Stuart v. Pittman
255 P.3d 482
| Or. | 2011Background
- Plaintiff entered into an oral course-of-construction insurance binder with Country Mutual through its agent Pittman before a written policy was issued.
- The partially built home was damaged by an ice storm in January 2004 after the binder was in place.
- Pittman assured coverage would include weather, injury, faulty work, and builder’s failure to perform, with no communicated limitations.
- In October–December 2003 the written policy was issued with direct physical loss and mold/water/faulty-work exclusions that later formed the basis of defense against the claim.
- A jury found the oral binder created coverage different from the written policy by eliminating direct physical loss and certain exclusions and awarded damages; Court of Appeals reversed; Oregon Supreme Court affirmed the trial court and reversed the Court of Appeals on appeal.
- The court addressed whether ORS 742.043(1) requires “clear and express” terms to supersede usual policy terms and whether attorney fees under ORS 742.061 could be recovered based on an enforceable binder.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether ORS 742.043(1) requires clear and express terms to supersede the usual policy terms. | Stuart argued binder terms like “safety net” were clear and express. | Pittman’s terms were vague and failed the “clear and express” standard. | Yes; the binder terms were clear and express and could supersede written policy terms. |
| Whether substantial evidence supported that Pittman’s oral binder eliminated direct physical loss and certain exclusions. | Stuart showed the binder changed coverage beyond the written policy. | The evidence did not prove a definite, explicit revision to the usual terms. | Yes; there was sufficient evidence the binder differed from the written policy. |
| Whether ORS 742.061 attorney fees apply to a case involving an enforceable oral binder. | Binder triggers attorney fees as a recovery on an insurance policy agreement. | The statute applies only to written policies. | Yes; attorney fees may be awarded where a binding oral binder exists and the written policy includes those terms. |
Key Cases Cited
- Farley v. United Pacific Ins. Co., 269 Or. 549 (Or. 1974) (estoppel by agent’s representation of coverage binds insurer to terms)
- Hartford v. Aetna/Mt. Hood Radio, 270 Or. 226 (Or. 1974) (binder recoveries can support attorney fees for insured)
- Sanders v. Oregon Pacific States Ins. Co., 314 Or. 521 (Or. 1992) (statutory language read to give effect to all provisions)
- United Pac. Ins. v. Truck Ins. Exch., 273 Or. 283 (Or. 1975) (binder for temporary insurance governs terms included in later policy)
- Jensen v. Medley, 336 Or. 222 (Or. 2003) (preponderance standard for issues decided in favor of plaintiff)
- Cleveland Oil Co. v. Ins. Society, 34 Or. 228 (Or. 1898) (formation of an enforceable oral binder requires specific elements)