Johnson v. Swaim

Citations: 172 P.3d 645; 343 Or. 423; 2007 Ore. LEXIS 939Docket: CC 0309-10527; CA A127483; SC S54603

Court: Oregon Supreme Court; November 23, 2007; Oregon; State Supreme Court

Original Court Document: View Document

SummaryOriginalCytator Case TreatmentBackward CitatorAnalysis

EnglishEspañolSimplified EnglishEspañol Fácil

Jesse H. Johnson, Jr. filed a personal injury claim against Gregory Alan Swaim arising from a motor vehicle accident caused by Swaim's negligence on October 4, 2001. Johnson initially informed Swaim’s insurance about his claim in a letter dated July 11, 2002, and later demanded $5,000 in damages via telephone on August 14, 2003. The insurer's adjuster declined to settle, stating that Johnson had not documented his injuries in a timely manner and reminded him of the impending statute of limitations deadline of October 4, 2003. Subsequently, on September 29, 2003, Johnson's attorney sent a demand for $5,500 in damages, referencing ORS 20.080, and indicating that if the demand was not met within ten days, Johnson would seek attorney fees. Unable to wait for the ten-day period due to the statute of limitations, Johnson filed his complaint on September 30, 2003. The trial court awarded Johnson attorney fees, but the Court of Appeals reversed this decision, leading to a review by the Oregon Supreme Court. The Supreme Court affirmed the Court of Appeals' ruling, concluding that Johnson did not comply with ORS 20.080(1) and that Swaim did not waive compliance. Thus, the Supreme Court reversed the trial court's award of attorney fees.

The complaint requested $5,500 in damages and attorney fees. After the plaintiff filed the complaint, the adjuster offered to settle for $500 within 10 days of the demand letter. The plaintiff rejected this offer, and the case proceeded to trial, where the jury found the defendant negligent and awarded the plaintiff $2,500. The plaintiff then sought attorney fees under ORS 20.080(1), which the defendant contested, arguing that the plaintiff did not make a sufficient written demand at least 10 days before filing the complaint as required by the statute. The trial court ruled that the plaintiff had made a sufficient demand through written correspondence and a phone call with the adjuster, and alternatively found that the defendant waived the written demand requirement. Consequently, the court awarded the plaintiff $9,122.73 in attorney fees. Upon appeal, the Court of Appeals reversed this fee award, stating that the plaintiff's communications did not meet the pre-filing requirements of ORS 20.080(1), and that the adjuster's letters did not constitute a waiver. The Supreme Court allowed the plaintiff's petition for review and affirmed the Court of Appeals' decision. The analysis focused on whether the plaintiff satisfied the requirements of ORS 20.080(1) for attorney fees, which include: 1) the action amount must be $5,500 or less; 2) the plaintiff must prevail; 3) a written demand for payment must be made at least 10 days before filing; and 4) the judgment must exceed any pre-filing settlement offer from the defendant.

The third requirement of ORS 20.080(1), concerning the prefiling written demand for payment of a claim, is central to this case. In *Landers*, the court clarified that "such claim" refers to claims within the statutory dollar limit of $5,500. The court emphasized that the purpose of the written demand is to notify the defendant of the claim's value, allowing them to assess the case and potentially settle to avoid incurring attorney fees. The plaintiff's initial letter dated July 11, 2002, merely indicated that a claim was being pursued without specifying the dollar amount, failing to inform the defendant that the claim was for $5,500 or less. Consequently, the defendant lacked sufficient notice to make a timely settlement offer. The plaintiff later attempted to fulfill this requirement in a September 29, 2003, letter, which identified the claim amount but was sent only one day prior to filing the complaint, violating the mandated 10-day notice period. The plaintiff did not contest this but argued that an oral demand made on August 14, 2003, supplemented the written notice. However, the court disagreed, asserting that the written demand must clearly convey the claim's value without reliance on oral communications. Thus, neither of the plaintiff's written demands satisfied the statutory requirements.

ORS 20.080(1) mandates that a plaintiff issue a written demand for payment of a claim at least 10 days prior to filing an action, with no exceptions to this written requirement. This demand serves to formally notify the defendant that the claim falls within the statute's monetary limits, thereby shifting the responsibility onto the defendant to evaluate and potentially settle the claim to avoid incurring attorney fees. The writing requirement adds clarity and minimizes disputes regarding the communications between parties. 

The plaintiff contends that the statute's policy aims to encourage settlements for small legitimate claims, asserting that he provided the defendant with actual notice of his claim through both written and oral communications, which he believes was sufficient for the defendant to settle. However, the court emphasizes that statutory interpretation must adhere strictly to the language of the statute rather than policy arguments. The written demand requirement is integral to ensuring that defendants are formally notified and can respond appropriately within the specified timeframe.

The court concludes that the plaintiff's communications did not satisfy the pre-filing written demand requirement of ORS 20.080(1). Additionally, the court examines whether the defendant waived compliance with this requirement. Under Oregon law, waiver involves the intentional relinquishment of a known right, which must be clearly indicated through the party's conduct or statements. The plaintiff claims that the defendant waived the requirement through correspondence from the claims adjuster, but the court has yet to determine if such waiver is evident.

Plaintiff's waiver theory is analyzed separately for two letters from the claims adjuster. The first letter, dated September 24, 2003, responded to plaintiff's demand for $5,000 and indicated that the adjuster could not make a settlement offer due to insufficient documentation. Plaintiff contends that this letter constituted a rejection of further negotiations, thereby waiving the defendant's right to receive a written demand for payment at least 10 days before initiating a lawsuit, as required by ORS 20.080(1). However, the court finds that the letter did not preclude further negotiations; it explicitly invited additional documentation and warned that legal action was necessary before the statute of limitations expired. Furthermore, even if the letter suggested a refusal to settle, it did not clearly indicate an intent to waive the statutory demand requirement. 

Additionally, plaintiff argues waiver based on a second letter from October 8, 2003, in which the adjuster offered to settle for $500, referencing ORS 20.080. Plaintiff interprets this citation as an acknowledgment of potential attorney fees and an attempt by the defendant to leverage the statute's "safe harbor" provision, which prevents awarding attorney fees if the defendant offers at least the amount awarded to the plaintiff before litigation. This letter was in response to a demand from plaintiff's attorney made just prior to filing the lawsuit. The adjuster’s offer aimed to mitigate the risk of incurring attorney fees if the plaintiff was awarded less than the settlement offer at trial.

A settlement offer was made after the complaint had been filed, rendering it too late for the defendant to benefit from the statute's "safe harbor." Despite the timing, the adjuster's late offer aimed to preserve the defendant's rights under the statute and did not constitute a clear and intentional waiver of these rights. Consequently, the October 8 letter did not waive the requirement of a prefiling written demand mandated by ORS 20.080(1). The Court of Appeals' decision is affirmed, and the circuit court's supplemental judgment is reversed. Historically, when Landers was decided, the statute required claims to be $1,000 or less; however, the legislature has since amended the statute to increase the qualifying claim amounts. Legislative intent behind ORS 20.080(1) has consistently been to encourage the settlement of small claims, discourage inflated claims, and ensure fair compensation from insurance companies and tortfeasors. In interpreting statutes, the court focuses on discerning the legislature's intent through the statute's text and context.