Goodman v. Continental Cas. Co.

• Decision Date: 29 May 1996
• Citation: 918 P.2d 438,141 Or.App. 379
• Parties: Roy GOODMAN, Jr., Respondent, v. CONTINENTAL CASUALTY CO., Appellant. 9406-04195; CA A88824.
• Court: Oregon Court of Appeals

Page 438

918 P.2d 438

141 Or.App. 379

Roy GOODMAN, Jr., Respondent, v. CONTINENTAL CASUALTY CO., Appellant.

9406-04195; CA A88824.

Court of Appeals of Oregon.

Argued and Submitted Dec. 8, 1995.

Decided May 29, 1996.

John R. Faust, Jr., Portland, argued the cause for appellant. With him on the briefs was Schwabe, Williamson & Wyatt.

Garry L. Kahn, Portland, argued the cause for respondent. On the brief was Kathryn H. Clarke.

Before DEITS, P.J., and De MUNIZ and HASELTON, JJ.

HASELTON, Judge.

Defendant Continental Casualty Co. appeals from the trial court's judgment that awarded plaintiff Roy Goodman damages on his action for breach of an insurance contract. We reverse and remand.

This case concerns a dispute over defendant's discontinuation of disability insurance benefits for injuries plaintiff suffered while working as a legal investigator in August 1968. The material facts are uncontroverted: Between 1955 and 1968, plaintiff was employed by a Portland law firm as a legal investigator. Between 15 and 20 percent of plaintiff's assignments involved investigating the circumstances of maritime-related personal injuries, which, on occasion, required him to climb into the lower holds of vessels.

Sometime before August 22, 1968, plaintiff purchased two policies of insurance from defendant. The first (policy # 23596035) provided that defendant would pay benefits of $500 per month in the event that plaintiff was totally disabled as the result of "injury" or "sickness or disease." If plaintiff was disabled because of "injury," benefits would continue throughout his lifetime. If, however, disability was the result of "sickness or disease," benefits would terminate at age 65. That policy defined the operative terms as follows:

" 'Injury' means bodily injury of the insured caused by an accident occurring while this policy is in force and resulting directly and independently of all other causes in loss covered by this policy.

" 'Sickness' means sickness or disease of the insured contracted and commencing after this policy has been in force for not less than thirty days after its effective date and resulting in loss covered by this policy." (Emphasis supplied.)

In contrast to the first policy, the second (policy # 5-A-5116) provided that, in the event of disability from either "injury" or "sickness or disease," plaintiff was to receive payments of (an additional) $200 a month for up to two years.

On August 22, 1968, after working a full day, plaintiff was contacted around midnight and asked to investigate an accident involving a longshoreman who had been injured in the lower hold of a docked ship. Thereafter, plaintiff descended an 80-foot ladder into the vessel's hold, while carrying a 60-pound equipment bag. After completing his investigation, plaintiff ascended the ladder and, as he approached the top, experienced sudden and extreme chest pain, accompanied by sweating and weakness. He hung onto the ladder for a few minutes until he could maneuver himself over the edge of the ship hatch onto the deck. A doctor determined that plaintiff had suffered a heart attack. Ultimately, that incident rendered plaintiff totally disabled and prevented him from returning to work.

Plaintiff subsequently filed claims for disability benefits under both of the disability insurance policies defendant had issued. In filing those claims, plaintiff stated that his disabling condition was the result of an "injury." In response to plaintiff's claim under the second policy, defendant notified plaintiff that his claim for an "injury" had been given "favorable consideration." In addition, in response to plaintiff's claim under the first policy, defendant began to pay plaintiff $500 a month; in doing so, however, defendant did not either dispute or specifically accept plaintiff's characterization of his condition as resulting from an "injury."

Defendant paid plaintiff $500 per month under the first policy from 1968 until 1994. ¹ In 1994, defendant discontinued the benefits, contending that the coverage had been for "sickness" and not "injury," and that, thus, benefits ended when plaintiff turned 65, in 1994.

Plaintiff brought this action, alleging that, because his on-the-job heart attack constituted an "injury," defendant had breached the parties' contract by terminating benefits at age 65, rather than continuing them throughout his lifetime. Plaintiff sought damages of $90,000, as well as attorney fees. The complaint did not plead estoppel, based on the parties' 26-year course of dealings.

At trial, defendant asserted that the question of whether plaintiff's heart attack was an "injury" within the meaning of the first policy was controlled by Botts v. Hartford Accident & Indemnity Co., 284 Or. 95, 585 P.2d 657 (1978). In Botts, as amplified below, the court held that an on-the-job heart attack is "accidental" for purposes of disability insurance coverage if "the job-related activity leading to a victim's heart attack was abnormal and unusual, taking into consideration the ordinary requirements of his job performance." Id. at 103, 585 P.2d 657.

At trial, plaintiff introduced, inter alia, a copy of the first policy (# 23596035) and copies of correspondence concerning plaintiff's claims under both policies and defendant's processing of those claims. Plaintiff did not, however, introduce a copy of the second policy (# 5-A-5116). ² Plaintiff was the only witness. In addition to describing the particular circumstances of the heart attack and defendant's subsequent payment of benefits, he offered the following testimony:

"Q. [By plaintiff's counsel] * * * Can you tell us with what frequency or infrequency you were required to climb onto a ship and go down into the lower hold of a ship?

"A. The accidents that occurred to the longshoremen occurred on various places of the ship. Of the 15 to 20 percent [of the] time that I was involved in looking into an accident on a ship--I couldn't give you a specific number of times because one could theoretically happen one day and one the next day--but for the frequency of happening in the lower hold, wasn't frequent. I was off on the main deck or on the next hold down, but for the very lowest hold of a ship it was certainly within the scope of what I did but it did not happen frequently.

"Q. Can you give us any educated estimate of how many times in a given year leading up to 1968 for the three or four years prior to that that you would have climbed 80 feet, approximately 80 feet down a ladder and back up out of a lower hold?

" * * * * *

"A. 12 to 18 times maybe.

"Q. Over a three or four-year period?

"A. Yes. Two or three times a year, four times a year.

"Q. But is was something that you occasionally did.

"A. Oh, certainly it was something I had to do.

" * * * * *

"Q. [By defense counsel] What you were doing during the early morning of August 22nd, 1968, was something that you had done a number of times before in your job. It wasn't unusual or out of the ordinary, was it?

"A. It was not unusual or out of the ordinary if you're talking about the scope of what I did. That was certainly usual for what I did. The frequency with which I did it was--I didn't do it frequently, not often.

"Q. You would consider it normal activity of your job, wouldn't you?

"A. I would consider it normal activity of my job."

After the close of evidence, the trial court expressed its belief that "the facts in this case are such that I cannot find that the activity was abnormal and unusual. It just simply wasn't based upon the testimony of Mr. Goodman and based upon the facts as presented in all of the evidence pertaining to the incident itself[.]" However, the trial court expressed concern about the fact that defendant had, in fact, paid benefits under the first policy for approximately 26 years, and invited further briefing on that issue.

The parties subsequently submitted post-trial memoranda. ³ Concurrently, plaintiff moved to reopen his case to introduce as an exhibit an excerpt of an insurance policy, which plaintiff asserted included operative terms and definitions that were identical to those of the missing second policy (# 5-A-5116). Plaintiff contended that that exhibit showed that the definition of "injury" in the second policy was identical to the definition of "injury" in the first policy and, thus, that because defendant had accepted plaintiff's condition as an "injury" under the second policy, his condition was, necessarily, an "injury" for purposes of coverage under the first (now disputed) policy.

The trial court granted plaintiff's motion to reopen and, based in part on the newly proffered exhibit, held that defendant had breached the insurance policy. In so holding, the court concluded that Botts was materially distinguishable and that the parties' post-casualty course of dealing evinced a mutual understanding that plaintiff's condition was the result of an accidental "injury" within the first policy's coverage:

"Botts is not determinative in this case. First, Botts was decided in 1978, ten years after benefits were first paid by the insurer under the policy in question. Second, Botts involved a dispute over death benefits which had yet to be paid, as compared to the instant case, where disability benefits had been paid for twenty-six years. Third, the nature of the job involved in Botts (road grading on a regular schedule for the state Highway Division) lends itself far more readily to the normal/abnormal, ordinary/unusual distinction than the job of a legal investigator which, of necessity, requires myriad tasks."

" * * * * *

"Far more significant here is the intent of the parties as gleaned from their course of conduct before this dispute arose. More than a preponderance of the evidence established that the defendant treated the disability as resulting from accidental injury. Moreover, plaintiff considered his disability to be based on injury and assumed the company had...