Justia Contracts Opinion SummariesArticles Posted in Oregon Supreme Court
Gist v. Zoan Management, Inc.
After plaintiff filed this class-action complaint against defendants, defendants filed a motion to compel arbitration. The trial court granted the motion. Plaintiff appealed, and the Court of Appeals affirmed. The Oregon Supreme Court granted review of the matter, finding that plaintiff and defendants executed a contract—the “Driver Services Agreement” (DSA)—for plaintiff to provide delivery services for defendants. The DSA stated that drivers are independent contractors. The DSA includes a section on dispute resolution. That section provides that any party “may propose mediation as appropriate” as a means for resolving a dispute arising out of or relating to the DSA. It then provided that, if the parties did not pursue mediation or mediation failed, “any dispute, claim or controversy” arising out of or relating to the DSA—including disputes about “the existence, scope, or validity” of the DSA itself—would be resolved through binding arbitration conducted by a panel of three arbitrators. The DSA also included a savings clause, which allowed for the severance of any invalid or unenforceable term or provision of the DSA. On review, plaintiff argued, inter alia, that the arbitration agreement within the DSA was unconscionable because it required him to arbitrate his wage and hour claims but prohibited the arbitrators from granting him relief on those claims. Plaintiff based his argument on a provision of the arbitration agreement that stated that the arbitrators could not “alter, amend or modify” the terms and conditions of the DSA. The Court of Appeals agreed with defendant’s reading of the DSA, as did the Supreme Court: read in the context of the DSA as a whole, the provision that the arbitrators may not “alter, amend or modify” the terms and conditions of the DSA “is not plausibly read as a restriction on their authority to determine what terms are enforceable or what law is controlling.” View "Gist v. Zoan Management, Inc." on Justia Law
Batten v. State Farm Mutual Automobile Ins. Co.
Consolidated cases presented a certified question from the United States District Court for the District of Oregon. The Oregon Supreme Court was asked to determine whether Oregon law precluded an insurer from limiting its liability for uninsured/underinsured motorist (UM/UIM) benefits on the basis that another policy also covered the insured’s losses. Each plaintiff suffered injuries caused by an uninsured or underinsured motorist, and each plaintiff incurred resulting damages that qualify as covered losses under multiple motor vehicle insurance policies issued by defendant State Farm Mutual Automobile Insurance Company (State Farm). Each plaintiff alleged a loss that exceeded the declared liability limits of any single applicable policy and sought to recover the excess under additional applicable policies, up to the combined total of the limits of liability. In each case, however, State Farm refused to cover the excess loss, citing a term in the policies that allowed State Farm to limit its liability to the amount that it agreed to pay under the single policy with the highest applicable limit of liability. The Oregon Supreme Court concluded that that term made State Farm’s uninsured motorist coverage less favorable to its insureds than the model coverage that the legislature has required and, thus, was unenforceable. View "Batten v. State Farm Mutual Automobile Ins. Co." on Justia Law
Allianz Global Risks v. ACE Property & Casualty Ins. Co.
Daimler-Benz AG acquired Freightliner Corporation (Freightliner) from Consolidated Freightways (now Con-Way) in 1981. As part of the transaction, it liquidated Freightliner’s assets and liabilities into a subsidiary, Daimler Trucks North America LLC (Daimler). Between 1952 and 1982, Freightliner and then Daimler had engaged in business activities, primarily the manufacture of trucks, that subsequently led to several environmental remediation proceedings, including claims related to the Portland Harbor Superfund cleanup, and to some 1,500 asbestos personal injury claims. Plaintiffs Allianz Global Risk US Insurance and Allianz Underwriters Insurance Company (Allianz) insured Freightliner in 1981 and Daimler from 1981 to 1986 through a general commercial liability insurance policy. Daimler also purchased from Allianz another policy to provide coverage for future claims that might be made against Freightliner based on its past operations that were “incurred but not yet reported.” By the time it filed the operative complaint in this action in 2014, Allianz had spent more than $24 million defending and paying environmental and asbestos claims against Daimler and the now-dissolved Freightliner arising from Freightliner’s business operations between 1952 and 1982. In this litigation, Allianz sought contribution for the payments it has made and will make in the future based on those environmental and asbestos claims from insurance companies that insured Freightliner -- either directly or through its parent, Con-Way -- from 1976 to 1982. The Oregon Supreme Court reversed the Court of Appeals' holding that Daimler did not assume the contingent liabilities of Freightliner (including the liabilities at issue here) and affirmed the jury verdict on that issue. On Allianz's appeal, the Supreme Court agreed that the trial court erred in submitting to the jury the question of whether, because of side agreements between Con-Way/Freightliner and the insurers, those insurers had a "duty to defend or indemnify Freightliner" -- that question was to be decided by the trial court as a matter of law based on the relevant policies. As to the "London pollution exclusion", the Supreme Court agreed with Allianz that it was error for the trial court not to provide a legal interpretation of a key provision in the policy as part of the jury instructions. The Court also concluded that the jury instructions regarding the London pollution exclusion should be similar to those regarding the Domestic exclusion. The decision of the Court of Appeals was reversed. The limited judgments of the trial court were affirmed in part and reversed in part, and the case was remanded to the trial court for further proceedings. View "Allianz Global Risks v. ACE Property & Casualty Ins. Co." on Justia Law
Jones v. Four Corners Rod & Gun Club
This appeal stemmed from plaintiff Rich Jones’ civil action to recover unpaid wages that defendant Four Corners Rod & Gun Club unlawfully withheld after the parties agreed to trade a lodging benefit for labor. Although Oregon’s wage laws authorized employers to deduct from an employee’s wages “the fair market value of lodging, meals or other facilities or services furnished by the employer for the private benefit of the employee,” those laws also prohibited employers from taking any deduction from wages unless the employer obtains the employee’s advance written authorization and keeps a record of the deductions. Defendant admittedly failed to comply with the requirements for deducting the lodging benefit from plaintiff’s wages. The issue this case presented for the Oregon Supreme Court’s review was whether defendant’s violation of ORS 652.610(3) prevented defendant from asserting an equitable claim for the value of the lodging benefit, either as an affirmative defense to plaintiff’s wage claim or as a lawful counterclaim. The Supreme Court concluded that defendant’s unlawful withholding of wages prevented it from asserting the value of the lodging benefit as an affirmative defense to defeat plaintiff’s wage claim, but did not prevent defendant from asserting an equitable counterclaim for the value of the lodging benefit. View "Jones v. Four Corners Rod & Gun Club" on Justia Law
Troubled Asset Solutions v. Wilcher
Sierra Development, LLC (Sierra), a real estate development company in which both Eddie Wilcher and his son were involved, borrowed approximately $5 million from The Mortgage Exchange (MEX), the predecessor in interest of plaintiff Troubled Asset Solutions, LLC (TAS). Wilcher and his son signed a promissory note for the loan as members of Sierra; Wilcher, his son, and his son’s wife also signed the promissory note as “individual guaran- tor(s).” The promissory note stated that it was secured by a trust deed on Sierra Heights, the property owned by Sierra that was to be developed with the loan proceeds, and also by “[a]dditional security” that was “required on this loan.” The promissory note identified as that “additional security” three other properties owned personally by Wilcher, one of which was described as “15 (+/-) acres including residence, Tax Lot 700, Klamath County, Oregon valued at $450,000.” The same three individuals that signed the promissory note also executed the critical document in this case: a deed of trust identifying more than a dozen separate parcels of land as collateral for the loan. The dispute in this case arose because, although the trust deed identified the collateral as including the properties owned personally by Wilcher and contained legal descriptions of those properties, the only name that appeared in the space labeled “GRANTOR” on the first page of the trust deed was Sierra. Wilcher, individually, was not identified as a “grantor” in the trust deed. After the loan went into default, TAS initiated foreclosure proceedings against one of the properties owned personally by Wilcher. The issue presented for the Oregon Supreme Court's review centered on the proper legal standard for the reformation of the contract to include a term that all parties had intended, but that one of the parties, by mistake, had failed to include in the written agreement. The trial court reformed the contract to include the term, finding that the mistake “was easily missed,” and that the “evidence is clear that all parties intended” the term to be included. The Court of Appeals reversed, concluding that reformation was permissible only if the party seeking the remedy demonstrates that it was not “grossly negligent,” and holding that the facts in this case did not meet that standard. The Supreme Court concluded the trial court did not err in reforming the contract to express the parties’ agreement. Accordingly, the Supreme Court reversed in part the decision of the Court of Appeals and remanded for further proceedings. View "Troubled Asset Solutions v. Wilcher" on Justia Law
Trinity v. Apex Directional Drilling LLC
This mandamus proceeding arose from a dispute about a contract’s forum-selection clause. Trinity Bank loaned money to Apex, a drilling company. Michael Lachner, a part owner of Apex and the relator in this case, signed a personal guaranty of the loan. Apex defaulted on the loan, and Lachner defaulted on the guaranty. Trinity filed an action asserting separate breach of contract claims against Apex (on the loan) and Lachner (on the guaranty). Apex made no appearance, and a default judgment was entered against it. Lachner filed a motion to dismiss the action against him under ORCP 21 A(1), because the action was not filed in San Francisco as required by the forum-selection clause. Neither party disputed the meaning of the forum-selection clause, only whether it should be enforced. The trial court denied the motion, without making any findings or conclusions of law, stating that it “ha[d] discretion in [the] matter.” After review of the clause at issue, the Oregon Supreme Court concluded the clause should be enforced. The Court found none of the circumstances identified in Roberts v. TriQuint Semiconductor, Inc., 364 P3d 328 (2015) (as grounds for invalidating a contractual forum-selection clause) were present here. “Trinity’s objections amount to little more than dissatisfaction with the forum selection clause. The trial court’s factual findings indicate that Oregon might be a marginally more convenient place than California to litigate the case, but that is not the applicable legal standard. . . . As counsel for Trinity conceded at oral argument, it is not unfair or unreasonable to litigate the case in California. For that reason, the trial court did not have discretion to deny Lachner’s ORCP 21A (1) motion to dismiss based on the forum-selection clause: The law required the court to dismiss the action. It was legal error not to do so.” A peremptory writ of mandamus issued. View "Trinity v. Apex Directional Drilling LLC" on Justia Law
Bates v. Bankers Life and Casualty Co.
The United States Court of Appeals for the Ninth Circuit certified a certified question of Oregon law to the Oregon Supreme Court. The question related to claims under ORS 124.110 for financial abuse of “vulnerable persons” (here, elderly persons) who purchased long-term care insurance from defendant Bankers Life & Casualty Co. (Bankers) and sought to receive insurance benefits under their policies. Specifically, the Ninth Circuit asked whether a plaintiff states a claim under ORS 124.110(1)(b) for wrongful withholding of money or property where it is alleged that an insurance company has in bad faith delayed the processing of claims and refused to pay benefits owed under an insurance contract. Plaintiffs were elderly Oregonians or their successors who purchased long-term healthcare insurance policies sold by Bankers and its parent company. Plaintiffs alleged Bankers developed onerous procedures to delay and deny insurance claims: failing to answer phone calls, losing documents, denying claims without notifying policyholders, denying claims for reasons that did not comport with Oregon law, and paying policyholders less than what they were owed under their policies. Bankers allegedly collected premium payments and, without good cause, delayed and denied insurance benefits to which Plaintiffs were entitled. The Oregon Supreme Court answered in the negative: allegations that an insurance company, in bad faith, delayed the processing of claims and refused to pay benefits owed to vulnerable persons under an insurance contract do not state a claim under ORS 124.110(1)(b) for wrongful withholding of “money or property.” View "Bates v. Bankers Life and Casualty Co." on Justia Law
Larisa’s Home Care, LLC v. Nichols-Shields
The issue presented for the Oregon Supreme Court’s review was whether an adult foster care provider claiming unjust enrichment may recover the reasonable value of its services from a defendant who, through fraud, obtained a lower rate from the provider for the services. Plaintiff owned two adult foster homes for the elderly. Plaintiff had contracted with the Oregon Department of Human Services to provide services in a home-like setting to patients who qualified for Medicaid. For those patients, the rates charged would be those set by the department. Isabel Pritchard resided and received care in one of plaintiff’s adult foster homes until her death in November 2008. Because Prichard had been approved to receive Medicaid benefits, plaintiff charged Prichard the rate for Medicaid-qualified patients: approximately $2,000 per month, with approximately $1,200 of that being paid by the department. Plaintiff’s Medicaid rates were substantially below the rates paid by plaintiff’s “private pay” patients. Prichard’s application for Medicaid benefits, as with her other affairs, was handled by her son, Richard Gardner. Gardner had for years been transferring Prichard’s assets, mostly to himself (or using those funds for his personal benefit). Gardner’s misconduct was discovered by another of Prichard’s children: defendant Karen Nichols-Shields, who was appointed the personal representative for Prichard’s estate. In 2009, defendant contacted the police and reported her brother for theft. Ultimately, Gardner pleaded guilty to three counts of criminal mistreatment in the first degree. Gardner’s sentence included an obligation to pay a compensatory fine to Prichard’s estate, to which he complied. After defendant, in her capacity as personal representative, denied plaintiff Larisa’s Home Care, LLC’s claim against Prichard’s estate, plaintiff filed this action, essentially asserting Prichard had been qualified for Medicaid through fraud and that Prichard should have been charged as a private pay patient. The Oregon Supreme Court concluded that, generally, a defendant who obtains discounted services as a result of fraud is unjustly enriched to the extent of the reasonable value of the services. The Court therefore reversed the contrary holding by the Court of Appeals. Because the fraud here occurred in the context of a person being certified as eligible for Medicaid benefits, however, the Court remanded for the Court of Appeals to consider whether certain provisions of Medicaid law may specifically prohibit plaintiff from recovering in this action. View "Larisa's Home Care, LLC v. Nichols-Shields" on Justia Law
Spearman v. Progressive Classic Ins. Co.
Plaintiff purchased an automobile insurance policy from Progressive. The policy included UM coverage with a limit of $25,000. Plaintiff was injured in an automobile accident with an uninsured motorist. Plaintiff filed a proof of loss for UM benefits with Progressive. ORS 742.061(1) generally provides for an award of attorney fees when an insured brings an action against his or her insurer and recovers more than the amount tendered by the insurer. Subsection (3) provides a “safe harbor” for the insurer: an insured is not entitled to attorney fees if, within six months of the filing of a proof of loss, the insurer states in writing that it has accepted coverage, that it agrees to binding arbitration, and that the only remaining issues are the liability of the uninsured motorist and the “damages due the insured.” At issue in this case was what the safe-harbor statute meant when it referred to the “damages due the insured.” The insurer, Progressive Classic Insurance Company, responded to plaintiff’s claim by agreeing that the accident was covered by the policy, but challenged the nature and extent of plaintiff’s injuries, as well as the reasonableness and necessity of his medical expenses. Plaintiff argued that, by reserving the right to challenge the nature and extent of his injuries, Progressive raised issues that went beyond the “damages due the insured.” The trial court, Court of Appeals and Oregon Supreme Court all rejected plaintiff’s construction of the safe-harbor statute. View "Spearman v. Progressive Classic Ins. Co." on Justia Law
Dowell v. Oregon Mutual Ins. Co.
Plaintiff had an Oregon auto insurance policy issued by defendant. In 2008, plaintiff was injured in a motor vehicle accident. Among other expenses, plaintiff incurred $430.67 in transportation costs to attend medical appointments and to obtain medication. She then applied for PIP medical benefits under her insurance policy. Defendant paid for plaintiff’s medical care, but it declined to pay for her transportation expenses to obtain her medical care. Plaintiff then filed a complaint for breach of contract, both for herself and on behalf of others similarly situated. She alleged that her claim for medical expenses under ORS 742.524(1)(a) included her transportation costs. Defendant moved for summary judgment, arguing ORS 742.524(1)(a) did not require it to pay for transportation costs. After a hearing, the trial court granted defendant’s motion and entered a judgment in defendant’s favor. The question on review was whether the PIP medical benefit in ORS 742.524(1)(a) included the insured plaintiff’s transportation costs to receive medical care. The Supreme Court held that PIP benefits for the “expenses of medical * * * services” do not include an insured’s transportation costs for traveling to receive medical care. Therefore, the Court affirmed the grant of summary judgment in favor of defendant. View "Dowell v. Oregon Mutual Ins. Co." on Justia Law