Case Title: Bauder v. Farmers Ins. Co.

Citation: 301 Or. 715, 725 P.2d 350

Docket Number: 

State: oregon

Court: Oregon Supreme Court

Date: 1986-09-16T00:00:00Z

Document:
725 P.2d 350 (1986)
301 Or. 715
Alita BAUDER, as Guardian and Conservator for Jack BAUDER, Respondent on Review,
v.
FARMERS INSURANCE COMPANY OF OREGON, an Oregon Corporation, Petitioner on Review.
TC A8403-01592; CA A34683; SC S32352.

Supreme Court of Oregon, In Banc.
Argued and Submitted April 3, 1986.
Decided September 16, 1986.
William L. Hallmark, Portland, argued the cause for petitioner on review. With him on petition were William G. Earle, and Hallmark, Griffith & Keating, P.C., Portland.
Ben C. Fetherston, Jr., Salem, argued the cause for respondent on review. With him on response was Clark, Marsh, Lindauer & McClinton, Salem.
GILLETTE, Justice.
This is another in a series of cases in which this court has been called upon to discern and declare the extent of statutorily mandated personal injury protection (PIP) insurance coverage in an automobile liability policy. The present case involves interaction between PIP coverage and separately mandated uninsured motorist (UM) coverage. The issue presented is: When the damages that an insured is entitled to recover from his insurer because of injuries caused by an uninsured motorist exceed the aggregate of his UM and PIP coverage, should the PIP payments be subtracted from the amount due under the UM coverage? The Court of Appeals answered this question in the negative. Bauder v. Farmer's Ins. Co., 76 Or.App. 41, 707 P.2d 1296 (1985). We reverse.
We take our statement of facts from the Court of Appeals:
"ORS 743.835 provides:
`Payment by a motor vehicle liability insurer of personal injury protection *351 benefits for its own insured shall be applied in reduction of the amount of damage that the insured may be entitled to recover from his insurer under uninsured motorist coverage for the same accident.'
The company, petitioner here, argues that this court's decision in Monaco v. U.S. Fidelity & Guar., 275 Or. 183, 550 P.2d 422 (1976), is virtually on all fours with this case and requires a decision in its favor. The insured, while not conceding that Monaco is controlling, nonetheless urges that two more recent decisions of this court, Kessler v. Weigandt, 299 Or. 38, 699 P.2d 183 (1985), and Staiger v. Burkhart, 299 Or. 49, 698 P.2d 487 (1985), have cast substantial doubt on Monaco's continuing efficacy. The Court of Appeals agreed with the insured: "Although the court did not answer the question [raised in this case] in either Staiger or Kessler, * * * statements [in both opinions] make it clear that the precise question [the insured] raises is now an open one, notwithstanding Monaco." 76 Or.App. at 41, 707 P.2d 1296.
Having decided that Monaco was no impediment to considering the merits of the insured's claim, the Court of Appeals then held:
The company then filed the present petition for review, which we granted to resolve the ambiguity the Court of Appeals found to exist between Monaco, Kessler and Staiger.
Normally, because a question of statutory construction is involved, we first would focus on the statutory language itself before passing on to secondary sources of construction such as legislative history and case law. Here, however, we need pause only briefly to note that, as far as the language of ORS 743.835 is concerned, the Court of Appeals' construction of the statute is eminently reasonable: "Damages" is normally read to refer to the aggregate harm suffered by a party, expressed as an amount of money. If that is what "damage" means in ORS 743.835, the Court of Appeals was correct. For the company to prevail, "damage" must be read to mean, in reality, "damage up to the limit of the UM coverage of the insurance policy."
The company argues that, whatever construction this court might give "damage" in ORS 743.835 if we were writing on a clean slate, this slate is not clean. We turn *352 to a consideration of Monaco v. U.S. Fidelity & Guar., supra.
The facts in Monaco are virtually identical to the present case. In Monaco, the insured's guardian ad litem brought an action against defendant insurance company seeking recovery under the UM coverage of defendant's insurance policy. Plaintiff's injuries had caused damages in excess of $20,000. The UM limit was $10,000. Plaintiff had received PIP payments of $8,322.35. Defendant had paid her $1,677.65the difference between the PIP payments and its UM policy limitand refused to pay more. A trial court gave judgment for defendant, holding that the PIP payments could be offset against the UM limit. Plaintiff appealed to this court.
Because of its importance, we set out this court's decision in Monaco at some length:
"Although all statutes can perhaps be more artfully drawn, there is no ambiguity in the language of ORS 743.835. It clearly does not limit reduction from the amount payable to situations where the total damages of the insured are less *353 than the uninsured motorist policy coverage amount.
"* * *
The foregoing speaks for itself: In a case decided soon after the enactment of ORS 743.835 and on facts remarkably similar to those of the present case, this court, making use of such legislative history and other aids as were available, authoritatively construed the statute as authorizing an insurance carrier to offset PIP payments against UM policy limits, even if to do so meant a claimant would not be fully compensated. The company is correct. The slate is not clean, unless Kessler or Staiger erased it.
Kessler arose under a different part of the statutory PIP scheme, viz., that portion dealing with interinsurer reimbursement for PIP advance payments. UM coverage was not involved. Kessler was injured in an accident in which Weigandt was at fault. Weigandt's motor vehicle liability policy had a $100,000 maximum limit for injuries suffered by any one party. Kessler's damages exceeded $400,000. Kessler's own carrier paid Kessler nearly $12,000 in PIP benefits. Under ORS 743.825, a *354 PIP interinsurer reimbursement statute, Weigandt's insurer was liable to reimburse Kessler's insurer for the $12,000 in PIP payments.
The issue in the case arose over whether Weigandt's insurerwhich recognized it was liable to Kessler up to its policy limitswas entitled to offset the $12,000 it owed Kessler's insured. This court held that an offset was not allowable, because the statutory reimbursement obligation ran between carriers and was not affected by the policy limit, which spoke only to Weigandt's carrier's obligation to Kessler. The obligations having different sources, one could not be offset against the other. 299 Or. at 43, 699 P.2d 183.
This court's holding in Kessler had nothing to do with ORS 743.835. However, an argument by Weigandt's insurer required a discussion of that statute:
"* * *
"* * * [Weigandt's insurer] assumes in its argument that the text of the Insurance Commissioner's statement and the statutory text are synonymous. That is not necessarily so. The statement speaks to subtraction of the amount of PIP benefits from the `policy limits.' The statute speaks to an entirely different minuend, i.e., `the amount of damage' [sic] which an injured person may be entitled to recover from an insurer. The text of the statute is not in accord with the Commissioner's explanation if the damages that a PIP benefits payee is entitled to recover are in excess of the policy limits." Kessler v. Weigandt, supra, 299 Or. at 44-5, 699 P.2d 183. (Emphasis in original.)
While not required to do so, this court had highlighted the fact that ORS 743.835 focused, by its terms, on "damage," not limits.
If the Kessler observation was, strictly speaking, a dictum, it was an understandable one in view of the fact that this court decided Staiger v. Burkhart on the same day, the two cases had interlocking subject matteroffsetting PIP benefits against other kinds of paymentsand Staiger did directly involve ORS 743.835.
In Staiger, plaintiffs were passengers in a car driven by defendant Burkhart when it was involved in a collision. Plaintiff's two minor children sued Burkhart, inter alia, for damages.
Defendant Oregon Mutual Insurance Company (OMIC) was Burkhart's motor vehicle liability insurer. The policy it issued to Burkhart had a single $50,000 bodily injury limit. OMIC paid each plaintiff $5,000 ($10,000 in total) in PIP benefits. Plaintiffs settled their actions for damages, with OMIC contributing $40,000 to the total settlement figure. The parties specifically reserved the question of whether OMIC could offset the $10,000 in PIP benefits against its $50,000 policy limits. If it could do so, the $40,000 contribution exhausted its liability. If not, it owed plaintiffs an additional $10,000.
This court held OMIC owed the additional amount. We explained:
*355 "* * * OMIC contends that it is entitled under a proper interpretation of ORS 743.835 to the offset. [Footnote omitted.] * * *
"* * *
"* * *
Kessler and Staiger are obviously distinguishable from Monaco, which remains the only opinion of this court specifically dealing with offsetting PIP payments against UM payments. Monaco holds that the statute authorizes such a setoff. See also Edwards v. Bonneville Auto Ins. Co., 299 Or. 119, 699 P.2d 670 (1985) (original legislative policy to allow setoff not intended to be changed by 1975 amendments).
The Court of Appeals, however, relied on our dictum in Kessler and, particularly, our footnote 6 in Staiger to infer that, were we facing the issue anew, we might decide Monaco differently. That inference is not unreasonable. However, we conclude that Monaco was right when it was decided and we are not going to overrule it now.
Two factors bear on our decision. The first is that Monaco's clear answer to the question presented here has always been *356 subject to legislative change. It has survived five regular legislative sessions after our interpretation was announced. We see no reason to do what the legislature, for whatever reason, has not seen fit to do.
Secondly, we wish to note that, to a degree, our implied criticism of Monaco in Staiger v. Burkhart, supra, 299 Or. at 53 n. 6, 698 P.2d 487, in which we said that there was no hint in Monaco that this court had considered the significance of the legislature's use of the term "damage," rather than "policy limits," was not justified. This very question was extensively briefed and argued by the parties, although the Monaco opinion makes no mention of it. Monaco's construction of ORS 743.835 remains the law. The Court of Appeals' contrary conclusion was error. It is reversed.
The judgment of the Court of Appeals is reversed. The judgment of the trial court is affirmed.