Brownstone Homes Condominium Ass'n v. Brownstone Forest Heights, LLC, 358 Or. 26

Brownstone Homes Condominium Association (Brownstone) sued contractor A&T Siding for construction defects; A&T was insured by Capitol Specialty Insurance Co. (Capitol).
Brownstone and A&T entered a settlement that included a stipulated judgment, an unconditional release and covenant not to execute the judgment against A&T, and an assignment of A&T’s claims against Capitol to Brownstone.
Brownstone served a writ of garnishment on Capitol under ORS 18.352; Capitol moved for summary judgment arguing the release/covenant extinguished A&T’s liability (and thus Capitol’s coverage obligation). The trial court granted summary judgment for Capitol.
While appeals were pending, Brownstone and A&T executed an addendum that modified the release/covenant and replaced the assignment with a requirement that A&T pursue Capitol directly and remit proceeds to Brownstone.
The Court of Appeals, unaware of the addendum, affirmed the trial court. Brownstone sought review in the Oregon Supreme Court; Capitol then moved to dismiss the appeal as moot based on the addendum.
The Supreme Court considered whether the addendum mooted review, noting its decision in a related case (A&T Siding, Inc. v. Capitol Specialty Ins. Co.) that reformation cannot be based on a mistake as to the legal effect of the original settlement.

Issue	Brownstone's Argument	Capitol's Argument	Held
Whether the appeal is moot because the addendum superseded the original settlement terms	The addendum restored the ability to collect from Capitol and thus intervening changes do not moot review of the original agreement’s legal effect	The addendum eliminated the original release/covenant so any decision about the original agreement is academic and the appeal is moot	Denied dismissal: appeal not moot because an opinion on the original agreement will have a practical effect; the addendum does not retroactively eliminate the original agreement’s legal effect
Whether the addendum reformed the original settlement to restore insurer coverage (i.e., whether reformation based on mistake as to legal effect is permissible)	The parties voluntarily reformed the original settlement to restore Capitol’s coverage	Reformation cannot be based on a mistake about the legal effect of the original agreement; thus the addendum cannot retroactively revive coverage	A&T Siding later held reformation on a mistake of law is not available; therefore the addendum did not retroactively nullify the original extinguishment of liability

State v. Hemenway, 353 Or 498 (discussing mootness and judicial authority)
Dept. of Human Services v. G. D. W., 353 Or 25 (definition of when a decision has practical effect on parties’ rights)
Couey v. Atkins, 357 Or 460 (distinguishing prudential vs. constitutional mootness in public-importance cases)
Yancy v. Shatzer, 337 Or 345 (limits on adjudicating moot controversies)
Brownstone Homes Condo. Assn. v. Brownstone Forest Hts., 255 Or App 390 (Court of Appeals decision on effect of original settlement)
A&T Siding, Inc. v. Capitol Specialty Ins. Co., 358 Or 32 (holding reformation cannot be grounded on a mistake as to legal effect)