Herman v. Valley Ins. Co.

• Decision Date: 04 December 1996
• Docket Number: C-10832
• Parties: Deborah E. HERMAN, Appellant, v. VALLEY INSURANCE COMPANY, Respondent. 95; CA A90019.
• Court: Oregon Court of Appeals

Page 985

928 P.2d 985

145 Or.App. 124

Deborah E. HERMAN, Appellant, v. VALLEY INSURANCE COMPANY, Respondent.

95C-10832; CA A90019.

Court of Appeals of Oregon.

Argued and Submitted Oct. 2, 1996.

Decided Dec. 4, 1996.

Lindsey H. Hughes argued the cause for appellant. With her on the briefs was Hallmark, Keating & Abbott, P.C.

Jeffery D. Eberhard argued the cause for respondent. With him on the brief were M. Robert F. Smith and Smith, Freed, Heald & Chock, P.C.

Before RIGGS, P.J., and LANDAU and LEESON, JJ.

LEESON, Judge.

Plaintiff appeals from a summary judgment for defendant Valley Insurance Company (Valley). ORS 19.010. The trial court ruled that the suit limitation provision in plaintiff's homeowner's insurance policy with Valley barred her suit against it. We affirm.

We view the facts in the light most favorable to plaintiff, the nonmoving party. ORCP 47 C; Jones v. General Motors Corp., 139 Or.App. 244, 911 P.2d 1243, rev. allowed 323 Or. 483, 918 P.2d 847 (1996). Plaintiff purchased a homeowner's insurance policy from Valley. ORS 742.240 requires such policies ¹ to contain the following suit limitation provision or its substantial equivalent: ²

"No suit or action on this policy for the recovery of any claim shall be sustainable in any court of law or equity unless all the requirements of this policy shall have been complied with, and unless commenced within 24 months next after inception of the loss."

Plaintiff's policy contained the following provision:

"8. Suit Against Us. No action can be brought unless the policy provisions have been complied with and the action is started within two years after the date of loss."

Plaintiff's home was burglarized on March 21, 1993. She notified Valley about the theft the next day. She also informed Valley that she could not find a copy of her policy, but she did not request another copy. Subsequently, Valley sent plaintiff a proof of loss form, which she filled out and returned around April 1, 1994. Valley rejected the form, because it was incomplete. In September, Valley sent her a second form, which she never received. Plaintiff made several telephone calls to Valley to discuss her claim but she never spoke with the representative who had been assigned to process that claim. In December, plaintiff received a letter from Valley's attorney informing her that she had failed to complete and return the second proof of loss form and that such failure was a breach of one of her duties under the policy. The letter warned plaintiff that Valley "reserves all of its rights" under the policy and that "[n]o waiver or estoppel is intended and none should be implied." Plaintiff told the attorney that she had never received the second proof of loss form. Valley sent her a third form. A letter enclosed with that form repeated Valley's warning that it reserved its rights and defenses. Plaintiff returned the form to Valley on March 8, 1995. On March 15, Valley rejected it as incomplete and sent a fourth proof of loss form to plaintiff. The letter accompanying that form warned plaintiff that ORS 742.240 required that any suit on the policy had to be filed within two years after the date of loss. It also warned plaintiff that Valley would not waive that time limitation and it repeated the statement reserving Valley's rights and defenses. On March 20, plaintiff made a telephone call to Valley's attorney, who explained to her that she had until the next day to file suit and suggested that she contact an attorney. Plaintiff did so and, on March 21, 1995, filed a complaint and mailed a copy to Valley. Valley received the complaint on March 24.

The caption of the complaint names "J.R. Price and Associates, Inc., dba Valley Insurance Company" as the defendant. There is no other reference to the defendant in the body of the complaint or in the prayer for relief. J.R. Price and Associates, Inc., is a La Grande, Oregon, corporation doing business under the business name Valley Insurance Company. Valley, by contrast, is an Albany, Oregon, corporation that is wholly unrelated to J.R. Price and Associates, Inc. On April 13, plaintiff served Valley with an amended complaint, naming "Valley Insurance Company" as the defendant. Valley answered and asserted as an affirmative defense the statutorily required suit limitation provision of the insurance policy. The trial court granted Valley's subsequent motion for summary judgment.

Plaintiff assigns error to the trial court's grant of summary judgment. We review to determine whether any genuine issue of material fact exists and whether defendant is entitled to judgment as a matter of law. ORCP 47 C; Jones, 139 Or.App. 244, 911 P.2d 1243. Interpretation of an insurance policy is a question of law. ³ Hoffman Construction Co. v. Fred S. James & Co., 313 Or. 464, 469, 836 P.2d 703 (1992).

Plaintiff first argues that her original complaint, filed before the limitation period had expired, properly names Valley, because the reference to "J.R. Price and Associates, Inc.," is a partial misnomer. She contends that, under ORCP 12, the trial court should have construed the complaint liberally by striking the words "J.R. Price and Associates, Inc.," from the caption, leaving "Valley Insurance Company" as the named defendant. Alternatively, plaintiff argues that her amended complaint, filed after the limitation period had expired, substitutes Valley, but relates back to the date that the original complaint was filed. Valley responds that the original complaint names the wrong defendant and that Valley did not receive the amended complaint within the applicable limitation period as required by ORCP 23 C.

ORCP 12 provides for the liberal construction of all pleadings:

"A Liberal Construction. All pleadings shall be liberally construed with a view toward substantial justice between the parties.

"B Disregard of error or defect not affecting substantial right. The court shall, in every stage of an action, disregard any error or defect in the pleadings or proceedings which does not affect the substantial rights of the adverse party." (Boldface in original.)

That rule, however, does not authorize courts to circumvent ORCP 23 C and substitute a different defendant by disregarding the caption of a complaint. J.R. Price and Associates, Inc., has no relationship to Valley and it is of no consequence that J.R. Price and Associates, Inc., does business under the business name "Valley Insurance Company." By naming "J.R. Price and Associates, Inc., dba Valley Insurance Company" in her original complaint, plaintiff subjected J.R. Price and Associates, Inc., to potential liability and placed its corporate assets at risk. Conversely, plaintiff's original complaint never placed Valley's assets at risk. Plaintiff's amended complaint substitutes parties; it does not merely correct a partial misnomer. See Maslov v. Manning, 239 Or. 393, 398-99, 397 P.2d 833 (1964) (where a plaintiff "seeks to impose liability upon a different 'entity' * * *, where the quantum of assets amenable to execution might be materially changed," misnomer analysis does not apply and "courts * * * generally * * * sustain[ ] the substituted defendants defense"). Consequently, plaintiff's original complaint does not properly name Valley.

Nevertheless, an amended complaint substituting a different defendant relates back to the date that the original complaint was filed if the claim in the amended complaint stems from the same factual predicate as the claim in the original complaint, and

"within the period provided by law for commencing the action against the party to be brought in by amendment, such party (1) has received such notice of the institution of the action that the party will not be prejudiced in maintaining any defense on the merits, and (2) knew or should have known that, but for a mistake concerning the identity of the proper party, the action would have been brought against the party brought in by amendment." ORCP 23 C. (Emphasis supplied.)

As provided by the suit limitation provision in plaintiff's homeowner's insurance policy, the period for commencing her action against Valley--the party to be brought in by amendment--is two years from the date of loss. Plaintiff's home was burglarized on March 21, 1993. Valley did not receive notice of the institution of plaintiff's action until March 24, 1995, more than two years after the burglary. Consequently, plaintiff's amended complaint does not meet the requirements of ORCP 23 C and does not relate back to the date on which she filed her original complaint. Hamilton v. Moon, 130 Or.App. 403, 405, 882 P.2d 1134, rev. den. 320 Or. 492, 887 P.2d 793 (1994); Richlick v. Relco Equipment, Inc., 120 Or.App. 81, 85, 852 P.2d 240, rev. den. 317 Or. 605, 860 P.2d 819 (1993). Therefore, as a matter of law, neither plaintiff's original nor amended complaint was timely filed against Valley.

Nonetheless, plaintiff argues, the statutorily required suit limitation provision is a contractual condition of forfeiture, not a statute of limitations. She contends that, regardless of the timeliness of her complaints, in order for Valley to prevail on a condition of forfeiture defense, it must show not only that her failure to comply with the suit limitation provision prejudiced Valley, but also that her failure to comply was unreasonable. If the suit limitation provision is not a condition of forfeiture, plaintiff's alternative argument is that before an insurer can rely on such a provision to deny liability, it must show that it was prejudiced by the insured's failure to file suit within the limitation period. Valley responds that the suit limitation provision is a statute of limitations and should be strictly construed. If the suit limitation provision is a condition of forfeiture, Valley's alternative argument is that the proper test is whether Valley is estopped to assert the provision, not whether Valley suffered prejudice and plaintiff acted...