Shisler v. Fireman's Fund Ins. Co.

• Decision Date: 26 August 1987
• Citation: 87 Or.App. 109,741 P.2d 529
• Parties: Mahlin SHISLER, Patricia Shisler, and Tia Marie Shisler by her Guardian ad Litem, Mahlin Shisler, Respondents-Cross-Appellants, v. FIREMAN'S FUND INSURANCE COMPANY, Appellant-Cross-respondent. A8404-02413; CA A37033.
• Court: Oregon Court of Appeals

Page 529

741 P.2d 529

87 Or.App. 109

Mahlin SHISLER, Patricia Shisler, and Tia Marie Shisler by

her Guardian ad Litem, Mahlin Shisler, Respondents-Cross-Appellants, v. FIREMAN'S FUND INSURANCE COMPANY, Appellant-Cross-respondent.

A8404-02413; CA A37033.

Court of Appeals of Oregon.

Argued and Submitted Dec. 15, 1986.

Decided Aug. 26, 1987.

Patrick N. Rothwell, Portland, argued the cause for appellant-cross-respondent. With him on the briefs was Hallmark, Griffith & Keating, Portland.

Mary Ellen Farr, Portland, argued the cause for respondents-cross-appellants. On the brief were Margaret H. Leek Leiberan and Kell, Alterman & Runstein, Portland.

Before WARDEN, P.J., and VAN HOOMISSEN and YOUNG, JJ. YOUNG, Judge.

Plaintiffs brought this declaratory judgment action against their insurer. On cross-motions for summary judgment, the trial court ruled that plaintiffs are entitled to $10,000 in underinsurance benefits and that defendant is entitled to reimbursement of Personal Injury Protection (PIP) benefits that it had paid to plaintiffs. After trial, the court awarded plaintiff $6,500 as reasonable attorney fees. Defendant appeals, and plaintiffs cross-appeal. The primary issues are: (1) whether plaintiffs' insurance policy entitles them to underinsurance benefits when the tortfeasor's liability policy limits are the same as plaintiffs' underinsurance coverage limits; (2) if not, whether defendant is estopped to deny that plaintiffs are entitled to underinsurance benefits; and (3) whether defendant is entitled to recover from plaintiffs' settlement with the tortfeasors' insurer the amount that defendant paid to plaintiffs in PIP benefits.

In 1981, plaintiffs suffered injuries which allegedly caused damages in excess of $50,000 when their vehicle was rear-ended by Hall. Plaintiffs were insured by defendant, and their policy included PIP benefits and underinsurance coverage of $50,000. Defendant paid plaintiffs $11,342.89 in PIP benefits and notified them that it would seek reimbursement of those benefits from Hall's insurer.

Hall was insured by Farmers Insurance (Farmers). His policy includes $50,000 in liability coverage. Farmers paid $10,000 to an injured individual who is not involved in this action. Plaintiffs settled with Farmers for the remaining $40,000. Of that amount, plaintiffs received $28,657.11 at the time of settlement. Pursuant to an agreement with defendant, the remaining $11,342.89, equal to the PIP benefits paid by defendant, was placed in escrow. Plaintiffs then filed this action for a declaration that they are entitled to the funds in escrow, and that the full $50,000 of underinsurance coverage under their policy applies and is available to them.

The parties filed cross-motions for summary judgment. The trial court granted a partial summary judgment to defendant, holding that it is entitled to recover the PIP benefits from plaintiffs' settlement with Farmers. The court also granted a partial summary judgment to plaintiffs, holding that they are entitled to the limits of their underinsurance coverage, less the PIP benefits paid and less plaintiffs' net recovery from the settlement with Farmers. The upshot of that holding is that plaintiffs are entitled to $10,000 in underinsurance benefits. After trial, a final judgment was entered which incorporated the rulings on the motions for summary judgment and awarded plaintiffs $6,500 as reasonable attorney fees on their claim for underinsurance benefits. Except for the issue concerning plaintiffs' entitlement to attorney fees, the assignments of error on the appeal and the cross-appeal arise out of the partial summary judgments. We reverse on the appeal and the cross-appeal.

Defendant's first assignment of error is that the trial court erred in holding that plaintiffs are entitled to recover $10,000 in underinsurance benefits under the provisions of their policy. Defendant argues that underinsurance coverage is not available, because the tortfeasor was not driving an underinsured motor vehicle. At oral argument, the parties correctly agreed that there is no applicable statute ¹ and that the issue is governed solely by the terms of the policy. The construction of an unambiguous contract, including an insurance contract, is a question of law for the court. Timberline Equip. v. St. Paul Fire and Mar. Ins., 281 Or. 639, 643, 576 P.2d 1244 (1978).

The policy provides:

"We will pay damages which a covered person is legally entitled to recover from the owner or operator of an underinsured motor vehicle * * *. The owner's or operator's liability for these damages must arise out of the ownership, maintenance or use of the underinsured motor vehicle. * * * 'Underinsured motor vehicle' means a land motor vehicle or trailer of any type to which a bodily injury liability bond or policy applies at the time of the accident but its limit for bodily injury liability is less than the limit of liability for this coverage."

The contract is unambiguous. Underinsurance coverage is available to plaintiffs only if Hall's liability coverage is less than the underinsured coverage limits in plaintiffs' policy. Because it is undisputed that Hall's liability coverage was the same as, and not less than, plaintiffs' underinsured coverage, he was not driving an "underinsured motor vehicle" at the time of the accident. For that reason, the trial court erred in holding that plaintiffs' policy's underinsurance provisions apply.

Defendant next argues that the trial court erred in awarding attorney fees on the underinsured motorist claim. ORS 743.114 provides, in part:

"If settlement is not made within six months from the date proof of loss is filed with an insurer and an action is brought in any court of this state upon any policy of insurance of any kind or nature, and the plaintiff's recovery exceeds the amount of any tender made by the defendant in such action, a reasonable amount to be fixed by the court as attorney fees shall be taxed as part of the costs of the action and any appeal thereon."

Because we reverse the award of underinsured benefits, plaintiffs' recovery on the policy (that is, none) does not exceed the amount of any tender made by defendant (that is, none), at this stage of the case. Therefore, the attorney fees award must also be reversed.

We turn to the cross-appeal. Plaintiffs' first two assignments of error involve the trial court's ruling that the underinsurance benefits should be reduced by the amount that plaintiffs received from the tortfeasor's liability policy. Plaintiffs argue that defendant is estopped to deny that $50,000 in underinsurance coverage is available to them, because defendant's agent represented to Mahlin Shisler that the coverage was in addition to the tortfeasor's coverage. Defendant contends that we cannot reach the issue, because it is unreviewable and because plaintiffs did not plead estoppel, and that, in any event, plaintiffs have failed to establish an estoppel.

Plaintiffs raise the estoppel issue by assigning error to the partial denial of their motion for summary judgment and to the partial allowance of defendant's motion. The denial of a motion for summary judgment is not reviewable ² in an appeal from a judgment entered after trial, if the denial is based on the existence of questions of fact and the moving party does not claim "that it must win under the law no matter what the facts may show." Payless Drug Stores v. Brown, 300 Or. 243, 246, 708 P.2d 1143 (1985); Mt. Fir Lumber Co. v. Temple Dist. Co., 70 Or.App. 192, 198, 688 P.2d 1378 (1984). However, issues determined by an interlocutory order granting summary judgment are reviewable after a final judgment has been entered. See Port v. Campbell-Norquist, Inc., 57 Or.App. 408, 410 n. 2, 644 P.2d 659 (1982); Thunderbird Motel v. City of Portland, 40 Or.App. 697, 702, 596 P.2d 994, rev. den. 287 Or. 409 (1979). Defendant argues that the estoppel claim was not determined by defendant's summary judgment. We disagree. The claim was clearly before the court, because it was the sole issue raised by plaintiffs' supplemental memorandum in support of their motion for summary judgment. The trial court could not properly grant defendant's cross-motion for summary judgment without ruling adversely to plaintiffs on the estoppel claim. Thus, the trial court impliedly rejected the estoppel claim when it granted defendant's cross-motion.

Defendant also argues that we should not consider the issue, because plaintiffs did not plead estoppel. Defendant cites Hill v. Oland, 61 Or.App. 85, 88, 655 P.2d 1088 (1982), where we held that we will not consider an estoppel claim if it was not pleaded, so long as an objection to consideration of the issue was raised at trial:

"The dissent would have us decide this case on an estoppel theory on appeal, even though plaintiffs failed to plead facts out of which an estoppel might have arisen, by relying on language in Rose v. Webster, 51 Or.App. 293, 297, 625 P.2d 1329 (1981). The rule as stated in Rose is that an objection that evidence supporting a particular theory was outside the scope of the pleadings will not be entertained for the first time on appeal, except in instances where it appears that the appellant has been prejudiced. The objection in this case was made at trial, before entry of judgment." 61 Or.App. at 88, 655 P.2d 1088. (Emphasis in original.)

In the present case, the record does not show that defendant objected below to the estoppel argument; it appears instead that defendant objects for the first time on appeal. Hill therefore does not apply. We turn to the merits.

An insurer may be estopped to deny coverage when the party claiming coverage has acted in reasonable reliance on an agent's representation of coverage that is not patently absurd. Allstate Ins. v. State Farm Ins., 67 Or.App. 623, 628, 679 P.2d 879 (1984). To establish estoppel, plaintiffs must prove (1) that defendant made a false representation to pl...