Court Opinion

ID: 9851493
Source: CourtListenerOpinion
Date Created: 2023-09-24 05:13:51.799175+00
Date Added: 2024-06-11T09:20:58.904995
License: Public Domain

WARDEN, J.,
dissenting.
The majority would deprive an injured person of the benefits of the tortfeasor’s insurance policy, on the basis of the tortfeasor’s misconduct, in the face of a contrary statutory *423policy and when no court has determined or even heard the evidence of misconduct on which the insurer relies. Because I believe that that result is wrong, I dissent.
There are two flaws with the majority’s analysis. First, it incorrectly limits the application of former ORS 486.551 to insurance policies required after a driver has an uninsured accident rather than extending it to all policies required as proof of the driver’s financial responsibility. Second, the majority improperly allows the insurer to use a judgment by default against the tortfeasor to prevent the injured party from litigating the validity of the tortfeasor’s insurance policy.
Former ORS 486.551 was adopted in 1955 as part of the Future Responsibility Law. At the time, that law was the only requirement that motorists or vehicles be insured; it applied only to drivers who had been involved in accidents that resulted in injury or significant property damage. The purpose of former ORS 486.551 was to ensure that the required coverage would be available to victims of the insured driver’s negligence, no matter what defenses might exist between the insurer and the insured. For that reason, the statute provided that it did not apply “to policies of vehicle liability insurance other than those required in connection with proof of future responsibility.”
In 1977, the legislature adopted the Mandatory Financial Responsibility Law, under which all vehicles must now carry a minimum amount of liability insurance. In doing so it gave “financial responsibility” under the new law the same meaning as “future responsibility” under the older law. Former ORS 486.011(7). The purpose for the new law was also the same as the purpose for the future responsibility law; the legislature simply extended that purpose to a larger group of drivers. Although it did not expressly amend former ORS 486.551 to apply to the new law, the use of the identical definition for “financial responsibility” as for “future responsibility,” together with the purpose of the two laws, convinces me that the legislature intended former ORS 486.551 to apply to all statutorily-required liability policies no matter which statute requires them. The legislature made its intent clear in 1983, when, as part of the revision of the traffic laws, it *424amended the statute to apply expressly to both kinds of financial responsibility. Or Laws 1983, ch 338, § 957; ORS 743.779 (formerly ORS 486.551). That action made explicit what was previously implicit.
The majority’s second error is its excessively limited reading of the most relevant Supreme Court case. The majority is correct in stating that defendants’ rights are derivative of those of the insureds (the Belekes and Haynie), but what those rights are has never been litigated. Although the judgment by default against the insureds resolves that issue as to them, it does not do so as to defendants. In State Farm Fire & Cas. v. Reuter, 299 Or 155, 700 P2d 236 (1985), the Supreme Court indicated that a judgment by default against the insured does not control the rights of the injured party. In that case, the court held that the injured party could not relitigate the issue of the insured’s intent, because the insured had litigated that issue in his trial for rape and had lost. In reaching its conclusion, it noted that “[f]or the result of the previous case to be binding against the successor in interest, the issue must have been actually litigated.,, 299 Or at 167 n 10. (Emphasis supplied.)
The court cited Restatement (Second) Judgments, § 27, and Clemmer v. Hartford Ins. Co., 22 Cal 3d 865, 877, 151 Cal Rptr 285, 587 P2d 1098 (1979), in support of the requirement that the issue actually be litigated. Comment e to section 27 states, in part, “[i]n the case of a judgment entered by confession, consent, or default, none of the issues is actually litigated. Therefore, the rule of this Section [providing issue preclusion (collateral estoppel) for issues actually litigated and determined by a final judgment] does not apply with respect to any issue in a subsequent action.”1 (Emphasis supplied.) In Clemmer, the California Supreme Court held that the injured parties could relitigate the issue of the wrongdoer’s mental state, because the wrongdoer withdrew his defense of insanity after being convicted of murder in the second degree and thus did not fully litigate the issue.
I conclude from the Supreme Court’s statement in *425State Farm Fire & Cas. v. Reuter, supra, and from the authority on which it relied, that a default judgment against the insureds cannot prevent the injured party from litigating the issue of coverage. This result ensures that the injured party will not be deprived of the benefit of the tortfeasor’s policy as a result of the tortfeasor’s inaction and before a court has heard the evidence and ruled on it. By so doing, it both protects the injured party from irresponsible tortfeasors and removes significant temptations to collusion and sweetheart deals between them and insurers. Because both the reasoning and the result of the majority opinion are wrong,T dissent.
Richardson, J., joins in this dissent.

 Although the comment to the Restatement refers to issue preclusion in a subsequent action, the Supreme Court’s reference to it in State Farm Fire & Cas. v. Reuter, supra, indicates that the court would apply the same rule to a non-defaulted party in the same action.