In April, the Oregon Court of Appeals released Wilson v. Tri-Met, 234 Or App 615, 228 P3d 1225 (2010), a new decision addressing an insured’s right to attorney fees pursuant to ORS 742.061. This time, the court discussed the intersection between ORS 742.061 and ORCP 54 E.
Under ORS 742.061, the right to reasonable and necessary attorney fees can be triggered if an insurer fails to settle, make a timely tender, or accept coverage of an insured’s claim within six months of proof of loss. ORCP 54 E provides that if a party makes an offer of judgment at least 10 days before trial—and the offer is rejected—the rejecting party loses the right to recover attorney fees incurred after the date of the offer, provided that the rejecting party fails to recover a more favorable judgment at trial.
In Wilson, the defendant argued that these statutes worked harmoniously. For instance, suppose an insured triggered attorney fees pursuant to ORS 742.061. At that point, the insured’s right to attorney fees begins to run. Next, suppose that the insurer makes a pre-trial offer of judgment pursuant to ORCP 54 E. If the insured rejects the offer and fails to recover anything more favorable at trial, the insured’s attorney fee award will be limited to the fees accrued before the insurer’s offer of judgment. Nothing more.
The Court of Appeals in Wilson disagreed, holding that the statutes cannot be read harmoniously. Instead, ORS 742.061 “trumps” ORCP 54 E. Thus, ORCP 54 E can never cut off an insured’s right to attorney fees. The Wilson decision leaves little doubt that an insurer’s offer of judgment under ORCP 54 E is powerless to limit the insured’s right to attorney fees under ORS 742.061.
In light of the Wilson decision, insurers must act carefully. The only way to stop the accrual of attorneys fees is to prevent an insured from triggering them in the first place. However, even if the right to attorney fees has been triggered, it still makes sense for an insurer to make an offer of judgment under ORCP 54 E. Although the offer will not cut off the right to attorney fees, the offer can be used as evidence to dispute the reasonableness and necessity of attorney fees accrued after the offer is made.
A copy of the Wilson decision can be found here: http://www.publications.ojd.state.or.us/A138860.htm
Thanks to Sam Smith for writing this Enews
Insurance Defense Team
Eric Kekel, Leader