Title: Mid-Century Ins. Co. v. Perkins
Citation: N/A
Docket Number: S054652
State: Oregon
Issuer: Oregon Supreme Court
Date: October 16, 2008

FILED: October 16, 2008
IN THE SUPREME COURT OF THE STATE OF OREGON
MID-CENTURY INSURANCE COMPANY,
Respondent on Review,
v.
ELIJAH PERKINS,
Petitioner on Review.
(CC 04-1834-E7; CA A127522; SC S054652)
DENNIS W. PHILLIPS,
Petitioner on Review,
v.
SAFECO INSURANCE COMPANY OF OREGON,
Respondent on Review.
(CC 0504-03584; CA A130265; SC S054660)
(Consolidated for opinion)
En Banc
On petitioner for review Perkins' petition for
reconsideration filed March 20, 2008; considered and under advisement May 21,
2008.*
Meagan A. Flynn, Preston Bunnell &amp; Flynn,
LLP, Portland, filed the petition for petitioner on review Perkins.
Thomas M. Christ, of Cosgrave Vergeer Kester
LLP, Portland, filed the brief for respondent on review Mid-Century Insurance
Company.
No appearance on behalf of petitioner on review
Phillips or respondent on review Safeco Insurance Company of Oregon.
Kathryn H. Clarke, Portland, filed the brief for
amicus curiae Oregon Trial Lawyers Association.
No appearance on behalf of amicus curiae
Allstate Ins. Co., State Farm Mutual Auto Ins. Co., Country Mutual Ins. Co.,
American Family Ins. Co., and The Property Casualty Insurers Association of
America.
DURHAM, J.
The petition for reconsideration is allowed. 
The former opinion is modified and adhered to as modified.
*344 Or 196, 179 P3d 633 (2008).
DURHAM, J.
Petitioner on review
Perkins in this underinsured motorist insurance case seeks reconsideration of
this court's decision.(1) 
Mid-Century Ins. Co. v. Perkins, 344 Or 196, 179 P3d 633 (2008).  Petitioner,
however, does not challenge the court's ultimate conclusion or resolution of
the issue presented by this case.  Instead, petitioner requests only that this
court remove two sentences from the penultimate paragraph of its opinion.  For
the reasons that follow, we agree with petitioner and modify our original
opinion by removing those two sentences from the opinion of the court.
Petitioner -- the
insured in the dispute that gave rise to one of the underlying proceedings -- and
amicus curiae Oregon Trial Lawyers Association (OTLA) take issue with
the following paragraph from this court's opinion: 
"[In Bergmann v. Hutton, 337 Or 596, 608, 101
P3d 353 (2004),] [w]e noted that ORS 742.502(2)(a) 'essentially defines the
limit of the insurer's liability in the UIM context' by providing 'that UIM
benefits are "equal to uninsured motorist coverage benefits less the
amount recovered from other automobile liability insurance policies."' * *
*  ORS 742.502(2)(a) establishes that, regardless of an insured's actual
damages, the insurer's liability will never exceed an amount totaling the
benefits available under uninsured motorist coverage, i.e., the policy limit,
minus the amount that the insured recovers from other policies.  In other
words, UIM benefits are intended to fill the gap between the limit of an
insured's UM coverage and the amount that he or she actually receives from
another motorist."
Id. at 217
(emphasis added).  Petitioner and OTLA focus on the two highlighted sentences
because, they contend, in those two sentences, the court purported to interpret
the concluding sentence of ORS 742.502(2)(a), although that part of ORS
742.502(2)(a) was not at issue in this case.  The last sentence of ORS 742.502(2)(a)
focuses on how to determine the amount of underinsurance benefits:  "Underinsurance
benefits shall be equal to uninsured motorist coverage benefits less the amount
recovered from other automobile liability insurance policies."
As petitioner and
OTLA note, however, this case "deal[t] with the threshold question of
whether a motorist is underinsured at all."  Mid-Century, 344 Or at
217.  Therefore, we needed to interpret only the sentence in ORS 742.502(2)(a)
that governed that "threshold question":  
"Uninsured motorist coverage larger than the amounts
required by ORS 806.070 shall include underinsurance coverage for damages or
death caused by accident and arising out of the ownership, maintenance or use
of a motor vehicle that is insured for an amount that is less than the
insured's uninsured motorist coverage."
(Emphasis added.)  Specifically, this case
required us to determine the meaning of the phrase "the insured's
uninsured motorist coverage," highlighted above.  If that phrase referred "to
the damages that the insured is legally entitled to recover from a
motorist, then a motorist is underinsured when those damages exceed the limits
of his liability policy, as [petitioner] claim[s]."  Mid-Century,
344 Or at 207-08 (emphasis in original).  On the other hand, if that phrase
referred to "the policy limits on the insured's [uninsured
motorist] coverage, then a motorist is underinsured when those policy limits
exceed the limits of his own liability policy, as [the insurer] claim[s]." 
Id. at 208 (emphasis in original).  After reviewing the statutory text
and context, we ultimately agreed with the insurer that "the insured's
uninsured motorist coverage" referred to the policy limits of that
coverage and held that whether a motorist is underinsured under ORS
742.502(2)(a) is determined by comparing the motorist's liability limits with
the limits on the insured's uninsured motorist coverage.  Id. at 216. 
In this case, petitioner's liability limits were equal to the liability limits
of the motorists who injured each plaintiff in the underlying proceedings;
therefore, petitioner was not injured by an underinsured motorist and was not
entitled to underinsured motorist benefits under ORS 742.502(2)(a).  Id.
at 218.
In reaching our
conclusion, we addressed petitioner's argument that this court's decision in Bergmann
v. Hutton, 337 Or 596, 101 P3d 353 (2004), mandated his proffered
interpretation of ORS 742.502(2)(a).  Bergmann involved the
interpretation of the phrase "[a]ny amount payable under the terms of this
coverage" in ORS 742.504(7)(c), which governs the reduction of any amounts
payable under uninsured motorist coverage under certain circumstances.(2)  Id. at 603. 
Specifically, in Bergmann, the court concluded that the phrase "amount
payable under the terms of this coverage" in ORS 742.504(7)(c) referred to
an insured's total damages, not to the policy's liability limit.  Id.
Based on that conclusion
in Bergmann, petitioner contended in this case that "coverage,"
as used in ORS 742.502(2)(a), must refer to an insured's damages and,
therefore, required a comparison of an insured's damages to the policy limits
of the other motorist to determine whether the motorist is underinsured. 
According to petitioner, if we failed to construe "coverage" in ORS
742.502(2)(a) to have the same meaning as "coverage" in ORS
742.504(7)(c), we would have created an untenable inconsistency among the
statutes governing underinsured motorist insurance.  We rejected petitioner's
argument based on Bergmann for two reasons.  First, we emphasized that Bergmann
did not address the threshold question whether a motorist is underinsured under
ORS 742.502(2)(a).  Mid-Century, 344 Or at 217.  Instead, Bergmann
interpreted a different section of the uninsured motorist statute, one not at
issue in this case.
The second reason
that we offered for rejecting petitioner's Bergmann argument is the
subject of this petition for reconsideration.(3) 
We first stated that this court "already considered this supposed problem
in Bergmann" and quoted Bergmann's statement that ORS
742.502(2)(a) provides that "[underinsured motorist] benefits are 'equal
to uninsured motorist coverage benefits less the amount recovered from other
automobile liability insurance policies.'"  Id. (quoting Bergmann,
337 Or at 608).  Our opinion went on to include the two sentences, highlighted
above, that petitioner and OTLA would like to have excised.  Those sentences
provided additional interpretation, beyond that in Bergmann, of the
concluding sentence of ORS 742.502(2)(a).  That interpretation appears to
establish the limits of the amount of an insurer's liability for underinsured
motorist benefits.
In this case,
however, we had no need to address or even discuss the limit of an insurer's
liability for underinsured motorist benefits.  Petitioner was not entitled to any
underinsurance benefits, because his policy limits were equal to those of the
other motorist.  Therefore, this case presented no reason to interpret the
sentence of ORS 742.502(2)(a) that governs how to determine the amount of
underinsurance benefits.  We agree with petitioner and OTLA that the
interpretation of the concluding sentence on ORS 742.502(2)(a) is best left to
a case where the issue is presented and has been fully briefed and argued.(4)
We therefore allow
petitioner's petition for reconsideration and modify the opinion of the court
in the following two ways:  (1) by changing the sentence, "Bergmann
dealt with the question of how much an insured may recover from an underinsured
motorist in light of benefits that the insured receives from other sources,"
Mid-Century, 344 Or at 217, to read:  "Bergmann dealt with
the question of how much an insured may recover from an underinsured motorist
insurer in light of benefits received from other sources," see ___
Or ___ at n 3 (slip op at ____ n 3); and (2) by removing the following two
sentences:  "ORS 742.502(2)(a) establishes that, regardless of an insured's
actual damages, the insurer's liability will never exceed an amount totaling
the benefits available under uninsured motorist coverage, i.e., the
policy limit, minus the amount that the insured recovers from other policies. 
In other words, UIM benefits are intended to fill the gap between the limit of
an insured's UM coverage and the amount that he or she actually receives from
another motorist."  Mid-Century, 344 Or at 217.
The petition for
reconsideration is allowed.  The former opinion is modified and adhered to as
modified.
1. In
its opinion, the court consolidated its review of two actions:  Mid-Century
Ins. Co. v. Perkins, 209 Or App 613, 149 P3d 165 (2006), and 
Phillips v. Safeco Ins. Co., 209 Or App 815, 149 P3d 316 (2006).  The
petitioner on review in Mid-Century is the party seeking
reconsideration.  For the sake of simplicity, we refer in this opinion to
petitioner on reconsideration Perkins as "petitioner."
2. At
the time we decided Bergmann, ORS 742.504(7)(c) (2003) provided:
"Any
amount payable under the terms of this coverage because of bodily injury
sustained in an accident by a person who is an insured under this coverage
shall be reduced by:
"(A) All sums paid on
account of such bodily injury by or on behalf of the owner or operator of the
uninsured vehicle and by or on behalf of any other person or organization
jointly or severally liable together with such owner or operator for such
bodily injury including all sums paid under the bodily injury liability
coverage of the policy; and 
"(B) The amount paid
and the present value of all amounts payable on account of such bodily injury
under any workers' compensation law, disability benefits law or any similar
law."
3. OTLA
also asks this court to correct an asserted minor misstatement in our earlier
discussion of Bergmann.  Our opinion stated that "Bergmann
dealt with the question of how much an insured may recover from an uninsured
motorist in light of benefits that the insured received from other
sources."  Mid-Century, 344 Or at 217 (emphasis added).  OTLA
asserts that the sentence instead should read:  "Bergmann dealt
with the question of how much an insured may recover from the underinsured
motorist insurer [that is, petitioner's insurer] in light of benefits that
the insured receives from other sources."  We agree with OTLA and make
that modification to our opinion.
4. The
Court of Appeals has addressed the meaning of the last sentence in ORS
742.502(2)(a) in two recent decisions:  Vogelin v. American Family Mutual
Ins. Co., 221 Or App 558, 191 P3d 687 (2008), and Albarran v. Allstate
Ins. Co., 221 Or App 701, 191 P3d 735 (2008) (per curiam).