Title: Wright v. State Farm Mutual Auto. Ins. Co.

State: oregon

Issuer: Oregon Supreme Court

Document:

Filed: April 19, 2001
IN THE SUPREME COURT OF THE STATE OF OREGON

ROBERT GARY WRIGHT,SHARI LEA WRIGHT,and JAMES R. STRICKLAND, Personal Representative of the Estate ofGEOFFERY ERIC WRIGHT, Deceased,
	Petitioners on Review,
	v.
STATE FARM MUTUALAUTOMOBILE INSURANCE COMPANY,and STATE FARM FIREAND CASUALTY COMPANY,
	Respondents on Review.
(CC 16-96-05691; CA A95110; SC S45288)

	On review from the Court of Appeals.*
	Argued and submitted November 10, 1999.
	Anthony A. Allen, Salem, argued the cause and filed the
brief for petitioners on review.  With him on the brief was J.
Michael Starr, Eugene.
	William G. Wheatley, Eugene, argued the cause and filed the
brief for respondents on review.  With him on the brief were
Kathryn S. Chase and Jaqua & Wheatley, P.C., Eugene.
	Phil Goldsmith, Portland, and David Nathan Allen, of
MacPherson, Gintner, Gordon & Diaz, Newport, filed the brief for
amicus curiae Oregon Trial Lawyers Association.
	Before Carson, Chief Justice, and Gillette, Durham,
Kulongoski, Leeson, and Riggs, Justices.**
	GILLETTE, J.
	The decision of the Court of Appeals is reversed in part and
affirmed in part.  The judgment of the circuit court is reversed
in part and affirmed in part, and the case is remanded to the
circuit court for further proceedings.
	Leeson, J., concurred in part and dissented in part, and
filed an opinion.
	*Appeal from Lane County Circuit Court, Gregory G. Foote, Judge. 152 Or App 101, 952 P2d 73 (1998).
    **Van Hoomissen, J., retired December 31, 2000, and did not
participate in the decision of this case.  De Muniz, J., did not
participate in the consideration or decision of this case.
		GILLETTE, J.
		This is an action against an insurer on a claim for
damages incurred in connection with a fatal automobile accident.  
Plaintiffs are Robert and Shari Wright (the insureds), whose son
died in the accident, and James R. Strickland, the personal
representative of the son's estate.  Notwithstanding higher
limits stated both in the insureds' motor vehicle liability
policy and their umbrella policy, the insurer, State Farm, (1)
refused to make any payment beyond the $25,000 minimum liability
coverage required by the Oregon financial responsibility law. 
State Farm based its position on the wording of the "family
member/household" exclusions contained in each of the policies. 
The trial court ruled in favor of State Farm, and the Court of
Appeals affirmed.  Wright v. State Farm Mutual Auto. Ins. Co.,
152 Or App 101, 952 P2d 73 (1998).  On review, we conclude that
the family member exclusion in the motor vehicle liability policy
is unenforceable and that State Farm therefore must pay the
amount set out on that policy's declarations page.  We also
conclude that no additional coverage is available under the
umbrella policy.  Accordingly, we reverse in part and affirm in
part the decision of the Court of Appeals.  
		The facts are not in dispute. (2)  In 1995, Geoffery Eric
Wright was riding as a passenger in a motor vehicle owned by his
parents, the insureds, when the motor vehicle was involved in a
collision.  Geoffery was killed.  The accident was caused by the
negligence of the motor vehicle's driver, who also was killed in
the accident.  Geoffery was 22 years old and was living with his
parents at the time of his death.
		There is no issue whether the two State Farm policies
apply to the accident; they do.  Rather, the issue is whether
certain exclusions within the policies apply.  The automobile
policy contains a declarations page that provides $100,000 in
liability coverage for each person and $300,000 for each
accident.  That policy also provides uninsured and underinsured
motorist coverage, with the same limits of liability.  The
umbrella policy provides for personal liability coverage of
$1,000,000 and also includes uninsured and underinsured motorist
coverage with the same limit.  Under both policies, the driver,
as a permissive user of the insureds' vehicle, was an additional
insured.
		Geoffery's damages exceeded $100,000.  The personal
representative of his estate therefore made a claim under both
policies.  State Farm, relying on the so-called "family
member/household exclusion" contained in the automobile policy,
offered to pay $25,000.  State Farm claimed that that exclusion,
which we set out verbatim, post, ___ Or at ___ (slip op at 4),
limits the amount payable to injured insureds and their family
members to $25,000, which is the minimum liability coverage
required by ORS 806.070(2)(a) for bodily injury to any one person
in any one accident.  State Farm denied coverage under the
umbrella policy, relying, in part, on a somewhat differently
worded family member/household exclusion in that policy.
		In the trial court, plaintiffs argued, inter alia, 
that, if the family member/household exclusion in the automobile
policy limits the amount that State Farm must pay to $25,000,
then the underinsured motorist provisions of that policy entitle
them to the difference between that amount and $100,000, the
limit of liability set out on the declarations page.  They made a
similar argument with respect to the umbrella policy:  In the
event that the court were to determine that the family
member/household exclusion of that policy precluded coverage,
they nonetheless were entitled to coverage under the underinsured
motorist provision of that policy.  As noted, the trial court
ruled in favor of State Farm.  On plaintiffs' appeal, the Court
of Appeals affirmed.  Wright, 152 Or App at 116.  We allowed
plaintiffs' petition for review.
		We turn first to the issue of the coverage available
under the automobile policy.  The declarations page of that
policy sets out the limits of liability for bodily injury and
property damage in the amount of $100,000 for each person for
each accident, up to a maximum of $300,000 per accident.  The
declarations page further states that "[y]our policy consists of
this page, any endorsements, and the policy booklet, form
9837.3."  Policy form 9837.3 contains, among other things, a
section entitled "When Coverage Does Not Apply."  As pertinent
here, that section provides:  
	"THERE IS NO COVERAGE:
	"* * * * *
	"2.  FOR ANY BODILY INJURY TO:
	"* * * * *
	"c.  (1)  YOU, OR 
		"(2)  ANY OTHER INSURED OR MEMBER OF AN INSURED'S
FAMILY RESIDING IN THE INSURED'S HOUSEHOLD.
		"TO THE EXTENT THE LIMITS OF LIABILITY OF THIS
POLICY EXCEED THE LIMITS OF LIABILITY REQUIRED BY
LAW."  
(Emphasis in original.)  Additionally, the automobile policy
includes an endorsement that provides for uninsured and
underinsured motor vehicle coverage under certain circumstances.  
		State Farm argues that the family member/household
exclusion quoted above makes the $100,000 limit of liability set
out on the declarations page of the policy inapplicable in this
case.  It contends that the phrase, "limits of liability required
by law," unambiguously refers to the minimum liability coverage
of $25,000 required by the Oregon financial responsibility law,
ORS 806.070(2)(a).  Because Geoffery was a family member residing
in the insureds' household, State Farm further argues, coverage
under the policy is excluded "to the extent that" it exceeds
$25,000. 
		Plaintiffs consistently have argued that, assuming that
State Farm's interpretation of the exclusion is correct, they
nonetheless are entitled to recover, because the consequence of
State Farm's liability limit argument is that plaintiffs'
coverage under the automobile policy is limited to $25,000,
making them "underinsured" and entitled to recover under the
policy's underinsured motorist provisions.  The Court of Appeals
chose to dispose of the case on that ground, rejecting
plaintiffs' argument.
		Plaintiffs attack the reasoning of the Court of Appeals
respecting its underinsured motorist analysis, arguing that the
Court of Appeals failed to analyze the pertinent statutes by
means of the methodology identified by this court in PGE v.
Bureau of Labor and Industries, 317 Or 606, 610-12, 859 P2d 1143
(1993).  We allowed review to address that issue of substantive
law, but now conclude that we need not reach it, because the
assumed premise for the inquiry is not well taken.
		In North Pacific Ins. Co. v. Hamilton, ___ Or ___, ___
P3d ___ (2001) (decided this date), we reviewed an exclusion
similar to the family member/household exclusion at issue in this
case.  In that case, an automobile liability policyholder was
injured in a motor vehicle accident and made a claim under the
policy.  Like State Farm in the present case, the insurer in
North Pacific argued that the family member exclusion in the
policy reduced the amount payable to the injured insured from the
amounts stated on the declarations page to the $25,000 minimum
liability coverage required by ORS 806.070(2)(a).  The exclusion
in that case provided that there would be no coverage for injured
insureds or their family members "to the extent that the limits
of liability for this coverage exceed the limits of liability
required by the Oregon financial responsibility law." 
		We held in North Pacific that the wording of the
foregoing exclusion was ambiguous because it failed to provide
proper notice to the insured that liability coverage under the
policy is limited to the statutorily required minimum coverage
for injured insureds and their family members.  Id. at __ (slip
op at 12-13).  We construed the provision against the insurer,
the party who drafted the policy.  Under that construction, we
held that the insured was entitled to liability coverage in the
amount provided on the declarations page of the policy.  Id. at
___ (slip op at 13).
		Our examination of the wording of the policy in North
Pacific followed the paradigm for such a process set out in
Hoffman Construction Co. v. Fred S. James & Co., 313 Or 464, 836
P2d 703 (1992).  North Pacific, ___ Or at ___ (slip op at 9-12). 
When we apply that methodology here, the same outcome is
appropriate.  The wording of the exclusion in the automobile
policy in the present case is as obtuse, if not more so, than the
wording that we construed in North Pacific.  The reference in the
exclusion to "the limits of liability required by law" does not
inform a policyholder what limit, if any, is applicable in a
given situation and does not even direct the policyholder to a
particular body of law to find out what that limit is.  Resort to
the context in which the phrase is used in the exclusion, as well
as to other provisions of the policy, does not clarify the
matter.  The exclusion remains inherently ambiguous, if not
incomprehensible.  As we did in North Pacific, we hold that the
exclusion in the automobile policy is unenforceable.  State Farm
is required to pay the amount stated on its declarations page,
viz., $100,000.  To the extent that the decision of the Court of
Appeals is to the contrary, it is reversed.  
 		We turn to the only remaining issue, which is whether
plaintiffs are entitled to coverage under the umbrella policy. 
Plaintiffs contend that the uninsured motor vehicle coverage
endorsement to the umbrella policy entitles them to
underinsurance coverage to the extent of the difference between
the coverage limits stated on the declarations page ($1,000,000)
and the coverage available under the automobile policy (now
$100,000).  
		Like the automobile policy, the umbrella policy also
contains a family member/household exclusion.  That exclusion is
not the same as that in the automobile policy, however.  The
exclusion provides: 
	"We will not provide insurance:
	"* * * * *
	"10.  for bodily injury or personal injury to the named
insured, spouse, or anyone within the meaning of part
a. or b. of the definition of insured." (3)
(Boldface type in original.)  In addition, the umbrella policy
includes an "Uninsured Motor Vehicle Coverage" endorsement that,
as pertinent here, provides: 
	"'Uninsured Motor Vehicle' means:
	"1.  a land motor vehicle, the ownership, maintenance
or use of which is:
"* * * * *
	"b.  insured or bonded for bodily injury liability at
the time of the accident, but
	"* * * * * 
	"(2) the limits of liability:
"(a) are less than the limits you carry for uninsured
motor vehicle coverage under this policy * * *.
	"* * * * *
	"An uninsured motor vehicle does not include a land
motor vehicle:  
	"1.  insured under the liability coverage of this
policy * * *.
	"* * * * *
	"Coverage U -- Uninsured Motor Vehicle 
	"We will pay, up to the Coverage U limit, the amount
which you and your passengers are legally entitled to
recover as bodily injury damages from the owner or
driver of the uninsured motor vehicle."
(Boldface type in original; emphasis added.)
		State Farm contends that Geoffrey Wright was included
within the definition of an "insured" under the umbrella policy
and, therefore, the family member/household exclusion in that
policy excludes him from coverage for his bodily injuries and
death.  In addition, according to State Farm, that exclusion
applies to the uninsured motorist endorsement as well, thus
operating to exclude injured insureds and their family members
from uninsured and underinsured motorist coverage.  Finally,
State Farm asserts that, in any event, coverage is unavailable
under the uninsured motorist coverage endorsement even without
regard to any exclusion in the umbrella policy, inasmuch as that
endorsement covers only uninsured and underinsured vehicles,
which expressly are defined to exclude vehicles insured under the
liability provisions of the policy.  Therefore, because Geoffrey
was killed while a passenger in an insured vehicle, plaintiffs
likewise are not entitled to underinsurance coverage under the
endorsement.  
		Plaintiffs appear to concede that the family member/
household exclusion to the umbrella policy excludes coverage
under that policy for Geoffrey's injuries and death.  The
gravamen of their argument is that they nonetheless are entitled
to coverage under the uninsured motor vehicle coverage
endorsement to that policy.  They contend that certain wording in
the endorsement clearly purports to grant coverage for named
insureds and their passengers injured or killed in single vehicle
collisions, but that State Farm is relying on other
unintelligible and misleading wording in the endorsement to
create an exemption from coverage.  Plaintiffs further assert
that the dispute should be resolved in their favor because, under
familiar rules of insurance law, ambiguities in insurance
policies are construed against the drafter.  Finally, they argue
that the wording that State Farm employed in its effort to reduce
coverage in certain circumstances does not comply with ORS
742.450(1), which provides:  
		"Every motor vehicle liability insurance policy
issued for delivery in this state shall state the name
and address of the named insured, the coverage afforded
by the policy, the premium charged therefor, the policy
period and the limits of liability."  
		Before we begin our analysis of ORS 742.450(1) and its
application to the umbrella policy and endorsement at issue here,
we note that, under ORS 742.468, umbrella policies generally are
exempt from the statutory requirements for motor vehicle
liability insurance policies.  That section provides that, "[f]or
purposes of statutes mandating kinds or amounts of coverage that
motor vehicle liability policies must contain, [umbrella
liability policies] shall not be considered motor vehicle
liability policies."  Plaintiffs argue that the requirements of
ORS 742.450(1) that certain terms be stated explicitly in a
"motor vehicle liability insurance policy" apply to the umbrella
policy and its endorsements notwithstanding ORS 742.468, because
those statutory requirements do not "mandat[e] kinds or amounts
of insurance." (4)  For purposes of this opinion, we assume (without
deciding) that ORS 742.468 does not exempt the umbrella policy
and its endorsements from the requirements of ORS 742.450(1). (5)
		We turn to plaintiffs' contention that the pertinent
wording of the umbrella policy is ambiguous and fails to state
the coverage as required by ORS 742.450(1).  All plaintiffs'
arguments in that regard can be reduced to a complaint that
neither the umbrella policy nor the uninsured motor vehicle
endorsement to that policy expressly states, in so many words,
that, in certain circumstances (such as in a case in which the
injured person is a named insured or a member of a named
insured's family, or in which the underinsured vehicle is an
insured vehicle), the limits of liability are reduced to zero. 
In particular, plaintiffs argue that an ordinary policyholder
would not understand that the family member/household exclusion
in the umbrella policy applies in an underinsurance situation
like the present because:  (1) that exclusion is not restated in
the endorsement; (2) other terms of the endorsement suggest that
insureds and their passengers are covered; and (3) the
endorsement should stand alone.  With regard to the terms of the
uninsured motor vehicle endorsement, plaintiffs argue that,
because the endorsement fails to employ either the phrase
"underinsured vehicle" or the phrase "underinsured motorist
coverage," an ordinary policyholder would not understand that the
limiting endorsement applies in an underinsurance situation at
all.  Finally, they argue that, by simultaneously defining an
uninsured vehicle to include an underinsured vehicle and to
exclude an insured vehicle, the endorsement is confusing and,
therefore, ambiguous.  That is so, according to plaintiffs,
because, although it is obvious that a vehicle cannot be at once
uninsured and insured, underinsurance coverage comes into play
only when there is some, but not enough, insurance coverage. (6)
		We agree with plaintiffs that the family member/
household exclusion in the umbrella policy, which clearly
excludes coverage for Geoffrey Wright's injuries and death,
cannot be read into the uninsured motor vehicle coverage
endorsement.  That endorsement provides that "[t]his coverage
applies to the operation of your automobile" and that "[w]e will
pay * * * the amount which you and your passengers are legally
entitled to recover as bodily injury damages from the owner or
driver of an uninsured motor vehicle."  (Boldface type in
original; emphasis added.)  The "definitions" section of the main
body of the umbrella policy states that "'you' and 'your' refer
to the 'insured' as defined."  (Boldface type in original.)  It
is apparent from the foregoing that the essential purpose of the
uninsured motor vehicle coverage endorsement is to compensate the
insured (a term that is defined to include family members of the
insured) for otherwise unrecoverable bodily injury damages.  Yet,
if State Farm were correct that the family member/household
exclusion in the umbrella policy applies to the endorsement, then
an insured person never would be entitled to uninsured motorist
coverage under the umbrella policy.  Such a construction would
vitiate the entire uninsured motorist coverage endorsement, a
result that the parties cannot have intended.
		We disagree, however, with plaintiffs' contention that
the endorsement either is ambiguous or fails to comply with ORS
742.450(1) to the extent that it defines an uninsured vehicle to
include an underinsured vehicle but, at the same time, defines an
uninsured vehicle to exclude a vehicle covered by the insured's
underlying liability policy.  
		We first consider whether the endorsement is ambiguous. 
We held in North Pacific that a policy provision is ambiguous if
it has multiple plausible meanings or if it is "not
comprehensible for some reason, such as indefiniteness, erroneous
usage, or form of expression."  ___ Or at ___ (slip op at 7).  As
we explain below, we conclude that the definition of the term
"uninsured motor vehicle" is not capable of multiple plausible
interpretations; neither is it obscure.  
		As discussed, an endorsement to the umbrella policy
provides uninsured motorist coverage.  The declarations page to
the umbrella policy lists under "COVERAGES," "COVERAGE U -
UNINSURED (INC UNDERINSURED) MOTOR VEHICLE."  "Coverage U," in
turn, provides that State Farm will pay, up to the applicable
limit, the amount the insured is "legally entitled to recover as
bodily injury damages from the owner or driver of an uninsured
motor vehicle."  (Boldface type in original.)  Thus, plaintiffs'
entitlement to coverage under the uninsured motorist endorsement
to the umbrella policy turns on whether the vehicle in which
Geoffrey Wright was killed was an "uninsured motor vehicle" as
defined in the endorsement.  
		As pertinent here, the term "uninsured motor vehicle"
is defined as "a land motor vehicle * * * which is * * * insured
or bonded for bodily injury liability at the time of the
accident, but * * * the limits of liability * * * are less than
the limits you carry for uninsured motor vehicle coverage under
this policy."  (Boldface type in original.)  That wording,
together with the wording of "Coverage U," plainly conveys that
coverage is available when the policyholder is entitled to
damages from an owner or driver of a vehicle that is insured for
an amount less than the umbrella policy's liability limits, viz., 
from an underinsured owner or driver.  The definition, though
admittedly dense, is comprehensible and is capable of only one
plausible interpretation, viz., "uninsured" includes
"underinsured."  
		As noted, plaintiffs have argued that, because the
endorsement fails to use the word "underinsured," it is
misleading and does not inform a policyholder adequately that the
endorsement applies in an underinsurance situation.  We disagree. 
The reference on the declarations page of the umbrella policy to
"COVERAGE U - UNINSURED (INC UNDERINSURED) MOTOR VEHICLE" places
the policyholder on notice that the endorsement grants
underinsurance as well as uninsurance coverage.  Moreover,
although we agree that the endorsement itself might be easier to
understand if it used the word "underinsured," it is not
ambiguous in the sense described in North Pacific merely because
it uses  other words to describe the same concept.  
		In the same vein, the exclusion from the definition of
an uninsured motor vehicle of a land motor vehicle "insured under
the liability coverage of this policy," when read together with
the wording of "Coverage U," is unambiguous.  The exclusion
informs the policyholder that he or she is not entitled to
recover for bodily injury damages from the owner or driver of a
vehicle insured under the underlying automobile policy.  That
wording neither is capable of more than one plausible
interpretation, nor is it obscure.  Thus, at least to this point
in the analysis, the endorsement excludes any liability to
plaintiffs. 
		We turn to whether the foregoing provisions fail to
"state * * * the coverage afforded by the policy," including the
limits of liability, as required by ORS 742.450(1).  As noted,
plaintiffs' contention that the endorsement does not comply with
that statutory requirement is based on the fact that neither the
declarations page nor the endorsement itself explicitly states
that, in certain circumstances, the coverage is zero, rather than
$1,000,000.
		To "state" means "to express the particulars of[:] set
forth."  Webster's Third New Int'l Dictionary, 2228 (unabridged
ed 1993).  The declarations page of the umbrella policy recites
that "OTHER LIMITS AND EXCLUSIONS MAY APPLY," and "YOUR POLICY
CONSISTS OF THIS PAGE, ANY ENDORSEMENTS AND THE POLICY FORM. 
PLEASE KEEP TOGETHER."  The policyholder, therefore, is on notice
not to rely exclusively on the declarations page for information
concerning the coverage available under the policy.  Moreover, as
noted, the declarations page of the umbrella policy specifically
directs the insured to the endorsement, "Coverage U," for an
explanation of the uninsured and underinsured motor vehicle
coverage available under the policy.  As discussed, we have
concluded that the wording of the two provisions at issue in the
endorsement is neither obscure nor capable of multiple plausible
interpretations.  Under those circumstances, the endorsement
meets the requirement set out in ORS 742.450(1) that it "state"
the coverage, i.e., it has "set forth" and "express[ed] the
particulars of" the pertinent coverage.
		Plaintiffs in effect ask for more.  They ask that all
the rules that relate to a particular kind of claim such as the
one that they are asserting appear together in one place in the
policy.  As we have explained, ORS 742.450(1) contains no such
requirement.  Plaintiffs point to no other authority that would
support that requirement, and we are aware of none.
		It follows from the foregoing that plaintiffs are not
entitled to recover any amount under the underinsured motor
vehicle coverage provisions of the umbrella policy.  The decision
of the Court of Appeals with respect to the plaintiffs' right to
recover under the umbrella policy therefore is affirmed.    
		The decision of the Court of Appeals is reversed in
part and affirmed in part.  The judgment of the circuit court is
reversed in part and affirmed in part, and the case is remanded
to the circuit court for further proceedings.
	LEESON, J., concurring in part and dissenting in part.
	I agree with the majority that, under the family
member/household exclusion in the umbrella policy, plaintiffs are
not entitled to coverage.  However, I disagree with the majority
that plaintiffs are entitled to prevail under the automobile
policy.  The reason that plaintiffs prevail on their auto claim,
the majority explains, is because the exclusion in their auto
policy is as unintelligible as a similar family member/household
exclusion in the policy at issue in North Pacific Ins. Co. v.
Hamilton, __ Or __, __ P3d __ (2001) (decided this date).  The
majority concludes that plaintiffs in this case are entitled to
prevail on the same theory, apparently because both cases are
decided on the same day.  The difficulty with the majority's
conclusion is that it permits these plaintiffs to prevail on a
theory that they did not raise below.  In my view, the majority
errs in reversing the Court of Appeals' decision and the trial
court's judgment for a reason that plaintiffs never have advanced
at any stage of this litigation. 
	This court has held that,  
	"[g]enerally, before an appellate court may address
whether a trial court committed an error in any of the
particulars of the trial of a case, the adversely
affected party must have preserved the alleged error in
the trial court and raised the issue on appeal by an
assignment of error in its opening brief."
Ailes v. Portland Meadows, Inc., 312 Or 376, 380, 823 P2d 956
(1991).  There is, of course, an exception to the rule requiring
preservation of error.  Appellate courts may consider unpreserved
errors if they are "'errors of law apparent on the face of the
record.'"  Id. at 381 (citing ORAP 5.45(2)).  
	Preservation problems typically arise when a party that
failed to preserve an error at trial claims error for the first
time on appeal.  See, e.g., Brokenshire v. Rivas and Rivas, Ltd.,
327 Or 119, 121, 957 P2d 157 (1998) (claim of error appeared for
first time in defendant's opening brief in Court of Appeals).  In
this case, plaintiffs did not raise at trial the issue whether
the family member/household exclusion in State Farm's policy is
ambiguous under this court's methodology for construing insurance
contracts.  Neither did plaintiffs make that argument on appeal
or on review. 
	At the trial court, the parties agreed to submit the
case under ORCP 66.  That rule provides, in part:
		"A Submission without action.  Parties to a
question in controversy, which might have been the
subject of an action with such parties plaintiff and
defendant, may submit the question to the determination
of a court having subject matter jurisdiction.
		"A(1)  Contents of submission.  The written
submission shall consist of an agreed statement of
facts upon which the controversy depends, a certificate
that the controversy is real and that the submission is
made in good faith for the purpose of determining the
rights of the parties, and a request for relief.
		"* * * * *
		"A(3)  Effect of submission.  From the moment the
submission is filed, the court shall treat the
controversy as if it is an action pending after a
special verdict found.  The controversy shall be
determined on the agreed case alone, but the court may
find facts by inference from the agreed facts."
ORCP 66 A (emphasis added).  In their stipulation, they agreed
that "the issues set forth below are the only issues in this
controversy."  Thereafter followed a list of four questions, two
of which related to coverage under plaintiffs' State Farm auto
policy:
		"Query #1:  Under State Farm Auto's car policy is
State Farm Auto's liability limited to $25,000.00[?]
		"Query #2:  If the liability limits of State Farm
Auto's policy are reduced from $100,000.00 to
$25,000.00, is there underinsured motorist coverage of
$75,000.00 available under State Farm Auto's policy for
claims of the Estate of Geoffery Eric Wright and James
R. Strickland, Personal Representative thereof[?]"
In their briefs to the trial court, plaintiffs argued that the
exclusion in Section 1 of the auto policy, quoted in the majority
opinion, __ Or at __ (slip op at 4), did not apply to the
personal representative of Geoffery Wright's estate.  They
contended that, by the plain terms of the exclusion, "the
Personal Representative's claim is not a claim brought by the
named insured or any members of the insured's family residing in
the insured's household."  
	Plaintiffs also argued that the failure of the auto
policy to include the claim of a personal representative within
its exclusion, and the failure "to advise their insured of the
lower limit [of coverage] when applicable," violated ORS
742.450(1).  That statute provides:
		"Every motor vehicle liability insurance policy
issued for delivery in this state shall state the name
and address of the named insured, the coverage afforded
by the policy, the premium charged therefor, the policy
period and the limits of liability." 
	At the Court of Appeals, plaintiffs pressed two
assignments of error regarding the trial court's judgment in
favor of State Farm on the auto policy.  In their first
assignment, plaintiffs argued that both the auto and umbrella
policies violated the requirements of ORS 742.450.  In their
second assignment, plaintiffs contended that, "[b]y failing to
provide a separate insurance section for underinsurance, [State
Farm] Auto issued a policy which is 'unintelligible, uncertain,
ambiguous or abstruse, or likely to mislead a person to whom the
policy is offered, delivered or issued' all in violation of ORS
742.005."  (Emphasis added.) 
	The Court of Appeals affirmed the trial court.  Wright
v. State Farm Mutual Auto. Ins. Co., 152 Or App 101, 952 P2d 73
(1998).  On review before this court, plaintiffs argued that, as
a matter of statutory construction, underinsured motorist
coverage is mandatory whenever a claim for injury or death arises
out of the use of a motor vehicle that has effective liability
insurance limits in amounts less than underinsured motorist
limits.  The majority does not reach that question, because it
holds that the wording of the family member/household exclusion
in the auto policy is so "obtuse" that, as a matter of contract
law, the exclusion is unenforceable.  ___ Or at___ (slip op at
7).  Plaintiffs no doubt will be relieved to learn that, after
losing at the trial court and at the Court of Appeals, they have
prevailed on one of their claims, but they also should be
surprised by this court's rationale for reversing both courts.
Each of those courts, in turn, no doubt will puzzle over why this
court reverses them on a theory that plaintiffs never asked them
to address.  And defendant no doubt will be baffled to learn
that, after prevailing at trial and on appeal, it has lost on
review in this court on an issue that it never knew was in the
case, and against which it had no opportunity to defend at any
stage of these proceedings.
	The majority, sua sponte, has raised the contract issue
for plaintiffs and then has resolved it in their favor.  The
majority's rationale appears to be that, if this court decides
two cases on the same day and, properly understood, the cases
raise the same issue, then this court will resolve the similar
issue the same way no matter how the cases were argued below.  I
disagree both with that rationale and the result in this case as
it affects plaintiffs' claim under the auto policy. 



1. At the time of the accident, the insureds were covered
as named insureds on a motor vehicle liability policy issued by
State Farm Mutual Automobile Insurance Company and on a personal
liability umbrella policy issued by State Farm Fire and Casualty
Company.  We refer to the two insurance companies collectively as
State Farm.  

2. The parties submitted the case to the trial court under
ORCP 66, which permits parties to a question in controversy to
submit the question to the determination of a court by presenting
an agreed statement of facts, a certificate that the controversy
is real and the submission made in good faith, and a request for
relief.  ORCP 66(A).  

3. The definition of "insured" provides:
	"5.  'insured' means:
	"* * * * *
	"b.  the following residents of the named insured's
household:
	"(1) the named insured's relatives * * *."   
(Boldface type in original.) 

4. A necessary premise of plaintiffs' argument is that the
umbrella policy, together with the uninsured motor vehicle
coverage endorsement, constitutes a "motor vehicle liability
insurance policy" for purposes of ORS 742.450(1), even if it is
not such a policy for purposes of other sections of that statute. 
The umbrella policy, standing alone, clearly is not a "motor
vehicle liability insurance policy," inasmuch as it insures
against personal liability for damages that the policyholder is
legally obligated to pay.  It is arguable, however, and
plaintiffs appear to assume, that the endorsement, which provides
for payment to the insured for "bodily injury damages from the
owner or driver of an uninsured motor vehicle," transforms the
umbrella policy into a motor vehicle liability policy.  

5. In addition to their other arguments, plaintiffs also
suggest for the first time in this court that, if the policy
initially was issued before 1993, the year that the legislature
enacted ORS 742.468, then, under American Economy Ins. Co. v.
Canamore, 114 Or App 348, 352, 834 P2d 542, rev den 314 Or 727,
843 P2d 454 (1992), and Savage v. Grange Mutual Ins. Co., 158 Or
App 86, 96, 970 P2d 695, rev den 329 Or 318, 994 P2d 123 (1999),
the umbrella policy was required under ORS 742.502 and ORS
742.504 to include underinsured motorist coverage, and that
statutorily mandated coverage was required to apply to
individuals in the position of plaintiffs in the present case. 
We do not consider that argument, because plaintiffs failed to
raise it below and, in any event, they concede that the record
does not establish whether the umbrella policy originally was
issued before 1993. 

6. Plaintiffs also contend for the first time in their
briefs to this court that the part of the endorsement's
definition of an uninsured motor vehicle that purports to exclude
"a land motor vehicle * * * insured under the liability coverage
of this policy" is incomprehensible and therefore ambiguous. 
That is so, according to plaintiffs, because the phrase "this
policy" in the foregoing exclusion clearly refers to the umbrella
policy (including endorsements thereto), but the umbrella policy
insures individuals against personal liability and does not
insure motor vehicles.  State Farm responds that the declarations
page of the umbrella policy requires the holder of that policy to
insure "all land motor vehicles or watercraft owned by, rented
by, or regularly furnished to you," and incorporates by reference
the underlying automobile policy by defining the "required
underlying insurance policies" to include "Automobile Liability,"
which, in turn, is defined as "your policy which provides
coverage for liability caused by the ownership, operation,
maintenance or use of any land motor vehicle * * *."  Plaintiffs
did not focus below on the phrasing of the exclusion for insured
vehicles in arguing that the endorsement was ambiguous or that it
did not comply with ORS 742.450(1).  In our view, that argument
is sufficiently distinct from the arguments that plaintiffs did
raise below that plaintiffs cannot be said to have preserved the
argument for consideration by this court.  Accordingly, we
decline to address it here.