Wallach v. Allstate Ins. Co.

• Decision Date: 17 May 2006
• Docket Number: A124340.,99-3671-L-4.
• Citation: 135 P.3d 404,206 Or. App. 137
• Parties: Michael E. WALLACH, Respondent-Cross-Appellant, v. ALLSTATE INSURANCE COMPANY, an Illinois corporation, aka Allstate Indemnity Company, Appellant-Cross-Respondent.
• Court: Oregon Court of Appeals

135 P.3d 404

206 Or. App. 137

Michael E. WALLACH, Respondent-Cross-Appellant, v. ALLSTATE INSURANCE COMPANY, an Illinois corporation, aka Allstate Indemnity Company, Appellant-Cross-Respondent.

99-3671-L-4.

A124340.

Court of Appeals of Oregon.

Argued and Submitted December 19, 2005.

Decided May 17, 2006.

Edward H. Talmadge, Medford, argued the cause for appellant-cross-respondent. With him on the briefs were Bernard S. Moore and Frohnmayer, Deatherage, Pratt, Jamieson, Clarke & Moore, PC.

G. Jefferson Campbell, Jr., Medford, argued the cause and filed the briefs for respondent-cross-appellant.

Before LANDAU, Presiding Judge, and SCHUMAN, Judge, and DEITS, Judge pro tempore.

SCHUMAN, J.

Defendant appeals from a judgment for plaintiff after a jury trial on plaintiff's claim for breach of an insurance contract. Plaintiff cross-appeals, arguing that the trial court erred in determining the amount of attorney fees it awarded him. We conclude that the trial court did not err in granting plaintiff's motion for partial summary judgment on the issue of defendant's liability to plaintiff for injuries caused by the conduct of the driver of a so-called "phantom vehicle," but that the court's jury instruction regarding the degree, if any, to which that liability encompassed injuries that plaintiff incurred in subsequent events, was prejudicially erroneous. We therefore reverse and remand for a new trial on the issues remaining after summary judgment, and we dismiss the cross-appeal as moot.

The following facts are not disputed. In October 1997, as plaintiff was driving through a construction area on Interstate 5 between Grants Pass and the Rogue River in Jackson County, a truck suddenly entered his lane, causing him to swerve erratically and hit a guardrail. Plaintiff caught his arm in the steering wheel and was thrown against the door. He reported the accident to the authorities and to defendant, his insurer, but was unable to identify the owner of the truck.

Subsequently, plaintiff submitted insurance claims to defendant for various upper-body injuries and pain problems under his policy's personal injury protection (PIP) and uninsured motorist (UM) provisions. The PIP provision promised benefits to plaintiff on proof of "bodily injury arising from the use of a motor vehicle" without consideration of fault. See also ORS 742.520 (describing statutory requirements for PIP coverage). According to the UM provision, defendant promised to "pay those damages which an insured person is legally entitled to recover from the owner of an uninsured auto because of bodily injury sustained by an insured person." Under the policy, one type of "uninsured auto" is "a phantom motor vehicle," defined as a vehicle that causes bodily injury to the insured person or property damages to the insured auto without physically contacting either and whose owner or operator is "not ascertainable." Defendant paid some benefits under the PIP provision but denied the UM claim.

Between the time defendant denied plaintiff's claim and the commencement of this action, plaintiff was involved in two subsequent car accidents, which, according to plaintiff, worsened the injuries that he suffered in the October 1997 accident.

Plaintiff filed this action in October 1999, alleging that defendant breached the PIP and UM provisions of the insurance contract and that it owed him benefits for injuries and chronic pain due to the October 1997 accident, as well as for the later aggravation of those injuries. The trial court granted summary judgment to plaintiff on the issue of defendant's liability under the insurance policy, and a trial on damages followed. Both parties presented expert evidence concerning the extent and severity of plaintiff's injuries. The jury returned a verdict awarding plaintiff $50,000 in damages under the UM provision and $25,000 under the PIP provision. The trial court entered a supplemental judgment awarding plaintiff attorney fees and costs under ORS 742.061.

Defendant now appeals, asserting that the trial court erred in granting plaintiff's motion for partial summary judgment, in certain evidentiary rulings, and in instructing the jury concerning how it could determine the extent of defendant's liability for injuries incurred subsequent to the phantom vehicle accident. Plaintiff cross-appeals from the supplemental judgment, asserting that the court's attorney fee determination was based on an improper standard. We conclude that the trial court did not err in granting partial summary judgment to plaintiff on the issue of defendant's liability for the phantom vehicle accident, but that the court's contested jury instruction constituted prejudicial error. Because that error requires a new trial on all issues except defendant's liability for the phantom vehicle driver's conduct, we do not reach defendant's other assignments of error, and we dismiss plaintiff's cross-appeal as moot.

We first consider whether the trial court erred in granting plaintiff's motion for partial summary judgment on defendant's liability under the UM provision.¹ The insurance policy provides UM coverage if plaintiff is "legally entitled to recover [damages] from the owner [of the phantom vehicle]."² On appeal, defendant asserts that the trial court erred because the record, viewed in the light most favorable to the nonmoving party, ORCP 47 C, discloses a genuine issue of material fact concerning whether plaintiff was himself so negligent as to negate the conclusion that he would have been "legally entitled" to recover anything from the phantom driver. To support that argument, defendant relies on two sources. First, it relies on the bare allegation in its answer to plaintiff's complaint that plaintiff was negligent. However,

"an adverse party may not rest upon the mere allegations or denials of that party's pleading, but the adverse party's response, by affidavits, declarations or as otherwise provided in this section, must set forth specific facts showing that there is a genuine issue as to any material fact for trial. If the adverse party does not so respond, summary judgment, if appropriate, shall be entered against such party."

ORCP 47 D (emphasis added). Second, defendant relies on statements that plaintiff made in his deposition, which, according to defendant, establish "that there were questions regarding his speed." The statements to which defendant refers are these:

"[Plaintiff:] I was going right around the bend. It bends to the right a little bit. Next to the river there. And as I was going this, you know, the speed that they set you at, this guy in this white, they call it a bottom belly. I don't know why. Just zipped right in front of us. I mean it was so close, I saw his face.

"He just, that's how close he came with his truck. We got caught in his draft. And I tried to grab control of the car. Like I said, the truck and, like I said, my arm got caught in the steering wheel. It flipped around this way. I grabbed it with my left arm, Larry was asking me to grab control of the car. I did. He was asking me to slow down. I was trying to slow down but my father-in-law always told me don't brake, just ease off the brake, ease off and go, that's what I was trying to do.

"[Counsel:] What do you think your speed was as he first passed you?

"[Plaintiff:] I'm guessing, just guessing.

"[Counsel:] That's fine.

"[Plaintiff:] About 25."

(Emphasis added.) We are unable to discern how those statements, standing alone, raise an issue of material fact regarding plaintiff's negligence. Had defendant offered evidence or testimony suggesting that driving 25 miles per hour where the accident occurred, or that "eas[ing] off" instead of braking, was unreasonable under the circumstances, we might conclude that a fact issue exists. Without such evidence or testimony in the summary judgment record, we do not. The court did not err in granting plaintiff's motion for partial summary judgment on the issue of the phantom vehicle's negligence (and hence defendant's liability) and in limiting the trial to the remaining issues: the extent of plaintiff's injuries and whether defendant's liability encompassed aggravation injuries incurred in later accidents.

In instructing the jury on the latter issue, however, the trial court erred. After rejecting proposals from both parties regarding how to instruct with respect to injuries that plaintiff incurred in accidents subsequent to the one involving the phantom vehicle, the court told the jury,

"The contract entered into by the plaintiff and the defendant sets forth that the defendant will provide coverage for all the natural, direct and proximate consequences of the wrongful acts of the driver of the phantom vehicle.³ If you find that the plaintiff was injured by those acts in the accident of October 24th, 1997, and then had a subsequent accident in which the plaintiff suffered further injury which would not have occurred but for the original injury, the defendant may then be held liable for the enhancement or aggravation of plaintiff's injuries caused by the subsequent accident.

"Defendant's liability would apply only to the injuries you attribute to the accident of October 24th, 1997, and to any enhancement or aggravation of those injuries, not to any new injuries suffered by plaintiff in any subsequent accident."

We will reverse the trial court based on a jury instruction if we can say that the instruction probably created an...