Legal Fees Insurance Policy In Oregon
ORS 742.061, which 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."
In Grijalva v. Safeco Insurance Co., 153 Ore. App. 144, 156-58, 956 P.2d 995 (1998), we held that a plaintiff could not recover attorney fees under the statute unless the plaintiff's recovery exceeded the amount of "any tender" made by the defendant, irrespective of whether the tender was made within six months of the proof of loss.
The Supreme Court addressed the meaning of the term "proof of loss" as used in ORS 742.061. In Dockins, the plaintiffs sought attorney fees in an action under a homeowner's policy.
The policy provided both general liability and property coverage. During the policy term, the Oregon Department of Environmental Quality (DEQ) made a claim against the plaintiffs that damage had occurred as a result of petroleum residue on the plaintiffs' property.
In their complaint against the insurer, the plaintiffs sought coverage for DEQ's claim under the third-party liability provisions of the policy. the parties settled the damages portion of the plaintiffs' claim more than six months after the date on which the complaint was filed.
The trial court denied the plaintiffs' request for attorney fees under ORS 742.061. We affirmed that decision. the Supreme Court reversed, concluding that the plaintiffs' complaint constituted proof of loss under the policy. the court noted that "proof of loss" is not defined by statute and, after reviewing the relevant statutory text and context, concluded:
From the foregoing discussion of the text of ORS 742.061 and the case law that surrounds it and its predecessor statutes, we conclude the meaning of the statutory term 'proof of loss' is clear: Any event or submission that would permit an insurer to estimate its obligations (taking into account the insurer's obligation to investigate and clarify uncertain claims) qualifies as a 'proof of loss' for purposes of the statute." Id. at 29.
The defendant insurer argued that the complaint was insufficient to qualify as a proof of loss under ORS 742.061 because:
(1) DEQ's demand was not attached;
(2) the insurer's duty to indemnify was not triggered because the plaintiffs were not yet able to calculate their remediation costs. the court rejected both arguments:
"Although it is true that the DEQ demand was not attached to the complaint and that State Farm was not required to accept plaintiffs' characterization of the DEQ demand at face value, it also is true that State Farm easily could have ascertained whether plaintiffs' characterization was accurate.
"As to its duty to indemnify under the liability provision of the policy, State Farm argues that the six-month settlement period does not begin to run until plaintiffs could calculate their remediation costs with enough specificity to enable State Farm to make a settlement offer. Again, in so arguing, State Farm ignores its duty of inquiry. There is no basis in this record to hold that, if it had undertaken an inquiry, State Farm could not have made that calculation." Id. at 30.
The court concluded that the allegations in the plaintiffs' complaint qualified as a proof of loss under ORS 742.061.
The court also disagreed with our reading of ORS 742.061 in Grijalva. the court held that, for a defendant's tender to defeat a plaintiff's right to attorney fees under the statute, the tender must be made within six months after the submission of an adequate proof of loss. Dockins, 329 Ore. at 32-34. See also Petersen v. Farmers Ins. Co., 162 Ore. App. 462, 465, 986 P.2d 659 (1999).