Moore v. Mutual of Enumclaw Ins. Co.

• Decision Date: 29 July 1993
• Citation: 855 P.2d 626,317 Or. 235
• Parties: Kenneth MOORE, Respondent on Review, v. MUTUAL OF ENUMCLAW INSURANCE COMPANY, Petitioner on Review. CC 9102-00723; CA A71176; SC S39842.
• Court: Oregon Supreme Court

Page 626

855 P.2d 626

317 Or. 235

Kenneth MOORE, Respondent on Review, v. MUTUAL OF ENUMCLAW INSURANCE COMPANY, Petitioner on Review.

CC 9102-00723; CA A71176; SC S39842.

Supreme Court of Oregon In Banc.

Argued and Submitted May 4, 1993.

Decided July 29, 1993.

[317 Or. 236] Thomas M. Christ, Portland, argued the cause and filed the petition for petitioner on review.

Robert E.L. Bonaparte, of Tooze Shenker Holloway & Duden, Portland, argued the cause and filed the responses for respondent on review. With him on the responses was Michael J. Gentry.

GILLETTE, Justice.

This case involves a claim made under a fire insurance policy with extended coverage. Plaintiff brought an action for breach of the insurance contract. The trial court granted summary judgment in favor of defendant on the ground that plaintiff had not commenced the action within the period allowed by a limitations clause of the policy. The Court of Appeals reversed and On review of a summary judgment, we determine whether the moving party is entitled to judgment as a matter of law. ORCP 47 C; Stevens v. Bispham, 316 Or. 221, 223, 851 P.2d 556 (1993). We view any evidence and all reasonable inferences to be drawn therefrom in the light most favorable to the nonmoving party. Id.

remanded, holding that there were genuine issues of material fact as to whether defendant had waived that clause. Moore v. Mutual of Enumclaw Ins. Co., 113 Or.App. 574, 579, 833 P.2d 1310, modified and adhered to as modified 116 Or.App. 206, 840 P.2d 1320 (1992). We reverse the decision of the Court of Appeals and reinstate the judgment of the circuit court.

The Oregon Insurance Code requires insurers to include certain provisions in all fire insurance policies. ORS 742.202; ¹ see also Molodyh v. Truck Insurance Exchange, 304 Or. 290, 293, 744 P.2d 992 (1987) (so stating). One such provision is the "nonwaiver" clause of ORS 742.222, which provides:

"A fire insurance policy shall contain a provision as follows: 'No permission affecting this insurance shall exist, or waiver of any provision be valid, unless granted herein or expressed in writing added hereto. No provision, stipulation or forfeiture shall be held to be waived by any requirement or proceeding on the part of this company relating to appraisal or to any examination provided for herein.' "

Another such provision is the "limitations" clause of ORS 742.240. Before 1991, that statute provided:

"A fire insurance policy shall contain a provision as follows: '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 twelve months next after inception of the loss.' " ²

Plaintiff owned a house insured under a fire insurance policy issued by defendant. That policy contained both the statutorily required nonwaiver clause and the statutorily required limitations clause. In addition to insuring against loss from fire, the policy also insured against loss from "vandalism or malicious mischief."

Plaintiff rented the house to tenants from July 1989 to October 1990. On October 15, 1990, a state police officer notified plaintiff that a woman had confessed to "cooking" methamphetamine in plaintiff's house. ³ On October 22, 1990, plaintiff submitted a claim to defendant for damage resulting from the drug manufacture. ⁴

On October 30, defendant sent a letter to plaintiff that showed the "date of loss" as October 15, 1990. The letter stated that defendant would investigate the claim subject to the enclosed "Reservation of Rights and Non-Waiver Agreement." That agreement, which plaintiff signed on November 5, provided in part:

"It is hereby understood and agreed by and between the assured and the Company that any action taken heretofore or hereafter by the Company relative to that certain loss of October 15, 1990, shall not be construed nor any attempt made to construe any action as indicating On November 9, 1990, a claims representative of defendant recorded a statement by plaintiff about the claim. During that statement, plaintiff told the representative that the "cooking" may have taken place during the occupancy of a tenant who had resided in the house between mid-July 1989 and mid-November 1989. Nonetheless, even the transcription of plaintiff's statement, typed on December 3, 1990, had a notation that the date of loss was October 15, 1990.

any waiver of the [317 Or. 239] Company's rights to stand upon the provisions of its policy * * *."

On December 17, 1990, defendant tendered a check to plaintiff for $2,268.62 "in settlement" of the claim. That check also showed the date of loss as October 15, 1990. Plaintiff refused the tender, because he believed that the amount tendered was substantially less than the amount to which he was entitled.

On February 1, 1991, plaintiff brought an action against defendant for breach of the insurance contract. In its answer to plaintiff's complaint, defendant pleaded the limitations clause of the contract as an affirmative defense: Thereafter, defendant moved for summary judgment, arguing that the action was not commenced within 12 months "after inception of the loss." In opposition to the motion, plaintiff argued that there was a factual question as to whether defendant had waived the limitations clause by tendering payment on the claim and by repeatedly representing that the date of loss was October 15, 1990. Plaintiff also argued that the limitations period should run from the date that he discovered the loss, rather than from the date that the "cooking" occurred. The trial court rejected plaintiff's arguments and granted summary judgment in favor of defendant.

On plaintiff's appeal, the Court of Appeals reversed and remanded, holding that "there are genuine issues of material fact as to whether defendant intentionally relinquished its right to rely on the nonwaiver agreement and the 12-month limitation period." Moore v. Mutual of Enumclaw Ins. Co., supra, 113 Or.App. at 579, 833 P.2d 1310. Defendant sought reconsideration, arguing that, as a matter of law under ORS 742.222, the statutorily required provisions of a standard fire insurance policy can be waived only by a written endorsement to the policy. The Court of Appeals disagreed, holding that "ORS 742.222 does not preclude a non-written waiver by defendant of the time limitations clause in its policy, because the purported waiver does not extend the coverage of the policy." Moore v. Mutual of Enumclaw Ins. Co., supra, 116 Or.App. at 209, 840 P.2d 1320.

As noted above, the insurance policy at issue in this case required that any action on the policy for recovery of a claim be commenced "within twelve months next after inception of the loss." For purposes of the motion for summary judgment, the parties stipulated that the methamphetamine "cooking" occurred in plaintiff's rental house more than one year before plaintiff commenced this action. To avoid an adverse summary judgment on the ground that his action was untimely, plaintiff advances two arguments. First, he contends that defendant waived the limitations clause. In the alternative, he argues that the limitations period did not begin until he discovered the loss. We address each of those arguments in turn.

WAIVER

Waiver is the intentional relinquishment or abandonment of a known right or privilege. State v. Hunter, 316 Or. 192, 201, 850 P.2d 366 (1993); Waterway Terminals v. P.S. Lord, 242 Or. 1, 26, 406 P.2d 556 (1965). Whether a waiver has occurred depends on the particular circumstances of each case. State v. Hunter, supra. In this case, plaintiff contends that defendant waived the limitations clause of the policy by tendering payment on plaintiff's claim and by repeatedly representing that the date of loss was October 15, 1990, a date that would place the commencement of plaintiff's action well within the 12-month limitations period.

Defendant argues that it could not have waived the limitations clause in the manner that plaintiff alleges because of the statutorily required "nonwaiver" clause contained in the policy. That clause provided, in part, that "[n]o permission affecting this insurance shall exist, or waiver of any provision be valid, unless granted herein or expressed in writing added hereto." (Emphasis supplied.) According to defendant, because there is no evidence of a written waiver of the limitations clause appended to the policy, no genuine issue of material fact remains as to whether defendant waived that clause.

Under general contract law, a party to a written contract can waive a provision of that contract by conduct or by oral representation, despite the existence of a nonwaiver clause. See, e.g., Fisher v. Tiffin, 275 Or. 437, 441, 551 P.2d 1061 (1976) (vendor's long-standing practice of accepting late payments constituted waiver of time provisions despite nonwaiver clause); 3A Corbin on Contracts § 763 at 531 (1960) ("An express provision in a written contract that no rescission or variation shall be valid unless it too is in writing is ineffective to invalidate a subsequent oral agreement to the contrary."). Plaintiff relies on that common law rule to argue that defendant could have waived the limitations clause without regard to the nonwaiver clause in the policy. Defendant contends, however, that ORS 742.222 has superseded the common law rule in cases involving standard fire insurance policies. According to defendant, the effect of ORS 742.222 is to prohibit the waiver of the provisions of a standard fire insurance policy by any means other than a writing appended to the policy.

Defendant's argument finds support in two previous decisions of this court. In Oatman v. Bankers' Fire Relief Assn., 66 Or. 388, 133 P. 1183, 134 P. 1033 (1913), the insured plaintiffs argued that the defendant insurer had waived a policy condition that required that the plaintiffs have sole...