rev. Stat. §30.905(2). Cf. Or. Rev. Stat. §30.907 (Asbestos–two years); Or. Rev. Stat. §§30.908, 12.276 (breast implants– two years); Or. Rev. Stat. §12.278 (civil action against manufacturer of pickup trucks for death, injury, or damage resulting from fire caused by rupture of a sidesaddle gas tank in a vehicle collision action based on products liability or negligence for death–three years; action based on products liability or negligence for injury or damage–two years). NOTE: 2007 Amendment to Or. Rev. Stat. §30.908, effective January 1, 2008 provides that a person who supplied component parts or raw materials to manufacturers of breast implants containing silicone, silica or silicon as a component is not subject to the statute of limitations set forth in Or. Rev. Stat. §30.908, but is subject to the limitations on actions imposed by Or. Rev. Stat. §§30.020 and 30.905 if (a) the person did not manufacture breast implants containing silicone, silica or silicone as a component at any time; and (b) the person was not owned by and did not own a business that manufactured breast implants containing silicone, silica or silicon as a component at any time. Unexplained Absence. Person is presumed dead if not heard from in seven years. Or. Rev. Stat. §40.135(1)(s).

DISABILITY Classifications. No statutory provisions define total and partial disability. Definition incorporated in insurance policy governs. Fagerlie v. New York Life, 129 Or. 485, 278 P. 104 (1929); see, e.g., Or. Rev. Stat. §743.414(4) (mandatory provision in individual health policy refers to “disability, as defined in the policy”). Proof of Condition. Under policy providing indemnity for disability that prevents insured from performing any work or following any occupation, allegations in complaint that insured could not perform duties of his given occupation were insufficient. Dullum v. Northern Life Ins. Co., 169 Or. 233, 127 P.2d 749 (1942). Provision for disability “which confines insured continuously within doors” permits recovery for illness sufficiently severe to confine insured to his home “for substantially all of time.” Purcell v. Washington Fidelity Nat’l Ins. Co., 146 Or. 475, 498, 30 P.2d 742 (1934). EXCLUSIONS Insurer has burden to establish that a loss is excluded from coverage. Insurer also has burden of drafting exclusionary clauses that are “clear and unambiguous.” California Ins. Co. v. Stimson Lumber Co., 2004 WL 1173185, at *5 (D. Or. May 26, 2004). Any ambiguity in an exclusionary clause is strictly construed against the insurer. Stanford v. American Guaranty Life Ins. Co., 280 Or. 525, 527, 571 P.2d 909 (1977), appeal after remand, 281 Or. 325, 574 P.2d 646 (1978). FINANCIAL RESPONSIBILITY LAW See Law Digest Tables; “AUTOMOBILES, Compulsory Insurance Coverage.” FIRE INSURANCE Amount. Together with any existing insurance, amount may not exceed fair value of risk insured or insured’s interest in property. Or. Rev. Stat. §742.200. An insured who has only a partial interest in property at issue cannot recover an amount that exceeds the insured’s actual interest in the property. However, where the amount of the loss is less than the value of the insured’s interest, insured may recover the full amount of the loss. Fleming v. United Services Automobile Ass’n, 169 Or. App. 371, 10 P.3d 297 (2000). Appraisal. All fire insurance policies must contain appraisal provision. Provision must provide that, on written demand, either party to an insurance contract may seek an appraisal to determine amount of actual cash value and loss under fire policy. Or. Rev. Stat. §742.232.

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Initially, appraisal process is permissive, and litigation may be commenced without invoking appraisal. However, when one party demands an appraisal, the process becomes mandatory, and to that extent, is a condition precedent to sustaining any claim in court. Molodyh v. Truck Ins. Exch., 304 Or. 290, 298, 744 P.2d 992 (1987). Demanding party is deemed to have consented voluntarily to appraisal process, appraisal award is binding upon demanding party, and conclusion that award is binding on demanding party does not offend constitutional right to trial by jury. Molodyh, 304 Or. at 299. For non-demanding party, however, appraisal process is mandatory, and therefore appraisal award is not binding, and non-demanding party has right to jury trial. Molodyh, 304 Or. at 298-99. Arson. Arson is an affirmative defense. Eslamizar v. American States Ins. Co., 134 Or. App. 138, 141, 894 P.2d 1195 (1995). Where policy excluded loss or damage “caused by any willful or dishonest act or omission of insured or any associate, employee or agent of any insured, while working or otherwise,” property damage caused by employee arson was not covered. Minnesota Bond v. St. Paul Mercury Ins. Co., 300 Or. 85, 706 P.2d 942 (1985). Arson in connection with strike not within definition of “riot” for purposes of riot coverage. Salem Mfg. Co. v. First American Fire Ins., 111 F.2d 797 (9th Cir. 1940) (Oregon law). Assignment. All fire insurance policies must contain the following provision: “Assignment of this policy shall not be valid except with the written consent of this company.” Or. Rev. Stat. §742.206. Bailed Goods. Fire loss through no-fault of bailee, in absence of contractual provision to contrary, falls upon bailor. However, when bailor has shown that bailment exists and goods have not been returned pursuant to contract, burden of going forward with evidence shifts to bailee, who must then show lack of fault on his part. Edward Hines Lumber Co. v. Purvine Logging Co., 240 Or. 60, 399 P.2d 893 (1965). Chattel Mortgages. Historically, a chattel mortgage represented a security interest in chattel. See, e.g., Finch v. Miller, 271 Or. 271, 531 P.2d 892 (1975). Such security interests are currently represented by various types of “possessory chattel liens,” see Or. Rev. Stat. §§87.152-.214, and “nonpossessory chattel liens.” See Or. Rev. Stat. §§87. 216-.346; see also Or. Rev. Stat. §§86.405-.470 (“Chattel Mortgages”), which provide for the discharge of chattel mortgages paid, released, or otherwise satisfied.

Conditions of Coverage. Automatic sprinkler clause in endorsement to fire insurance policy was condition of coverage. Fire insurer was entitled to avoid coverage for breach of condition without inquiring as to its existence before accepting risk, where condition was not waived in writing or added to policy. Coos Head Timber Co. v. Unigard Indem. Co., 73 Or. App. 598, 699 P.2d 1143, rev. denied, 299 Or. 663, 704 P.2d 514 (1985), overruled on other grounds, Kabban v. Mackin, 104 Or. App. 422, 801 P.2d 883 (1990), called into doubt on other grounds, Prudential Prop. & Cas. Ins. Co. v. Lillard-Roberts, 2002 WL 31495830, at *24 (D. Or. June 18, 2002). Contract-Policy – Binders. See “CONSTRUCTION OF POLICY, Binders.” Contract-Policy – Cancellation. Or. Rev. Stat. §742.224 governs the cancellation of fire insurance policies. Fire insurance policies must contain the following provision: “This policy shall be canceled at any time at the request of the insured, in which case this company shall, upon demand and surrender of this policy, refund the excess of paid premium above the customary short rates for the expired time.” Or. Rev. Stat. §742.224(1). The policy must also provide that the insurer may cancel at any time with 10 days’ written notice of cancellation to the insured in the event of nonpayment of premium or 30 days’ written notice for any other reason. Or. Rev. Stat. §742.224(2)(a). The statute does not limit either parties’ reasons for canceling a policy. At the time of cancellation, the insurer must either tender the excess of paid premium above the pro rata premium for the expired time or give notice that the refund will be made on demand. Or. Rev. Stat. §742.224(2)(b), (3). Contract-Policy – Excepted Risks – Statutory. Every fire insurance policy must contain a provision that states: “This policy shall not cover accounts, bills, currency, deeds, evidences of debt, money or securities; nor, unless specifically named hereon in writing, bullion or manuscripts.” Or. Rev. Stat. §742.210. Every fire insurance policy must also contain a provision that the insurer shall not be liable for loss by fire or other perils insured against caused directly or indirectly by: enemy attack; invasion; insurrection; rebellion; revolution; civil war; usurped power; order of any civil authority except acts of destruction at time of fire for purpose of preventing its spread; insured’s neglect to use all reasonable means to save and protect property at and after a loss or when property is endangered by fire on neighboring premises; or loss by theft. Or. Rev. Stat. §742.212. Insurer may exclude loss or damage caused by nuclear event whether directly or indirectly resulting from an insured peril under the policy at issue. However, in---- For Current Listings access www.ambest.com/legal---Last Update August, 2008

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surer may also provide coverage for such loss or damage. Or. Rev. Stat. §742.244. Contract-Policy – Excepted Risks – Contractual. Contamination. Exclusion for contamination did not apply to bar coverage for damage to property due to discharge of airborne vapor and particulates resulting from “cooking” of methamphetamine in illegal methamphetamine laboratory. Farmers Ins. Co. of Oregon v. Trutanich, 123 Or. App. 6, 858 P.2d 1332 (1993); Largent v. State Farm Fire & Casualty Co., 116 Or. App. 595, 842 P.2d 445 (1992). Characterization of damages as covered “smoke,” rather than “vapors” “inconsequential”; contamination exclusion does not apply to damages resulting from use of home as methamphetamine laboratory. Shaffer v. State Farm Fire & Casualty Co., 120 Or. App. 70, 73, 852 P.2d 245 (1993). Contract-Policy – Mortgage Clause. A fire insurance policy must contain a mortgage clause providing that the insurer may cancel the mortgagee’s interest in the policy by 10 days’ written notice of cancellation. Or. Rev. Stat. §742.226(1). If the insured does not render proof of loss, the mortgagee, upon notice, must render proof of loss with 60 days after the notice. Or. Rev. Stat. §742.226(2). Mortgagee is not party to contract, and its rights are dependent upon those of the insured. Haskin v. Greene, 205 Or. 140, 286 P.2d 128 (1955). Contract-Policy – Severable Contracts. Insurance contract is not construed as severable between the several classes of property it covers. Misrepresentation after a loss as to a single material fact forfeits entire insurance contract. Henricksen v. Home Ins. Co., 237 Or. 539, 542 n.1, 392 P.2d 324 (1964). Where fire policy had schedule of buildings and listed each building separately, court rejected insurer’s argument that under policy terms each building was in effect insured under a separate contract, reasoning that interpretation would give no effect to policy provisions expressly providing coverage. Adams v. Northwest Farm Bureau Ins. Co., 40 Or. App. 159, 164-65, 594 P.2d 1256 (1979). Contract-Policy – Standard Provisions. The Oregon Insurance Code sets forth the provisions required in a “standard” fire insurance policy. See Or. Rev. Stat. §§742.202-.246. However, any policy that provides coverage for fire and “substantial coverage against other perils” does not need to comply with the statutory provisions if: 1) policy provides “not less than the substantial equivalent” of the standard policy; 2) the Director of the Department of Consumer and Business Services finds that the policy does not violate Or. Rev. Stat. §742.005(2) (policy cannot contain language that is “unintelligible, uncertain, ambiguous or abstruse, or likely
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to mislead a person to whom the policy is offered, delivered or issued”); and 3) policy is “complete as to all its terms” without reference to standard fire policy or any other policy. Or. Rev. Stat. §742.204. The insuring agreement in a standard fire policy must provide coverage against “all direct loss by fire, lightning and by removal from premises endangered by the perils insured against.” Or. Rev. Stat. §742.206. However, fire insurer may insure against other perils. Or. Rev. Stat. §742.218. A fire insurer may also add to the required insuring agreement additional conditions, provisions, and agreements that are not in conflict with law or contrary to public policy. Or. Rev. Stat. §742.246(1). Any provision that restricts or abridges the insured’s rights under the policy “must be preceded by a sufficiently explanatory title printed or written type no smaller than eight-point capital letters.” Or. Rev. Stat. §742.246(2); see, e.g., Indiana Lumbermens Ins. Co. v. West Oregon Wood Products, Inc., 268 F.3d 639 (9th Cir. 2001), amended on denial of reh’g, (Nov. 27, 2001) (holding that pollution exclusions in policy did not violate Or. Rev. Stat. §742.246(2) because that statute does not require that titles or headings be printed using only capital letters, but rather establishes a size requirement– that type used in titles or headings in an insurance policy must not be smaller than size of type produced by using 8-point capital letters). Or. Rev. Stat. §742.246(2) applies only to standard fire insurance policies, not to any other insurance policies. Or. Rev. Stat. §742.246(3). Contract-Policy – Suit Limitation Provision. Oregon’s standard fire policy provisions provide that no action on policy can be maintained “unless all the requirements of this policy shall have been complied with, and unless commenced within 24 months next after inception of the loss.” Or. Rev. Stat. §742.240. Such suit limitation provision is a contract condition, rather than a statute of forfeiture, and therefore insurer does not have to show that it was prejudiced by the insured’s failure to file suit within period specified in suit limitation provision before it can assert provision as an affirmative defense. Herman v. Valley Ins. Co., 145 Or. App. 124, 928 P.2d 985 (1996). Insurer may be estopped from asserting suit limitation provision as a defense to liability, but only if insurer did something that amounted to “an affirmative inducement” that would cause insured to delay bringing action. Lyden v. Goldberg, 260 Or. 301, 304, 490 P.2d 181 (1971).

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See Or. Rev. Stat. §742.056, which provides: “Without limitation of any right or defense of an insurer otherwise, none of the following acts by or on behalf of an insurer shall be deemed to constitute a waiver of or estoppel to assert any provision of a policy or of any defense of the insurer thereunder: (1) Acknowledgment of the receipt of notice of loss or claim under the policy. (2) Furnishing forms for reporting a loss or claim, for giving information relative thereto, or for making proof of loss, or receiving or acknowledging receipt of any such forms or proofs completed or uncompleted. (3) Investigating any loss or claim under the policy or engaging in negotiations looking toward a possible settlement of any such loss or claim.” Damages – Fraud. Every fire policy must contain a concealment/fraud provision providing that the entire policy will be void “if, whether before or after a loss, the insured has willfully concealed or misrepresented any material fact or circumstance concerning this insurance or the subject thereof, or the interest of the insured therein, or in case of any fraud or false swearing by the insured relating thereto.” Or. Rev. Stat. §742.208(1). All statements made by or on behalf of the insured, “in the absence of fraud, shall be deemed representations and not warranties.” Or. Rev. Stat. §742.208(2). If insured willfully overstates value of property in inventories or in proof of loss, or if insured includes items not damaged or lost as result of fire, insurer is not liable for any part of loss regardless of whether the insured’s misrepresentations caused damage to insurer or would cause damage if insurer was required to pay the loss. Hendricksen v. Home Ins. Co., 237 Or. 539, 543, 392 P.2d 324 (1964). The insurer must, however, have relied on the misrepresentation. Eslamizar v. American States Ins. Co., 134 Or. App. 138, 894 P.2d 1195 (1995). Damages – Repair. Standard fire insurance policy must contain a provision stating that: “It shall be optional with this company to take all, or any part, of the property at the agreed or appraised value, and also to repair, rebuild or replace the property destroyed or damaged with other of like kind and quality within a reasonable time, on giving notice of its intention so to do within 30 days after the receipt of the proof of loss herein required.” Or. Rev. Stat. §742.234. Oregon follows the broad evidence rule. Measure of property damage is difference in value before and after accident, of which cost of repairs is relevant, but not sole evidence. It may be shown that value is not fully restored by repairs. Loss of use during reasonable time to repair may be recovered. Williams v. International, 172 Or. 270, 141 P.2d 832 (1943), overruled on other grounds, Rogue Valley Memorial Hosp. v. Salem Ins., 265 Or. 603, 510 P.2d 845 (1973). Oregon follows the
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broad evidence rule. Schnitzer v. So. Carolina Ins. Co., 62 Or. App. 300, 304 n. 5, 661 P.2d 550 (1983). Damages – Replacement. Fire policy containing provision requiring insured to “make claim” for replacement cost within 180 days of loss did not require that replacement be completed within 180 days; insured only had to notify insurer within 180 days of its intention to replace property and then complete replacement within reasonable time. Bourrie v. U.S. Fidelity & Guar., 75 Or. App. 241, 707 P.2d 60 (1985). In fire insurance policy limiting liability to lesser of replacement cost or policy limit, salvage value that remains of destroyed building is relevant only in determining replacement cost value. Columbia Edgewater Country Club v. Industrial Indem., 73 Or. App. 211, 698 P.2d 500 (1985). Multiple Policies – Co-Insurance. A standard fire policy must contain a provision that provides for pro-rata liability: “This company shall not be liable for a greater proportion of any loss than the amount hereby insured shall bear to the whole insurance covering the property against the peril involved, whether collectible or not.” Or. Rev. Stat. §742.228. Right to contribution does not arise from statute, which only limits insurer’s liability to its insured. Farmers Ins. Co. of Oregon v. St. Paul Fire and Marine Ins. Co., 305 Or. 488, 491, 752 P.2d 1212 (1988). Where two insurers covered fire damage to insured’s home, one insurer was entitled to contribution from the other insurer for one-half of the amount first insurer paid to their mutual insured. St. Paul Fire and Marine Ins. Co. v. Valley Ins. Co., 93 Or. App. 457, 762 P.2d 1048 (1988). See also Farmers Ins. Co. of Oregon v. St. Paul Fire and Marine Ins. Co., 305 Or. 488, 752 P.2d 1212 (1988). In that case, fire insurer issued policy to owner of home. Policy made former owner loss payee under policy’s mortgage clause. Under policy’s subrogation clause, insurer stood in shoes of loss payee and was entitled to contribution from insurer who issued fire policy to loss payee covering same property. Multiple Policies – Concurrent Insurance. Where not specifically excluded in perils policy, insurance against loss to vehicle by fire covers fire caused at collision, even though separate company insured for collision. Each company to share liability in proportion to limits of each policy. Northwest Agricultural Co-op v. Continental, 95 Or. App. 285, 769 P.2d 218 (1989). Proof of Loss. A fire insurance policy must contain a provision requiring insured to give company “immediate written notice” of any loss and, within 90 days after
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receiving proof of loss forms, to tender proof of loss to insurer, unless time extended in writing by company. Or. Rev. Stat. §742.230. With respect to proof of loss requirement, court held that, where proof of loss was unsigned, substantial rather than strict compliance with proof of loss requirement was all that was required. Sutton v. Fire Ins. Exch., 265 Or. 322, 509 P.2d 418 (1973). However, court explicitly distinguished proof of loss from notice of loss, which is also required by policy. “Proof of loss” requirement is intended to trigger insurer’s duty to investigate; “It does not encompass every piece of information that the insurer may find useful in order to make a settlement offer.” Mosley v. Allstate Ins. Co., 165 Or. App. 304, 308, 996 P.2d 513 (2000). However, for purposes of Or. Rev. Stat. §742.061 (“Recovery of Attorney Fees in Action on Policy”), which does not define “proof of loss,” “proof of loss” may be event or submission permitting insurer to estimate its obligations (taking into account insurer’s obligation to investigate and clarify uncertain claims). Dockins v. State Farm Ins. Co., 329 Or. 20, 985 P.2d 796 (1999) (holding that complaint qualified as proof of loss under Or. Rev. Stat. §742.061). Standard fire insurance policy must contain a provision that provides the insurer will pay the amount of the loss within 60 days after receiving proof of loss and ascertainment of loss has been made. Or. Rev. Stat. §742.238. Subrogation. See “SUBROGATION, Fire Insurance.” Waiver. A fire insurance policy must contain the following waiver provision: “No permission affecting this insurance shall exist, or waiver of any provision be valid, unless granted herein or expressed in writing added hereto. No provision, stipulation or forfeiture shall be held to be waived by any requirement or proceeding on the part of this company relating to appraisal or to any examination provided for herein.” Or. Rev. Stat. §742.222. Waiver provision required by Or. Rev. Stat. §742.222 prevails over common-law rule that party to a written contract can waive contract provision by conduct or oral representation, despite existence of nonwaiver clause. See Moore v. Mutual of Enumclaw Ins. Co., 317 Or. 235, 243-44, 855 P.2d 626 (1993). Estoppel is not included under the term “waiver” in Or. Rev. Stat. §742.222. Kabban v. Mackin, 104 Or. App. 422, 431, 801 P.2d 883 (1990), called into doubt on other grounds, Prudential Prop. & Cas. Ins. Co. v. Lillard-Roberts, 2002 WL 31495830, at *24 (D. Or. June 18, 2002).

GUEST CASES See “AUTOMOBILES, guests.” HEALTH INSURANCE “Health insurance” is defined as insurance against “bodily injury, disablement or death by accident or accidental means” and includes insurance “against the risk of economic loss assumed under a less than fully insured employee health benefit plan.” “Health insurance” does not include workers’ compensation coverages. Or. Rev. Stat. §731.162. Forms of group life or health insurance policies that have been agreed upon as result of negotiations between policyholder and insurer are exempt from filing and approval requirements. Or. Rev. Stat. §742.003(1)(c). NOTE: 2007 Amendment, effective June 22, 2007 provides: the Director of the Department of Consumer and Business Services by rule may specify categories of life insurance, annuities or disability insurance for which the director need not consider or review an individual policy form that an insurer has filed before approving the form for delivery or issuance for delivery in this state. Policy forms that the Interstate Insurance Product Regulation Commission has approved are subject to approval in the manner specified in this section if the director finds that the commission’s approval process, taken as a whole, gives policyholders substantially the same protection as or better protections than the approval process available under the laws of this state, when considered in light of: (a) The product standards and review procedures the commission uses; (b) The nature of the insurance product reviewed; and (c) The consumer needs that the insurance product serves. Statutory requirements for individual health insurance at Or. Rev. Stat. §§743.402-.498. Statutory requirements do not apply to workers’ compensation insurance; any policy of reinsurance; any blanket or group policy of insurance; any life insurance policy that contains certain provisions relating to health insurance, or coverage under Or. Rev. Stat. §§735.600-.650 (state medical insurance pool). Or. Rev. Stat. §743.402. Individual health policies must expressly state consideration and term of policy. Or. Rev. Stat. §743.405(1)-(2). Individual health policies must contain the specific provisions enumerated by statute. Or. Rev. Stat. §743.408. Examples: time limit on defenses available to insurer, Or. Rev. Stat. §743.414; grace period on payment of premiums, Or. Rev. Stat. §743.417; written notice of claim to be filed within twenty days, or reasonable time thereafter, of occurrence, Or. Rev. Stat.
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§743.423; written proof of loss to be filed within ninety days of loss, Or. Rev. Stat. §743.429; claims to be paid immediately upon receipt of proof of loss, other than loss for which policy provides any periodic payment. Or. Rev. Stat. §743.432. Other than provisions for cancellation or renewability under Or. Rev. Stat. §743.498, the style, arrangement and overall appearance of the policy may not give “undue prominence” to any portion of the text and must comply with statutory typeface requirements. Or. Rev. Stat. §743.405(5). Absent excess or pro rata clause in policy, insured’s recovery for medical expenses from another insurer fails to excuse defendant insurer from its duty to fully reimburse insured. Heis v. Allstate Ins., 248 Or. 636, 436 P.2d 550 (1968). Cancellation. Or. Rev. Stat. §§743.471-.472 govern cancellation of individual health insurance policies. Policies must provide a minimum grace period of 10 days after the premium due date. Or. Rev. Stat. §743.417(1). Or. Rev. Stat. §743.472 specifies permissible reasons for the health insurer to cancel or refuse to renew a policy of individual health insurance. Cancellation is without prejudice to claims originating prior to effective date of cancellation. Or. Rev. Stat. §743.471. Excepted Risks. Individual health policy must set forth exceptions and reductions of indemnity. Other than mandatory provisions set forth in Or. Rev. Stat. §§743.411-.480, exceptions and reductions are printed at insurer’s option. They may be included with applicable benefit provision or under appropriate caption, such as EXCEPTIONS, or EXCEPTIONS AND REDUCTIONS. Exceptions and reductions must be included with applicable benefit provision if they specifically apply to that particular benefit. Or. Rev. Stat. §743.405(6). Exclusion in medical insurance policy for “deformities” was held to exclude liability for cost of repairing deformity, at least where repair was “principal objective” of operation. Perkins v. National Hosp. Ass’n, 240 Or. 136, 399 P.2d 164 (1965). Model Act. Model Life and Health Insurance Policy Language Simplification Act adopted in 1978 by National Association of Insurance Commissioners has been enacted as Or. Rev. Stat. §§743.100-.109. Act establishes minimum readability standards for all policies delivered or issued for delivery in Oregon, subject to exceptions listed at Or. Rev. Stat. §743.104. Notice. Individual health insurance policy must contain provision that written notice of claim must be given to insurer within 20 days after occurrence of cov-

ered loss or “as soon thereafter as is reasonably possible.” Or. Rev. Stat. §743.423(1). Proof of Loss. Policy must contain provision that written proof of loss must be furnished to insurer within 90 days after date of loss. In case of continuing loss, proof of loss must be furnished within 90 days after termination of period for which insurer is liable. Failure to provide proof of loss within required time limit will not invalidate or reduce any claim if not “reasonably possible” to give proof within such time, provided proof is furnished “as soon as reasonably possible and in no event, except in the absence of legal capacity, later than one year from the time proof is otherwise required.” Or. Rev. Stat. §743.429. Renewal. Insurer may refuse to renew individual health insurance policy for a “fraudulent or material misstatement” made by applicant in application for health policy; because of excess or other insurance with the same insurer; nonpayment of premium; or as specified by rule. Or. Rev. Stat. §743.472. Statute of Limitations. Individual health insurance policy must contain provision that no action at law or in equity shall be brought to recover under policy prior to 60 days after written proof of loss has been furnished to insurer. No action shall be brought after three years from time written proof of loss is required to be furnished to insurer. Or. Rev. Stat. §743.441. HOSPITALS Term “hospital” defined at Or. Rev. Stat. §442.015(19). Term “health care facility,” which includes term “hospital,” defined at Or. Rev. Stat. §442.015(16). Evidence – Records. Any party against whom a civil action is filed for compensation or damages for injuries may obtain copies of hospital records of injured party within the scope of discovery. Or. R. Civ. P. 44E. Subpoena procedure set forth in Or. R. Civ. P. 55H. Physician lost staff privileges at hospital. In subsequent suit, physician sought her medical staff file from hospital. Trial court did not abuse discretion in denying discovery of those documents in file that contained information dated years before any of pertinent events alleged in complaint. See, e.g., Johnson v. Eugene Emergency Physicians, P.C., 159 Or. App. 167, 174, 974 P.2d 803 (1999). Evidence – Res Ipsa Loquitur. Doctrine of res ipsa loquitur applicable in malpractice action against hospital. Sellars v. Presbyterian Intercommunity Hospital, 277 Or. 101, 105, 559 P.2d 876 (1977).

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Immunity. Oregon has abolished the doctrine of charitable immunity. See Hungerford v. Portland Sanitarium & Benevolent Ass’n, 235 Or. 412, 384 P.2d 1009 (1963) (charitable immunity does not apply to charitable hospital). However, certain statutory immunities apply to hospitals. Where “health care facility,” which includes hospitals, restricts or terminates physician’s privilege to practice medicine at that facility, facility must promptly provide written report to state Board of Medical Examiners. Or. Rev. Stat. §441.820 (1). Facility that reports or provides information to Board in good faith immune from an action for civil damages. Or. Rev. Stat. §441.820(2). Health care provider providing emergency care in health care facility to a person that provider has reason to believe is under influence of intoxicants and is about to drive a motor vehicle and is “clear and present danger to society” “may” notify appropriate law enforcement authorities. Or. Rev. Stat. §676.300(1). Anyone making such notification in good faith is immune from civil or criminal liability, including with respect to any judicial proceeding. Or. Rev. Stat. §676.300(4). Liability – Breach of Contract. Where contract commits hospital to performance without reference to and irrespective of any general standard of care, hospital may be liable on contract whether or not hospital was negligent and whether or not facts exist that might excuse hospital from liability in tort. See SecuritiesIntermountain v. Sunset Fuel, 289 Or. 243, 259-60, 611 P.2d 1158 (1980). Thus, allegations that defendant hospital breached agreement requiring hospital to obtain parent’s consent before administering any substance to child sounded in contract even though plaintiff parents pleaded tort damages. Dauven v. St. Vincent Hospital and Medical Center, 130 Or. App. 584, 588-89, 883 P.2d 241 (1994), appeal after remand, 144 Or. App. 363, 927 P.2d 151 (1996) (“‘unjust to bar an action merely because it contain[s] elements of both tort and contract’”) (citation omitted). Liability – Direct. Hospital may be directly liable for tort of employee on theories of negligent retention and/or negligent supervision. See, e.g., G.L. v. Kaiser Foundation Hospitals, Inc., 306 Or. 54, 59-61, 757 P.2d 1347 (1988) (affirming trial court’s determination that plaintiff stated potential claim for negligent retention and negligent supervision against hospital where hospital employee sexually assaulted plaintiff). Wrongful death statute, Or. Rev. Stat. §30.010, et seq., affords cause of action against hospital for death of a viable fetus. Libbee v. Permanente Clinic, 268 Or. 258, 261-67, 518 P.2d 636, reh’g denied, 268 Or. 258, 520

P.2d 361, appeal after remand, 269 Or. 543, 525 P.2d 1296 (1974). However, wrongful death statute does not afford cause of action for wrongful death of a nonviable fetus. LaDu v. Oregon Clinic, P.C., 165 Or. App. 687, 696, 998 P.2d 733 (2000). Liability – Vicarious. Oregon has not adopted the “captain of ship” rule. Simpson v. Sisters of Charity of Providence, 284 Or. 547, 588 P.2d 4 (1978). However, hospital may be vicariously liable for tort of employee if: 1) act occurred “substantially within the time and space limits authorized by the employment”; 2) employee “was motivated, at least partially, by a purpose to serve the employer”; and 3) act was of a kind employee was “hired to perform.” Chesterman v. Barmon, 305 Or. 439, 442, 305 P.2d 439 (1988); see, e.g., G.L. v. Kaiser Foundation Hospitals, Inc., 306 Or. 53, 59-61, 757 P.2d 1347 (1988) (hospital employee sexually assaulted plaintiff patient; holding hospital not liable for injuries because there was no allegation, “and we cannot imagine one,” that employee was acting to further any interest of employer). Hospital may be vicariously liable for surgeon’s alleged negligence if surgeon was acting as hospital’s agent. Fieux v. Cardiovascular & Thoracic Clinic, P.C., 159 Or. App. 637, 646, 978 P.2d 429 (1999). Where resident performed services at defendant hospital pursuant to affiliation program between it and resident’s actual employers, whether hospital was vicariously liable for injury sustained by patient due to resident’s negligence raised question of fact for jury. Shepard v. Sisters of Providence, 102 Or. App. 196, 793 P.2d 1384 (1990). Hospital may be vicariously liable on theory of apparent agency, which is exception to rule that torts of independent contractors will not be imputed to their “employer.” To be liable under theory of apparent agency, 1) hospital “must hold itself out as a provider of medical services” and 2) unless patient has “actual knowledge” of physician’s actual status as independent contractor, patient can recover “if it is objectively reasonable for the patient to believe that physician is an employee of the hospital.” Jennison v. Providence St. Vincent Medical Center, 174 Or. App. 219, 229, 235, 25 P.3d 358 (2001). Liens. Statutory requirements for hospital and physician liens at Or. Rev. Stat. §§87.555-.585 (“Medical Service Lien”). Hospital, by complying with lien statutes, has lien on amounts awarded injured person or his or her personal representative by judgment, award, settlement, or compromise to extent of amount due hospital and physi---- For Current Listings access www.ambest.com/legal---Last Update August, 2008

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cian for reasonable value of medical treatment rendered prior to date of judgment, award, settlement, or compromise. Or. Rev. Stat. §87.555(1). Lien not valid against anyone coming under Workers’ Compensation Act. Id. No lien allowed for hospitalization and treatment by a physician given after settlement by or on behalf of person causing injury. No lien allowed against necessary attorney fees, costs, and expenses incurred by injured party in securing a settlement, compromise, award, or judgment. Or. Rev. Stat. §87.560. Motor Vehicle Accident Fund. Motor Vehicle Accident Fund established for payment of medical and hospital expenses of indigent persons suffering a motor vehicle injury. Hospital or other claimant can file claim against Fund for specified benefits. Where hospital or other claimant receives payment from or on behalf of indigent patient, those moneys, less expenses for recovering those moneys, must be paid back to the Fund. See Or. Rev. Stat. §§445.010-.270. Nursing Homes. Oregon has adopted Nursing Home Patients’ Bill of Rights. Or. Rev. Stat. §§441.600.620. Civil penalties for violation of any rule or general order pertaining to a long term care facility. Or. Rev. Stat. §441.710(1)(b). Standard of Care. Hospital standards for staff membership that require applicant to be able to give “a high quality of medical care” not an impermissibly vague standard and applicant’s ability to work with others held legitimate consideration reasonably related to quality of patient care. Huffaker v. Bailey, 273 Or. 273, 279, 540 P.2d 13998 (1975). Warranties. In context of contract for furnishing of services, claim for breach of warranty ordinarily based on allegations that the services, having been provided, were insufficient under contract terms or implied expectations of parties. However, where plaintiff alleged defendant physician failed to perform services at all, such allegations state breach-of-contract claim, not breach of warranty. Zehr v. Haugen, 318 Or. 647, 655-56, 871 P.2d 1006 (1994). HUSBAND AND WIFE Community Property. Oregon is not a community property state. See Or. Rev. Stat. §108.520. Husband-Wife Privilege. Spousal privilege does not apply to the following cases: 1) criminal actions in which one spouse is charged with bigamy or with offenses against the other spouse or the children of either spouse; 2) matters occurring prior to the marriage; and

3) any civil action where the spouses are adverse. Or. Rev. Stat. §40.255(4). Interspousal Immunity. Interspousal immunity is not available in Oregon to bar negligence actions between spouses. Heino v. Harper, 306 Or. 347, 759 P.2d 253 (1988). Civil causes of action for alienation of affections and criminal conversation have been abolished by statute. Or. Rev. Stat. §31.980, .982. Plaintiff’s claim that defendant/psychiatrist intruded into his marital relationship by having sexual relationship with plaintiff’s wife, a patient of defendant, dismissed because claim was for abolished torts of alienation of affections and criminal conversation. Spiess v. Johnson, 89 Or. App. 289, 748 P.2d 1020, aff’d, 307 Or. 242, 765 P.2d 811 (1988). Loss of Consortium. Husband has cause of action for loss of wife’s consortium. Elling v Blake-McFall, 85 Or. 91, 166 P. 57 (1917). By statute, Oregon also recognizes a wife’s right to sue for lost consortium. See generally Or. Rev. Stat. §108.010. A wife whose injured husband is subject to the Workers’ Compensation Act or the Federal Employers’ Liability Act may not maintain an action for loss of consortium. See Ellis v. Fallert, 209 Or. 406, 307 P.2d 283 (1957); Kinney v. Southern Pacific, 232 Or. 322, 375 P.2d 418 (1962). An injured spouse’s negligence either reduces or bars recovery on the other spouse’s loss of consortium claim. See Lakin v. Senco Products, 144 Or. App. 52, 925 P.2d 107 (1996), aff’d, 329 Or. 62, 987 P.2d 463, opinion clarified, 329 Or. 369, 987 P.2d 476 (1999). INFANTS See “AUTOMOBILE, Age”; “NEGLIGENCE, Age.” INLAND MARINE Inland marine insurance covers “virtually all kinds of things that move or are in transport.” Village of Kiryas Joel Local Dev. Corp. v. Ins. Co. of N. Am., 996 F.2d 1390, 1392 (2nd Cir. 1993) (New York law). Inland marine coverage is made up of three main branches: domestic shipments; bridges, tunnels, and other instrumentalities of transportation and communication; and personal property coverage. Robert E. Keeton & Alan I. Widiss, Insurance Law §1.5(b)(2) (1988). Oregon distinguishes between two categories of inland marine insurance: “marine and transportation insurance,” Or. Rev. Stat. §731.174, and “wet marine and transportation insurance,” Or. Rev. Stat. §731.194. Marine and Transportation Insurance. There are two categories of marine and transportation insurance: 1) insurance with respect to movables and means of con---- For Current Listings access www.ambest.com/legal---Last Update August, 2008

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veyance, Or. Rev. Stat. §731.174(1); and 2) marine protection and indemnity insurance, Or. Rev. Stat. §731.174(2). Marine and Transportation Insurance – Insurance for Movables and Means of Conveyance. Or. Rev. Stat. §731.174(1) defines “marine and transportation insurance” to include 1) insurance against “any and all kinds of loss of or damage” to “[v]essels, craft, aircraft, cars, automobiles and vehicles of every kind, all goods, freights, cargoes, merchandise, effects, disbursements, profits, moneys, bullion, precious stones, securities, chooses in action, evidences of debt, valuable papers, bottomry and respondentia interests all other kinds of property and interests therein” for “…any and all risks or perils of navigation, transit or transportation…on or under any seas or other water, on land or in the air, or while being assembled, packed, crated, baled, compressed or similarly prepared for shipment or while awaiting the same or during any delays, storage, transshipment, or, or reshipment incident thereto, including marine builders’ risk, and all personal property floater risks including bailees’ customers risks.” Or. Rev. Stat. §731.174(1)(a); 2) insurance covering persons or property in connection with marine, inland marine, transit, or transportation insurance, including liability for loss arising out of “the construction, repair, operation, maintenance or use of” the covered property, but excluding life insurance, surety bonds and bodily injury losses arising out of the ownership, maintenance, or use of automobiles. Or. Rev. Stat. §731.174(1)(b); 3) insurance covering precious stones, jewels, jewelry, gold, silver and other precious metals, “whether used in business or trade or otherwise and whether the same is in course of transportation or otherwise.” Or. Rev. Stat. §731.174(1)(c); and 4) insurance covering: (a) bridges, tunnels, and “other instrumentalities of transportation and communication,” excluding buildings and their contents (unless certain listed perils are the only hazards covered); (b) “piers, wharves, docks, and slips,” subject to certain excluded perils; and (c) “other aids to navigation and transportation, including dry docks and marine railways,” against all risks. Or. Rev. Stat. §731.174(1)(d). Marine and Transportation Insurance – Marine Protection and Indemnity Insurance. Or. Rev. Stat. §731.174(2) provides for marine protection and indemnity insurance, which is insurance against loss “arising out of…the ownership, operation, chartering, maintenance, use, repair or construction of any vessel, craft or instrumentality in use in ocean or inland waterways….” Although Or. Rev. Stat. §731.174 is designated as “marine and transportation insurance,” Or. Rev. Stat. §731.174(2) may include not only general marine insurance, but also wet marine insurance; both general marine and wet marine insurance include the types of insurance
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listed in Or. Rev. Stat. §731.174(2); see Port of Portland v. Water Quality Ins. Syndicate, 796 F.2d 1188, 1196 (9th Cir. 1986) (Oregon law). Wet Marine and Transportation Insurance. Wet marine and transportation insurance is a subset of marine and transportation insurance. Or. Rev. Stat. §731.194. This type of insurance includes only: 1) insurance covering vessels, crafts, and hulls. Or. Rev. Stat. §731.194(1); 2) insurance covering marine builder’s risks, marine war risks, and contracts referred to in Or. Rev. Stat. §731.174(2) or any replacement of that insurance. Or. Rev. Stat. §731.194(2); 3) insurance covering “freights and disbursements pertaining to a subject of insurance coming within this section.” Or. Rev. Stat. §731.194(3); 4) insurance covering personal property “in course of exportation from or importation into any country, and in course of transportation coastwise or on inland waters, including transportation by land, water, or air from point of origin to final destination…in connection with, any and all risk or perils of navigation, transit or transportation, and while being prepared for and while awaiting shipment, and during any delays, storage, transshipment or reshipment incident thereto.” Or. Rev. Stat. §731.194(4); 5) insurance covering operations of railroads engaged in interstate transportation and property used in the operations. Or. Rev. Stat. §731.194(5); and 6) insurance covering aircraft operated in scheduled interstate flight, or cargo of the aircraft, or risks against this liability other than workers’ compensation and employers’ liability arising out of the ownership, maintenance, or use of the aircraft. Or. Rev. Stat. §731.194(6). Marine and transportation insurance policies are subject to the provisions of the Oregon Insurance Code. See generally Or. Rev. Stat. Chapter 742 (Property and Casualty Policies). However, wet marine and transportation insurance is excepted from the scope of Or. Rev. Stat. Chapter 742 and Or. Rev. Stat. Chapter 743 (Health and Life Insurance) of the Insurance Code. Or. Rev. Stat. §742.001 (“This chapter [742] and Or. Rev. Stat. Chapter 743 apply as to all insurance policies delivered or issued for delivery in this state other than reinsurance and wet marine and transportation insurance policies.”) (emphasis added). Accordingly, certain provisions of the Oregon Insurance Code are unavailable to the insured who brings an action on a wet marine and transportation policy. See Port of Portland v. Water Quality Ins. Syndicate, 796 F.2d 1188, 1195-96 (9th Cir 1986) (Oregon law) (“wet marine and transportation” policy does not provide for recovery of attorney fees under Or. Rev. Stat. §742.061). In addition to Or. Rev. Stat. §742.001, other Insurance Code provisions expressly except “wet marine and transportation insurance.” See, e.g., Or. Rev. Stat.
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§742.046(2) (delivery of policy) (does not apply to inland marine floater policies); Or. Rev. Stat. §742.048(5) (effective date and time of coverage; applicability) (“This section does not apply to life, health, mortgage, title, surety or wet marine and transportation insurance.”). Transport of Goods. Oregon law requires that a person cannot operate as a licensed motor carrier until that person has a policy for public liability and property damage insurance. Or. Rev. Stat. §825.160(1). Or. Rev. Stat. §825.162(1) requires a bond in a sum to be fixed by the Department of Transportation for intrastate for-hire carriers providing “collect on delivery” service, and Or. Rev. Stat. §825.162(2) requires for-hire intrastate carriers of freight or express to have cargo insurance “in such penal sum” as the Department of Transportation deems necessary “to protect adequately the interests of the public.” Oregon Department of Transportation may waive these bond or insurance requirements under certain conditions. Or. Rev. Stat. §825.162(3). Inland Marine Coverage. Inland marine coverage applies to domestic shipments; bridges, tunnels, and other instrumentalities of transportation and communication; and personal property coverage. Robert E. Keeton & Alan I. Widiss, Insurance Law §1.5(b)(2) (1988). Commercial inland marine coverage forms include: 1) accounts receivable; 2) agricultural machinery and livestock; 3) camera and musical instrument dealers; 4) commercial articles; 5) commercial fine arts; 6) equipment dealers; 7) film; 8) floor plan; 9) jewelers block; 10) mail; 11) physicians and surgeons equipment; 12) signs; 13) theatrical property; and 14) valuable papers and records. See generally 1 Susan J. Miller & Philip Lefebvre, Miller’s Standard Insurance Policies Annotated, 566-621 (4th ed. 1995). LIABILITY INSURANCE Apportionment of Liability – Primary Insurers. Oregon Supreme Court holds that, where there are conflicting “other insurance” clauses, they are “repugnant” and should be “rejected in toto.” Lamb-Weston, Inc. v. Oregon Auto. Ins. Co., 219 Or. 110, 129, 341 P.2d 110, modified and reh’g denied, 219 Or. 129, 346 P.2d 643 (1959). To fill the vacuum left by discarding the repugnant clauses, Lamb-Weston requires that each insurer pay a proportion of the loss based upon the limits of liability of each applicable policy. Lamb-Weston, 219 Or. at 129-138, 341 P.2d 643. “One loss, a common insured, and conflicting ‘other insurance’ clauses provide the basis for the application of Lamb-Weston.” Preferred Risk Mut. Ins. v. Mission Ins., 261 Or. 576, 579, 495 P.2d 727 (1972); see, e.g., Forest Ind. Ins. Exch. v. Viking Ins. Co., 82 Or. App. 615, 728 P.2d 943 (1986) (where there

were two auto liability policies, liability prorated according to per accident limits, not per person limits). Attorney fees and defense costs also must be prorated according to the Lamb-Weston rule. Pacific Power & Light Company v. Transport Indemnity Co., 460 F.2d 959, 963 (9th Cir. 1972) (Oregon law). Apportionment of Liability – Excess Insurers. Lamb-Weston rule applies. Lamb-Weston, Inc. v. Oregon Auto. Ins. Co., 219 Or. 110, 341 P.2d 110, modified and reh’g denied, 219 Or. 129, 346 P.2d 643 (1959). Oregon Supreme Court soundly rejected rule seeking to resolve a conflict among policies containing a pro-rata clause and an excess clause by determining which policy was primary and which policy was secondary. Instead, court held that the insurers should share equally in the loss. Court required insurers to prorate loss in proportion to respective limits of liability stated in their policies. In dictum, court noted that it would apply the same logic to other types of conflicts: “In our opinion, whether one policy uses one clause or another [a pro-rata clause, an excess clause, or an escape clause], when any come in conflict with the ‘other insurance’ clause of another insurer, regardless of the nature of the clause, they are in fact repugnant and should be rejected in toto.” LambWeston, 219 Or. at 129. Attachment – Or. Rev. Stat. §18.352 (“Proceeds of Casualty and Indemnity Insurance Attachable on Execution”) authorizes attachment proceedings against liability or indemnity insurer to enforce a judgment against its insured. Hecht v. James and Farmers Mut. Ins. Co., 218 Or. 251, 253, 345 P.2d 246 (1959). Cancellation. Cancellation and nonrenewal of most commercial liability policies are governed by Or. Rev. Stat. §§742.700-.710. When this statutory scheme applies, grounds for cancellation are limited to the stated, statutory reasons. Or. Rev. Stat. §742.702(1). Cancellation under Or. Rev. Stat. §742.702 cannot be effective until at least ten working days after the insured receives written notice of the cancellation. Or. Rev. Stat. §742.702(2). A commercial liability insurer may not withdraw from, fail to renew, or cancel any line of insurance or class of business without providing appropriate written justification to the Director of the Department of Consumer and Business Services. Or. Rev. Stat. §731.482(1). Contribution among Joint Tortfeasors. Right of contribution exists among joint tortfeasors even though judgment has not been recovered against all or any of the tortfeasors. Or. Rev. Stat. §31.800(1). There is no right of contribution from a person who “is not liable in tort” to the claimant. Id. Thus, where legal defense bars claimant’s recovery from a particular tortfeasor, contri---- For Current Listings access www.ambest.com/legal---Last Update August, 2008

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bution is precluded even though there has been no adjudication of liability in an action between claimant and that tortfeasor. That is, even if tortfeasor was negligent for causing claimant’s injury, tortfeasor “is not liable in tort” under Or. Rev. Stat. §31.800. Fujitsu Microelectronics, Inc. v. Lam Research Corp., 174 Or. App. 513, 517-20, 27 P.3d 493 (2001). Only tortfeasor who has paid more than a proportional share of the common liability has right of contribution. Or. Rev. Stat. §31.800(2). Total recovery is limited to amount paid in excess of proportional share. Id. No tortfeasor is compelled to make contribution beyond tortfeasor’s proportional share of entire liability. Id. Tortfeasor who settles with claimant has no right of contribution from another tortfeasor whose liability has not been extinguished by the settlement. Or. Rev. Stat. §31.800(3). Provisions relating to right of contribution among joint tortfeasors do not impair any right of indemnity under existing law, Or. Rev. Stat. §31.800(5), and do not apply to breaches of trust or other fiduciary obligations. Or. Rev. Stat. §31.800(6). Liability insurer that, by payment, discharges liability of insured tortfeasor is subrogated to tortfeasor’s right of contribution to extent of amount insurer has paid in excess of tortfeasor’s share of the common liability. Or. Rev. Stat. §31.800(4). State may be a joint tortfeasor for purposes of the contribution provisions. Beaver v. Pelett, 299 Or. 664, 705 P.2d 1149 (1985). Cooperation of Insured. Insurer must show it has acted with diligence and good faith to secure insured’s cooperation. Insurer must show that it was prejudiced by insured’s lack of cooperation before non-cooperation is defense to coverage. Bailey v. Universal Underwriters, 258 Or. 201, 474 P.2d 746 (1970). Coverage. Liability policy generally provides coverage for damages because of bodily injury or property damage caused by an “occurrence” and requires insurer to defend against any claim or suit. Liability policy typically defines “occurrence” as an “accident” resulting in injury or damage that is “neither expected nor intended from the standpoint of the Insured.” Term “accident” means “unforeseen, unexpected, unintended or the like.” SAFECO Ins. v. House, 80 Or. App. 89, 96, 721 P.2d 862 (1986). Term “accident” focuses not on conduct, but on result. Question is not whether conduct resulting in injury or damage was intentional, but whether insured specifically intended to cause injury or damage. North Clackamas School Dist. No. 12 v. OSBA, 164 Or. App. 339, 345, 991 P.2d 1089 (1999).

Insured pled guilty to assault after he hit someone in a tavern. Insured admitted in guilty plea that he had acted “recklessly.” Court held admission did not conclusively establish that insured acted with intent to harm under “occurrence” language in liability policy. See, e.g., Farmers Ins. Co. of Oregon v. Limbocker, 109 Or. App. 130, 818 P.2d 527 (1991). See also Fox v. Country Mutual Ins. Co., 327 Or. 500, 516, 964 P.2d 997 (1998), on remand, 169 Or. App. 54, 7 P.3d 677 (2000). Where insured was a passenger in vehicle that was intentionally wrecked to obtain insurance benefits, court held fatal injuries to insured were “caused by accident” even though insured was aware of scheme, because there was no evidence insured intended to cause harm to himself, “let alone to end his life in the accident.” SAFECO Ins. v. House, 80 Or. App. 89, 721 P.2d 862 (1986). Intoxicated insured shot and killed two persons. Question existed as to whether homeowner’s policy with liability coverage for “accident resulting in bodily injury” covered incident. Court held that liability was question of fact. Occurrence cannot arise if insured intended “some” harm, even if actual harm turns out to be or include different type of harm. Drake v. Mutual of Enumclaw Ins. Co., 167 Or. App. 475, 485, 1 P.3d 1065 (2000). But see Mutual of Enumclaw Ins. Co. v. Gutman, 172 Or. App. 528, 534, 21 P.3d 101 (2001) (“Damages because of bodily injury are caused by an occurrence, unless the insured subjectively intended to cause the particular injuries that produced the damages.”) (court’s emphasis). Oregon Supreme Court recognizes that there are some intentional acts the nature of which is such that intent to harm is inferred. Nielsen v. St. Paul Companies, 283 Or. 277, 281, 583 P.2d 545 (1978). Where intent to injure is inferred, insured’s conduct not an accident or occurrence under liability policy. Mutual of Enumclaw v. Merrill, 102 Or. App. 408, 411-12, 794 P.2d 818 (1990) (sexual abuse); Cunningham & Walsh, Inc. v. Atlantic Mutual Ins. Co., 88 Or. App. 251, 255, 744 P.2d 1317 (1987) (deceit). Coverage – Fraud. It is against public policy to insure for fraud and its harm whether the particular harm is intended or not. When fraud or deceit is committed by insured, conduct which brought it about is not an “occurrence” under policy and insurer has no duty to defend. Cunningham & Walsh, Inc. v. Atlantic Mut. Ins., 88 Or. App. 251, 744 P.2d 1317 (1987). Coverage – Insured. Where term “insured” included members of “household,” court held term “household” referred to group of individuals living in a single house under same roof. Additional insured added by endorsement was not member of “household.” Mutual of Enum---- For Current Listings access www.ambest.com/legal---Last Update August, 2008

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claw Ins. Co. v. Rohde, 170 Or. App. 574, 13 P.3d 1006 (2000). Damages. Liability insurer must exercise good faith and due care in defense and settlement of claims on behalf of its insured. Baton v. Transamerica Ins., 584 F.2d th 907 (9 Cir. 1978) (Oregon law). Where liability insurer has not undertaken defense of claim, only contract damages are recoverable. However, once insurer has undertaken defense of the claim, failure to exercise reasonable care in settling a claim gives rise to tort damages. Georgetown Realty v. Home Ins. Co., 313 Or. 97, 831 P.2d 7, on remand, 113 Or. App. 641, 833 P.2d 1333 (1992); Warren v. Farmers Ins. Co., 115 Or. App. 319, 324-25, 838 P.2d 620 (1992), superseded by statute on other grounds, Thorn v. Adams, 125 Or. App. 257, 263, 865 P.2d 417 (1993). Where liability insurer undertakes to defend its insured, it may be liable to insured for amount of any excess verdict over the policy limits if insurer “did not reasonably attempt to settle the claim within the policy limits, or if it conducted the defense of its insured in a manner that was otherwise negligent.” Goddard ex rel. Estate of Goddard v. Farmers Ins. Co. of Oregon, 173 Or. App. 633, 637, 22 P.3d 1224 (2001). See generally “DAMAGES.” Duty to Defend. Insurer “is not obligated to defend any action not tendered to it.” American Casualty Co. v. Corum, 139 Or. App. 58, 63, 910 P.2d 1151, adhered to on reconsideration, 141 Or. App. 92, 917 P.2d 39 (1996). Whether insurer has duty to defend is a question of law, which is determined by comparing insurance policy terms with allegations of complaint against the insured. That is, “eight-corners rule” applies–compare the four corners of the complaint with the four corners of the insurance contract. See Mutual of Enumclaw Ins. Co. v. Gutman, 172 Or. App. 528, 531, 21 P.3d 101, rev. denied, 333 Or. 162, 39 P.3d 192 (2001) (citing cases). In determining whether insurer has defense obligation, court looks only at facts alleged in complaint to determine whether they provide a basis for recovery under the policy. Insurer should be able to determine from face of complaint whether to accept or reject tender of defense. Ledford v. Gutoski, 319 Or. 397, 400, 877 P.2d 80 (1994). Conduct alleged in complaint, and not label on alleged claims, determines insurer’s duty to defend. L & D of Oregon, Inc. v. American States Ins. Co., 171 Or. App. 17, 20, 14 P.3d 617 (2000). Failure to identify or separately state claims correctly does not defeat defense obligation. Clinical Research Inst. of Southern Oregon, P.C. v. Kemper Ins. Cos., 191 Or. App. 595, 599, 84 P.3d 147 (2004).
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Insurer has duty to defend if complaint provides any basis for which insurer provides coverage. Ledford, supra. If complaint alleges facts, that if proved, would impose liability under the policy, insurer must defend, even if some of alleged conduct would not be covered. Gutman, supra. In such a mixed complaint, court must first determine whether complaint contains allegations of covered conduct–if so, insurer has duty to defend even if complaint also includes allegations of excluded conduct. On the other hand, if complaint does not contain any allegations of covered conduct, insurer has no defense obligation. Abrams v. General Start Indem. Co., 335 Or. 392, 400, 67 P.3d 931 (2003). Any ambiguity in complaint as to whether allegations could be covered is resolved in favor of the insured. Ledford, supra. If complaint contains allegations of covered conduct, insurer has duty to defend, even if complaint contains allegations of excluded conduct. But, if complaint does not contain any allegations of covered conduct, insurer has no duty to defend. Abrams v. General Star Indem. Co., 335 Or. 392, 67 P.3d 931 (2003); see, e.g., Minnis v. Oregon Mut. Ins. Co., 334 Or. 191, 203, 48 P.3d 137 (2002) (employee assaulted claimant at employee’s apartment; finding that, because employee was not acting within course and scope of employment, employer was not vicariously liable and therefore insurer had no duty to defend insured employer). Thus, insurer has duty to defend if allegations in a complaint, identified as a single claim for relief, “in fact” state more than one claim for relief and at least one of those claims is for conduct covered by the policy. “In other words, neither the failure to identify correctly the claims nor the failure to state them separately defeats the duty to defend.” Marleau v. Truck Ins. Exchange, 333 Or. 82, 91, 37 P.3d 148 (2001). “[A]ny facts not alleged in the complaint are irrelevant in determining the existence of the duty to defend,” Gebrayel v. Transamerica Title Ins. Co., 132 Or. App. 271, 275, 888 P.2d 83 (1995), and “failing to exclude a possibility of [a covered] event is not the same as affirmatively alleging that the event has occurred.” Martin v. State Farm Fire & Casualty Co., 146 Or. App. 270, 277, 932 P.2d 1207 (1997). Under notice pleading in federal court, a plaintiff does not need to allege all the facts giving rising to a cause of action, but may state claims in general and broad terms. Consequently, a federal court complaint may not provide an insurer with enough information to determine whether or not it has a duty to defend. See Ross Island Sand & Gravel Co. v. General Ins. Co., 472 F.2d 750, 752 (9th Cir. 1973) (Oregon law). However, although a “broadly-worded” federal court pleading may trigger a duty to defend, duty “evaporates” as soon as
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complaint is supplemented by material facts establishing insurer had no duty to indemnify. Spada v. Unigard Ins. Co., 232 F. Supp. 2d 1155, 1162 (D. Or. 2002) (citing Ross Island Sand & Gravel Co. v. General Ins. Co., 472 F.2d 760, 752 (9th Cir. 1973) (Oregon law)), aff’d in part, rev’d in part, and remanded on other grounds, 2003 WL 2244978 (9th Cir. Oct. 28, 2003) (Oregon law) (not selected for publication in the Federal Reporter). Example: STK Enterprises, Inc. v. Crusader Ins. Co., 171 Or. App. 9, 14 P.3d 638 (2000). Three AfricanAmericans who had been denied entry to the insured’s restaurant sued the insured for racial discrimination. After the insurance company rejected the insured’s tender, the insured defended and settled the claims itself. Thereafter, the insured brought suit, arguing that the claims fell within (a) the personal injury coverage because the complaint stated claims for wrongful eviction; or (b) the liquor liability coverage because the insured was attempting to comply with Oregon Liquor Control Commission (“OLCC”) regulations governing the service of alcohol. The trial court rejected both arguments and granted summary judgment to the insurance company. The court held that there was no duty to defend the claim for racial discrimination. The claim was not one for wrongful eviction. Essential to such claim is that a person be removed from premises in which he has a possessory interest. The patrons did not have a possessory interest in the restaurant. The court further held that the claim was not one involving the liquor liability coverage. None of the allegations against the insured had anything to do with furnishing alcohol. The court concluded that the insured’s argument that its employees were attempting to comply with OLCC regulations amounted to asserting “facts” outside those alleged in the complaints against the insured, and any such “facts” were not relevant to the duty to defend. The court also held that there also was no duty to indemnify. Nothing in the final record showed that the claimants had a possessory interest in the property. Moreover, there could be no coverage under the liquor liability provisions. First, the claims did not involve liquor laws. Second, there was no evidence that the employees were acting pursuant to OLCC regulations. Finally, if the insured had prevailed on the OLCC defense, the insured would have avoided liability. If the insured had been unsuccessful on that defense, that would have established that liability was based on something other than OLCC provisions. Consequently, the liquor liability coverage was not an issue. Insurer may not introduce facts in a declaratory judgment action commenced before the underlying action is concluded to show that its policy does not cover the claim alleged and that there is no duty to defend.
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North Pacific Ins. Co. v. Wilson’s Distributing, 138 Or. App. 166, 908 P.2d 827 (1995). Duty to Indemnify. Duty to indemnify is independent of duty to defend. Even where insurer has no duty to defend based upon allegations in complaint, facts proved at trial on which liability is established may give rise to duty to indemnify if insured’s conduct is covered by policy. Ledford v. Gutoski, 319 Or. 397, 403, 877 P.2d 80 (1994); American Casualty Co. v. Corum, 139 Or. App. 58, 62, 910 P.2d 1151, adhered to on reconsideration, 141 Or. App. 92, 917 P.2d 39 (1996). Duty to Settle. Duty to defend includes duty to settle within policy limits if it is reasonable to do so. Insurer has affirmative duty of care to its insured, which, in appropriate case, requires insurer to initiate settlement efforts. Also, under Oregon Insurance Code, insurer has affirmative responsibility to seek an equitable settlement once liability becomes “reasonably clear.” Goddard ex rel. Estate of Goddard v. Farmers Ins. Co. of Oregon, 173 Or. App. 633, 637-38, 22 P.3d 1224 (2001) (citing Or. Rev. Stat. §746.230(1)(f) (unfair claim settlement practice: “Not attempting in good faith to promptly and equitably settle claims in which liability has become reasonably clear”)). Entry of an adverse excess judgment is “normally a reasonable indication of liability” and, as matter of first impression, court held insurer has continuing duty to engage in reasonable settlement negotiations after trial and entry of excess judgment.” Goddard, 173 Or. App. at 642. Insurer has affirmative duty to seek to protect its insured against any excess liability by making “reasonable effort” to settle within policy limits, “whether or not plaintiff made a policy limits offer of its own.” Goddard, 173 Or. App. at 638. Depending upon the case, insurer may also be required to explain why no further coverage exists. Goddard, 173 Or. App. at 638 n.3. Also, insurer, on receiving offer to settle in which an excess verdict is sought, owes duty to inform its insured so insured may take action to protect its own interests if insurer rejects offer. Radcliffe v. Franklin Nat. Ins. Co. of New York, 208 Or. 1, 48-49, 298 P.2d 1002 (1956). To prevail on motion for summary judgment, insured must show that insurer breached duty of care by failing to negotiate and offer a policy-limits settlement to claimant and that insured’s damages (i.e., excess verdict over policy limits) were caused by that breach. Goddard, supra, 173 Or. App. at 638-39. Insurer is not required to offer to settle case at risk of facing action for bad faith if it reasonably believes that exposure of insured will be less than policy limits. Where evidence indicated that, prior to trial, insurer thought maximum jury verdict would be below policy
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limits, jury could not reasonably draw any inference of bad faith from company’s failure to make counter-offer of settlement. Eastham v. Oregon Auto. Ins., 273 Or. 600, 540 P.2d 895 (1975). Exclusions. In determining what parties may have intended by exclusion from liability insurance, purpose for which exclusion exists may be considered. A-1 Sandblasting v. Baiden, 53 Or. App. 890, 632 P.2d 1377 (1981), aff’d, 293 Or. 17, 643 P.2d 1260 (1982). Exclusions – Business Pursuits. Business pursuits exclusion in homeowners policy applies to “all compensating activities of an insured, including the insured’s principal gainful activity or activities and all incidental or occasional ones.” Hiebert v. Farmers Ins. Co. of Oregon, 172 Or. App. 13, 18, 18 P.3d 397 (2001) (holding that business pursuits exception in homeowners policy applied to bar coverage for losses resulting from death of child playing on insured’s rock crusher where: 1) insured purchased rock crusher for scrap-metal value; 2) transported it to Oregon with intention to sell or trade it; 3) made efforts toward that end by discussing machine with acquaintances and painting it to make it more saleable; and 4) although insured did not necessarily expect to achieve a profit from sale or trade, he hoped and intended to be compensated for purchase price and expenses in transporting crusher to Oregon). Homeowners policy did not cover injuries arising out of business pursuits of insured where insured was performing a “business pursuit” within the meaning of policy when she provided ongoing child care for which she expected and received compensation. Aetna Life & Cas. Co. v. Ashe, 88 Or. App. 391, 745 P.2d 800 (1987). Exclusions – Care, Custody or Control. Applied where employee of insured damaged shovel loader rented by insured. Crist v. Potomac Ins., 243 Or. 254, 413 P.2d 407 (1966). Not applied where non-business employee unwittingly exercised control over another’s property and damaged it. Ferguson v. Birmingham Fire Ins., 254 Or. 496, 460 P.2d 342 (1969). Exclusions – Intentional Acts. Clause in contract of insurance purporting to indemnify insured for damages recovered against him as consequence of his intentional conduct in inflicting injury upon another is unenforceable. Isenhart v. General Casualty Co., 233 Or. 49, 377 P.2d 26 (1962). Public policy precludes insurer from indemnifying an insured for insured’s intentional injury of another, but public policy does not preclude insurer from defending an insured against such a claim if, as a legal matter, insured is entitled to a defense. Eugene Police Employees’ Ass’n v. City of Eugene, 157 Or. App. 341, 344-45, 972 P.2d 1191 (1998).

Intentional act exclusion applies only where insured commits the act for the purpose of inflicting injury; both act and harm must be intended. Farmers Ins. Co. v. Limbocker, 109 Or. App. 130, 818 P.2d 527 (1991); see also Fox v. Country Mut. Ins. Co., 327 Or. 500, 964 P.2d 997 (1998), on remand, 169 Or. App. 54, 7 P.3d 677 (2000). In Ledford v. Gutoski, 319 Or. 397, 401, 877 P.2d 80 (1994), Oregon Supreme Court held that “[i]njuries resulting from intentional acts are excluded from insurance coverage where the insured intended to cause the particular injury or harm, as opposed to merely intending the act” and indicated it would apply this test in determining whether coverage is precluded by an “accident” requirement. Whether a particular intentional act is excluded from coverage depends upon the subjective intent of insured. This is a question of fact. Oregon Supreme Court has rejected objective “natural and ordinary” consequences approach to intentional act exclusions. Allstate Ins. Co. v. Stone, 319 Or. 275, 278-79, 876 P.2d 313 (1994). Whether resulting loss was unexpected and unintended calls for determination of insured’s subjective expectation and intent. Albertson’s Inc. v. Great Southwest Fire Ins., 83 Or. App. 527, 732 P.2d 916 (1987). Although intent to injure is generally a question of fact, where insured sexually molested victim, “an injurious intent” will be inferred even though insured has claimed he did not intend to harm victim, and insurer has no duty to defend. Mutual of Enumclaw v. Merrill, 102 Or. App. 408, 794 P.2d 818 (1990). Criminal conviction may conclusively establish that insured engaged in intentional conduct for purposes of intentional acts exclusion. State Farm Fire & Cas. Co. v. Parker, 167 Or. App. 413, 1 P.3d 498 (2000). Compare Aetna Cas. & Sur. Co. v. Brathwaite, 90 Or. App. 109, 751 P.2d 237 (1988). Court found that insured, who fired a gun resulting in another’s death, did so because insured was unable to control his actions. Court held absence of specific intent to cause harm to the other person supported conclusion that intentional acts exclusion in insurance policy did not apply and that insurer was required to defend and indemnify the insured’s estate. Exclusions – Miscellaneous. Exclusion in garage liability policy for vehicles in charge of insured held not repugnant to insuring agreement. Clark Motor Co. v. United Pac. Ins., 172 Or. 145, 139 P.2d 570 (1943). Exclusions – Pollution. Term “sudden and accidental” in exception to pollution exclusion is ambiguous and will be construed to mean “unexpected or unintended.” St. Paul v. McCormick & Baxter, 324 Or. 184, 923 P.2d 1200 (1996).
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Coverage for damage caused by insured’s intentional release into sewers of acids and caustics over tenyear period was excluded by pollution clause and was not provided for by exception for “sudden and accidental” discharge. Transamerica Ins. Co. v. Sunnes, 77 Or. App. 136, 711 P.2d 212 (1985). Coverage for cleanup costs incurred from depositing solvents and paint sludge in unlined pit excluded by pollution exclusion and not covered by “sudden and accidental” exception even though escape of contaminants into the ground water was not intended. Mays v. Transamerica Ins., 103 Or. App. 578, 799 P.2d 653 (1990). Exclusions – Violation of Law. Employer’s liability policy excluded accidents where insured failed to comply with workplace safety laws. To avoid liability, insurer had to show that employee’s injury was due to the violation. Bridal Veil Lumbering Co. v. Pacific Coast Casualty Co., 75 Or. 57, 67-68, 145 P. 671 (1915) (holding no coverage where jury could reasonably find that lack of safety rail on walkway in violation of Employers’ Liability Act was proximate cause of employee’s injury). Insured – Definition. Homeowners policy defined “insured” to include relatives who were members of the named insured’s household. Court held there was no duty to defend insured’s son and daughter-in-law because they were not members of the insured’s household even though their houses were only 25 feet apart. The court conceded that the term “household” is not necessarily limited to persons living in a single dwelling, but the subject policy named the insured’s son as an additional insured and finding the son a member of the insured’s household would make the additional insured endorsement meaningless. Mutual of Enumclaw Ins. Co. v. Rohde, 170 Or. App. 574, 13 P.3d 1006 (2000). Insured – Insolvency. Policy for loss or damage resulting from accident to, or injury suffered by, employee or others and for which insured is liable shall contain a bankruptcy clause allowing direct action against insurer for unsatisfied judgment. Or. Rev. Stat. §742.031. Liability Between Insurers. Where liability policies provide overlapping coverage for same loss, liability prorated according to proportion of policy limits to the total limits of all other policies. Extrinsic evidence held not admissible to prove that co-insurer did not intend to be bound by its underwriting obligations. Webb v. National Union Fire Ins. Co. of Pittsburgh, 207 F.3d 579, 582 (9th Cir. 2000) (Oregon law). But see OTECC v. Co-Gen, 168 Or. App. 466, 476 n.8, 7 P.3d 594 (2000) (rejecting Ninth Circuit’s construction of Oregon law in Webb regarding admissibility of extrinsic evidence in interpreting a contract).

Primary and excess insurers do not have a contractual relationship, but they are linked to common insured. Excess insurer is liable for amount of judgment in excess of primary policy, up to limits of excess insurer’s coverage. Above that amount, insured is liable. Maine Bonding & Casualty Co. v. Centennial Ins. Co., 298 Or. 514, 520, 693 P.2d 1296 (1985). “A primary insurer owes an excess insurer essentially the same duty of due diligence in claims handling and settlement negotiating it owes to an insured - due care under all the circumstances. In considering the manner in which it will defend a claim, the primary insurer may consider its own interests, but it must also consider the interests of other parties whose interests are involved, notably, the insured and the excess insurer.” Maine Bonding, 298 Or. at 523. Excess insurer is equitably subrogated to essentially same rights against primary insurer as insured would have if there were no excess coverage. Maine Bonding, 298 Or. at 520. Notice. Reasonable notice of accident is condition precedent to insurer’s liability to insured. Oregon Farm Bureau Ins. v. SAFECO, 249 Or. 449, 438 P.2d 1018 (1968). First inquiry is whether insurer was prejudiced by insured’s failure to give earlier notice of accident. If no prejudice, insurer must fulfill policy obligations. If insurer is prejudiced, relevant inquiry is whether insured acted reasonably in failing to give earlier notice. If insured acted reasonably, insurer must fulfill policy obligations. Lusch v. Aetna Casualty, 272 Or. 593, 538 P.2d 902 (1975). Reservation of Rights. Insurer may defend under reservation of rights. Ferguson v. Birmingham Fire Ins. Co., 254 Or. 496, 509, 460 P.2d 342 (1969). Insurer is not estopped from asserting nonliability defense because it participated in the insured’s defense, so long as insurer has given timely notice to insured that it does not waive that defense. Clark Motor Co. v. United Pacific Ins. Co., 172 Or. 145, 155, 139 P.2d 570 (1943). Where reservation of rights letter expressly reserves insurer’s right to withdraw from the defense, insured cannot legitimately claim prejudice when insurer exercises that right. United Pacific Ins. Co. v. Pacific Northwest Research Foundation, 39 Or. App. 873, 877, 593 P.2d 1278 (1979). Waiver. Even where insurer defends without a reservation of rights, insurer does not waive any coverage issues. Waiver “cannot be the basis for creating a contract of coverage where no such contract previously existed.” Schaffer v. Mill Owners Ins. Co., 242 Or. 150, 156, 407 P.2d 614 (1965). Waiver may be available to prevent insurer from asserting a policy defense only if defense is a condition of forfeiture, not a condition of
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coverage. Condition of forfeiture is one where there is coverage for a particular loss in first place, but acts of insured nullify coverage. Exclusions are not conditions of forfeiture because they control whether coverage is available and cannot be waived. Farmers Ins. Co. of Oregon v. Munson, 127 Or. App. 413, 418, 873 P.2d 370 (1994). Similarly, estoppel cannot be invoked to expand insurance coverage or scope of an insurance contract. ABCD...Vision v. Fireman’s Fund Ins. Companies, 304 Or. 301, 307, 744 P.2d 998 (1987). LIMITATION OF TIME FOR COMMENCEMENT OF ACTION See Law Digest Tables. See generally Or. Rev. Stat. ch. 12 (“Limitations of Actions and Suits”). Commencement of Action – Contract. Six years, Or. Rev. Stat. §12.080(1), unless for sale of goods, then four years. Or. Rev. Stat. §72.7250. Commencement of Action – Injury to Person. Two years. Injury to person includes assault, battery, false imprisonment, and negligence. Or. Rev. Stat. §12.110(1). Commencement of Action – Injury to Interest in Real Property. Six years. Or. Rev. Stat. §12.080(3) (“action for waste or trespass upon or for interference with or injury to any interest of another in real property” subject to specified exceptions). Construction, alteration or repair of improvement to real property–10-year upper limit. Or. Rev. Stat. §12.135(1). Commencement of Action – Negligence Statute of Repose. Action for negligent injury to person or property cannot be commenced more than ten years from date of act or omission complained of. Or. Rev. Stat. §12.115(1). For injuries to persons arising from medical causes, see Or. Rev. Stat. §12.110(4); MALPRACTICE, Medical – Statute of Limitations. Contract or Tort Statute of Limitations. Whether contract or tort statute of limitations is applicable depends on gravamen of action and not on plaintiff’s election. Lindemeier v. Walker, 272 Or. 682, 538 P.2d 1266 (1975). Contracting parties have freedom to create contractual remedies for conduct that would otherwise constitute a tort. Where contract incorporates by reference or implication a general standard of skill and care to which defendant would be bound independent of contract, and alleged contract breach would also be breach of this noncontractual duty, two-year tort statute of limitations

applies. However, where contract spells out performance expected by plaintiff and promised by defendant without reference to any general standard of care, defendant liable only on the contract and six-year contract statute of limitations would apply. Metropolitan Property & Casualty v. Harper, 168 Or. App. 358, 7 P.3d 541 (2000); Georgetown Realty, Inc. v. Home Ins. Co., 313 Or. 97, 831 P.2d 7 (1992), on remand, 113 Or. App. 641, 833 P.2d 1133 (1992); Securities-Intermountain, Inc. v. Sunset Fuel Co., 289 Or. 243, 611 P.2d 1158 (1980). Defense to Action. By its acts, an insurer may be estopped from asserting a contractual limitations period or a statute of limitations as a defense. Lyden v. Goldberg, 260 Or. 301, 490 P.2d 181 (1971); Gilbert v. Globe & Rutgers, 91 Or. 59, 174 P. 1161 (1918), reh’g denied, 91 Or. 59, 178 P. 358 (1919). Where insurer made no promise to settle claim, but indicated willingness to continue negotiations, insurer’s conduct was not sufficient as matter of law to lull plaintiff and his attorney into false sense of security so as to estop insurer from raising defense of statute of limitations. Johnson v. Kentner, 71 Or. App. 61, 691 P.2d 499 (1984). See Or. Rev. Stat. §742.056, which provides: “Without limitation of any right or defense of an insurer otherwise, none of the following acts by or on behalf of an insurer shall be deemed to constitute a waiver of or estoppel to assert any provision of a policy or of any defense of the insurer thereunder: (1) Acknowledgment of the receipt of notice of loss or claim under the policy. (2) Furnishing forms for reporting a loss or claim, for giving information relative thereto, or for making proof of loss, or receiving or acknowledging receipt of any such forms or proofs completed or uncompleted. (3) Investigating any loss or claim under the policy or engaging in negotiations looking toward a possible settlement of any such loss or claim.” Discovery Rule. “Actions shall only be commenced within the periods prescribed in this chapter [“Limitations of Actions and Suits”], after the cause of action shall have accrued, except where a different limitation is prescribed by statute.” Or. Rev. Stat. §12.010. Phrase “the cause of action…accrued” provides basis for recognizing a discovery rule. Cause of action accrues and limitations period begins to run when plaintiff discovers or should have discovered act at issue. Moore v. Mutual of Enumclaw Ins. Co., 317 Or. 235, 248, 855 P.2d 626 (1993). Cf. Or. Rev. Stat. §742.240, mandatory suit limitation provision for fire insurance policies, which requires suit to be “commenced within 24 months next after inception of the loss.” Court held discovery rule does not apply to “inception of the loss” language. “Inception of
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the loss” denotes time at which loss occurs. See Moore, 317 Or. at 244-50. “Discovery” means “gaining knowledge” or “ascertaining the existence of something previously unknown or unrecognized.” Webster’s Third New Int’l Dictionary 647 (unabridged ed. 1993). A loss has been “discovered” for purposes of a statute of limitations if: 1) “discovered” loss is of a type that falls with policy coverage; 2) insured is aware of “‘sufficient facts’” to lead reasonable person to believe circumstances of loss bring loss under policy; and 3) insured’s awareness is based on objective standards, what reasonable person would or should conclude from available information. Nike, Inc. v. Northwestern Pacific Indem. Co., 166 Or. App. 312, 999 P.2d 1197, opinion adhered to on reconsideration, 167 Or. App. 322, 1 P.3d 1060 (2000). For example, two-year period of limitations in Or. Rev. Stat. §12.110(1) does not begin to run until “the plaintiff knows, or as a reasonably prudent person should know, that he has the condition for which his action is brought and that defendant has caused it.” Schiele v. Hobart Corp., 284 Or. 483, 489, 587 P.2d 1010 (1978). Statute of Limitations – Fraud. Period of limitations for fraud or deceit begins to run when plaintiff knew or should have known of alleged fraud under Or. Rev. Stat. §12.110(1). Mathies v. Hoeck, 284 Or. 539, 588 P.2d 1 (1978); see also Kinyon v. Cardon, 69 Or. App. 546, 686 P.2d 1048 (1984). Date of discovery is question of fact to be resolved by trier of fact. Ogan v. Ellison, 297 Or. 25, 682 P.2d 760 (1984). Statute of Limitations – Negligent Infliction of Occupational Disease. Claims for negligent infliction of occupational disease must be commenced within two years after plaintiff knows or reasonably should know he has a serious or permanent condition and that defendant has caused it. Schiele v. Hobart Corp., 284 Or. 483, 587 P.2d 1010 (1978). Statute of Limitations – Public Bodies. Notice of tort claim, other than wrongful death, against public body must be filed within 180 days of when person has reasonable opportunity to discover his injury and identity of party responsible for that injury under Or. Rev. Stat. §30.275(2)(b). Adams v. Oregon State Police, 289 Or. 233, 611 P.2d 1153 (1980). For wrongful death actions, notice must be given within one year. Or. Rev. Stat. §30.275(2)(a). The notice period does not include the period, not exceeding 90 days, during which the person injured is unable to give notice because of the injury, minority, incompetency, or other incapacity. Or. Rev. Stat. §30.275(2).

Two-year statute of limitations for tort actions against public bodies, Or. Rev. Stat. §30.275(9), does not begin to run until there is reasonable opportunity for plaintiff to discover his injury resulted from defendant’s negligence. Dowers Farms, Inc. v. Lake County, 288 Or. 669, 607 P.2d 1361 (1980). Discovery rule also applies to 180-day notice period. The mere fact that a plaintiff gives a tort claim notice does not necessarily mean statute of limitations begins to run, i.e. may be issue of fact as to whether cause of action has actually accrued. Uruo v. Clackamas County, 166 Or. App. 133, 997 P.2d 269 (2000). Statute of Limitations – Ski Injuries. Action against ski area operator to recover damages for injuries to skier must be commenced within two years of date of injuries. Or. Rev. Stat. §30.980(3). Notice of such injury must be given to area operator within 180 days after skier discovers, or reasonably should have discovered, injury. Or. Rev. Stat. §30.980(1). Statute of Limitations – Tenant Claims. Two-year statute of limitations applies to personal injury actions brought by tenants against their landlords if a non-tenant suffering same injury could have brought action after one year. Jones v. Bierek, 306 Or. 42, 755 P.2d 698 (1988). Tolling. Oregon Rev. Stat. §12.220, which permits recommencement of an action within one year after its dismissal if the limitations period has run, does not apply to actions that are voluntarily dismissed. Alderson v. State, 105 Or. App. 574, 806 P.2d 142 (1991). Tolling – Advance Payments. The statute of limitation is tolled if advance payments are made under Or. Rev. Stat. §12.155 to person entitled to recover damages under a liability policy, unless notice of expiration of period of limitation is given to person not later than 30 days after the date the first of such advance payments was made. Rybke v. Royal Globe Ins. Co., 293 Or. 513, 651 P.2d 138 (1982). Tolling – Disability. Statute of limitations on certain actions tolled if plaintiff is under 18 or insane. The period will not be extended more than 5 years by such disability or more than one year after disability ceases, whichever occurs first. Or. Rev. Stat. §12.160. Disability must have existed when right of action accrued. Or. Rev. Stat. §12.170. Mental retardation does not per se fall outside scope of “insane” as used in disability tolling statute. Roberts By and Through Drew v. Drew, 105 Or. App. 251, 804 P.2d 503 (1991). Psychological or mental conditions will not toll statute if plaintiff is able to understand nature of alleged harm. Gaspar v. Village Missions, 154 Or. App. 286, 961 P.2d 286 (1998).
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Right to sue still remains in protected person after appointment of guardian or conservator. Lucini By and Through Lucini v. Harsany, 98 Or. App. 217, 221, 779 P.2d 1053 (1989). Waiver. See “WAIVER AND ESTOPPEL.” MALPRACTICE Legal. See “ATTORNEYS, Legal Malpractice.” Medical. Claims – Breach of Contract. Where contract commits defendant to performance without reference to and irrespective of any general standard of care, defendant may be liable on contract whether or not defendant was negligent and whether or not facts exist that might excuse defendant from liability in tort. Thus, allegations that defendant physician failed to perform a contracted-for procedure states a claim for breach of contract. Zehr v. Haugen, 318 Or. 647, 654-55, 871 P.2d 1006 (1994); see Securities-Intermountain, Inc. v. Sunset Fuel Co., 289 Or. 243, 259-60, 611 P.2d 1158 (1980). Medical. Claims – Breach of Warranty. In context of contract for furnishing of services, claim for breach of warranty ordinarily based on allegations that the services, having been provided, were insufficient under contract terms or implied expectations of parties. However, where plaintiff alleged defendant physician failed to perform services at all, such allegations state breachof-contract claim, not breach of warranty. Zehr v. Haugen, 318 Or. 647, 655-56, 871 P.2d 1006 (1994). Medical. Claims – Negligence. To establish a claim for professional negligence, i.e., medical malpractice, a plaintiff must allege and prove a particular duty that arises from a special relationship running from defendant to plaintiff, a duty distinct from defendant’s general duty not to engage in conduct creating a foreseeable risk of harm. In Delaney v. Clifton, 180 Or. App. 119, 41 P.3d 1099 (2002), husband alleged that his wife sought professional counseling from defendants and that it was foreseeable to defendants that wife’s relationship with husband would be and was damaged as a result of the counseling. Husband did not allege that defendants had a particular duty of care to husband arising from a special relationship. Court held husband did not state claim for medical malpractice. Court also held husband’s allegations did not state claim for common-law negligence. Husband sought redress for purely emotional injury. To establish a claim for negligence, husband had to allege a duty to husband arising from “a legal source that goes beyond the common-law duty to exercise reasonable care to prevent foreseeable harm,” Delaney, 180 Or. App. at 124, but husband did not make any such allegations.

A medical malpractice plaintiff must also allege and prove a breach of that duty; a resulting harm to plaintiff measurable in damages; and a causal link between the breach and the harm. Zehr v. Haugen, 318 Or. 647, 871 P.2d 1006 (1994). Where plaintiff’s claim is that a medical practitioner breached a professional duty to guard against a specified medical harm, fact that harm is psychological rather than physical is not a bar to liability. Curtis v. MRI Imaging Services, II, 327 Or. 9, 956 P.2d 960 (1998). However, to recognize purely psychological harm in a medical malpractice case, plaintiff must establish that defendant had a duty to guard against that psychological harm. Rustvold v. Taylor, 171 Or. App. 128, 134, 14 P.3d 675 (2000). But, medical professionals do not operate under any general duty “to avoid any emotional harm that foreseeably might result from their conduct.” Curtis, 327 Or. at 15. Generally, claim for negligent infliction of emotional distress requires evidence of physical injury. However, absent physical injury, a plaintiff may support a claim for negligent infliction of emotional distress based upon a duty independent of defendant’s general duty to avoid the foreseeable risk of harm. Rustvold, 171 Or. App. at 137-39; Phillips v. Lincoln County School District, 161 Or. App. 429, 433, 984 P.2d 947 (1999). Medical. Evidence – Res ipsa loquitur. Res ipsa loquitur may be used in medical malpractice actions to infer both negligence and causation if accident that occurred was of a kind “which more probably than not would not have occurred in the absence of negligence on the part of the defendant.” Fieux v. Cardiovascular & Thoracic Clinic, P.C., 159 Or. App. 637, 640 (1999) (internal quotation marks and citation omitted); see also Brannon v. Wood, 251 Or. 349, 444 P.2d 558 (1968); Mayor v. Dowsett, 240 Or. 196, 400 P.2d 234 (1965) (first application of res ipsa loquitur in medical malpractice case). However, for res ipsa loquitur to apply, inference of negligence must be attributable to a particular defendant. Inference of causation based either on showing of some specific cause of injury within defendant’s responsibility or on showing that defendant was responsible for “all reasonably probable causes of the accident.” Fieux, 159 Or. App. at 644. In cases involving multiple defendants, plaintiff must show that each of defendants’ negligence was probable cause of injury. Id. Medical. Evidence – Settlement. In medical malpractice action against doctor and hospital, where hospital settles with plaintiff, evidence of settlement inadmissible to disprove validity of plaintiff’s claim against doctor; evidence of settlement is admissible if it is relevant
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to prove another issue in the case, such as bias or prejudice of a witness. Pounds By and Through Pounds v. Holy Rosary Medical Center, 127 Or. App. 221, 224-25, 872 P.2d 437 (1994); Holger v. Irish, 316 Or. 402, 414, 412, 851 P.2d 1122 (1993). Thus, settlement information not admissible unless it has independent relevance to issues of damages or liability. Foxworth by Foxworth v. Emanuel Hospital & Health Center, 131 Or. App. 110, 112, 883 P.2d 917 (1994). Medical. Expert Testimony. In most instances, the materiality of a medical risk, that disclosure of the risk will not be detrimental to the patient, and the feasibility of alternatives to the treatment require expert medical testimony. However, once medical testimony establishes that a risk is material, that alternatives are feasible, and that disclosure of risk will not harm patient, expert medical testimony not required to establish existence of a duty to disclose such risks. Getchell v. Mansfield, 260 Or. 174, 181-82, 489 P.2d 953 (1971) (holding that plaintiff who alleged physician failed to warn of material risks inherent in treatment, and to advise plaintiff of feasible alternatives need not produce expert medical testimony that it is custom of physicians in same or similar localities to give such warnings in comparable cases). However, if jury can decide what constitutes reasonable conduct without expert, no expert testimony necessary to establish standard of care. Getchell, 260 Or. at 179-80; see Chouinard v. Health Ventures, 179 Or. App. 507, 512, 39 P.3d 951 (2002) (not every medical case requires expert testimony to establish standard of care or causation); compare Fieux v. Cardiovascular & Thoracic Clinic, P.C., 159 Or. App. 637, 643, 978 P.2d 429 (1999) (holding that expert testimony not required to prove that physician was negligent for leaving a clamp behind in patient’s heart) with Howerton v. Pfaff, 246 Or. 341, 348, 425 P.2d 533 (1967) (holding that expert testimony required to prove accident caused plaintiff’s hernia, even though nature of a hernia was matter of common knowledge). For purposes of res ipsa loquitur, expert testimony not always required for providing a rational basis from which to infer negligence. Fieux, 159 Or. App. at 642. Medical. Informed Consent. Under Or. Rev. Stat. §677.097, for a physician or podiatrist to obtain patient’s informed consent, he or she must explain 1) the general terms of procedure or treatment; 2) any alternatives; and 3) any risks of procedure or treatment. Expert testimony is not required to establish whether physician or podiatrist meets these three requirements. Tiedemann v. Radiation Therapy Consultants, P.C., 299 Or. 238, 248, 701 P.2d 440 (1985).

Statute then requires physician or podiatrist to ask if patient wants a more detailed explanation. If so, physician or podiatrist must disclose in “substantial detail” the procedure, viable alternatives, and the material risks “unless to do so would be materially detrimental to the patient.” In making that determination, due consideration must be given to “standards of practice of reasonable medical or podiatric practitioners in the same or a similar community under the same or similar circumstances.” Or. Rev. Stat. §677.097(2). Section 677.097(2) may require expert testimony to establish standard of practice. Tiedemann, 299 Or. at 248. To establish claim for failure to obtain informed consent, plaintiff must establish that 1) defendant failed to explain a) in general terms, procedure or treatment; b) any alternatives; and c) any risks of the procedure or treatment; and 2) that defendant’s failure caused plaintiff injury. Mandell v. Maurer, 150 Or. App. 543, 546, 946 P.2d 706 (1997). Proper test for determining whether a physician’s failure to disclose material risks or alternatives caused patient’s injury is “subjective,” in the sense that factfinder must decide whether the particular plaintiff would have consented to the procedure or treatment had the information been disclosed. Arena v. Gingrich, 305 Or. 1, 748 P.2d 547 (1988). If nature of procedure or treatment is subject to reasonable dispute, statement that procedure or treatment did not cause plaintiff’s injury is insufficient to establish defendant is entitled to judgment as matter of law. Mandell, 150 Or. App. at 545. Medical. Standard of Care. “Professional negligence, or malpractice, is the failure to meet the standard of care used in the reasonable practice of the profession in the community.” Delaney v. Clifton, 180 Or. App. 119, 123, 41 P.3d 1099 (2002). A physician or podiatric physician has the duty to use that degree of care, skill and diligence which is used by “ordinarily careful” physicians or podiatric physicians and surgeons in the same or similar circumstances in the community of the physician or podiatric physician or a similar community. Or. Rev. Stat. §677.095(1). Medical. Statute of Limitations. For “injuries to the person” arising from medical, surgical or dental treatment, omission, or operation, an action must be commenced within two years of the date when the injury is “first discovered or in the exercise of reasonable care should have been discovered.” Or. Rev. Stat §12.110(4). However, every action must be commenced within five years from the date of treatment, omission, or operation at issue or, if there has been no action commenced within five years because of fraud, deceit, or misleading representation, then action must be commenced within
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two years from date fraud, deceit, or misrepresentation is discovered or in exercise of reasonable care should have been discovered. Or. Rev. Stat. §12.110(4). Term “injury” within meaning of Or. Rev. Stat. §12.110(4) consists of 1) harm; 2) causation; and 3) tortious conduct. Gaston v. Parsons, 318 Or. 247, 255, 864 P.2d 1319 (1994). Or. Rev. Stat. §12.110(4) begins to run on the earlier of 1) the date of plaintiff’s actual discovery of the injury or 2) the date when a person exercising reasonable care should have discovered, including learning facts that would have been disclosed by an inquiry. Greene v. Legacy Emanuel Hosp. and Health Care Ctr., 335 Or. 115, 123, 60 P.3d 535 (2002). However, “[i]n neither of those circumstances does the period of limitations begin to run from the plaintiff’s discovery of facts that served only to trigger a duty to inquire about whether an injury has occurred.” Id. The discovery of tortious conduct, either actual or imputed, is a question of fact dependent upon the type of harm, the medical procedure, and other relevant circumstances. Gaston v. Parsons, 318 Or. 247, 256, 864 P.2d 1319 (1994); see, e.g., Laird v. Stroot, 188 Or. App. 118, 125, 71 P.3d 105 (2003) (plaintiff knew on May 5, 1994 that defendant doctors had left gauze in his foot after operation; holding that absent “some reason for plaintiff to believe that leaving gauze in his foot was a part of the course of treatment, plaintiff’s knowledge of that fact constituted knowledge that he had suffered harm as a consequence of defendants’ tortious conduct and triggered the running of [Or. Rev. Stat. §12.110(4)].”). On summary judgment, defendant must establish that plaintiff knew or in exercise of reasonable care should have known facts that would have made a reasonable person aware of a “substantial possibility” that each of the three elements of an injury–harm, causation, and tortious conduct–existed. Doe v. American Red Cross, 322 Or. 502, 514-15, 910 P.2d 364 (1996); see Greene v. Legacy Emanuel Hosp. and Health Care Center, 335 Or. 115, 127, 60 P.3d 535 (2002) (explaining that Doe “recognizes that the circumstances surrounding an adverse medical outcome might permit a reasonably careful person to discover only the possibility of the defendant’s tortious conduct, rather than its existence, and give rise to a duty to inquire. In that circumstance, according to Doe, factual questions about what the plaintiff should have discovered likely will persist until the facts learned as the result of an inquiry would cause a reasonable person to discover that tortious conduct occurred”) (court’s emphasis). In ordinary case, plaintiff’s awareness that a medical procedure has resulted in injury, and that defendant physician’s acts cause that injury, establishes plaintiff’s
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discovery, actual or imputed, for purposes of Or. Rev. Stat. §12.110(4). Greene, 335 Or. at 127. Medical. Vicarious Liability. For plaintiff to recover from surgeon for negligence of operating room nurses, plaintiff had to establish that nurses were negligent and that nurses were surgeon’s employees or agents or that there were other facts establishing surgeon’s supervision and control over nurses. Holger v. Irish, 316 Or. 402, 410, 412, 851 P.2d 1122 (1993). In general, physician cannot be directly liable or liable on theory of respondeat superior if no evidence of physician’s personal responsibility for instrumentality causing injury and no evidence of physician’s supervision or control over nurses’ operation of instrumentality. Fieux v. Cardiovascular & Thoracic Clinic, P.C., 159 Or. App. 637, 645 (1999). Whether surgeon is vicariously liable for negligence of other operating room personnel is question of fact. Holger, 316 Or. at 410. Medical. Wrongful Birth/Wrongful Life. Husband and wife who conceived and gave birth to child because physician did not perform surgical sterilization on wife as she had requested had cause of action in negligence against physician, professional corporation, and hospital. Zehr v. Haugen, 121 Or. App. 489, 855 P.2d 1127 (1993), aff’d in pertinent part, 318 Or. 647, 871 P.2d 1006 (1994). Hospitals. See “HOSPITALS, Liability.” Other Professionals – Accountants. Accountants – Standard of Care. In most instances, in charges of negligence against professional persons, expert testimony is required to establish what reasonable practice is in community. Getchell v. Mansfield, 260 Or. 174, 179, 489 P.2d 953 (1971). Degree and skill accountant must use in advising a client is not within knowledge and expertise of lay jury. Expert testimony is required concerning standard of care in circumstances at issue. Halvorson v. Sooy, 99 Or. App. 255, 260, 782 P.2d 161 (1989). Accountants – Statute of Limitations. Statute of limitations for accounting malpractice is two years. Or. Rev. Stat. §12.110(1). Term “injury” within meaning of Or. Rev. Stat. §12.110(1) consists of 1) harm; 2) causation; and 3) tortious conduct. Gaston v. Parsons, 318 Or. 247, 255, 864 P.2d 1319 (1994). On summary judgment, defendant must establish that plaintiff knew or in exercise of reasonable care should have known facts that would have made a reasonable person aware of a “substantial possibility” that each of the three elements of an injury–harm,
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causation, and tortious conduct–existed. Gaston, 318 Or. at 256. When statute begins to run is an objective, factbased test–whether reasonable person in same or similar circumstances would have done what plaintiff did. Relevant to analysis is a plaintiff’s failure to make further inquiry if a reasonable person would have done so. Id. Statute begins to run when plaintiff has been damaged and plaintiff becomes aware, or should have become aware, that defendant’s negligence caused plaintiff’s damage. When damage occurred may be question of fact or law. Godfrey v. Bick & Monte, P.C., 77 Or. App. 429, 432, 713 P.2d 655 (1986) (holding statute of limitations began to run when taxpayer was assessed with tax deficiency, which was more than two years before plaintiff commenced malpractice action against attorneys and accountants); cf. Timber By-Products, Inc. v. Sloan, 148 Or. App. 415, 419, 939 P.2d 1177 (1997) (holding statute of limitations did not begin to run until plaintiffs discovered accountant’s negligent tax advice, which was less than two years before plaintiffs commenced malpractice action against accountant). LIFE INSURANCE “Life insurance” means “insurance on human lives” and includes additional benefits in event of death, disability, or dismemberment by accident or accidental means. “Life insurance” does not include workers’ compensation coverages. Or. Rev. Stat. §731.170(1). A former wife’s interest in ex-husband’s life insurance policy was not a property interest, but a mere expectancy. Prudential Ins. Co. v. Weatherford, 49 Or. App. 835, 621 P.2d 83 (1980). The trial court did not err in receiving parol evidence to show intent of parties to property settlement agreement, which did not specifically address the life insurance policy. Id. Statutory requirements for individual life insurance at Or. Rev. Stat. §§743.159-.243. Thirty days grace must be allowed for payment of premium. Or. Rev. Stat. §743.165. Policy incontestable after in force two years, except for nonpayment of premiums. Or. Rev. Stat. §743.168. If age is misstated, amount payable must be adjusted according to premiums that would have been payable on correct age. Or. Rev. Stat. §743.180. Standard non-forfeiture provisions required in life insurance policy. See Or. Rev. Stat. §§743.204-.222 (“Standard Nonforfeiture Law for Life Insurance”). For the purpose of “adequate disclosure” of policy terms, all non-group life insurance policies issued in Oregon must contain separate statement of premium for each benefit provision when necessary in judgment of
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Director of Department of Consumer and Business Services. Or. Rev. Stat. §743.156. Forms of group life or health insurance policies that have been agreed upon as result of negotiations between policyholder and insurer are exempt from filing and approval requirements of Or. Rev. Stat. §742.003. Or. Rev. Stat. §742.003(1)(c). NOTE: 2007 Amendment, effective June 22, 2007 provides: the Director of the Department of Consumer and Business Services by rule may specify categories of life insurance, annuities or disability insurance for which the director need not consider or review an individual policy form that an insurer has filed before approving the form for delivery or issuance for delivery in this state. Policy forms that the Interstate Insurance Product Regulation Commission has approved are subject to approval in the manner specified in this section if the director finds that the commission’s approval process, taken as a whole, gives policyholders substantially the same protection as or better protections than the approval process available under the laws of this state, when considered in light of: (a) The product standards and review procedures the commission uses; (b) The nature of the insurance product reviewed; and (c)The consumer needs that the insurance product serves. Application. Provision in application for life policy requiring insured’s health remain as stated in application until delivery of policy and payment of first premium must be fulfilled in order for policy to go into effect. Olsen v. Federal Kemper Life, 299 Or. 169, 700 P.2d 231 (1985). Damages – Double Indemnity. Beneficiary has burden of proof to establish that accidental injury was of kind covered under double indemnity clause of life policy and that fact may be established by circumstantial evidence. Stuart v. Occidental Life Ins. Co., 156 Or. 522, 527-30, 68 P.2d 1037 (1937). See, e.g., Oregon Pacific State Ins. Co. v. Jackson, 162 Or. App. 654, 656-57, 986 P.2d 650 (1999), in which accidental death group life insurance policy had primary death benefit of $50,000. Policy also included a double indemnity provision in event of insured’s accidental death. Insurer acknowledged that insured’s death in an automobile accident triggered policy’s double indemnity provision. Cf. e.g., Tabler v. Standard Ins. Co., 257 Or. 166, 477 P.2d 709 (1970), in which group accident policy provided double indemnity for death “as a direct result of accidental bodily injuries, independently of all other causes” and also provided that no payment would be made for any loss caused “wholly or partly, directly or indirectly” by sickness or disease. Court con---- For Current Listings access www.ambest.com/legal---Last Update August, 2008

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cluded that insured decedent’s pre-existing heart disease “substantially contributed” to insured’s death and therefore double indemnity provision did not apply. But see Salisbury v. John Hancock Mut. Life Ins. Co., 259 Or. 453, 486 P.2d 1279 (1971), in which pre-existing condition caused fatal accident, but death was caused solely as a result of the injuries suffered in the accident. Court held double indemnity provision applied. See also Trevathan v. Mutual Life Ins. Co. of New York, 166 Or. 515, 525-27, 113 P.2d 621 (1941) (insured was negligent for driving motorcycle at a dangerous rate of speed and died when his motorcycle collided with truck; holding that negligence alone was not sufficient to defeat liability of insurer under double indemnity clause providing benefits where insured died as “direct result of bodily injury effected solely through external, violent, and accidental means, independently and exclusively of all other causes”). NEGLIGENCE See Law Digest Tables. Traditional negligence involves concepts of duty, breach, cause-in-fact, proximate cause, and damages. Oregon has replaced the term “proximate cause” in favor of the term “foreseeability.” Fazzolari v. Portland Sch. Dist. No. 1J, 303 Or. 1, 734 P.2d 1326 (1987). However, there still must be proof that plaintiff’s harm resulted from defendant’s negligent conduct. Buchler v. Oregon Corrections Div., 316 Or. 499, 511-12, 853 P.2d 798 (1993) (holding that “mere ‘facilitation’ of an unintended adverse result, where intervening intentional criminality of another person is the harm-producing force, does not cause the harm so as to support liability for it.”); cf. Knepper v. Brown, 182 Or. App. 597, 622, 50 P.3d 1209 (2002) (declining to extend Buchler to cases other than those involving “intervening intentional criminal conduct”) (footnote omitted). But see Boothby v. D.R. Johnson Lumber Co., 184 Or. App. 138, 159, 55 P.3d 1113 (2002), aff’d, 341 Or. 35, 137 P.3d (2006) (defendant not liable in negligence where defendant had bargained for, and was entitled to rely upon, plaintiff’s (or plaintiff’s employer’s) knowledge and expertise). Gross negligence is conscious indifference to, or reckless disregard of, rights of others. Garrison v. Pacific Northwest Bell, 45 Or. App. 523, 608 P.2d 1206 (1980). The first inquiry is whether some status, statute, or relationship limits, defines, or creates a duty owed by defendant to plaintiff. German v. Murphy, 146 Or. App. 349, 932 P.2d 580 (1997). Certain relationships give rise to an “enhanced duty,” Lewis-Williamson v. Grange Mut. Ins. Co., 179
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Or. App. 491, 494, 39 P.3d 947 (2002), in which defendant owes plaintiff a duty to exercise reasonable care “beyond the common-law duty to prevent foreseeable harm.” Conway v. Pacific Univ., 324 Or. 231, 239, 924 P.2d 818 (1996), overruled on other grounds, Navarette v. Nike, Inc. (D. Or. Jan. 26, 2007) (unpublished decision). Unless otherwise provided for by law, the “nature” of a relationship is a factual question determined on a case-by-case basis. Whether the relationship is one that gives rise to an enhanced duty is a legal question. LewisWilliamson, 179 Or. App. at 495. If there is no “special” relationship, then Fazzolari’s general principle of foreseeability is applied. Blachly v. Portland Police Dept., 135 Or. App. 109, 898 P.2d 784 (1995). Under that principle, defendant’s liability for harming plaintiff depends upon whether defendant created unreasonable risks of foreseeable harms to foreseeable plaintiffs. Allstate Ins. Co. v. Tenant Screening Svcs., Inc., 140 Or. App. 41, 914 P.2d 16 (1996). If plaintiff engages defendant to provide professional services, a general standard of care for professional conduct is at issue. Fessler v. Quinn, 143 Or. App. 397, 923 P.2d 1294 (1996). Thus, a heightened duty of care is imposed upon lawyers toward their clients and physicians toward their patients. Conway, supra, 324 Or. at 239. A physician’s duty of care to patient does not preclude liability to a third-party nonpatient. Zavalas v. Dept. of Corrections, 124 Or. App. 166, 172, 861 P.2d 1026 (1993) (rejecting defendant physician’s argument that Or. Rev. Stat. §677.095, which sets forth physician’s duty of care, limits that duty to patients). A medical professional may operate under a standard of care that includes a specific duty to guard against adverse psychological reactions to medical procedures. Curtis v. MRI Imaging Svcs. II, 327 Or. 9, 956 P.2d 960 (1998) (holding plaintiff stated valid claim for medical malpractice based upon alleged psychological injuries resulting from administration of magnetic resonance imaging “MRI” procedure). If there is a contract between a professional, such as an engineer or architect, and a client, and the contract incorporates the general standard of care to which the professional must adhere independent of the contract, the professional may be liable in tort. Conway, supra, 324 Or. at 239. Other special relationships requiring a heightened duty of care include agents, trustees, pledgees, shippers, bailors and liability insurers undertaking their duty to defend. Conway, supra, 324 Or. at 239; see Lewis---- For Current Listings access www.ambest.com/legal---Last Update August, 2008

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Williamson v. Grange Mut. Ins. Co., 179 Or. App. 491, 494, 39 P.3d 947 (2002) (noting that relationship giving rise to enhanced duty includes duty of agent to act with due care and in principal’s interest and stating: “Specifically, an insurance agent acting as an agent for the insured owes a general duty to exercise reasonable skill and care in providing the requested insurance”); see also Park v. Hoffard, 315 Or. 624, 847 P.2d 852 (1993) (landlord-tenant); Coulter Prop. Mgmt., Inc. v. James, 138 Or. App. 568, 910 P.2d 397 (1996), rev’d on other grounds, 328 Or. 164, 970 P.2d 209 (1998) (same); Dikeman v. Carla Properties, Ltd., 127 Or. App. 53, 871 P.2d 474 (1994) (same); Thompson v. Klimp, 101 Or. App. 127, 789 P.2d 696 (1990) (premises liability); cf. Sherwood v. Finck, 2000 WL 1862562, at 12-13 (D. Or. Dec. 20, 2000) (declining to extend the landlord-tenant special relationship to include relationship between landlord and prospective tenant). Restatement (Second) of Torts §315 states the general rule that a person has no duty to control a third person’s conduct. This nonliability limitation applies to all persons and does not arise out of any special relationship. Therefore, a defendant’s conduct is subject to the foreseeability test for negligence. Faverty v. McDonald’s Restaurants, 133 Or. App. 514, 892 P.2d 703 (1995); but see Washa v. Oregon Dep’t of Corrections, 159 Or. App. 207, 979 P.2d 273 (1999), aff’d, 335 Or. 403, 69 P.3d 1232 (2003) (criticizing Faverty). However, in arm’s length negotiations, economic losses resulting from negligent misrepresentation are not actionable, absent injury to person or property, even if the harm is foreseeable. Liability arises only if there is a legal source for defendant’s duty that falls outside the common law of negligence. Onita Pacific Corp. v. Trustees of Bronson, 315 Or. 149, 159, 843 P.2d 890 (1992), on remand, 122 Or. App. 452, 858 P.2d 453 (1993); Hale v. Groce, 304 Or. 281, 744 P.2d 1289 (1987); SFG Income Fund, LP v. May, 189 Or. App. 269, 274, 75 P.3d 470 (2003) (“In negligence actions seeking to recover for only economic harm, a plaintiff must establish a duty independent of the general obligation to prevent foreseeable harm.”) (citing Hale); Lewis-Williamson v. Grange Mut. Ins. Co., 179 Or. App. 491, 494, 39 P.3d 947 (2002) (same). Foreseeability of risk is a factual determination. Foreseeability does not depend upon predicting the actual sequence of events resulting in injury. If an injury falls into the general category of reasonably anticipated risks, the injury is considered foreseeable. Lamorie v. Warner Pacific College, 119 Or. App. 309, 850 P.2d 401 (1993). In a case involving negligent supervision, the trial court erred in granting summary judgment for defendant
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where there was evidence in the record from which a jury could find defendant did not ensure compliance with store’s security policy and that it was reasonably foreseeable under the facts that the harm that befell plaintiff would take place. Hoke v. The May Dept. Stores, Co., 133 Or. App. 410, 891 P.2d 686 (1995). In an auto accident case, in which defendant’s employee hit plaintiff’s vehicle causing injury, there was sufficient evidence to establish that defendant should have foreseen that working employee three shifts in 24 hours would create a foreseeable risk of harm to motorists like plaintiff. Faverty v. McDonald’s Restaurants, 133 Or. App. 514, 892 P.2d 703 (1995). Whether a court finds some particular risk of harm foreseeable may depend upon how the risk is described. A risk described in a general way is more likely to be considered foreseeable than a risk described in a more specific way. Dodge v. Darritt Const., Inc., 146 Or. App. 612, 934 P.2d 591 (1997). To survive motion to dismiss, plaintiff must allege that: 1) defendant’s conduct caused foreseeable risk of harm; 2) risk is an interest of the kind the law protects against negligent invasion; 3) defendant’s conduct is unreasonable in light of risk; 4) conduct cause of plaintiff’s harm; and 5) plaintiff within class of persons and plaintiff’s injury was within general type of potential injuries that made defendant’s conduct negligent. Solberg v. Johnson, 306 Or. 484, 760 P.2d 867 (1988); see Slogowski v. Lyness, 324 Or. 436, 927 P.2d 587 (1996). Age. Negligence of infants must be judged in light of knowledge, discretion, maturity and experience of child in each case as it arises. Thomas v. Inman, 282 Or. 279, 578 P.2d 399 (1978). Very young children are, as matter of law, incapable of negligence. Simpson v. Hillman, 163 Or. 357, 97 P.2d 527 (1940) (3 years of age). Issue submitted to jury where child was 5 years and 10 months old. Taylor v. Bergeron, 252 Or. 247, 449 P.2d 147 (1969). In auto accident case involving injuries to young child, victim’s youth was merely circumstance for jury to consider in determining quantum of care to be exercised by reasonably prudent person. Taylor v. Baughman, 38 Or. App. 179, 589 P.2d 1160 (1979). Exception: Minor held to adult standard of care when engaging in adult activity. Nielsen v. Brown, 232 Or. 426, 374 P.2d 896 (1962). Assumption of Risk. All uses of doctrine of implied assumption of risk are abolished. Or. Rev. Stat. §31.620(2) (formerly Or. Rev. Stat. §18.475(2)); Blair v. Mt. Hood Meadows Dev. Corp., 291 Or. 293, 630 P.2d 827, modified, 291 Or. 703, 634 P.2d 241 (1981); see
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generally “NEGLIGENCE; Defenses–Assumption of Risk.” Attractive Nuisance – See “Premises Liability,” infra. Comparative Negligence/Contributory Negligence. Contributory negligence does not bar recovery for damages for death, injury, or property damage if the fault attributable to the claimant is not greater than the combined fault of all tortfeasors, including third-party defendants and parties with whom the claimant has settled. Any damages allowed are reduced according to the percentage of fault attributable to the claimant. Or. Rev. Stat. §31.600(1). Comparative fault is defense to ordinary as well as gross negligence under Or. Rev. Stat. §18.470 (now §31.600). De Young v. Fallon, 104 Or. App. 66, 798 P.2d 1114 (1990). In enacting rule of comparative negligence, legislature did not do away with possibility of objective standard of behavior, and imposition of objective standard of duty does not offend comparative negligence doctrine. Nylander v. State, 51 Or. App. 413, 625 P.2d 1354 (1981), rev’d on other grounds, 292 Or. 254, 637 P.2d 1286 (1981). Comparative fault does not apply to, and thus does not reduce, a plaintiff’s recovery from a defendant whose liability is based on intentional or willful misconduct rather than negligence. Hampton Tree Farms, Inc. v. Jewett, 158 Or. App. 376, 974 P.2d 738 (1999). Other than persons who have settled with the plaintiff, plaintiff’s fault is not compared with persons who are immune from liability; who are not subject to the jurisdiction of the court; or who are not subject to the action because claim is barred by a statute of limitations or a statute of ultimate repose. Or. Rev. Stat. §31.600(2). Any party may request trier of fact to determine amount of damages or degree of fault of each defendant. Or. Rev. Stat. §31.605(1). In any action for damages arising out of bodily injury, death, or property damage, including claims for emotional injury or distress, loss of care, comfort, companionship and society, and loss of consortium, liability of each defendant is several, not joint. Or. Rev. Stat. §31.610(1). Upon motion not later than one year after final judgment or after appellate review, court “shall” determine whether any party’s share of the obligation is uncollectible; if court makes that determination, court must reallocate uncollectible share among the other parties. Or. Rev. Stat. §31.610(3). However, a party’s share of its obligation to claimant may not be increased by any reallocation if the claimant’s percentage of fault is equal
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to or greater than the party’s percentage of fault or the party’s percentage of fault is 25% or less. Or. Rev. Stat. §31.610(4). Damages. See generally “DAMAGES.” Duty. “Negligence” may refer to conduct that falls below statutory as well as common law standards of responsibility. Humbert v. Sellars, 300 Or. 113, 708 P.2d 344 (1985). Even though conduct is knowing, it may give rise to liability in negligence. Sipes v. Sipes, 147 Or. App. 462, 936 P.2d 1027 (1997). Generally, one owes duty of reasonable care to every person. Kirby v. Sonville, 286 Or. 339, 594 P.2d 818 (1979). Person is generally held to higher standard of care when he affirmatively acts than when he fails to act at all. Brennen v. City of Eugene, 285 Or. 401, 591 P.2d 719 (1979). Negligence can be based on duty voluntarily assumed. Once someone has chosen to act on another’s behalf, they must act with reasonable care with respect to aid or advice given. McDonald v. Title Ins. of Oregon, 49 Or. App. 1055, 621 P.2d 654 (1980); Slogowski v. Lyness, 324 Or. 436, 927 P.2d 587 (1996). When parties to tort action are also parties to contract, there must be some source of legal obligation, other than the duties set out in the contract and arising from general contract law, before a tort action will lie. Computerized Design v. GenRad, Inc., 84 Or. App. 189, 733 P.2d 485 (1987). Although insureds claimed that parties were engaged in relationship of fiduciary nature, existence of duty, for purposes of cause of action in negligence against title insurer, could not be based upon insurer’s role as escrow agent in insureds’ purchase of new home because “escrow holder,” by definition, is neutral party with no obligation to either party to transaction except to carry out terms of escrow instructions. McDonald v. Title Ins. Co. of Oregon, 49 Or. App. 1055, 621 P.2d 654 (1980). Felonious Actions. It is a complete defense in action for personal injury or wrongful death that (a) person damaged was engaged in conduct at the time of injury or death that would constitute aggravated murder or Class A or Class B felony; and (b) felonious conduct was a “substantial factor” contributing to the injury or death. Or. Rev. Stat. §31.180(2). This defense is not available if the injury or death resulted from the use of a spring gun or similar device. Or. Rev. Stat. §31.180(4). Governmental Immunity. For a public official or entity to have absolute immunity for acts performed under a court order, the order or directive must be a permissible exercise of judicial authority and acts must

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comply with the court order or directive. Fay v. City of Portland, 311 Or. 68, 804 P.2d 1155 (1991). Or. Rev. Stat. §30.265(3)(c) provides, in part: “Every public body and its officers, employees and agents acting with the scope of their employment or duties…are immune from liability for…(c) Any claim based upon the performance of or the failure to exercise or perform a discretionary function or duty, whether or not the discretion is abused.” Where principal had discretion to determine number and allocation of school security personnel, public body discretionary immunity doctrine applied to bar claim against school district for negligent supervision of students. Mosley v. Portland Sch. Dist., 315 Or. 85, 843 P.2d 415 (1992). County officials who selected final design for refuse transfer station, even if decision was flawed, were not liable for injuries suffered by business invitee because officials’ actions were protected by discretionary function immunity under Or. Rev. Stat. §30.265(3)(c). Garrison v. Deschutes County, 334 Or. 264, 276, 48 P.3d 807 (2002). Imputed Negligence. See “AUTOMOBILES, Imputed Negligence/Joint Enterprise.” Liquor Liability/Dram Shop Act. Innkeeper may be liable for loss of guest’s property due to theft by third person if innkeeper’s conduct creates unreasonable risk of harm or loss. Kutbi v. Thunderlion Enterprises, 73 Or. App. 458, 698 P.2d 1044 (1985). Under Or. Rev. Stat. §699.010 (Limitation on Innkeeper or Hotelkeeper Liability for Valuables), innkeeper is liable without limitation for loss of “any property” of a guest that is due to theft by or negligence of innkeeper or his servants, whether or not property has been accepted by innkeeper for safekeeping. Id. Innkeeper’s liability does not extend to adjacent property. Beauregard v. Barrett, 92 Or. App. 707, 759 P.2d 337 (1988). Or. Rev. Stat. §471.565 provides that licensees, permittees, and social hosts are not liable for damages caused by intoxicated patron or guest unless plaintiff can prove by clear and convincing evidence that licensee, permittee, or social host served alcoholic beverages to patron or guest while patron or guest was “visibly intoxicated,” Or. Rev. Stat. §471.565(2)(a), and plaintiff did not “substantially contribute” to intoxication of patron or guest. Or. Rev. Stat. §471.565(2)(b). Generally, a plaintiff may bring any action against a licensee, permittee, or social host for damages caused by intoxicated patrons or guests off the premises only if plaintiff has provided proper statutory notice. Or. Rev. Stat. §471.565(3). A person is a “social host” under Or. Rev. Stat. §471.565 when that person receives guests in a social or

commercial setting in which host serves or directs the serving of alcohol to guests. Solberg v. Johnson, 306 Or. 484, 760 P.2d 867 (1988) (social host buying drinks for person visibly intoxicated). Oregon Rev. Stat. §471.565 imposes liability for service to patrons who are visibly intoxicated not only by alcohol, but by other controlled substances. Blunt v. Bocci, 74 Or. App. 697, 704 P.2d 534 (1985). The purpose of Or. Rev. Stat. §471.565 is to protect persons injured by drunk motorist. Therefore, the statute does not impose statutory liability on a tavern owner in favor of person who is assaulted off the tavern premises by tavern patron who was served alcohol while visibly intoxicated. Gattman v. Favro, 306 Or. 11, 757 P.2d 402 (1988) (plaintiff stabbed by intoxicated person); see also Moore v. Willis, 307 Or. 254, 767 P.2d 62 (1988) (no statutory liability under Or. Rev. Stat. §471.565 where cab driver, who picked up inebriated persons from tavern, was shot to death by persons who were served alcohol when visibly intoxicated). Nor does it impose statutory liability on an alcohol provider in favor of the visibility intoxicated patron or one who encouraged the patron to drink. Plattner v. VIP’s Industries, Inc., 95 Or. App. 351, 768 P.2d 440 (1989). Where statutory liability under Or. Rev. Stat. §471.565 is not available, plaintiff may have a claim for common law negligence. Moore v. Willis, 307 Or. 254, 767 P.2d 62 (1988). To state a claim for negligence, complaint must include allegations from which trier of fact could determine that defendant’s conduct caused foreseeable risk of harm. Id. Plaintiff must prove foreseeability as a matter of fact. Chartrand v. Coos Bay Tavern, Inc., 298 Or. 689, 696 P.2d 513 (1985). To survive defendants’ motion for summary judgment, plaintiff must present evidence of foreseeability, i.e., that defendants knew or should have known that serving alcohol to minor would create an unreasonable risk that minor would be come violent. Sparks v. Warren, 122 Or. App. 136, 856 P.2d 337 (1993). The fact that one is visibly intoxicated or underage does not make it foreseeable that serving alcohol to person creates an unreasonable risk that the person will become violent. Moore v. Willis, 307 Or. 254, 767 P.2d 62 (1988). Joint and Several Liability. See “LIABILITY INSURANCE, Contribution among Joint Tortfeasors.” Last Clear Chance. Oregon has abolished doctrines of last clear chance and implied assumption of risk. Or. Rev. Stat. §31.620.

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Negligence Per Se. Negligence per se based upon a statutory standard is not the same as negligence based upon foreseeability of harm. Scovill v. City of Astoria, 324 Or. 159, 921 P.2d 1312 (1996). To state a claim for negligence per se, plaintiff must allege: 1) defendant violated a statute that directly regulates defendant’s conduct; 2) plaintiff was injured as a result of the violation; 3) plaintiff was a member of the protected class; and 4) the injury was the type the statute was intended to prevent. McAlpine v. Multnomah County, 131 Or. App. 136, 883 P.2d 869 (1994); Hagan v. Gemstate Mfg., Inc., 148 Or. App. 192, 200, 939 P.2d 141 (1997), aff’d, 328 Or. 535, 982 P.2d 1108 (1999); see Shatout v. Emco Garbage Co., 298 Or. 598, 601, 695 P.2d 897 (1985) (where plaintiff invokes governmental rule in support of theory that defendant did not meet an applicable standard of due care under the circumstances, “the question is whether the rule, though it was not itself meant to create a civil claim, nevertheless so fixes the legal standard of conduct that there is no question of due care left for a fact finder to determine; in other words, that noncompliance with the rule is negligence as a matter of law”). Negligence per se also applies to violation of an administrative regulation so long as the regulation supports a private right of action under the four-part test in McAlpine v. Multnomah County, supra, and the terms of the regulation permitting imposition of private liability are not ultra vires. Ettinger v. Denny Chancler Equip. Co., Inc., 139 Or. App. 103, 910 P.2d 420 (1996); see, e.g., George v. Myers, 169 Or. App. 472, 478, 10 P.3d 265 (2000) (applying four-part McAlpine test to case involving violation of Oregon Safe Employment Act regulation). The meaning of the statute or rule allegedly violated by defendant is a question of law, on which the court instructs the jury. James v. Carnation Co., 278 Or. 65, 562 P.2d 1192 (1977). Violation of motor vehicle statutes relating to rules of road constitutes negligence as matter of law. Stanfield v. Laccoarce, 284 Or. 651, 588 P.2d 1271 (1978). Negligence per se is based upon negligence and is not the same as a “statutory tort.” Plaintiff can plead violation of a statute or rule as a fact to establish negligence per se, whether or not the statute or rule provides for damage claims. Plaintiff can use the statute or rule to establish the proper standard of care and to show that defendant met or failed to meet the applicable standard. Bellikka v. Green, 306 Or. 630, 762 P.2d 997 (1988). On the other hand, a statutory tort arises from a legal right created by the particular statute; the issue of foreseeability is not material or has already been incorCopyright © 2009 by A.M. Best Company, Inc.

porated into the statute. Harris v. Sanders, 142 Or. App. 126, 919 P.2d 512 (1996). The court recognizes a statutory tort by reasonably weighing the protective purpose set forth in the legislation at issue. The determination of the existence of a statutory tort is an objective factual determination. Scoville v. City of Astoria, 324 Or. 159, 921 P.2d 1312 (1996). To establish a statutory tort, plaintiff must show that his or her injury resulted from a statutory violation and that plaintiff was a member of the protected class. Harris, 142 Or. App. 126; see, e.g., Or. Rev. Stat. §471.565 (imposing liability on server of alcohol if plaintiff can prove by clear and convincing evidence that patron or guest was served alcohol while “visibly intoxicated”). Violation of motor vehicle operations statute creates disputable presumption of negligence which may be rebutted by showing that actor, in violating statute, was acting reasonably. Barnum v. Williams, 264 Or. 71, 504 P.2d 122 (1972). Parent and Child. Parent liable for intentional or reckless torts of unemancipated child to maximum of $7,500. Or. Rev. Stat. §30.765(1)-(2). Or. Rev. Stat. §30.765 does not apply to foster parents. Or. Rev. Stat. §30.765(4). General parental immunity abolished in Oregon. Winn v. Gilroy, 296 Or. 718, 681 P.2d 776 (1984). In action for death of minor, who left both parents surviving as her sole heirs, brought for benefit of estate by personal representative (Or. Rev. Stat. §30.020), negligence of one of parents, who was plaintiff in action, would not bar recovery. Oviatt v. Camarra, 210 Or. 445, 311 P.2d 746 (1957). Premises Liability. Trespasser is person who enters or remains on premises in another’s possession without possessor’s consent. Generally possessor is not liable for injuries to trespassers caused by possessor’s failure to exercise reasonable care to put his premises in a safe condition. Rich v. Tite-Knot Pine Mill, 245 Or. 185, 421 P.2d 370 (1966). Licensee is person who comes on premises for licensee’s own purposes, but with possessor’s consent. Id. A social guest in the home of another is a licensee. Fleck v. Nickerson, 239 Or. 641, 399 P.2d 353 (1965). Premises Liability – Activities on the Land. Possessor has duty to exercise reasonable care for protection of licensee. Ragnone, supra;. see, e.g., Mounts v. Knodel, 83 Or. App. 90, 730 P.2d 594 (1986) (holding that, where plaintiff was not injured by conditions of land, but while engaged in activity of riding a horse on the land, jury could have found defendant failed to exercise reasonable care in maintaining horse’s saddle and therefore could be held liable for plaintiff’s injuries). The duty of a possessor of land to make the premises reasonably safe
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applies to licensees as well as invitees if the dangerous condition is created by the possessor of the land. Nelsen v. Nelsen, 174 Or. App. 252, 23 P.3d 424 (2001). Invitee is person who comes on premises on business that concerns the possessor. Rich, 245 Or. 185; See Parker v. Hult Lumber and Plywood Co., 260 Or. 1, 8, 488 P.2d 454 (1971) (holding that Oregon generally determines whether a person is an invitee under “economic benefit” theory, but noting that another test to determine invitee is the “invitation” test). An invitee has the possessor’s invitation, either express or implied. The possessor has a duty to warn of latent dangers and an affirmative duty to protect invitee against dangers of premises that possessor knows or should have known about by exercise of reasonable care. Rich, 245 Or. 185. Generally, the possessor has no obligation to protect the invitee from dangers known to the invitee; the expectation is that the invitee will take care of himself and reasonable care requires no more than a warning. However, where the possessor anticipates an unreasonable risk of harm, for example, icy steps, notwithstanding the invitee’s knowledge or the possessor’s warning, the possessor must take “reasonable and feasible” steps to fix the problem. Wilk v. Georges, 267 Or. 19, 26, 514 P.2d 877 (1973). To recover from occupant having control of the property, invitee who is injured by slipping on a piece of lettuce on grocery store’s floor must show: 1) that occupant placed lettuce on floor; 2) that occupant knew lettuce was on floor and did not use “reasonable diligence” to remove lettuce; or 3) lettuce had been on floor so long that occupant, in exercise of “reasonable diligence” should have discovered and removed lettuce. Swisher v. Albertson’s, Inc., 186 Or. App. 734, 737-38, 64 P.3d 1212 (2003). Invitee himself is subject is same standard of care as possessor. Standard is what a reasonable person of ordinary prudence would, or would not do, in the same or similar circumstances; invitee must use reasonable care to avoid harm that he knows about or that he should know about. Invitee’s conduct is therefore subject to a comparative fault analysis under Or. Rev. Stat. §31.600. Woolston v. Wells, 297 Or. 548, 687 P.2d 144 (1984). Invitee who leaves premises covered by invitation ceases to be invitee, unless person acted with reasonable belief that he had not left area covered by invitation. Whether person had reasonable belief that he was on premises to which he was invited is question of fact. Blair v. Mt. Hood Meadows Dev. Corp., 48 Or. App. 109, 616 P.2d 535 (1980), rev’d on other grounds, 201 Or. 203, 630 P.2d 827, reh’g denied and opinion modified, 291 Or. 703, 634 P.2d 241 (1981).

Person who comes on another’s premises may be a licensee or invitee for one purpose or for part of the premises and not for another. Rich, supra. Licensee’s or invitee’s status may change to that of trespasser if person exceeds bounds of his invitation. Dutton v. Donald M. Drake Co., 237 Or. 419, 391 P.2d 761 (1964). Premises Liability – Conditions of the Land. Possessor is liable for injuries to licensee resulting from possessor’s willful or wanton act or gross negligence that is equivalent to willfulness or wantonness. Ragnone v. Portland School Dist. No. 1J, 291 Or. 617, 633 P.2d 1287 (1981). However, although possessor owes no duty to put his premises in a safe condition, possessor is obligated to disclose any concealed, dangerous conditions of the premises which he knows about that might cause injury to the licensee, notwithstanding use of reasonable care by the licensee. Rich, supra; Ragnone, supra. Licensee must take his chances with respect to any defective condition unknown to the possessor. Fleck, supra. Premises Liability – Landlord, Tenant. Tenant’s actual or constructive knowledge of dangerous condition does not determine, as a matter of law, nature or extent of landlord’s obligations to the tenant. However, evidence of tenant’s actual or constructive knowledge is relevant in determining and comparing fault in a tenant’s negligence action against landlord. Coulter Property Management, Inc. v. James, 328 Or. 164, 970 P.2d 209 (1998), on remand, 160 Or. App. 390, 981 P.2d 395 (1999). Proper basis for determining landowner’s liability for injuries caused by defects in property and suffered by visitors who are on the property at invitation of tenant is whether nature of defect might be such that landlord would reasonably expect that tenant would take steps to remedy the defect or otherwise safeguard persons entering leased premises at tenant’s invitation. Bellikka v. Green, 306 Or. 630, 762 P.2d 997 (1988). Premises Liability – Pedestrians. Property owner has no common law duty to pedestrians to keep public sidewalk free of ice, snow; ordinance requiring property owner to keep sidewalk clear of ice, snow and imposing penalty for failure to do so does not impose civil liability on property owner in favor of third parties. Fitzwater v. Sunset Empire Inc., 263 Or. 276, 502 P.2d 214 (1972). This holding does not apply where local ordinance specifically imposes liability. Premises Liability – Private Lands. Liability of certain landowners whose land is used by public for recreational purposes or woodcutting is limited. Or. Rev. Stat. §§105.672-.696. Or. Rev. Stat. §105.682(1) provides that a private landowner is not liable in contract or tort for injury,

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death, or property damage where “the owner of land either directly or indirectly permits any person to use the land for recreational purposes, woodcutting or the harvest of special forest products.” Or. Rev. Stat. §105.682 applies only where private landowners grant permission to a person as a member of the public generally, not as a specific invitee. Or. Rev. Stat. §105.682 requires only that the injury “arise out of the use of the land”; the land itself does not have to be the “mechanism” of the injury. Conant v. Stroup, 183 Or. App. 270, 276, 281-82, 51 P.3d 1263 (2002), rev. allowed, 335 Or. 195, 64 P.3d 576, rev. dismissed as improvidently granted, 336 Or. 126, 81 P.3d 709 (2003) (holding that owners of private land on which plaintiff was bitten by a dog were immune from liability for negligence under Or. Rev. Stat. §105.682). Premises Liability – Trespassing Children. Landowner’s obligation to a trespasser is a matter of “status.” Therefore, a landowner’s liability is not governed by the foreseeability principles in Fazzolari v. Portland Sch. Dist. No. 1J, 303 Or. 1, 734 P.2d 1326 (1987). If injured plaintiff meets requirements of attractive nuisance doctrine, duty owed him by property owner is that of reasonable care. Loney v. McPhillips, 268 Or. 378, 521 P.2d 340 (1974); Baker v. Lane County, 28 Or. App. 53, 558 P.2d 1247 (1977), appeal after remand, 37 Or. App. 87, 586 P.2d 114 (1978). Under attractive nuisance doctrine, possessor of land or chattel liable for physical harm to trespassing children for harm caused by a condition of land or chattel if: 1) place where conditions exists is one possessor knows or has reason to know that children are likely to trespass; 2) condition is one possessor knows or has reason to know about and which possessor realizes or should realize will involve unreasonable risk of death or serious bodily harm to such children; 3) children, because of their “youth” do not discover condition or realize risk involved in intermeddling in it or coming within area made dangerous by it; 4) utility of maintaining the condition and burden of eliminating the danger are slight when compared with risk to children involved; and 5) possessor fails to exercise reasonable care to eliminate danger or otherwise protect the children. Legg By and Through Legg v. Blanchfield, 116 Or. App. 408, 410, 841 P.2d 662 (1992) (citations omitted). Attractive Nuisance – Doctrine Applied. Burroughs v. Pac. Tel. & Tel. Co., 109 Or. 404, 220 P. 152 (1923) (pile of telephone poles, not on defendant’s property); Wheeler v. St. Helens, 153 Or. 610, 58 P.2d 501 (1936) (quarry). Attractive Nuisance – Doctrine Not Applied. Slattery v. Drake, 130 Or. 693, 281 P. 846 (1929) (pile

of bridge timbers); Wright v. Portland Traction Co., 157 Or. 346, 71 P.2d 797 (1937) (rear steps of street-car). Oregon has adopted the rule stated in Restatement of Torts §339 regarding liability of landowners to trespassing children; however, in Loney v. McPhillips, 268 Or. 378, 521 P.2d 340 (1974), court held that Restatement rule does not apply to natural conditions on land. It applies only to artificial conditions, despite some dicta to contrary in Pocholec v. Guistina, 224 Or. 245, 355 P.2d 1104 (1960). Infancy does not immunize one from being trespasser. State v. Johnson, 52 Or. App. 651, 628 P.2d 789 (1981). Proximate Causation. Oregon has replaced the term “proximate cause” in favor of the term “foreseeability.” Fazzolari v. Portland Sch. Dist. No. 1J, 303 Or. 1, 734 P.2d 1326 (1987). However, there still must be proof that plaintiff’s harm resulted from defendant’s negligent conduct. Buchler v. Oregon Corrections Div., 316 Or. 499, 853 P.2d 798 (1993). Res Ipsa Loquitur. Res ipsa loquitur applies where: 1) accident is of kind that does not ordinarily occur in absence of someone else’s negligence; 2) accident caused by agency or instrumentality in “exclusive control” of defendant; and 3) accident not due to any voluntary action or contribution by plaintiff. St. Paul Fire & Marine Ins. Co. v. Watkins, 261 Or. 473, 495 P.2d 265 (1972). Res ipsa loquitur not available to prove gross negligence or recklessness. Burghardt v. Olson, 223 Or. 155, 349 P.2d 792, opinion adhered to on reh’g, 223 Or. 155, 354 P.2d 871 (1960); see generally Denny v. Warren, 239 Or. 401, 398 P.2d 123 (1964). Whether res ipsa loquitur applies is matter of law to be determined by the court. Fieux v. Cardiovascular & Thoracic Clinic, P.C., 159 Or. App. 637, 640, 978 P.2d 429 (1999). Where automobile runs off road and there is no evidence to show cause of accident, res ipsa loquitur applies. Kaufman v. Fisher, 230 Or. 626, 371 P.2d 948 (1962). In cases other than carrier-passenger, doctrine gives rise only to permissible inference of negligence and no instruction to jury on presumption is warranted. Ritchie v. Thomas, 190 Or. 95, 224 P.2d 543 (1950). In medical malpractice case, where it was shown that instrumentality causing injury was not within “exclusive control” of defendants, res ipsa loquitur would not be applicable. May v. Broun, 261 Or. 28, 492 P.2d 776 (1972); see generally Gow v. Multnomah Hotel,
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Inc., 191 Or. 45, 224 P.2d 552 (1950), as amended, 191 Or. 45, 228 P.2d 791 (1951) (discussing “exclusive control” requirement). Statute of Limitations. See Or. Rev. Stat. §12.110(1) (two-year statute of limitations for negligence). Cause of action for negligence does not accrue and limitations period does not begin to run until negligence causes harm and resulting damages to plaintiff. Bollam v. Fireman’s Fund Ins., 302 Or. 343, 730 P.2d 542 (1986). Statute of ultimate repose for negligence actions. See Or. Rev. Stat. §12.115(1) (10 years). Or. Rev. Stat. §12.115(1) not subject to statute governing effect of notice of advance payment on running of applicable limitations period, Or. Rev. Stat. §12.155. Or. Rev. Stat. §12.115(1) controls, “regardless of the circumstances.” Davis v. Blanchard, 84 Or. App. 99, 102, 733 P.2d 460 (1987). Subsequent Injury. The doctrine that the original tortfeasor’s liability extends to subsequent injuries to the victim caused by a physician does not extend to injuries gratuitously caused by the physician that are not related to care of the original injury. Martin v. Bohrer, 84 Or. App. 7, 733 P.2d 68 (1987), aff’d, 307 Or. 144, 764 P.2d 550 (1988). Owner who negligently leaves ignition key in automobile may be liable to third party injured by negligent thief. Mezyk v. National Repossessions, Inc., 241 Or. 333, 405 P.2d 840 (1965). Sudden Emergency. As condition for application of emergency doctrine, party claiming its benefits must have been free from negligence; party cannot invoke doctrine if emergency created by party’s own negligence. Bowden v. Texas Pac. Lumber Co., 42 Or. App. 711, 601 P.2d 841 (1979). Sudden Emergency – Rescue Doctrine. Rescue Doctrine operates like emergency doctrine in that it simply applies reasonable and prudent person standard to particular set of circumstances; question is whether reasonably prudent person would have acted similarly under same or similar circumstances. Calvert v. Ourum, 40 Or. App. 511, 595 P.2d 1264 (1979). NO-FAULT INSURANCE See “AUTOMOBILES, No-Fault.” PENALTY AND ATTORNEY FEES FOR FAILURE TO PAY POLICY BENEFITS See “ATTORNEYS, Fees.”

PRIVILEGED COMMUNICATIONS Attorney/Client. A client has a privilege to refuse to disclose and to prevent any other person from disclosing confidential communications made in aid of obtaining professional legal services. Or. Rev. Stat. §40.225 (Or. Evid. Code Rule 503). The privilege belongs to the client. Bergsvik v. Bergsvik, 205 Or. 670, 291 P.2d 724 (1955). Only confidential communications are privileged. Whether the communication is confidential depends upon the intent of the client. State v. Ogle, 297 Or. 84, 682 P.2d 267 (1984). Communications made in public, meant to be relayed to outsiders, or which are divulged to third persons by the client or by the lawyer at the direction of the client are not considered confidential. United States v. Gann, 732 F.2d 714 (9th Cir. 1984). A client’s written communication to a lawyer is subject to the lawyer-client privilege. However, tangible objects or assets left with the lawyer are not communications and do not fall within the scope of the privilege. State ex rel. Hardy v. Gleason, 19 Or. 159, 23 P. 817 (1890). The lawyer-client privilege presupposes the existence of the lawyer-client relationship and does not attach to its creation or existence. State v. Bilton, 36 Or. App. 513, 585 P.2d 50 (1978). Work-product doctrine related to attorney-client privilege. The immunity created by the doctrine allows the lawyer to avoid discovery of records of interviews, statements, memoranda, correspondence, briefs, mental impressions, and other similar data prepared by the lawyer to further a client’s interest in pending litigation. The immunity afforded the work-product doctrine is qualified protection, unlike the lawyer-client privilege, because the shield may be overcome by a showing of “substantial need” and hardship. Or. R. Civ. P. 36B(3). Clergy/Penitent. A member of the clergy acting in the member’s “professional character” shall not be examined regarding confidential communications without the consent of the person making the communication. Or. Rev. Stat. §40.260(2) (Or. Evid. Code Rule 506). The state of mind of the penitent, not the clergy member, determines whether the clergy member was acting in a professional capacity as a member of the clergy when the communication was made. State v. Cox, 87 Or. App. 443, 742 P.2d 694 (1987). Doctor/Patient. In a civil action, patient has a privilege to refuse to disclose and to prevent any other person from disclosing confidential communications made for the purpose of diagnosis or treatment. Or. Rev. Stat. §40.235(2) (Or. Evid. Code Rule 504-1). The privilege created by this section cannot be claimed by members of the patient’s family unless they are serving as the patient’s guardian, conservator, or personal representative. Or. Rev. Stat. §40.235(3)(a)-(c); Doe v. Portland Health
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Centers, Inc., 99 Or. App. 423, 782 P.2d 446 (1989); see also Or. Rev. Stat. §40.230 (Or. Evid. Code Rule 504) (Psychotherapist/Patient privilege); Or. Rev. Stat. §40.240 (Or. Evid. Code Rule 504-2) (Nurse/Patient Privilege); Or. Rev. Stat. §40.250 (Or. Evid. Code Rule 504-4) (Clinical Social Worker/Client Privilege); Or. Rev. Stat. §40.262 (Or. Evid. Code Rule 507) (Counselor/Client Privilege). Insurer/Insured. There is no statutory privilege between insurer and insured related to confidential communications. Spousal. In any civil or criminal action, spouse has privilege to refuse to disclose, and to prevent other spouse from disclosing, any confidential communication made by one spouse to the other during the marriage. Or. Rev. Stat. §40.255(2) (Or. Evid. Code Rule 505). In any criminal proceeding, neither spouse, during the marriage, shall be examined adversely against the other as to any other matter occurring during the marriage unless spouse called as a witness consents to testify. Or. Rev. Stat. §40.255(3). However, there is no spousal privilege: 1) in criminal actions in which one spouse is charged with a.) bigamy; b.) with offenses against the other spouse or c.) the children of either spouse; or with an offense against the person or property of a third person committed in the course of committing or attempting to commit an offense against the other spouse 2) with respect to matters occurring prior to the marriage; or 3) in any civil action where the spouses are adverse. Or. Rev. Stat. §40.255(4). Waiver. Holder of privilege against disclosure of confidential communications waives the privilege if holder voluntarily discloses or consents to disclosure of any significant part of the matter or communication. Or. Rev. Stat. §40.280 (Or. Evid. Code Rule 511). Where disclosure is compelled erroneously or made without opportunity to claim the privilege, disclosed statement or matter not admissible against holder of privilege. Or. Rev. Stat. §40.285 (Or. Evid. Code Rule 512). A waiver is “the voluntary relinquishment of a known right.” Alderman v. Davidson, 326 Or. 508, 513, 954 P.2d 779, on remand, 156 Or. App. 478, 965 P.2d 1063 (1998). Absent contrary evidence, lawyer who voluntarily discloses confidential information during discovery has waived lawyer-client privilege. There is an inference that disclosure during discovery is done with client’s consent. Contrary evidence: inadvertent disclosure; prompt attempts to remedy disclosure; and whether presentation of privilege will be unfair to opponent. No general legal requirement that client have specifically consented to release of a particular document for waiver of attorneyclient privilege to be established. Goldsborough v. Eagle

Crest Partners, Ltd., 314 Or. 336, 342-43, 838 P.2d 1069 (1992). NOTE: In addition, see Or. Rev. Stat. §40.245 (Or. Evid. Code Rule 504-3) (School Employee/Student Privilege); Or. Rev. Stat. §40.265 (Or. Evid. Code Rule 508a) (Stenographer/Employer Privilege); Or. Rev. Stat. §40.270 (Or. Evid. Code Rule 509) (Public Officer Privilege); Or. Rev. Stat. §40.272 (Or. Evid. Code Rule 509-1) (Person with a Disability / Sign Language Interpreter Privilege); Or. Rev. Stat. §40.273 (Or. Evid. Code Rule 509-2) (Non-English Speaking Person/Interpreter Privilege); Or. Rev. Stat. §40.275 (Or. Evid. Code Rule 510) (Government/Identity-of-Informer Privilege). PRODUCT LIABILITY Action for Product Liability. Applicable Statutory Provisions. Or. Rev. Stat. §§30.900-.920. A “product liability civil action” is a “civil action brought against a manufacturer, distributor, seller or lessor of a product for damages for personal injury, death or property damage arising out of: 1) any design, inspection, testing, manufacturing or other defect in a product; 2) any failure to warn regarding a product; or 3) Any failure to properly instruct in the use of a product.” Or. Rev. Stat. §30.900. Action for Product Liability – Meaning of “Product.” Or. Rev. Stat. §30.920 imposes liability on “[o]ne who sells…any product in defective condition unreasonably dangerous to others.” Or. Rev. Stat. §30.920(1). Whether something is a “product” under the statute is a question of law. Restatement (Second) of Torts §402A and Comments a-m govern the interpretation of Or. Rev. Stat. §30.920(1), (2). By its terms, Section 402A focuses on “goods.” In Association of Unit Owners of Bridgeview Condominiums v. Dunning, 187 Or. App. 595, 617, 69 P.3d 788 (2003), the court held that a condominium complex consisting of two buildings that were constructed on the site were neither chattels nor goods and therefore were not “products” within the meaning of Or. Rev. Stat. §30.920. Action for Product Liability – Theories of Recovery. Product liability action generally based upon theories of strict liability in tort and/or negligence. Marinelli v. Ford Motor Co., 72 Or. App. 268, 273, 696 P.2d 1 (1985) (court’s emphasis); see also Bancorp Leasing & Financial Corp. v. Agusta Aviation Corp., 813 F.2d 272, 276 (9th Cir. 1987) (Oregon law) (product liability claims may include strict liability, negligence, breach of warranty, fraudulent misrepresentations, and wanton and willful misconduct). Action for Product Liability – Theories of Recovery – Strict Liability. Under Or. Rev. Stat. §30.920(1),
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“[o]ne who sells or leases any product in a defective condition unreasonably dangerous to the user or consumer or to the property of the user or consumer is subject to liability for physical harm or damage to property caused by that condition, if: (a) The seller or lessor is engaged in the business of selling or leasing such a product; and (b) The product is expected to and does reach the user or consumer without substantial change in the condition in which it is sold or leased.” To recover under Or. Rev. Stat. §30.920(1), plaintiff must establish 1) that the product was defective; and 2) that the defect was of a kind rendering the product “unreasonably dangerous” to persons or property. For purposes of the statute, a product may be unreasonably dangerous to either persons or property. A product is unreasonably dangerous only if its poses a risk to other property. However, a product is not unreasonably dangerous to other property if it causes only a decrease in the property’s value or an economic loss to the user. “[M]ere economic loss unaccompanied by physical injury to property will not suffice for a product liability claim but physical destruction of, or perhaps other significant physical injury to, the property will.” Russell v. Deere & Co., 186 Or. App. 78, 84, 61 P.3d 955 (2003) (footnote omitted). Strict Liability – Design Defect Cases. Under Or. Rev. Stat. §30.920(1), consumer expectations test is standard for determining strict product liability in design defect cases. To establish that product was in “defective condition unreasonably dangerous to the user or consumer,” plaintiff must prove that: 1) at time product leaves seller’s hands, it is “‘in a condition not contemplated by the ultimate consumer, which will be unreasonably dangerous to him’”; and 2) product is dangerous “‘to an extent beyond that which would be contemplated by the ordinary consumer who purchases it, with the ordinary knowledge common to the community as to its characteristics.’” McCathern v. Toyota Motor Corp., 332 Or. 59, 77, 23 P.3d 320 (2001) (quoting Restatement (Second) of Torts, §402A, Comments g and i). In some cases, it may be within the jurors’ common experience as to how a product should perform under particular circumstances. However, where the product or circumstances are not within the jurors’ common experience or knowledge, a plaintiff must provide additional evidence on the issue of consumer expectations. Such evidence may include a risk-utility analysis or advertising and promotional materials. “The relevant question is not what consumers should expect or how a product should perform; rather, the jury is to determine ‘the basically factual question of what reasonable consumers do expect from the product.’” Benjamin v. Wal-Mart Stores,

Inc., 185 Or. App. 444, 461, 61 P.3d 257 (2002) (court’s emphasis) (citation omitted). Whether product is dangerous to an extent beyond that which would be contemplated by the ordinary consumer is a question of fact for the jury. However, trial court must ensure evidence is sufficient for jury to be able to make informed decision about what ordinary consumers expect. McCathern, supra, 332 Or. at 77-78. Strict Liability – Failure-to-Warn Cases. Comment h of Restatement (Second) of Torts §402A governs failure-to-warn claims sounding in strict liability. See Or. Rev. Stat. §30.920(3). Comment h provides: “A product is not in a defective condition when it is safe for normal handling…If the injury results from abnormal handling…the seller is not liable. Where, however, [the seller] has reason to anticipate that danger may result from a particular use,…he may be required to give adequate warning of the danger…and a product sold without such a warning is in a defective condition.” Action for Product Liability – Theories of Recovery – Negligence. Failure-to-Warn Cases. In failure-to-warn cases, a defendant may be liable if the defendant can reasonably foresee that there is an unreasonable risk of harm, that a reasonable defendant would warn of the risk, and that the defendant had reasonable chance to warn of risk but failed to do so to plaintiff’s detriment. Fuhrer v. Gearhart By The Sea, Inc., 306 Or. 434, 760 P.2d 874 (1988); Fields v. Jantec, Inc., 115 Or. App. 350, 839 P.2d 723 (1992), rev’d on other grounds, 317 Or. 432, 857 P.2d 95 (1993). Foreseeability standard for negligence set out in Fazzolari v. Portland School Dist. No. 1J, 303 Or. 1, 17, 734 P.2d 1326 (1987) does not govern the liability of a product supplier. Section 388 of Restatement (Second) of Torts sets the applicable standard of care. Hoyt v. Vitek, 134 Or. App. 271, 894 P.2d 1225 (1995). Section 388 provides, in pertinent part: “One who supplies…a chattel for another to use is subject to liability…for physical harm caused by the use of the chattel in the manner for which and by a person for whose use it is supplied, if the supplier (a) knows or has reason to know that the chattel is or is likely to be dangerous for the use for which it is supplied, and (c) fails to exercise reasonable care to inform them of its dangerous condition or of the facts which make it likely to be dangerous.” A seller is negligent if it fails to warn of dangerous propensities about which it knows or should know. Hoyt v. Vitek, 134 Or. App. 271, 894 P.2d 1225 (1995). A warning that eliminates or satisfactorily reduces the risks involved in a product’s use satisfies a manufacturer’s or supplier’s duty to warn. Anderson v. Klix Chemical Co., 256 Or. 199, 472 P.2d 806, 810 (1970),
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overruled on other grounds, Phillips v. Kimwood Machine Co., 269 Or. 485, 525 P.2d 1033, 1039 (1974); see Burns v. General Motors Corp., 133 Or. App. 555, 891 P.2d 1354 (1995). For a warning to be adequate, it must be in such form that it can reasonably be expected to catch the attention of a reasonably prudent person, and the content of the warning must be such that it is comprehensible to the average user. Anderson, 256 Or. 199 (citing Spruill v. Boyle-Midway, Inc., 308 F.2d 79, 85 (4th Cir. 1962)). However, where the risks remain unreasonable even after a clear warning, an alternate, safer design may be required. McClaughry v. Sandwell International, Inc., 273 Or. 481, 541 P.2d 1050, 1051-52 (1975). The adequacy of a warning is a question for the jury. Benjamin v. Wal-Mart Stores, Inc., 185 Or. App. 444, 458, 61 P.3d 527 (2002) (expert expressed opinion with respect to warning affixed to subject heater and not with respect to additional warnings; court held that, although expert rendered opinion regarding specific warning, that fact did not prevent jury from making determination as to adequacy of additional warnings or the adequacy of all the warnings as a whole). Admissible Evidence – Expert Scientific Testimony. In Oregon, standard of admissibility of expert scientific testimony is governed by factors set forth in State v. Brown, 297 Or. 404, 687 P.2d 751 (1984). Oregon courts have not adopted U.S. Supreme Court’s standard for the admission of expert scientific testimony set forth in Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579, 113 S. Ct. 2786, 125 L. Ed. 2d 469 (1993). However, Oregon Supreme Court has adopted those aspects of Daubert it found persuasive. When faced with a proffer of expert scientific testimony, “an Oregon trial court, in performing its vital role as ‘gatekeeper’ pursuant to OEC [Or. Evid. Code] 104(1), should, therefore, find Daubert instructive.” State v. O’Key, 321 Or. 285, 306-07, 899 P.2d 663 (1995). The Brown court listed the following guidelines for determining the relevance or probative value of proffered scientific evidence under OEC 401 and OEC 702: 1) the technique’s general acceptance in the field; 2) the expert’s qualifications and stature; 3) the use that has been made of the technique; 4) the potential rate of error; 5) the existence of specialized literature; 6) the novelty of the invention; and 7) the extent to which the technique relies on the subjective interpretation of the expert. In applying these factors, court concluded that “[w]hat is important is not lockstep affirmative findings as to each factor, but analysis of each factor by the court in reaching its decision on the probative value of the evidence under OEC 401 and OEC 702.” Brown, 297 Or. at 417-18.
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To oppose motion for summary judgment, a party may need expert opinion to establish genuine issue of material fact. Under Or. Rule Civ. P. 47E, party’s attorney may submit an affidavit stating that “an unnamed qualified expert has been retained who is available and willing to testify.” Rule requires that affidavit be made in good faith based upon admissible facts obtained from a qualified expert “who has actually been retained by the attorney who is available and willing to testify.” Rule “enable[s] a party to rely on an expert’s opinion to establish the existence of disputed issues of fact, and thereby avoid summary judgment, without requiring disclosure of the expert’s identity or opinions.” Stotler v. MTD Products, Inc., 149 Or. App. 405, 408, 943 P.2d 220 (1997); see also Moore v. Kaiser Permanente, 91 Or. App. 262, 754 P.2d 615 (1988). Admissible Evidence – Government Regulations. Failure to comply with government regulations may constitute evidence in product liability case. See, e.g., Hagan v. Gemstate Mfg., Inc., 328 Or. 535, 982 P.2d 1108 (1999) (defendant’s tilt-bed trailer did not comply with 49 C.F.R. §393.86, provision of the Federal Motor Carrier Safety Regulations; holding regulation admissible for purpose of determining whether defendant met applicable standard of care in designing and manufacturing its tilt-bed trailer, but not admissible for purpose of helping to establish factual basis of what occurred). Admissible Evidence – Mary Carter Agreements. “Mary Carter agreement” is a “contract…by which one or more, but not all, codefendants settle with the plaintiff and obtain a release, along with a provision granting them a portion of any recovery from the nonparticipating co-defendants.” Black’s Law Dictionary 989 (7th ed. 1999). In product liability case, existence and term of Mary Carter agreement may be relevant, but admissibility of agreement subject to strictures otherwise placed on relevant evidence. Bocci v. Key Pharmaceuticals, Inc., 158 Or. App. 521, 535 974 P.2d 758 (1999), vacated on other grounds, 332 Or. 39, 22 P.3d 758, on remand, 178 Or. App. 42, 35 P.3d 1106 (2001), rev. denied, 334 Or. 260, 47 P.3d 486 (2002), cert. granted, judgment vacated, and remanded to court of appeals for further consideration in light of State Farm v. Campbell, 538 U.S. 408, 123 S. Ct. 1513, 155 L. Ed. 2d 585 (2003) [standards for award of punitive damages], 123 S. Ct. 1781, 155 L. Ed. 2d 662 (April 21, 2003), on remand, 189 Or. App. 349, 76 P.3d 669, mod. on reconsideration., 190 Or. App. 407, 79 P.3d 908 (2003). Admissible Evidence – Similar Incidents. Evidence of similar incidents may be admissible in product liability case. McCathern v. Toyota Motor Corp., 332 Or. 59, 68-72, 23 P.3d 320 (2001). Similarly, evidence of prior problems with a product is admissible to establish that
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the manufacturer had notice of the problem. In Waddill v. Anchor Hocking, Inc., 175 Or. App. 294, 297-99, 27 P.3d 1092 (2001), rev. denied, 334 Or. 260, 47 P.3d 486 (2002), cert. granted and judgment vacated on other grounds, 538 U.S. 974, 123 S. Ct., 155 L. Ed. 2d (2003), on remand, 190 Or. App. 172, 78 P.3d 570 (2003), plaintiff suffered serious injuries when a fishbowl she was carrying shattered. Plaintiff brought a products liability action claiming, inter alia, that defendant failed to properly warn purchasers of the risk associated with carrying a full fishbowl. The trial court admitted evidence of prior complaints about fishbowls, ruling that events were sufficiently similar to the facts alleged by plaintiff that evidence was admissible to demonstrate that defendant had notice of the problem. The court agreed with the trial court’s conclusion that the other incidents were sufficiently similar to the events involving plaintiff to justify admission of the evidence for the limited purpose of establishing notice. The fact that plaintiff’s attorney tried to use the prior events as substantive evidence that the fishbowls were dangerously defective does not change the fact that admission for a limited purpose was proper. If plaintiff’s attorney went too far, defendant should have objected and asked for a limiting instruction. Damages – Compensatory. Plaintiff can seek damages in a “product liability civil action” for personal injury, death, or property damage. Or. Rev. Stat. §30.900. Absent physical harm, there is no recovery for emotional distress under a strict product liability theory, Sease v. Taylor’s Pets, Inc., 74 Or. App 110, 700 P.2d 1054, 1059 (1985), or under a negligence product liability theory. Kent v. Shiley, Inc., 1989 WL 88307, at *2 (D. Or.); see also Pryor v. Shiley, Inc., 916 F.2d 716 (9th Cir. 1990) (unpublished disposition). Plaintiff may recover economic losses resulting from damages to the defective product itself, but only where there is threat to personal safety or an unreasonable danger to property other than the product itself. Agristor Credit Corp. v. Schmidlin, 601 F. Supp. 1307, 1316 (D. Or. 1985); Russell v. Ford Motor Co., 281 Or. 587, 575 P.2d 1383, 1387 (1978). Plaintiff may also recover for economic losses resulting from the product where there is injury to a third person due to defendant’s negligence. See, e.g., Oksenholt v. Lederle Laboratories, 294 Or. 213, 656 P.2d 293, 298-99 (1982) (holding that doctor’s impairment of earning capacity and lost income were legally cognizable damages where defendant misinformed doctor about effects of drug, doctor relied upon misinformation, and prescribed drug to patient who was injured). “Economic damages” include only “objectively verifiable monetary losses.” Or. Rev. Stat. §31.710(2)(a).

Plaintiff may also recover non-economic damages. “Non-economic” damages are subjective, non-monetary losses, including pain and suffering, humiliation, emotional distress, injury to reputation, loss of consortium, and usual activities apart from gainful employment. Or. Rev. Stat. §31.710(2)(b). Oregon Supreme Court has held Or. Rev. Stat. §31.710(1), which limits recovery of non-economic damages for one person to a maximum of $500,000, unconstitutional under Oregon Constitution. Lakin v. Senco Products, Inc., 329 Or. 62, 987 P.2d 463, 475, modified, 329 Or. 369, 987 P.2d 476 (1999). However, Oregon Supreme Court, so far, has held that limitations on damages for the torts of public bodies–see Oregon Tort Claims Act, Or. Rev. Stat. §30.270(1)–are constitutional. See Hale v. Port of Portland, 308 Or. 508, 783 P.2d 506 (1989), abrogated, in part, Smothers v. Gresham Transfer, Inc., 332 Or. 83, 23 P.3d 333 (2001). The limitation on non-economic damages has also been held constitutional in wrongful death actions. See Grace v. Phillips, supra. In May 2000, Oregon voters defeated a constitutional amendment proposed by the 1999 Oregon Legislature that would have allowed legislature to establish caps on damages awarded in civil actions. Damages – Indemnity. Common law indemnity available in Oregon. See, e.g., Smith Radio Communications, Inc. v. Challenger Equipment, Ltd., 270 Or. 322, 527 P.2d 711, 712 (1974). In addition, contractual indemnity provisions between manufacturers and sellers are generally enforceable. See, e.g., Southwest Forest Industries, Inc. v. Vanply, Inc., 43 Or. App. 347, 602 P.2d 1113 (1979). Where a retailer delivers goods to a buyer without creating a defect in the product, the retailer is only secondarily liable for that defect and generally is entitled to indemnity from the manufacturer. Smith Radio Communications, 527 P.2d at 712-13. Damages – Punitive. In civil action, such as product liability, punitive damages are not recoverable “unless it is proven by clear and convincing evidence that the party against whom punitive damages are sought has acted with malice or has shown a reckless and outrageous indifference to a highly unreasonable risk of harm and has acted with a conscious indifference to the health, safety and welfare of others.” Or. Rev. Stat. §31.730. The amount of a punitive damage is based upon following criteria: “(a) The likelihood at the time that serious harm would arise from the defendant’s misconduct; (b) The degree of the defendant’s awareness of that likelihood; (c) The profitability of the defendant’s misconduct; (d) The duration of the misconduct and any concealment of it; (e) The attitude and conduct of the defen---- For Current Listings access www.ambest.com/legal---Last Update August, 2008

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dant upon discovery of the misconduct; (f) The financial condition of the defendant; and (g) The total deterrent effect of other punishment imposed upon the defendant as a result of the misconduct, including, but not limited to, punitive damage awards to persons in situations similar to the claimant’s and the severity of criminal penalties to which the defendant has been or may be subjected.” Or. Rev. Stat. §30.925(2). A court reviews a punitive damages award for unconstitutional excessiveness in a product liability case under the same standards applicable to other types of cases. Williams v. Philip Morris Inc., 182 Or. App. 44, 63, 48 P.3d 824, adhered to on reconsideration, 183 Or. App. 192, 51 P.3d 670, rev. denied, 335 Or. 142, 61 P.3d 938 (2002) (substantial subsequent history omitted); see Parrott v. Carr. Chevrolet, Inc., 331 Or. 537, 555, 17 P.3d 473 (2001) (setting forth standards for review of punitive damages awards). See generally “DAMAGES, Punitive.” The manufacturer of a drug that allegedly caused plaintiff harm is not liable for punitive damages if the drug (1) was manufactured and labeled pursuant to an approval or license issued by the FDA, Or. Rev. Stat. §30.927(1)(a); or (2) is generally recognized as “safe and effective” pursuant to FDA conditions and regulations, including regulations for labeling and packaging. Or. Rev. Stat. §30.927(1)(b). However, a drug manufacturer is not exempt from liability for punitive damages if clear and convincing evidence shows that the defendant “knowingly”–in violation of FDA regulations–”withheld from or misrepresented to the agency or prescribing physician information known to be material and relevant to the harm which the plaintiff allegedly suffered.” Or. Rev. Stat. §30.927(2). NOTE: 2007 Amendment to Or. Rev. Stat. §30.927 provides specific procedures where a COX-2 inhibitor is the subject of a civil action. : SECTION 1. (1) As used in this section, “COX-2 inhibitor” means a medication that is intended to inhibit the enzyme known as cyclooxygenase-2. (2) A civil action for injury, including any product liability action under Or. Rev. Stat. §30.900 to 30.920 and any action based on negligence, resulting from the use of a COX-2 inhibitor must be commenced not later than four years after the date on which the plaintiff first discovered, or in the exercise of reasonable care should have discovered, the injury and the causal relationship between the injury and the product, or the causal relationship between the injury and the conduct of the defendant. (3) A civil action for death, including any product liability action under Or. Rev. Stat. §30.900 to 30.920 and any ac-

tion based on negligence, resulting from the use of a COX-2 inhibitor must be commenced not later than six years after the date on which the plaintiff first discovered, or in the exercise of reasonable care should have discovered, the causal relationship between the death and the product, or the causal relationship between the death and the conduct of the defendant. SECTION 2. (1) Except as provided in subsection (2) of this section, section 1 of this 2007 Act applies only to causes of action arising on or before January 1, 2007. (2) Section 1 of this 2007 Act does not apply to any causes of action for which a judgment was entered in the register of a court before the effective date of this 2007 Act. Under Oregon law, a pleading may not contain a request for a punitive damages award. Or. Rev. Stat. §31.725(1). However, after the pleading is filed, a party may move to amend the pleading to assert a claim for punitive damages. Or. Rev. Stat. §31.725(2). A court must grant a motion to amend where plaintiff has proffered “some” evidence of a prima facie case for punitive damages. Bolt v. Influence, Inc., 333 Or. 572, 578, 43 P.3d 425 (2002) (in case involving motion to amend a complaint to add a punitive damages claim in product liability case, see Or. Rev. Stat. §31.725(2), finding trial court erred in denying plaintiffs’ motion to amend on ground that plaintiffs had not presented evidence sufficient for jury to find, by clear and convincing evidence, that plaintiffs were entitled to punitive damages). Defenses – Alteration. Alteration of a product is a statutory affirmative defense and may be a total bar to recovery where the alteration was made either without consent of defendant or not in accordance with the instructions of defendant and the alteration was “a substantial contributing factor” to plaintiff’s injury. Or. Rev. Stat. §30.915(1)-(2). However, where product’s alteration is reasonably foreseeable, defendant must have given plaintiff adequate warning of the danger in order to avail itself of the defense. Or. Rev. Stat. §30.915(3). Defenses – Assumption of Risk. Oregon has abolished the doctrine of “implied” assumption of the risk as a bar to recovery. Or. Rev. Stat. §31.620(2); see Blair v. Mt. Hood Meadows Development Corp., 291 Or. 293, 630 P.2d 827, 831, reh’g denied and opinion modified, 291 Or. 703, 634 P.2d 241 (1981). Implied assumption of the risk survives as type of contributory negligence. Sandford v. Chevrolet Division of General Motors, 292 Or. 590, 642 P.2d 624, 628 (1982). Facts that formerly were used to establish implied assumption of the risk may still help defendant reduce or eliminate a plaintiff’s recovery for negligence pursuant to Oregon’s comparative negligence statute, Or. Rev. Stat. §31.600. Blair, 291 Or. at 301.
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Although Oregon has abolished implied assumption of the risk, courts recognize that there are risks inherent in sports activities. Mounts v. Knodel, 83 Or. App. 90, 730 P.2d 594, 597 (1986) (horseback riding injuries), Blair, supra (skiing injuries). Or. Rev. Stat. §§30.970.990 (Skiing Activities Law) provide an assumption-ofthe risk defense, but only to ski area operators. Stiles v. Freemotion, Inc., 185 Or. App. 393, 399, 59 P.3d 548 (2002) (holding that Skiing Activities Law did not apply to snowboard manufacturer or dealer and therefore manufacturer and dealer were not shielded from product liability). Defenses – Comparative Fault. Oregon’s comparative negligence statute speaks in terms of a party’s “fault.” Or. Rev. Stat. §31.600. Claimant’s comparative negligence will not bar recovery unless the fault attributable to the claimant is greater than the combined fault of defendants. Or. Rev. Stat. §31.600(1). If the fault attributable to the claimant is not greater than the combined fault of defendants, the claimant’s contributory negligence does not bar recovery, but allowed damages are reduced in proportion to the percentage of fault attributable to the claimant. Id. Employers cannot be joined as defendants because workers’ compensation remedies are exclusive. Or. Rev. Stat. §656.018(1)(a), (7); Lacy v. State Accident Insurance Fund, Inc., 113 Or. App. 369, 832 P.2d 1268, 1268 (1992); But see Smothers v. Gresham, Inc., 332 Or. 83, 23 P.3d 333 (2001) (concluding that, if workers’ compensation claim alleging an injury to a right protected by the remedy clause is denied for failure to meet burden of proof, then exclusive remedy provisions are unconstitutional under remedy clause of Article I, section 10, of Oregon Constitution). A claimant’s fault includes both conduct that previously constituted implied assumption of the risk and ordinary negligence. Sandford v. Chevrolet Division of General Motors, 292 Or. 590, 642 P.2d 624, 628 (1982). However, fault does not include a plaintiff’s failure to discover or to guard against the very defect that makes the product dangerously defective in the first place. Sandford, 642 P.2d at 628; see also Hernandez v. Barbo Machinery Co., 141 Or. App. 34, 917 P.2d 30, 32-33 (1996), aff’d, 327 Or. 99, 957 P.2d 147 (1998); Hackett v. Alco Standard Corp., 71 Or. App. 24, 691 P.2d 142, 146-47 (1984). Comparative fault is a defense in a product liability case pleaded in strict liability or negligence. Dahl v. Bayerische Motoren Werke (BMW), 304 Or. 558, 748 P.2d 77, 80 (1987); see, e.g., Sandford, 292 Or. 590, 642 P.2d at 626-28 (strict liability); Blair v. Mt. Hood Meadows Development Corp., 291 Or. 293, 630 P.2d 827, 831, reh’g denied and opinion modified, 291 Or. 703, 634 P.2d 241 (1981) (negligence).

There is authority to suggest that comparative fault is irrelevant in a breach of warranty case. See Valley Iron & Steel Co. v. Thorin, 278 Or. 103, 562 P.2d 1212, 1216 (1977) (implied warranty of fitness for a particular purpose); Miller v. Hubbard-Wray Co., 52 Or. App. 897, 630 P.2d 880, 883, opinion modified, 53 Or. App. 531, 633 P.2d 1, rev. denied, 292 Or. 109, 642 P.2d 310 (1981) (express warranty). A claimant’s felonious conduct at the time of injury constitutes a complete defense in any civil action for personal injury or wrongful death, Or. Rev. Stat. §31.180(1)(a), and the felonious conduct was “a substantial factor contributing to the injury or death.” Or. Rev. Stat. §31.180(1)(b). The defendant must prove the criminal conduct by a preponderance of the evidence. Or. Rev. Stat. §31.180(2). Defenses – Compliance with Standards. Compliance with government statutory or administrative safety standards is not conclusive on question of tort liability where there is no such legislative intent. Wilson v. Piper Aircraft Corp., 282 Or. 61, 577 P.2d 1322, 1324-25, reh’g denied, 282 Or. 411, 579 P.2d 1287 (1978) (FAA safety standards); McEwen v. Ortho Pharmaceutical Corp., 270 Or. 375, 528 P.2d 522, 533-34 (1974) (FDA labeling/warning regulations); Barry v. Don Hall Laboratories, 56 Or. App. 518, 642 P.2d 685, 690 (1982) (same). However, although proof of such compliance does not preclude the possibility of liability, compliance is properly considered in determining whether a plaintiff has produced sufficient evidence to go to the jury. Wilson, 577 P.2d at 1328 (strict liability); McEwen, 528 P.2d at 533-34 (negligence); Barry, 642 P.2d at 690 (strict liability). Where government safety standards are not binding on defendant, they may still provide some evidence of whether defendant’s conduct has met the appropriate standard of care. Hansen v. Abrasive Engineering & Manufacturing, Inc., 317 Or. 378, 856 P.2d 625, 628-30 (1993) (ANSI standards and OSHA safety rules). Defenses – Failure to Wear Seat Belts. Oregon law expressly states that evidence of failure to wear a seat belt is admissible only to mitigate the injured party’s damages, but not by more than five percent. Or. Rev. Stat. §31.760(1). This limitation does not, however, apply to product liability actions within the scope of Or. Rev. Stat. §§30.900-.920, or to any personal injury action where non-use of the safety belt or harness is a “substantial contributing cause of the accident itself.” Or. Rev. Stat. §31.760(2). Defenses – Learned Intermediary Doctrine. Under principles of strict product liability law, product manu---- For Current Listings access www.ambest.com/legal---Last Update August, 2008

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facturer has duty to warn. Garside v. Osco Drug, Inc., st 976 F.2d 77, 80 (1 Cir. 1992) (Massachusetts law). Typically, that duty extends to the consumer. Restatement (Second) of Torts, §388(c ) sets forth general rule. For products known to be dangerous for their intended use, a “supplier”–which includes prescription drug manufacturers, see Mazur v. Merck & Co., rd Inc., 964 F.2d 1348, 1365 (3 Cir. 1992)–has a duty to exercise “reasonable care” to inform those for whose use the product is supplied “of the facts which make it likely to be dangerous.” However, where prescription drugs and medical devices inserted by a physician are at issue, under learned intermediary doctrine, manufacturer’s duty generally limited to warning prescribing physician of any potential danger that may result from use of the drug or device. Martin by Martin v. Ortho Pharmaceutical Corp., 661 N.E.2d 352, 354 (Ill. 1996). Once manufacturer has adequately warned physician, manufacturer has fulfilled its duty to warn. Direct warnings to consumers are not required. Gurski v. Wyeth-Ayerst Div. Of American Home Products Corp., 953 F. Supp. 412, 415 (D. Mass. 1997). The learned intermediary doctrine is not a defense to strict liability claims alleging failure to warn under Or. Rev. Stat. §30.920. Griffith v. Blatt, 334 Or. 456, 468, 51 P.3d 1256 (2002). A related defense is the sophisticated user defense, which absolves a product supplier from a duty to warn a party that is already aware of its product’s relevant danger. Oregon has recognized the sophisticated user defense, although without labeling it as such. Schmeiser v. Trus Joist Corp., 273 Or. 120, 540 P.2d 998, 1002 (1975) (the manufacturer or seller is exonerated from liability for injury to workmen if the contractor has knowledge of the danger); see also Jacobson v. Colorado Fuel & Iron Corp., 409 F.2d 1263 (9th Cir. 1969) (Montana law) (duty to warn satisfied by giving warning to plaintiff’s supervisor). Defenses – Misuse of Product. Misuse of a product is a defense to a strict product liability action. Wilson v. B.F. Goodrich Co., 52 Or. App. 139, 627 P.2d 1280, 1287 (1981), aff’d, 292 Or. 626, 642 P.2d 644 (1982). A defendant is not strictly liable for injury caused by a use which was not reasonably foreseeable. Newman v. Utility Trailer & Equipment Co., 278 Or. 395, 564 P.2d 674, 676-77 (1977). Whether a product was put to a foreseeable use generally is a question for the jury. Id. “A product is not in a defective condition when it is safe for normal handling and consumption.” Restatement (Second) of Torts, §402A, comment h. Where a product is safe for normal handling and plaintiff’s injury results from “abnormal” use, the defendant is not liable. Id.

Misuse sufficient to bar recovery must be “use or handling so unusual that the average consumer could not reasonably expect the product to be designed and manufactured to withstand it–a use which the seller, therefore, need not anticipate and provide for.” Findlay v. Copeland Lumber Co., 265 Or. 300, 509 P.2d 28, 31 (1973). Therefore, misuse is not a defense where that misuse was reasonably foreseeable. Id. In a product liability action based upon negligence, Oregon courts indicate that defense of “misuse” would be characterized as one of contributory negligence. See Wilson, 627 P.2d at 1287 (noting that separate affirmative defenses alleging misuse and contributory negligence are “largely, but not completely, overlapping”) (court’s emphasis). Defenses – Preemption. Many federal statutes contain provisions preempting state tort claims. Preemption is an important defense to product liability claims because remedies available under federal statutes are typically more limited than those available pursuant to state tort law, particularly the availability of punitive damages. See, e.g., Medical Device Amendments of 1976 to the Food, Drug and Cosmetics Act, 21 U.S.C. §301 et seq.; Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA), 7 U.S.C. §136 et seq. Defenses – Privity of Contract. Privity of contract is not necessary in a cause of action against a product seller based upon a negligence theory or a strict liability theory. Wights v. Staff Jennings, Inc., 241 Or. 301, 405 P.2d 624, 626 (1965). Privity also is not a prerequisite in a breach of express warranty case where damages sought are only for economic loss. Dravo Equipment Co. v. German, 73 Or. App. l65, 698 P.2d 63, 64-65 (1985). However, privity of contract is required in a breachof-implied warranty case where only economic damages are sought. Dravo, 698 P.2d at 65. Privity is also required where a seller allegedly breaches an express or implied warranty and the damages sought are for personal injury. Colvin v. FMC Corp., 43 Or. App. 709, 604 P.2d 157, 160-61 (1979) (warranty provision of Or. Rev. Stat. §72.3180 does not extend to parties claiming personal injury who are not in privity with the seller). But see Or. Rev. Stat. §§72.8020,.8030 (manufacturer of consumer goods to be sold at retail gives implied warranty of merchantability or implied warranty of fitness at time of sale). Defenses – Sealed Containers. Vendors and distributors may use the “sealed container doctrine” as a defense in a product liability action based on negligence. Keller v. Coca Cola Bottling Co. of Walla Walla, Wash., 214 Or. 654, 330 P.2d 346, 348-50 (1958). If plaintiff received a defective product in a container that was
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sealed by its manufacturer, then that “seal” is evidence that the defective product was the result of the manufacturer’s negligence. The manufacturer then has the burden of proving that the product was made defective by the negligence of a third person. Id. Defenses – Statutes of Limitation. In 2003, Oregon Legislature extensively revised Or. Rev. Stat. §30.905, the product liability statute of limitations. Prior to amendments, Or. Rev. Stat. §30.905 provided that a product liability civil action had to be brought within two years after “the death, injury or damage complained of” occurred. Or. Rev. Stat. §30.905(2) (2001). Oregon Supreme Court concluded that Or. Rev. Stat. §30.905(2) (2001) did not incorporate a “discovery” rule, holding that the limitation period begins to run when the plaintiff’s injury occurs, whether or not plaintiff discovers the injury within the two-year limitation. Gladhart v. Oregon Vineyard Supply Co., 332 Or. 226, 26 P.3d 817, 821 (2001). Court also concluded that Or. Rev. Stat. §30.905(2) applied to claim for death from a product defect, not Or. Rev. Stat. §30.020, the three-year statute of limitation for wrongful death actions. Kambury v. DaimlerChrysler Corp., 334 Or. 367, 50 P.3d 1163, 1166 (2002), on remand, 185 Or. App. 635 (2003). Or. Rev. Stat. §30.905, as amended in 2003, incorporates a discovery rule and expressly states that the statute of limitation for wrongful death (Or. Rev. Stat. §30.020) applies to product liability claims. Except with respect to actions for damages from asbestos-related disease, Or. Rev. Stat. §30.907 (twoyear statute of limitation), and actions arising out of injury allegedly resulting from breast implants, Or. Rev. Stat. §30.908 (two-year statute of limitation), Or. Rev. Stat. §30.905(2) (2003) provides that a product liability action for personal injury or property damage must be commenced not later than the earlier of: 1) two years after date on which plaintiff “discovers or should have discovered, the personal injury or property damage and the causal relationship between the injury or damage and the product, or the causal relationship between the injury or damage and the conduct of the defendant” or 2) ten years after date product was “first purchased for use or consumption.” Or. Rev. Stat. §30.905(2). Generally, two-year limitation period of Or. Rev. Stat. §30.905(2) applies to all product-related claims, whether based on negligence, strict liability, breach of warranty, or other theories. See Kambury v. DaimlerChryslerCorp., 185 Or. App. 635, 60 P.3d 1103, 110405 (2003) (holding that plaintiff’s claims for negligence, breach of warranty, intentional misrepresentation, and negligent misrepresentation are subject to Or. Rev. Stat. §30.905(2)); Marinelli v. Ford Motor Co., 72 Or. App. 268, 696 P.2d 1, 3 (1985) (agreeing with defendant that
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term “product liability civil action,” as defined by Or. Rev. Stat. §30.900, “embraces all theories a plaintiff can adduce in an action based on a product defect”) (court’s emphasis). Or. Rev. Stat. §30.905(2) applies only to acts, omissions, or conditions existing or occurring before or at time defendant places product into commerce stream. Erickson Air-Crane Co. v. United Technologies Corp., 303 Or. 281, 735 P.2d 614, 618, on reconsideration, 303 Or. 452, 736 P.2d 1023 (1987). Product is placed into commerce stream after product leaves seller’s hands, regardless of sale contract date. Jamison v. Spencer R.V. Center, Inc., 98 Or. App. 529, 779 P.2d 1091, 1093 (1989). Or. Rev. Stat. §30.905(2) does not apply against governmental bodies. City of Medford v. Budge-McHugh Supply Co., 91 Or. App. 213, 754 P.2d 607 (1988). Or. Rev. Stat. §30.905(3) (2003) provides that, except with respect to actions stemming from asbestosrelated disease and breast implants (see supra), product liability action for death must be commenced not later than the earlier of: 1) the limitation provided by Oregon’s wrongful death statute, Or. Rev. Stat. §30.020 (generally three years); or 2) ten years after date product was “first purchased for use or consumption.” Or. Rev. Stat. §30.905(3). Prior to 2003 amendments, Or. Rev. Stat. §30.905 provided for eight-year statute of repose: “[A] product liability action shall be commenced not later than eight years after the date on which the product was purchased for use or consumption.” Or. Rev. Stat. § 30.905(1) (2001). Or. Rev. Stat. §30.905(2003) similarly provides for eight-year repose period, but states: ““[A] product liability action may not be brought for any death, personal injury or property damage that is caused by a product and that occurs more than eight years after the date on which the product was first purchased for use or consumption.” Exceptions to eight-year statutory repose period are actions for damages from asbestos-related disease (two years, Or. Rev. Stat. §30.907), and actions arising out of injury allegedly resulting from breast implants (two years, Or. Rev. Stat. §30.908). NOTE: 2007 Amendment to Or. Rev. Stat. §30.908, effective January 1, 2008 provides that a person who supplied component parts or raw materials to manufacturers of breast implants containing silicone, silica or silicon as a component is not subject to the statute of limitations set forth in Or. Rev. Stat. §30.908, but is subject to the limitations on actions imposed by Or. Rev. Stat. §§30.020 and §30.905 if (a) the person did not manufacture breast implants containing silicone, silica or silicone as a component at any time; and (b) the person
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was not owned by and did not own a business that manufactured breast implants containing silicone, silica or silicon as a component at any time. Or. Rev. Stat. §30.905(1) (2001) focused on purchase date of allegedly offending product, barring action more than eight years after product’s purchase date. Or. Rev. Stat. §30.905(1) (2003) clarifies that plaintiff’s harm must occur within eight years after the product’s purchase date, a position taken by courts construing the prior version of the statute. See, e.g., Border v. Indian Head Industries, Inc., 101 Or. App. 556, 792 P.2d 111, 113 (1990) (“A plaintiff who is injured more than eight years after the first purchase of the product for use or consumption simply never has a claim.”). As statute of ultimate repose, Or. Rev. Stat. §30.905(1) sets “absolute period” during which plaintiff must be injured to have a claim: “That period passes of its own force, and the plaintiff’s knowledge or lack of knowledge can have nothing to do with it.” Border, 792 P.2d at 114-15. Discovery rule “cannot apply to a statute of ultimate repose, because there can be no extension of an absolute period,” and therefore a discovery rule does not apply to Or. Rev. Stat. §30.905(1). Border, 792 P.2d at 115 (court’s emphasis). Summary judgment is inappropriate when there is a question of fact as to whether the plaintiff’s injury occurred during the eight-year period. Akins v. BucyrusErie Co., 115 Or. App. 222, 837 P.2d 981, 984 (1992). Statute of ultimate repose applies to product liability claims based on strict liability or negligence. Marinelli v. Ford Motor Co., 72 Or. App. 268, 696 P.2d 1, 3-4 (1985). Moreover, Marinelli suggests that the statute applies to product liability claims based on any theory applicable to product liability. 696 P.2d at 3. In product liability case for personal injury for breach of implied warranty, cause of action will be governed by U.C.C. statute of limitations covering actions on sales contracts. Redfield v. Mead, Johnson & Co., 266 Or. 273, 512 P.2d 776 (1973) (citing Or. Rev. Stat. §72.7250 (“Statute of Limitations in Contracts for Sale”)). Plaintiff has option of pursuing his action in tort and, in such case, plaintiff will be subject to two-year tort statute of limitation. Defenses – Unavoidably Unsafe Products. Oregon Legislature has adopted Section 402A of the Restatement (Second) of Torts and comments a through m. Or. Rev. Stat. §30.920(3). Section 402A permits strict product liability claims and provides that a seller of a defective product unreasonably dangerous to the user or consumer” is subject to liability even though “the seller has exercised all possible care in the preparation and sale of

his product.” §402A(2)(a).

Restatement

(Second)

of

Torts

Comment k exempts from liability manufacturers and suppliers of unavoidably unsafe products that pose reasonable risks. Willamette Essential Oils, Inc. v. Herrold & Jensen Implement Co., 68 Or. App. 401, 683 P.2d 1374, 1378 n.7 (1984). Although unavoidably unsafe products, such as drugs or vaccines, cannot be made safe for their “intended and ordinary use,” their use is “fully justified,” and they are not considered defective or unreasonably dangerous where properly prepared and accompanied by proper directions and warnings. §402A, comment k. That is, the utility of such products outweighs their risk. Willamette Essential Oils 68 Or. App. at 408 n.7 (noting that comment k implicitly suggests that there are products that are unreasonably dangerous because their risk outweighs their utility). Under Oregon law, comment k apparently does not preclude all claims of defective design with respect to prescription drugs. Allen v. G.D. Searle & Co., 708 F. Supp. 1142, 1150 (D. Or. 1989). In a case involving product liability claims against a vaccine, Oregon Supreme Court indicated that an evidentiary hearing was needed to determine issues of the “vaccine’s efficacy, the degree of risk attending its use, and the extent to which it is in fact ‘unavoidably unsafe.’” Senn v. Merrell-Dow Pharmaceuticals, Inc., 305 Or. 256, 751 P.2d 215, 218 n.4, answer to certified question conformed to, 850 F.2d 611 (9th Cir. 1988), on remand, 1989 WL 29902 (D. Or. March 28, 1989) (court’s emphasis); see Allen, 708 F. Supp. at 1150 (citing Senn for the proposition that Oregon “may not adopt” the approach of the California Supreme Court in Brown v. Superior Court (Abbott Laboratories), 44 Cal.3d 1049, 245 Cal. Rptr. 412 n.11 (1988), which held that comment k precludes claims of defective design against all prescription drugs). Thus, where there are factual issues regarding the claim of defective design of prescription drugs, “[i]t appears that under the present state of the law an Oregon court would allow such evidence to go to the jury.” Allen, 708 F. Supp. at 1150. Insurance. Meaning of term “accident” in product liability policy must be relevant to kind of product being manufactured by insured and to kind of loss insured could sustain by reason of a defect in manufacture. Ramco, Inc. v. Pacific Ins. Co., 249 Or. 666, 439 P.2d 1002 (1968) (holding that failure of electric baseboard heaters to produce heat was caused by “accident” and therefore loss was covered by heater manufacturer’s product liability policy in light of uncontradicted evidence that manufacturer wanted coverage for loss sustained by defective products and insurance agent agreed to provide such coverage).
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RELEASE See Law Digest Tables. Contract Law. A release is a contract in which one or more parties agree to abandon claims or rights. Lindgren v. Berg, 307 Or. 659, 772 P.2d 1336 (1989). Whether any particular release gives rise to enforceable rights depends on whether it constitutes valid contract, and threshold contract inquiry is whether there was offer and acceptance of same terms. Financial Indem. Co., v. Bevans, 38 Or. App. 369, 590 P.2d 276 (1979). Release agreements are subject to ordinary rules of contract construction and interpretation. Ristau v. Wescold, Inc., 318 Or. 383, 868 P.2d 1331 (1994). If the terms of a release unambiguously express the intent of the parties, a court will enforce the release accordingly; if terms are ambiguous, trier of fact must ascertain parties’ intent. Contract is ambiguous only if capable of more than one reasonable and sensible interpretation. In absence of a specific promise to release liability, for unanticipated claim, before a release is valid, there must be both knowledge of existence of a claim and intention to relinquish it. Patterson v. American Med. Sys., 141 Or. App. 50, 916 P.2d 881, rev. denied, 324 Or. 229, 925 P.2d 907 (1996). Releases are a form of settlement agreement, and, as such, are favored by the law. Pioneer Resources, LLC v. D.R. Johnson Lumber Co., 187 Or. App. 341, 356, 68 P.3d 233 (2003) (citation omitted). Courts generally enforce objective intent of parties as expressed in a release, particularly where party releasing rights is represented by an attorney. Farley v. Northwest Marine Iron Works, 724 F. Supp. 1274, 1277-78 (D. Or. 1989). Court will not set aside otherwise “‘unimpeachable’” release agreement “merely because it was improvident.” Pioneer Resources, 187 Or. App. at 356 (citation omitted). However, under limited circumstances, court will not enforce release where release was product of “misrepresentation or unconscionable conduct.” Id. Thus, court will not enforce release where “(1) the release agreement was unilaterally coerced or imposed and was not the result of arm’s-length negotiations between the parties; (2) the party seeking to avoid the release did not have independent representation; or (3) the party seeking to enforce the release misrepresented the nature, effect, or scope of the release agreement, or misled the other party about the value or merit of an asserted legal claim.” Pioneer Resources, 187 Or. App. at 356-57 (citing cases); cf. Mann v. Wetter, 100 Or. App. 184, 187, 785 P.2d 1064 (1990) (“Although agreements to limit liability are not favored, neither are they automatically void. An agreement limiting liability is governed by
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principles of contract law and will be enforced in the absence of some consideration of public policy derived from the nature of the subject of the agreement or a determination that the contract was adhesionary.”). Release may be shown as complete defense in action at law. Broad v. Kelly’s Olympian Co., 156 Or. 216, 66 P.2d 485 (1937). Covenant Not to Sue. Where a covenant not to sue or enforce a judgment is given in good faith to one of two or more tortfeasors, it does not discharge the other tortfeasors from liability unless otherwise stated. The covenant also discharges the tortfeasor to whom it is given from all liability for contribution to any other tortfeasor. However, the covenant does reduce claimant’s claim against the remaining tortfeasors by the share of the tortfeasor to whom the covenant is given. Or. Rev. Stat. §31.815(1). Where an insured assigns its claim against an insurer to a third-party claimant in return for an unconditional agreement not to execute on any judgment entered against the insured, the insurer’s liability is extinguished. The unconditional agreement not to execute insulates the insured from liability and consequently leaves no possibility of a loss that the insurer is obligated to indemnify. Warren v. Farmers Ins. Co. of Oregon, 115 Or. App. 319, 322, 838 P.2d 620 (1992); Far West Federal Bank v. Transamerica Title Ins. Co., 99 Or. App. 340, 342-45, 781 P.2d 1259 (1989). Standard contract principles govern the effect given to an assignment of rights given in exchange for a covenant not to execute. Oregon Mut. Ins. Co. v. Gibson, 88 Or. App. 574, 578, 746 P.2d 245 (1987). Fraud and Misrepresentation. Rule is that “‘[a]n honest release, untainted by unconscionable conduct, can[not] be set aside because it was improvident.’” Walcutt v. Inform Graphics, Inc., 109 Or. App. 148, 151, 817 P.2d 1353 (1991) (citation omitted); see also Wheeler v. White Rock Bottling Co., 229 Or. 360, 367, 366 P.2d 527 (1961) (“mere improvidence [not]…a plausible ground for setting aside otherwise unimpeachable contracts”). Thus, release agreements may be void where agreement obtained by misrepresentation or unconscionable conduct, but not for mutual mistake. Raymond v. Feldmann, 120 Or. App. 452, 455, 853 P.2d 297, opinion adhered to as modified on reconsideration, 124 Or. App. 543, 863 P.2d 1269 (1993) (citations omitted). However, “fraud or inequitable conduct with respect to a transaction that is the subject of a release does not bar enforcement of a release, so long as the release was not itself the product of fraud in the inducement.” Pioneer Resources, LLC v. D.R. Johnson Lumber Co., 187 Or. App. 341, 358, 68 P.3d 233 (2003) (citing Ris---- For Current Listings access www.ambest.com/legal---Last Update August, 2008

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tau v. Wescold, Inc., 318 Or. 383, 868 P.2d 1331 (1994)). Fraud in either execution or inducement of release is legal defense and triable before jury. Where release is pleaded in defendant’s answer, plaintiff may allege fraud in reply. Olston v. Oregon Water Power R., 52 Or. 343, 96 P. 1095, reh’g denied, 52 Or. 343, 97 P. 538 (1908); Wood v. Young, 127 Or. 235, 271 P. 734 (1928). Infants/Capacity. See “CONSTRUCTION POLICY, Capacity – Infants.” OF

Joint Tortfeasors. Whether joint tortfeasors are released depends on intent of parties. Computer Concepts v. Brandt, 98 Or. App. 618, 780 P.2d 249 (1989), aff’d, 310 Or. 706, 801 P.2d 800 (1990). Amount paid by one joint tortfeasor for covenant not to sue may be shown in reduction of damages in action against other joint tortfeasor. Murray v. Helfrich, 146 Or. 602, 30 P.2d 1053 (1934). Fact that release of owner and driver of vehicle was executed after plaintiff commenced malpractice action against doctor who treated plaintiff for injuries received in automobile accident did not, as matter of law, require finding that release extended to doctor. Brackenbrough v. MacCloskey, 42 Or. App. 231, 600 P.2d 481 (1979). Mistake. Mutual mistake not a ground for invalidating release agreement. Raymond v. Feldmann, 120 Or. App. 452, 853 P.2d 297, opinion adhered to as modified on reconsideration, 124 Or. App. 543, 863 P.2d 1269 (1994). Parties to release take risk that facts or law may turn out to be different than what they believed them to be. Albrich v. Allstate Ins. Co., 152 Or. App. 416, 41920, 954 P.2d 216, opinion adhered to on reconsideration, 154 Or. App. 255, 962 P.2d 699 (1998). REPRESENTATIONS AND WARRANTIES Application for Insurance. Statements made by insured in any application for insurance shall be deemed to be representations and not warranties. Or. Rev. Stat. §742.013(1). Absent information that gives an insurer notice that an applicant for insurance has misrepresented facts, the insurer has no obligation to investigate an applicant’s representations. However, the insurer “can be charged with knowing of the insured’s misrepresentations if, pursuant to an independent investigation, it becomes aware of facts sufficient to give it the required notice.” Story v. Safeco Life Ins. Co., 179 Or. App. 688, 696, 40 P.3d 1112 (2002). The insurer has the burden of establishing that it did not have such knowledge or, “at least that its failure to discover the true facts was attributable to mere negligence.” Crawford v. Standard Ins. Co., 49 Or. App. 731, 736, 621 P.2d 583 (1980).

Materiality. False answer in an application for insurance is “material” if insurer would not have accepted the application at the premium given had a truthful answer been given. The insurer has the burden of proving the materiality and falseness of the answer. Santilli v. State Farm Life Ins. Co., 278 Or. 53, 57-58, 562 P.2d 965 (1977); Bunn v. Monarch Life Ins. Co., 257 Or. 409, 412, 478 P.2d 363 (1970). Materiality of false information in an application for insurance is generally a question of fact. However, under some circumstances, the false information may be found material as a matter of law. Santilli, 278 Or. at 57-58. Misrepresentations. Misrepresentations, omissions, concealments of facts and incorrect statements shall not prevent a recovery under a policy unless they 1) are contained in a written application for the policy and a copy of the application is endorsed upon or attached to the policy when issued; 2) are shown by the insured to be material; 3) were relied on by the insurer; and 4) are either fraudulent or “[m]aterial either to the acceptance of the risk or to the hazard assumed by the insurer.” Or. Rev. Stat. §742.013(1). This section is not applicable to surety insurance. Or. Rev. Stat. §742.013(2) A “standard fire policy” must include a concealment or fraud provision, stating that “this entire policy shall be void if, whether before or after a loss, the insured has willfully concealed or misrepresented any material fact or circumstance concerning this insurance or the subject thereof, or the interest of the insured therein, or in case of any fraud or false swearing by the insured relating thereto.” Or. Rev. Stat. §742.208(1). A single misrepresentation has been held to void a policy. See Henricksen v. Home Ins. Co., 237 Or. 539, 392 P.2d 324 (1964). However, the insurer must have relied on the misrepresentation. Eslamizar v. American States Ins. Co., 134 Or. App. 138, 894 P.2d 1195 (1995). SERVICE OF PROCESS See Law Digest Tables. Summons should be served in any manner reasonably calculated to apprise defendant of existence and pendency of the action and to afford a reasonable opportunity to appear and defend. Or. R. Civ. P. 7D(1). Personal Service. Personal service is made by delivery of a true copy of both summons and complaint to the person to be served. Or. R. Civ. P. 7D(2)(a). Service of Process – Corporations. The primary method of service upon domestic or foreign corporations or limited partnerships is by personal or office service upon a registered agent, officer, director, general partner, or managing agent of the corporation or limited partnership or by personal service upon any clerk on duty in the
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office of a registered agent. Or. R. Civ. P. 7D(3)(b)(i). If a registered agent, officer, director, general partner, or managing agent cannot be found, alternatives are substituted service or service by mail. Or. R. Civ. P. 7D(3)(b)(ii). The provisions relating to service on a private corporation govern all insurers doing business in Oregon, “whether authorized or unauthorized.” Or. Rev. Stat. §731.434(1); see Or. Rev. Stat. Chapter 60 (“Private Corporations”); Or. Rev. Stat. §60.121 (“Service on Corporation”). Service of Process – In Rem Jurisdiction. Or. R. Civ. P. 5 provides that an Oregon court having jurisdiction of the subject matter may exercise jurisdiction in rem when the subject of the action is real or personal property in the State of Oregon, but only if a summons has been served on the defendant pursuant to Or. R. Civ. P. 7 or other applicable rule or statute. Or. R. Civ. P. 5(A). The court may exercise in rem jurisdiction even where the defendant is unknown. Id. Court may also exercise jurisdiction in rem (when it has subject matter jurisdiction) in actions to foreclose, redeem from, or satisfy a mortgage, claim, or lien on real property in Oregon. Or. R. Civ. P. 5(B). Service of Process – Non-Resident Motorists. Or. R. Civ. P. 4C provides that a court having subject matter jurisdiction has personal jurisdiction over properly served party in any action claiming injury to person or property within or without Oregon arising out of act or omission within Oregon by defendant. Service of Process – Resident Motorists. In any accident, collision, or other event resulting in liability in which motor vehicle is involved, plaintiff must make at least one attempt to serve defendant by personal or substituted service. If service is not effected by these methods, plaintiff may then serve defendant by mailing to 1) address given by defendant at time of accident, 2) most recent address as shown by Department of Transportation’s driver records, and 3) any other address of defendant known to plaintiff, which might result in actual notice. Or. R. Civ. P. 7D(4)(a)(i). Service by mail made by mailing “true copy” of summons and complaint by first class mail and by certified mail, registered mail, return receipt, or express mail. Or. R. Civ. 7D(2)(d)(i). SUBROGATION Under general rules of law, Oregon courts have recognized rights of insurance company to both contractual and equitable subrogation. National Fire Ins. v. Mogan, 186 Or. 285, 206 P.2d 963 (1949). Even where there is no subrogation clause in insurance policy, Oregon recognizes an insurer’s common-law right of subrogation, and insurer stands in same position it would have if there were an express subrogation clause in policy.
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State, By and Through Healy v. Smither, 290 Or. 827, 831, 626 P.2d 356 (1981). Rights of subrogee insurer rise no higher then subrogor’s rights, and person against whom claim is made may assert any defenses available to subrogor. Smither, 290 Or. at 832. Subrogee’s rights determined to exist only after consideration of facts and relative equities, particularly when rights are to be enforced against persons other than principal debtor. Mayer v. First Nat. Bank. Of Oregon, 260 Or. 119, 129, 489 P.2d 385 (1971). Parties to Action. Actions are frequently brought by insurance companies because of the right of subrogation, but, in the absence of a valid “loan receipt,” such actions must be instituted in name of insurance company under real-party-in-interest rule, Or. R. Civ. P. 26A. Waterways Terminals v. P. S. Lord, 242 Or. 1, 406 P.2d 556 (1965). As general rule, insurer is subrogated pro tanto to any right of action which insured may have against wrongdoer. American Cent. Ins. Co. v. Weller, 106 Or. 494, 212 P. 803 (1923). Ten-day grace period of loss payable endorsement, extending coverage beyond expiration date of policy for amount of any indebtedness, was separate contractual relationship for benefit of lienholder. Upon paying debt owed to lienholder, insurer, by terms of policy, was subrogated to lienholder’s position against insured on debt. Scott v. Northwestern Agencies, 75 Or. App. 187, 706 P.2d 195 (1985). “Volunteer rule,” which would deny subrogation to stranger or interloper who confers benefit, is applied narrowly, giving preference to principle that insurer has right to recover for damages it has been called upon to pay to insured under its policy. Northwestern Mut. Ins. v. Peterson, 280 Or. 773, 572 P.2d 1023 (1977); see also United Pacific Ins. Co. v. Schetky Equip. Co., 217 Or. 422, 342 P.2d 766 (1959). If loan receipt is taken, insurer is not subrogated to its insured’s claims, and insured may bring action in his own name. Waterways Terminals v. P. S. Lord, 242 Or. 1, 406 P.2d 556 (1965); Furrer v. Yew Creek Logging Co., 206 Or. 382, 292 P.2d 499 (1956); Growers Refrigeration Co. v. Pacific Electrical Contractors, Inc., 165 Or. App. 274, 996 P.2d 521 (2000). Tort defendant against whom judgment has been rendered may assign any action against its insurer to plaintiff, but assignment does not extinguish action against insurer unless assignment specifically so provides. Or. Rev. Stat. §31.825. No subrogation of rights of assignee against seller as guarantor of contract, since property, not debt, was insured. Weller, 106 Or. 494.

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Types of Insurance – Collision Insurance. Typical subrogation clause covering payments for collision and comprehensive damage to insured’s vehicle provides: “Upon payment under this policy, the company shall be subrogated to all the insured’s rights of recovery thereof and the insured shall do whatever is necessary to secure such rights and do nothing to prejudice them.” State Farm Mut. Auto. Ins. Co. v. Pohl, 255 Or. 46, 48-49, 464 P.2d 321 (1970). Rule prohibiting assignment of a personal injury claim does not render invalid subrogation provision in insurance contract. Insurer’s right to subrogation under subrogation clause in automobile policy applicable to payments under medical payments coverage; clause “clearly” reserved to insurer right to subrogation upon payment of medical expenses under policy, but where insured recovered medical expenses from tortfeasor or tortfeasor was released without insurer’s consent, insured was barred from recovery under policy’s medical payments provision. Geertz v. State Farm Fire & Casualty, 253 Or. 307, 309, 451 P.2d 860 (1969). Types of Insurance – Fire Insurance. Standard fire policy must contain the following provision: “This company may require from the insured an assignment of all right of recovery against any party for loss to the extent that payment therefor is made by this company.” Or. Rev. Stat. §742.242. In addition, standard fire policy must contain the following provision: “If this company shall claim that no liability existed as to the mortgagor or owner, it shall, to the extent of payment of loss to the mortgagee, be subrogated to all the mortgagee’s rights of recovery, but without impairing mortgagee’s right to sue.” Or. Rev. Stat. §742.226(2). Types of Insurance -Liability Insurance. Liability insurer who has discharged its obligation as insurer in full is subrogated to tortfeasor’s right of contribution “to the extent of the amount it has paid in excess of the tortfeasor’s proportional share of the common liability.” Or. Rev. Stat. §31.800(4). Or. Rev. Stat. §31.800(4) does not “limit or impair any right of subrogation arising from any other relationship.” Id. Types of Insurance – Surety. Surety who is compelled to pay its principal’s debt is subrogated only to those rights and remedies of creditor in existence immediately prior to payment. Mayer v. First Nat. Bank. Of Oregon, 260 Or. 119, 130, 489 P.2d 385 (1971). Types of Insurance – Workers’ Compensation Insurance. Worker who suffers a “compensable injury” under workers’ compensation statutes may file claim for compensation from employer or from employer’s insurer. If claimant’s injury was caused by the negligence of a third party, then claimant may elect, in addition, to

recover damages from third party. If claimant so elects, entity that paid claim has lien against claimant’s action against third party that is second only to cost of recovering those damages. If claimant recovers money from third party, that paying agency has lien against the proceeds. See Rash v. McKinstry Co., 331 Or. 665, 670, 20 P.3d 197 (2001) (citing applicable statutes). However, claimant’s election not to proceed with third-party action acts as assignment of cause of action to paying agency. Or. Rev. Stat. §656.591(1); State Acc. Ins. Fund Corp. v. Meredith, 104 Or. App. 570, 574, 802 P.2d 95 (1990). WAIVER AND ESTOPPEL In the insurance context, Or. Rev. Stat. §742.056 provides: “Without limitation of any right or defense of an insurer otherwise, none of the following acts by or on behalf of an insurer shall be deemed to constitute a waiver of or estoppel to assert any provision of a policy or of any defense of the insurer thereunder: (1) Acknowledgment of the receipt of notice of loss or claim under the policy. (2) Furnishing forms for reporting a loss or claim, for giving information relative thereto, or for making proof of loss, or receiving or acknowledging receipt of any such forms or proofs completed or uncompleted. (3) Investigating any loss or claim under the policy or engaging in negotiations looking toward a possible settlement of any such loss or claim.” Waiver and estoppel as applied in context of insurance contracts are different concepts. Waiver. Waiver involves act or conduct of only one party to the contract. Waiver is intentional relinquishment of a known right, involving both knowledge and intent, but a waiver does not necessarily imply that a party has been misled to his or her detriment. See Moore v. Mutual of Enumclaw Ins. Co., 317 Or. 235, 240, 855 P.2d 626 (1993). Waiver – Agents. After investigation, adjuster promising to pay loss held to have waived requirement of proof of loss. Western Loggers’ Machinery Co. v. National Union Fire Ins. Co., 136 Or. 549, 299 P. 311 (1931). Waiver – Defenses. Notice of cancellation after careful investigation waives insurer’s other defenses. Eaid v. National, 122 Or. 547, 259 P. 902 (1927). Waiver – Non-Waiver Agreements. Common-law rule is that party to a written contract can waive contract provision by conduct or oral representation, despite existence of nonwaiver clause. Moore v. Mutual of Enumclaw Ins. Co., 317 Or. 235, 241, 855 P.2d 626 (1993). However, where fire policy contained mandatory waiver
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provision requiring written waiver appended to policy to waive “any provision” of policy, see Or. Rev. Stat. §742.222, statutory provision prevailed. Moore, 317 Or. at 243-44. Estoppel is not included under the term “waiver” in Or. Rev. Stat. §742.222 (waiver provisions required in standard fire policy). Kabban v. Mackin, 104 Or. App. 422, 431, 801 P.2d 883 (1990), called into doubt on other grounds, Prudential Prop. & Cas. Ins. Co. v. Lillard-Roberts, 2002 WL 31495830, at *24 (D. Or. June 18, 2002). Waiver – Proof of Loss. Denial of liability under fire policy within time for filing proof of loss constitutes waiver of policy provisions requiring such proofs. However, there is no waiver where insurer’s denial results from lack of knowledge of material facts known only to insured. Grau v. Northwestern Mut. Ins. Co., 221 Or. 240, 350 P.2d 1082 (1960). Estoppel. Equitable estoppel involves act or conduct of both parties to the contract and always involves a party who has been misled to his or her detriment. Kimball v. Horticultural Fire Relief, 79 Or. 133, 154 P. 578 (1916). A related, but distinct doctrine is “estoppel by acceptance of benefits.” See Hess v. Seeger, 55 Or. App. 746, 762, 641 P.2d 23 (1982). To establish equitable estoppel, there must be evidence from which trier of fact could find that 1) insurer defendant made a false representation (albeit an innocent one;2) defendant knew the facts; 3) plaintiff insured was ignorant of the truth; 4) the statement was made with the intention that plaintiff act on it; and 5) plaintiff did act on it. Shisler v. Fireman’s Fund Ins. Co., 87 Or. App. 109, 741 P.2d 529 (1987); see Day v. Advanced M&D Sales, Inc., 336 Or. 511, 518-19, 86 P.3d 678 (2004) (listing five elements of equitable estoppel). To avoid summary judgment, record must contain sufficient evidence from which “an objectively reasonable juror” could find an estoppel. Herman v. Valley Ins. Co., 145 Or. App. 124, 134, 928 P.2d 985 (1996). Estoppel cannot be used affirmatively to create a right to coverage not contained in the insuring clauses of the policy. However, estoppel can be used defensively to preserve a right to coverage already acquired by preventing the forfeiture of that right to coverage. Bennett v. Farmers Ins. Co., 332 Or. 138, 158, 26 P.3d 785 (2001) (holding that estoppel cannot be used to negate unambiguous exclusion in written policy of insurance when insurer did not dissuade insured from reading or understanding exclusion); ABCD … Vision v. Fireman’s Fund. Ins. Cos., 304 Or. 301, 744 P.2d 988 (1987); Richardson v. Guardian Life Ins. Co. of America, 161 Or. App. 615, 984 P.2d 917 (1999). Therefore, absent “exceptional cirCopyright © 2009 by A.M. Best Company, Inc.

cumstances in which insurer can be estopped to deny existence of coverage notwithstanding policy’s terms and conditions,” estoppel cannot “negate an express exclusion” in an insurance policy and expand coverage beyond terms of policy. DeJonge v. Mutual of Enumclaw, 315 Or. 237, 242, 245 843 P.2d 914 (1992) (footnote omitted). That estoppel cannot be invoked to negate an express exclusion in a written insurance policy “applies even when the alleged representation occurred before the loss…, the exclusion on which the insurer relies is unambiguous and the insurer did not dissuade the insured from reading or understanding the exclusion.” DeJonge, 315 Or. at 245-46 (footnotes omitted). Judgment against insured in underlying case acts as estoppel by judgment in a subsequent action on issue of coverage only where interests of insured and insurer were identical in defending underlying case. Ferguson v. Birmingham Fire Ins., 254 Or. 496, 510, 460 P.2d 342 (1969), called into doubt on other grounds, Marleau v. Truck Ins. Exchg., 155 Or. App. 147, 152, 963 P.2d 715 (1998), aff’d, 333 Or. 82, 37 P.3d 148 (2001). Estoppel – Agents. Insurer may be estopped to deny coverage where party claiming coverage has acted in reasonable reliance on an agent’s representation of coverage that is “not patently absurd.” Shisler v. Fireman’s Fund, Ins. Co., 87 Or. App. 109, 114-15, 741 P.2d 529 (1987). Estoppel – Defenses. Insurer not estopped from asserting statutorily required suit limitation provision as affirmative defense where insurer did not make any false representations or affirmatively induce insured to delay in bringing her action. Herman v. Valley Ins. Co., 145 Or. App. 124, 928 P.2d 985 (1996). Estoppel – Duty to Defend. Insurer that fails to defend is not estopped from asserting exclusions in policy to show there is no coverage for claims. Northwest Pump v. American States Ins. Co., 144 Or. App. 222, 925 P.2d 1241 (1996). Estoppel – Premiums. Insurer is estopped from asserting forfeiture for delinquency in payment of premium where, by custom, insurer induced belief on insured’s part that insurer would not insist upon prompt payment. Rosebraugh v. Tigard, 120 Or. 411, 252 P. 75 (1927). Estoppel – Proof of Loss. Insurer must point out defects in proof of loss furnished within stipulated time; otherwise insurer is estopped to object to sufficiency. Fagerlie v. New York Life Ins. Co., 129 Or. 485, 278 P. 104 (1929). Issue Preclusion. “Issue preclusion prevents relitigation in a later proceeding of an issue of ultimate fact
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that has been finally determined by a valid prior proceeding. State Farm Fire and Casualty Co. v. Sallak, 140 Or. App. 89, 92, 914 P.2d 697 (1996); see generally Nelson v. Emerald People’s Utility Dist., 318 Or. 99, 103, 862 P.2d 1293 (1993) (setting out requirements for issue preclusion). Issue preclusion applies only if disputed issue or fact was actually decided and necessary to judgment in underlying action. Party asserting issue preclusion has burden of establishing that it applies. State Farm Fire and Casualty Co. v. Paget, 123 Or. App. 558, 562, 860 P.2d 864 (1993). Both criminal conviction following full adjudication or criminal conviction following a guilty plea have preclusive effect in a subsequent civil proceeding. Sallak, 140 Or. App. at 94. No coverage if, in earlier proceeding, facts establishing that coverage is not available “have necessarily and conclusively been determined.” Sallak, 140 Or. App. at 92 (affirming summary judgment for insurer on basis of intentional act exclusion where insured pleaded guilty to resisting arrest and assaulting a police officer). Issue preclusion and claim preclusion apply to workers’ compensation proceedings. SAIF v. Myers, 191 Or. App. 263, 268, 82 P.3d 638 (2003). WORKERS’ COMPENSATION Oregon’s Workers’ Compensation Law is codified at Or. Rev. Stat. Chapter 656. Law must be construed liberally in favor of worker and compensation. Stovall v. Sally Salmon Seafood, 306 Or. 25, 757 P.2d 410 (1988). Law allocates to employer burden of proof to persuade trier of fact that worker unreasonably failed to follow needed medical advice or otherwise to mitigate damages. Nelson v. EBI Cos., 296 Or. 246, 674 P.2d 596 (1984); Christensen v. Argonaut Ins. Co., 72 Or. App. 110, 694 P.2d 1017, rev. denied, 299 Or. 37, 698 P.2d 965 (1985). Attorney Fees. Workers’ compensation claimant entitled to insurer-paid attorney fee where insurer 1) refuses to pay compensation due under an order of an ALJ, board, or court, or 2) “otherwise unreasonably resists payment of compensation.” Or. Rev. Stat. §656.382(1). Resistance to payment of compensation includes conduct that “unreasonably delays the processing of a claim and thereby postpones, ‘counteracts,’ or ‘strives against’ the payment of compensation,” but does not require that compensation be due at time of insurer’s misconduct. Tri-Met, Inc. v. Wolfe, 192 Or. App. 556, 562, 86 P.3d 111 (2004).

A letter from workers’ compensation insurer using broad and ambiguous language regarding whether the worker’s claim was denied constituted a “denied claim” entitling the worker to attorney fees under Or. Rev. Stat. §656.382(1). Cervantes v. Liberty Northwest Ins. Co., 205 Or. App. 316, 322, 134 P.3d 1033 (2006). Or. Rev. Stat. §656.382(2) provides that, on a request for hearing, review, appeal, cross-appeal, or petition for review initiated by employer or insurer and Administrative Law Judge (ALJ), if board or court finds that “the compensation awarded to a claimant should not be disallowed or reduced,” the employer or insurer must pay reasonable attorney fees to the claimant. Claimant is entitled to reasonable attorney fees only where claimant’s compensation has been awarded by a notice of closure, administrative or judicial determination, “or other affirmative determination of entitlement”; a payment of benefits is not an award of compensation under Or. Rev. Stat. §656.382(2). Reynolds v. Hydro Tech Inc., 182 Or. App. 488, 493, 49 P.3d 827 (2002). Where employer denies claim based upon claimant’s failure to cooperate, claim is “denied claim” under Or. Rev. Stat. §656.386(1), which provides for recovery of attorney fees where claimant “finally prevails.” Or. Rev. Stat. §656.386(1)(a). Because claimant succeeded in overturning claim denial in hearing before ALJ, claimant finally prevailed on a “denied claim” under Or. Rev. Stat. §656.386(1) and was entitled to attorney fees. SAIF v. Wart, 192 Or. App. 505, 523, 87 P.3d 1138 (2004). Where employer’s or insurer’s petition for judicial review is dismissed before decision on the merits, worker’s attorney is not entitled to attorney fees under Or. Rev. Stat. §656.382(2) (attorney fees pursuant to hearing on compensation awarded to a claimant). Agripac, Inc. v. Kitchel, 73 Or. App. 132, 698 P.2d 69 (1985). However, where a stipulated settlement order is approved and signed by an ALJ, which constitutes a decision on the merits, worker’s attorney is entitled to attorney fees. Deaton v. Hunt-Elder, 145 Or. App. 110, 928 P.2d 992 (1996). Where an attorney is instrumental in obtaining compensation for a worker and a hearing by referee is not held, a reasonable attorney fee shall be allowed. Jones v. OSCI, 108 Or. App. 230, 814 P.2d 558 (1991). Worker not entitled to attorney fees for his counsel’s participation in a responsibility hearing held under Or. Rev. Stat. §656.307 because worker’s right to compensation not in jeopardy in the responsibility portion of the hearing. Wilson v. Geddes, 90 Or. App. 64, 750 P.2d 1182 (1988).

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Worker not entitled to attorney fees for delay in denying claim where he failed to show that delay amounted to unreasonable resistance to payment of compensation. Miller v. SAIF, 78 Or. App. 158, 714 P.2d 1105 (1986); but see Senner v. Consolidated Metro, 76 Or. App. 197, 708 P.2d 378 (1985). Workers’ Compensation Board rule establishes suggested schedule of attorney fees based on attorney efforts and result obtained. Circuit court not bound by rule and could consider attorney’s risk of recovery in determining what fees were reasonable in current case. Wattenbarger v. Boise Cascade Corp., 301 Or. 12, 717 P.2d 1175 (1986). Benefits. See generally Or. Rev. Stat. §§656.204.250. Examples: Medical treatment is compensable under Or. Rev. Stat. §656.245 (“Medical Services to Be Provided”) if the compensable injury is a material contributing cause of the need for treatment. Hansen v. Weyerhaeuser, 89 Or. App. 349, 749 P.2d 1183 (1988); Jordan v. SAIF, 86 Or. App. 29, 738 P.2d 588 (1987). To recover compensation for on-the-job heart attack, worker must show, first, that he exerted himself in carrying out his job and, second, that exertion was material contributing factor in producing heart attack; proof is same whether exertion is physical or emotional, and plaintiff must prove both legal and medical causation by preponderance of evidence. Matter of Compensation of Harris, 53 Or. App. 618, 632 P.2d 1299 (1981); Magana v. Wilbanks Int’l, 112 Or. App. 134, 826 P.2d 1058 (1992). Benefits – Procedure for Obtaining. Or. Rev. Stat. §656.262 et seq. establishes procedure for obtaining workers’ compensation. Statute, in essence, creates a presumption–pending the employer’s action on a claim– that claim is for a compensable injury and that worker is entitled to compensation until and unless the employer denies the claim. Georgia-Pacific v. Hughes, 305 Or. 286, 751 P.2d 775 (1988). Benefits – Reconsideration. Evaluation Division of Workers’ Compensation Department may reconsider its prior awards based on new medical evidence. McGinnis v. Tigard Sch. Dist. No. 23J, 87 Or. App. 363, 742 P.2d 662 (1987). Benefits – Refusal to Pay. General rule is that once workers’ compensation insurer accepts a claim, it cannot deny claim, deny responsibility, or deny compensability. Insurer “must continue to pay compensation unless and until someone else is determined to be responsible.” D Maintenance Co. v. Mischke, 84 Or. App. 218, 221, 733

P.2d 483 (1987) (emphasis in original) (footnote omitted). Compensable Injury. Workers’ compensation applies to “compensable injury.” Or. Rev. Stat. §656.017(1). A “compensable injury” is defined as “an accidental injury.” Or. Rev. Stat. §656.005(7)(a). A “compensable injury” is an injury that requires medical services or results in disability or death. Or. Rev. Stat. §656.005(7)(a) does not require that worker’s injury result in both medical services and in disability or death. K-Mart v. Evenson, 167 Or. App. 46, 1 P.3d 477, rev. denied, 331 Or. 191, 18 P.3d 1098 (2000). A “compensable injury” must 1) arise out of, and 2) occur in the course of employment. Or. Rev. Stat. §656.005(7)(a). “In course of “ and “arising out of” are two prongs of “single, unitary work-connection test.” Alltucker v. City of Salem, 164 Or. App. 643, 645, 993 P.2d 159 (1999); see Rogers v. SAIF, 289 Or. 633, 616 P.2d 485 (1980). Test asks whether the relationship between the injury and the employment is “sufficiently close” that the injury should be compensable. Halsey Shedd RFPD v. Leopard, 180 Or. App. 332, 336, 44 P.3d 610 (2002) (citations omitted). The “in the course of employment” prong of the test relates to time, place, and circumstances of injury. The “arising out of” prong requires a causal link between worker’s injury and employment. Two-part test may be satisfied if factors supporting one prong are weak, but factors supporting other prong are strong. Id. (citation omitted). However, both prongs must be satisfied to some degree; neither is dispositive. Fred Meyer, Inc. v. Hayes, 325 Or. 592, 943 P.2d 197 (1997). Under the first prong, an injury occurs “in the course of employment” “if it takes place within the period of employment, at a place where a worker reasonably may be expected to be, and while the worker reasonably is fulfilling the duties of the employment or is doing something reasonably incidental to it.” Fred Meyer, 325 Or. at 598; see, e.g., In re Compensation of Lamb, 193 Or. App. 564, 92 P.3d 742 (2004) (bus driver injured as different bus was returning her to bus garage to pick up her private auto; finding that claimant was in course of her employment at time of injury–injury occurred within a reasonable period of time after claimant’s shift ended; injury occurred at bus garage, a place where employer could reasonably expect claimant to be at end of her shift; and injury was reasonably incidental to employment based upon implied agreement with employer that claimant would return to bus garage at end of her shift); American Medical Response v. Gavlik, 189 Or. App. 294, 299, 76 P.3d 117 (2003) (recognizing that employee’s “on-call” status, when combined with other
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circumstances, may be sufficient to say injury occurred in course of employment). Under the second prong of the test, an injury “arises out of” claimant’s employment when there is a causal connection between claimant’s injury and a risk connected with her employment. In re Compensation of Lamb, 193 Or. App. at 568 (bus driver injured as different bus was returning her to bus garage to pick up her private auto; finding that claimant’s injury “arose out of” her employment–”‘Traveling back to the [bus] garage by means of transportation offered free to employees by the employer exposed claimant to the risk of being injured on such transportation.’”) (quoting Workers’ Compensation Board). Claimant who sustains a work-related injury and who subsequently suffers a second injury during a compelled medical exam conducted to evaluate the first injury is entitled to workers’ compensation because second injury has arisen out of and in the course of employment. McAleny v. SAIF Corp., 191 Or. App. 105, 107, 81 P.3d 88 (2003). Worker’s death resulting from activities occurring after work hours–but while worker was away from home as requirement of his employment–held “compensable injury” under statutory definition. Rogers v. SAIF, 289 Or. 633, 616 P.2d 485 (1980). Injury incurred on delayed coffee break as worker was seeking restroom and refreshment facilities when no facilities were provided by employer is sufficiently work-related to be compensable. Halfman v. SAIF, 49 Or. App. 23, 618 P.2d 1294 (1980). An injury incurred “while engaging in or performing, or as a result of engaging in or performing, any recreational or social activities primarily for the workers’ personal pleasure” is not compensable. Or. Rev. Stat. §656.005(7)(b)(B). Injury occurring off employer’s premises while worker was on personal mission during time for which there is no evidence that employer had any control of worker is not within course and scope of employment. Crampton v. Bullis, 48 Or. App. 179, 616 P.2d 562 (1980). Auto accident at 3:00 a.m. beyond scope of employment. O’Connell v. SAIF, 19 Or. App. 735, 528 P.2d 1064 (1974). Compensable Injury – Aggravation Claim. To establish aggravation claim, worker must prove by preponderance of evidence the worsening of her condition since last award or arrangement of compensation and causal relation between worsening and her compensable injury. Brown v. Gates, 75 Or. App. 340, 706 P.2d 580 (1985). Worker’s fatal car accident en route to compensable-injury-related treatment was consequence of

compensable injury. Quality Plastics v. Hamilton, 112 Or. App. 175, 827 P.2d 946 (1992). Proof of pathological, as opposed to symptomatic, worsening of condition is generally required to establish “an actual worsening of the compensable condition” under Or. Rev. Stat. §656.273(1); International Paper Co. v. Miller, 151 Or. App. 131, 947 P.2d 1132 (1997). In order for a worker to establish an aggravation claim under Or. Rev. Stat. §656.273(1), there must be direct medical evidence that the underlying condition has worsened. Evidence of symptomatic worsening by itself does not permit fact-finder to infer actual worsening under statute. SAIF Corp. v. Walker, 330 Or. 102, 996 P.2d 979 (2000); see also Lepage v. Rogue Valley Med. Ctr., 166 Or. App. 627, 999 P.2d 533 (2000). However, symptomatic worsening may meet proof standard for actual worsening under statute if medical evidence, i.e., physician’s expert opinion, establishes that symptomatic worsening represents an actual worsening of underlying condition. Trier of fact must determine whether or not physician’s opinion is persuasive. SAIF Corp. v. January, 166 Or. App. 620, 998 P.2d 1286 (2000). Requirement that aggravation claim be accompanied by attending physician’s “objective findings” that claimant has suffered a “worsened condition” under Or. Rev. Stat. §656.273(3) refers to objective findings that, “at least as a prima facie matter, evince a worsening.” Liberty Northwest Ins. Corp. v. Stapleton, 192 Or. App. 312, 318, 84 P.3d 1116 (2004) (court’s emphasis). Award on an aggravation claim under Or. Rev. Stat. §656.273 (“Aggravation for Worsened Conditions”) depends on whether worker’s condition has worsened, regardless of whether that worsening was anticipated at the time of prior permanent partial disability award, and whether prior permanent partial disability award was intended to compensate the worker for that worsening. Gwynn v. SAIF, 304 Or. 345, 745 P.2d 775 (1987), on remand, 91 Or. App. 84, 754 P.2d 586 (1988). Worker who is hospitalized or who returns to work and then experiences total disability of 14 days or more has established aggravation as a matter of law. Ybarra v. Castle & Cooke, Inc., 94 Or. App. 746, 767 P.2d 112, opinion adhered to as modified on reconsideration, 96 Or. App. 665, 774 P.2d 503 (1989). In aggravation claim for increased compensation for unscheduled disability under Or. Rev. Stat. §656.273, worker need not show he is less able to work in his present employment, but must prove that his underlying condition has worsened so that he is less able to work in the broad field of general occupations resulting in a loss of earning capacity. Smith v. SAIF, 302 Or. 396, 730 P.2d 30 (1986); Intel Corp. v. Renfro, 155 Or. App. 447, 963 P.2d 173 (1998).
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Compensable Injury – Alcohol. “Compensable injury” does not include injury the major contributing cause of which is use of alcohol or illegal use of controlled substances, “unless the employer permitted, encouraged, or had actual knowledge of such consumption.” Or. Rev. Stat. §656.005(7)(b)(C). Compensable Injury – Assault. “Compensable injury” does not include injury to active participant in assaults or combats that 1) are not connected to job assignment; and 2) amount to “deviation” from customary duties. Or. Rev. Stat. §656.005(7)(b)(A). Exclusion applies only if both elements are met. Redman Industries, Inc. v. Lang, 326 Or. 32, 38, 943 P.2d 208 (1997). To be active participant in an assault, there must be either a physical altercation initiated by worker or, if worker initiates verbal altercation, it must incite or invite physical response. C.W. McCallen Const. Co., Inc. v. MacDonald, 172 Or. App. 738, 743, 19 P.3d 977, (2001) (holding that, where worker approached foreman yelling obscenities, and there was no evidence that worker invited physical response but foreman grabbed worker, worker was not an active participant in an assault or combat under Or. Rev. Stat. §656.005(7)(b)(A)). Compensable Injury – Consequential. A consequential injury or disease of a compensable injury is compensable only if compensable injury is “the major contributing cause of the consequential condition.” Or. Rev. Stat. §656.005(7)(a)(A). Where worker is injured while performing exercises to prevent reoccurrence of previous compensable back injury, new injury sustained is not compensable because preventative measures are not treatment, and therefore do not constitute reasonable and necessary medical treatment of compensable injury. Rogers v. Cascade Pacific Ind., 152 Or. App. 624, 955 P.2d 307 (1998), rev. dismissed, 331 Or. 584, 19 P.3d 356 (2001). Compensable Injury – Disability/Temporary. Person who is unavailable for work because of necessary treatment for a compensable injury is physically unable to work and is entitled to temporary total disability. Or. Rev. Stat. §656.210(1) (“Temporary Total Disability”); Weyerhaeuser v. Surprise, 89 Or. App. 296, 748 P.2d 1024 (1988). “Total disability” as used in Or. Rev. Stat. §656.210(1) means loss, including preexisting disability, of use or function of any scheduled or unscheduled portion of body that incapacitates worker from regularly performing work at gainful and suitable occupation. Cutright v. Weyerhaeuser Co., 299 Or. 290, 702 P.2d 403 (1985).

Voluntary withdrawal from work force before closure of claim does not preclude temporary total disability benefits where worker initially injured by occupational disease while in work force. Weyerhaeuser v. Kepford, 100 Or. App. 410, 786 P.2d 745 (1990). Where injured worker approached employer, sought re-employment, and furnished medical certificate releasing him to work, worker could not subsequently complain that employer’s offer of re-employment was premature because worker was not medically stationary at time and was still receiving temporary total disability benefits. Or. Rev. Stat. § 659A.046 (“Reemployment of Injured Worker in other Available and Suitable Work”); Carney v. Guard Pub. Co., 48 Or. App. 147, 616 P.2d 548, modified on other grounds, 48 Or. App. 927, 630 P.2d 867 (1980). Temporary disability benefits intended to provide replacement for wages due to compensable injury. Madrigal v. J. Frank Schmidt & Son, 172 Or. App. 1, 5, 17 P.3d 555 (2001). “Loss of wages” are those wages lost due to the compensable injury, not whatever wages worker is not making following the compensable injury, regardless of reason for that loss. Madrigal, supra, 172 Or. App. at 7. A worker with a temporary, but total disability receives compensation “equal to 66-2/3 percent of wages, but not more than 133 percent of the average weekly wage nor less than the amount of 90 percent of wages a week or the amount of $50 a week whichever amount is less. Or. Rev. Stat. §656.210(1). Premiums paid for retirement, medical and dental benefits are not “wages” for purposes of calculating temporary, total disability benefits. Nelson v. SAIF, 302 Or. 463, 731 P.2d 429 (1987). Compensable Injury – Disability/Permanent. Worker whose permanent disability claim has been accepted is entitled to receive workers’ compensation benefits and consequently has a protected property interest in receiving that compensation. Koskela v. Willamette Industries, Inc., 331 Or. 362, 371, 382, 15 P.3d 548 (2000), reconsideration denied, (Jan. 30, 2001) (concluding that post-1995 statutory scheme for assessing whether a worker should receive permanent total disability benefits fails to satisfy due process requirements and commenting that worker, “at some meaningful stage of the process,” should have opportunity for at least some kind of oral evidentiary hearing). “Gainful occupation,” for determining whether worker is permanently and totally disabled, is occupation that pays wages equal to or greater than state mandated minimum wage, not occupation that provides worker with sufficient “net gain” once employment expenses are subtracted from wages. Tee v. Albertson’s, Inc., 148 Or.
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App. 384, 939 P.2d 668 (1997); Or. Rev. Stat. §656.206(1)(a). Worker has burden of establishing “permanent total disability status and must establish that the worker is willing to seek regular gainful employment and that the worker has made reasonable efforts to obtain such employment.” Or. Rev. Stat. §656.206(3). Under statute, worker must prove that, “but for the compensable injury, [worker] (1) is or would be willing to seek gainful employment and (2) has or would have made reasonable efforts to obtain such employment” unless seeking such work would have been futile.” Lasley v. SAIF Corp., 165 Or. App. 634, 640, 997 P.2d 289 (2000) (citation and internal quotation marks omitted). Unreasonable refusal to take offered course of vocational rehabilitation constituted failure to show worker was willing to seek regular, gainful employment and had made reasonable efforts to obtain such employment. Delanoy v. Western Shake Co., 96 Or. App. 699, 773 P.2d 818 (1989). “All permanent disability contemplates future waxing and waning of symptoms of the condition.” Or. Rev. Stat. §656.214(7). NOTE: Or. Rev. Stat. §656.214 amended, effective Jan. 1, 2008 this section is moved to (6). Total disability award can be adjusted at later date if worker is no longer totally disabled, but can be reduced only upon finding of present ability to perform gainful and suitable employment under Or. Rev. Stat. §656.206(1) (“Permanent Total Disability”). Award cannot be justified by speculation of future changes in employment status. Gettman v. SAIF, 289 Or. 609, 616 P.2d 473 (1980), appeal after remand, 53 Or. App. 185, 631 P.2d 358 (1981). Loss of earning capacity is test for determining extent of permanent, partial unscheduled disability. Matter of Compensation of Hunt, 52 Or. App. 493, 628 P.2d 759 (1981); see also Howerton v. SAIF, 70 Or. App. 99, 688 P.2d 422 (1984). Employer must reinstate injured worker if job available and worker not prevented by disability from performing it. Or. Rev. Stat. §659.415(1) [renumbered 659A.043] (“Reinstatement of Injured Worker to Former Position”). Worker can be disabled for purposes of compensation if unable to perform old job. Chavez v. Boise Cascade Corp., 307 Or. 632, 772 P.2d 409 (1989). Compensable Injury – Mental Disorders. Stressrelated mental disorder compensable under workers’ compensation law if 1) stressful conditions objectively existed on the job at employer’s work place and 2) employment conditions, when compared to nonemployment

exposure, were the major contributing cause of disorder. McGarrah v. SAIF, 296 Or. 145, 675 P.2d 159 (1983). Citing several post-1983 appellate court decisions, Nordstrom, Inc. v. Gaul, 108 Or. App. 237, 815 P.2d 710 (1991) held the standard to be material, not major, contributing factor. Under Or. Rev. Stat. §656.802(3)(b), claim for mental disorder must not arise from employment conditions generally inherent in “every working situation.” Employee discipline is intrinsic to employment relationship, and if that discipline is objectively stressful, it could give rise to a claim for a stress-related occupational disease. SAIF v. Varner, 89 Or. App. 421, 749 P.2d 606 (1988). In the absence of satisfactory medical explanation of a distinction between symptoms of mental illness and the underlying condition, the symptoms are the condition. Id. Stressful events accompanying discharge from employment arise out of and in scope of employment, but mere act of discharge and loss of job do not. Elwood v. SAIF, 298 Or. 429, 693 P.2d 641, on remand, 72 Or. App. 771, 697 P.2d 567 (1985). If work conditions could produce stress and do produce worsening of worker’s condition, compensation is obtainable. Adsitt v. Clairmont Water District, 79 Or. App. 1, 717 P.2d 1231 (1986). Fact that worker’s continuing symptoms may be psychosomatic does not defeat compensability of claim where evidence shows that worker’s pain was initially caused by compensable injury. Judd v. Pendleton Woolen Mills, 87 Or. App. 583, 743 P.2d 751 (1987). Compensable Injury – Occupational Disease. See Or. Rev. Stat. §§656.802-.807. An “occupational disease” is considered an “injury” for purposes of workers’ compensation. Or. Rev. Stat. §656.804. An “occupational disease” is any disease or infection arising out of and in the course of employment caused by exposure to substances or activities to which worker is not ordinarily subjected or exposed other than during “regular actual employment.” Or. Rev. Stat. §656.802(1). Exposure must lead to disease or infection requiring medical services or resulting in disability or death. Id. Date of injury for occupational disease under statute providing benefits shall be continued as authorized by law “at the time the injury giving rise to the right to compensation occurred” is the date of disability or date of first medical treatment, not last date of exposure to agent which caused the injury. Reynoldson v. Multnomah Co., 189 Or. App. 327, 75 P.3d 477 (2003). Worker has burden of proof under occupational disease statutes. Or. Rev. Stat. §656.266; Or. Rev. Stat.
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§656.802(2). Worker must prove employment conditions were “major contributing cause” of disease or infection. Or. Rev. Stat. §656.802(2)(a). “Substantial evidence” is required to sustain worker’s proof burden. SAIF Corp. v. Chipman, 166 Or. App. 443, 446, 997 P.2d 899 (2000); see Garcia v. Boise Cascade Corp., 309 Or. 292, 295, 787 P.2d 884, on remand, 103 Or. App. 508, 798 P.2d 265 (1990) (defining “substantial evidence”). Worker must prove that injury or occupational disease is compensable and prove nature and extent of any resulting disability. Or. Rev. Stat. §656.266(1). Worker has burden of proving entitlement to benefits claimed. Matthews v. Louisiana Pacific, 47 Or. App. 1083, 615 P.2d 1151 (1980). Where worker suffers from a condition that is result of both on-the-job and off-the-job causative agents, worker must demonstrate that the onthe-job factors were the major contributing cause. Clark v. Erdman Meat Packing, 88 Or. App. 1, 744 P.2d 255 (1987). Occupational disease claims must be filed by the later of 1) one year from date worker first discovers, or in the exercise of reasonable care should have discovered, the occupational disease, Or. Rev. Stat. §656.807(1)(a); or 2) one year from date worker becomes disabled or is informed by a physician that worker is suffering from an occupational disease. Or. Rev. Stat. §656.807(1)(b). A worker is “informed” under Or. Rev. Stat. §656.807(1)(b) when physician tells worker “expressly or in substance” that worker is suffering from an occupational disease. Wayne-Dalton Corp. v. Mulford, 190 Or. App. 370, 79 P.3d 894 (2003) (footnote omitted). Where occupational disease results in death, worker’s beneficiary must file claim within one year from date worker’s beneficiary first discovered, or in the exercise of reasonable care should have discovered, that the cause of the worker’s death was due to occupational disease. Or. Rev. Stat. §656.807(2). Under Or. Rev. Stat. §656.807(3) and Or. Rev. Stat. §656.265(4)(a), worker’s failure to file occupational disease claim within statutory limitation does not bar claim unless employer proves prejudice from late filing. Robinson v. SAIF, 69 Or. App. 534, 686 P.2d 1053 (1984). Compensable Injury – Personal Activities. “Compensable injury” does not include injuries incurred “while engaging in or performing…any recreational or social activities primarily for the worker’s personal pleasure.” Or. Rev. Stat. §656.005 (7)(b)(B); see e.g., Liberty Northwest Ins. Corp. v. Nichols, 186 Or. App. 664, 670-71, 64 P.3d 1152 (2003) (employee broke tooth when he ate an employer-supplied candy while setting up a delivery for employer; holding that employee’s in-

jury did not fall within recreational exception to “compensable injury”). Compensable Injury – Preexisting Conditions. If compensable injury combines with preexisting condition to cause or prolong disability or a need for treatment, combined condition compensable only if otherwise compensable injury “is the major contributing cause of the disability of the combined condition or the major contributing cause of the need for treatment of the combined condition.” Or. Rev. Stat. §656.005(7)(a)(B). Statute requires fact-finder to weigh extent of worker’s preexisting condition against extent of worker’s on-the-job injury to determine which of the two problems is primary cause of need for treatment of combined condition. To establish compensability of combined condition, worker must show more than fact that work injury resulted in need for treatment. Mohr v. Barrett Business Services, 168 Or. App. 579, 7 P.3d 665 (2000). Where continuing compensability of combined condition is denied because the otherwise compensable injury is no longer the “major contributing cause” of the combined condition, the underlying accepted injury is still compensable and must be closed according to Or. Rev. Stat. §656.268(1). South Lane County School Dist. #45-J3 v. Arms, 186 Or. App. 361, 367, 62 P.3d 882 (2003). A condition that is “solely” caused by a preexisting condition is not a separate condition from the preexisting condition; an insurer’s acceptance of a claim of such a condition automatically includes acceptance of the disease causing that condition. However, where a condition is not solely caused by a preexisting condition, the acceptance “does not necessarily” include that preexisting condition. Rather, the scope of the acceptance is a question of fact for the Workers’ Compensation Board. Cloud v. Klamath County School Dist., 191 Or. App. 610, 614-15, 83 P.3d 918 (2004). Medical services directed “solely” to worker’s preexisting condition not compensable unless, in occupational disease or injury claims, work conditions or events constitute “major contributing cause of a pathological worsening of the preexisting condition” or “major contributing cause of an actual worsening of the preexisting condition and not just of its symptoms.” In medical service claims, preexisting condition not compensable unless medical service prescribed to treat change in preexisting condition as specified above. Or. Rev. Stat. §656.225. If worker is permanently and totally disabled following a compensable injury, and if medical conditions that preexisted the injury interfere with the healing of the compensable injury, then the effect of the preexisting conditions on the compensable injury must be consid---- For Current Listings access www.ambest.com/legal---Last Update August, 2008

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ered in awarding benefits. Waremart, Inc. v. White, 85 Or. App. 122, 735 P.2d 1262 (1987). Where compensable injury is a material contributing cause of worker’s permanent total disability, postinjury natural worsening of a preexisting condition is not fatal to compensability. Weyerhaeuser Co. v. Rees, 85 Or. App. 325, 736 P.2d 213 (1987). Where there are multiple accepted injuries involving the same body part, there is a rebuttable presumption that the last injury contributed independently to the condition now requiring further medical services or resulting in additional disability. Ebbtide Enterprises v. Tucker, 303 Or. 459, 738 P.2d 194 (1987). Compensable Injury – Suicide. Suicide is not result of deliberate intention if evidence shows that worker suffers from work-related psychological condition which causes or is in itself a mental derangement that impairs worker’s ability to resist compulsion to take his own life. Ahn v. Frito-Lay, Inc., 91 Or. App. 443, 756 P.2d 40 (1988). Going and Coming Rule. General rule is that injuries incurred while worker is traveling to or from work do not occur in course of employment and therefore are not compensable. Krushwitz v. McDonald’s Restaurants, 323 Or. 520, 919 P.2d 465 (1996). However, there are exceptions to general rule. Where worker travels to or from work and incurs injury “on or near employer’s premises,” there is “sufficient work relationship” between injury and employment for purposes of workers’ compensation only if employer exercises “some” control over place where injury occurs. Cope v. West American Ins. Co., 309 Or. 232, 239, 785 P.2d 1050 (1990). However, some causal connection must be shown between injury and the employment. Norpac Foods, Inc. v. Gilmore, 318 Or. 363, 867 P.2d 1373 (1994). Injury incurred while coming to work compensable if it takes place on only practicable route across area that is subject to employer’s control. Montgomery Ward v. Malinen, 71 Or. App. 457, 692 P.2d 694 (1984). Where worker is required, as part of job, to bring car to work for use during the working day, his trip to and from work is, by that fact alone, embraced within the course of employment. Where travel is essentially part of employment, risk remains incident to employment even though worker may not actually be working at time of injury. SAIF v. Reel, 303 Or. 210, 735 P.2d 364 (1987). Even where worker briefly departs from instructed route, accident may be within scope of employment. Iliaifar v. SAIF, 160 Or. App. 116, 981 P.2d 353 (1999).

Despite fact that injury occurred during commute to job site, where worker was compensated for travel at time of injury, worker not barred from recovery under rule because he was within scope of employment. Bernards v. Wright, 93 Or. App. 192, 760 P.2d 1388 (1988). Employer – Acceptance or Denial of Claim. Employer or insurer may accept less than entirety of claim. If worker believes scope of acceptance is inadequate, worker has a remedy through hearings process. Rogers v. Hewlitt-Packard Co., 153 Or. App. 436, 960 P.2d 871 (1998); see Or. Rev. Stat. §656.283 (“Hearing Rights and Procedure”). Acceptance or denial of claim must occur within 60 days after insurer or self-insured employer has notice or knowledge of the claim. Or. Rev. Stat. §656.262(6)(a). Once claim is accepted, insurer or self-insured employer cannot revoke acceptance except as provided for in Or. Rev. Stat. §656.262. Or. Rev. Stat. §656.262(6)(a). “Back-up” denial possible within two years of claim acceptance if new evidence comes to light that claim is not compensable. Or. Rev. Stat. §656.262(6)(a). Employer’s general denial cannot encompass claims or conditions of which employer had no knowledge at the time of denial. Naught v. Gamble, Inc., 87 Or. App. 145, 741 P.2d 901 (1987). Insurer or self-insured employer may revoke acceptance of claim at anytime upon showing of fraud, misrepresentation, or other illegal activity by the worker. Or. Rev. Stat. §656.262(6)(a). Worker “entitled to receive compensation” under Workers’ Compensation Law required to submit to independent medical examination (IME) if requested by insurer or self-insured employer. Or. Rev. Stat. §656.325(1). Worker “entitled to receive benefits” includes worker whose claim has been denied and who is appealing denial; insured or self-insured employer can require worker to submit to IME during that time period. Darling v. Johnson Controls Battery Group, Inc., 188 Or. App. 190, 204, 70 P.3d 894 (2003). Employer’s payment of medical benefits does not necessarily constitute a claim acceptance. Richmond v. SAIF, 87 Or. App. 401, 742 P.2d 677 (1987); Or. Rev. Stat. §656.262(10). A worker objecting to a claim denial must file a request for hearing not later than the 60th day after the mailing of the denial to the claimant or not later than the th 180 day after mailing of the denial and the claimant establishes at a hearing that there was “good cause” for th failure to file the hearing request by the 60 day after the mailing of the denial. Or. Rev. Stat. §656.319(1). Mental problem less than incompetency may satisfy “good
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cause” requirement. SAIF Corp. v. Avery, 167 Or. App. 327, 999 P.2d 1216 (2000). Date of mailing, not receipt, starts the running of the 60 days. Board must determine “good cause” on basis of consideration of Or. R. Civ. P. 71B (1). Cowart v. SAIF, 86 Or. App. 748, 740 P.2d 249 (1987), appeal after remand, 94 Or. App. 288, 765 P.2d 226 (1988). Employer – Benefits Payment. See Or. Rev. Stat. §§656.204-.260 (“Compensation and Medical Benefits”) (effective to Jan. 1, 2008). See Or. Rev. Stat. §§656.262-.340 (“Procedure for Obtaining Compensation”) (effective to Jan. 1, 2008). Employer – Last Injurious Exposure Rule. Oregon has adopted “last injurious exposure” rule. Rule imposes full responsibility on last employer from time of onset of disability, if worker was exposed there to working conditions that could have caused type of disease suffered by worker. Roseburg Forest Products v. Long, 325 Or. 305, 937 P.2d 517 (1997), appeal after remand, 156 Or. App. 518, 972 P.2d 1229 (1998); see Foster Wheeler Corp. v. Marble, 188 Or. App. 579, 582, 72 P.3d 645 (2003) (under last injurious exposure rule, “liability is presumptively assigned to the potentially causal employer for whom claimant is working at the time claimant first seeks or receives medical treatment, whichever comes first”) (citing cases). Rule is one of proof and assignment of responsibility. As rule of proof, worker can prove a compensable injury without having to prove degree, if any, to which exposure to disease-causing conditions at a particular employment actually caused the disease. Worker need prove only that disease was caused by employmentrelated exposure. Roseburg Forest Products, 325 Or. at 311. As rule of assignment of responsibility, rule assigns “full responsibility to the last employer that could have caused the worker’s injury.” Roseburg Forest Products, 325 Or. at 309. An employer cannot be responsible for a particular worker’s occupational disease that it could not, in fact, have caused. Roseburg Forest Products, 325 Or. at 311. Where two simultaneous employments contribute to worker’s occupational disease, both employers are responsible for worker’s compensation, and last injurious exposure rule does not apply. Mathis v. SAIF, 10 Or. App. 139, 499 P.2d 1331 (1972). Employer – Multiple. An employee is considered a “joint” employee where he or she is under the “‘simultaneous control of two employers and performs simultaneous and related services for each.’” Under those circumstances, the employee’s injuries are the joint responsibilCopyright © 2009 by A.M. Best Company, Inc.

ity of both employers. For liability purposes, it does not matter that the employee was working exclusively for one of the employers when he or she was injured. Liberty Northwest Ins. Corp. v. McDonald, 187 Or. App. 40, 44-45, 66 P.3d 528 (2003) (citation omitted). An employee is considered a “dual” employee where he or she is under the separate control of two employers and performs separate, unrelated services for each of the two employers. Under those circumstances, liability rests on the employer for whom the employee was working when he or she was injured. Id. In dual-employer situation, an employee cannot obtain workers compensation from one employer and a tort judgment from the other employer for the same injury. Robinson v. Omark Industries, 46 Or. App. 263, 269, 611 P.2d 665 (1980), rev. dismissed, 291 Or. 5, 627 P.2d 1263 (1981). Employer – Temporary. Defendant was “complying” employer under Or. Rev. Stat. §656.017 and immune from tort liability for defendant’s work related injury (Or. Rev. Stat. §656.018) when it was established that fee paid by defendant for plaintiff’s services to a temporary services corporation employing plaintiff was computed to include workers’ compensation insurance. Blacknall v. Westwood Corp., 89 Or. App. 145, 747 P.2d 412 (1987), aff’d, 307 Or. 113, 764 P.2d 544 (1988). Worker-leasing companies are specifically provided for under Or. Rev. Stat. §§656.850-.855 (effective through Jan. 1, 2008). Where worker injured in course of physical ability test, which was prerequisite for consideration for position, he was not a “worker furnish[ing] services a for remuneration” within meaning of Or. Rev. Stat. §656.005(30) and was therefore not entitled to compensation benefits. Dykes v. SAIF, 47 Or. App. 187, 613 P.2d 1106 (1980). Insurer. Insurer’s failure to deny a claim within the 60-day limit imposed by Or. Rev. Stat. §656.262(6)(a) did not preclude a subsequent denial. Penalty for insurer’s late denial is specified in Or. Rev. Stat. §656.262(11)(a). Richmond v. SAIF, 85 Or. App. 444, 737 P.2d 135, clarified on reconsideration, 87 Or. App. 401, 742 P.2d 677 (1987). Insurer’s late claim payment due to internal processing errors and delays not always unreasonable delay for purposes of penalties under workers’ compensation statute. However, where parties agreed to a particular time for payment; agreement was drafted by insurer; four of five factors contributing to late payment were under insurer’s control; and timely payment was feasible despite delay by Workers’ Compensation Board, insurer’s late payment held unreasonable as a matter of
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law. Neighbors. v. Blake, 167 Or. App. 343, 3 P.3d 172 (2000). Liens. Where worker elects to seek damages from non-complying employer or third party for compensable injury, workers’ compensation insurer or self-insured employer paying benefits has lien against any sum recovered. See Or. Rev. Stat. §656.580(2). Lien preferred to all claims except cost of recovering damages. Or. Rev. Stat. §656.580(2). Statutory lien under §656.580 specifically contemplates recovery of paid workers’ compensation benefits from proceeds recovered from a third party. Trout v. Liberty Northwest Ins. Corp., 154 Or. App. 89, 99, 961 P.2d 235 (1998). Where worker settles with third party, paying agency, which includes insurers, has lien against the settlement. Rash v. McKinstry Co., 331 Or. 665, 671, 20 P.3d 197 (2001). A Claim Disposition Agreement by the parties to a workers’ compensation claim that does not mention an existing lien extinguishes that lien. Rash, 331 Or. at 673; see Or. Rev. Stat. §656.236(1) (“Unless otherwise specified, a disposition resolves all matters and all rights to compensation, attorney fees and penalties potentially arising out of claims, except medical services regardless of the conditions stated in the agreement.”). Where a wrongful death action includes worker’s compensation worker and non-worker’s compensation workers, insurer’s lien attaches only to that amount distributed to workers’ compensation worker, not to total amount recovered in action. Where workers’ compensation worker does not receive any share of the recovery, insurer’s lien is effectively extinguished. Worthen v. Lumbermen’s Underwriting Alliance, Inc., 137 Or. App. 368, 373-75, 904 P.2d 1088 (1995). Notice. “Claim” means a written request for compensation “or any compensable injury of which a subject employer has notice or knowledge.” Or. Rev. Stat. §656.005(6). Thus, where employer knows that worker was injured or has an occupational disease, that knowledge constitutes a “claim.” Requisite written notice under Or. Rev. Stat. §656.265 perfects only an existing claim. McPhail v. Milwaukie Lumber Co., 165 Or. App. 596, 999 P.2d 1144 (2000). Out-of-State Injury. Critical determinant in deciding if worker falls within application of statute specifying scope of coverage under Workers’ Compensation Act for out-of-state injuries is whether worker is permanently or temporarily employed in Oregon. Jackson v. Tillamook Growers Co-op, 39 Or. App. 247, 592 P.2d 235 (1979). Oregon Rev. Stat. §656.245 (“Medical Services to Be Provided”) does not permit insurer to deny worker reasonable medical treatment, even where worker is treated out of state. Day v. S & S Pizza Co., 77 Or. App. 711, 714 P.2d 275 (1986).
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Remedy – Exclusivity. Remedy under workers’ compensation laws is exclusive and protects employers from all other liability arising out of and in the course of employment, including claims for contribution or indemnity asserted by third parties. Or. Rev. Stat. §656.018(1)(a); but see Or. Rev. Stat. §656.019. The exclusive remedy provision applies whether or not conditions are compensable under workers’ compensation law. Or. Rev. Stat. §656.018(7). The exclusive remedy provision does not bar workers of public bodies from recovering uninsured motorist coverage under Or. Rev. Stat. §278.215, which requires a public body to provide uninsured motorist coverage for or on account of operation of motor vehicles within public body’s control. City of Salem v. Salisbury, 168 Or. App. 14, 5 P.3d 1131 (2000). Remedy – Indemnity Agreements. Indemnity agreements between employers have been held void as violative of exclusive remedy provision of workers’ compensation statute. Or. Rev. Stat. §656.018; see Robert v. Gray’s Crane & Rigging, Inc., 73 Or. App. 29, 697 P.2d 985 (1985); Rock v. Peter Kiewit Sons’ Co., 77 Or. App. 469, 713 P.2d 673 (1986); Young v. Mobil Oil Corp., 85 Or. App. 64, 735 P.2d 654 (1987). However, employer may be required to indemnify third party held liable for worker’s injuries if employer breached independent duty of care owed to third party. Independent duty does not arise simply from fact that employer purchased services from third party; there must be some evidence of particular duty. Sandwell Int’l Inc. v. American Can Co., 47 Or. App. 429, 614 P.2d 620 (1980). Remedy – Exhaustion. Under workers’ compensation scheme, worker must exhaust his or her administrative remedies before seeking further review. Everett v. SAIF, 179 Or. App. 112, 118, 38 P.3d 952 (2002). Remedy – Unconstitutionality. Under current workers’ compensation scheme, there is a class of workers who have suffered a work-related injury, but who cannot receive compensation benefits because they cannot establish that the work-related incident at issue is the major contributing cause of their injury. The exclusivity provisions of the workers’ compensation statutes bar such workers from seeking relief outside the workers’ compensation system, leaving them without any remedy. Oregon Supreme Court has concluded that, if a workers’ compensation claim alleging an injury to a right protected by the remedy clause is denied for failure to meet the above burden of proof, then the exclusive remedy provisions are unconstitutional under the remedy clause of Article I, section 10 of the Oregon Constitution. Smothers v. Gresham Transfer, Inc., 332 Or. 83, 23 P.3d 333 (2001).
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OREGON

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In response to Smothers, the 2001 Oregon Legislature passed Senate Bill 485, 2001 Or. Laws c. 865, §15, which amended the Workers’ Compensation Act. The amendment allows workers whose claims are denied based on the “major contributing standard” to bring a civil action against the employer. However, the Act requires that the employee file a workers compensation claim first. The Amendment contained an emergency clause and became effective when the Governor signed the bill on June 30, 2001. See Or. Rev. Stat. §656.019. Statute of Limitations. Or. Rev. Stat. §656.319(6) requires that a worker requesting a hearing based upon allegations of failure to process a claim or processing a claim “incorrectly” must be “filed within two years after the alleged action or inaction occurred.” The “inaction” referred to in Or. Rev. Stat. §656.319(6) is “a failure to perform a time-specific, discrete duty, request or obligation.” French-Davis v. Grand Central Bowl, 186 Or. App. 280, 285, 62 P.3d 865 (2003). Under Or. Rev. Stat. §656.268(5)(b), an insurer must respond to a claimant’s request for a hearing to close an injury claim within 10 days. After those 10 days have elapsed, an insurer has failed to perform its obligation. That failure to perform is the “inaction” that commences the running of the twoyear statute of limitations under Or. Rev. Stat. §656.319(6). French-Davis, 196 Or. App. at 287. Workers. A “worker” for purposes of workers compensation is “any person…who engages to furnish services for a remuneration, subject to the direction and control of an employer[.]” Or. Rev. Stat. §656.005(30). In Hopkins v. Kobos Co., 186 Or. App. 273, 62 P.3d 870 (2003), claimant was a resident of a charitable religious institution. The institution had an arrangement with defendant that, in return for a charitable donation, the institution would assign certain residents, including claimant, to perform services for defendant. Claimant was injured while working for defendant. Court held that claimant was not entitled to workers compensation from defendant because claimant received no remuneration from defendant as was therefore not a “worker” within the meaning of the statute. The court rejected arguments that claimant was the institution’s agent or “subcontractor.” Id. at 277-78. Injured workers must cooperate in investigation of claims. Or. Rev. Stat. §656.262(13); see, e.g., SAIF Corp. v. Dubose, 193 Or. App. 62, 88 P.3d 933 (2004). If worker refuses to cooperate and claim is denied for failure to cooperate, worker must make a timely, affirmative request for an expedited hearing on the noncooperation denial in order to receive a further hearing on the claim. Or. Rev. Stat. §656.262(14). Workers’ Compensation Board. Workers’ Compensation Board has jurisdiction over matters concerning a

claim, which “are those matters in which a worker’s right to receive compensation, or the amount thereof, are directly in issue.” Or. Rev. Stat. §656.704(3)(a); LeGore v. Self-Insured Management Services, 157 Or. App. 229, 234, 972 P.2d 892 (1998). Based upon facts of case, Workers’ Compensation Board acted within delegated range of authority when it determined that claimant did not have good cause for failing to file a timely request for a hearing. Meza v. Bruce Packing Co., Inc., 186 Or. App. 452, 63 P.3d 1193 (2003). Workers’ Compensation Board lacked jurisdiction over dispute concerning delay by workers’ compensation insurer in reimbursing worker’s private health care provider. Ashley v. University of Oregon, 100 Or. App. 588, 787 P.2d 506 (1990). Workers’ Compensation Board did not have authority to order worker’s attorney to pay an unpaid lien amount out of attorney’s personal funds where attorney has already disbursed entire third-party judgment proceeds to worker, the workers’ compensation insurer, and to himself for costs and attorney fees. Steiner v. E.J. Bartells Co., 170 Or. App. 759, 761, 13 P.3d 1050 (2000). Worker’s Compensation Board does not have specialized medical expertise and therefore not entitled to take official notice of technical facts. Board’s findings must be based on medical evidence in the record. SAIF v. Calder, 157 Or. App. 224, 228, 969 P.2d 1050 (1998). However, where medical opinion is divided, Board must evaluate the evidence and, depending on record in each case, may or may not give greater weight to opinion of treating physician. Oregon Court of Appeals will affirm Board’s findings if supported by “substantial evidence.” Dillon v. Whirlpool Corp., 172 Or. App. 484, 489, 19 P.3d 951 (2001). Rules of res judicata apply to successive proceedings before the Workers’ Compensation Board. North Clackamas Sch. Dist. v. White, 305 Or. 48, 750 P.2d 485, modified on other grounds, 305 Or. 468, 752 P.2d 1210, on remand, 92 Or. App. 573, 758 P.2d 893 (1988). Department of Consumer and Business Services processes requests for reconsideration of determination of workers’ compensation benefits. Department has authority to abate and withdraw first Determination Order and later to issue a second order on reconsideration. Boydston v. Liberty Northwest Ins. Corp., 166 Or. App. 336, 999 P.2d 503 (2000); Liberty Northwest Ins. Corp. v. Allenby, 166 Or. App. 331, 1 P.3d 464 (2000); see Or. Rev. Stat. §656.268(6)(b)-(g).

BEST’S DIRECTORIES OF RECOMMENDED INSURANCE ATTORNEYS AND ADJUSTERS
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