Murphy v. Allstate Insurance
284 P.3d 524
Or. Ct. App.2012Background
- Plaintiff owns a rental property in Grants Pass and filed a flood-damage claim under defendant insurer's policy, which agreed to pay for repairs.
- Gould, a defendant adjuster, invited Stewart, a restoration contractor, to assess the property; plaintiff signed a work-authorization contract to begin repairs.
- Gould and Stewart told plaintiff no building permits were needed; plaintiff questioned permit necessity and Stewart's qualifications but signed the contract anyway.
- Repair work proceeded; later, inspector indicated permits were required; February 2009 notice alleged violations and fines; plaintiff paid penalties to obtain permits.
- Plaintiff sued for fraud on April 13, 2009; trial court granted summary judgment on timeliness, justify-reliance, and special-relationship grounds.
- Court of Appeals reversed and remanded, agreeing summary judgment on all grounds was inappropriate.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Fraud accrual under discovery rule | Should have discovered fraud within two years from contract signing. | Discovery rule triggered earlier; claim untimely. | Jury must decide timing; not as a matter of law. |
| Justifiable reliance | Relied reasonably on Gould's statements about permits and Stewart's qualifications. | Reliance not justifiable given available information and risk. | Material facts create jury issue on whether reliance was justified. |
| Special relationship and tort vs contract | Fraud claims can proceed in tort despite contract; no need for independent standard of care via contract. | No tort standard of care unless a special relationship exists. | Court erred; intentional fraud not limited by contract-based standard. |
Key Cases Cited
- Strawn v. Farmers Ins. Co., 350 Or 336 (Or. 2011) (elements of fraud claim; justifiable reliance analyzed)
- Georgetown Realty v. The Home Ins. Co., 313 Or 97 (Or. 1992) (special relationship and tort vs contract framework)
- Miller v. Protrka, 193 Or 585 (Or. 1952) (availability of information and purchaser reliance standard)
- Rosboro Lumber Co. v. Apsel, 144 Or App 298 (Or. App. 1996) (whether equal means of information affect reliance)
- Soursby v. Hawkins, 307 Or 79 (Or. 1988) (duty to investigate under justifiable reliance analysis)
- Johnson v. Cofer, 204 Or 142 (Or. 1955) (duty to exercise diligence in respect to representations)
- Widing v. Schwabe, Williamson & Wyatt, 154 Or App 276 (Or. App. 1998) (discovery rule application for fraud claims)