337 P.3d 874
Or. Ct. App.2014Background
- Nakamoto, J. reviews MOE’s denial of replacement-cost benefits under a homeowner’s policy with a guaranteed replacement-cost endorsement.
- Patton I reversed a trial judgment on breach of contract and remanded for new trial.
- On remand, MOE moved for summary judgment arguing policy required completion within two years for replacement-cost recovery.
- The policy provides replacement-cost carve-out and a no-action two-year period after loss; it also permits replacement-cost if repair/replacement is complete and sets an 180-day claim option in Bourrie-like terms.
- Patton I held the two-year completion requirement ambiguous and relied on Bourrie to permit reasonable time to rebuild; the case later proceeded toward enforcing the policy terms rather than constraining to a strict deadline.
- Patton I ultimately remanded to address whether Smith’s letters altered the policy’s unambiguous terms or merely reiterated them; on remand, the trial court again granted summary judgment to MOE, which this opinion overturns.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the policy requires completion of reconstruction within two years to recover replacement costs | Patton argues reasonable time to rebuild; no express two-year completion requirement. | MOE argues two-year completion is implied by no-action clause and policy terms. | Two-year completion not expressly required; reasonable time to rebuild prevails. |
| Effect of Smith’s letters on policy interpretation | Smith’s letters changed the policy to require full replacement pay-out regardless of timing. | Letters merely reminded conditions; did not alter unambiguous terms. | Letters did not alter the policy; interpretation remains based on unambiguous terms. |
| Whether Bourrie controls, requiring reasonable time rather than a strict deadline | Bourrie supports reasonable-time interpretation; two-year cap not explicit. | Bourrie distinguishes no-action clause; two-year window implied by policy. | Bourrie controls; replacement must be completed within a reasonable time, not strictly within two years. |
Key Cases Cited
- Bourrie v. U.S. Fidelity & Guaranty Ins. Co., 75 Or App 241, 707 P.2d 60 (1985) (replacement cost requires reasonable time when no express limit is stated; no-action clause does not create strict deadline)
- Higgins v. Insurance Co. of N. Amer., 256 Or 151, 469 P.2d 766 (1970) (replacement-cost insurance generally requires completion of repair or replacement for liability to accrue; time limits may be implied)
- Taylor v. Wells, 188 Or 648, 217 P.2d 236 (1950) (implied reasonable time for completion when contract silent on explicit deadline)
- Patton v. Mutual of Enumclaw Ins. Co., 238 Or App 101, 242 P3d 624 (2010) (original appeal reversing breach-of-contract judgment and addressing replacement-cost/like-construction issues)