Oregon Court Holds Insurer Entitled to Subrogation Against Tortfeasor

On August 13, 2014, the Oregon Court of Appeals issued an opinion in Nationwide Ins. Co. of Am. v. Tri-County Metropolitan Trans. Dist., 2014 WL 3954003, — Or App —, — P.3d — (2014), addressing whether an insurance company sufficiently stated a claim against an alleged tortfeasor in a subrogation action.  The tortfeasor sought to dismiss the insurance company’s complaint on the ground that it was not the real party in interest and it failed to state a claim for relief.  The Court of Appeals found that the insurance company’s subrogation right meant it was a proper party in the litigation.

The complaint alleged that the insurance company paid approximately $2,750 to its insured repair damages to a vehicle caused by the tortfeasor’s negligently operated vehicle.  The insurance company sued the tortfeasor to recover the amount, alleging that it was subrogated to its insured’s rights against the tortfeasor.  The tortfeasor moved to dismiss the case pursuant to ORCP 21 A (6) and ORCP 26 on the ground that the insurance company was not the real party in interest.  The tortfeasor also sought dismissal under ORCP 21 A(8), on the ground that the complaint failed to state a claim for negligence because it did not allege that the insurance company, as opposed to its insured, had been damaged by the tortfeasor’s alleged negligence.  The trial court agreed with the tortfeasor and dismissed the complaint.  The insurance company appealed.

The Court of Appeals first addressed the tortfeasor’s claim that the insurance company was not a real party in interest.  The court began by noting that, under Oregon law, an insurance company that makes outright payment to its insured is subrogated to the insured’s claims arising out of the loss for which payment was issued.  The insurance company argued the complaint stated allegations sufficient to satisfy those requirements.  The tortfeasor countered that the insured—not the insurance company—should be considered the real party in interest because it places the tortfeasor at risk of being subject to separate litigation from the insured.  While it recognized the tortfeasor’s concern, the Court of Appeals rejected its argument on because (1) review was limited to the allegations in the complaint, and (2) the proper remedy to address the tortfeasor’s concern was to move to dismiss under ORCP 21 A(7) for failure to join an indispensable party.

Next, the Court of Appeals analyzed the trial court’s dismissal of the complaint for failure to state a claim.  That dismissal was based on the tortfeasor’s argument that the complaint did not state facts establishing that the insurance company was injured as a result of the tortfeasor’s alleged conduct.  As the tortfeasor acknowledged at oral argument, however, the Court of Appeals’ finding that the insurance company was subrogated to its insured’s claim meant the complaint sufficiently stated a claim for relief.

The attorneys of Maloney Lauersdorf Reiner regularly address insurance claims such as those at issue in this case.  Please do not hesitate to contact us with any questions or concerns about this case or any other issue you see addressed on the MLR Insurance Coverage Blog.

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