610 May 26, 2016 No. 34

IN THE SUPREME COURT OF THE

STATE OF OREGON

Kevin RAINS

and Mitzi Rains,

Petitioners on Review,

v.

STAYTON BUILDERS MART, INC.;

John Doe Lumber Supplier;

John Doe Lumber Mill;

and Five Star Construction, Inc.,

Defendants.

STAYTON BUILDERS MART, INC.,

Third-Party Plaintiff-Respondent,

v.

RSG FOREST PRODUCTS, INC., et al.,

Third-Party Defendants,

and

WEYERHAEUSER COMPANY,

Respondent on Review.

WEYERHAEUSER COMPANY,

Fourth-Party Plaintiff,

v.

RODRIGUEZ & RAINS CONSTRUCTION,

an Oregon corporation,

Fourth-Party Defendant.

WITHERS LUMBER COMPANY,

Fourth-Party Plaintiff,

v.

SELLWOOD LUMBER CO., INC.

an Oregon corporation;

and Weyerhaeuser Company,

Fourth-Party Defendants.

WESTERN INTERNATIONAL

FOREST PRODUCTS, INC.,

Fourth-Party Plaintiff,
Cite as 359 Or 610 (2016) 611

v.

Benito RODRIGUEZ,

Kevin Rains,

and Rodriguez & Rains Construction,

Fourth-Party Defendants.

SELLWOOD LUMBER CO., INC.,

an Oregon corporation,

Fifth-Party Plaintiff,

v.

SWANSON BROS. LUMBER CO., INC.,

an Oregon corporation,

Fifth-Party Defendant.

(S062939)(Control)

Kevin RAINS

and Mitzi Rains,

Respondents on Review,

v.

STAYTON BUILDERS MART, INC.;

John Doe Lumber Supplier;

John Doe Lumber Mill;

and Five Star Construction, Inc.,

Defendants.

STAYTON BUILDERS MART, INC.,

Respondent on Review,

v.

RSG FOREST PRODUCTS, INC., et al.,

Third-Party Defendants,

and

WEYERHAEUSER COMPANY,

Petitioner on Review.

WEYERHAEUSER COMPANY,

Fourth-Party Plaintiff,

v.

RODRIGUEZ & RAINS CONSTRUCTION,

an Oregon corporation,

Fourth-Party Defendant.
612 Rains v. Stayton Builders Mart, Inc.

WITHERS LUMBER COMPANY,

Fourth-Party Plaintiff,

v.

SELLWOOD LUMBER CO., INC.,

an Oregon corporation;

 and Weyerhaeuser Company,

Fourth-Party Defendants.

WESTERN INTERNATIONAL

FOREST PRODUCTS, INC.,

Fourth-Party Plaintiff,

v.

Benito RODRIGUEZ,

Kevin Rains,

and Rodriguez & Rains Construction,

Fourth-Party Defendants.

SELLWOOD LUMBER CO., INC.,

an Oregon corporation,

Fifth-Party Plaintiff,

v.

SWANSON BROS. LUMBER CO., INC.,

an Oregon corporation,

Fifth-Party Defendant.

(S062959)

(CC 06C21040; CA A145916;

SC S062939 (Control), SC S062959)

On review from the Court of Appeals.*

Argued and submitted October 14, 2015.

Maureen Leonard, Portland, argued the cause and filed 

the briefs for petitioners on review/respondents on review 

Kevin and Mitzi Rains. With her on the briefs were Brian 

Whitehead, Salem, and J. Randolph Pickett, Portland.

Michael T. Garone, Schwabe Williamson & Wyatt 

P.C., Portland, argued the cause and filed the briefs for

______________

* Appeal from Marion County Circuit Court, Dennis J. Graves, Judge. 264 

Or App 1, 636, P3d 483 (2014).
Cite as 359 Or 610 (2016) 613

respondent on review/petitioner on review Weyerhaeuser 

Company. With him on the briefs were Sara Kobak, W. 

Michael Gillette, and Jordan R. Silk.

Thomas W. Brown, Cosgrave Vergeer Kester LLP, 

Portland, argued the cause and filed the briefs for thirdparty plaintiff/respondent on review Stayton Builders Mart, 

Inc. With him on the briefs was Julie A. Smith.

James N. Westwood, Stoel Rives LLP, Portland, filed the 

brief on behalf of amici curiae Washington Legal Foundation 

and Allied Educational Foundation.

Keith M. Garza, Oak Grove, filed the brief on behalf 

of amici curiae Associated Oregon Industries and Oregon 

Business Association.

Sharon A. Rudnick, Harrang Long Gary Rudnick P.C., 

Eugene, filed the brief on behalf of amici curiae Chamber 

of Commerce of the United States of America, NFIB Small 

Business Legal Center, American Tort Reform Association, 

and Coalition for Litigation Justice, Inc. With her on the 

brief were William F. Gary, Mark A. Behrens and Cary 

Silverman, Shook, Hardy & Bacon LLP, Washington, D.C.

Kathryn H. Clarke, Portland, filed the brief on behalf of 

amicus curiae Oregon Trial Lawyers Association.

Before Balmer, Chief Justice, and Kistler, Walters, 

Landau, Baldwin, Brewer, and Nakamoto, Justices.**

BREWER, J.

The decision of the Court of Appeals is affirmed in part, 

reversed in part, and vacated in part and remanded. The 

limited judgment in favor of Stayton against Weyerhaeuser 

and the general judgment for Stayton’s costs against 

Weyerhaeuser are reversed.

______________

** Linder, J., retired December 31, 2015, and did not participate in the decision of this case.
614 Rains v. Stayton Builders Mart, Inc.

Case Summary: Before the trial court, plaintiffs prevailed on strict-productsliability and loss-of-consortium claims against the retailer and the manufacturer 

of a defective wood board, and the retailer prevailed on an indemnification claim 

against the manufacturer. The trial court rejected the manufacturer’s arguments that a partial settlement agreement between plaintiffs and the retailer 

defeated the justiciability of plaintiffs’ claims against the retailer; that the partial settlement agreement should be admitted into evidence to establish the 

retailer’s insurance coverage; that the jury should have been allowed to allocate 

fault to plaintiff’s employer; that Article I, section 17, precluded the legislature 

from limiting noneconomic damages with respect to plaintiffs’ claims for both 

strict products liability and loss of consortium; and that the retailer prevailed on 

its indemnification claim and was entitled to defense costs. The Court of Appeals 

reversed the trial court’s rulings that the statutory cap on noneconomic damages 

could not apply plaintiff’s strict-products-liability claim and that the retailer prevailed on its indemnity claim against Weyerhaeuser. The Court of Appeals otherwise affirmed the trial court’s rulings and held that the manufacturer failed to 

preserve arguments related to the admissibility of the partial settlement and 

agreement and the verdict form. Held: (1) a partial settlement agreement does 

not defeat justiciability if the parties continue to have adverse interests with 

respect to the amount of a potential damage award; (2) the trial court may refuse 

to admit a partial settlement agreement in evidence if the proponent of the evidence intends to use it to establish insurance coverage; (3) to preserve a claim of 

error with respect to excluded evidence, the substance of the evidence must have 

been made known to the trial court; (4) to preserve an argument that a statute 

requires certain information on a jury form, the party must do more than offer 

a proposed jury form containing that information; (5) the parties’ assignments 

of error concerning a statutory cap on noneconomic damages should be reconsidered by the Court of Appeals in light of Horton v. OHSU, 359 Or 168, ___ 

P3d ___ (2016); and (6) ORS 20.220(3) requires reversing a general judgment 

awarding defense costs related to a limited judgment that the Court of Appeals 

had reversed on appeal.

The decision of the Court of Appeals is affirmed in part, reversed in part, 

and vacated in part and remanded. The limited judgment in favor of the retailer 

against the manufacturer and the general judgment for the retailer’s defense 

costs are reversed.
Cite as 359 Or 610 (2016) 615

BREWER, J.

This is an action brought by an injured construction worker and his wife. The injury occurred when a defective board broke. Plaintiffs Kevin Rains and Mitzi Rains 

obtained a judgment based on claims of strict products liability and loss of consortium, respectively, against both the 

retailer, Stayton Builders Mart (Stayton), and the manufacturer, Weyerhaeuser Company (Weyerhaeuser), of the defective wooden board. Stayton, in turn, obtained a judgment 

against Weyerhaeuser based on its cross-claim for commonlaw indemnity. Prior to trial, plaintiffs and Stayton had 

partially settled their claims in an agreement that required 

Stayton to pay at least $1.5 million in damages to plaintiffs, 

but capped Stayton’s liability at $2 million.

Weyerhaeuser appealed, assigning error to numerous trial court rulings. The Court of Appeals agreed with 

Weyerhaeuser that the trial court had erred by refusing 

to apply a statutory cap on noneconomic damages to plaintiff’s claim for strict products liability and by refusing 

to require Stayton to discharge its liability to plaintiffs 

before Stayton could prevail on its indemnity claim against 

Weyerhaeuser. The Court of Appeals, however, largely 

rejected Weyerhaeuser’s remaining arguments, affirming 

the trial court’s decisions (1) refusing to dismiss Stayton as 

a defendant for lack of adversity after it had partially settled plaintiffs’ claims; (2) refusing to admit the partial settlement agreement in evidence at trial; (3) failing to allow 

the jury to allocate fault to the general contractor, Five Star 

Construction, on the verdict form; and (4) refusing to apply 

the statutory cap on noneconomic damages to Mitzi Rains’ 

claim for loss of consortium. And, although the Court of 

Appeals deducted some of the expenses that Weyerhaeuser 

challenged in Stayton’s award for defense costs, the deductions were small, and the Court of Appeals largely upheld 

the trial court’s calculation of Stayton’s defense costs.

For the reasons that follow, we affirm most aspects 

of the decision of the Court of Appeals, but we vacate the 

decision of the Court of Appeals with respect to the parties’ assignments of error concerning the statutory cap on 

noneconomic damages based on Article I, section 17, of the 
616 Rains v. Stayton Builders Mart, Inc.

Oregon Constitution, and we remand those assignments of 

error to that court for reconsideration in light of this court’s 

decision in Horton v. OHSU, 359 Or 168, ___ P3d ___ (2016). 

Further, we conclude that ORS 20.220(3) requires the general judgment in favor of Stayton against Weyerhaeuser 

awarding defense costs to be reversed, and we therefore 

reverse the decision of the Court of Appeals to the extent 

that it is inconsistent with that conclusion. We reverse the 

limited judgment for indemnity in favor of Stayton against 

Weyerhaeuser, and we reverse the general judgment in favor 

of Stayton for costs on Stayton’s indemnity claim against 

Weyerhaeuser.

I. BACKGROUND

The parties do not dispute the underlying facts of 

this case. We state those facts consistently with the determinations reached by the factfinders at trial. Baker v. English, 

324 Or 585, 587, 932 P2d 57 (1997). Because of preservation 

arguments raised on appeal and review, the issues before us 

require an examination of the specific arguments presented 

to the trial court. Where relevant, we examine those arguments more closely in later sections of this opinion.

Five Star hired plaintiff Kevin Rains and his partner to construct a barn, and it purchased grade No. 2 wood 

boards from Stayton for that project. Wood boards graded as 

No. 2 must meet certain minimum strength requirements 

and may be used as structural components in building construction. Stayton sold Five Star boards manufactured by 

Weyerhaeuser, which graded each board as No. 2. At least 

one board manufactured by Weyerhaeuser and sold by 

Stayton was defective. The defective board contained a large 

knot that compromised its integrity. Because of that knot, 

Weyerhaeuser should not have graded that board as a No. 2, 

and Stayton should not have sold the board to Five Star as a 

No. 2.

Kevin and his partner used that defective board in 

the construction of the barn. At the time of the accident, 

Kevin was standing on the defective board 16 feet above the 

ground and was not wearing safety gear. A properly graded 

No. 2 board should have been able to hold the weight that 

Kevin placed on the board. But, because of its defect, the 
Cite as 359 Or 610 (2016) 617

board broke, causing Kevin to fall to the ground and sustain 

injuries resulting in paraplegia.

Kevin sued Five Star under ORS 654.305 for failing 

to “use every device, care and precaution that is practicable 

to use for the protection and safety of life and limb.” Kevin 

also sued Stayton for negligence and strict products liability. 

Kevin’s wife, Mitzi, brought additional claims against Five 

Star and Stayton for loss of consortium. Stayton, in turn, 

brought third-party claims for common-law indemnity and 

contribution against Weyerhaeuser and several other lumber companies that Stayton believed could have manufactured the defective board.

Early in the litigation, plaintiffs entered into an 

agreement with Five Star, resulting in a default judgment 

against Five Star for $18 million.1

 At some point, Stayton 

tendered its own defense to Weyerhaeuser, which refused 

the tender. After discovery, Stayton maintained that 

Weyerhaeuser manufactured all the boards that it had sold 

to Five Star. Consequently, the trial court granted summary judgment to the other manufacturers that Stayton 

had joined in the action as third-party defendants. The trial 

court, however, denied Weyerhaeuser’s motions for summary 

judgment against plaintiffs, which Stayton had joined, and 

against Stayton, which Stayton had opposed.

Because the trial court denied summary judgment 

on plaintiffs’ claims against Stayton and Stayton’s claims 

against Weyerhaeuser, the case proceeded to trial on those 

claims alone. Five days before the start of trial, Stayton 

and plaintiffs entered into an agreement partially settling 

plaintiffs’ claims against Stayton. Plaintiffs and Stayton 

disclosed that agreement to Weyerhaeuser and the trial 

court.

Under the terms of the partial settlement agreement, plaintiffs agreed to dismiss their negligence claim 

against Stayton and pursue only the strict-products-liability 

and loss-of-consortium claims. Plaintiffs also agreed to cap 

Stayton’s potential liability on those remaining claims at

1 Plaintiffs did not disclose that agreement to the other parties. See Rains v. 

Stayton Builders Mart, Inc., 258 Or App 652, 656, 310 P3d 1195 (2013).
618 Rains v. Stayton Builders Mart, Inc.

$2 million. For its part, Stayton agreed to pay plaintiffs at 

least $1.5 million on those claims regardless of its liability at 

trial. Further, if the jury returned a verdict against Stayton 

in excess of $1.5 million, Stayton would pay plaintiffs up 

to $2 million, but not more. The agreement also required 

Stayton to continue prosecuting its indemnity claim against 

Weyerhaeuser and to pay plaintiffs any damage award 

that Stayton might receive from Weyerhaeuser in excess of

$2 million.

Based on the partial settlement agreement, plaintiffs dismissed their negligence claim against Stayton at 

a hearing held on the first day of jury selection. Because 

of that dismissal, Stayton dismissed its contribution claim 

against Weyerhaeuser, a claim that Stayton had premised 

on its potential negligence liability. At the same hearing, 

Weyerhaeuser moved to dismiss Stayton from the action, 

arguing that the partial settlement agreement defeated 

the requisite adversity between plaintiffs and Stayton; 

alternatively, Weyerhaeuser sought to admit the agreement in evidence. The trial court denied both of those 

motions.

The case then proceeded to trial on plaintiffs’ strictproducts-liability and loss-of-consortium claims, which were 

tried to a jury, and on Stayton’s indemnity claim, which was 

tried to the court. At Weyerhaeuser’s request, the trial court 

read preliminary jury instructions before opening arguments that described very generally the fact that plaintiffs 

and Stayton had entered into a settlement agreement and 

that Stayton was asserting an indemnity claim against 

Weyerhaeuser.

During trial, plaintiffs presented evidence that, 

based on the construction plan, the location of the boards 

within the barn, and Stayton’s delivery schedules, the defective board had been manufactured by Weyerhaeuser and 

sold by Stayton, even though the barn contained boards of 

the same size and length as the defective board that had 

been manufactured by companies other than Weyerhaeuser. 

In its defense, Weyerhaeuser attempted to establish that 

Kevin was comparatively negligent and that another lumber 

company manufactured the defective board.
Cite as 359 Or 610 (2016) 619

Stayton did not present evidence attempting to 

establish that the board came from a different retailer or 

from a manufacturer other than Weyerhaeuser. In its closing arguments, Stayton explained the consumer protection goals of strict-products-liability standards, admitted 

Stayton’s liability under those standards, and repeated 

the trial court’s earlier instruction regarding Stayton’s 

settlement with plaintiffs and its indemnity claim against 

Weyerhaeuser. Stayton argued that, although it should be 

held liable, the jury should apportion Stayton only a small 

percentage of fault. It contended instead that Weyerhaeuser 

had been the party most capable of avoiding the accident 

in this case and therefore should bear the lions’ share of 

liability.

Following closing arguments, the trial court gave 

final jury instructions that again referred to the partial settlement agreement and gave the jury a verdict form that did 

not refer to Five Star. After the jury was excused to deliberate, the court asked the parties whether there were any 

objections to the verdict form. Weyerhaeuser noted that the 

verdict form that it had originally submitted to the court 

had included Five Star among the parties to whom the jury 

could allocate fault. Weyerhaeuser observed that the court 

had removed that wording.

The jury returned a verdict in favor of plaintiffs 

and found that Kevin had suffered $5,237,700 in economic 

damages and $3,125,000 in noneconomic damages, and it 

found that Mitzi had suffered $1,012,500 in noneconomic 

damages. The jury further found Weyerhaeuser 45 percent 

at fault, Stayton 30 percent at fault, and Kevin 25 percent 

at fault. Weyerhaeuser moved to reduce plaintiffs’ noneconomic damages to $500,000 on each claim, based on ORS 

31.710(1).2

 The trial court denied that motion, concluding 

that Article I, section 17, precluded the legislature from limiting noneconomic damages on the claims brought by plaintiffs. Accounting for Kevin’s comparative fault, the trial 

court entered a limited judgment against Weyerhaeuser and 

Stayton for a total of $6,272,025 as to Kevin and $759,375 

as to Mitzi.

2 We set that statute out below. 359 Or at 638.
620 Rains v. Stayton Builders Mart, Inc.

The trial court later heard arguments on Stayton’s 

indemnity claim against Weyerhaeuser. Weyerhaeuser 

argued that Stayton could not prevail on its indemnity 

claim because it had failed to establish that it actually 

had paid plaintiffs the amount Stayton was seeking from 

Weyerhaeuser, and it also argued that it had not wrongfully 

denied Stayton’s tender of a defense and that the tender was 

untimely. The trial court rejected those arguments, ultimately entering a limited judgment in favor of Stayton for 

$2 million, plus defense costs. After hearing Weyerhaeuser’s 

objections to Stayton’s claim for defense costs, the trial court 

determined those costs to be $265,458.70, which it awarded 

in a general judgment against Weyerhaeuser.

Weyerhaeuser appealed, raising numerous assignments of error that related to the partial settlement agreement, the verdict form, the statutory cap on noneconomic 

damages, and Stayton’s indemnity claim. The Court of 

Appeals agreed with Weyerhaeuser on two issues. First, 

rejecting plaintiffs’ argument, the Court of Appeals held 

that the trial court erred by refusing to apply the statutory 

cap on noneconomic damages, ORS 31.710(1), to Kevin’s 

claim for strict products liability. Rains v. Stayton Builders 

Mart, Inc., 264 Or App 636, 665, 336 P3d 483 (2014). Second, 

rejecting Stayton’s argument, the Court of Appeals held that 

the trial court erred in entering a judgment in Stayton’s 

favor for indemnity because Stayton had failed to prove that 

it had discharged its liability to plaintiffs. Id. at 669.

The Court of Appeals, however, rejected 

Weyerhaeuser’s remaining arguments, affirming the trial 

court’s denial of Weyerhaeuser’s motion to dismiss Stayton 

as a defendant due to lack of adversity; its exclusion of the 

partial settlement agreement from evidence; its failure to 

include Five Star as a defendant on the verdict form; and its 

failure to apply the statutory cap on noneconomic damages 

to Mitzi’s claim for loss of consortium. Id. at 647-48, 651, 656, 

666. As noted, the Court of Appeals largely affirmed the trial 

court’s determination of Stayton’s defense costs. Id. at 677.

After the Court of Appeals issued its decision, 

Weyerhaeuser moved for reconsideration, arguing that, in 

reversing the trial court’s judgment in favor of Stayton on its 
Cite as 359 Or 610 (2016) 621

indemnity claim, the Court of Appeals should have reversed 

the award for defense costs as well. The Court of Appeals 

denied that motion without explanation.

Stayton did not seek review of the Court of Appeals 

decision vacating its indemnity award. Plaintiffs and 

Weyerhaeuser, however, both petitioned this court to review 

the issues on which the Court of Appeals ruled against 

them. We granted those petitions.

II. DISCUSSION

Before this court, Weyerhaeuser seeks review with 

respect to five issues: (1) whether the trial court erred in 

declining to dismiss Stayton as a defendant for lack of justiciability; (2) whether the trial court erred in excluding the 

partial settlement agreement from evidence; (3) whether 

the trial court should have provided a verdict form that 

would have allowed the jury to allocate fault to Five Star;

(4) whether the Court of Appeals properly applied Article I, 

section 17 to exclude Mitzi’s loss-of-consortium claim from 

the statutory cap on noneconomic damages; and (5) whether 

the Court of Appeals was required to vacate Stayton’s 

defense cost award after concluding that Stayton was not 

entitled to prevail on its indemnity claim. Plaintiffs additionally seek review of the Court of Appeals’ application of 

the statutory cap on noneconomic damages to Kevin’s strictproducts-liability claim. We address each of those issues in 

turn.

A. Partial Settlement Agreement

As described above, plaintiffs and Stayton entered 

into a partial settlement agreement five days before the commencement of trial. In overview, the agreement required 

plaintiffs to dismiss their negligence claim against Stayton, 

guaranteed plaintiffs a payment from Stayton of at least 

$1.5 million, capped Stayton’s potential liability at $2 million, and required Stayton to pursue its indemnity claim 

against Weyerhaeuser, providing plaintiffs with any proceeds from that claim in excess of $2 million.3

3 The agreement states in its entirety:

“1. In the event of a verdict, net of plaintiffs’ comparative fault, in favor of 

plaintiffs against Stayton Builders Mart in an amount less than $1.5 million, 
622 Rains v. Stayton Builders Mart, Inc.

On the first day of jury selection, Weyerhaeuser 

made the following motions related to the partial settlement 

agreement: (1) to dismiss plaintiffs’ claims against Stayton 

because the agreement eliminated adversity between them 

and, therefore, their dispute was no longer justiciable; (2) to 

limit Weyerhaeuser’s liability to $2 million because the only 

claim made directly against Weyerhaeuser was Stayton’s 

indemnity claim and Stayton’s liability was capped at

$2 million; (3) to admit the agreement in evidence at trial; 

and (4) to give the jury a cautionary instruction.

The trial court agreed to give the jury a cautionary 

instruction, the content of which raised no objections from 

Weyerhaeuser. But the trial court denied Weyerhaeuser’s 

remaining motions. Weyerhaeuser appealed the trial court’s 

rulings denying its motion to dismiss plaintiffs’ claims 

or in the event of a defense verdict, Stayton Builders Mart will pay plaintiffs 

the sum of $1.5 million. Stayton Builders Mart will be free to collect any 

amount it is awarded in its contribution or indemnity claims from third-party 

defendant.

“2. In the event of a net verdict in excess of $ 1.5 million, Stayton Builders 

Mart will pay the amount of the verdict up to $2 million. Any excess over

$2 million that is recovered by Stayton Builders Mart on its indemnity or contribution claims against third-party defendant Weyerhaeuser, if any, shall be 

paid to the plaintiffs.

“3. In exchange for the defendant entering into this High–Low Agreement, 

the plaintiffs agree to dismiss their negligence claims against Stayton 

Builders Mart, Inc.

“4. Both plaintiffs and Stayton Builders Mart agree not to appeal the jury 

verdict on plaintiffs’ claim against Stayton Builders Mart. Stayton Builders 

Mart retains the right to appeal the jury verdict on its third-party indemnity 

and contribution claims.

“5. Stayton Builders Mart agrees to pursue its indemnity claim based upon 

strict liability against third-party defendant through trial to verdict.

“6. In the event of an appeal by third-party defendant that could affect 

Stayton Builders Mart’s obligations under this Agreement, Stayton Builders 

Mart and its insurer will pay the sum of $1.5 million within 60 days after 

the jury verdict. The potential obligation of Stayton Builders Mart and its 

insurer for the remaining $500,000 will then be determined by the ultimate 

outcome of the appeals process, pursuant to the terms of this Agreement.

“7. Should any disputes arise out of the interpretation or implementation 

of the terms of the Agreement, the parties agree that the matter shall be 

referred back to Eric B. Lindauer as Mediator with full authority to resolve 

the disputes, either through mediated resolution, or, in the event that a settlement cannot be reached between the parties, the Mediator shall have the 

authority to arbitrate the issue, which would be final and binding on both 

parties.”
Cite as 359 Or 610 (2016) 623

against Stayton and denying its motion to admit the partial settlement agreement in evidence. The Court of Appeals 

affirmed those rulings, which Weyerhaeuser now challenges 

before this court.

Before addressing those justiciability and evidentiary issues, we note that the parties frame their arguments 

as if they hinge on different characterizations of the partial settlement agreement. Weyerhaeuser contends that the 

agreement is a “Mary Carter agreement.” Under a Mary 

Carter agreement, the settling defendant remains in the 

lawsuit but obtains some financial interest in the success 

of the plaintiff’s claims against the non-settling defendant. 

The settling defendant’s financial interest is often based on 

an inverse relationship to the non-settling defendant’s financial interest in the lawsuit: The more money the non-settling 

defendants are required to pay the plaintiff, the less money 

the settling defendant will be required to pay. See Grillo v. 

Burke’s Paint Co., 275 Or 421, 425 n 1, 551 P2d 449 (1976) 

(explaining nature of such agreements). Plaintiffs, however, 

contend that the partial settlement agreement is not a Mary 

Carter agreement but is, instead, a “high-low agreement.” 

Under a high-low agreement, “‘a defendant agrees to pay 

the plaintiff a minimum recovery in return for the plaintiff’s agreement to accept a maximum amount regardless 

of the outcome of the trial.’” Rains, 264 Or App at 643 n 6 

(quoting Black’s Law Dictionary 797 (9th ed 2009)).

The Court of Appeals declined to characterize the 

agreement as either a Mary Carter agreement or a high-low 

agreement, noting that “the agreement has aspects consistent with each label.” Rains, 264 Or App at 643. Instead, 

the Court of Appeals concluded that “the precise label is not 

material in this case; it is the substance of the agreement 

that drives our analysis.” Id.

We agree with the Court of Appeals’ framing of the 

matter. There is no reason to treat the two terms as describing mutually exclusive categories of settlement agreements. 

Both terms are flexible enough to allow for overlap. There 

are no rules of justiciability or evidence that are specific to Mary Carter agreements or high-low agreements. 

Agreements falling within those categories may implicate 
624 Rains v. Stayton Builders Mart, Inc.

issues of justiciability and admissibility differently depending on their specific terms and the factual and legal context 

of the cases in which they arise. Ultimately, our analysis 

requires applying the appropriate legal standards to the 

particular partial settlement agreement and the specific 

factual and legal context of this case.

1. Justiciability

For a controversy to be justiciable: (1) “the interests 

of the parties to the action are adverse” and (2) “the court’s 

decision in the matter will have some practical effect on the 

rights of the parties to the controversy.” Brumnett v. PSRB, 

315 Or 402, 405, 848 P2d 1194 (1993); see also Brown v. 

Oregon State Bar, 293 Or Or 446, 449, 648 P2d 1289 (1982) 

(describing a justiciable controversy as “an actual and substantial controversy between parties having adverse legal 

interests” that “results in specific relief through a binding 

decree”).4

Weyerhaeuser’s motion to dismiss plaintiffs’ claims 

against Stayton was made orally following an off-the-record 

colloquy between the attorneys and the trial court. When it 

moved to dismiss, Weyerhaeuser stated:

“Because they had entered into a Mary Carter Agreement 

with the plaintiffs, it’s Weyerhaeuser’s position that there 

is no longer a justiciable controversy between those parties; 

that instead, we believe that they are essentially working in concert. Stayton Builders Mart has agreed to pay

$1.5 million in this case.

“And if a plaintiffs’ verdict is received, then Stayton 

Builders Mart is going to be paid $1.5 million. They stand to 

gain $1.5 million by the verdict in this case. Because of that 

damage setting, we believe that dismissal is appropriate.”

The trial court rejected Weyerhaeuser’s argument 

and concluded that plaintiffs and Stayton retained adverse 

4 We recently held that courts have constitutional authority to adjudicate 

“public actions or cases involving matters of public interest,” even when the 

court’s decision will not have a practical effect on the parties’ rights. See Couey 

v. Atkins, 357 Or 460, 520, 355 P3d 866 (2015) (so stating). Because the arguments in this case relate to the adversity requirement in a private action, no 

party argues that our decision in Couey changes the manner in which the trial 

court should have considered the issue of justiciability.
Cite as 359 Or 610 (2016) 625

interests with respect to a potential judgment against 

Stayton falling within the range of the $1.5 million minimum and $2 million cap. The Court of Appeals reached a 

similar conclusion:

“[T]he agreement did not absolutely establish Stayton’s 

potential financial exposure. Instead, it set up a range of 

liability for Stayton that, at least on some level, maintained 

an adversarial position between the parties. The remaining adversity was that every dollar above $1.5 million 

that the jury awarded to plaintiff against Stayton, up to a 

maximum of $2 million, equaled an additional dollar that 

Stayton had to pay to plaintiffs.”

Rains, 264 Or App at 647-48.

Weyerhaeuser argues that the trial court and the 

Court of Appeals erred in failing to consider the extent to 

which the partial settlement agreement affected Stayton’s 

incentives in litigating the case. According to Weyerhaeuser, 

before entering the partial settlement agreement, Stayton 

had an incentive to defend itself against plaintiffs’ claims 

and seek to minimize any damage award for plaintiffs. In 

other words, minimizing plaintiffs’ recovery minimized 

Stayton’s liability.

But, Weyerhaeuser argues, after entering the partial settlement agreement, Stayton had an interest in establishing its own liability as well as that of Weyerhaeuser. 

According to Weyerhaeuser, the agreement created that 

incentive by requiring Stayton to pay at least $1.5 million 

regardless of the jury’s verdict, while allowing Stayton 

to recoup that payment through its indemnity claim 

against Weyerhaeuser. Stayton could recover its payment 

to plaintiffs only if it proved its indemnity claim against 

Weyerhaeuser. And Stayton could prove its indemnity claim 

only if it proved that both it and Weyerhaeuser were liable 

for plaintiffs’ injuries. Eclectic Investment, LLC v. Patterson, 

357 Or 25, 33, 346 P3d 468, opinion adh’d to as modified on 

recons, 357 Or 327, 354 P3d 678 (2015) (describing the elements of common-law indemnity).

Further, Weyerhaeuser insists, not only did Stayton 

have an interest in establishing its own liability, but it 

also had an interest in maximizing plaintiffs’ recovery. If 
626 Rains v. Stayton Builders Mart, Inc.

plaintiff recovered less than $1.5 million—for example, 

$70,000—then Stayton could recover a maximum of $70,000 

from Weyerhaeuser on its indemnity claim, leaving Stayton 

to pay the remaining portion of the $1.5 million itself. So, 

according to Weyerhaeuser, Stayton had an incentive for 

plaintiffs to receive a damage award of at least $1.5 million to cover the entire amount that Stayton already had 

agreed to pay plaintiffs. And, because the partial settlement 

agreement capped Stayton’s liability at $2 million, exposing 

Stayton to an additional $500,000 in liability, Weyerhaeuser 

asserts that Stayton’s interest in an award of at least

$1.5 million outweighed any interest that it had in avoiding 

the additional liability it might incur if plaintiffs obtained 

a very large damage award. In other words, Stayton would 

prefer that plaintiffs obtain a $7 million judgment rather 

than a $70,000 judgment.

Weyerhaeuser maintains, based on that analysis, 

that Stayton’s interests were completely aligned with plaintiffs’ interests, thus defeating justiciability. According to 

Weyerhaeuser, a justiciable controversy does not exist “when 

a settling defendant’s strongest pecuniary interest under a 

Mary Carter agreement is to maximize the recovery for the 

plaintiff at trial.”

The problem with Weyerhaeuser’s argument is that 

the standard it proposes is not grounded in this court’s precedents. And Weyerhaeuser’s proposed standard, focusing on 

the settling defendant’s “strongest” interest, implicates a 

difficulty that Weyerhaeuser fails to resolve—namely, that 

a party may have interests pulling in different directions, 

each contingent on uncertain future events. How a party 

resolves those competing interests is not always a matter 

of logic, but will often turn on strategic decisions that are 

based on how the party views the strengths and weaknesses 

of the parties’ respective positions in a case.

As noted, Weyerhaeuser discounts the $500,000 

that separates Stayton’s minimum exposure of $1.5 million 

and its maximum exposure of $2 million, by positing that 

Stayton would prefer a large plaintiffs’ judgment, such as 

$7 million, to a small plaintiffs’ judgment, such as $70,000. 

But that is true only if Stayton sufficiently valued its odds of 
Cite as 359 Or 610 (2016) 627

prevailing on its indemnity claim against Weyerhaeuser—a 

claim that Weyerhaeuser contested at trial. If Stayton lost 

on its indemnity claim, then a $7 million plaintiffs’ judgment would require Stayton to pay up to the cap under the 

partial settlement agreement, $2 million. That payment 

would be $500,000 beyond the $1.5 million Stayton already 

owed plaintiffs under the partial settlement agreement. But, 

assuming again that Stayton lost on its indemnity claim, a 

$70,000 plaintiffs’ verdict would cost Stayton nothing. Of 

course, Stayton would still owe plaintiffs the $1.5 million 

under the partial settlement agreement, but Stayton would 

owe that amount regardless of whether plaintiffs prevailed 

on their claims or whether Stayton prevailed on its indemnity claim.5

 Thus, Weyerhaeuser’s argument is premised on 

the assumption that Stayton would prevail on its indemnity 

claim, even though Weyerhaeuser was attempting to defeat 

that claim.

We conclude, consistent with the views of the trial 

court and the Court of Appeals, that the $500,000 difference between Stayton’s minimum and maximum litigation 

exposure preserved the requisite adversity between plaintiffs and Stayton, even though Stayton’s own evaluation of 

its likelihood of prevailing on the indemnity claim might 

have affected how it valued the risk of having to pay that 

$500,000. At most, the expected cost to Stayton of a large 

plaintiffs’ judgment would be reduced by its perception of its 

chances of prevailing on the indemnity claim. So if Stayton 

thought it had a 50 percent chance of prevailing on its 

indemnity claim, it might value the risk of a large plaintiffs’ 

judgment at $250,000. And, if Stayton thought it had a 90 

percent chance of prevailing, then it might value the risk of 

a large plaintiffs’ judgment at $50,000.

The point is that as long as Stayton’s indemnity 

claim remained unadjudicated, Stayton would prefer a judgment in favor of plaintiffs for $1.5 million over a judgment 

in favor of plaintiffs for $2 million. Plaintiffs’ interests, however, ran in the other direction. All other things being equal, 

5 As a result, the $1.5 million is a sunk cost and the proper measure of 

Stayton’s incentives is the extent to which it would be subject to liability beyond 

that $1.5 million.
628 Rains v. Stayton Builders Mart, Inc.

plaintiffs would prefer a $2 million judgment to a $1.5 million judgment. That was sufficient to establish the adversity 

required for justiciability.

Attempting to avoid that conclusion, Weyerhaeuser 

relies on the dissenting opinion by then-Judge Landau in 

Bocci v. Key Pharmaceuticals, Inc., 158 Or App 521, 974 P2d 

758 (1999), decision vac’d, 332 Or 39 (2001), a case in which 

an evenly divided Court of Appeals split with respect to the 

justiciability of a plaintiff’s claims after the plaintiff entered 

into a Mary Carter agreement with a defendant. In Bocci, 

the plaintiff brought claims on behalf of a patient who had 

become incapacitated by a toxic condition resulting from the 

interaction of two prescribed medications. Id. at 523. The 

plaintiff brought claims against the patient’s doctor, who 

had failed to diagnose the condition, and the manufacturer 

of one of the medications, who had failed to provide warnings about the potential problem. Id. The doctor then crossclaimed against the drug manufacturer for negligence and 

fraud. Id.

Prior to trial, the plaintiff and the doctor entered 

into a Mary Carter agreement. Id. at 527. Under that agreement, the plaintiff agreed not to enforce a judgment against 

the doctor and the doctor agreed to pay the plaintiff $1 million. Id. at 527-28. Of that sum, $200,000 was paid in cash 

and $800,000 was paid in the form of a loan, the repayment 

of which depended on the amount that the plaintiff obtained 

in a judgment against the non-settling defendant, the drug 

manufacturer. Id. The more money the plaintiff obtained 

against the drug manufacturer, the more money the plaintiff would repay the doctor, thus decreasing the doctor’s net 

exposure under the settlement agreement. Id. Ultimately, 

if the plaintiff obtained $3 million from the drug manufacturer, then the plaintiff would repay the doctor the entire 

$800,000 loan. Id. The trial court denied the drug manufacturer’s motion to dismiss the doctor as a defendant after 

concluding that the dispute between the plaintiff and the 

doctor remained justiciable. Id. at 529. A jury found in favor 

of the plaintiff against both the doctor and the drug manufacturer, and it found in favor of the doctor against the drug 

manufacturer. Id. at 527.
Cite as 359 Or 610 (2016) 629

The drug manufacturer appealed. Because it was 

equally divided, the Court of Appeals affirmed the trial court 

without a majority opinion. The concurring judges insisted 

that the trial court properly found adversity because the 

plaintiff and the doctor disputed whether the doctor was at 

fault. Id. at 529. But in dissent, Judge Landau concluded 

that the plaintiff had no incentive at trial to prove that the 

doctor was at fault because doing so would only decrease the 

award that the plaintiff could obtain against the drug manufacturer. Id. at 556 (“If plaintiff established at trial that 

Edwards was negligent, the percentage of fault that the jury 

assigned to Edwards would only lessen any recovery from 

Key. Thus, plaintiff’s sole objective at trial was to establish 

Key’s—not Edwards’s—liability.”). And, in fact, the plaintiff 

dismissed his claims against the doctor after the presentation of evidence and before the case was submitted to the 

jury. Id.

Weyerhaeuser argues that this case resembles Bocci

and asks this court to adopt the analysis of the dissenting 

opinion. Without deciding how the justiciability issue in 

Bocci should have been resolved, we note only that this case 

is unlike Bocci, even though both cases involve elements of 

a Mary Carter agreement.6

 In Bocci, the dissent’s analysis turned not on the fact that the agreement was a Mary 

Carter agreement, but on the conclusion that the agreement 

eliminated any incentive at all for the plaintiff to prosecute 

his claim against the settling defendant, the doctor. Id. at 

556. The doctor agreed to pay the plaintiff a fixed sum of 

$200,000 plus a variable amount on a sliding scale between 

zero and $800,000. The sliding scale went up or down 

depending on the plaintiff’s recovery against the non-settling defendant. Thus, proving the doctor’s fault could not 

have increased either the fixed or the variable amount. 

Instead, proving the doctor’s fault created the potential of 

decreasing the variable amount by allocating some of the 

damage award to the doctor and reducing the plaintiff’s 

recovery against the non-settling defendant.

6 This court vacated the decision of the Court of Appeals in Bocci and remanded 

the case for consideration in light of new case law on the standards for awarding 

punitive damages. Bocci v. Key Pharmaceuticals, Inc., 332 Or 39, 40, 22 P3d 758 

(2001). This court never addressed the justiciability of the dispute in Bocci.
630 Rains v. Stayton Builders Mart, Inc.

That is not true in this case. As an initial matter, 

Stayton and Weyerhaeuser were jointly and severally liable 

for plaintiffs’ damage award. Thus, establishing Stayton’s 

fault would not detract from plaintiffs’ award; it merely 

would provide plaintiffs with a second source of recovery if 

they were unable to prove that Weyerhaeuser was at fault. 

The partial settlement agreement made Stayton a more 

limited source of recovery because of the $2 million cap. 

Nevertheless, as noted above, plaintiffs would prefer a larger 

recovery against Stayton rather than a smaller one even 

though the larger recovery would add, at most, $500,000 

to the amount that plaintiffs could recover from Stayton. 

Plaintiffs would rather have that $500,000 than not have it. 

Thus, unlike the plaintiff in Bocci, plaintiffs in this case had 

an incentive to prosecute their claims against Stayton.

Accordingly, we conclude that there was sufficient 

adversity between plaintiffs and Stayton to maintain the 

justiciability of their dispute, and we affirm the trial court’s 

denial of Weyerhaeuser’s motion to dismiss.

2. Admissibility of the partial settlement agreement

Weyerhaeuser also assigns error to the trial court’s 

ruling denying Weyerhaeuser’s request to admit the partial settlement agreement in evidence at trial. According to 

Weyerhaeuser, that alleged error is prejudicial and justifies 

reversing the judgments entered against it in favor of plaintiffs and Stayton. Because plaintiffs and Stayton argue that 

Weyerhaeuser failed to preserve some of the arguments that 

it now makes, we review the procedural history of this issue 

in further detail.

As noted above, on the first day of jury selection, 

Weyerhaeuser made four oral motions to the trial court. 

After presenting its arguments on the justiciability and 

damages issues, Weyerhaeuser presented its arguments on 

the evidentiary proffer:

“The third point that was raised was that Weyerhaeuser 

would like to make use of the Mary Carter Agreement 

during the course of the presentment of evidence. We 

believe the jury has a right to know of this agreement. 

They have a right to know the terms of this agreement. 
Cite as 359 Or 610 (2016) 631

They also have a right to know that it’s insurance that’s 

paying these terms as opposed to Stayton Builders Mart, a 

small, local lumber yard.

“The Oregon Rule of Evidence, I believe it’s 811,[7] dealing 

with the presentment of insurance information, details that 

you can only discuss insurance—you cannot discuss insurance in front of a jury when it’s being used to show liability 

or negligence. But there are exceptions to that. Exceptions 

include a discussion of prejudice and other such things.

“The concern is that in typical cases where a defendant has 

insurance, a plaintiff would use that against the defendant 

and essentially show the jury, well, don’t worry about this 

defendant, whether they can pay. They have got insurance. 

And that heightens the likelihood that a jury would find 

negligence. In this case, it’s different.

“In this case, the jury will be left with the impression that 

this small, local lumber yard is potentially on the hook for a 

very large settlement. And they might think differently as 

to how to deal with the apportionment of damages if they 

were under that false impression.

“The true impression is that the money is being paid by a 

very large insurance company in Ohio, and the jury has a 

right to know that. And it is not within the exclusion as 

detailed in Oregon Rules of Evidence.”

On the fourth issue—whether to give the jury a cautionary 

instruction about the agreement—Weyerhaeuser noted that 

the trial court had already given such an instruction to most 

of the jury pool.

When Weyerhaeuser completed its arguments on all 

four issues, the trial court heard opposing arguments from 

plaintiffs and Stayton on the justiciability and damages 

issues and denied those motions. Next, the court returned 

to the question whether the settlement agreement would 

be admitted in evidence. Weyerhaeuser’s counsel stated, “I 

think the final point was just whether that agreement was 

going to be admissible for any purpose during the course of 

trial.” The court never heard arguments from plaintiff or 

Stayton in opposition to Weyerhaeuser’s motion. Instead, the 

7 In fact, it is Oregon Rule of Evidence 411.
632 Rains v. Stayton Builders Mart, Inc.

court rejected the proffer, relying on the Court of Appeals 

decision in Bocci:

“And as I understand the Bocci case, a copy of which was 

provided to me earlier * **. Based upon the ruling in Bocci, 

the Court would be consistent with that ruling and say that 

the terms of the agreement and the fact that insurance is 

involved would not be admissible at trial.”

On appeal, Weyerhaeuser challenged that ruling. 

The Court of Appeals rejected that assignment of error. 

According to the Court of Appeals, Weyerhaeuser offered 

the agreement to inform the jury of Stayton’s insurance coverage and improperly influence the jury’s allocation of fault 

and calculation of damages, which, according to the Court of 

Appeals, violated OEC 411. Rains, 264 Or App at 651 (“The 

trial court did not err by excluding the agreement on the 

basis that such an offer was improper under OEC 411.”).

Weyerhaeuser had further argued to the Court of 

Appeals that, beyond the insurance information, the agreement should have been admitted for the purpose of showing 

Stayton’s bias toward plaintiffs, thereby undermining the 

credibility of Stayton’s witnesses. With respect to those proffered grounds, the Court of Appeals faulted Weyerhaeuser 

for not offering a redacted copy of the agreement that omitted the insurance information:

“Where a party attacks the exclusion of an exhibit that contains some irrelevant material, that party has ‘the burden 

of excising the irrelevant portions of the exhibit to preserve 

the claimed error.’”

Id. at 651 (quoting Fazzolari v. Portland School Dist. No. 

1J, 78 Or App 608, 614, 717 P2d 1210 (1986), aff’d on other 

grounds, 303 Or 1, 734 P2d 1326 (1987)). Regardless, the 

Court of Appeals concluded that Weyerhaeuser had failed 

to preserve its arguments based on bias and credibility 

because the arguments that Weyerhaeuser had made to the 

trial court had focused exclusively on the relevance of the 

agreement’s insurance information. Id. at 653-54.

Moreover, the Court of Appeals interpreted the scope 

of the trial court’s ruling more narrowly than Weyerhaeuser. 

Weyerhaeuser claimed that the trial court’s pretrial ruling 
Cite as 359 Or 610 (2016) 633

precluded it from presenting arguments or cross-examining 

witnesses based on the agreement. The Court of Appeals 

pointed out, however, that the trial court itself informed the 

jury that plaintiffs and Stayton had settled and that the 

jury could use that fact only “‘as it might bear on the issues 

of credibility or believability of the witnesses who testify.’” 

Id. at 654. As a result, the Court of Appeals concluded that 

the trial court had not precluded Weyerhaeuser from relying 

on the agreement insofar as it might be relevant to Stayton’s 

bias and the credibility of its witnesses.

On review, the parties essentially reprise the arguments before this court that they made in the Court of 

Appeals. We begin with Weyerhaeuser’s argument that the 

Court of Appeals erred by upholding the trial court’s exclusion of the partial settlement agreement under OEC 411. 

OEC 411 states,

“(1) Except where lack of liability insurance is an 

element of an offense, evidence that a person was or was 

not insured against liability is not admissible upon the 

issue whether the person acted negligently or otherwise 

wrongfully.

“(2) Subsection (1) of this section does not require the 

exclusion of evidence of insurance against liability when 

offered for another purpose, such as proving agency, ownership or control, or bias, prejudice or motive of a witness.”

OEC 411.

Evidence is relevant if it has a “tendency to make 

the existence of any fact that is of consequence to the determination of the action more probable or less probable than 

it would be without the evidence.” OEC 401. In this case, 

lack of liability insurance is not an element of any claim at 

issue. As a result, the trial court could not admit evidence 

tending to establish that Stayton had liability insurance if 

Weyerhaeuser offered the evidence for the purpose of proving that Stayton “acted negligently or otherwise wrongfully.” 

OEC 411(1). Thus, to the extent that Weyerhaeuser offered 

the agreement to show that its references to insurance bore 

on the issue of Stayton’s fault, the trial court did not err in 

excluding the agreement from evidence on that ground.
634 Rains v. Stayton Builders Mart, Inc.

But, the trial court could have admitted the

agreement—including its references to liability insurance—

if Weyerhaeuser had offered that evidence for a permissible 

purpose. OEC 411(2). Weyerhaeuser had argued before the 

trial court that the agreement was relevant to defeat the 

inference that Stayton was a small company that—in contrast to Weyerhaeuser—would find it difficult to pay a large 

damage award. However, whether a damage award against 

Stayton would be paid by a large and well-heeled company 

or a small company was not a fact of legal consequence—i.e., 

a material fact—in this case. As a result, the partial settlement agreement was irrelevant, and thus inadmissible, for 

that purpose. See State v. Cunningham, 337 Or 528, 536, 

99 P3d 271 (2004) (holding that relevancy determinations 

present questions of law).

As noted, the only remaining ground for admitting 

the agreement that Weyerhaeuser has asserted is that it 

was relevant to show Stayton’s bias and to attack the credibility of its witnesses. And, as further noted, the Court of 

Appeals rejected that argument as unpreserved. Rains, 264 

Or App at 654. We now turn to that issue.

To preserve a claim of error with respect to excluded 

evidence, “the substance of the evidence [must have been] 

made known to the court by offer or was apparent from the 

context within which questions were asked.” OEC 103(1)(b).

“One method of making an offer of proof is by question and 

answer. It also is acceptable, however, for a party’s counsel 

to state what the proposed evidence is expected to be.” State 

v. Phillips, 314 Or 460, 466, 840 P2d 666 (1992).

We review the sufficiency of Weyerhaeuser’s proffer by considering whether the offer fulfilled the purposes 

that underlie the preservation requirement. See State v. 

Stevens, 328 Or 116, 122, 970 P2d 215 (1998) (“[I]n considering whether an objection at trial raised the ‘issue’ being 

advanced on appeal, an appellate court must view the facts 

in light of the purposes of fairness and efficiency that underlie the requirement.”). “One purpose of an offer of proof is to 

assure that appellate courts are able to determine whether 

the ruling was erroneous.” State v. Olmstead, 310 Or 455, 

461, 800 P2d 277 (1990). “Another purpose of an offer of proof 
Cite as 359 Or 610 (2016) 635

is to assure that the trial court can make an informed decision. An offer of proof permits the parties to raise additional 

arguments, if appropriate, and gives the court an opportunity to reconsider its ruling and correct any error.” Id.

The parties dispute whether Weyerhaeuser sufficiently informed the trial court that it wanted to use the 

agreement to establish Stayton’s bias and to attack the 

credibility of Stayton’s witnesses. Before discussing the 

insurance information in the partial settlement agreement, 

Weyerhaeuser told the trial court,

“The third point that was raised was that Weyerhaeuser 

would like to make use of the Mary Carter Agreement 

during the course of the presentment of evidence. We believe 

the jury has a right to know of this agreement. They have 

a right to know the terms of this agreement.”

Weyerhaeuser insists that those statements sufficiently raised the issues of bias and witness credibility. As 

noted above, the evidentiary issue was the third of four issues 

that Weyerhaeuser raised in its oral motions, all related to 

the partial settlement agreement. The first concerned justiciability and was premised on the claim that the partial 

settlement agreement provided Stayton with the motivation 

to help plaintiffs establish Weyerhaeuser’s liability. The 

fourth motion sought a cautionary jury instruction on the 

partial settlement agreement. Weyerhaeuser appeared to 

find acceptable the instruction that the trial court had given 

earlier that day, which informed the jury pool of the partial 

settlement agreement and stated that jurors could consider 

the fact of the settlement only for the purposes of assessing 

the bias and credibility of the witnesses. Given that context, 

it is not wholly implausible to read the sentences quoted 

above as indicating that Weyerhaeuser intended to use the 

partial settlement agreement during the presentation of evidence because it believed that the jury had a right to know 

that the agreement created financial incentives for Stayton 

to assist plaintiffs.

But that impression of Weyerhaeuser’s focus—as 

a continuation of earlier arguments focused on bias and 

motive—ignores other context indicating that Weyerhaeuser 

was offering the agreement to show that Stayton had 
636 Rains v. Stayton Builders Mart, Inc.

insurance coverage. After stating that the jury had a right 

to know the terms of the agreement, Weyerhaeuser devoted 

the remainder of its argument to discussing how the jury 

could make use of the fact that a large company would likely 

pay Stayton’s liability. The closest Weyerhaeuser came to 

referring to bias and credibility is when its counsel stated 

that OEC 411 does not prohibit offering evidence of insurance information to establish “prejudice.” But in the context 

of Weyerhaeuser’s argument, the reference to “prejudice” 

referred to Weyerhaeuser’s concern that the jury would 

improperly base its verdict on sympathy for the smaller company, Stayton.

Because, in offering the partial settlement agreement in evidence at trial, Weyerhaeuser did not apprise the 

trial court that the agreement—appropriately redacted—

was independently relevant to show Stayton’s bias and to 

attack the credibility of Stayton’s witnesses, and because 

the agreement was inadmissible for the purposes that 

Weyerhaeuser did assert before the trial court, we conclude 

that the trial court did not err in excluding it from evidence.

B. Verdict Form

Before jury deliberations commenced, Weyerhaeuser 

submitted a proposed verdict form that allowed the jury to 

apportion fault to Five Star. After the close of evidence, the 

court gave the jury instructions and a verdict form that did 

not refer to Five Star. When the jury was excused to deliberate, the court asked the parties whether they had any exceptions to the jury instructions. Weyerhaeuser made exceptions 

to the jury instructions that were unrelated to whether Five 

Star should be included in the verdict form. Then Stayton 

raised an objection to the verdict form. Weyerhaeuser joined 

in that objection and then added another objection to the 

verdict form, stating,

“[W]ith the original verdict form that was submitted we 

requested that Five Star be added. I understand that was 

taken off by the court, and that plaintiffs’ counsel stipulated back in chambers that by removing it from the verdict form that it would not be a waiver of any argument 

Weyerhaeuser may make at a later date, offset from any 

sums obtained from Five Star Construction.”
Cite as 359 Or 610 (2016) 637

There is no further record establishing the reason 

Weyerhaeuser gave to the trial court for why it believed 

Five Star should have been included in the verdict form and 

no further record establishing why the trial court denied 

Weyerhaeuser’s request.

Before the Court of Appeals, Weyerhaeuser argued 

that the trial court erred because ORS 31.600(2) required 

the inclusion of Five Star on the verdict form so that the 

jury would have the option of allocating some fault to Five 

Star, rather than having only the options of apportioning 

fault among Kevin Rains, Stayton, and Weyerhaeuser. ORS 

31.600(2) provides, in part:

“The trier of fact shall compare the fault of the claimant with the fault of any party against whom recovery is 

sought, the fault of third party defendants who are liable in 

tort to the claimant, and the fault of any person with whom 

the claimant has settled.”

The Court of Appeals rejected Weyerhaeuser’s 

assignment of error on the ground that Weyerhaeuser had 

failed to make a record of any argument based on ORS 

31.600(2):

“Although the parties and the court may have had a lengthy 

off-the-record discussion about the proper verdict form that 

included discussion of whether Five Star should be on the 

form because of ORS 31.600(2), the record on appeal contains nothing that demonstrates that Weyerhaeuser made 

such an argument to the trial court. All we are left with is 

evidence that Weyerhaeuser submitted a verdict form that 

had a place to allocate fault to Five Star. We cannot say 

that, in doing so, Weyerhaeuser provided the court with 

an explanation of its objection that was specific enough to 

ensure that the court could identify its alleged error with 

enough clarity to permit it to consider and correct the error 

immediately, if correction was warranted.”

Rains, 264 Or App at 656. We agree with the Court of the 

Appeals that the record does not show that Weyerhaeuser 

asserted before the trial court the objection that it presses 

on appeal. See Shields v. Campbell, 277 Or 71, 77, 559 P2d 

1275 (1977) (“A party owes the trial court the obligation of a 

sound, clear and articulate motion, objection or exception, so 
638 Rains v. Stayton Builders Mart, Inc.

as to permit the trial judge a chance to consider the legal contention or to correct an error already made.”). Accordingly, 

even though Weyerhaeuser objected on a different ground—

one that it has not pursued on appeal—the trial court did 

not err in submitting the verdict form to the jury.8

C. Statutory Damages Cap

As noted above, the jury found that Kevin had suffered $5,237,700 in economic damages and $3,125,000 in 

noneconomic damages and that Mitzi was entitled to damages in the amount of $1,012,500 for noneconomic injuries. 

After accounting for the fact that the jury had allocated 25% 

of the fault to Kevin, plaintiffs submitted a form of limited 

judgment against Weyerhaeuser and Stayton for a total of 

$6,272,025 as to Kevin and $759,375 as to Mitzi. Of those 

amounts, approximately $2,343,750 of the damages awarded 

to Kevin was for noneconomic injuries and the entire amount 

awarded to Mitzi was for noneconomic injuries.

Weyerhaeuser objected based on ORS 31.710(1), 

which provides that “the amount awarded for noneconomic 

damages shall not exceed $500,000” in cases for damages 

arising out of bodily injury or loss of consortium. Because 

plaintiffs’ damages arose out of claims for bodily injury and 

loss of consortium, Weyerhaeuser argued that the noneconomic damage awards for both Kevin and Mitzi should be 

reduced to $500,000.

Plaintiffs responded by arguing that application of 

the statutory cap on noneconomic damages in ORS 31.710(1) 

to plaintiffs’ claims in this case would violate Article I, section 17, of the Oregon Constitution, which states that, “[i]n 

all cases the right of Trial by Jury shall remain inviolate.” 

Plaintiffs relied on this court’s opinion in Lakin v. Senco 

Products, Inc., 329 Or 62, 987 P2d 463 (1999), opinion clarified, 329 Or 369, 987 P2d 476 (1999), which held that Article I, 

section 17, “guarantees a jury trial ‘in those classes of cases 

in which the right was customary at the time the [Oregon] 

constitution was adopted or in cases of like nature.’” Id. at 

69 (quoting Molodyh v. Truck Insurance Exchange, 304 Or 

8 We reject without discussion Weyerhaeuser’s alternative argument that the 

trial court plainly erred by giving the verdict form to the jury.
Cite as 359 Or 610 (2016) 639

290, 295, 744 P2d 992 (1987)). Plaintiffs argued that the 

strict-products-liability and loss-of-consortium claims either 

were recognized at the time that the Oregon Constitution 

was adopted or were claims of a like nature.

The trial court agreed with plaintiffs, concluding 

that both claims had roots in the common law predating the 

adoption of the Oregon constitution. Thus, the trial court 

held that Article I, section 17, precluded the legislature from 

limiting noneconomic damages with respect to plaintiffs’ 

claims. The trial court therefore denied Weyerhaeuser’s 

motion to limit plaintiffs’ noneconomic damages.9

 On 

appeal, the Court of Appeals agreed with the trial court that 

Article I, section 17, shielded Mitzi’s claim for loss of consortium from the statutory damages cap in ORS 31.710(1), but 

it held that Kevin’s claim for strict products liability was not 

afforded the same protection and that the legislature could 

subject that claim to a statutory cap on noneconomic damages. Rains, 264 Or App at 659-66.

Weyerhaeuser sought review of the Court of Appeals’ 

determination that Article I, section 17, protects Mitzi’s 

claim for loss of consortium from the statutory damages cap 

in ORS 31.710(1). Petitioners, in turn, challenged the Court 

of Appeals conclusion that Article I, section 17, did not similarly protect Kevin’s claim for strict products liability.

Following the briefing in this case, this court decided 

Horton, 359 Or 168, which overturned Lakin based on this 

court’s conclusion that Article I, section 17, does not independently restrict the legislature’s ability to impose a statutory damage cap on specific claims. Id. at 244-54.10 Because 

the Court of Appeals did not have the benefit of our decision in Horton in addressing the parties’ arguments under 

Article I, section 17, we vacate its decision with respect to 

90 Although plaintiffs’ written response to Weyerhaeuser’s motion was based 

solely on Lakin and Article I, section 17, plaintiffs amended that response days 

before the hearing, adding arguments based on Article I, section 10, and Article 

VII (amended), section 3, of the Oregon Constitution. The trial court, however, did 

not consider those arguments and denied Weyerhaeuser’s motion based entirely 

on Article I, section 17.

10 In Horton, this court further held that Article I, section 10, of the Oregon 

Constitution, substantively ensures a remedy for persons injured in their person, 

property, or reputation. Id. at 218-21.
640 Rains v. Stayton Builders Mart, Inc.

the parties’ assignments of error relating to the application 

of the statutory damage cap to plaintiffs’ noneconomic damage awards and remand to that court for reconsideration of 

those assignments of error in light of Horton.

11

D. Defense Costs

After the jury trial resulted in a plaintiffs’ verdict, 

the trial court heard arguments on Stayton’s common-law 

indemnity claim against Weyerhaeuser. The elements of a 

common-law indemnity claim are:

“‘[T]he claimant must plead and prove that (1) he has discharged a legal obligation owed to a third party; (2) the 

defendant was also liable to the third party; and (3) as 

between the claimant and the defendant, the obligation 

ought to be discharged by the latter.’”

Eclectic Inv., 357 Or at 33 (quotation omitted). Among other 

arguments, Weyerhaeuser argued that Stayton failed to 

establish the first element. According to Weyerhaeuser, even 

if Weyerhaeuser and Stayton were jointly and severally liable to plaintiffs under the limited judgment, thus establishing that both Stayton and Weyerhaeuser were both liable 

to a third party—namely, plaintiffs—Stayton could not prevail, because there was no evidence that it had discharged 

its liability to plaintiffs. In fact, Stayton conceded that it 

had not paid any money to plaintiffs. Despite that concession, the trial court ruled in favor of Stayton and entered a 

limited judgment that provided:

“1. Third-party plaintiff [Stayton] is entitled to judgment against third-party defendant [Weyerhaeuser] on 

[Stayton]’s indemnity claims in the amount of $2.0 million.

“2. [Stayton] is entitled to an additional judgment from 

Weyerhaeuser for its attorney fees, costs, disbursements 

and prevailing party fee to be determined under ORCP 68.”

11 Depending on the Court of Appeals’ resolution of the parties’ arguments 

under Article I, section 17, it may be appropriate for that court to consider plaintiffs’ alternative challenges to the application of the statutory damage cap to 

their claims based on Article I, section 10, as interpreted in Horton. We express 

no opinion on that issue, nor do we express any opinion as to whether that issue 

was properly raised, preserved, or developed below, and leave those questions, in 

the first instance, to the Court of Appeals on remand.
Cite as 359 Or 610 (2016) 641

After conducting proceedings under ORCP 68, the trial court 

determined that the additional judgment from Weyerhaeuser 

to Stayton would be in the sum of $265,458.70. The trial 

court included that award in the general judgment against 

Weyerhaeuser.

On appeal, Weyerhaeuser renewed its challenge to 

Stayton’s indemnity claim and asked the Court of Appeals 

to reverse the limited judgment quoted above. The Court of 

Appeals agreed and held that Stayton was required to discharge its liability to plaintiffs in order to prevail on its indemnity claim against Weyerhaeuser. Rains, 264 Or App at 669. 

According to the Court of Appeals, to satisfy that element, 

Stayton either was required to actually discharge the limited 

judgment or establish that its settlement agreement with plaintiffs “‘brought peace’ for Weyerhaeuser.” Id. Because Stayton 

acknowledged that neither of those acts had occurred, id., the 

Court of Appeals “reverse[d] the limited judgment entered for 

Stayton on its indemnity claim[.]” Id. at 678.12

In addition to arguing that the limited judgment in 

favor of Stayton should be reversed, Weyerhaeuser raised 

assignments of error that challenged the amount that the 

trial court awarded to Stayton as defense costs. Ultimately, 

the Court of Appeals concluded that the general judgment 

overstated Stayton’s defense costs by $1,512 dollars. As a 

result, the Court of Appeals “reverse[d] and remand[ed] the 

general judgment for the trial court to reduce the judgment 

by $1,512.” Id.

Weyerhaeuser thereafter sought reconsideration 

in the Court of Appeals, asserting that it was error to 

direct the trial court to “reduce the judgment by $1,512” 

and, instead, that the Court of Appeals simply should have 

reversed the general judgment because the limited judgment establishing Stayton’s right to defense costs was itself 

reversed. The Court of Appeals denied reconsideration without explanation.

On review, Weyerhaeuser asks this Court to reverse 

the general judgment without directing the trial court to 

enter a new dollar amount as defense costs owed to Stayton. 

12 Stayton did not petition for review on that issue.
642 Rains v. Stayton Builders Mart, Inc.

According to Weyerhaeuser, the outcome it seeks is required 

by ORS 20.220(3), which states:

“When an appeal is taken from a judgment under ORS 

19.205 to which an award of attorney fees or costs and disbursements relates:

“(a) If the appellate court reverses the judgment, the 

award of attorney fees or costs and disbursements shall be 

deemed reversed[.]”

We agree with Weyerhaeuser’s reading of ORS 

20.220(3). The limited judgment establishing that Stayton 

prevailed on its indemnity claim “relates” to the award of 

attorney fees and costs in the general judgment. That is so 

because a claimant seeking common-law indemnification 

has no right to recover defense costs without first establishing its success on the common-law indemnity claim. See

Eclectic Inv., 357 Or at 331 (“Even if the county is correct 

that a claim for common-law indemnity includes a claim for 

attorney fees, it is incorrect that a defendant has an independent claim for attorney fees when the plaintiff’s claim 

for restitution itself is not viable.”); see also ZRZ Realty 

v. Beneficial Fire and Casualty Ins., 349 Or 117, 150, 241 

P3d 710, 729 (2010), opinion adh’d to as modified on recons,

349 Or 657, 249 P3d 111 (2011) (holding that the Court of 

Appeals erred by reversing a fee award based on its reversal of another claim that had no effect on the party’s right 

to attorney fees). Because the limited judgment establishing Stayton’s right to indemnification relates to the general 

judgment awarding Stayton defense costs, the reversal of 

the limited judgment means that the general judgment 

awarding Stayton defense costs “shall be deemed reversed.” 

ORS 20.220(3).13

The Court of Appeals decision states that the general judgment is “reversed,” rather than modified. Rains, 

13 Stayton briefly asserts that Weyerhaeuser failed to preserve its statutory 

argument because Weyerhaeuser did not raise it until its motion for reconsideration to the Court of Appeals. We reject that assertion. Weyerhaeuser asked the 

Court of Appeals to reverse both the limited judgment for indemnity that was 

the only possible source of Stayton’s entitlement to defense costs as well as the 

general judgment for defense costs. ORS 20.220(3) was a source of authority that 

supported Weyerhaeuser’s preserved argument. On the merits, Stayton’s opposing interpretation of the statute is difficult to follow and not well taken.
Cite as 359 Or 610 (2016) 643

264 Or App at 678. But the decision also remanded the general judgment “with instructions to reduce the judgment by 

$1,512, otherwise affirmed.” Id. It is not clear whether the 

Court of Appeals intended for the trial court to reduce its 

calculation of Stayton’s defense costs and award that amount 

in a judgment that is immediately enforceable or reduce its 

calculation of Stayton’s defense costs that would be awarded 

should Stayton ever establish its claim for common-law 

indemnification.

There is no need to parse the Court of Appeals decision for an answer. We conclude that ORS 20.220(3) requires 

the general judgment awarding defense costs to be reversed 

along with the underlying judgment for common-law indemnity. To the extent that the Court of Appeals decision is 

inconsistent with that conclusion, it is reversed.

III. CONCLUSION

The decision of the Court of Appeals with respect to 

the parties’ assignments of error concerning the statutory 

cap on noneconomic damages based on Article I, section 17, is 

vacated, and those assignments are remanded to that court 

for reconsideration in light of this court’s decision in Horton. 

Further, the decision of the Court of Appeals is reversed to 

the extent that it is inconsistent with our holding that ORS 

20.220(3) requires the general judgment awarding defense 

costs to be reversed. The decision of the Court of Appeals is 

otherwise affirmed. The limited judgment for indemnity in 

favor of Stayton against Weyerhaeuser is reversed, and the 

general judgment in favor of Stayton for costs on Stayton’s 

indemnity claim against Weyerhaeuser is reversed.