Kiryuta v. Country Preferred Insurance Co.
360 Or. 1
| Or. | 2016Background
- Plaintiff (Kiryuta) was injured in an auto accident and sought underinsured motorist (UIM) benefits from Country Preferred Insurance.
- Defendant timely sent a letter accepting coverage, limiting arbitration to the uninsured/underinsured motorist's liability and the damages due the insured, and consenting to binding arbitration under ORS 742.061(3).
- At arbitration defendant filed an answer that admitted some allegations but also pleaded two affirmative defenses: (1) offsets (statutory and PIP offsets) and (2) a broad "contractual compliance" defense stating UIM benefits were subject to "all terms and conditions" of the policy, including "other clauses."
- The arbitrator awarded relief to plaintiff and attorney fees; defendant filed exceptions to the fee award in circuit court, which denied fees based on defendant’s safe-harbor letter.
- The Court of Appeals reversed, holding the insurer lost safe-harbor protection by raising issues beyond liability and damages in arbitration. The Oregon Supreme Court affirmed the Court of Appeals, reversed the circuit court, and remanded for entry of attorney fees for plaintiff.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether insurer satisfied ORS 742.061(3) safe-harbor (limits issues to motorist liability and damages) | Kiryuta: insurer’s affirmative defenses raised matters that could preclude recovery, so safe harbor fails | Country Preferred: it accepted coverage and defenses only affect amount of damages (offsets and UIM limits), so safe harbor remains | Held: insurer’s "contractual compliance" defense ("all terms and conditions" and "other clauses") opened arbitration to issues beyond liability and damages, so safe harbor unavailable |
| Whether contesting other defenses that could result in no recovery automatically defeats safe harbor | Kiryuta: any defense that could lead to no recovery vitiates safe harbor (relying on Grisby rationale) | Country Preferred: UM/UIM differs from PIP; insurers must be able to raise defenses that could bar recovery without losing safe harbor | Held: Court did not decide broad extension of Grisby to UM/UIM; resolved case on the pleaded breadth of the contractual-defense, not the broader question |
| Whether admissions in answer cured the inconsistent affirmative defenses | Kiryuta: admissions did not eliminate the broad contractual-defense risk | Country Preferred: it admitted compliance in one paragraph and thus accepted coverage | Held: admission did not negate the separate broad affirmative defense; coverage was not effectively accepted for safe-harbor purposes |
| Remedy: whether plaintiff is entitled to attorney fees | Kiryuta: plaintiff entitled to fees because insurer failed to meet ORS 742.061(3) requirements | Country Preferred: argued alternate trial-court position under ORCP 54 E but did not pursue on appeal | Held: Trial court erred; case remanded for entry of judgment awarding reasonable attorney fees to plaintiff |
Key Cases Cited
- Grisby v. Progressive Preferred Ins. Co., 343 Or 175 (2007) (interpreting PIP safe harbor and holding insurer not protected when dispute involves more than amount of benefits)
- Cardenas v. Farmers Ins. Co., 230 Or App 403 (2009) (insurer lost UM safe-harbor where it raised issues at arbitration inconsistent with its safe-harbor letter)
- Vega v. Farmers Ins. Co., 323 Or 291 (1996) (explaining UM/UIM purpose: place injured person in same position as if tortfeasor had insurance)