On July 9, 2014, the Oregon Court of Appeals issued an opinion in Jones v Nava, 264 Or App 235, — P3d — (2014), analyzing an insured’s ability to present evidence of fear and nightmares in a UM/UIM coverage case. Overruling the trial court, the Court of Appeals held that an insured was able to present evidence of fear and nightmares resulting from a physical injuries sustained in an automobile accident. The court also addressed an insured’s entitlement to attorney fees under ORS 742.061. It found that if a “tender” that occurs more than six months after receipt of proof of loss—even if made before the insured files suit and is greater than the amount the insured ultimately recovers—it does not bar an insured from recovering attorney fees under the statute.
The case involved an insured that was injured in an automobile accident caused by an uninsured driver. The insured filed a claim under her insurance policy and demanded the full UM/UIM policy limits of $25,000. Eight months after filing the claim, the insurance company offered the insured $3,000 to settle the claim. The insurance company eventually raised its offer to $6,000, which the insured rejected. After receiving the increased offer, the insured filed suit.
Following court-annexed arbitration, the insured was awarded slightly more than $11,800 in damages and approximately $9,250 in attorney fees under ORS 742.061. The insurance company appealed the arbitration award to trial de novo. At trial, the insurance company filed a motion in limine to preclude the insured from presenting evidence that she suffered from continuing nightmares about the accident and driving in the dark. The trial court granted the motion, reasoning that the insured’s action sounded in contract and her damages were limited by the UM/UIM statute to damages that “arise from bodily injury,” which the court found did not include the insured’s fear and nightmares. Following trial, the jury awarded the insured about $5,850 in economic and non-economic damages. Thereafter, the trial court awarded the insured almost $25,200 in attorney fees. The attorney fee award was based on a rate of $300, which was 20 percent more than the attorney’s typical rate because the attorney took the case on a contingency basis. The insurance company appealed the insured’s right to recover attorney fees and, alternatively, the amount of fees awarded by the trial court. The insured cross-appealed the trial court’s ruling excluding evidence of continuing emotional distress and fear.
The Court of Appeals first addressed the trial court’s ruling on the insured’s ability to present evidence of her fear and nightmares. The insured, citing the terms of the insurance policy and ORS 742.504, argued that she should have been permitted to present the evidence because it was directly related to her physical injuries. The Court of Appeals agreed with the insured, finding that the trial court erred in its ruling. It also determined that the error was not harmless and remanded the case to the trial court.
Next, the court considered the trial court’s award of attorney fees. The insurance company argued that the insured was not entitled to attorney fees under ORS 742.061 based on its tender of $6,000 to settle the claim, which was less than was awarded by the jury. The Court of Appeals rejected this argument because the insurance company failed to make any settlement offer within six months of receipt of the insured’s proof of loss—in effect, its tender was zero dollars—and the insured recovered more than the amount tendered within the six month period. The court refused to consider the insurance company’s later offer of $6,000 because it occurred after the six month period lapsed. The insurance company argued that the six month period in ORS 742.061 did not apply in this case because it made the $6,000 tender before the insured filed suit. Citing a number of prior cases, the Court of Appeals rejected the argument on the ground that the six month period applied regardless of when the insured filed suit.
Finally, the court considered the insurance company’s challenge to the amount of attorney fees awarded by the trial court. The parties each presented arguments regarding the timing of when “objective reasonableness” must be determined—the insurance company argued it must be assessed at the time of its $6,000, while the insured argued it must have been determined prior to trial de novo. Instead, the Court of Appeals held that these issues should be decided on its own facts and based on consideration of the factors outlined in ORS 20.075(1) and (2).
Maloney Lauersdorf Reiner frequently represents clients facing UM/UIM insurance coverage issues and questions regarding the entitlement to and reasonableness of attorney fees under ORS 742.061. Please contact us with any questions about this case or any other matter you see address on our Insurance Coverage Blog.