Title: Mid-Century Ins. Co. v. Perkins

State: oregon

Issuer: Oregon Supreme Court

Document:

FILED: February 28, 2008
IN THE SUPREME COURT OF THE STATE OF OREGON
MID-CENTURY INSURANCE COMPANY,
Respondent on Review,
v.
ELIJAH PERKINS,
Petitioner on Review.
(CC 04-1834-E7; CA A127522; SC S054652)
DENNIS W. PHILLIPS
Petitioner on Review,
v.
SAFECO INSURANCE COMPANY OF OREGON,
Respondent on Review.
(CC 0504-03584; CA A130265; SC S054660)
(Consolidated for opinion)
En Banc
On petitions for review of the decisions of the Court of Appeals*
Argued and submitted October 3, 2007.
Thomas N. Petersen, of Black Chapman Webber & Stevens, Medford, argued the
cause for petitioner on review Perkins.  Meagan A. Flynn, Preston Bunnell & Flynn, LLP,
Portland, filed the brief for petitioner on review Perkins.
Thomas M. Christ, of Cosgrave Vergeer Kester LLP, Portland, argued the cause
and filed the brief for respondent on review Mid-Century Insurance Company.  With him
on the brief was Thomas W. Brown.
Randall J. Wolfe, of Randall J. Wolfe, PC, Lake Oswego, argued the cause and
filed the brief for petitioner on review Phillips.
Barbara L. Johnson, of Brisbee & Stockton, LLC, Hillsboro, argued the cause and
filed the brief for respondent on review Safeco Insurance Company of Oregon.  With her
on the brief was Matthew J. Yium.
Kathryn H. Clarke, Portland, filed the brief for amicus curiae Oregon Trial
Lawyers Assocation.
Joel S. DeVore, of Luvaas Cobb, Eugene, filed the brief for amicus curiae Allstate
Ins. Co., State Farm Mutual Auto Ins. Co., Country Mutual Ins. Co., American Family
Ins. Co., and The Property Casualty Insurers Association of America.
DURHAM, J.
The decisions of the Court of Appeals are affirmed.
*Appeal from Jackson County Circuit Court, Mark S. Schiveley, Judge. 209 Or
App 613, 149 P3d 265 (2006).
Appeal from Multnomah County Circuit Court, Jean K. Maurer, Judge 209 Or
App 815, 149 P3d 316 (2006).
DURHAM, J.
We consolidate in this opinion our review of two actions for the recovery of
underinsured motorist (UIM) insurance benefits.  In Mid-Century Ins. Co. v. Perkins, 209
Or App 613, 149 P3d 265 (2006), the Court of Appeals reversed a trial court order
allowing the insured to recover UIM benefits.  In Phillips v. Safeco Ins. Co.,
209 Or App 815, 149 P3d 316 (2006), the Court of Appeals affirmed an order denying
recovery of UIM benefits.  Both cases center on the interpretation of ORS 742.502(2)(a)
in light of this court's decision in Bergmann v. Hutton, 337 Or 596, 101 P3d 353 (2004). 
We now affirm both decisions of the Court of Appeals.
Before addressing the facts of these cases, we summarize the statutes that
govern UIM benefits.(1)  ORS 742.502(1) requires all motor vehicle liability policies
issued in Oregon to provide uninsured motorist (UM) coverage, as defined by ORS
742.500(1):
"'Uninsured motorist coverage' means coverage within the terms and
conditions specified in ORS 742.504 insuring the insured, the heirs or legal
representative of the insured for all sums which the insured or they shall be
legally entitled to recover as damages for bodily injury or death caused by
accident and arising out of the ownership, maintenance or use of an
uninsured motor vehicle in amounts or limits not less than the amounts or
limits prescribed for bodily injury or death under ORS 806.070."
ORS 742.502(2)(a) provides, in part:
" * * * Uninsured motorist coverage larger than the amounts required by
ORS 806.070 shall include underinsurance coverage for damages or death
caused by accident and arising out of the ownership, maintenance or use of
a motor vehicle that is insured for an amount that is less than the insured's
uninsured motorist coverage.  Underinsurance benefits shall be equal to
uninsured motorist coverage benefits less the amount recovered from other
automobile liability insurance policies."(2)
We now turn to the facts of these cases, none of which are in dispute.   Mid-Century Ins. Co. involves a motor vehicle insurance policy that Mid-Century Insurance
Company (Mid-Century) issued to Elijah Perkins and his mother in 1997.(3)  The
policy provided UM and UIM coverage up to a limit of $100,000 per person and
$300,000 per occurrence.  Perkins renewed the policy every six months until March 2002. 
The policy initially covered a 1979 Chevrolet Blazer but, in 1999, Perkins changed the
policy to cover a 1986 Toyota pickup.  Perkins moved to Seattle, Washington at some
point thereafter and kept the Toyota in Washington, but never registered it there.
In October 2001, Perkins sustained injuries in a car accident in Washington.  The other
driver, Gretchen Elster, was at fault.  Elster had an automobile insurance policy that
provided $100,000 of liability coverage.  Perkins recovered that entire amount from
Elster's policy.  Perkins then sought UIM benefits from Mid-Century, claiming that the
$100,000 that he had received from Elster did not cover his total damages from the
accident.  Mid-Century denied his claim and filed an action for a declaratory judgment
stating that Perkins was not entitled to recover UIM benefits.  Perkins counterclaimed for
those benefits.  Both parties filed cross motions for summary judgment.
The trial court initially disposed of the matter as a choice of law question. 
Perkins argued that the law of the state where the accident occurred governed his
eligibility for UIM benefits and that, under Washington law, Elster was an underinsured
motorist because his damages exceeded the liability limits in Elster's policy.  See Wash
Rev Code 48.22.030(1).(4)  Mid-Century argued that Oregon law governed the dispute
and that, under Oregon law, Elster was not an underinsured motorist because the liability
limits in her policy were equal to Perkins's own policy limits for UIM coverage.  The trial
court ruled that the policy was governed by Oregon law and, therefore, because Elster's
liability policy limit was equal to Perkins's UIM policy limit, Perkins was not entitled to
recover UIM benefits.  On November 16, 2004, the court issued an order granting Mid-Century's motion for summary judgment.
On December 2, 2004, this court issued its decision in Bergmann.  On
December 7, Perkins filed a motion requesting reconsideration of his case in light of
Bergmann.  The trial court granted the motion and determined that Bergmann controlled
the outcome of the case, stating:
"The Supreme Court's analysis and interpretation of underinsured motorist
coverage sets forth that it is determined by the damages suffered by the
insured, not by the limits of the policy.  Thus, in order that this policy not be
less favorable to the insured than the provisions required by ORS 742.504,
the determination of whether a vehicle is underinsured must start with a
determination of the total damages the insured would be entitled to recover
from the other driver, and a comparison of those damages to the policy
limits. * * *
"Thus, this court finds that the ruling in [Bergmann] affects the legal
analysis of the issue raised by the parties in their original motions for
summary judgment. * * * The court therefore finds that, should defendant
Perkins's damages exceed $100,000.00 (the amounts paid by the other
driver), the policy taken out by defendant Perkins with plaintiff Mid-Century Insurance would require further underinsured coverage, up to the
underinsured motorist policy limits of $100,000."
Accordingly, the trial court set aside its earlier order (aside from its ruling that Oregon
law applies to the policy) and granted Perkins's motion for summary judgment.  Mid-Century appealed.
The Court of Appeals reversed.   Mid-Century Ins. Co., 209 Or App at 636. 
The court affirmed the trial court's holding that Oregon law governed the policy.  Id. at
620.  The court then noted that, under ORS 742.502(2)(a), an insured may recover UIM
benefits when he is injured in an accident and recovers, in the words of the statute, "an
amount that is less than the insured's uninsured motorist coverage."  After analyzing the
text of ORS 742.502(2)(a), the court held that "an amount that is less than the insured's
uninsured motorist coverage" referred to an amount that is less than the insured's policy
limit for uninsured motorist coverage.  Id. at 634-35.  Because Perkins had recovered
$100,000 from Elster, and $100,000 was the policy limit for his UM coverage, the court
concluded that Perkins was not entitled to recover any further benefits from Mid-Century. 
Id. at 636.  We granted Perkins's petition for review.
The facts of Phillips are similar to those of Mid-Century Ins. Co.  Because
Phillips comes before this court on a motion to dismiss under ORCP 21 A, "we assume
the truth of all well-pleaded facts alleged in the complaint."  Juarez v. Windsor Rock
Products, Inc., 341 Or 160, 163, 144 P3d 211 (2006).  Safeco Insurance Company of
Oregon (Safeco) issued Phillips an automobile insurance policy that included UIM and
UM coverage with limits of $100,000 per occurrence.(5)  In 2003, Phillips was injured
in a car accident.  The other driver, Alana Dianatkhah, was at fault.  Dianatkhah had an
automobile insurance policy with a liability limit of $100,000 and Phillips recovered that
entire amount from her.  Phillips then submitted a claim for UIM benefits to Safeco,
claiming that the $100,000 that he had recovered from Dianatkhah's policy was less than
the sum of his total damages.  Safeco denied the claim.  Phillips sued to recover the UIM
benefits that he had claimed.  
Safeco moved to dismiss the claim under ORCP 21A(8), arguing that, in
order to recover UIM benefits, Phillips had to plead that the $100,000 that he had
recovered was less than his policy limit for his UIM coverage.  Safeco asserted that
because Phillips already had recovered an amount equal to the limit of his UIM coverage,
he was not entitled to further recovery from Safeco.  After examining the text of ORS
742.502(2)(a) and Bergmann, the trial court concluded that Safeco was correct and that
Phillips had failed to plead ultimate facts sufficient to constitute a claim.  Accordingly,
the trial court dismissed Phillips's claim.  The Court of Appeals affirmed, citing Mid-Century Ins. Co.  We granted review.  The primary issue on review is whether Oregon
law allows the recovery of UIM benefits when an insured is injured in an accident and the
insured's UIM policy limit is equal to the other motorist's liability policy limit, but the
insured's damages exceed the other motorist's policy limit.  
Before we reach that issue, however, Perkins presents another argument that
is potentially dispositive of his claim.  Perkins argues that the trial court and the Court of
Appeals erred in ruling that Mid-Century's liability for UIM benefits is governed by
Oregon law.  Instead, Perkins contends that the law of the state where his accident
occurred -- Washington, in this case -- determines the amount that he may recover. 
Because Perkins's argument and the holdings below are based on interpretations of
Perkins's insurance policy, we review those interpretations for errors of law.  Holloway v.
Republic Indemnity Co. of America, 341 Or 642, 649, 147 P3d 329 (2006).  
Perkins's argument is based on the following section of the policy, which
appears under "PART II -- UNINSURED MOTORIST":
"Limits of Liability
"The limits of liability shown in the Declarations apply subject to the
following:
"1. The limit for 'each person' is the maximum for bodily injury
sustained by any person in any one occurrence.   Any claim for loss of
consortium or injury to the relationship arising from this injury shall be
included in this limit.  
"If the financial responsibility law of the place of the accident treats
the loss of consortium as a separate claim, financial responsibility limits
will be furnished.  
"2. Subject to the limit for 'each person,' the limit for 'each occurrence'
is the maximum combined amount for bodily injury sustained by two or
more persons in any one occurrence.  
"3. Subject to the law of the state of the occurrence, we will pay no more
than these maximums regardless of the number of vehicles insured, insured
persons, claims, claimants, policies, or vehicles involved in the occurrence. 

"4. Any amount payable by us to or for an insured person under this
coverage shall be reduced by:
"a. the amount payable to an insured person under Coverage A--Bodily Injury;
"b. all amounts paid by or for the owner or operator of an
uninsured or underinsured motor vehicle and any other person or
organization who may be held legally liable for bodily injury to an
insured person;  and
"c. the amount paid and the present value of all amounts payable
on account of bodily injury under any workers' compensation law,
disability benefits law or any similar law.  
"5. The amount of underinsured motorist coverage we will pay shall be
reduced by the amount of any other bodily injury coverage available to any
person or entity liable for the accident."  
(Boldface in original; emphasis added.)  Perkins argued that the third paragraph "clearly
states that UIM benefits are to be paid according to the law of the state of the
occurrence."  The Court of Appeals rejected that argument and held that paragraph 3 did
not refer generally to the insurer's limits for UIM liability.  Instead, according to the court,
paragraph 3 referred back to paragraphs 1 and 2 and "addresses a particular issue that
arises in situations involving multiple claimants," namely, the question of what the policy
limits are when multiple insured vehicles, insured persons, claims, claimants, policies, or
vehicles are involved in one accident.  Mid-Century Ins. Co., 209 Or App at 618-19.  The
court found no policy provision indicating that the parties had agreed on the applicable
law for adopting the policy, and held that in the absence of such an election, "conflict of
law principles dictate that Oregon law applies to the interpretation of the policy."  Id. at
619.  The court then noted that the policy was issued in Oregon under Oregon law when
Perkins and his mother were Oregon residents, and that, at the time of the accident,
Perkins's mother was still a resident of Oregon and the vehicle was registered in
Oregon.(6)  Citing Davis v. State Farm Mut. Ins., 264 Or 547, 507 P2d 9 (1973), the
court concluded that, under those facts, "Oregon has the more significant relationship to
the insurance policy," and Perkins's entitlement to UIM benefits under the policy was
governed by Oregon law.  Id. at 620.
On review, instead of repeating his argument that paragraph 3 clearly states
that Washington law governs the availability of UIM benefits, Perkins argues that
paragraph 3 creates an ambiguity as to which state's law governs the determination of
UIM benefits, and that this court must resolve any reasonable doubt about the intended
meaning of that paragraph against the insurer.  Holloway, 341 Or at 650 (citing North
Pacific Ins. Co. v. Hamilton, 332 Or 20, 25, 22 P3d 739 (2001)).
We disagree.  A phrase in an insurance policy is ambiguous only if, after a
reviewing court examines the phrase's text and context, "two or more plausible
interpretations of that term withstand scrutiny, i.e., continue[] to be reasonable * * *."
Hoffman Construction Co. v. Fred S. James & Co., 313 Or 464, 470, 836 P2d 703 (1992). 
After reviewing the text and context of paragraph 3, the Court of Appeals concluded that
it had nothing to do with the question of "whether defendant is entitled to UIM benefits
when his UM/UIM policy limits are identical to the tortfeasor's policy limits."  After
reviewing the record, we conclude that the Court of Appeals was correct and that
Perkins's interpretation of paragraph 3 is neither correct nor plausible when we view the
policy in context.  The introductory clause in paragraph 3 ("Subject to the law of the state
of the occurrence, * * *") serves only to insure that the policy will remain in compliance
with the law of the state where an accident occurs if that state's law requires the payment
of benefits in excess of the "maximums" stated in the policy and regardless of the other
circumstances set out in paragraph 3.  We conclude that Perkins's contention that
paragraph 3 is ambiguous in the way that we have described is not well taken. 
Furthermore, the Court of Appeals appears to have correctly determined that Oregon law
governs Perkins's policy.  Accordingly, we affirm that holding of the Court of Appeals. 
We now turn to the question whether Perkins and Phillips are entitled to
receive UIM benefits for their injuries.  Both Perkins and Phillips claim that their injuries
resulted from accidents with motorists who were "underinsured" under Oregon law.(7) 
They argue that, when an insured is involved in an accident with a motorist, the motorist
is underinsured if the limit of his or her liability policy is less than the sum of the damages
sustained by the insured.  In short, they argue that a court must determine whether a
motorist is underinsured by means of a "limits-to-damages" comparison.  Because they
both claim to have sustained damages beyond the limits of the liability policies of the
motorists who caused their injuries, Perkins and Phillips conclude that they were injured
by underinsured motorists and are entitled to collect UIM benefits.
Mid-Century and Safeco, in response, assert that Perkins and Phillips are
not entitled to UIM benefits because the motorists who caused their injuries were not
underinsured.  Mid-Century and Safeco argue that, under Oregon law, one determines
whether a motorist is underinsured by comparing the limits of that motorist's liability
policy to the limits of the insured's UM policy, i.e., a "limits-to-limits" comparison. 
Because Perkins and Phillips both were injured by motorists whose liability policies had
limits equal to the limits on Perkins's and Phillips's policies, Mid-Century and Safeco
conclude that Perkins and Phillips were not injured by underinsured motorists and are not
entitled to recover any benefits.
The question before this court is what the legislature intended by the
requirement that insurers issuing policies in Oregon must provide "underinsurance
coverage."  As always, we begin our inquiry into legislative intent with the text of a
statute.  PGE v. Bureau of Labor and Industries, 317 Or 606, 610, 859 P2d 1143 (1993). 
The parties' arguments  turn on this court's interpretation of ORS 742.502(2)(a), which
provides:
"A motor vehicle bodily injury liability policy shall have the same limits for
uninsured motorist coverage as for bodily injury liability coverage unless a
named insured in writing elects lower limits.  The insured may not elect
limits lower than the amounts prescribed to meet the requirements of ORS
806.070 for bodily injury or death.  Uninsured motorist coverage larger than
the amounts required by ORS 806.070 shall include underinsurance
coverage for damages or death caused by accident and arising out of the
ownership, maintenance or use of a motor vehicle that is insured for an
amount that is less than the insured's uninsured motorist coverage. 
Underinsurance benefits shall be equal to uninsured motorist coverage
benefits less the amount recovered from other automobile liability insurance
policies."
The third sentence of that paragraph states that UIM coverage is triggered by damages or
death caused by accidents with motor vehicles that are insured for less than "the insured's
uninsured motorist coverage."  The meaning of that phrase determines the outcome of this
case.  If "the insured's uninsured motorist coverage" refers to the damages that the insured
is legally entitled to recover from a motorist, then a motorist is underinsured when those
damages exceed the limits of his liability policy, as Perkins and Phillips claim.  If "the
insured's uninsured motorist coverage" refers to the policy limits on the insured's UM
coverage, then a motorist is underinsured when those policy limits exceed the limits of his
own liability policy, as Mid-Century and Safeco claim.
To determine the meaning of the phrase "the insured's uninsured motorist
coverage," we first examine the statutory definition of the phrase "uninsured motorist
coverage" in ORS 742.500(1), which we again quote to aid our analysis:
"'Uninsured motorist coverage' means coverage within the terms and
conditions specified in ORS 742.504 insuring the insured, the heirs or legal
representative of the insured for all sums which the insured or they shall be
legally entitled to recover as damages for bodily injury or death caused by
accident and arising out of the ownership, maintenance or use of an
uninsured motor vehicle in amounts or limits not less than the amounts or
limits prescribed for bodily injury or death under ORS 806.070."
Perkins and Phillips claim that the phrase "all sums which the insured * * * shall be
legally entitled to recover as damages for bodily injury" in ORS 742.500(1) reveals that
"uninsured motorist coverage" refers to the insured's total damages arising from an
accident and not to the insurer's limit of liability for uninsured motorist coverage.  The
text of ORS 742.500(1) undermines that claim somewhat.  ORS 742.500(1) defines
uninsured motorist coverage as coverage "in amounts or limits not less than the amounts
or limits prescribed" under ORS 806.070.(8)  In other words, ORS 742.500(1)
presumes that an insurer will provide uninsured motorist coverage only up to stated limits,
and sets minimum limits on that coverage.
Perkins and Phillips insist, however, that when the legislature uses the term
"coverage," it intends to refer to the insured's damages arising from an accident without
reference to the insurer's limits of liability.  Perkins and Phillips claim that this court's
decision in Bergmann interpreted "coverage" in a way that mandates that reading of that
term.  Accordingly, we review Bergmann to determine if it supports that claim.
Like Perkins and Phillips, the plaintiff in Bergmann had an automobile
insurance policy that provided UIM coverage with a limit of $100,000.  She was severely
injured in an automobile accident caused by a driver who had a policy with a liability
limit of only $25,000.  After recovering the limits of the other driver's policy and
receiving $107,652 in workers' compensation benefits, the plaintiff made a claim for
damages under the UIM provision of her insurance policy, claiming that her total
damages exceeded the amount of her recovery by over $500,000.  The insurer denied the
claim, asserting that it was entitled to reduce the amount owed to the plaintiff by the
amounts that she had received from workers' compensation and from the other driver. 
Because those amounts totaled over $100,000, the insurer maintained that it owed the
plaintiff nothing.  The plaintiff filed an action for breach of contract, the insurer moved
for summary judgment, and the trial court granted the motion.  The Court of Appeals
affirmed without opinion.  
This court reversed the grant of summary judgment and held that the
plaintiff could still recover UIM benefits despite her receipt of workers' compensation. 
The case centered on the interpretation of ORS 742.504(7)(c), which provided:
"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 benefits law or any similar law."
The plaintiff contended that the "amount payable under the terms of this coverage"
referred to the insured's total damages, while the insurer maintained that that term referred
to the policy's liability limit.  Bergmann, 337 Or at 603.  We held that the plaintiff was
correct.  We based that holding on the observation that, for purposes of ORS
742.504(7)(c), there is a difference between an amount that is payable under terms of
"coverage" and an amount payable under terms of a "policy."  A "policy" refers to "the
specific contract between the insurer and the insured," and includes limits on the insurer's
liability.  Bergmann, 337 Or at 604.  "Coverage" refers to "the universe of people,
vehicles, and events that trigger the insurer's obligation to pay under the policy[,]" and
does not include limits on the insurer's liability.  Id.  We concluded that, under ORS
742.504(7)(c), the "amount payable under the terms of this coverage" is equal to all sums
that the insured is "legally entitled to recover" as a result of bodily injury arising from an
accident with an uninsured or underinsured motorist, i.e., the insured's damages.(9)  Id.
at 610.
Perkins and Phillips contend that Bergmann requires this court to hold that,
in ORS 742.502(2)(a), the phrase "an amount that is less than the insured's uninsured
motorist coverage" refers to an amount that is less than the insured's damages.  First, they
point out Bergmann's holding that the term "coverage" does not include limits on an
insurer's liability.  If that term does not include those limits in one portion of the statutes
governing uninsured motorist coverage, they reason, it should not include those limits in
another.  Accordingly, "the insured's uninsured motorist coverage" cannot refer to the
insured's policy limits.  Second, Perkins and Phillips argue that, if this court were to
accept Mid-Century's and Safeco's argument that "an amount that is less than the insured's
uninsured motorist coverage" refers to an amount that is less than the insured's policy
limit, then an inconsistency in the statutes would result.  The term "coverage" would
incorporate limits on the insurer's liability in ORS 742.502(2)(a), but not in ORS
742.504(7)(c).  Again, Perkins and Phillips note that this court assumes that the same term
has the same meaning throughout a statutory scheme, and thus they conclude that
"coverage" must mean the same thing in ORS 742.502(2)(a) and ORS 742.504(7)(c).
We disagree.  Perkins and Phillips are correct to assert that "[w]hen the
legislature uses the identical phrase in related statutory provisions that were enacted a * * *  part of the same law, we interpret the phrase to have the same meaning in both
sections."  Tharp v. PSRB, 338 Or 413, 422, 110 P3d 103 (2005).  However, the statutory
phrase that was at issue in Bergmann is not identical to the phrase that is at issue in the
present case.  Bergmann concluded that, in ORS 742.504(7)(c), the phrase "amount
payable under the terms of this coverage" refers to an insured's total damages.  Bergmann,
337 Or at 605.  ORS 742.502(2)(a), however, asks whether a vehicle is insured for "an
amount that is less than the insured's uninsured motorist coverage," not an amount that is
less than the amount payable under the insured's uninsured motorist coverage.  Bergmann
stated that the latter phrase refers to an insured's damages, but made no such statement
regarding the phrase quoted from ORS 742.502(2)(a).  Accordingly, we need not assume
that each phrase means the same thing.
Perkins and Phillips also argue that "uninsured motorist coverage" must
refer to an insured's damages and not to his policy limits because, as we stated in
Bergmann, terms of coverage do not include limits on an insurer's liability.  337 Or at
604.  "Coverage," Perkins and Phillips argue, must mean the same thing in both ORS
742.504(7)(c) and ORS 742.502(2)(a).  We disagree.  We will assume that the same word
has the same meaning in related statutory provisions, but we are not bound by that
assumption if an examination of the text and context of the statute reveals that the word,
in fact, does have more than one meaning.  See Enertrol Power Monitoring Corp. v. State,
314 Or 78, 84, 836 P2d 123 (1992) ("The legislature's definition of a term made
applicable to one portion of the statutes does not control on the meaning of the term in
another portion of the statutes.").  Moreover, we do not read the word "coverage" in a
vacuum, but in the context of the statutory text that surrounds it.  See Vsetecka v. Safeway
Stores, Inc., 337 Or 502, 508, 98 P3d 1116 (2004) (illustrating principle).  In this case,
that context gives us several reasons not to agree with Perkins and Phillips.
First, we did not define "coverage" as "damages" in Bergmann.  We held
that coverage refers to the external factors, i.e., "people, vehicles, and events," that trigger
an insurer's obligation to pay under the policy."  Bergmann, 337 Or at 604.  Nothing in
that statement indicates that "coverage" refers only to the amount that the insurer is
obligated to pay.  As mentioned above, the phrase "amount payable under the terms of
this coverage" designated that amount.
Second, were we to assume that "uninsured motorist coverage" means
"damages," then the statutory provision at issue would become nonsense.  The third
sentence of ORS 742.502(2)(a) provides:
"Uninsured motorist coverage larger than the amounts required by ORS
806.070 shall include underinsurance coverage for damages or death caused
by accident and arising out of the ownership, maintenance or use of a motor
vehicle that is insured for an amount that is less than the insured's uninsured
motorist coverage."
Because the phrase "uninsured motorist coverage" appears at both the beginning and end
of that sentence, reading that phrase to refer to the insured's damages would give the
sentence the following meaning: 
"[The insured's damages] larger than the amounts required by ORS 806.070
shall include underinsurance coverage for damages or death caused by
accident and arising out of the ownership, maintenance or use of a motor
vehicle that is insured for an amount that is less than [the insured's
damages]."
Perkins and Phillips offer no explanation for why an insured's damages would include
"underinsurance coverage" for damages, or why his entitlement to damages would depend
on the amount of insurance on the motor vehicle that injured him.  At best, that
interpretation of ORS 742.502(2)(a) results in a circular statement that an insured's
damages will include his damages.  This court assumes that the legislature did not intend
for any part of its enactments to convey that kind of contradictory message.  See Bolt v.
Influence, Inc., 333 Or 572, 581, 43 P3d 425 (2002) (discussing principle).  The
redundancy and confusion that follow from the assumption that "uninsured motorist
coverage" refers to "damages" suggest that, in this context, that is not the phrase's
intended meaning.
Third, the first sentence of ORS 742.502(2)(a) establishes that, within that
subsection, "coverage" does include limits on an insurer's liability:
"A motor vehicle bodily injury liability policy shall have the same limits for
uninsured motorist coverage as for bodily injury liability coverage unless a
named insured in writing elects lower limits."
That sentence requires a "policy" to have the same "limits" for uninsured motorist
"coverage" that the policy places on bodily injury liability "coverage."  As mentioned in
Bergmann, a "policy" ordinarily includes limits on an insurer's liability, while "coverage"
does not.  337 Or at 604.  The premise of that sentence, however, is that a policy provides
coverage and, in that context, coverage has limits.  The second sentence of that subsection
also concerns limits: "The insured may not elect limits lower than the amounts prescribed
to meet the requirements of ORS 806.070 for bodily injury or death."
The two sentences just examined strongly suggest that, when the third
sentence mentions "coverage," it refers to coverage within the context of a policy. 
Therefore, contrary to Perkins's and Phillips's assertions, the phrase "uninsured motorist
coverage" can incorporate the limits on an insurer's liability without creating any
inconsistency with Bergmann.  The statutory subsection at issue in Bergmann contained
no wording indicating that the "coverage" that it referred to was subject to any kind of
"limits," while the first two sentences of ORS 742.502(2)(a) establish that the stated
limits do apply to and govern "coverage."  Viewed in that light, the third sentence
effectively reads:
"Uninsured motorist coverage [under a given policy with limits] larger than
the amounts required by ORS 806.070 shall include underinsurance
coverage for damages or death caused by accident and arising out of the
ownership, maintenance or use of a motor vehicle that is insured for an
amount that is less than the insured's uninsured motorist coverage [under
that policy]."
An "amount that is less than the insured's uninsured motorist coverage" refers to an
amount that is less than the insured's uninsured motorist coverage as the terms of the
policy limit that coverage.  That interpretation does not create any inconsistency with
Bergmann and avoids the same problems of confusion and surplusage that arise when we
interpret "uninsured motorist coverage" to mean "damages."  
Finally, the statutory context of ORS 742.502(2)(a) also supports Mid-Century's and Safeco's argument, because related statutory provisions use limits-to-limits
comparisons to determine the required extent of "coverage."  ORS 742.502(3) also uses
the term "coverage" to refer to coverage in the context of a policy that provides limits on
that coverage:
"The insurer issuing such policy may offer one or more options of
uninsured motorist coverage larger than the amounts prescribed to meet the
requirements of ORS 806.070 and in excess of the limits provided under the
policy for motor vehicle bodily injury liability insurance. Offers of
uninsured motorist coverage shall include underinsurance coverage for
bodily injury or death caused by accident and arising out of the ownership,
maintenance or use of a motor vehicle with motor vehicle liability insurance
that provides recovery in an amount that is less than the insured's uninsured
motorist coverage. Underinsurance benefits shall be equal to uninsured
motorist coverage benefits less the amount recovered from other motor
vehicle liability insurance policies."(10)
That subsection allows an insurer issuing a "policy" to offer "coverage" that is greater
than the "amounts" required under ORS 806.070 and the "limits" provided for bodily
injury liability under the policy.  If "coverage" refers to the insured's damages, then that
offer is impossible to make:  an insurer cannot offer coverage greater than the insured's
damages in some future accident at the time it offers the policy to the insured, because
neither the insured nor the insurer could be aware of those damages.  But if "coverage"
refers to coverage within the context of a policy, with limits on liability, then the meaning
of the subsection becomes clear:  the insurer may offer uninsured motorist coverage and
underinsurance coverage with liability limits greater than those required by ORS 806.070
or those provided for bodily injury liability.  In other words, the subsection makes use of a
limits-to-limits comparison to describe the permissible range of coverage that an insurer
may offer.  Using a limits-to-damages comparison to determine the insurer's actual
liability would contradict the subsection.
ORS 742.500(1) also uses a limits-to-limits comparison to determine
whether a vehicle is uninsured, which is a necessary prerequisite for the application of
uninsured motorist coverage.  The statute provides that uninsured motorist coverage
insures for all sums that the insured is entitled to recover as damages caused by an
accident with an "uninsured motor vehicle."  ORS 742.504(2)(d)(A) defines an
"uninsured vehicle" in part as follows:
"(d) 'Uninsured vehicle,' except as provided in paragraph (e) of this
provision, means:
"(A) A vehicle with respect to the ownership, maintenance or use of which
there is no collectible automobile bodily injury liability insurance or bond,
in at least the amounts or limits prescribed for bodily injury or death under
ORS 806.070 applicable at that time of the accident with respect to any
person or organization legally responsible for the use of such vehicle * * *."
(Emphasis added.)  Courts and insurers must determine whether a vehicle is uninsured by
comparing the limits of the insurance on that vehicle to the limits prescribed by ORS
806.070 and calculating whether the former exceed the latter -- in other words, by
engaging in a limits-to-limits comparison, as opposed to a limits-to-damages comparison.
Using the latter type of comparison would create an internal inconsistency in the statute.  
Likewise, ORS 742.504(9)(b) addresses the application of underinsured and
uninsured motorist coverage as "excess" insurance by making a limits-to-limits
comparison:
"With respect to bodily injury to an insured while occupying or through
being struck by an uninsured vehicle, if such insured is an insured under
other insurance available to the insured which is similar to this coverage,
then the damages shall be deemed not to exceed the higher of the applicable
limits of liability of this insurance or such other insurance, and the insurer
shall not be liable under this coverage for a greater proportion of the
damages than the applicable limit of liability of this coverage bears to the
sum of the applicable limits of liability of this insurance and such other
insurance."
If an insured is covered by two or more policies, that statute requires the insurer to
determine its liability by comparing its own policy limit to the limits of the other policies
in order to set a cap on the insured's damages, and then calculating the insurer's
proportion of liability by making that same comparison.  Again, that is a limits-to-limits
comparison.
The statutes governing uninsured and underinsured motorist coverage use 
limits-to-limits comparisons to establish whether a vehicle is "uninsured," what policy
limits an insurer may and must offer for uninsured motorist coverage, and what the extent
of an insurer's liability is when there is more than one source of insurance.  Perkins and
Phillips argue that it would create an inconsistency in the statutes to hold that the question
of whether a motorist is underinsured is determined by a limits-to-limits comparison.  In
fact, the prevalence of limits-to-limits comparisons in the statutes shows that the reverse
is true.  Our examination of the text and context of ORS 742.502(2)(a) make it clear that
when the Oregon legislature enacted that subsection, it intended that insurers and courts
should determine whether a vehicle is underinsured by comparing its liability limits with
the limits on the insured's uninsured motorist coverage.(11)
Perkins and Phillips nonetheless claim that this interpretation of ORS
742.502(2)(a) is at odds with Bergmann because of the results that it creates. 
Specifically, they argue that it is inconsistent to require an insurer to deduct "all sums
paid on account of such bodily injury by or on behalf of the owner or operator of the
uninsured vehicle" and other recovery from the insured's damages under ORS
742.504(7)(c), but to establish whether a motorist is underinsured by comparing policy
limits under ORS 742.502(2)(a).  We disagree.  First, the question of whether a motorist
is "underinsured" is not the question that this court considered in Bergmann.  Bergmann
dealt with the question of how much an insured may recover from an underinsured
motorist in light of benefits that the insured receives from other sources.  This case deals
with the threshold question of whether a motorist is underinsured at all.
Second, we already considered this supposed problem in Bergmann.  We
noted that ORS 742.502(2)(a) "essentially defines the limit of the insurer's liability in the
UIM context" by providing "that UIM benefits are 'equal to uninsured motorist coverage
benefits less the amount recovered from other automobile liability insurance policies.'"
Bergmann, 337 Or at 608.  ORS 742.502(2)(a) establishes that, regardless of an insured's
actual damages, the insurer's liability will never exceed an amount totaling the benefits
available under uninsured motorist coverage, i.e., the policy limit, minus the amount that
the insured recovers from other policies.  In other words, UIM benefits are intended to fill
the gap between the limit of an insured's UM coverage and the amount that he or she
actually receives from another motorist.
We hold that, under ORS 742.502(2)(a), an underinsured motorist is a
motorist who is insured for an amount that is less than the policy limits of the insured's
uninsured motorist coverage.  In both of the present cases, Perkins and Phillips were
injured by motorists with liability limits equal to the limits of their own uninsured
motorist coverage.  Accordingly, Perkins and Phillips were not injured by underinsured
motorists and, therefore, they are not entitled to UIM benefits under ORS 742.502(2)(a).
The decisions of the Court of Appeals are affirmed.
1. All citations to ORS chapter 742 refer to the 2001 versions of the statutes, unless
otherwise noted.  At the time of Perkins's accident in 2001, and Phillips's accident in
2003, the legislature had last modified ORS 742.502 and ORS 742.504 in 1997.  See Or
Laws 1997, ch 808, § 1, 2.  The legislature made minor amendments to those statutes in
the 2003 session, but those amendments were not effective until January 1, 2004, and in
any event, they do not appear to have any bearing on this case.  See Or Laws 2003, ch
175, § 2; Or Laws 2003, ch 220, § 1.
2. The legislature amended ORS 742.502(2)(a) in 2005 and 2007.  Or Laws 2005, ch
235, § 1; Or Laws 2007, ch 287, § 2.  That subsection now provides:
"A motor vehicle bodily injury liability policy shall have the same limits for
uninsured motorist coverage as for bodily injury liability coverage unless a named insured
in writing elects lower limits. The insured may not elect limits lower than the amounts
prescribed to meet the requirements of ORS 806.070 for bodily injury or death. Uninsured
motorist coverage shall include underinsurance coverage for bodily injury or death caused
by accident and arising out of the ownership, maintenance or use of a motor vehicle with
motor vehicle liability insurance that provides recovery in an amount that is less than the
insured's uninsured motorist coverage. Underinsurance coverage shall be equal to
uninsured motorist coverage less the amount recovered from other motor vehicle liability
insurance policies."
3. To avoid confusion, we refer to the parties by name rather than by the terms
"plaintiff" and "defendant."
4. Wash Rev Code 48.22.030 provides in part:
"(1) 'Underinsured motor vehicle' means a motor vehicle with respect
to the ownership, maintenance, or use of which either no bodily injury or
property damage liability bond or insurance policy applies at the time of an
accident, or with respect to which the sum of the limits of liability under all
bodily injury or property damage liability bonds and insurance policies
applicable to a covered person after an accident is less than the applicable
damages which the covered person is legally entitled to recover."
5. The complaint states that at the time of the accident, Safeco
"was contracting" with Phillips "and/or [Phillips's] spouse" to provide an
automobile insurance policy.  For purposes of this appeal, however, the
parties do not dispute that Safeco issued a policy to Phillips.
6. The Court of Appeals decision and the record below do not
make it clear whether Perkins himself was a resident of Washington or
Oregon at the time of the accident.  In an affidavit filed with the trial court,
Perkins declared that he had been living in Washington since May 2001,
had found employment there, and had obtained a Washington driver's
license.
7. Perkins conceded before the Court of Appeals that he was not
injured by an underinsured motorist as his policy defines that term.  Mid-Century Ins. Co., 209 Or App at 620.  He argues, however, that the
definition in his policy is invalid because as it is inconsistent with the
requirements of ORS 742.502 and ORS 742.504.  Accordingly, Perkins and
Mid-Century focus their dispute on what those statutes require Mid-Century
to provide.
8. ORS 806.070(2) requires minimum limits of "$25,000
because of bodily injury to or death of one person in any one accident" and
"$50,000 because of bodily injury to or death of two or more persons in any
one accident * * *."
9. The holding was based on ORS 742.504(1)(a), which requires
the insurer to pay "all sums which the insured * * * shall be legally entitled
to recover as general and special damages" for bodily injury resulting from
an accident with an uninsured vehicle.  Bergmann, 337 Or at 605.
10. The legislature has made minor amendments to the subsection
since 2001.  See Or Laws 2007, ch 287, § 2, which altered the last sentence
of the subsection to read: "Underinsurance coverage shall be equal to
uninsured motorist coverage less the amount recovered from other motor
vehicle liability insurance policies."  (Emphasis added.) Those later
amendments do not affect our analysis in this case.
11. The legislature has amended ORS 742.502(2)(a) since 2001. 
The third and fourth sentences of that subsection now read:
"Uninsured motorist coverage shall include
underinsurance coverage for bodily injury or
death caused by accident and arising out of the
ownership, maintenance or use of a motor
vehicle with motor vehicle liability insurance
that provides recovery in an amount that is less
than the uninsured's motorist coverage. 
Underinsurance coverage shall be equal to
uninsured motorist coverage less the amount
recovered from other motor vehicle liability
insurance policies."
Those amendments may bear on future determinations of whether a
vehicle is underinsured, but the meaning of that amended text is not a
question presently before this court, and therefore we do not address it at
this time.