Grijalva v. Safeco Insurance Co. of America

Citations: 985 P.2d 784; 329 Or. 36; 1999 Ore. LEXIS 384Docket: CC 95-SV-0296-AB; CA A94209; SC S45472

Court: Oregon Supreme Court; July 9, 1999; Oregon; State Supreme Court

Original Court Document: View Document

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Judith Grijalva filed a breach of contract action against Safeco Insurance Company regarding underinsured motorist (UIM) benefits following an automobile accident. The core legal issue was how to calculate UIM benefits under a single-limit policy when multiple claimants are involved. The trial court and the Court of Appeals initially ruled that the UIM award should be calculated by subtracting amounts recovered by all claimants from the policy limit. However, the Supreme Court of Oregon reversed this decision, stating that the calculation should only deduct amounts recovered by the individual claimant from other sources, not those of all claimants. Grijalva sustained over $100,000 in damages from the accident, received $42,000 from the at-fault driver’s insurance, and also collected workers' compensation benefits. Safeco had issued a policy with a UIM limit of $100,000, but denied Grijalva's claim, stating she was only entitled to $16,521.02 after other recoveries. The Supreme Court remanded the case for further proceedings, clarifying the method of calculating UIM benefits.

Safeco argued that due to multiple claimants seeking Underinsured Motorist (UIM) coverage for the same accident, the plaintiff's recovery should be the policy limit of $100,000 minus amounts already recovered by all claimants. Safeco identified several deductions: $4,755.37 paid to Edwards, $60,000 from Dawson's liability policy to both claimants, $14,877.02 from the plaintiff's workers' compensation, and $3,846.59 paid to Edwards on her workers' compensation claim. The trial court granted judgment for Safeco on its declaratory relief claim and awarded the plaintiff $16,521.02 in benefits, while denying both parties' requests for attorney fees on the grounds that neither party prevailed on a claim that justified such an award. The plaintiff appealed, contesting the offsets applied against her UIM recovery, particularly regarding Edwards' recoveries from Dawson's policy and her own workers' compensation. Although she abandoned the challenge to her workers' compensation offset, she maintained that her UIM recovery should not be reduced by Edwards' recoveries. The plaintiff cited ORS 742.502(2)(a) and ORS 742.504(7)(c), which she argued clarify that a claimant's UIM recovery should only be reduced by amounts the claimant personally received from other sources. Safeco countered that these statutes indicate that UIM recoveries should be reduced by the total amounts paid to all insureds, including those from the tortfeasor’s insurer and workers' compensation. The resolution of this issue hinges on the interpretation of the cited statutes, with ORS 742.502(2)(a) establishing the general UIM coverage requirements.

ORS 742.504(7) establishes the limits of liability for uninsured motorist (UM) and underinsured motorist (UIM) coverage and outlines permissible reductions from such coverage. Specifically, the liability limit for "each person" pertains to damages from bodily injury to one individual in an accident, while the limit for "each accident" encompasses total damages for all injured persons in that incident. Reductions in coverage amounts for injured insureds are specified: A) by sums paid by the uninsured vehicle's owner/operator or related parties, and B) by amounts received under any workers' compensation or similar laws. There are differing interpretations of the phrase "on account of such bodily injury." The plaintiff argues it refers to the individual claimant's injury, while Safeco contends it pertains to the injuries of all claimants involved in the accident. To resolve this, the court applies the interpretative framework from PGE v. Bureau of Labor and Industries, emphasizing that the phrase does not clearly indicate whether it refers to individual or aggregate injuries. However, a holistic reading of the statute suggests that the legislature intended for reductions to be based on amounts paid for all claimants' injuries related to the accident.

The provision clarifies that "such bodily injury" in subparagraphs (A) and (B) directly refers to "bodily injury sustained in an accident by a person who is an insured under this coverage," indicating the legislature's focus on the individual claimant. The amounts payable to that insured are to be reduced by any sums received for their bodily injury from a tortfeasor's liability policy or workers' compensation. Safeco disputes this interpretation, citing other statutes to argue for a broader reduction of total recovery amounts. Notably, it highlights the lack of qualification in ORS 742.502(2)(a) regarding amounts recovered from other insurance, suggesting a legislative intent for total offsets. However, the counterargument emphasizes that the absence of specification does not undermine the existing framework filled by ORS 742.504(7)(c)(A). Safeco also claims that ORS 742.504(7)(a) establishes two categories of benefits, which depend on the number of insureds making claims. It suggests that if multiple insureds file, they can only recover from the "each accident" limit. Nonetheless, the interpretation holds that ORS 742.504(7)(a) maintains relevance of the "each person" limit regardless of the number of claimants. The conclusion affirms that the legislature's intent is clear: the amount payable to an insured is solely reduced by amounts received for their bodily injury from liable parties or workers' compensation, without suggesting an alternate interpretation from the cited statutes.

The trial court improperly reduced the plaintiff's Underinsured Motorist (UIM) recovery by amounts received by another claimant, Edwards, from Dawson's liability insurer and Edwards' employer's workers' compensation carrier, as such reductions are not permitted under the UIM statute. On remand, the court is directed to reduce the plaintiff's recovery only by amounts she received for her injuries from workers' compensation and Dawson's liability policy. The second issue pertains to the plaintiff's entitlement to attorney fees under ORS 742.061, which stipulates that if a settlement is not reached within six months after proof of loss is filed and the plaintiff's recovery exceeds any amount tendered by the defendant, reasonable attorney fees can be awarded. The Court of Appeals had previously ruled that ORS 742.061 did not apply, asserting that Safeco had tendered an amount equal to the $16,521.02 judgment. However, since the judgment was deemed erroneous, this reasoning is invalid. Consequently, the Court of Appeals' decision and the circuit court's judgment are both reversed, and the case is remanded for further proceedings. Additionally, it is noted that the insurance policy in question had identical per-person and per-accident limits of $100,000, and the plaintiff previously contended that her workers' compensation recovery should not offset her claim. ORS 742.504 was initially enacted for Uninsured Motorist (UM) insurance but was later applied to UIM coverage through ORS 742.502(4).