505 P.3d 1047
Or. Ct. App.2022Background
- Troy Moody died from an accidental gunshot on a camping trip; he was the insured under a $3,000 accidental death policy.
- Federal Insurance denied the beneficiary Christine Moody’s claim, citing a policy exclusion for accidents caused by the insured being under the influence based on a sheriff’s toxicology report indicating marijuana.
- Moody sued for breach of contract and negligence per se under ORS 746.230, alleging Federal failed to conduct a reasonable investigation and failed to settle in good faith; she sought $3,000 plus $47,001 for emotional distress.
- The trial court dismissed the negligence per se claim and struck the emotional-distress damages allegation; the insurer later paid the $3,000 and plaintiff obtained judgment on the contract claim.
- On appeal the court considered whether ORS 746.230 can supply an independent standard of care supporting negligence per se against an insurer and whether emotional-distress damages are within the statute’s protective purpose.
- The court reversed and remanded, holding that (1) ORS 746.230 can establish an independent standard of care for negligence per se and (2) emotional distress falls within the kinds of harms the statute was enacted to prevent.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a violation of ORS 746.230 can support a negligence per se claim against an insurer that is a party to the contract | ORS 746.230 creates a statutory standard of care independent of the insurance contract; violation supports negligence per se | Tort claims cannot be predicated on mere breach of contract; negligence claim is barred when it is essentially a contract dispute | Court: Yes. The statute provides an independent standard of care; Moody adequately pleaded negligence per se |
| Whether a separate common-law negligence claim or special relationship is required before a statute can supply the standard of care (re: Abraham and Deckard) | Abraham shows statutes/regulations can supply an independent standard; Deckard’s footnote does not impose a prerequisite common-law claim | Supreme Court decisions require a common-law duty or special relationship; Deckard suggests statutory standard only creates a presumption when negligence otherwise exists | Court: Rejected defendant’s reading. Deckard’s footnote is not a strict prerequisite; Abraham remains instructive that a statute may supply the standard |
| Whether emotional-distress damages are recoverable as the kind of harm ORS 746.230 was adopted to prevent (re: Farris) | Insurance provides economic security and peace of mind; unfair claim practices foreseeably cause emotional distress and statute aims to protect the insurance‑buying public | Farris indicates the legislature did not intend ORS 746.230 to convert all contract breaches into torts or provide emotional‑distress damages | Court: Rejected defendant’s reliance on Farris dictum. Emotional distress is within the range of harms the statute was enacted to prevent; the allegation cannot be struck at this pleading stage |
Key Cases Cited
- Abraham v. T. Henry Construction, Inc., 350 Or 29 (2011) (Supreme Court affirmed appellate decision on other grounds while leaving open that statutory or regulatory standards may supply independent tort duties)
- Abraham v. T. Henry Construction, Inc., 230 Or App 564 (2009) (appellate decision finding a statutory building code can create an independent standard of care supporting negligence per se)
- Georgetown Realty v. The Home Ins. Co., 313 Or 97 (1992) (special relationships can create independent tort duties separate from contract terms)
- Farris v. U.S. Fidelity & Guaranty Co., 284 Or 453 (1978) (concluded ORS 746.230 does not itself create a private statutory cause of action; dictum questioned emotional‑distress recovery)
- Bob Godfrey Pontiac v. Roloff, 291 Or 318 (1981) (explains distinction between statutory liability and using a statute to define duty in negligence per se cases)
- Deckard v. Bunch, 358 Or 754 (2016) (noted that when a negligence claim otherwise exists, a statute defining the standard of care can establish a presumption of negligence)