438 P.3d 441
Or. Ct. App.2019Background
- Homeowner’s house burned on Nov. 8, 2001; policy included a replacement-cost endorsement payable only after repair or replacement was complete.
- MOE paid $600,000 initially and later $1.14 million (Feb. 27, 2003); plaintiff began rebuilding and spent about $3.23 million on a new house of like construction and use.
- First trial: court found plaintiff rebuilt a house of like construction and awarded $3.23 million less prior payments, plus prejudgment interest and fees; Patton I reversed because replacement-cost recovery requires completed reconstruction.
- On remand, summary judgment for MOE was reversed in Patton II; second trial's jury found the cost to replace the identical house would have been $2.556 million, not $3.23 million.
- Trial court awarded plaintiff damages based on jury verdict, $1.023 million prejudgment interest running from Feb. 27, 2003, and attorney fees; MOE appealed, challenging issue preclusion and the prejudgment-interest award.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether MOE is precluded by issue preclusion from contesting entitlement to prejudgment interest | Preclusion applies because MOE had opportunity to litigate interest in the first appeal/trial | Issues in two trials were not identical; prejudgment-interest question differed after different damage findings | Reversed trial court: issue preclusion did not apply because the issues were not identical |
| Whether prejudgment interest under ORS 82.010(1)(a) is allowable because amount owed was ascertainable | Amount due was readily ascertainable once parties could calculate replacement cost (last payment Feb. 27, 2003 sufficient) | Amount and accrual date were not readily ascertainable; contract’s loss-payment clause and condition precedent (completion) meant interest could not run earlier | Prejudgment interest award reversed: record did not establish an easily ascertainable date from which interest should run |
| Whether the policy’s loss-payment clause dictates when monies become due for interest purposes | Plaintiff: statute governs; policy doesn’t prevent interest under ORS 82.010(1)(a) | MOE: loss is payable 60 days after proof of loss and agreement/entry of judgment/appraisal; thus no pre-judgment accrual | Court did not adopt MOE’s position on the clause but reversed interest award for lack of ascertainable start date on this record |
| Whether plaintiff’s pleadings sufficiently alleged amount and accrual date for interest | Plaintiff contends pleading that he is entitled to legal-rate interest from the date due sufficed and MOE showed no prejudice | MOE argued plaintiff failed to plead foundational facts (amount/date) | Court found plaintiff’s pleading did not cure lack of evidentiary support for chosen accrual date; interest award reversed |
Key Cases Cited
- Patton v. Mutual of Enumclaw Ins. Co., 238 Or. App. 101 (Or. App. 2010) (first appeal addressing replacement-cost condition precedent)
- Patton v. Mutual of Enumclaw Ins. Co., 266 Or. App. 154 (Or. App. 2014) (second appeal rejecting MOE’s timeliness/summary judgment argument)
- Strawn v. Farmers Ins. Co., 353 Or. 210 (Or. 2013) (prejudgment interest is statutory; amount must be readily ascertainable)
- Strader v. Grange Mut. Ins. Co., 179 Or. App. 329 (Or. App. 2002) (prejudgment interest proper when amount/time are easily ascertainable; jury resolutions can supply required facts)
- Farhang v. Kariminaser, 230 Or. App. 554 (Or. App. 2009) (party seeking interest must support chosen accrual date; appellate record must permit review of accrual-date determination)
- Nelson v. Emerald People’s Util. Dist., 318 Or. 99 (Or. 1993) (elements required for issue preclusion)