APRIL 2009
A recent Oregon decision requires an offer to allow judgment to be filed in court to limit a claimant’s right to recover attorney fees and costs, even if the offer was rejected. In Wilmoth v. Ann Sacks Tile and Stone, Inc., 224 Or App 315, 197 P3d 567 (2008). WL 5071886 (Dec. 3, 2008), the Oregon court of appeals held that an unfiled offer to allow judgment under Oregon Rule of Civil Procedure 54 E was ineffective, even though the plaintiff had rejected the offer and failed to recover more than the amount of the offer at trial.
ORCP 54 E is intended to promote settlement of claims. It allows a party against whom a claim is asserted to make an offer to allow judgment. If accepted, the offer to allow judgment is signed on behalf of the claimant and filed with the court to resolve the claim. If the offer is not accepted and filed within the time prescribed, it is deemed withdrawn; however, a claimant who rejects the offer and recovers less than the amount of the offer at trial cannot recover attorney fees or costs incurred after the date of the offer. The federal counterpart to ORCP 54 E is Federal Rule of Civil Procedure 68. In federal court, a party serves the FRCP 68 offer of judgment on opposing counsel, but does not file the offer with the court. In fact, Oregon federal district court even has a local rule that prohibits filing an offer to allow judgment.
Wilmoth involved an employment claim where the plaintiff employee was awarded $10,758.50 in damages. The defendant employer had previously served an ORCP 54 E offer of judgment in excess of that amount, which plaintiff did not accept. The Wilmoth court rejected federal authorities in holding that an otherwise valid Rule 54 E offer of judgment does not cut off a claimant’s right to fees unless it is served on the plaintiff and filed with the court within a reasonable time.
The key to the court’s opinion lies in another procedural rule, ORCP 9, which establishes requirements for serving and filing papers in Oregon state court. ORCP 9 provides, among other things, that every offer of judgment shall be served on each of the parties. ORCP 9 further provides that all papers required to be served on a party “shall be filed with the court within a reasonable time after service”. Although certain pleadings are exempt from the filing rule, neither ORCP 54 E nor ORCP 9 contains an exception for offers of judgment. Therefore, the Wilmoth court held, a party who makes and serves an offer of judgment also must file it within a reasonable time.
In Wilmoth, the defendant argued that ORCP 54 E only requires a party who accepts an offer of judgment to file the offer, and that it was illogical to file an unaccepted offer because ORCP 54 E specifically states that an unaccepted offer cannot be used as evidence. Defendants also relied on federal case law and policies favoring confidentiality of settlement discussions. In rejecting those arguments, the Wilmoth opinion indicated some sympathy for the defendant’s position, but stated, “this court cannot, however, impose its own view of logic or policy to ignore the plain requirement of ORCP 9. Although ORCP 54 E(3) provides that an unaccepted offer is deemed withdrawn and is inadmissible as evidence at trial, it does not create an exception to the ORCP 9 requirement that an offer of judgment be served and filed.”
Barring an amendment to ORCP 9, counsel making an ORCP 54 E offer of judgment that is not accepted must file the offer of judgment with the court within a reasonable time. Failure to do so will make the offer ineffective to cut off fees and costs by a claimant who fails to beat the offer at trial.
Otherwise Uninsured Drivers Possibly Could Recover Noneconomic Damages in MVA Claims: “Other Drivers” Coverage May Qualify for Exception to Noneconomic Damages Bar
Oregon law that an uninsured driver may not recover noneconomic damages in a motor vehicle accident claim pursuant to ORS 31.715. A statutory exception, however, allows an recently uninsured driver to avoid the noneconomic damages bar if he or she was insured under a policy that lapsed within six months before the accident. Hill v. Null, 224 Or App 345, 197 P3d 582 (2008). WL 5072410 (Dec. 3, 2008), just decided by the Oregon court of appeals, held that the exception does not apply unless the plaintiff pleads and proves all elements of the statute. More importantly, the court suggested that a driver who is not a named insured still may be able to recover noneconomic damages under the exception as a permissive user under another driver’s recently lapsed policy.
Plaintiff filed a claim alleging economic and noneconomic damages. Defendant admitted liability, but moved to strike the claim for noneconomic damages under ORS 31.715(1), which prohibits an uninsured driver from recovering noneconomic damages in a personal injury claim involving a motor vehicle accident.
ORS 31.715(6) contains an exception to the noneconomic damages limitation if the plaintiff “was insured under a motor vehicle liability insurance policy within 180 days before the act or omission occurred, and the plaintiff has not operated a motor vehicle in violation of ORS 806.010 within the one-year period immediately preceding the date on which coverage under the motor vehicle liability insurance policy lapsed.” Plaintiff argued that although he was not a named insured, he had been an insured under the “other drivers” coverage. He further asserted that the date of the accident was the first time he operated an uninsured motor vehicle. Defendant argued that the statute only permits a named insured to avoid the penalty for driving while uninsured. The trial court agreed that the exception applies only to drivers who were named as an insured and granted defendant’s motion to strike plaintiff’s noneconomic damages claim.
The court of appeals affirmed the trial court’s decision on different grounds, stating that the type of insurance coverage contemplated by the statute was immaterial because the statute also requires coverage under the policy to have “lapsed.” Because the plaintiff presented no evidence that, within 180 days before the accident, he became uninsured as the result of the lapse of an insurance policy that covered him, the court held that ORS 31.715(6) did not apply. The Hill court’s dictum is also significant, suggesting that an otherwise uninsured driver might still qualify for the exception as a permissive user of another person’s car. “We do not need to decide whether the first requirement can be satisfied by “other driver” coverage under a motor vehicle liability insurance policy. That meaning of the statute is certainly plausible.” Thus, insurers and attorneys intending to rely on ORS 31.715 to strike noneconomic damages from claims by uninsured motorists should carefully investigate the existence of lapsed “other drivers” coverage through depositions and document discovery before filing a motion to strike.
Insurance Defense Team
Eric Kekel, Leader
Randy Arthur
Anne Foster
Sam Smith
Don Templeton
Tom Tongue
