Koenig v. State Farm Mut. Auto. Ins. Co., A173132

Citation315 Or.App. 28
Decision Date06 October 2021
Docket NumberA173132
PartiesAmanda KOENIG, Plaintiff-Appellant, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, an Illinois corporation, Defendant-Respondent.
CourtCourt of Appeals of Oregon

315 Or.App. 28

Amanda KOENIG, Plaintiff-Appellant,
STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, an Illinois corporation, Defendant-Respondent.


Court of Appeals of Oregon

October 6, 2021

Argued and submitted July 6, 2021.

Multnomah County Circuit Court 18CV26241 Michael A. Greenlick, Judge.

Willard E. Merkel argued the cause for appellant. Also on the briefs was Merkel & Associates.

Andrew D. Glascock argued the cause for respondent. Also on the brief were Glascock, Street, Waxler, LLP.

Before DeVore, Presiding Judge, and DeHoog, Judge, and Mooney, Judge.


[315 Or.App. 29]

[315 Or.App. 30]


Plaintiff appeals from a judgment on her under-insured motorist (UIM) claim against State Farm Mutual Automobile Insurance Company (State Farm). She assigns several errors. First, she argues that the trial court erred in a post-trial proceeding by granting an offset of $15, 000 for personal injury protection (PIP) benefits against the jury's award of damages of $82, 734.41, resulting in a net judgment of $67, 734.41. Second, she argues that the trial court erred at trial of her UIM claim in excluding evidence of State Farm's payment of PIP benefits. Finally, she argues that, because State Farm disputed the amount of damages based on causation, the trial court erred in denying her request for attorney fees under ORS 742.061. We affirm for the reasons that follow.


The dispositive facts are undisputed. In July 2016, plaintiff was injured in a motor vehicle accident involving an underinsured vehicle. Plaintiff brought this claim against her auto insurer, State Farm, for UIM benefits. State Farm's policy provided UIM coverage up to $100, 000. Plaintiff alleged that State Farm breached the policy by failing to pay all that is due, alleged that she incurred medical bills of $158, 814.88, alleged that State Farm had paid $15, 000 of those bills as PIP benefits, and prayed for an award of $100, 000.[1] State Farm admitted that it provided UIM coverage and that the underinsured driver was negligent. But State Farm disputed the amount of plaintiffs damages.

In June 2018, State Farm paid plaintiff $17, 265.59- its opinion of the value of plaintiffs UIM claim and an "advance payment" in the language of its cover letter. In an amended answer, State Farm alleged that its advance payment of UIM benefits entitled State Farm to an offset and that it had also paid $15, 000 in PIP benefits, warranting an offset from damages. Finally, State Farm alleged that [315 Or.App. 31] plaintiff had refused an offer of binding arbitration after State Farm had sent a "safe harbor" letter accepting coverage and agreeing to dispute only the amount of benefits owing plaintiff, such that plaintiff was not entitled to recover attorney fees under ORS 742.061(3).

Before trial began in July 2019, State Farm filed a motion in limine, among other things, seeking to exclude evidence of PIP payments at the UIM trial. During discussion of the motion, the trial court expressed concern about plaintiffs proposed verdict form and the prayer in plaintiffs complaint that proposed to limit the jury's finding of damages to $100, 000, when the damages alleged could be higher than that amount. Addressing that concern, State Farm underscored that it claimed an offset for PIP payments against damages pursuant to ORS 742.542. The court commented, "The offset happens post-trial with these PIP payments." The court indicated that evidence of PIP payments would not be relevant and would not be admitted in the trial itself.

In that discussion, the trial court offered to allow plaintiff to amend her complaint so that the jury could determine actual damages, in an amount greater than the $100, 000 policy limits, for purposes of subtracting PIP payments in a post-trial calculation. The court explained:

"I understand that the Plaintiff has limited their complaint to $100, 000. Given the Court's ruling, I will allow the [p]laintiffs to amend their complaint by interlineation, if they wish, to allege the full $258, 814.88 in their prayer, but they're not required to do so obviously
"If they want to include that full amount in their prayer, then we'll just have the-we'll explain to the jury that their job is to determine the damages. We'll give them a verdict form telling them that they can't allow-they can't find damages in excess of that $258, 000 figure, and the Court will then reduce the damages to the extent of the policy at the end of the case
"If the Plaintiff doesn't wish to amend their complaint by interlineation, then the jury will be told that their award cannot exceed $100, 000, and we won't explain why.
"So that's the [p]laintiff s choice at this time."

[315 Or.App. 32] Plaintiffs counsel replied, "I understand, and in response, Your Honor, we will not be amending the complaint."

At trial, plaintiff offered evidence that she incurred medical expenses of $158, 814.88. State Farm admitted that medical bills of $3, 515 were reasonable, necessary, and related to the accident, but it disputed additional bills as unrelated. To dispute damages, State Farm offered the testimony of a physician and biomechanical expert. After State Farm rested its defense case, plaintiff indicated she intended to testify in rebuttal that State Farm paid PIP benefits. As before, State Farm objected to that proposed testimony, based on the differing nature of PIP and UIM coverage. The court sustained the objection.

After the parties and trial court discussed jury instructions, the form of a verdict, and plaintiffs approach to the case, the jury was instructed that State Farm had already paid $17, 265.59 in UIM benefits and that the maximum, potential, total amount of economic and noneconomic damages was $82, 734.41. The jury returned its verdict finding plaintiffs economic damages to be $72, 734.41 and non-economic damages to be $10, 000 for a total of $82, 734.41.

In a post-trial proceeding, the court granted State Farm's motion to offset its PIP payments of $15, 000 from the jury's determination of damages. The judgment was entered in plaintiffs favor in the sum of $67, 734.41.


Given the nature of the dispute presented by the first assignment of error, we review for errors of law. Cooksley v. Lofland, 289 Or.App. 103, 106, 407 P.3d 954 (2017). In her first assignment, plaintiff asserts that the trial court erred in granting State Farm's post-trial motion for an offset. Plaintiff concedes that State Farm is potentially entitled to offset its PIP payments against damages but argues that State Farm must allege and prove its PIP payments at trial as an affirmative defense under ORCP 19 B and that State Farm failed to do either. We unpack that argument to address its several parts-as questions of pleading, proof, and procedure.

[315 Or.App. 33] The pleading question has a simple answer despite some confusion. In the trial court, plaintiff and State Farm both eventually acknowledged that State Farm's amended answer had pleaded an affirmative defense of offset. During proceedings, plaintiff had proposed a form of order allowing an amended complaint and amended answer, but the proposed order had been left unsigned by another judge due to form-compliance reasons. The trial judge commented that the apparent rejection ought not to have happened. Plaintiff promised to resubmit the order allowing amendment but did not. Nevertheless, both parties proceeded on their amended pleadings, which were filed of record, with or without formal approval. On appeal, plaintiff now argues that defendant failed to plead offset. Seeing this record, we reject the argument. See ORCP 23 B (issues tried by consent).[2]

The proof question is a non-issue. Plaintiffs amended complaint alleged "a payment made by State Farm under the no-fault personal injury protection coverage * * * in the sum of $15, 000." Defendant's amended answer alleged PIP payments in the same sum. When State Farm moved for a PIP offset, it reiterated its statement about PIP payments of $15, 000, tendering its payment log reflecting that figure. In response, plaintiff did not dispute that sum.[3]Instead, plaintiff noted that her complaint "acknowledges [p]laintiff s receipt of State Farm's PIP limit of $15, 000[.]"[4]In short, the court did not err in accepting as fact that State Farm had paid $15, 000 in PIP benefits toward plaintiffs medical bills.

[315 Or.App. 34] The procedural question requires more discussion. As noted, plaintiff argues that, because State Farm did not prove its PIP payments in the trial, it could not offset PIP payments in a post-trial proceeding. State Farm responds that PIP payments in an uninsured or underinsured motorist (UM/UIM) claim function like PIP payments in typical tort claims-that is, as advance payments-and may be offset in a post-trial proceeding. State Farm is correct.

The complementary or offsetting relationship of PIP and UM/UIM coverage is described in the enigmatic ORS 742.542, which provides:

"Payment by a motor vehicle liability insurer of personal injury protection benefits for its own insured shall be applied in reduction of the amount of damages that the insured may be

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