Eastham v. Oregon Auto. Ins. Co.

• Decision Date: 20 November 1974
• Parties: William W. EASTHAM, Respondent, v. OREGON AUTOMOBILE INSURANCE COMPANY, Appellant.
• Court: Oregon Supreme Court

Page 364

540 P.2d 364

273 Or. 600

William W. EASTHAM, Respondent, v. OREGON AUTOMOBILE INSURANCE COMPANY, Appellant.

Supreme Court of Oregon.

Argued and Submitted May 7, 1975.

Decided Sept. 25, 1975.

Rehearing Denied Nov. 20, 1974. See 542 P.2d 895.

William H. Morrison, Portland, argued the cause for appellant. With him on the briefs were Thomas Healy Tongue, and Morrison, Dunn, Cohen, Miller & Carney, Portland.

Douglas E. Kaufman, Tillamook, argued he cause for respondent. On the brief were C. S. Emmons, of Emmons, Kyle, Kropp & Kryger, Albany, and McMinimee and Kaufman, Tillamook.

Before O'CONNELL, C.J., and McALLISTER, ^* DENECKE, ^* HOLMAN, HOWELL and BRYSON, JJ.

HOLMAN, Justice.

Plaintiff brought an action against one, Byrd, for personal injuries resulting from an automobile accident and secured a judgment against Byrd in the sum of $50,000. Byrd had liability coverage in the maximum sum of $25,000 which was furnished by the defendant, Oregon Automobile Insurance Company (the company). The company expended the policy maximum in partial satisfaction of the judgment. Byrd assigned to plaintiff any claim that he might have against the company for bad faith in failing to settle or failing to attempt to settle plaintiff's claim against Byrd within Byrd's policy limits. The present action is one by plaintiff on Byrd's assigned claim. Trial was had by jury and a judgment was entered upon a verdict for plaintiff. The company appeals.

The principal assignment of error concerns whether there was sufficient evidence to make a jury question on the issue of bad faith and, thus, whether the trial court erred in denying the company's motion for a directed verdict. The discussion of such a question necessitates an extensive statement of the facts surrounding the accident and plaintiff's injuries as were known or reasonably should have been known by the parties to the first case before, at, and during the time of trial.

At the time of the accident plaintiff was 20 years of age and a strong, vigorous, and enthusiastic young man. The automobile he was operating was struck from the rear by a vehicle operated by Byrd. The blow was of sufficient force to break loose the seat in which plaintiff was sitting. Byrd had been drinking, but he did not appear to be drunk at the time of the accident and the investigating officer did not cite him for intoxication. However, Byrd could not give a satisfactory explanation of why he struck plaintiff's vehicle. At the time of the trial liability was admitted and Byrd did not take the witness stand.

Plaintiff was not rendered unconscious as a result of the collision. Immediately following the accident he left his vehicle to see if anyone in the other automobile was injured. He remained at the scene of the accident some considerable length of time until his father came and took plaintiff to his parents' home in Corvallis, whereupon he went to bed. The next day, while he and his brother were on the way to Eugene, where plaintiff was attending college, he had a lapse of memory of about an hour. He immediately went to see a doctor in Eugene whose name he does not remember. In addition to attending college, plaintiff had a part-time job clerking in a market, in which occupation he was engaged about ten hours a week. The accident occurred about two weeks before the school year was completed and he continued with his schooling and his job until the end of the school year, although he had difficulty keeping awake in class and following the lectures.

Three days after the accident plaintiff went to his family physician, Dr. Kaliher. He complained of neck and back difficulty and excessive sleepiness. Dr. Kaliher saw him five times in approximately the next three months, during which period Dr. Kaliher sent him to see a Dr. Carter, a neurological specialist, for an examination. Thereafter, in September 1969, plaintiff moved to Alaska with his parents.

Upon arrival in Alaska, plaintiff did not see a doctor for approximately a year and nine months. He then went to a Dr. Bartko, who saw him eight times over the next ten months, the last time being shortly before plaintiff returned from Alaska to Oregon the first part of April 1972 for the trial of the case. While in Alaska plaintiff went to work in a trailer assembly plant in May 1971 and worked continuously until returning to Oregon except for a month when he was having physical difficulty performing the work and another undesignated period when the plant did not operate. He has never been hospitalized; he had total medical expenses of $427; he requested no compensation for loss of wages.

Plaintiff continuously complained of back and neck difficulties, of headaches, excessive sleepiness and exhaustion. More recently he complained of lack of taste and smell and of an area of altered skin sensation upon one of his hips. Dr. Kaliher testified that plaintiff had developed a permanent lateral curvature of the back (scoliosis) from muscle spasm on the right side of the back and that it would prevent plaintiff from engaging in anything that involved extensive lifting. The doctor further indicated that as a result of the trauma of the accident plaintiff had developed excessive sleepiness and catalepsy which were permanent and necessitated his taking a pep pill (Ritilin) the rest of his life.

As previously mentioned, Dr. Kaliher sent plaintiff for an examination by a neurological specialist, Dr. Carter. Dr. Carter died prior to the time of the first trial but the company was aware from a copy of his report that his examination had not confirmed Dr. Kaliher's diagnosis of catalepsy, and an electro-encephalogram showed no evidence of brain damage. Dr. Carter's report also indicated he had found an area of spasm on the right side of plaintiff's back, but no scoliosis. This examination had been performed approximately two months after the accident.

When, approximately two years after the accident, plaintiff began to see Dr. Bartko in Alaska, tenderness in the musculature of the right side of the back was found, but no scoliosis. The doctor thought plaintiff's complaints of tiredness and sleepiness might be caused by low blood sugar and low thyroid function. He was of the opinion that plaintiff had a permanent partial disability because of his back of 10 per cent and that, although his prognosis was good, he should perform no heavy lifting.

When, about three years after the accident, plaintiff returned from Alaska for trial, the company secured its first medical examination of plaintiff. He was sent for examination by a Dr. Wilson, a neurologist. Dr. Wilson testified that plaintiff did not manifest conditions which are usually associated with narcolepsy (deep sleep), but, rather, those associated with an excessive tendency toward drowsiness (hypersomnic state) which is frequently associated with psychological problems. He performed an electro-encephalogram which revealed no indication of brain damage. The physician could form no opinion concerning plaintiff's alleged loss of the senses of smell and taste because plaintiff had much nasal congestion at the time of examination. He found no abnormalities of the back and there was no scoliosis. The doctor did not attribute plaintiff's sleepiness to any head injury but, rather, was of the opinion that the accident might have induced a neurotic condition which caused the sleepiness.

Subsequent to all of the physical examinations, except Dr. Wilson's which was largely favorable to the company, and after taking depositions of plaintiff and Byrd, plaintiff's and the company's lawyers discussed the value of plaintiff's case. The prayer of the complaint was $50,000. Plaintiff's lawyer expressed an opinion that the case was worth $12,000 to $14,000 in settlement, and the company's lawyer, $6,000...