Court Opinion

ID: 4122674
Source: CourtListenerOpinion
Date Created: 2017-02-02 16:12:09.733167+00
Date Added: 2024-06-11T14:37:13.945745
License: Public Domain

No. 3	                       February 2, 2017	791

              IN THE SUPREME COURT OF THE
                    STATE OF OREGON

                        Cary LONG,
                    Petitioner on Review,
                              v.
                  FARMERS INSURANCE
                  COMPANY OF OREGON,
                   Respondent on Review.
           (CC 12C23950; CA A156674; SC S063701)

    On review from the Court of Appeals.*
    Argued and submitted September 19, 2016.
   Calvin P. Vance, Law Office of Calvin Vance, Spokane,
Washington, argued the cause and filed the brief for peti-
tioner on review. Also on the brief was Kristian Roggendorf,
Roggendorf Law LLC, Lake Oswego.
   Francis J. Maloney, Maloney Lauersdorf Reiner PC,
Portland, argued the cause and filed the brief for respondent
on review. Also on the brief was Janis C. Puracal.
   Charles Robinowitz, Law Offices of Charles Robinowitz,
Portland, filed the brief on behalf of amicus curiae Oregon
Trial Lawyers Association.
  Before Balmer, Chief Justice, and Kistler, Walters,
Landau, Baldwin, and Brewer, Justices, and Sercombe,
Judge of the Court of Appeals, Justice pro tempore.**
    WALTERS, J.
   The decision of the Court of Appeals is reversed. The
judgment of the circuit court is reversed, and the case is
remanded to the circuit court to award attorney fees in
accordance with this opinion.

______________
	**  Appeal from Marion County Circuit Court, Thomas Hart, Judge. 273 Or
App 821, 362 P3d 1215 (2015)
	   **  Nakamoto, J., did not participate in the consideration or decision of this
case.
792	                                             Long v. Farmers Ins. Co.

    Case Summary: After failing to reach a settlement with her homeowner’s
insurer over losses resulting from a leak in her home, plaintiff brought an action
against the insurer, alleging that it had breached the insurance policy by refus-
ing to pay the entire amount that was due under the policy and by refusing to
submit to an appraisal process that she had requested. Defendant thereafter
agreed to submit to the requested appraisal. When the appraisal panel returned
an appraisal that significantly exceeded the amount that defendant already had
paid plaintiff on the claim, defendant immediately paid the appraisal amount
to plaintiff, less certain items as to which it disputed coverage. The litigation
continued over those disputed items, and the jury eventually returned a verdict
for defendant. Plaintiff then sought attorney fees under ORS 742.061, which
requires an insurer to pay its insured’s attorney fees if, in the insured’s action
against the insurer, the insured obtains a “recovery” that exceeds the amount
of any tender made by the insurer in the first six months after it received the
insured’s proof of loss. Plaintiff argued that, although she had not technically
prevailed in her action against defendant, she had obtained a “recovery” for pur-
poses of ORS 742.061 because, after she filed the action, defendant had actually
paid her more than it had offered her during the first six months after it received
her proof of loss. The trial court denied plaintiff’s petition, accepting defendant’s
argument that only a money judgment can qualify as a “recovery” for purposes
of ORS 742.061. The Court of Appeals affirmed. Held: When an insured files
an action against an insurer to recover sums owing under an insurance policy
and the insurer subsequently pays the insured more than the amount of any
tender made within six months of the insured’s proof of loss, the insured obtains
a “recovery” within the meaning of ORS 742.061 that entitled the insured to an
award of reasonable attorney fees.
    The decision of the Court of Appeals is reversed. The judgment of the circuit
court is reversed, and the case is remanded to the circuit court to award attorney
fees in accordance with this opinion.
Cite as 360 Or 791 (2017)	793

	       WALTERS, J.
	        ORS 742.061 requires an insurer to pay its insured’s
attorney fees if, in the insured’s action against the insurer,
the insured obtains a “recovery” that exceeds the amount
of any tender made by the insurer within six months from
the date that the insured first filed proof of a loss. In this
case, we decide that, when an insured files an action against
an insurer to recover sums owing on an insurance policy
and the insurer subsequently pays the insured more than
the amount of any tender made within six months from the
insured’s proof of loss, the insured obtains a “recovery” that
entitles the insured to an award of reasonable attorney fees.
	        Although the parties dispute many of the facts in
this case, the facts that are essential to our review are not
disputed. On December 20, 2011, plaintiff discovered a leak
under her kitchen sink, which had caused extensive damage
to her home, and filed a claim with her insurer, Farmers
Insurance Company of Oregon (Farmers). On January 17,
2012, Farmers voluntarily paid plaintiff a sum that it deter-
mined constituted the actual cash value of plaintiff’s losses
less a deductible—the sum of $3,300.45. At around that
time, it also paid plaintiff $2,169.22 in mitigation expenses.
On January 17 and 31, 2012, plaintiff submitted to Farmers
a proof of loss that included estimates of her mitigation costs
and the actual cash value of her losses that far exceeded
the sum that Farmers had paid her. Because plaintiff had
not yet replaced any of the damaged items, she did not, at
that time, submit a proof of loss that included the replace-
ment cost of her losses. A year later, the parties had not
resolved plaintiff’s claim, and in January 2013, plaintiff ini-
tiated this action. In her complaint, plaintiff alleged, among
other things, that Farmers had not paid the sums due
under her policy of insurance and had failed to submit to an
appraisal process that she had demanded. In its answer to
plaintiff’s complaint, Farmers admitted that plaintiff was
entitled to appraisal under the terms of the policy, and the
trial court ordered the parties to submit to and complete
the appraisal process by July 22, 2013. After the appraisal
process was completed, Farmers made two additional vol-
untary payments to plaintiff. Farmers paid plaintiff the
794	                                           Long v. Farmers Ins. Co.

sum of $2,467.09 on July 11, 2013, and the sum of $4,766.80
on August 14, 2013. Those sums reflected the actual cash
value that appraisers had assigned to certain of plaintiff’s
claimed losses—the losses for which Farmers did not dispute
coverage—as well as the appraisers’ assessment of plain-
tiff’s mitigation costs.
	         Six months later, in February 2014, shortly before
trial, plaintiff submitted proof of loss for the replacement
cost of her losses. Three days later, Farmers voluntarily paid
plaintiff a sum that it determined constituted the replace-
ment cost of plaintiff’s undisputed losses - $4,214.18. The
trial began the next day and was limited to issues that
remained in dispute after Farmers’ payments. In the end,
plaintiff did not recover an amount that was greater than
the amount that Farmers had paid, in total, before the
trial had begun, and the trial court entered judgment for
Farmers. Nevertheless, plaintiff filed a petition for attorney
fees under ORS 742.061. Plaintiff argued that the require-
ments of the statute had been satisfied because she had filed
an action against Farmers and thereafter had obtained a
greater sum from Farmers than it had tendered within six
months after she had submitted her initial proof of loss.
Plaintiff argued that the voluntary payments that Farmers
had made after she filed this action constituted a “recovery”
within the terms of the statute. The trial court denied plain-
tiff’s petition: It agreed with Farmers that, to constitute a
“recovery,” an insured must obtain a judgment that exceeds
a timely tender.
	        Plaintiff appealed, and the Court of Appeals
affirmed without opinion. Long v. Farmers In. Co. of Oregon,
273 Or App 821, 362 P3d 1215 (2015). We allowed plaintiff’s
petition for review to consider the attorney fee issue that we
have outlined.1 We begin our analysis with the controlling
statute—ORS 742.061(1), which provides in part:
    “Except as otherwise provided in subsections (2) and (3) of
    this section, if settlement is not made within six months

	1
      In her petition for review, plaintiff also sought review of two other trial
court rulings. Although we allowed review of those rulings, we do not discuss
them; plaintiff’s arguments lack merit, and a discussion would not benefit bench
or bar.
Cite as 360 Or 791 (2017)	795

   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 recov-
   ery exceeds the amount of any tender made by the defen-
   dant 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.”
(Emphasis added.)
	         The parties both offer interpretations of the stat-
ute that support their respective positions and that focus
on the meaning of the term “recovery.” Plaintiff argues that
the term “recovery” refers to any kind of restoration of a
loss, including a voluntary payment of a claim made after
an action on an insurance policy has been filed. Under that
interpretation, all that matters is that, after filing an action
on an insurance policy, the insured obtains more from the
insurer—whether through judgment, settlement, voluntary
payment, or some other means—than the insurer tendered
in the first six months after proof of loss. Farmers argues
that, in the context of the statute, “recovery” means a money
judgment in the action in which attorney fees are sought.
Under that interpretation, attorney fees may be had for
an insured’s action on a policy only if the insured obtains
a money judgment that exceeds any tender made by the
insurer within the first six months after the insured offers
proof of loss.
	        Resolution of the dispute is a matter of statutory
interpretation, a process that involves examining of the
applicable statute’s text and context, along with any useful
legislative history. State v. Gaines, 346 Or 160, 171-72, 206
P3d 1042 (2009). We agree with the parties that the most
germane part of the statutory text is the term “recovery.”
At all times that are relevant to the present discussion, the
word “recovery” has had both a specific, legal meaning and
a more general meaning. When the original version of what
is now ORS 742.061 was first enacted in 1919, “recovery”
could mean “the obtaining in a suit at law of a right to some-
thing by a verdict, decree or judgment of court,” but it could
also refer simply to the “act of recovering: act of regaining
or retaking possession.” Webster’s New Int’l Dictionary of
the English Language 1785 (1910 ed). Although some more
796	                                             Long v. Farmers Ins. Co.

modern dictionary definitions of the term “recovery” ignore
the more general meaning, those same dictionaries define
the root term “recover” as, among other things, “to get or
win back,” “to make good the loss, injury or cost of: make up
for.” Webster’s Third New Int’l Dictionary 1898 (unabridged
ed 2002). See also Black’s Law Dictionary 1280 (7th ed 1999)
(defining “recovery” as “1. The regaining or restoration of
something lost or taken away. 2. The obtaining of a right to
something (esp. damages) by a judgment or decree. 3. An
amount awarded or collected from a judgment or decree.”).2
In light of those varying definitions, the legislature’s choice
of the word “recovery,” is not, by itself, determinative.
	         Farmers argues, however, that other aspects of the
statute support its interpretation. Given that “recovery”
occurs in the context of a statement about a legal action (“and
an action is brought in any court of this state”), Farmers
contends that the legislature used that term in its more spe-
cific legal sense, i.e., an amount awarded by decree or judg-
ment. Supporting that interpretation, Farmers contends, is
the fact that the statute directs that “a reasonable amount
to be fixed by the court as attorney fees shall be taxed as
part of the costs of the action,” if the plaintiff’s “recovery”
exceeds any timely tender. The allowance of costs, including
attorney fees, is and always has been associated with the
issuance of a judgment. See, e.g., Oregon Laws, title I, ch VI,
§§ 561, 562 (1920) (“there may be allowed to the prevailing
party in the judgment or decree certain sums * * * for his
attorney fees”; “Costs are allowed, of course, to the plain-
tiff upon a judgment in his favor”); ORCP 68 B (costs shall
be allowed to the “prevailing party”); ORS 20.080 to ORS
20.096 (various provisions for award of attorney fees to “pre-
vailing party”); ORS 20.077 (identifying prevailing party
as “party who receives a favorable judgment or arbitration
award on the claim”). We agree that those contextual clues
suggest that the legislature may have had money judgments
in mind when it required the insured’s “recovery” to exceed
the amount of any timely tender made by the insurer.

	2
       On the other hand, the 1910 version of Black’s described the term as, “in its
most extensive sense” involving a “restoration or vindication of a right * * * by the
formal judgment or decree of a competent court,” Black’s Law Dictionary 1000-
001 (2d ed 1910).
Cite as 360 Or 791 (2017)	797

	       That is only the beginning of our contextual analy-
sis, however. We also consider as context the enactment
history of ORS 742.061 and the meaning that this court
has ascribed to it in its earlier cases. See Krieger v. Just,
319 Or 328, 336, 876 P2d 754 (1994) (considering statutory
predecessor as context); Liberty Northwest Ins. Corp., Inc.
v. Watkins, 347 Or 687, 692, 227 P3d 1134 (2010) (requir-
ing consideration of court’s previous cases as statutory
context).
	       We begin with Farmers’ argument that a differ-
ently worded predecessor to ORS 742.061 demonstrates that
the term “recovery” means “judgment.” That version of the
statute provided, in part:
    “Whenever any suit or action is brought in any of the courts
    of this state upon any policy of insurance of any kind or
    nature whatsoever, the plaintiff, in addition to the amount
    which he may recover, shall also be allowed and shall
    recover as part of said judgment, such sum as the court or
    jury may adjudge to be reasonable as attorney’s fees in said
    suit or action; * * * provided, that settlement is not made
    within six months from the date of proof of loss is filed with
    the company; provided further, that if a tender be made by
    a defendant in any such suit or action and the plaintiff’s
    recovery shall not exceed the amount thereof, then no sum
    shall be recoverable as attorney’s fees.”
Or Laws 1927, ch 184, § 1 (emphasis added).3 Farmers
argues that, by referring to the amount that plaintiff may
“recover” and then to “said judgment,” the original statute
suggests some equivalency between the two terms. There
are two problems with that argument. First, the statute
does not appear to contemplate that a plaintiff’s “recovery”
necessarily will already exist as a judgment at the time
that an attorney fee decision is made. Rather, it appears to
refer to a money award (or right thereto) that would later be
included in a judgment that also provides for attorney fees.
A range of items might qualify as a “recovery” under that
latter meaning.

	3
       The statute originally was enacted in 1919, in words that are identical to
those quoted above, except that they provided for an eight month, rather than a
six month, period for settlement. Or Laws 1919, ch 110, § 1. The change to the
six-month period for settlement occurred in 1927. Or Laws 1927, ch 184, § 1.
798	                               Long v. Farmers Ins. Co.

	        Second, it is not clear that the statute’s amendment
to eliminate reference to “said judgment” cuts in Farmers’
favor. On the one hand, one might argue that the connec-
tion between a plaintiff’s “recovery” and “said judgment” in
the earlier version of the statute informs the meaning of the
term “recovery” in the modern version. But one also could
argue that that the elimination of the word “judgment” in
the modern version suggests a specific intent by a later leg-
islature to reject any former connection between the two
terms. Again, the statute remains ambiguous.
	         We turn next to the parties’ contextual argu-
ments based on this court’s prior decisions interpreting
ORS 742.061. The parties draw our attention to three
cases. Farmers points to McGraw v. Gwinner, 282 Or 393,
400, 578 P2d 1250 (1978)—in particular, to a statement in
that case that “to secure attorney fees pursuant to [ORS
742.061’s predecessor] the insured must recover a money
judgment against the insurer.” (Emphasis added.) McGraw
was a case in which an insured negligently injured a third
party, who then sued the insured for damages. The insured’s
liability insurance carrier refused to defend the insured in
that action, and the insured filed a declaratory judgment
action, seeking a declaration that the insurer was obligated
to defend the insured and pay a judgment up to the limits
of the policy. The trial court granted the declaratory relief
that the insured sought, but, insofar as the insured had not
sought any monetary relief, there was no money judgment.
The question presented was whether the insured, never-
theless, could obtain an award of attorney fees under the
statutory predecessor to ORS 742.061. Id. at 395. The court
reviewed its prior decisions applying that statute in declar-
atory judgment actions and explained that it had distin-
guished between declaratory judgment proceedings in which
the insured had obtained a declaration of coverage and those
in which the insured had received a monetary “recovery”; it
had held that the statute applied in the latter circumstance,
but not in the former. In McGraw, the plaintiff had neither
sought nor obtained a monetary “recovery”; and the court
therefore held that the statute was inapplicable. Id. at 396-
400. In explaining that decision, the court did state that,
to secure fees under that statute, the insured must recover
Cite as 360 Or 791 (2017)	799

a “money judgment” against the insurer, but it then com-
pleted that sentence by saying that, “it is not sufficient that
the insured establish coverage which may in turn lead to
a subsequent recovery of money.” 282 Or at 400 (emphasis
added). The form of the monetary recovery was not the issue
presented in the case. Thus, although the court’s reference
to a money judgment provides some support for Farmers’
position, its reasoning does not squarely address the issue
before us.
	         Two cases that plaintiff cites, Dockins v. State
Farm Ins. Co., 329 Or 20, 985 P2d 796 (1999), and Dolan
v. Continental Casualty Co., 133 Or 252, 289 P. 1057 (1930),
also are not definitive. In Dockins, the insureds filed a
complaint against their insurer for failure to defend them
in an administrative action brought by DEQ after oil was
discovered leaking from their home oil tank. Six months
after filing their action, the insureds sent a proof of loss to
the insurer that met the formal proof of loss requirements
set out in the insurance policy. About three months after
that, the parties settled for $15,000, reserving the ques-
tion of whether the insured was entitled to attorney fees. A
stipulated order and judgment to that effect followed. The
insureds then petitioned for an award of attorney fees under
ORS 742.061. When settlement was made, more than six
months had elapsed from the date that the insureds had
filed their complaint, but less than six months had elapsed
from the date that the insureds had filed their formal proof
of loss. The trial court denied the insured’s petition for
fees, but this court reversed. The court reasoned that the
insured’s complaint served the purpose of a proof of loss in
the context of the statute: it permitted the insurer to esti-
mate its obligations. Id. at 28. Thus, the court concluded, the
insurer’s settlement offer, made more than six months after
the filing of the complaint, was not timely, and only a timely
tender could defeat the insured’s claim for attorney fees. Id.
at 26-30.
	      Plaintiff interprets Dockins to mean that, other
than the insured’s receipt of an amount that exceeds the
amount previously tendered, whether or not the tender
was timely is the only thing that determines an insured’s
800	                                 Long v. Farmers Ins. Co.

claim for attorney fees. As such, she concludes, there can
be no additional requirement that the insured’s recovery be
in the form of a judgment. But Dockins stands for no such
thing. The form of the insured’s “recovery” was not at issue
in Dockins, and the recovery that the insured obtained in
that case ultimately came in the form of a judgment (albeit
a stipulated judgment entered after the parties entered into
a settlement agreement). Dockins does not resolve the issue
before us.
	         Dolan, a case decided under the statutory prede-
cessor to ORS 742.061, is much the same. Although plain-
tiff describes that case as one in which attorney fees were
awarded in the absence of a judgment, that description is
not entirely accurate. In the original trial of the case, the
insured obtained a judgment for sums due under an insur-
ance policy and for attorney fees under the predecessor
to ORS 742.061. On appeal, however, that judgment was
reversed, and the case was remanded for retrial. Before the
retrial, the insurer filed an amended answer in which it con-
fessed its liability for the amount of the claim plus costs, but
not for the attorney fees that the insured had been awarded,
and tendered that amount to the court. The insurer then
moved for judgment on the pleadings and, over the plain-
tiff’s objection, the trial court granted the motion. 133 Or at
253-5. The insured appealed again, and the insurer argued
that its tender to the court precluded an award of fees;
the insured would not recover more than the amount that
the insurer had tendered. This court concluded otherwise.
Considering the statutory definition of “tender” in a related
statute and the legislative intent underpinning the statute,
the court concluded that the insurer’s untimely confession of
liability and tender into court did not deprive the insured of
the right to fees. Id. At 254-56. The question of whether an
insured’s recovery must be in the form of a judgment did not
figure in the court’s analysis.
	Although Dockins and Dolan did not expressly
address, and therefore do not stand for, the proposition for
which plaintiff contends—that an insured need not obtain a
judgment as a precondition to an award of fees under ORS
742.061—they nevertheless provide other helpful statutory
context. First, they demonstrate that, at least factually,
Cite as 360 Or 791 (2017)	801

this court has not limited the term “recovery” to an award
resulting from a contested trial; rather, the court has inter-
preted it to include voluntary payments made in settlement
or as a result of confession of judgment.
	Second, Dockins and Dolan demonstrate that, in
interpreting ORS 742.061 and its substantively similar pre-
decessors, the court has given the terms of the statute a
functional meaning that will advance the well-understood
purposes of the statute.4 In Dolan, the court explained:
    “Oftentimes insurance companies have contested their
    obligation to pay a loss with such persistence and vigor that
    the benefit of an insurance policy is either largely dimin-
    ished or entirely lost. * * * For that reason[,] * * * insurance
    companies are required to pay reasonable attorneys’ fees,
    where they have wrongfully defended an action to recover
    or refused to pay the loss within a reasonable time. That
    purpose would be largely destroyed if [the insurer’s] posi-
    tion in the instant case can be sustained. * * * If a judg-
    ment be reversed, as occurred in the instant case, upon
    some technical error during the progress of the trial and
    defendant’s tender will then defeat a recovery of attorneys’
    fees, notwithstanding the expensive and prolonged litiga-
    tion, the benefit of the statute is largely destroyed. When
    plaintiff was compelled to institute an action against defen-
    dant in order to recover the amount due on the policy, she
    became entitled to an attorney fee.”
133 Or at 255-56. Similarly, in Dockins, the court recog-
nized that the term “proof of loss” should be given a func-
tional meaning, i.e., one that requires a court to determine
whether an insured’s act accomplished the purpose of a
proof of loss under ORS 742.061—to give insurers adequate
information to investigate and form reasonable estimates as
to their obligations. 329 Or at 26-28.
	       Dockins and Dolan are not the only cases in which
this court has assigned a functional meaning to the terms of

	4
       This court has deemed the differently-worded predecessor to ORS 742.061
quoted above, 360 Or at__, to be “substantively identical” to ORS 742.061, and
thus has relied on cases decided under that predecessor statute in interpreting
ORS 742.061. See, e.g., Dockins, 329 Or at 27 (relying on State v. Claypool,145 Or
615, 28 P2d 882 (1934), to interpret ORS 742.061 and noting that that case was
decided under a “substantively identical predecessor of ORS 742.061”).
802	                               Long v. Farmers Ins. Co.

ORS 742.061 (or its predecessors). For example, in Groce v.
Fidelity General Insurance, 252 Or 296, 311-12, 448 P2d 554
(1969), this court considered an argument under an earlier
version of the statute that the actions at issue—brought by
an insured’s creditors against an insurer for wrongful fail-
ure to settle within the policy limits—were not actions “upon
any policy of insurance” within the meaning of the statute.
Id. at 311. This court observed that “the statute no doubt
was drawn in contemplation of the type of claim ordinarily
made by means of a ‘proof of loss’ form and for one reason or
another denied by the insurer” but concluded that “the lan-
guage of the statute * * * is broad enough to permit recovery
of attorney fees in [the case before it].” Id. The court read
the statute broadly on the ground that “[i]f attorney fees
were not allowed, the insured, or his assignees, would not be
made whole.” Id. at 312.
	In Travelers Insurance Co. v. Plummer, 278 Or 387,
563 P2d 1218 (1977), this court also looked to the attor-
ney fee statute’s purpose to determine the meaning of the
phrase “action upon any policy of insurance.” In Plummer,
the insurer had sued its insured on a loan receipt, which
the insured had signed to memorialize the insurer’s loan
of funds to the insured in return for the insured’s agree-
ment to pursue his claims against a third party and repay
the insurer if he recovered his damages. The insured had
employed an attorney to prosecute the third-party action,
and, after the attorney settled the action, the insured ten-
dered two-thirds of the amount of the loan to the insurer,
holding back the remaining third for his attorney’s fees.
The insurer rejected the tender and sued the insured for
the full amount of the loan receipt. Later, the insurer moved
to amend its pleadings to accept the tender as full satisfac-
tion of the claim under the loan receipt. However, by that
time, the insured had incurred attorney fees in the action
on the loan receipt. The trial court entered judgment for
the insured for the amount that the insurer had disputed
and also awarded the insured his attorney fees under the
version of ORS 742.061 that was in effect at the time. The
insurer appealed, arguing (among other things) that the
statute was inapplicable, because the statute referred to an
“action upon any policy of insurance” and the action at issue
Cite as 360 Or 791 (2017)	803

was, instead, an action on a loan receipt. This court rejected
that argument, giving a functional meaning to the specified
phrase and relying on the statute’s underlying purpose:
    	 “What [the insurer] attempted to do by making [its
    insured] turn over to it all sums recovered by him at his
    own legal expense would in effect have denied its insured
    the full repayment of the damages to his car * * * contracted
    for in [the insurance] policy. As the trial court stated: ‘It
    is precisely this type of situation the legislature intended
    to remedy in allowing attorney fees in disputes between
    insured and insurer where the insurer is wrong.’ ”
Id. at 392.5
	        With that contextual analysis in mind, we return
to the question presented here—the meaning of the statu-
tory term “recovery.” Purely based on text, the meaning of
that term is ambiguous. The legislature could have used the
term “recovery” to require that an insured obtain a money
“judgment,” or to require only that an insured obtain pay-
ment of an amount in excess of a timely tender. Statutory
context also points in different directions. On one hand,
the legislature used the term “recovery” in the context of
a legal action, suggesting that it intended to use it in its
technical legal sense, and this court seems to have ascribed
that meaning in McGraw. On the other hand, the form that
a recovery takes has not been a meaningful aspect of this
court’s decisions.
	        But, importantly, this court repeatedly has
instructed that the terms of ORS 742.061 and its predeces-
sors should be interpreted in light of their function within
the statute’s overall purpose. Dolan, 133 Or at 255-56;
Dockins, 329 Or at 28; Groce, 252 Or at 312; Plummer, 278
Or at 392. If we heed that instruction here, as we think we
must, it becomes evident that the term “recovery” must be

	5
      The Plummer court also rejected the insurer’s argument for avoiding appli-
cation of the statute on the ground that, in the particular procedural posture of
the case, the insured was not the designated “plaintiff.” The court concluded that,
in the light of the statute’s purpose, the insured was “functionally” the plaintiff
and that the statute applied. 278 Or at 391. See also Hardware Mut. Cas. Co. v.
Farmers Ins. Exchange, 256 Or 599, 611, 474 P2d 316 (1970) (permitting attorney
fees when insured, who was designated as the “defendant” in the insurer’s declar-
atory judgment action, sought to recover from insurer in counterclaim).
804	                                Long v. Farmers Ins. Co.

read to include mid-litigation payments such as the ones
that Farmers made in this case.
	        The purpose of ORS 742.061 is “to discourage
expensive and lengthy litigation.” Dolan, 133 Or at 255.
Requiring the insurer to pay the insured’s attorney fees if
and only if the insured obtains more in the litigation than
was timely tendered advances that purpose insofar as it
encourages insurers to make reasonable and timely offers
of settlement and also encourages insureds to accept rea-
sonable offers and forego litigation. But the statute also
serves a compensatory purpose. The statute ensures that,
when insureds file suit to obtain what is due to them under
their policies, they do not win the battle but lose the war by
expending much or all of what they obtained in the litigation
on attorney fees. See Dolan, 133 Or at 255 (purpose of attor-
ney fee statute to ensure that the benefit of an insurance
policy is not diminished by or entirely lost to attorney fees
when insurance company wrongfully contests its obligation
to pay); Plummer, 278 Or at 392 (full payment of benefits
contracted for in insurance policy is denied when insured
must pay his or her own legal expenses to obtain benefits,
and legislature intended to address that problem by enact-
ing statute); Groce, 252 Or at 311 (implying that purpose of
statute is to ensure that insured is “ma[d]e whole”).
	        The function that a “recovery” plays in that overall
framework is to establish that the insured indeed obtained
something in the action—payment of benefits due under the
insurance policy that exceeded any amount that the insurer
timely tendered. In the circumstances presented here, there
is no functional difference between Farmers’ mid-litigation
payments and the payments that were made by the insurers
in settlement in Dockins or pursuant to a confession of lia-
bility in Dolan. Under each of those scenarios, the insured
received a sum from the insurer that exceeded any amount
timely tendered, a result that indicates that, at least in some
practical sense, the insured prevailed in the action. It was
the insurer’s payment, not the form of payment, that enti-
tled the insured to attorney fees.
	        We conclude that the fact that plaintiff in this case
did not obtain a “judgment” memorializing these payments
Cite as 360 Or 791 (2017)	805

does not make ORS 742.061 inapplicable. To the extent that
we implied otherwise in McGraw, we use this opportunity
to clarify its meaning: A declaration of coverage is not suf-
ficient to make ORS 742.061 applicable; an insured must
obtain a monetary recovery after filing an action, although
that recovery need not be memorialized in a judgment.
	        Before we apply that holding to the present circum-
stances, we turn briefly to an additional argument made
by Farmers about the meaning of ORS 742.061. Farmers
suggests that its payments to plaintiff cannot be consid-
ered a recovery “in the action,” for purposes of ORS 742.061,
because they were made, not in response to the action, but
in response to the decision of appraisers in the appraisal
proceeding that the insured demanded. We are not per-
suaded. Although it is true that Farmers made its payments
to plaintiff after the appraisal process had concluded, both
the appraisal proceeding and the payments came more than
six months after plaintiff’s proof of loss and after plaintiff
had instituted her action. And, at least initially, whether
Farmers had wrongfully failed to engage in the appraisal
process was an issue in the action. In those circumstances,
we conclude that Farmers’ belated payments qualify as a
recovery “in the action.”
	         The foregoing analysis of the statute resolves plain-
tiff’s entitlement to attorney fees for the work performed by
her attorney up until the time that Farmers made volun-
tary payments to plaintiff in July and August of 2013. By
then, plaintiff had brought an action on her insurance policy
and, by virtue of Farmers’ July and August payments, had
“recovered” more in that action than Farmers had tendered
in the first six months after proof of loss. She was entitled to
attorney fees accrued in pursuit of those recoveries.
	         However, plaintiff is not entitled to an award for
attorney fees that accrued after the July and August 2013
payments, for two different reasons. First, the subsequent
voluntary payments, which Farmers made in February
2014, were payments for the replacement value of plain-
tiff’s loss. Farmers made those payments within days after
plaintiff filed proof of her replacement costs—the “proof of
loss” that would justify paying the replacement cost, rather
806	                                 Long v. Farmers Ins. Co.

than the actual cash value, of plaintiff’s losses. It was that
later proof of loss that triggered the six-month period for
settlement of plaintiff’s claim for the replacement value of
her losses under ORS 742.061. Because Farmers made the
replacement cost payments within the six-month window for
settlement provided in the statute, plaintiff is not entitled to
reimbursement for attorney fees incurred in obtaining that
additional “recovery.”
	       Second, except for the two replacement cost pay-
ments that Farmers made in February 2014, plaintiff did
not recover, after August 2013, any amount over and above
what Farmers already had paid. At trial, plaintiff sought
but was unsuccessful in obtaining any greater sum. Thus,
because plaintiff’s recovery after Farmers’ August 2013
payment did not exceed Farmers’ timely tender, plaintiff is
not entitled to attorney fees under ORS 742.061 for work
performed by her attorney after that date.
	      The decision of the Court of Appeals is reversed.
The judgment of the circuit court is reversed, and the case
is remanded to the circuit court to award attorney fees in
accordance with this opinion.