This case involves an insurance-related dispute arising out of construction defect litigation. Plaintiff Brownstone Homes Condominium Association, an assignee of the insured defendant, A&T Siding, Inc. (A&T), appeals, challenging the trial court’s determination that plaintiff was not entitled to garnish the proceeds of an insurance policy issued by A&T’s insurer, Capitol Specialty Insurance Co. (Capitol). The trial court’s ruling was based on an application of the holding in Stubblefield v. St. Paul Fire & Marine,
Where, as here, the material facts are undisputed, we review the trial court’s grant of summary judgment for legal error. Povey v. City of Mosier,
This case derives from construction defect litigation, in which the plaintiff association filed claims against defendant A&T, a siding subcontractor, for breach of contract
“[Capitol] will pay those sums that the insured becomes legally obligated to pay as damages because of‘bodily injury’ or ‘property damage’ to which this insurance applies.”
(Emphasis added.)
On March 14, 2008, plaintiff, A&T, and Zurich entered into a settlement agreement. A&T agreed to stipulate to a judgment against it in favor of plaintiff for $2 million. Zurich agreed to pay plaintiff $900,000 on behalf of A&T. Plaintiff agreed that
“in no event will it execute upon or permit the execution of the stipulated judgment against A&T or its assets or [Zurich]. [Plaintiff] shall be entitled to seek recovery of the unexecuted portion of [the stipulated judgment] against [Capitol] ***.”
A&T assigned to plaintiff any claims that A&T had against Capitol under the above-quoted policy. In addition, A&T agreed to “reasonably and in good faith cooperate with [plaintiff] in pursuing the rights and claims assigned.”
A stipulated general judgment and money award was entered on November 13, 2008. Plaintiff subsequently served a writ of garnishment on Capitol pursuant to ORS 18.352,
The trial court agreed with Capitol and granted the motion for summary judgment in a post-judgment order and letter opinion. The court reasoned that the Stubblefield rule was “fatal to plaintiff’s claims,” and that ORS 31.825 was inapplicable because the assignment here “occurred long before the judgment was entered.”
Plaintiff appeals,
Capitol remonstrates that the Stubblefield rule applies to garnishment actions because plaintiff, as a judgment creditor, “steps into the shoes” of the judgment debtor, A&T, for purposes of prosecuting claims against Capitol and, thus, remains subject to Stubblefield’s constraints.
We address each of plaintiff’s alternative arguments in turn, and ultimately conclude that plaintiff does not have any enforceable claims against Capitol. Accordingly, the trial court properly granted summary judgment.
We begin with Stubblefield. There, the plaintiff and the insured defendant entered into a settlement agreement in a tort action, which included a stipulated judgment against the defendant in the amount of $50,000.
While forthrightly acknowledging Stubblefield’s reasoning and result, plaintiff first asserts that Stubblefield is not controlling here because its rationale is categorically inapposite to garnishment proceedings. Specifically, plaintiff posits that, because plaintiff may proceed directly against Capitol under ORS 18.352 and ORS 742.031, plaintiff’s claim against Capitol is dependent neither on A&T’s rights against Capitol nor on the viability of the assignment of those rights to plaintiff. In response, Capitol invokes State Farm Fire & Cas. v. Reuter,
In Reuter, after concluding that the defendant insured had no enforceable claims under the terms of his insurance policy, the court considered whether the plaintiff in a tort action against the insured would similarly be barred from asserting coverage.
“Whether [the plaintiff] would proceed against [the insurer] under ORS [742.031] or under ORS [18.352], either as garnishor or subrogee, [the plaintiffs] rights against [the insurer] are no greater than those of [the defendant insured]. As garnishor [the plaintiff] stands in the shoes of the subrogor.”
Id. at 166.
We agree with Capitol that Reuter preempts and precludes plaintiff’s garnishment-based distinction of Stubblefield. Consistently with Reuter, plaintiff’s rights as a garnishor against Capitol are, at most, no greater than those of its judgment debtor, A&T, under the terms of the insurance policy. As noted, under the policy, Capitol is liable to A&T only for “those sums that [A&T] becomes legally obligated to pay”—and, under Stubblefield, Capitol has no enforceable payment obligations to A&T (and, derivatively, plaintiff). Thus, in this circumstance, there is no material functional difference in the relationship between an assignee and an assignor, as in Stubblefield, and between a garnishor and a judgment debtor, as in Reuter. In sum, under Stubblefield and Reuter, plaintiff—“standing] in [A&T’s] shoes”—has “no rights which are enforceable by it” against Capitol.
Plaintiff next contends that ORS 31.825 abrogates the operation of the Stubblefield rule. ORS 31.825 provides:
“A defendant in a tort action against whom a judgment has been rendered may assign any cause of action that defendant has against the defendant’s insurer as a result of the judgment to the plaintiff in whose favor the judgment has been entered. That assignment and any release or covenant given for the assignment shall not extinguish the*398 cause of action against the insurer unless the assignment specifically so provides.”
The parties’ dispute with respect to the applicability of that statute centers on whether the statute requires a particular sequence of events. Specifically, plaintiff argues that “[n]othing in the text of the statute says that any ‘assignment and any covenant or release’ must be executed after the ‘judgment rendered’ for the statute to apply.” (Emphasis in original.) Capitol counters that, by its plain language, ORS 31.825 applies only “if the judgment has been entered prior to execution of the Settlement Agreement and its unconditional covenant not to execute.” (Emphasis in original.) We agree with Capitol.
ORS 31.825 refers to the judgment using the present perfect verb tense: “[a] defendant in a tort action against whom a judgment has been rendered may assign”; “to the plaintiff in whose favor the judgment has been entered” That tense necessarily connotes that the judgment must be entered before the assignment of rights. We conclude that, by its terms, ORS 31.825 preserves assigned rights against an insurer that “result from a judgment” that “has been entered” prior to the assignment. Accord Burdge v. Palmateer,
That construction of ORS 31.825 comports with the statute’s legislative history. For example, and with particular respect to the timing feature, a proponent of the legislation, Steve Piucci of the Oregon Trial Lawyers Association, responded in the affirmative to committee counsel’s question regarding whether a judgment must precede an assignment:
*399 “[Committee Counsel]: But a judgment under the underlying coverage is a precursor to getting the assignment!?]
“[Piucci]: That is correct.”
Tape Recording, Senate Committee on Judiciary, SB 519, Mar 27,1989, Tape 82, Side A.
We note finally that our construction here of the timing feature of ORS 31.825 comports with our prior understanding of the statute’s operation, as expressed in Portland School Dist. v. Great American Ins. Co.,
We concluded:
“[ORS 31.825] expressly permits a defendant in a tort action who has received an adverse judgment to assign to the plaintiff in that action any cause of action that the defendant has against the defendant’s insurer as a result of the judgment. Here, at the time the [plaintiff] and the [defendant] entered into the ‘Assignment of Claims and Covenant Not to Execute’ the [defendant] was the defendant in an action for negligence brought by the [plaintiff], and a judgment in favor of the [plaintiff] had been entered in that case. As a result of that judgment, the [defendant] had a cause of action against [the insurer] for breach of the insurance contract, which the [defendant] then assigned to the [plaintiff].”
We turn to plaintiffs third and final alternative argument. Plaintiff invokes Lancaster,
Capitol responds—and we agree—that Lancaster is materially distinguishable and that the nonexecution covenant between plaintiff and A&T was unambiguously unqualified. In Lancaster, the plaintiff in a tort action entered into a settlement agreement with the defendant insured, which provided that “plaintiff agreed not to execute ‘personally' on a judgment against [the defendant] in return for [the defendant’s] assignment of his rights, if any, against [the insurance company].”
“could have meant *** that plaintiff could not execute against [the defendant’s] personal property but that [the defendant] remained liable as to his real property, or it*401 could have meant that plaintiff would not execute against [the defendant] but would execute against the insurer.”
Id. at 68 (footnote omitted). The court concluded that that ambiguity created a factual issue, which precluded summary judgment—viz., whether the insured could be legally obligated to the plaintiff under the terms of the nonexecution covenant. Id. at 68-69.
In the predicate nonexecution covenant here, plaintiff agreed that “in no event will it execute upon or permit the execution of the stipulated judgment against A&T or its assets.” (Emphasis added.) Plaintiff’s agreement not to execute the judgment against A&T was not conditioned upon A&T’s continued cooperation; rather the nonexecution agreement was unqualified.
In sum, the operative nonexecution covenant unconditionally released A&T from any liability to plaintiff. As a result, under the Stubblefield rule, in conjunction with Reuter, plaintiffs have no enforceable claims against Capitol under A&T’s insurance policy.
Affirmed.
Notes
As we amplify below, the circumstances in Stubblefield were closely analogous to those presented here, involving similar insurance policy language (under which the insurer agreed to pay those sums that the insured was “legally obligated to pay”), as well as a settlement agreement by which the tortfeasor insured assigned its rights under the policy to the plaintiff and the plaintiff agreed not to execute on a stipulated judgment against the insured. The Supreme Court concluded that those circumstances precluded the plaintiff’s subsequent action, based on the assignment, against the insurer. The Supreme Court reasoned as follows: (a) given the operation of the nonexecution covenant, the insured assignor was no longer “legally obligated to pay” the plaintiff assignee; (b) thus, the insurer had no payment obligation to the assignor insured; and (c) consequently, the plaintiff assignee “acquired no rights which are enforceable by it” against the insurer.
OES 18.352 provides:
“Whenever a judgment debtor has a policy of insurance covering liability, or indemnity for any injury or damage to person or property, which injury or damage constituted the cause of action in which the judgment was rendered, the amount covered by the policy of insurance shall be subject to attachment upon the execution issued upon the judgment.”
ORS 31.825 provides:
“A defendant in a tort action against whom a judgment has been rendered may assign any cause of action that defendant has against the defendant’s insurer as a result of the judgment to the plaintiff in whose favor the judgment has been entered. That assignment and any release or covenant given for the assignment shall not extinguish the cause of action against the insurer unless the assignment specifically so provides.”
On July 29, 2010, the Appellate Commissioner determined that the trial court’s order in this case was appealable. The commissioner reasoned that, “[a]lthough the order purports to grant ‘summary judgment,’ it, in fact, simply sustains [Capitol’s] objection to the garnishment.” As such, the order is appealable under ORS 19.205(3) because it was rendered after entry of the general judgment and “affectfs] a substantial right.” The parties do not challenge the commissioner’s jurisdictional determination, and we do not revisit it.
ORS 742.031 provides:
“A policy of insurance against loss or damage resulting from accident to or injury suffered by an employee or other person and for which the person insured is liable, or against loss or damage to property caused by horses or by any vehicle drawn, propelled or operated by any motive power, and for which loss or damage the person insured is liable, shall contain within such policy a provision substantially as follows: ‘Bankruptcy or insolvency of the insured shall not relieve the insurer of any of its obligations hereunder. If any person or legal representative of the person shall obtain final judgment against the insured because of any such injuries, and execution thereon is returned unsatisfied by reason of bankruptcy, insolvency or any other cause, or if such judgment is not satisfied within 30 days after it is rendered, then such person or legal representatives of the person may proceed against the insurer to recover the amount of such judgment, either at law or in equity, but not exceeding the limit of this policy applicable thereto.’”
Capitol also asserts that plaintiff’s invocation of ORS 742.031 on appeal is “unpreserved” in that plaintiff did not refer to that statute before the trial court. That threshold response is unavailing in that, as we understand it, plaintiff is merely referring to ORS 742.031 as instructive context for our construction and application of ORS 18.352 in these circumstances, see generally Miller v. Water Wonderland Improvement District,
That result would obtain regardless of whether plaintiff proceeded before the trial court solely under OES 18.352 or under both ORS 18.352 and ORS 742.031. See Reuter,
In that regard, this case is dispositively distinguishable from Terrain Tamers v. Insurance Marketing Corp.,
“it is conditioned upon the [insured’s] good faith prosecution of an action against [the insurer] and the payment of any proceeds from that action. Should [the defendant insured] fail to comply with either of those conditions, it is arguable that [the insured] and its assets would be subject to the [plaintiffs’] execution of the judgment for the full amount.”
Id. at 541.
Here, unlike in Terrain Tamers, A&T did not agree to pursue claims against Capitol; it merely assigned to plaintiff any claims that it might have against Capitol. Even more significantly, in Terrain Tamers, the nonexecution covenant explicitly provided that the plaintiffs would not execute the judgment “only during the pendency of an action against [the insurer] and that a satisfaction of judgment [would] be entered only upon payment of any proceeds from the action against [the insurer]Id. at 540-41. Plaintiff here did not similarly condition its covenant not to execute the judgment against A&T.