Case Title: Grijalva v. Safeco Ins. Co.

Citation: 

Docket Number: S45472

State: oregon

Court: Oregon Supreme Court

Date: 1999-07-15T00:00:00Z

Document:
Filed:  July 9, 1999

IN THE SUPREME COURT OF THE STATE OF OREGON

JUDITH GRIJALVA,

	Petitioner on Review,

	v.

SAFECO INSURANCE COMPANY OF
AMERICA, a Washington corporation,

	Respondent on Review,

___________________________

SAFECO INSURANCE COMPANY OF
AMERICA, a Washington corporation,

	Cross-Appellant,

	v.

JUDITH GRIJALVA and ROBERT
GRIJALVA,

	Cross-Respondents,

	and

CAROL S. EDWARDS and LARRY
EDWARDS,

	Third-Party Defendants.

(CC 95-SV-0296-AB; CA A94209; SC S45472)

	On review from the Court of Appeals.*

	Argued and submitted January 7, 1999.

	Bruce J. Brothers, of Brothers & Ash, Bend, argued the cause
and submitted the brief for petitioner on review.  With him on
the brief was Brian Chenoweth, of Rycewicz and Chenoweth,
Portland.

	Brian L. Gingerich, of Karnopp, Petersen, Noteboom, Hansen,
Arnett & Sayeg, LLP, Bend, argued the cause and filed the
response for respondent on review.

	Charles Robinowitz and Dean Heiling, Portland, filed briefs
for amicus curiae Oregon Trial Lawyers Association.

	Before Carson, Chief Justice, and Gillette, Van Hoomissen,
Durham, and Kulongoski, Justices.**

	GILLETTE, J.

	The decision of the Court of Appeals is reversed.  The
judgment of the circuit court is reversed.  The case is remanded
to the Court of Appeals for further proceedings.

	*Appeal from Deschutes County Circuit Court,

	 Alta J. Brady, Judge.

	 153 Or App 144, 956 P2d 995 (1998). 

    **Leeson and Riggs, JJ., did not participate in the
consideration or decision of this case.

		GILLETTE, J.

		This is an action for breach of an automobile insurance
contract.  The primary issue before this court concerns the proper
method for calculating the amount of underinsured motorist (UIM)
benefits payable to an individual claimant under a so-called
"single-limit" policy, when other persons injured in the same
accident also are seeking benefits under 
the policy.(1)  The trial
court ruled, and the Court of Appeals agreed, that, when the
individual's damages equal or exceed the policy limit, the
individual's award should be calculated by subtracting from the
policy's UIM limit the amounts recovered from other sources by the
individual and all the other claimants.  However, for the reasons
that follow, we conclude that those courts were incorrect and that
the claimant's UIM proceeds should be calculated by subtracting
from the policy limit only those amounts recovered by the claimant
from other sources.

		There is no dispute about the relevant facts.  Plaintiff
and a coworker, Edwards, were driving together in Edwards' car when
the car was struck by a car driven by Dawson.  Plaintiff was
injured and suffered damages in excess of $100,000.

  		At the time of the collision, Dawson had a liability
insurance policy that provided combined single-limit liability
coverage in the amount of $60,000.  Plaintiff received $42,000 out
of that policy while Edwards, who also had been injured, received
$18,000.  Plaintiff and Edwards also received workers' compensation
benefits because of their injuries.  Plaintiff received $14,877.02
in unreimbursed workers' compensation benefits from the accident;
Edwards received $3,846.59.  

		Because neither plaintiff nor Edwards were made whole by
the foregoing recoveries, both filed claims under the UIM
provisions of Edwards' automobile insurance policy.  That policy,
which defendant Safeco had issued, provided UIM coverage up to a
single limit of $100,000.  Safeco paid Edwards $4,755.37 on her
claim; it denied plaintiff's claim.  

		Plaintiff then filed the present action against Safeco,
alleging breach of the insurance policy and seeking (after
amendment) $58,000 in damages.  Plaintiff claimed that, because her
injuries exceeded the UIM policy's $100,000 single limit, she was
entitled to the full $100,000, less only the $42,000 that she had
received from Dawson's liability policy.(2)  

		Safeco answered, denying liability in that amount.  It
also counterclaimed, seeking a declaration that the maximum
benefits available under the policy were $16,521.02, together with
an order allowing it to deposit that amount with the clerk of the
court and directing plaintiff and Edwards to resolve their claims
under the policy based on that amount.  Safeco's theory was that,
because there was more than one claimant seeking UIM coverage for
the same accident, plaintiff's award should equal the amount of the
policy limit ($100,000) minus any amounts that all the claimants
(i.e., plaintiff and Edwards) had recovered from other sources. 
Specifically, Safeco proposed that the following items were proper
reductions:  (1) the $4,755.37 already paid to Edwards out of the
UIM policy; (2) the $60,000 paid to plaintiff and Edwards under
Dawson's liability policy; (3) the $14,877.02 paid to plaintiff by
her employer's workers' compensation carrier; and (4) the $3,846.59
paid to Edwards on her workers' compensation claim. 

   		After motions for summary judgment, the trial court
entered judgment for Safeco on its declaratory relief claim and
awarded plaintiff the $16,521.02 in benefits that Safeco had argued
was available.  The trial court also entered judgment for Safeco on
plaintiff's claim and denied Safeco's interpleader claim.  The
court denied the parties' competing claims for attorney fees,
concluding that no party had prevailed on a claim that would allow
an award of attorney fees.   

		Plaintiff appealed, assigning error to a number of items
that the trial court had accepted as proper offsets against her UIM
recovery, viz., (1) Edwards' recovery from Dawson's liability
policy; (2) Edwards' workers' compensation recovery; and (3)
plaintiff's own workers' compensation recovery.  Plaintiff also
assigned error to the trial court's denial of her claim for
attorney fees.  The Court of Appeals concluded that the trial court
had not erred in any respect that plaintiff had argued and
affirmed.  Grijalva v. Safeco Ins. Co., 153 Or App 144, 956 P2d 995
(1998). 

		In this court, plaintiff has abandoned any claim that her
own recovery from her employer's workers' compensation carrier was
an impermissible offset.  However, plaintiff continues to press her
argument that her UIM recovery cannot be reduced by Edwards'
recoveries from other sources, i.e., from Dawson's liability policy
or from workers' compensation.  She contends that the relevant
statutes (i.e., those that provide minimum requirements for UIM
insurance) are clear on that score -- that a UIM insurer's
liability for a claimant's injuries is to be reduced only by the
amounts that the claimant has received from other sources.  In so
arguing, plaintiff particularly relies on two statutes, ORS
742.502(2)(a) and ORS 742.504(7)(c), both set out post.   

		Safeco acknowledges that the two statutes identified by
plaintiff are the relevant point of departure.  However, Safeco
contends that, contrary to plaintiff's view, those statutes
unambiguously provide that a claimant's UIM recovery is to be
reduced by the total amount paid by the tortfeasor's liability
insurer or in workers' compensation to all insureds.

		We agree with the parties that resolution of the present
controversy lies in the proper interpretation of ORS 742.502(2)(a)
and ORS 742.504(7).  ORS 742.502(2)(a) is the general UIM mandate. 
It requires the inclusion of UIM coverage in any policy that
provides uninsured motorist (UM) coverage in excess of the
financial responsibility amounts and provides the following general
formula for calculating UIM benefits:   

	"Underinsurance benefits shall be equal to
uninsured motorist coverage benefits less the amount
recovered from other automobile liability insurance
policies."

(Emphasis added.)  

		ORS 742.504(7) describes the limits of the insurer's
liability for both UM and UIM coverage and also sets out the
permissible reductions or offsets from such coverage.  It provides,
in relevant part:

	"(a) The limit of liability stated in the
declarations as applicable to 'each person' is the
limit of the insurer's liability for all damages
because of bodily injury sustained by one person as the
result of any one accident and, subject to the above
provision respecting each person, the limit of
liability stated in the declarations as applicable to
'each accident' is the total limit of the company's
liability for all damages because of bodily injury
sustained by two or more persons as the result of any
one accident.

	"* * * * *

	"(c) Any amount payable under the terms of this
coverage because of bodily injury sustained in an
accident by a person who is an insured under this
coverage shall be reduced by:

		"(A) All sums paid on account of such bodily
injury by or on behalf of the owner or operator of the
uninsured vehicle and by or on behalf of any other
person or organization jointly or severally liable
together with such owner or operator for such bodily
injury including all sums paid under the bodily injury
liability coverage of the policy; and

		"(B) The amount paid and the present value of
all amounts payable on account of such bodily injury
under any workers' compensation law, disability benefit
law or any similar law."(3)

(Emphasis added.)

		As noted, the parties assign differing meanings to
those statutes and, in particular, to the phrase "on account of
such bodily injury" in ORS 742.504(7)(c)(A) and (B).  Plaintiff
contends that that phrase unambiguously refers to a single bodily
injury -- the individual claimant's -- and that, consequently,
the "amount" or "sums" paid "on account of such bodily injury"
are amounts that are paid to that individual claimant.  Safeco
contends, on the other hand, that, where there is more than one
UIM claimant, "such bodily injury" refers to the injuries
sustained in the accident by all claimants.  Thus, Safeco
maintains, ORS 742.504(7)(c)(A) and (B) direct that an individual
claimant's recovery be reduced by the amounts paid to all the
claimants who were injured in a given accident.

		To determine which interpretation is correct, we employ
the framework set out by this court in PGE v. Bureau of Labor and
Industries, 317 Or 606, 859 P2d 1143 (1993).  PGE directs us to
focus first on text and context, and to stop there if those
sources make the legislature's intent clear.  Id. at 610-11.  

		By itself, the phrase "on account of such bodily
injury" does not resolve the controversy.  Although, in ordinary
parlance, "injury" can refer to a single wound or harm, it seems
clear that, in this context, "bodily injury" also could mean an
aggregation of such individual injuries.  Nothing in the phrase
itself indicates whether the legislature conceived of that
aggregate meaning in terms of the various injuries suffered by an
individual claimant or in terms of the injuries suffered by all
claimants who were involved in a single accident.      			
We are persuaded, however, that the legislature's
intent in that regard easily can be determined from the rest of
the text of the statute, that is, by reading ORS 742.504(7)(c)
and its subsections as a connected whole.  When read in that
manner, ORS 742.504(7)(c) provides that "[a]ny amount payable
under the terms of this coverage because of bodily injury
sustained in an accident by a person who is an insured under this
coverage shall be reduced by * * * (A) [a]ll sums paid on account
of such bodily injury by or on behalf of the owner or operator of
the uninsured vehicle * * *; and * * * (B) [t]he amount paid 

* * * on account of such bodily injury under any workers'
compensation law."  (Emphasis added.)  When the provision thus is
read as a whole, it is clear that "such bodily injury" in
subparagraphs (A) and (B) refers back to the phrase "bodily
injury sustained in an accident by a person who is an insured
under this coverage" (emphasis added) in paragraph (c).   The use
of the singular -- "a person" -- shows that the legislature was
referring to the individual claimant.  It also is clear that,
under the statute, "amounts payable" to that person are to be
reduced by the sums paid for "such bodily injury," i.e., the
individual claimant's injury, paid to that person out of the
tortfeasor's liability policy or out of workers' compensation on
account of that person's injuries.

  		Safeco rejects that textual reading, arguing that other
textual and contextual clues support a contrary interpretation of
the statutes.  It notes, for example, that the phrase "amount
recovered" in a different UIM statute, ORS 742.502(2)(a) (UIM
benefits equal UM benefits "less the amount recovered from other
automobile liability insurance policies"), is not qualified in
any way.  Safeco holds up that lack of qualification as a clear
indication that the legislature intended that a plaintiff's
recovery be reduced by the total amount recovered from a
tortfeasor's liability policy.  However, we agree with plaintiff
that the absence of any qualification in ORS 742.502(2)(a) has no
affirmative significance, particularly where the absent detail
(i.e., indication by whom the amount is recovered) is filled in
by another statute, ORS 742.504(7)(c)(A).

		Safeco also places an emphasis on ORS 742.504(7)(a),
which provides for, and distinguishes between, an "each person"
and "each accident" policy limit.  Safeco contends that that
provision defines the "amount payable" for purposes of ORS
742.504(7)(c).  Safeco further suggests that the provision
creates two mutually exclusive "categories" of benefits, based on
the two types of policy limits and, ultimately, on the number of
insureds who file UIM claims.  Safeco's position in that regard
is summarized in the opinion of the Court of Appeals: 	
"An insured is entitled to recover from only one
category of UIM benefits following an accident --
either the 'each person' limit or the 'each accident'
limit of liability.  ORS 742.504(7)(a).  The category
of UIM benefits to which an insured is entitled depends
on the number of insureds making claims against the UIM
policy.  If only one insured makes a claim for UIM
benefits, the category is the 'each person' limit.  If
more than one insured makes a claim for UIM benefits,
each claimant's maximum recovery is the 'each person'
limit, subject also to the 'each accident' limit. * * *
In cases where the 'each person' limit multiplied by
the number of claimants equals or exceeds the 'each
accident' limit of the UIM policy, all claimants are
entitled to benefits from the 'each accident' category,
and all applicable offsets for each claimant are
deducted from that category." 

Grijalva, 153 Or App at 150 (emphasis added).

		We are not persuaded by Safeco's reasoning.  There is
nothing in ORS 742.504(7)(a) or, to our knowledge, anywhere else
in the underinsurance statutes, that suggests that, when more
than one insured files a claim, an individual claimant's recovery
comes from a separate, "each accident category."  In fact, ORS
742.504(7)(a) clearly indicates that the "each person" limit
always is relevant, even when two or more persons sustain
injuries in an accident.  Under ORS 742.504(7)(a), the "each
accident" limit is "subject to the above provision respecting
each person."  Although that does not mean that the insurer ever
is required to pay more than the "each accident" limit, it does
indicate that the "each person" limit remains relevant,
regardless of the number of persons involved.  

		Ultimately, we are persuaded that the legislature's
intent is clear from text and context.  ORS 742.504(7)(c)
unambiguously provides that the amount payable to an individual
insured is to be reduced only by amounts paid to the insured on
account of the insured's bodily injury by or on behalf of the
liable party or a workers' compensation carrier.  Nothing in ORS
742.504(7)(a) or ORS 742.502(2)(a) fairly suggests a different
meaning.    

		In the present case, the trial court reduced
plaintiff's UIM recovery by the amounts that another claimant,
Edwards, had received from Dawson's liability insurer and from
Edwards' employer's workers' compensation carrier.  Those
reductions were not authorized by the UIM statute.  On remand,
the court should reduce plaintiff's recovery only by the amounts
that plaintiff recovered on account of her injuries from workers'
compensation and Dawson's liability policy.           

		That brings us to the second question raised in
plaintiff's petition, viz., whether plaintiff is entitled to
attorney fees under ORS 742.061.  That statute provides:

	"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 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 in the
appeal thereon."

The Court of Appeals concluded that ORS 742.061 did not apply,
because Safeco had "tendered" an amount equal to the $16,521.02
judgment (which the Court of Appeals affirmed) in its amended
answer and third-party complaint. 	Obviously, given our
conclusion that the $16,521.02 judgment was erroneous, that
reasoning no longer can support the decision that plaintiff's
claim for attorney fees properly was denied. 

		The decision of the Court of Appeals is reversed.  The
judgment of the circuit court is reversed.  The case is remanded
to the circuit court for further proceedings.
< 
1. 	In a "single-limit" policy, the limit on the insurer's
per-person liability is identical to its per-accident liability. 
In the present case, the per-person and per-accident limits both
were $100,000. 

2. 	Plaintiff argued at that time that her workers'
compensation recovery was not a proper offset. 

3. 	ORS 742.504 originally was enacted with UM insurance in
mind.  It was made applicable to UIM coverage by ORS 742.502(4).