Lead Opinion
This case concerns the proper application of stare decisis and requires us to decide whether Collins v. Farmers Ins. Co.,
The facts are undisputed. Plaintiff issued defendant a motor vehicle liability insurance policy that provides liability coverage with limits of $100,000 per person and $300,000 per occurrence. Exclusion 12(a) of the policy, however, states that “coverage does not apply to * * * [liability for bodily injury to an insured person.” The policy defines an “insured person,” in relevant part, as “you” or “[a]ny person using your insured car.” Thus, the policy provided insurance coverage for claims made against an insured by third parties, but purported to exclude coverage for claims against an insured made by other “insured persons” under the policy, such as family members or others using the insured vehicle.
In 2005, defendant was injured in a collision while riding as a passenger in her own vehicle, which her friend was driving. Under the insurance policy, defendant’s friend was an insured person. Defendant made a claim under the policy, but defendant and plaintiff disagreed on the amount of coverage available for the claim. Plaintiff contended that $25,000 was available — the minimum amount required by the FRL — because exclusion 12(a) caused defendant’s coverage to “drop down” from the otherwise applicable per person liability coverage in the policy. Defendant sought coverage of $100,000 — the per person liability coverage stated on the declarations page of the policy. As noted, the trial court and the Court of Appeals agreed with plaintiff, citing Collins. Defendant sought review, arguing that Collins should be overruled because it was wrongly decided and is in conflict with a more recent case, North Pacific Ins. Co. v. Hamilton,
We begin by reviewing the relevant statutes and then turn to this court’s decision in Collins. Under ORS 742.450(4) (2005), amended by Or Laws 2007, ch 782, § l,
“Any policy which grants the coverage required for a motor vehicle liability insurance policy under ORS 742.450, 806.080 and 806.270 may also grant any lawful coverage in excess of or in addition to the required coverage, and such excess or additional coverage shall not be subject to the provisions of * * * [ORS] 742.450 to 742.464. With respect to a policy which grants such excess or additional coverage only that part of the coverage which is required by ORS 806.080 and 806.270 is subject to the requirements of those sections.”
Thus, an insurance policy may limit the coverage for some types of liability, including insured-versus-insured claims, to the minimum limits required by the FRL even though the policy provides greater coverage for other types of claims.
In Collins, Farmers issued a motor vehicle liability policy that was virtually identical to the policy in this case, including a liability limit of $100,000 per person and $300,000 per occurrence and an exclusion stating that “coverage does not apply to * * * [l]iability for bodily injury to an insured person.” Collins,
After describing the relevant components of the FRL, the court stated that Oregon law implies in every motor vehicle liability insurance policy issued in the state a provision that the policy includes the minimum coverage required by ORS 742.450, ORS 806.080, and ORS 806.270. Id. at 342. “Coverage other than that required by law may be limited by any lawful exclusion.” Id. at 343. More specifically, the court stated:
“The manifest purpose of ORS 742.464 is to permit an insurer to write any other lawful coverage that the insurer wishes to write, in addition to the required coverage. Such coverage may include higher limits than those required by ORS 742.450 and 806.080. But as to such higher limits, the mandatory requirements of ORS 742.450 and 806.080 do not apply. The insurer may limit such additional coverage by any exclusion not otherwise prohibited by law.”
Id. at 342.
The court then examined whether the absolute exclusion for insured-versus-insured claims in that policy— an exclusion, as noted, identical to the one in this case— limited coverage to the FRL minimum. Because the law implies in every insurance policy the minimum requirements of the FRL
A dissenting opinion in Collins argued at length that the plaintiff should have had $100,000 of coverage under the policy. The dissent took issue with the majority’s interpretation of ORS 742.464. In its view, that statute required an insurance policy to first grant the minimum coverage required by the FRL before the policy could exclude excess coverage. Collins,
“If the insurer wishes to exclude from excess coverage persons required * * * to be covered for the statutory minimum, it must first affirmatively grant the statutorily-required minimum coverage for those persons, ORS 742.464, and must state the limits of liability, ORS 742.450(1).”
Id. (emphasis omitted).
The dissent also voiced concern that the majority position would encourage insurers to rely on automatic inclusion of the statutory minimum coverage in policies they issue rather than writing policies that state precisely the actual coverage purchased by the insured. “The danger is that an insured and other parties might assume that the contract provisions are lawful and mean what they say and might thereby forgo making claims for coverage that Oregon law requires insurance companies to provide.” Id. at 353 (internal quotation marks and citation omitted). The dissent argued that such a result “rewards an insurance company for selling an insurance policy that it did not certify under [the FRL] and that it should have known did not comply with [the] FRL
In this case, defendant argues that we should overrule Collins because it was wrongly decided and because Hamilton calls the reasoning of Collins into question. Plaintiff, on the other hand, asserts that the principle of stare decisis prohibits this court from overruling precedent without sufficient justification, which defendant, in plaintiffs view, has not provided. Plaintiff argues that the issues raised by defendant were fully considered by the Collins court and that Hamilton does not conflict with Collins.
Because the parties disagree about how stare decisis should be applied in this case, we turn to a review of that doctrine. “[T]he principle of stare decisis dictates that this court should assume that its fully considered prior cases are correctly decided. Put another way, the principle of stare decisis means that the party seeking to change a precedent must assume responsibility for affirmatively persuading us that we should abandon that precedent.” State v. Ciancanelli,
Our cases discussing stare decisis identify various considerations that this court has weighed in deciding whether to follow or to overrule an earlier decision. We have emphasized the “undeniable importance of stability in legal rules and decisions,” Stranahan,
Before returning to the parties’ differing views on the application of stare decisis in this case, we pause to sketch briefly our approach to stare decisis in several common types of cases. In the area of constitutional interpretation, our cases emphasize that decisions “should be stable and reliable,” because the Oregon Constitution is “the fundamental document of this state.” Stranahan,
“[W]e remain willing to reconsider a previous ruling under the Oregon Constitution whenever a party presents to us a principled argument suggesting that, in an earlier decision, this court wrongly considered or wrongly decided the issue in question. We will give particular attention to arguments that either present new information as to the meaning of the constitutional provision at issue or that demonstrate some failure on the part of this court at the time of the earlier decisions to follow its usual paradigm for considering and construing the meaning of the provision in question.”
Id. at 54. See also Ciancanelli,
In applying the principle of stare decisis to common-law precedents, we have relied upon similar considerations, although we have articulated them somewhat differently. In G.L., for example, we listed three alternative bases, which, if affirmatively asserted by a party, would “ordinarily” cause us to reconsider a nonstatutory rule or doctrine:
“(1) that an earlier case was inadequately considered or wrong when it was decided; (2) that surrounding statutory law or regulations have altered some essential legal element assumed in the earlier case; or (3) that the earlier rule was grounded in and tailored to specific factual conditions, and that some essential factual assumptions of the rule have changed.”
G.L., however, does not purport to cover all circumstances in which we will revisit common-law precedent. Rather, G.L. identifies the typical grounds for reconsidering a decision, namely where a decision was demonstrably wrong or where the statutory or factual underpinnings of a decision have changed. G.L. has been criticized for making the application of stare decisis too rigid. See Schiffer v. United Grocers, Inc.,
This court has addressed stare decisis as it applies to statutory interpretation on a number of occasions, and not always consistently. At times we have articulated a strict version of what is often referred to as the “rule of prior interpretation.” Under that rule, “[w]hen this court interprets a statute, the interpretation becomes a part of the statute, subject only to a revision by the legislature.” State v. King,
The strict application of the rule of prior construction has long been criticized as wrong in principle and unduly restrictive in practice, see State ex rel Huddleston v. Sawyer,
The rule of prior interpretation, as articulated in Missouri Athletic Club, is based on the theory of legislative acquiescence. 261 Mo at 605,
In Severy / Wilson, this court articulated a less rigid approach to precedent interpreting a statute:
“Although this court makes every attempt to adhere to precedent, in accordance with the doctrine of stare decisis, it has, from time to time, found an earlier interpretation of a statute to be so deficient that it has concluded that some reexamination of the prior statutory construction was appropriate.”
Thus, our more recent cases discussing stare decisis have, appropriately, abjured the strict rule of prior interpretation articulated in King and have instead relied upon considerations similar to those that we have used in examining constitutional and common-law precedents. That does not mean that we perceive no difference between our task in interpreting a statute and our task in interpreting a constitutional provision or a rule of common law. On the contrary, as discussed above, Stranahan makes the point that, because this court is the ultimate interpreter of state constitutional provisions — subject only to constitutional amendment by the people — if we have erred in interpreting a constitutional provision, there is no one else to correct the error. That is not true in the interpretation of statutes. Our responsibility in statutory interpretation is to “pursue the intention of the legislature, if possible.” ORS 174.020(1)(a). After we have interpreted a statute, the legislature’s constitutional role allows it to make any change or adjustment in the statutory scheme that it deems appropriate, given this court’s construction of the statute (and, of course, subject to constitutional limitations). The legislature can — and often does — amend a statute that this court has interpreted to clarify or change the statute or otherwise to advance the policy objectives that the legislature favors.
For those reasons, we disavow the inflexible rule of prior interpretation as set out in cases such as Elliott and King. In applying stare decisis to decisions construing statutes, we will rely upon the same considerations we do in constitutional and common-law cases, although, as noted, the weight
As the discussion above indicates, the application of stare decisis is not mechanistic. Rather, stare decisis is a prudential doctrine that is defined by the competing needs for stability and flexibility in Oregon law. Stability and predictability are important values in the law; individuals and institutions act in reliance on this court’s decisions, and to frustrate reasonable expectations based on prior decisions creates the potential for uncertainty and unfairness.
At the same time, this court’s obligation when interpreting constitutional and statutory provisions and when formulating the common law is to reach what we determine to be the correct result in each case. If a party can demonstrate that we failed in that obligation and erred in deciding a case, because we were not presented with an important argument or failed to apply our usual framework for decision or adequately analyze the controlling issue, we are willing to reconsider the earlier case. See Stranahan,
With that discussion of stare decisis as background, we return to the parties’ arguments. Plaintiff asserts that Collins is a case involving statutory interpretation, and so defendant’s argument for overruling Collins should be summarily rejected under the rule of prior interpretation. As we have discussed in detail above, we reject the rule of prior interpretation. Defendant, on the other hand, contends that Collins was a case involving contract interpretation and thus, for stare decisis purposes, should be reviewed under the assertedly more flexible standard for common-law precedents set out in G.L.
Collins, in fact, relied on both common-law contract principles and statutory interpretation. See Collins,
Whether we consider Collins to be a common-law case or one of statutory interpretation makes little difference here. The sole issue in this case is whether the rule announced in Collins — that a contractual exclusion for insured-versus-insured liability is effective beyond the minimum limit set by the FRL — should be overruled. Defendant’s basic argument is that Collins should be overruled because the case was wrong when decided. Defendant does not argue that other considerations, such as a change in the legal context or a change in the factual underpinnings of Collins, support reconsidering and overturning that decision. In fact, the Insurance Code and the FRL did not change in any relevant way between the time Collins was decided and when the accident leading to this case occurred. Similarly, the essential facts in this case are identical to those in Collins, so there is no difference in the factual setting to provide a basis to depart from Collins.
In arguing that Collins was wrongly decided, defendant contends that the Collins majority impermissibly rewrote the insurance policy in that case to grant the coverage required by the FRL when the policy expressly excluded such coverage. Defendant asserts that, under ORS 742.464, an insurer may exclude additional coverage for insured-versus-insured claims only if the policy first grants at least the required minimum coverage for those claims. However, Collins explicitly considered and rejected that argument. See
We assume that fully considered prior cases were correctly decided, Ciancanelli,
In the area of commercial transactions, we have noted that stability and predictability strongly support adherence to precedent. Noonan v. City of Portland,
We turn to defendant’s contention that, despite Collins having decided the precise issue presented in this case, we should rule in defendant’s favor because of this court’s more recent decision in Hamilton,
This court, however, distinguished the exclusion in Hamilton from the one in Collins, “which was worded as a simple, absolute exclusion from coverage.” Id. at 27. The Hamilton exclusion operated only “to the extent that the limits of liability for this coverage exceed the limits required” by the FRL. Id. at 23. Hamilton thus required the insured to look to the FRL to divine the circumstances in which the exclusion applied and the attendant coverage. Even assuming that an insured was sufficiently sophisticated to locate the FRL in the Oregon Revised Statutes, the words used by North Pacific in the exclusion did not track the wording of the FRL, which does not contain the phrase “limits of liability.” Id. at 27-29. Further, as used in the policy, “limits of liability” referred to the maximum amount of coverage available under the policy; yet the FRL makes no mention of maximum limits of liability and instead sets the minimum amount of coverage insurers are required to provide. Id. at 28-29. Accordingly, the court held that the exclusion was so ambiguous as to be indecipherable: “[T]he ordinary purchaser of insurance would not be able to determine what [the exclusion] means and, more particularly, would not be able to determine that it is meant to reduce the limits of liability for certain claimants below the amount that appears on the declarations page.” Id. at 29. Although Collins established that an insurer could limit liability to the FRL minimum, the exclusion drafted by North Pacific had not done so. Id.
Following the methodology for interpreting insurance contracts set out in Hoffman Construction Co. v. Fred S. James & Co.,
The parties agree that Hamilton did not expressly overrule Collins. Indeed, Hamilton cited Collins as establishing “that an insurance company may write an insurance policy that limits coverage” for insured-versus-insured claims to the FRL minimum, id., and it contrasted the exclusion in Collins, which did just that, with the ineffective exclusion in Hamilton. Id. at 27. Thus, at the time this court decided Hamilton, it did not view the two cases as in conflict. Despite that fact, defendant argues that Collins cannot be reconciled with the court’s approach in Hamilton. In defendant’s view, in both cases, “the basic problem is that the insured is confused and misled.”
Defendant’s argument hangs on the notion that it is inconsistent for this court to enforce an exclusion that did not accurately reflect Oregon law but to refuse to enforce an exclusion that attempted to follow the law but did so in an ambiguous manner. That perceived inconsistency, however, misses the mark. This court decided Hamilton based on common-law principles of insurance policy interpretation. See id. at 29 (“It is the insurer’s burden to draft exclusions and limitations that are clear.”). The exclusion in that case was unenforceable because the insurer failed to draft it in a comprehensible manner. Id. Collins, on the other hand, was decided based on the conflict between an unambiguous exclusion that denied all coverage for insured-versus-insured claims and the unambiguous statutory requirement for minimum coverage. Because the exclusion was lawful under ORS 742.464 but the FRL imported a minimum coverage of $25,000 into the policy, the exclusion remained effective, but only as to the excess coverage granted by the policy. Id. at 343. Because Hamilton and Collins were decided under distinct legal theories construing differently
Even if we were to agree that Hamilton provides the proper approach to examining the exclusion in this case, such an inquiry simply leads back to the question posed by Collins, namely, the effect of an absolute exclusion for insured-versus-insured claims. As a matter of contract law, exclusion 12(a)
Finally, defendant argues that the primary problem with the exclusion in Hamilton was not that it was ambiguous but that it was misleading. In defendant’s view, because the absolute exclusions in this case and Collins are also “misleading” — in that the exclusions do not accurately reflect the coverage that the insurer is directed by law to provide — the absolute exclusions should be unenforceable as well. That argument, however, disregards the reasoning in Hamilton. This court did not hold that the exclusion in Hamilton was misleading; rather, the legally significant fact was that the insured could not understand the meaning of the exclusion itself — it was “incomprehensible.” Id. at 29. In this case, as in Collins, the exclusion is misleading only to the extent that it is inconsistent with the coverage required by the Insurance Code and the FRL. Collins resolved that inconsistency by holding that the exclusion was unenforceable as to the minimum coverage required by those statutes, but enforceable as to coverage in excess of that amount. Moreover, defendant does not allege that she was, in fact, misled by exclusion 12(a) or that she relied on that exclusion to her detriment. Nor did the plaintiff in Collins make such an allegation.
The proponent of overturning precedent bears the burden of demonstrating why prior case law should be abandoned. Ciancanelli,
The decision of the Court of Appeals and the judgment of the circuit court are affirmed.
Notes
In 2007, the legislature amended ORS 742.450 by adding subsection (8): “Every motor vehicle liability insurance policy issued for delivery in this state shall contain a provision that provides liability coverage for each family member of the insured residing in the same household as the insured in an amount equal to the amount of liability coverage purchased by the insured.” Aside from that amendment, which was not in effect at the time of the accident in this case, the legislature has not altered the provisions of any statute relevant to this case since Collins. Subsequent references to ORS 742.450 are to the 2005 version of the statute.
Unlike the policy in this case, the policy in Collins included a provision that “[plolicy terms which conflict with laws of Oregon are hereby amended to conform to such laws.”
“Any insurance policy issued and otherwise valid which contains any condition, omission or provision not in compliance with the Insurance Code, shall not be thereby rendered invalid hut shall be construed and applied in accordance with such conditions and provisions as would have applied had such policy been in full compliance with the Insurance Code.”
Thus, the court in Collins would have construed the policy to comply with Oregon law even had the policy not included the provision mentioned above.
We do not undertake in this opinion to identify an exhaustive list of “considerations” that may be appropriate in determining whether a particular precedent should be followed or abandoned. The circumstances in which stare decisis applies are simply too varied. We note, however, that in addition to the considerations discussed in this opinion, this court has inquired into the age of the precedent at issue and the extent to which it had been relied upon in other cases. See Ciancanelli,
As Justice Brandéis put it, “Stare decisis is usually the wise policy, because in most matters it is more important that the applicable rule of law he settled than that it be settled right.” Brunet v. Coronado Oil & Gas Co.,
Although parties seeking to overturn an adverse precedent often argue that the case they challenge was erroneous at the time it was decided, that is not always necessary. Particularly in cases involving common-law rules, an earlier precedent may not have been “wrong” when it was decided, but changes in other statutes and the evolution of the common law may lead this court to conclude that the earlier case should no longer be followed. See, e.g., Winn v. Gilroy,
Again, exclusion 12(a) states, “coverage does not apply to * * * [l]iability for bodily injury to an insured person.”
Concurrence Opinion
specially concurring.
The central question posed by this case is whether this court should continue to recognize the unfortunate decision in Collins v. Farmers Ins. Co.,
As I explain below, I join in the majority’s conclusion, but not because defendant has made an insufficient showing that Collins was decided erroneously. The opposite is true.
The inquiry here, however, is broader than an assessment of whether Collins was wrongly decided. We must evaluate, in addition, the extent to which the Collins decision,
Collins was a 4-to-3 decision in this court. Justice Unis authored a lengthy dissenting opinion, which Justices Van Hoomissen and Fadeley joined. I will not repeat all the points registered in the dissent. To be candid, it does not appear to this writer that the majority and dissenting opinions succeeded in addressing the same issues.
According to the Collins majority, the issue in that case was whether a motor vehicle liability policy afforded the statutorily required minimum coverage of $25,000 for a claim by one insured party against another insured party under the same policy, even though the policy contained an express exclusion of any coverage for that kind of claim.
First, ORS 742.450(2) required the policy to “contain an agreement or indorsement stating that, as respects bodily injury and death or property damage, or both, the insurance provides * * * [t]he coverage described in ORS * * * 806.080 [i.e., $25,000 because of bodily injury to or death of one person in any one accident].” The plaintiff pointed out that the policy in question failed to contain the required agreement; rather, it expressly excluded coverage for that kind of claim when state law required the insurer to expressly cover that kind of claim.
Second, ORS 742.450(1) provided:
“Every motor vehicle liability insurance policy issued for delivery in this state shall state * * * the coverage afforded by the policy, * * * and the limits of liability.”
According to the plaintiff, the insurer’s statutory obligation to state the coverage and the limits of liability afforded by the policy in the policy itself protected the interest of the insurance-consuming public in allowing policyholders to determine their policy’s coverage, as well as exclusions and exceptions to that coverage, from the face of the policy and, thus, obviate the need to research insurance statutes to determine the extent of any coverage.
The Collins majority never considered, much less interpreted, subsection (1) of ORS 742.450, on which both the plaintiff and the dissent relied. Consequently, the Collins majority never evaluated whether its theory of partial enforcement of the policy’s absolute exclusion still left the policy in violation of state law because the policy sold to the plaintiff failed to state the coverage and limits of liability, as ORS 742.450(1) required.
The Collins majority found support for its theory in ORS 742.464, which provides:
“Any policy which grants the coverage required for a motor vehicle liability insurance policy under ORS 742.450, 806.080 and 806.270 may also grant any lawful coverage in excess of or in addition to the required coverage, and such excess or additional coverage shall not be subject to the provisions of ORS 742.031, 742.400 and 742.450 to 742.464. With respect to a policy which grants such excess or additional coverage only that part of the coverage which is required by ORS 806.080 and 806.270 is subject to the requirements of those sections.”
The Collins majority’s reliance on that statute fails to support the ultimate answer given in Collins. That is because the governing statute, ORS 742.450(1) and (2), imposed two significant requirements, not one, on insurers that marketed motor vehicle liability insurance policies in this state. Those requirements, as noted above, required the delivered policy (1) to state the policy’s coverage and limits of liability, and (2) to contain an agreement providing (among other things) the $25,000 minimum coverage. The Collins majority asserted that ORS 742.464 permitted the majority to read into the defendant’s policy a provision granting the minimum coverage of $25,000 required by ORS 742.450(2) and ORS 806.080 (even though, obviously, the policy explicitly excluded that coverage).
As a result of the theory that the Collins majority adopted in the context of insured-versus-insured claims, the insurance-consuming public lost the assurance that the legislature sought to provide in ORS 742.450(1) and (2) — that every motor vehicle liability insurance policy will contain an agreement providing the statutorily mandated coverage and that the policy will state the coverage and limits of liability in its text. The Collins decision leaves consumers at a serious disadvantage, despite the legislature’s effort to
This court has declined to extend the rationale of Collins in later cases that also involved broad policy exclusions and the minimum coverage requirement of the Financial Responsibility Law (FRL), ORS 806.060, and ORS 806.070. In North Pacific Ins. Co. v. Hamilton,
The court in North Pacific adopted a markedly different analysis than that used in Collins. Unlike in Collins, the North Pacific court focused on whether the insurer had clearly phrased Exclusion 10. The court concluded that the exclusion was ambiguous and, thus, unenforceable, stating:
“This court’s decision in Collins establishes that an insurance company may write an insurance policy that limits coverage in that manner, but the policy in the present case does not do so.”
Id. at 29. The court held that, because Exclusion 10 was ambiguous and unenforceable, the insured husband was entitled to liability coverage in the amount of $60,000, as provided by the policy for bodily injury claims generally. Id.
The North Pacific court’s description of Collins as a case pertaining to insurer authority to limit insured-versus-insured claims by the device of an exclusion is not fully accurate. Rather, Collins addressed only the legal effect of the exclusion in that case.
If the North Pacific court had had any continuing confidence in the correctness of Collins, it easily could have held that Exclusion 10, at a minimum, was a lawful, even if ambiguous, exclusion and that its inartful reference to the “limits of liability for this coverage” did not obscure its exclusion of coverage exceeding that “required by the Oregon financial responsibility law.” North Pacific,
The court’s effort in North Pacific to distinguish Collins leaves a curious state of affairs in the law. Under Collins, if the insurer uses clear wording and expressly excludes any coverage for insured-versus-insured claims, even though the law requires $25,000 in minimum coverage for such claims, the court will partially enforce the exclusion and confine the coverage to the $25,000 statutory minimum coverage. However, under North Pacific, if the insurer’s exclusion does not directly contradict the statutorily mandated minimum coverage requirement, and merely expresses an exclusion of coverage above statutory minimum amounts with some ambiguity, the court will not enforce the exclusion at all and will permit the insured claimant to recover coverage up to the limit stated on the declaration page for claims of bodily injury.
The court sought to explain the basis for that distinction in Wright v. State Farm Mutual Auto. Ins. Co.,
This court followed North Pacific in concluding that the exemption was unenforceable, and the reasoning that the court relied on is pertinent to our discussion of Collins:
“We held in North Pacific that the wording of the foregoing exclusion was ambiguous because it failed to provide proper notice to the insured that liability coverage under the policy is limited to the statutorily required minimum coverage for injured insureds and their family members. Id. at 29. We construed the provision against the insurer, the party who drafted the policy. Under that construction, we held that the insured was entitled to liability coverage in the amount provided on the declarations page of the policy. Id. at 29.
“The wording of the exclusion in the automobile policy in the present case is as obtuse, if not more so, than the wording that we construed in North Pacific. The reference in the exclusion to The limits of liability required by law’ does not inform a policyholder what limit, if any, is applicable in a given situation and does not even direct the policyholder to a particular body of law to find out what that limit is.[3 ] Resort to the context in which the phrase is used in the exclusion, as well as to other provisions of the policy, does not clarify the matter. The exclusion remains inherently ambiguous, if not incomprehensible. As we did in North Pacific, we hold that the exclusion in the automobile policy is unenforceable.”
Wright,
Despite the virtually identical failure of notice to policyholders in Collins, North Pacific, and Wright, this court chose not to overrule Collins in North Pacific and Wright but to distinguish Collins instead. It was not essential to nullify Collins to reach a correct answer in North Pacific and Wright. But we still must decide whether Collins has continuing prec-edential force in this case, where the policy exemption is on all fours with that examined in Collins.
The record indicates that, after Collins came down, plaintiff and other insurers rewrote the pertinent exclusion for insured-versus-insured claims in their automobile liability policies to incorporate exemptions similar or identical to those later examined in North Pacific and Wright. After North Pacific and Wright declared that the revised exemptions were ambiguous and ineffectual, because they failed to give notice to policyholders that the policies limited coverage to $25,000, plaintiff again responded by rewriting its exclusion to return to the absolute phrasing of the policy exemption addressed in Collins.
The motivation for that revision is clear and is not seriously questioned by defendant. By that tactic, plaintiff sought to claim that the revised exemption was enforceable against any insured-versus-insured claim beyond the minimum coverage of $25,000 required by state law, as Collins had held. Because this court had distinguished, not overruled, Collins in North Pacific and Wright, plaintiff had no incentive to eliminate the ambiguity in wording noted in North Pacific and Wright, and to give “proper notice to the insured” as Wright put it,
As the majority indicates, this court considers a number of factors in deciding whether to follow or to overrule a prior decision of this court. This court’s disagreement with the result reached in a prior case ordinarily is not an adequate justification for overturning the prior decision.
Collins was an incorrect decision, in my view, because, as discussed above, the court disregarded important parts of the pertinent statutory text and reached a result that contradicts the legislature’s intent to require insurers to state a policy’s coverage and limits on liability in the text of the policy itself. The court effectively rewrote the policy exclusion, contrary to the court’s ordinary interpretive methodology. The policy text gave no notice to policyholders that the coverage, as rewritten by the court, was limited to the $25,000 statutory minimum coverage. Those defects justify the conclusion that Collins was wrong when this court decided it.
Other factors, however, also must be considered. Here, the record shows that plaintiff relied on Collins in redrafting its automobile liability policy exemption and in marketing its automobile liability policies. In fact, plaintiff restored to its exemption the exact wording that this court had addressed in Collins. Under that circumstance, a decision in this case to overrule Collins would upset the reasonable expectations of plaintiff and, presumably, other insurers about the case law that governs the
We also consider other factors. The legislature has not modified the legislative or administrative scheme surrounding the exemption in question in a way that might justify a reconsideration of Collins by this court.
In my view, this is a circumstance in which the need for stability and predictability in the automobile insurance industry, as well as the evidence of plaintiffs reliance on the ruling, support adherence to Collins under the stare decisis doctrine, even though Collins was wrongly decided. But I also urge the legislature to consider the problems surrounding Collins, particularly the failure of that decision to heed the legislature’s efforts to assure that policyholders will receive reasonable notice, in the text of their policies, if the policy confines its coverage of insured-versus-insured claims to the minimum statutory coverage.
For the reasons stated above, I specially concur in the majority’s decision.
The Collins majority stated:
“Under Oregon law, every motor vehicle liability insurance policy issued for delivery in Oregon must, at the least, provide coverage in the amounts required by statute. ORS 742.450.1 ”
For many decades, the Oregon legislature has required insurers to state in their motor vehicle liability policies the coverage that the policy affords and the limits of liability under the policy. See, e.g., ORS 486.540 (1953), which provided:
“Every motor vehicle liability policy shall state * * * the coverage afforded by the policy * * * and the limits of liability, and shall contain an agreement or indorsement which provides that the insurance is provided thereunder in accordance with the coverage defined in this chapter as respects bodily injury and death or property damage, or both, and is subject to all the provisions of this chapter.”
The legislature consistently has retained those substantive statutory requirements although it has renumbered that statute several times during the intervening years. Those requirements now appear in ORS 742.450. It seems safe to say that the statutory rule that Collins modified was well-established Oregon law.
The court’s comment in Wright that the exemption under review “does not even direct the policyholder to a particular body of law to find out what that limit is” is dictum..
The unchanged character of the legislative and administrative scheme since Collins was decided is not the same thing as so-called “legislative acquiescence.” I do not rely at all on the latter, because the absence of an intervening legislative change does not signify legislative satisfaction with any court decision.
The record contains little information about the purported justification for an exclusion of coverage of insured-versus-insured claims from automobile liability policies. Defendant suggests that the exclusion is aimed at eliminating fraudulent claims. Certainly that is a proper goal. However, the exclusion paradoxically denies coverage for all claims, not only for fraudulent ones, despite the existence of ample evidence and good faith to support a claim by an injured insured and the existence of other effective means whereby an insurer can protect itself against a false or fraudulent claim. Those are questions that are properly addressed by the legislature.