Case Title: Haynes v. Tri-County Metro.

Citation: 

Docket Number: S51097

State: oregon

Court: Oregon Supreme Court

Date: 2004-12-23T00:00:00Z

Document:
FILED:  December 23, 2004
IN THE SUPREME COURT OF THE STATE OF OREGON
MAE HAYNES,
Petitioner on Review,
v.
TRI-COUNTY METROPOLITANTRANSPORTATION 
DISTRICT OF OREGON,
a municipal corporation,
Respondent on Review.
(0201-00624; CA A120056; SC S51097)
En Banc
On review from the Court of Appeals.*
Argued and submitted September 8, 2004.
Willard E. Merkel, of Merkel & Associates, Portland, argued
the cause and filed the briefs for petitioner on review. 
Jana Toran, of TriMet Legal Department, Portland, argued the
cause and filed the brief for respondent on review.
BALMER, J.
The decision of the Court of Appeals is reversed.  The
judgment of the circuit court is reversed, and the case is
remanded to the circuit court for further proceedings.
*Appeal from Multnomah County Circuit Court, Edward J. Jones, Judge. 190 Or App 555, 79 P3d 353 (2003)
BALMER, J.
The issue in this case is whether a self-insured entity
may be liable for attorney fees in the same circumstances as an
insurer.  We hold that the answer to that question is yes.
ORS 742.061, the text of which is set out below,
generally provides that a person may recover reasonable attorney
fees from an insurer if the following sequence of events occurs:
(1) the person presents a proof of loss to an insurer; (2) the
parties fail to settle the claim within six months; and (3) the
person files an action seeking recovery under the insurance
policy and obtains a recovery that exceeds any settlement offer.
The question before us respecting the statute's scope
arises under the following facts.  Plaintiff Mae Haynes was
injured while riding as a passenger in a bus operated by the Tri-County Metropolitan Transportation District (Tri-Met).  Plaintiff
submitted a claim to Tri-Met, and Tri-Met denied it.  Plaintiff
eventually filed a complaint and obtained a judgment against Tri-Met.  When plaintiff sought attorney fees under ORS 742.061, Tri-Met asserted that ORS 742.061 did not apply to it because it was
self-insured.  An arbitrator agreed with Tri-Met, as did the
trial court and, on plaintiff's appeal, the Court of Appeals. 
Haynes v. Tri-County Metro., 190 Or App 557, 79 P3d 353 (2003). 
We conclude, however, that ORS 742.061 applies to Tri-Met and
that Tri-Met therefore may be liable to plaintiff for reasonable
attorney fees if it failed to settle plaintiff's claim within six
months after the claim was submitted, provided that the other
requirements of ORS 742.061 were satisfied.
We first describe briefly the procedures that Tri-Met
has established to respond to claims by persons injured on Tri-Met buses, and then we consider the facts of this case.  The
Financial Responsibility Law requires the owner of any motor
vehicle to be able to "respond in damages" for liability from
accidents arising out of the operation of that motor vehicle. 
ORS 806.060(1).  As an alternative to purchasing insurance to
cover such liability, an owner may "self-insure" by meeting
certain statutory criteria and obtaining a certificate of self-insurance from the Oregon Department of Transportation.  See ORS
806.130-806.140 (describing requirements to obtain self-insurance
and certificates of self-insurance).  To qualify as a self-insurer under ORS 806.150, the owner must "agree to pay the same
amounts with respect to an accident occurring while the
certificate is in force that an insurer would be obligated to pay
under a motor vehicle liability policy, including uninsured
motorist coverage * * *."  ORS 806.130(3) (emphasis added).
Tri-Met chose to self-insure and, as described in
greater detail below, adopted an ordinance in which it agreed to
compensate its passengers for injuries caused by uninsured
motorists in accordance with the provisions of ORS 742.500 to ORS
742.510.  The Tri-Met ordinance also established a claims
procedure for Tri-Met passengers injured on Tri-Met vehicles. 
We now return to the facts of this case.  Plaintiff was
riding as a passenger in a Tri-Met bus when the bus driver took
evasive action to avoid a collision with another vehicle. 
Plaintiff was injured as a result of the bus driver's evasive
action.  Plaintiff filed a claim with Tri-Met to recover
compensation for her injuries, but Tri-Met denied the claim. 
After more than six months had elapsed since she had asserted her
claim, plaintiff filed a complaint in circuit court.  In addition
to the facts just noted, the complaint alleged that an
unidentified vehicle had caused the accident, that plaintiff was
uninsured, and that, in those circumstances, the Tri-Met
ordinance required Tri-Met to provide uninsured motorist (UM)
benefits to plaintiff. (1)
  The complaint requested economic
damages totaling $4,564.94 and general damages totaling $25,000. 
In addition, the complaint demanded attorney fees under ORS
742.061 because Tri-Met had failed to resolve plaintiff's claim
within six months after she had submitted it.  Tri-Met denied
that plaintiff was entitled to recover UM benefits and also
asserted that it was not liable for attorney fees because it was
not an insurer under ORS 742.061.  
The trial court referred the dispute to arbitration,
where plaintiff recovered economic damages totaling $4,564.94 and
general damages totaling $3,000.  The arbitrator declined to
award plaintiff her attorney fees, however, concluding that Tri-Met was not an insurer for purposes of ORS 742.061(1).  Plaintiff
filed an exception in the trial court, but the trial court agreed
with the arbitrator's decision to deny attorney fees.  On appeal,
applying statutory definitions of "insurer," "policy," and
"insurance," the Court of Appeals affirmed, holding that ORS
742.061(1) did not apply to Tri-Met because, even if Tri-Met were
an "insurer" under the terms of that statute, Tri-Met's UM
coverage did not qualify as a "policy of insurance" within the
meaning of that statute.  Haynes, 190 Or App at 560-61.
Plaintiff's right to recover attorney fees from Tri-Met
turns on the application of ORS 742.061.  That statute provides,
in part:
"Except as otherwise provided in subsections (2)
and (3) of this section, 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."
ORS 742.061(1) (emphasis added).
This case presents two issues:  whether Tri-Met is an
"insurer" for purposes of ORS 742.061 and whether Tri-Met's UM
coverage is a "policy of insurance of any kind or nature."  Those
are questions of statutory construction that we consider under
the methodology outlined in PGE v. Bureau of Labor and
Industries, 317 Or 606, 610-12, 859 P2d 1143 (1993).  Pursuant to
that methodology, we first examine the text and context of the
statute, giving words of common usage "their plain, natural, and
ordinary meaning."  Id. at 611.  If the legislative intent is
clear from the text and context of the statute, then further
analysis is unnecessary.  Id. at 611-612.
Tri-Met's initial argument is that it is not an
"insurer" because, as a self-insurer, it is exempt from the
provisions of the Insurance Code, including ORS 742.061(1). (2) Tri-Met is correct that it is exempt from the Insurance Code: 
The Insurance Code does not apply to public bodies that establish
a self-insurance fund for tort liability or property damage.  ORS
731.036(4)-(5).  Despite that general exemption, however,
numerous statutes impose specific Insurance Code requirements on
self-insurers.  Here, for example, ORS 278.215 requires that
self-insurance coverage for government vehicles must include UM
coverage under ORS 742.500 to 742.504.  The required provisions
of UM coverage are set out in ORS 742.504, which is part of the
Insurance Code. (3)
  Thus, if ORS 742.061, which also is part
of the Insurance Code, applies to Tri-Met's activities by its own
terms, then Tri-Met cannot be exempt from that statute by virtue
of the general Insurance Code exemption in ORS 731.036 for public
bodies that self-insure.
Tri-Met next argues that, even if it is not exempt from
ORS 742.061, it nevertheless is not an "insurer" under that
statute because it is a "self-insurer," rather than an insurance
company.  Plaintiff contends that Tri-Met is an "insurer" under
ORS 742.061 precisely because it is a self-insurer. 
ORS 742.061 is part of the Insurance Code.  The
Insurance Code provides a statutory definition of the word
"insurer":  "'Insurer' includes every person engaged in the
business of entering into policies of insurance."  ORS 731.106
(emphasis added).  Because the legislature uses the term
"include," the definition is nonexclusive, i.e., the definition
of insurer encompasses insurance companies, but it is not limited
to insurance companies.  Thus, the definition is broad enough to
include other entities that provide insurance, in addition to
ones that are "engaged in the business of entering into policies
of insurance." (4)
  Whether an entity that provides insurance,
but is not "engaged in the business of entering into policies of
insurance," is an "insurer" for purposes of a particular statute
will depend on the meaning of the word "insurer" in that statute.
Here, Tri-Met has undertaken to provide UM insurance
coverage to its passengers by self-insuring, rather than by
purchasing insurance coverage from an insurance company.  As a
municipal corporation under Oregon law, Tri-Met is authorized to
adopt ordinances of general applicability that have the force of
municipal law. (5)
  By ordinance, Tri-Met has agreed to comply
with ORS 742.504, which establishes UM coverage, and has provided
that UM claims by Tri-Met passengers "shall be subject to ORS
742.504." (6)
  ORS 742.504, in turn, first sets out the
provisions of UM coverage that are required when UM coverage is
offered:  
"Every policy required to provide the coverage
specified in ORS 742.502 shall provide uninsured
motorist coverage which in each instance is no less
favorable in any respect to the insured or the
beneficiary than if the following provisions were set
forth in the policy."  
ORS 742.504 (emphasis added).  The statute then sets out the
rights and liabilities of insurers and insureds.  
Regarding insurers, in particular, the statute
provides, in part:
"The insurer will pay all sums which the insured,
the heirs or the legal representative of the insured
shall be legally entitled to recover as general and
special damages from the owner or operator of an
uninsured vehicle because of bodily injury sustained by
the insured caused by accident and arising out of the
ownership, maintenance or use of such uninsured
vehicle."
ORS 742.504(1)(a) (emphasis added).  Thus, the "insurer" for
purposes of UM coverage is the entity that "will pay all sums
which the insured * * * shall be legally entitled to recover as
general and special damages * * *."  ORS 742.504(1)(a).  In this
instance, that entity is Tri-Met.  By electing to self-insure --
here, by enacting an ordinance that explicitly provides to its
passengers the UM coverage set out in ORS 742.504(1)(a) -- Tri-Met has made itself an "insurer" of its passengers for that
purpose.
Having determined that Tri-Met is an insurer because it
provides UM coverage to its passengers under ORS 742.504, we now
return to ORS 742.061, the attorney fees statute at issue in this
case.  ORS 742.061(1) provides that, if an "insurer" fails to
settle a claim within six months after a claimant files a proof
of loss, and the claimant brings an action on a policy and
recovers an amount that exceeds any tender that the insurer made,
then the court "shall" award a reasonable attorney fee.  The
statute's requirement that an insurer pay attorney fees in those
circumstances -- but not in cases in which the insurer settles
the claim within six months or in which the claimant recovers
less than the insurer offered in settlement -- shows that ORS
742.061 was designed to expedite the processing of claims and
reduce litigation by providing an incentive for efficient claim
resolution.  Having concluded that Tri-Met is an "insurer"
providing UM coverage to its passengers under ORS 742.504, we
have little doubt that the legislature intended that an entity
that is an "insurer" under that statute also should be deemed to
be an "insurer" as that term is used in ORS 742.061(1), the
statute that provides an incentive to insurers to resolve claims
expeditiously.
Based on the foregoing analysis, we hold that Tri-Met
is an insurer for purposes of the attorney fees provision of ORS
742.061(1).  We therefore turn to the second issue:  whether
plaintiff's claim against Tri-Met is based on a "policy of
insurance."  As noted previously, a person making a claim against
an insurer may recover attorney fees under ORS 742.061(1) in an
action on a "policy of insurance of any kind or nature."  The
Insurance Code defines "policy" as a "written contract or written
agreement for or effecting insurance, by whatever name called." 
ORS 731.122.  It also defines "insurance" as "a contract whereby
one undertakes to indemnify another or pay or allow a specified
or ascertainable amount or benefit upon determinable risk
contingencies."  ORS 731.102.  Tri-Met argues that those
definitions suggest that an insurance policy is limited to a
written insurance contract between an insurer and an insured and
that this case involves no such contract.
Here, insurance coverage was not provided pursuant to a
contract between an insurance company and the owner of the
vehicle, as often is the case.  Instead, Tri-Met's ordinance
represents its agreement to provide coverage.  By agreeing to
adopt the coverage provisions of ORS 742.504, including the
obligation to compensate passengers injured by the negligence of
uninsured motorists, Tri-Met has "undertake[n] to indemnify
another or pay or allow a specified or ascertainable amount or
benefit upon determinable risk contingencies."  ORS 731.102
(defining "insurance").  That undertaking likewise constitutes a
"written agreement for or effecting insurance, by whatever name
called."  ORS 731.122 (defining "policy").  Tri-Met's ordinance
thus satisfies the requirement of "any policy of insurance of any
kind or nature" as that phrase is used in ORS 742.061(1).  Tri-Met, in effect, offers its passengers recovery under an insurance
policy, with the same terms that ORS 742.504 requires of any UM
policy.
The words of Tri-Met's ordinance make the disposition
of this case straightforward.  We do not suggest, however, that
other motor vehicle self-insurers under ORS 806.060 would be less
liable under ORS 742.061(1) than is Tri-Met.  Certainly, as we
have explained, all such self-insurers are "insurers" under ORS
742.061.  Moreover, ORS 806.130 requires a self-insurer to
"agree" to pay the amounts that an insurer would pay, including
UM coverage, before it can obtain a certificate of self-insurance
from the Oregon Department of Transportation. (7)

For the reasons discussed above, we conclude that,
under ORS 742.061(1), Tri-Met is an insurer and plaintiff's case
is "an action * * * upon [a] policy of insurance of any kind or
nature."  Plaintiff therefore is entitled to recover her
reasonable attorney fees from Tri-Met.
The decision of the Court of Appeals is reversed.  The
judgment of the circuit court is reversed, and the case is
remanded to the circuit court for further proceedings.
1. 
As noted, Tri-Met provides UM coverage to its passengers.  ORS 742.504, which
sets out the required provisions of UM coverage, includes, within the definition of "uninsured
vehicle," a "phantom vehicle."  See ORS 742.504(d)(C) (defining "uninsured vehicle").  A
"phantom vehicle" is a vehicle that, among other criteria, causes bodily injury in a motor vehicle
accident and neither the owner nor operator of which can be identified.  See ORS 742.504(g)
(defining "phantom vehicle").  In this court, the parties do not dispute that a phantom vehicle
caused plaintiff's injuries or that plaintiff is entitled to UM benefits for her injuries.
2. 
The Insurance Code consists of ORS chapters 731 to 735, 737, 742 to 744, 746,
748, and 750.  ORS 731.004.
3. 
Other statutes supplement the provisions requiring UM coverage.  To qualify as a
self-insurer, Tri-Met had to promise to "pay the same amounts with respect to an accident * * *
that an insurer would be obligated to pay under a motor vehicle liability insurance policy,
including uninsured motorist coverage and liability coverage to at least the limits specified in
ORS 806.070."  ORS 806.130(3); see also ORS 806.070 (setting out schedule of payments).
4. 
The Court of Appeals recognized that the nonexclusive definition of "insurer" in
ORS 731.106 does not foreclose the possibility that a self-insurer is an insurer for purposes of
ORS 742.061.  Haynes, 190 Or App at 560.  The Court of Appeals did not need to decide that
interpretive issue, however, because it concluded that, in any event, the use of the term "policy"
in ORS 742.061 barred plaintiff from recovering her attorney fees.  Id. at 560-61.  As explained
below, we reach a different conclusion.
5. 
Tri-Met is "a municipal corporation of this state, and a public body, corporate and
politic, exercising public power."  ORS 267.200.  In particular, it is a "mass transit district,"
organized pursuant to ORS chapter 267 for the primary purpose of "providing a mass transit
system for the people of the district."  ORS 267.080.  As a mass transit district, Tri-Met may
enact ordinances under ORS 198.510 to 198.600, such as the Tri-Met Code.  The Tri-Met Code
provides that it "is adopted as the codification of permanent and general provisions enacted in
ordinance form by the Tri-County Metropolitan Transportation District of Oregon (Tri-Met) * *
*."  Tri-Met Code § 1.05.
6. 
Section 9.10 of the Tri-Met Code states:
"As a self-insurer, Tri-Met complies with the provisions of ORS Chapter
806, the Financial Responsibility Law, and ORS 742.500 through 742.510,
concerning Uninsured Motorist Coverage.  Nothing in this Chapter shall be
construed as adopting procedures or limits to liability other than those required by
ORS Chapter 806 and ORS 742.500 through 742.510 * * *."
7. 
ORS 806.130 provides, in part:
"To qualify as a self-insurer for purposes of financial responsibility
requirements under ORS 806.060, a person must do all of the following:
"(1) Apply to the Department of Transportation and be issued by the
department a certificate of self-insurance under ORS 806.140.
"* * * * *
"(3) Agree to pay the same amounts with respect to an accident occurring
while the certificate is in force that an insurer would be obligated to pay under a
motor vehicle liability insurance policy, including uninsured motorist coverage
and liability coverage to at least the limits specified in ORS 806.070."
(Emphasis added.)