Bird v. Norpac Foods, Inc.

• Jurisdiction: Oregon
• Court: Oregon Court of Appeals
• Writing for the Court: HASELTON
• Citation: Bird v. Norpac Foods, Inc., 888 P.2d 118, 132 Or.App. 349 (Or. App. 1995)
• Decision Date: 04 January 1995
• Parties: Linda BIRD, Respondent, v. NORPAC FOODS, INC., an Oregon cooperative, dba Stayton Canning Company, Appellant, Donald Gale Moreland, an individual, Defendant. OREGON INSURANCE GUARANTY ASSOCIATION, an association, and Norpac Foods, Inc., dba Stayton Canning Company, a cooperative, and Donald Moreland, Respondents, v. Linda BIRD, Appellant, American Motorists Insurance Company, an Illinois corporation, and Farmers Insurance Company of Oregon, an Oregon Corporation, Defendants. 850500C; C900682CV; CA A65075 (Control); CA A68732.

Page 118

888 P.2d 118

132 Or.App. 349

Linda BIRD, Respondent, v. NORPAC FOODS, INC., an Oregon cooperative, dba Stayton

Canning Company, Appellant,

Donald Gale Moreland, an individual, Defendant.

OREGON INSURANCE GUARANTY ASSOCIATION, an association, and Norpac Foods, Inc., dba Stayton Canning Company, a cooperative, and Donald Moreland, Respondents, v. Linda BIRD, Appellant,

American Motorists Insurance Company, an Illinois

corporation, and Farmers Insurance Company of

Oregon, an Oregon Corporation, Defendants.

850500C; C900682CV; CA A65075 (Control); CA A68732.

Court of Appeals of Oregon.

Argued and Submitted Oct. 10, 1994.

Decided Jan. 4, 1995.

John L. Langslet, Portland, argued the cause for appellant Norpac Foods, Inc. With him on the briefs in CA A65075 were Michael G. Harting and Martin, Bischoff, Templeton, Langslet & Hoffman.

John E. Uffelman, Beaverton, argued the cause and filed the brief in CA A65075 for respondent Linda Bird.

John E. Uffelman, Beaverton, argued the cause and filed the briefs in CA A68732 for appellant Linda Bird.

John L. Langslet, Portland, argued the cause for respondents Oregon Ins. Guar. Ass'n, Norpac Foods, Inc., and Donald Moreland. With him on the brief in CA A68732 were Michael G. Harting and Martin, Bischoff, Templeton, Langslet & Hoffman.

Before DEITS, P.J., and RIGGS and HASELTON, JJ.

HASELTON, Judge.

These two consolidated appeals involve contradicting dispositions that present the same question: Where the Oregon Insurance Guaranty Association (OIGA) has assumed the rights and responsibilities of an insolvent insurer under ORS 734.510 et seq., and a plaintiff obtains a personal injury judgment against a defendant insured by that insolvent insurer, must the judgment be deemed satisfied to the extent the plaintiff has received workers' compensation and uninsured motorist benefits for the same injury? Because we answer that question in the affirmative, we reverse in the first appeal and affirm in the second.

In 1983, plaintiff Linda Bird was injured in the course of her employment when the car she was driving collided with a car driven by Donald Moreland, who was in the course of his employment with Norpac Foods, Inc. Bird filed a workers' compensation claim based on her injuries and collected $84,607.84 in benefits from her employer's workers' compensation insurer, American Motorists Insurance Company (AMIC). She also filed an uninsured motorist claim against her own motor vehicle insurer, Farmer's Insurance Company of Oregon, and ultimately collected $5,664.49 on that claim. ¹

Bird also filed a personal injury claim against Moreland and Norpac. At the time of the accident, Norpac and Moreland, as its agent, were insured by Mission Insurance Company. Mission was later declared insolvent, and OIGA assumed its rights and responsibilities vis-a-vis Moreland and Norpac, including the defense of Bird's action, pursuant to ORS 734.570(1) and (2). A jury awarded Bird damages of $104,742.26, including $94,742.26 in economic damages and $10,000 in non-economic damages; the trial court entered judgment against Norpac and Moreland, jointly and severally, in that amount.

Norpac and Moreland, at OIGA's instigation, filed a motion for an order directing satisfaction of the judgment. In that motion, they argued that, because OIGA had assumed the responsibilities of their insolvent insurer and was ultimately responsible for paying the judgment against them, the judgment was subject to ORS 734.640. That statute provides:

"(1) Any person who has a claim under an insurance policy against an insurer other than an insolvent insurer which would also be a covered claim against an insolvent insurer must first exhaust the remedies under such policy.

" * * * * *

"(3) Any recovery under ORS 734.510 to 734.710 from [OIGA] shall be reduced by the amount of any recovery pursuant to subsection (1) * * * of this section."

Under that provision, they argued, Bird's judgment must be offset and deemed satisfied to the extent of her workers' compensation and uninsured motorist recoveries. ²

Bird opposed the motion, arguing, among other things, that her claim did not qualify as a "covered claim" and that her workers' compensation recovery did not qualify as "a claim under an insurance policy," as those terms are used in ORS 734.640(1). The trial court denied the motion:

"ORS 734.640 is a claim priority matter and has nothing to do with the plaintiff in this matter. It talks about 'any recovery under 734.514 to 734.710' and I do not believe that 'covered claim under 734.510(4)(a)' has anything to do with the plaintiff in this case."

Norpac appealed that denial. ORS 19.010(c). That appeal (CA A65075) is the first of the consolidated appeals before us. In filing the appeal, Moreland was not named as an appellant. Because the limitations period for appealing that decision has long since elapsed, the trial court's decision is final and unappealable with respect to Moreland.

While Norpac's appeal was pending, OIGA filed a complaint against Bird, AMIC and Farmer's in its own name, as well as Norpac's and Moreland's, seeking a declaratory judgment that OIGA, Norpac, and Moreland had no duty to pay Bird's judgment. As its insureds had argued in their motion to direct satisfaction, OIGA alleged that, under the OIGA statutes, and ORS 734.640 in particular, Bird's workers' compensation and uninsured motorist recoveries must be offset against the judgment in her personal injury action.

Bird moved to dismiss, arguing, inter alia, that another action involving the same claim was pending (i.e., Norpac's appeal) and that the present action was barred under principles of res judicata and collateral estoppel. Bird also moved for summary judgment, asserting the same substantive arguments that had prevailed against Norpac's and Moreland's motion to direct satisfaction. OIGA filed a cross-motion for summary judgment. The trial court denied Bird's motions, granted OIGA's cross-motion for summary judgment, and entered a judgment declaring that Bird's $104,742.26 judgment against Norpac and Moreland should be offset by the $90,272.33 she had recovered from AMIC and Farmer's. Bird appeals that judgment in CA A68732.

We first address Norpac's appeal. Norpac argues that the trial court's denial of its motion to satisfy is contrary to ORS 734.640(3) and, in particular, to the Supreme Court's interpretation of that provision in Carrier v. Hicks, 316 Or. 341, 851 P.2d 581 (1993). Bird counters that the denial of satisfaction was proper for a number of reasons. She argues, variously, that: (1) Carrier v. Hicks, supra, is inapplicable to her workers' compensation recovery; (2) Norpac failed to establish that Bird's personal injury claim was a "covered claim" under the OIGA statutes; and (3) the satisfaction procedure invoked by Norpac was not available under the circumstances. We consider, and reject, each argument in turn.

The relevant statutes, which are set out at ORS 734.510 to ORS 734.710, provide a scheme for guaranteeing payment on claims falling within the coverage of insurance policies issued by insurers that are later declared insolvent. Under those statutes, OIGA, an association of insurers doing business in Oregon, collects funds from its members, and uses those funds to pay certain insurance claims, i.e., "covered claims," filed against insurers that have been declared insolvent. OIGA is required to:

"(1) * * * pay covered claims existing at the time of determination of insolvency of an insurer or arising within 30 days after the determination of insolvency * * *.

"(2) Be the insurer to the extent of the association's obligation on the covered claims and to such extent have all the rights, duties and obligations of the insolvent insurer as if the insurer had not become insolvent." ORS 734.570. (Emphasis supplied.)

A "covered claim" is

"an unpaid claim * * * that arises out of and is within the coverage and limits of an insurance policy to which ORS 734.510 to 734.710 apply and which is in force at the time of the occurrence giving rise to the unpaid claim, made by a person insured under such policy or by a person suffering injury or damage for which a person insured under such policy is legally liable * * *." ORS 734.510(4)(a).

The term "covered claim" does not include any amount owed to an insurer "as subrogated recoveries or otherwise." ORS 734.510(4)(b).

The statutory scheme recognizes that a person who has a claim under a policy issued by an insolvent insurer might also have claims, based on the same accident or occurrence, against insurance policies issued by solvent insurers. Thus, ORS 734.640 ensures that, in those situations, OIGA funds will not be used "until all other available insurance sources of payment have been used up." Carrier v. Hicks, supra, 316 Or. at 348, 851 P.2d 581. In particular, under ORS 734.640(1), claimants are required to exhaust their remedies under policies issued by solvent insurers, by filing any available "claim[s] under an insurance policy * * * which would also be a covered claim," before they turn to OIGA for payment. In addition, any recovery from OIGA must be reduced by the amount recovered as a result of those claims. ORS 734.640(3).

Norpac argues, and Bird does not dispute that, under the analysis of Carrier v. Hicks, supra, Bird's uninsured motorist recovery was obtained pursuant to a "claim under an insurance policy * * * which would also be a covered claim." Thus, subject to our disposition of Bird's alternative arguments, ORS 734.640(3) operates to reduce her judgment to that extent.

Whether her workers' compensation recovery was obtained pursuant to a "claim under an insurance policy" is a closer and more difficult question. The text of ORS 734.640 is unenlightening. Neither that section, nor the OIGA statutes generally, defines "insurance." Nor, obviously, does the statutory text refer expressly to workers' compensation coverage. See PGE v....