Grijalva v. Safeco Ins. Co. of America

• Decision Date: 25 March 1998
• Docket Number: CV-0296-AB
• Parties: Judith GRIJALVA, Appellant--Cross-Respondent, v. SAFECO INSURANCE COMPANY OF AMERICA, a Washington corporation, Respondent--Cross-Appellant. SAFECO INSURANCE COMPANY OF AMERICA, a Washington corporation, Third-Party Plaintiff, Cross-Appellant, v. Judith M. GRIJALVA and Robert Grijalva, Third-Party Defendants, Cross-Respondents, and Carol S. Edwards and Larry Edwards, Third-Party Defendants. 95-; CA A94209.
• Court: Oregon Court of Appeals

Page 995

956 P.2d 995

153 Or.App. 144

Judith GRIJALVA, Appellant--Cross-Respondent, v. SAFECO INSURANCE COMPANY OF AMERICA, a Washington

corporation, Respondent--Cross-Appellant.

SAFECO INSURANCE COMPANY OF AMERICA, a Washington

corporation, Third-Party Plaintiff, Cross-Appellant, v. Judith M. GRIJALVA and Robert Grijalva, Third-Party

Defendants, Cross-Respondents,

and

Carol S. Edwards and Larry Edwards, Third-Party Defendants.

95-CV-0296-AB; CA A94209.

Court of Appeals of Oregon.

Argued and Submitted Oct. 15, 1997.

Decided March 25, 1998.

Bruce J. Brothers argued the cause for appellant--cross-respondent Judith Grijalva. With him on the briefs were Lawrence Gorman and Brothers & Ash, Bend.

Brian Gingerich, argued the cause for respondent--cross appellant. With him on the brief were Dennis James Hubel and Karnopp, Petersen, Noteboom, Hubel, Hansen & Arnett, Bend.

No appearance for cross-respondent Robert Grijalva.

Before RIGGS, P.J., and LANDAU and HASELTON, JJ. ^*

LANDAU, Judge.

In this underinsured motorist (UIM) benefits dispute, plaintiff appeals from an amended judgment granting defendant Safeco's motion for summary judgment and awarding plaintiff $16,521.02 on defendant's claim for declaratory judgment. Plaintiff's first three assignments of error address the offsets the trial court applied to reduce plaintiff's award of UIM benefits. Her fourth assignment of error challenges the trial court's failure to award attorney fees. Defendant's cross-appeal assigns error to the trial court's failure to award it attorney fees under the interpleader statute. ORCP 31 C. On review of a summary judgment, we determine whether there is any genuine issue of material fact and, viewing the evidence in the light most favorable to plaintiff, whether defendant, the moving party, is entitled to judgment as a matter of law. ORCP 47 C; Jones v. General Motors Corp., 325 Or. 404, 420, 939 P.2d 608 (1997). Because a purely legal question is presented in this case, we review entitlement to attorney fees as a matter of law. ORS 20.220. We affirm on appeal and cross-appeal.

On February 10, 1993, plaintiff was a passenger in Carol Edwards's car as the two drove to a business meeting. Edwards's car was struck negligently by a car owned by Donald Dawson, and plaintiff was seriously injured. Dawson was insured under a $60,000 single-limit liability insurance policy, and Edwards's insurance with defendant included $100,000 single-limit underinsured motorist (UIM) coverage. As a passenger in Edwards's car, plaintiff is an insured under Edwards's policy with defendant.

Plaintiff and Edwards received $42,000 and $18,000, respectively, from Dawson's liability insurance policy. Both plaintiff and Edwards received workers' compensation benefits from their employer's workers' compensation insurance carrier. In unreimbursed workers' compensation benefits, plaintiff received $14,877.02, and Edwards received $3,846.59.

Both plaintiff and Edwards sought UIM benefits under Edwards's policy. Defendant paid Edwards $4,755.37 on her claim and refused plaintiff's claim for UIM benefits. Plaintiff filed this breach of contract action, claiming that defendant refused to arbitrate the claim and refused to accept plaintiff's settlement offer of $40,000. Defendant's answer denied liability and counterclaimed for declaratory relief and third-party interpleader pursuant to ORCP 31. Plaintiff amended her complaint to increase the prayer to $58,000. Both parties filed motions for summary judgment. The trial court granted defendant's motion for summary judgment on plaintiff's claim and awarded plaintiff $16,521.02 on defendant's declaratory relief action. The trial court calculated the amount of the award to plaintiff by reducing the $100,000 UIM benefits available under Edwards's policy by the following offsets: (1) $60,000 paid to plaintiff and Edwards by Dawson's liability insurance carrier; (2) $4,755.37 defendant paid to Edwards under her UIM policy; (3) $14,877.02 paid to plaintiff by her employer's workers' compensation carrier as unreimbursed workers' compensation benefits; and (4) $3,846.59 paid to Edwards by her employer's workers' compensation carrier as unreimbursed workers' compensation benefits. Neither party was awarded attorney fees or costs.

On appeal, plaintiff first assigns error to the trial court's determination that Edwards's recovery from Dawson's liability insurance carrier is an offset against the amount that plaintiff is entitled to recover under Edwards's UIM policy. Plaintiff argues that she is entitled to all of Edwards's $100,000 UIM coverage, less $42,000 that she recovered from Dawson and $4,755.37 that Edwards received from defendant under the UIM policy, or a total of $53,244.63. Plaintiff argues that the trial court erred in also deducting from her recovery the amount that Edwards received from Dawson, because the applicable statute, ORS 742.504(7), focuses on the "each person" limit of liability, not the "each accident" limit, and nothing in the statutory scheme requires a different result. Defendant responds that Edwards's recovery from Dawson was properly offset, because such an offset is required by both the statutes and Oregon case law.

The minimum required terms of UIM coverage are provided by ORS 742.502(4) and ORS 742.504. Because the intention of the legislature, rather than the parties, controls the interpretation of those terms, we examine only those statutory provisions. See To v. State Farm Mutual Ins., 319 Or. 93, 97, 873 P.2d 1072 (1994) (when insurance contract provision is required by statute, the intent of the legislature, rather than the intent of the parties to the contract, controls); Moore v. Mutual of Enumclaw Ins. Co., 317 Or. 235, 244-45, 855 P.2d 626 (1993) (when a provision appears in a contract because required by statute, the court must determine meaning intended by the legislature). We first examine the text and context of the statutes to discern the intent of the legislature. PGE v. Bureau of Labor and Industries, 317 Or. 606, 610-11, 859 P.2d 1143 (1993). If the statutes are unambiguous, our inquiry ends. Id. at 611-12, 859 P.2d 1143.

ORS 742.502(2)(a) provides that uninsured motorist (UM) coverage in excess of the financial responsibility amounts, ORS 806.070, shall include UIM coverage. The statute declares that "[u]nderinsurance benefits shall be equal to uninsured motorist coverage benefits less the amount recovered from other automobile liability insurance policies." ORS 742.502(2)(a) (emphasis supplied). According to ORS 742.502(4), UIM coverage is subject to ORS 742.504, which describes the minimum requirements of UM coverage. ORS 742.504(7) provides:

"(a) The limit of liability stated in the declarations as applicable to 'each person' is the limit of the insurer's liability for all damages because of bodily injury sustained by one person as the result of any one accident and, subject to the above provision respecting each person, the limit of liability stated in the declarations as applicable to 'each accident' is the total limit of the company's liability for all damages because of bodily injury sustained by two or more persons as the result of any one accident.

"(b) Any payment made under this coverage to or for an insured shall be applied in reduction of any amount which the insured may be entitled to recover from any person who is an insured under the bodily injury liability coverage of this policy.

"(c) Any amount payable under the terms of this coverage because of bodily injury sustained in an accident by a person who is an insured under this coverage shall be reduced by:

"(A) All sums paid on account of such bodily injury by or on behalf of the owner or operator of the uninsured vehicle and by or on behalf of any other person or organization jointly or severally liable together with such owner or operator for such bodily injury including all sums paid under the bodily injury liability coverage of the policy; and

"(B) The amount paid and the present value of all amounts payable on account of such bodily injury under any workers' compensation law, disability benefits law or any similar law."

(Emphasis supplied.)

ORS 742.502(2)(a) and ORS 742.504(7)(c)(A) unambiguously require that UIM coverage be reduced by the total amount paid to insureds by a tortfeasor's liability insurance carrier. Plaintiff does not dispute that her recovery from Dawson's liability carrier must be deducted from Edwards's UIM policy limit. For the reasons that follow, we reject plaintiff's contention that the trial court erred in deducting Edwards's recovery from Dawson's liability carrier from plaintiff's recovery under Edwards's UIM policy.

An insured is entitled to recover from only one category of UIM benefits following an accident--either the "each person" limit or the "each accident" limit of liability. ORS 742.504(7)(a). The category of UIM benefits to which an insured is entitled depends on the number of insureds making claims against the UIM policy. If only one insured makes a claim for UIM benefits, the category is the "each person" limit. If more than one insured makes a claim for UIM benefits, each claimant's maximum recovery is the "each person" limit, subject also to the "each accident" limit. The "each accident" limit is the upper limit on the total recovery available under the UIM policy. ORS 742.504(7)(a). The amount available from the "each accident" category depends on factors such as the number of claimants, the tortfeasor's liability limit and the amount of each claimant's damages. In cases where the "each person" limit multiplied by the number of claimants equals or exceeds the "each accident" limit of the UIM policy, all claimants are entitled to benefits from the "each accident" category, and all applicable offsets for each claimant are deducted from that category.

In this case, Edwards's UIM policy is a single-limit policy with an "each person" limit of...