Title: McGraw v. Gwinner
Citation: 282 Or. 393, 578 P.2d 1250
Docket Number: N/A
State: Oregon
Issuer: Oregon Supreme Court
Date: May 23, 1978

578 P.2d 1250 (1978)
282 Or. 393
Michael A. McGraw, Appellant,
v.
Donald GWINNER and Reliance Insurance Company, Defendants, Oregon Insurance Guaranty Association, Respondent.

Supreme Court of Oregon, Department 1.
Decided May 23, 1978.
Argued and Submitted March 7, 1978.
Karen C. Allan, Medford, argued the cause for appellant. On the brief was James L. Sutherland, of Frohnmayer &amp; Deatherage, Medford.
Austin W. Crowe, Jr., Portland, argued the cause for respondent. With him on the brief were Cosgrave &amp; Kester, Portland.
Before DENECKE, C.J., HOLMAN and LENT, JJ., and THORNTON, J. Pro Tem.
DENECKE, Chief Justice.
The plaintiff allegedly negligently injured the defendant Gwinner. Gwinner sued plaintiff. Plaintiff's insurer became insolvent and the defendant Oregon Insurance Guaranty Association (OIGA) became plaintiff's insurer by operation of statute. ORS 734.570.[1] OIGA refused to defend plaintiff in the action brought by Gwinner.[2]
Plaintiff filed this declaratory judgment action seeking a declaration that OIGA was obligated to defend him and in the event Gwinner recovered a judgment against the plaintiff that OIGA was obligated to pay such judgment up to the limits of plaintiff's policy.
The trial court held for the plaintiff on both contentions. However, the trial court denied plaintiff's request for attorney fees.
*1251 OIGA contends that no attorney fees are payable because plaintiff failed to satisfy the condition that a money judgment is required under the statute. ORS 743.114.[3]
We have decided several cases involving different facets of this issue. First National Bank v. Malady, 242 Or. 353, 360, 408 P.2d 724 (1966), was a declaratory judgment proceeding initiated by a liability insurance company to determine its coverage for an accident. William J. Masters, as representative of Russell Sheets, deceased, was named a defendant. Sheets was a possible omnibus insured of the insurer and possibly liable for the accident. The insurance company was found to have coverage. Masters sought attorney fees. We denied his claim stating: "We can find no basis for the allowance of attorney fees. It is apparent that ORS 736.325 [now ORS 743.114] does not apply to this case." 242 Or. at 360, 408 P.2d  at 727.
Oregon Mutual Ins. v. Hollopeter, 251 Or. 619, 447 P.2d 391 (1968), was a declaratory judgment proceeding brought by the liability insurer. We affirmed the trial court's judgment that the insurer covered the defendant Hollopeters. No attorney fees were sought. The Hollopeters then filed a lawsuit against their insurer seeking reimbursement for collision damage to their automobile, medical expenses and attorney fees in the action for reimbursement and in the earlier declaratory judgment proceeding. We affirmed a judgment for collision damage, medical expenses and attorney fees in the reimbursement action but reversed an allowance of fees in the previous declaratory judgment proceeding. In that case, Hollopeter v. Oregon Mutual Ins., 255 Or. 73, 464 P.2d 316 (1970), we stated:
Hardware Mut. Cas. v. Farmers Ins., 256 Or. 599, 474 P.2d 316 (1970), was a declaratory judgment proceeding instituted by the liability carrier. Hardware Mutual insured World Wide Dodge. One Bonsor, while driving a World Wide Dodge vehicle injured Grace Beliel who sued Bonsor and recovered judgment against him. Bonsor and Beliel were defendants in the declaratory judgment proceeding and counterclaimed for the unpaid portion of Beliel's judgment against Bonsor. The trial court held Bonsor was covered by Hardware Mutual and entered a money judgment for Bonsor against Hardware Mutual and ordered the money paid into court to be paid to Beliel in satisfaction of her judgment against Bonsor. The trial court, however, denied Bonsor's and Beliel's claim for attorney fees because this was a declaratory judgment proceeding. We reversed the denial of attorney fees. We noted that Williams v. Stockman's Life Ins., 250 Or. 160, 441 P.2d 608 (1968), was a declaratory judgment proceeding in which the insured was awarded attorney fees. We stated:
In Hartford v. Aetna/Mt. Hood Radio, 270 Or. 226, 236, 527 P.2d 406 (1974), the plaintiff instituted a declaratory judgment proceeding to determine whether it had coverage and, if so, the amounts it and other concerned insurance companies were obligated to pay for damage to the insured's television tower. One defendant, Western Fire Insurance Company, denied it had any coverage. Prior to suit Hartford and Western paid the insured amounts equaling the highest amount for which they might be liable. However, the payments were made pursuant to a loan receipt agreement which provided that the insurer's liability could be litigated and the insured would have to repay any amounts which the court found the insurers were not obligated to pay. The insured, Mt. Hood Radio, contended Hartford and Western both had coverage and also asked for attorney fees and interest on moneys which became due from the insurers, interest to run from the date the moneys should have been paid to the date the moneys were paid pursuant to the loan receipt.
We reversed the trial court and held attorney fees and interest were payable. We reasoned:
We cited Hardware Mut. Cas. v. Farmers Ins., supra, 256 Or. 599, 474 P.2d 316, in support of these statements, but did not cite Malady or Hollopeter or allude to the distinction made in Hardware Mutual between Hardware Mutual and Malady and Hollopeter. We now conclude either that Hartford changed the law without expressing the change or that in Hartford we were of the opinion that the insured's judgment for interest was a sufficient "plaintiff's recovery" to invoke the statute providing for attorney fees. Admittedly, we did not articulate this latter rationale.
In our most recent review of these decisions, we impliedly accepted the view that Hartford rested the insured's recovery on its counterclaim for interest. Travelers Insurance Co. v. Plummer, 278 Or. 387, 391, 563 P.2d 1218, 1220 (1977):
We adhere to the proposition that in order to secure attorney fees pursuant to ORS 743.114, the insured must recover a money judgment against the insurer; it is not sufficient that the insured establish coverage which may in turn lead to a subsequent recovery of money. That proposition was clearly the law until our decision in Hartford. That also is clearly a requirement of the statute. ORS 743.114 provides that an insured has a right to attorney fees when he can establish that "the plaintiff's recovery exceeds the amount of any tender made by the defendant in such action * * *."
If the claim of the insured has not progressed to the stage where the insured can request and secure a money judgment against the insurer, the legislature did not contemplate that attorney fees were awardable.
Affirmed.
[1]  ORS 734.570(2):

"[OIGA shall:] be the insurer to the extent of the association's obligation on the covered claims and to such an extent have all the rights, duties and obligations of the insolvent insurer as if the insurer had not become insolvent."
[2]  The reason OIGA refused to defend was because Gwinner had uninsured motorist coverage and under the applicable statutes the priority between OIGA's coverage and the uninsured motorist coverage was in doubt. The trial court determined that priority and that part of its decisions is not in issue on appeal. The priority has now been clarified by the 1977 legislature. ORS 734.640(3).
[3]  ORS 743.114:

"If settlement is not made within six months from the date proof of loss is filed with an insurer and an action is brought in any court of this state upon any policy of insurance of any kind or nature, and the plaintiff's recovery exceeds the amount of any tender made by the defendant in such action, a reasonable amount to be fixed by the court as attorney fees shall be taxed as part of the costs of the action and any appeal thereon."