Plaintiffs Kevin and Mitzi Rains filed an action against several parties seeking damages for injuries sustained by Kevin when a board on which he was standing broke, causing him to fall 16 feet to the ground. Kevin, who was working as a subcontractor on a construction project, sustained a thoracic T12 vertebrae burst fracture that resulted in paraplegia. Kevin brought claims against a number of parties for negligence and strict products liability. Mitzi also brought a claim for loss of consortium. Eventually, after several rounds of third-party practice and a partial settlement agreement between plaintiffs and Stayton Builders Mart (the company that supplied the board to the job site), the case proceeded to trial on Kevin’s strict products liability claim and Mitzi’s loss of consortium claim against Stayton, and claims against Weyerhaeuser Company (the third-party defendant that had provided lumber to Stayton). The jury returned a verdict for plaintiffs, and the trial court determined that Stayton was entitled to indemnity from Weyerhaeuser. The trial court also awarded Stayton its defense costs from Weyerhaeuser. Weyerhaeuser appeals the judgments that resulted from the litigation.
I. BACKGROUND
The relevant background facts are undisputed and mostly procedural. Kevin originally brought his action for negligence and strict products liability against Five Star Construction, Inc.
The case proceeded to trial and the jury returned a verdict against Stayton and Weyerhaeuser. In addition, the jury applied the comparative fault statute, ORS 31.600(2), and designated Stayton 30 percent at fault, Weyerhaeuser 45 percent at fault, and Kevin 25 percent at fault. The jury awarded Kevin $5,237,700 in economic damages and $3,125,000 in noneconomic damages, and Mitzi $1,012,500 in noneconomic damages. After reducing the judgment to account for Kevin’s comparative fault, the trial court entered a limited judgment for plaintiffs in the sum of $7,031,400.
In a subsequent hearing, the trial court ruled in favor of Stayton on its indemnity
On appeal, Weyerhaeuser raises 13 assignments of error. We reject three assignments — numbered eight, nine, and eleven — without discussion. The first four assignments relate to the partial settlement agreement between plaintiffs and Stayton. For the reasons explained below, we reject Weyerhaeuser’s first and second assignments of error, and conclude that its third and fourth assignments were not preserved. Weyerhaeuser’s fifth and sixth assignments challenge the verdict form used at trial. We conclude that the fifth assignment was not preserved, and reject the sixth assignment on the merits. Weyerhaeuser’s seventh assignment contends that the trial court should have reduced each plaintiffs noneconomic damages award to $500,000 under ORS 31.710. We agree that the trial court should have applied the statutory cap to Kevin’s strict products liability claim, and reverse plaintiffs’ limited judgment for correction of that error. However, we conclude that the trial court correctly determined that the cap, as applied to Mitzi’s loss of consortium claim, would violate Article I, section 17, of the Oregon Constitution, and affirm the judgment on that issue. In its tenth assignment, Weyerhaeuser contends that the court erroneously entered a judgment for Stayton on its indemnity claim because Stayton failed to prove that it had discharged Weyerhaeuser’s liability to plaintiffs. We agree, and reverse Stayton’s limited judgment. Finally, in its twelfth and thirteenth assignments of error, Weyerhaeuser contends that the trial court erred by awarding Stayton its defense expenses. Stayton concedes that $1,512 of appeal-related fees should not have been awarded by the trial court. We accept that concession, and reverse the general judgment for correction of that error, but otherwise reject Weyerhaeuser’s twelfth and thirteenth assignments of error.
II. ANALYSIS
We divide our discussion of Weyerhaeuser’s assignments of error into five groups and discuss any additional relevant facts as necessary within each group. First, we address assignments one through four, which involve the partial settlement between plaintiffs and Stayton. Second, we address assignments five and six, which challenge the verdict form used by the court. Third, we address assignment seven relating to the $500,000 cap on noneconomic damages. Fourth, we address Weyerhaeuser’s tenth assignment, which relates to the validity of the limited judgment on Stayton’s indemnity claim. And finally, we address the twelfth and thirteenth assignments involving the trial court’s award of defense costs to Stayton.
A. The agreement: first through fourth assignments of error
Weyerhaeuser’s first through fourth assignments relate to the partial settlement agreement between Stayton and plaintiffs. We begin with the relevant text of that agreement.
“1. In the event of a verdict, net of plaintiffs’ comparative fault, in favor of plaintiffs against Stayton Builders Mart in an amount less than $1.5 million, or in the event of a defense verdict, Stayton Builders Mart will pay plaintiffs the sum of $1.5 million. Stayton Builders Mart will be free to collect any amount it is awarded in its contribution or indemnity claims from third-party defendant.
“2. In the event of a net verdict in excess of $1.5 million, Stayton Builders Mart will pay the amount of the verdict up to $2 million. Any excess over $2 million that is recovered by Stayton Builders Mart on its indemnity or contribution claims against third-party defendant Weyerhaeuser, if any, shall be paid to the plaintiffs.
“3. In exchange for the defendant entering into this High-Low Agreement, the plaintiffs agree to dismiss their negligence claims against Stayton Builders Mart, Inc.
“4. Both plaintiffs and Stayton Builders Mart agree not to appeal the jury verdict on plaintiffs’ claim against Stayton Builders Mart. Stayton Builders Mart retains the right to appeal the jury verdict on its third-party indemnity and contribution claims.
“5. Stayton Builders Mart agrees to pursue its indemnity claim based upon strict liability against third-party defendant through trial to verdict.
“6. In the event of an appeal by third-party defendant that could affect Stayton Builders Mart’s obligations under this Agreement, Stayton Builders Mart and its insurer will pay the sum of $1.5 million within 60 days after the jury verdict. The potential obligation of Stayton Builders Mart and its insurer for the remaining $500,000 will then be determined by the ultimate outcome of the appeals process, pursuant to the terms of this Agreement.”
As a preliminary matter, the parties dispute whether the agreement should be labeled a “Mary Carter agreement”
After Stayton and plaintiffs entered into the agreement, Weyerhaeuser moved to dismiss Stayton from the action as a defendant, arguing that there was no longer a justiciable controversy between plaintiffs and Stayton because the agreement eliminated any adversity between them. The trial court’s denial of that motion is the subject of Weyerhaeuser’s first assignment of error.
As relevant to the parties’ arguments, whether a justiciable controversy exists depends on whether (1) “the interests of the parties to the action are adverse” and (2) “the court’s decision in the matter will have some practical effect on the rights of the parties to the controversy.” Brumnett v. PSRB,
Weyerhaeuser argues, as it did to the trial court, that the agreement eliminated all adversity between plaintiffs and Stayton. Specifically, Weyerhaeuser contends that, under the terms of the agreement, Stayton’s only chance of recovering the money that it agreed to pay plaintiffs was if (1) the jury found Stayton and Weyerhaeuser liable for
Plaintiffs counter that the agreement was only a partial settlement and that it did not extinguish all adversity between plaintiffs and Stayton. In particular, plaintiffs point out that the agreement established a potential range of liability for Stayton between $1.5 and $2 million, which they argue made their interests adverse enough to survive Weyerhaeuser’s challenge to justiciability. The trial court agreed with plaintiffs on this point, and so do we.
At the outset, we acknowledge that agreements such as the one at issue here have the potential to distort the adversarial process. The Supreme Court, in Grillo v. Burke’s Paint Co.,
We also acknowledge that Stayton, as a result of the agreement, had an interest in the jury finding both it and Weyerhaeuser liable for at least $1.5 million. That is so because, if the jury had returned a defense verdict, Stayton would have been liable to plaintiffs for $1.5 million under the agreement and would have been precluded from recovering in indemnity because Weyerhaeuser would not have been found to be liable to plaintiffs. See Marton v. Ater Construction Co., LLC,
Nevertheless, the potential ills created by such agreements did not, as a matter of law, extinguish all adversity between plaintiffs and Stayton. Instead, whether adversity
In Stephens v. Bohlman,
“was absolute; nothing in the agreement entitles it to recover any portion or to pay any additional amount no matter what the outcome of the lawsuit against defendant. Thus, [the] hospital’s only purpose for appearing at the trial was to fulfill its contractual obligation to plaintiff because it had no interest in the outcome.”
Id. at 384. Accordingly, we concluded that the hospital had nothing at stake in the outcome of the case, and the trial court erred in not dismissing the hospital as a party.
In Dew v. City of Scappoose,
We reversed, explaining that, even though the agreement effectively insulated the councilor from any personal financial exposure, “the question of his liability remains an open one.” Id. at 143. Accordingly, we concluded that the outcome of the trial would have a practical effect on the councilor’s rights “because it will determine whether he is personally liable. Because [his] personal liability to [the] plaintiff has yet to be determined, the parties remain in an adversarial relationship and the issue is not moot.” Id. In reaching that conclusion, we noted that Stephens differed because the plaintiff in that case “specifically discharged the defendant hospital from any further liability beyond the $90,000 that the hospital had already paid.” Id.
We acknowledge that this case differs from Dew because the agreement in that case did not give the councilor an affirmative incentive to facilitate a determination that both he and the city were liable for the plaintiffs section 1983 claim; here, the agreement provided
Weyerhaeuser’s second through fourth assignments of error challenge the trial court’s denial of Weyerhaeuser’s request to admit the agreement into evidence. At a pretrial hearing, Weyerhaeuser argued that the agreement should be admitted into evidence because
“Weyerhaeuser would like to make use of the Mary Carter Agreement during the course of the presentment of evidence. We believe the jury has a right to know of this agreement. They have a right to know the terms of this agreement. They also have a right to know that it’s insurance that’s paying these terms as opposed to Stayton Builders Mart, a small, local lumber yard.”
Weyerhaeuser then acknowledged that, under OEC 411,
“[t]he concern is that in typical cases where a defendant has insurance, a plaintiff would use that against the defendant and essentially show the jury, well, don’t worry about this defendant, whether they can pay. They have got insurance. And that heightens the likelihood that a jury would find negligence. In this case, it’s different.
“In this case, the jury will be left with the impression that this small, local lumber yard is potentially on the hook for a very large settlement. And they might think differently as to how to deal with the apportionment of damages if they were under that false impression.
“The true impression is that the money is being paid by a very large insurance company in Ohio, and the jury has a right to know that. And it is not within the exclusion as detailed in [the] Oregon Rules of Evidence.”
The trial court ruled that “[b]ased upon the ruling in Bocci, the court would be consistent with that ruling and say that the terms of the agreement and the fact that insurance is involved would not be admissible at trial.”
“[h]aving reviewed [cases from other jurisdictions discussing the validity of Mary Carter agreements], we conclude that the [Mary Carter agreement] in the instant case is valid and enforceable, but that it would have been subject to pretrial discovery and, upon request of defendant, would have been admissible in evidence.”
Plaintiffs counter that Weyerhaeuser offered the agreement to inform the jury that any financial obligation incurred by Stayton at trial would be paid by Stayton’s insurer and that such a purpose — to demonstrate that Stayton had insurance coverage and to influence the jury’s potential allocation of fault and its damage award — was impermissible under OEC 411. Plaintiffs acknowledge that “[t]he jury was entitled to know that plaintiffs and Stayton had entered into a partial settlement in which Stayton’s liability would be based on the outcome of trial,” but asserts that the jury was not entitled to know that Stayton’s insurer would pay Stayton’s obligation to plaintiffs.
Ultimately, we conclude that the trial court did not err. As an initial matter, we disagree that the court in Grillo explicitly held that all Mary Carter agreements must be admitted into evidence without any analysis of relevance and admissibility under the Oregon Evidence Code. The court did not have occasion to consider that question. Rather, the court reviewed the trial court’s denial of a nonsettling defendant’s motion for new trial based on the nonsettling defendant’s post-trial determination that the plaintiff and the settling defendant had entered into a Mary Carter agreement immediately before trial. In reviewing that issue, the court examined the various criticisms of Mary Carter agreements and ultimately agreed with the jurisdictions that refuse to “condemn the agreements as invalid per se.”
Given that conclusion, it was appropriate for the trial court to evaluate Weyerhaeuser’s request to admit the entire agreement between plaintiffs and Stayton in light of relevant provisions of the evidence code. See OEC 101(2) (the Oregon Evidence Code generally applies in civil actions). Weyerhaeuser makes a limited attempt to argue that “insurance was not being offered to show negligence or wrongful conduct, but to show prejudice and that small local lumber yard Stayton would not be on the hook to pay a judgment on their own.” For two reasons, we agree with plaintiffs that the trial court did not err in excluding the agreement on the basis that it contained evidence of insurance in violation of OEC 411.
Second, Weyerhaeuser concedes that it did not attempt to introduce the agreement with the insurance information redacted. Where a party attacks the exclusion of an exhibit that contains some irrelevant material, that party has “the burden of excising the irrelevant portions of the exhibit to preserve the claimed error.” Fazzolari v. Portland School Dist. No. 1J,
We next consider Weyerhaeuser’s third and fourth assignments of error. In its third assignment, Weyerhaeuser contends that, if the trial court properly concluded that the agreement could not be entered into evidence because of the insurance references, the trial court should have, at the very least, informed the jury about the other terms of the agreement so that the jury had a full understanding of it. In its fourth assignment of error, Weyerhaeuser argues that it should have been allowed to use the agreement, or evidence of its terms, to establish bias, interest, or motive of witnesses at trial. In particular, Weyerhaeuser asserts that the court should have allowed it to use the agreement in its cross-examination of Roberts, a key witness for Stayton whose testimony supported a finding that the broken board came from Weyerhaeuser.
Plaintiffs insist that Weyerhaeuser failed to preserve its third and fourth assignments of error. As to the third, plaintiffs point out that Weyerhaeuser never offered the agreement into evidence without the offending insurance references — as Weyerhaeuser does not dispute — and that, in fact, the court instructed the jury that the agreement existed and that the jury could consider it to evaluate the credibility or believability of witnesses who testified. As to the fourth assignment, plaintiffs maintain that it was not preserved because Weyerhaeuser never attempted to cross-examine Roberts about the agreement — and indeed, Weyerhaeuser concedes that it never attempted to raise the agreement during cross-examination of Roberts or any other witness.
Nevertheless, Weyerhaeuser takes the view that its third and fourth assignments of error are preserved because it was clear from the trial court’s ruling at the pretrial hearing that neither the agreement nor its terms were admissible “for any purpose.” As such, Weyerhaeuser relies on the principle that “when the trial court excludes an entire class of evidence by declaring, in advance, that it is inadmissible as a matter of law, the ruling renders a further offer futile.” State v. Olmstead,
We reject Weyerhaeuser’s argument that that principle applies in this instance. Rather, the record, particularly when considered in light of the purposes of the preservation rules, supports the conclusion that Weyerhaeuser had to raise the specific points that it now makes in its third and fourth assignments of error in order to preserve them for our review.
One purpose of the preservation rules is to allow the adversary to present its position and to permit the court to understand and avoid or correct the error. Peiffer v. Hoyt,
Neither of those purposes was served as to Weyerhaeuser’s third and fourth assignments of error. At the pretrial hearing, Weyerhaeuser argued that the agreement as a whole should be entered into evidence, including the insurance references, for the express purpose of informing the jury that the money Stayton had agreed to pay to plaintiffs would be paid by a “very large insurance company in Ohio.” Although Weyerhaeuser also made general reference to OEC 411 and the admission of insurance information for purposes of showing prejudice, that reference, considered in context, did not reasonably put plaintiffs, Stayton, or the trial court on notice that Weyerhaeuser was alternatively asking the court to inform the jury about the terms of the agreement in the way that it now argues it was precluded from doing at trial. The same goes for Weyerhaeuser’s contention regarding cross-examination. Nothing at the pretrial hearing would have informed the court or other parties that Weyerhaeuser was requesting a ruling on whether it could use terms of the agreement, or the existence of the agreement, to cross-examine witnesses. Instead, Weyerhaeuser’s argument at the pretrial hearing can be fairly characterized only as a request to enter the entire agreement into evidence to inform the jury of its existence and to inform the jury that Stayton had liability insurance.
Furthermore, the trial court’s charge to the jury both before and after the presentation of evidence undermines Weyerhaeuser’s contention that the trial court’s pretrial ruling unequivocally excluded any use of the agreement or its terms during trial. Prior to opening statements, the trial court informed the jury that Stayton and plaintiffs had entered into a settlement agreement, but Stayton remained a party to the action, and that the jury “may only consider the fact of the settlement as it might bear on the issues of credibility or believability of the witnesses who testify.” The trial court similarly instructed the jury before it began its deliberations.
In these circumstances, it was incumbent on Weyerhaeuser to seek to use the agreement or certain terms to establish bias, interest, or motive beyond its general request that the agreement be entered into evidence as a whole to show that Stayton was adequately insured. The third and fourth assignments of error are unpreserved.
B. The verdict form: fifth and sixth assignments of error
Weyerhaeuser’s fifth and sixth assignments of error relate to the verdict form used by the court. First, Weyerhaeuser contends that, pursuant to the comparative fault statute, ORS 31.600, Five Star should have been included on the verdict form so that the jury could apportion fault to it. In particular, Weyerhaeuser relies on ORS 31.600(2), which states in part, “The trier of fact shall compare the fault of the claimant with the fault of any party against whom recovery is sought ***[.]” Weyerhaeuser argues that because plaintiffs sought recovery from Five Star in their complaint, the jury should have been given an opportunity to assign a fault percentage to it — even though Five Star defaulted and no evidence was presented at trial as to Five Star’s potential fault.
In response, plaintiffs first contend that Weyerhaeuser failed to preserve its fifth assignment of error, and we agree. In support of preservation, Weyerhaeuser asserts that it sought to have Five Star on the verdict form “both by submitting a proposed verdict form before trial, and by verbally confirming, before the verdict form was provided to the jury, that the court had rejected its request to include Five Star on the verdict form.”
The record demonstrates that after instructing the jury, the trial court read to the jury the verdict form that it ultimately used. After the jury was excused for that day, the court asked the parties whether they had any objections. Stayton objected to the verdict form. The court explained that
“the court chose the verdict form for the reason that it spent approximately three hours last night and this morning with counsel, including during the noon hour, and counsel were not able to agree on the language in a special verdict form, in particular in regard to the specific questions concerning product liability, product liability verdict in this case.
“And so for that reason the trial judge * * * said we’ll stick with the Uniform Instructions until someone in the appellate courts tell us that those are incorrect for use in a products liability case.”
Stayton explained that it did not believe that the verdict form was appropriate for a strict products liability case because the verdict form was not adapted to the issues in such a case, such as the condition of the product and whether it was unreasonably dangerous when it left the manufacturer’s “hands.” Weyerhaeuser then joined in Stayton’s objection, asking
“that the verdict form[] that is submitted by Weyerhaeuser be made a part of the court file. It’s very similar to the one that Stayton * * * actually submitted, and we join with all of the concerns that they express now, as well as back when it was originally being contemplated.”
Weyerhaeuser continued with further explanation as to why the verdict form did not match with strict products liability law, and then transitioned to its last objection:
“Also with the original verdict form that was submitted we requested that Five Star be added. I understand that was taken off by the court, and that plaintiffs’ counsel stipulated back in chambers that by removing it from the verdict form that it would not be a waiver of any argument Weyerhaeuser may make at a later date, offset from any sums obtained from Five Star Construction.”
In short, the record does not establish that Weyerhaeuser properly preserved the argument it now makes on appeal. As we explained in relation to Weyerhaeuser’s third and fourth assignments, one purpose of the preservation requirement is to allow the adversary to present its position and to permit the court to understand and avoid or correct the error, Peiffer,
In its sixth assignment of error, Weyerhaeuser declares that the verdict form used by the court likely confused the jury because it allowed the jury to assign liability on the basis of negligence, as opposed to strict products liability. Weyerhaeuser maintains that, given the difference in proof between claims for negligence and strict liability, the verdict form used was prejudicial.
The verdict form, as pertinent, stated:
“We, the jury, find:
“la. Was * * * Stayton * * * at fault in one or more of the ways the plaintiffs claim?
“ANSWER: _____(Yes or No)
“lb. Was * * * Staytonfs] * * * fault a cause of damages to the plaintiffs?
“ANSWER: _____(Yes or No)
“2a. Was * * * Weyerhaeuser * * * at fault in one or more of the ways claimed?
“ANSWER: _____(Yes or No)
“2b. Was *** Weyerhaeuser[’s] *** fault a cause of damages to the plaintiffs?
“ANSWER: _____(Yes or No)
“3a. Was plaintiff Kevin Rains at fault in one or more of the ways claimed by *** Stayton *** and *** Weyerhaeuser * * * ?
“ANSWER: _____(Yes or No)
“3b. Was plaintiff Kevin Rains’ fault a cause of damages to the plaintiffs?
“ANSWER: _____(Yes or No)”13
Weyerhaeuser asserts that, instead of generically asking the jury if defendants were “at fault,” the form should have tracked the elements of a claim for strict products liability and required the jury to indicate whether it found that (1) the defendants were sellers or manufacturers, (2) the product was in defective condition, (3) the product, in its defective condition, was unreasonably dangerous, and (4) the product reached the user without substantial change in the condition in which it was sold.
Weyerhaeuser acknowledges that the trial court properly instructed the jury with regard to the law of strict products liability. Weyerhaeuser asserts, however, that when the instructions and the verdict form were considered together, the jury likely was confused, warranting reversal in this case. In particular, as noted, Weyerhaeuser contends that the verdict form was inconsistent with the law on strict products liability and may have confused the jury in regard to that claim.
Plaintiffs counter that there is no legal requirement that the verdict form ask the factfinder to answer a question on every element of a claim. Instead, plaintiffs contend that the trial court instructed the jury on “fault” in the context of Kevin’s strict products liability claim and the comparative fault statute. Accordingly, plaintiffs assert that, when the jury instructions and the verdict form are considered together, there is no risk that the jury misunderstood its charge to determine liability based on strict products liability law. That is so because the jury, which is presumed to follow the court’s instructions, would have understood that “fault” as used on the verdict form meant that a party was liable under the elements of strict products liability.
We agree with plaintiffs. When the verdict form is considered in conjunction with the jury instructions, it is not likely that the verdict form “created an erroneous impression of the law in the minds of the jurors” that “affected the outcome of the case.” Nolan v. Mt. Bachelor, Inc.,
The elements of a strict products liability claim provided in ORS 30.920, are as follows:
“(1) One who sells or leases any product in a defective condition unreasonably dangerous to the user or consumer or to the property of the user or consumer is subject to liability for physical harm or damage to property caused by that condition, if:
“(a) The seller or lessor is engaged in the business of selling or leasing such a product; and
“(b) The product is expected to and does reach the user or consumer without substantial change in the condition in which it is sold or leased.”
The trial court instructed the jury as to the meaning of “defective condition” and “unreasonably dangerous to the user or consumer.” The court also instructed the jury “on the law of strict liability for a defective product,” and that instruction touched on all the elements of a strict products liability claim. Also relevant is that the court instructed the jury on comparative fault. Weyerhaeuser does not take issue with the court’s instructions on strict liability, so the heart of its argument is that, even though the jury was correctly instructed as to what had to be proved to establish strict products liability, use of the phrase “at fault” on the verdict
As plaintiffs note, we generally presume that jurors follow jury instructions. Bazzaz v. Howe,
C. Noneconomic damages: seventh assignment of error
Weyerhaeuser’s seventh assignment challenges the trial court’s denial of its motion to reduce each plaintiffs noneconomic damages under ORS 31.710(1). ORS 31.710(1) caps noneconomic damages at $500,000 in most civil actions “arising out of bodily injury[.]” The trial court denied Weyerhaeuser’s motion to apply the statutory cap, agreeing with plaintiffs that application of the cap in this case would violate Article I, section 17, of the Oregon Constitution.
In the most recent Supreme Court case addressing ORS 31.710 and Article I, section 17, the court explained:
‘“Article I, section 17, guarantees a jury trial in civil actions for which the common law provided a jury trial when the Oregon Constitution was adopted in 1857 and in cases of like nature. In any such case, the trial of all issues of fact must be by jury. The determination of damages in a personal injury case is a question of fact. * * * The legislature may not interfere with the full effect of a jury’s assessment of noneconomic damages, at least as to civil cases in which the right to jury trial was customary in 1857[.] ’ ”
Klutschkowski v. PeaceHealth,
We begin with Kevin’s claim for strict products liability. Weyerhaeuser maintains that Article I, section 17, is not implicated in this case because an action for strict products liability was not recognized in Oregon until 1967 in the case of Heaton v. Ford Motor Co.,
First, Weyerhaeuser asserts that, in ORS 30.920, the legislature created a cause of action that is separate and independent from a common-law negligence action for defective products. Second, Weyerhaeuser explains that the types of proof required to establish each claim are different. According to Weyerhaeuser, a plaintiff can establish strict products liability by demonstrating the existence of a product defect that rendered the product unreasonably dangerous to persons or property, while a negligence claim based on a product defect requires proof that the product defect resulted from the manufacturer’s
Plaintiffs take a different approach, arguing that strict products liability has origins in the common law, such that it is a case “of like nature” to those to which a right to a jury trial was customary in 1857. Plaintiffs rely on a statement in State v. 1920 Studebaker Touring Car et al.,
“the constitutional right of trial by jury is not to be narrowly construed, and is not limited strictly to those cases in which it had existed before the adoption of the Constitution, but is to be extended to cases of like nature as they may hereafter arise.”
Plaintiffs posit that “cases of like nature” include actions for money damages that have common-law origins, as well as any modern variation of the common-law action. In line with that view, plaintiffs claim that the Supreme Court in Stout v. Madden & Williams,
Restating the parties’ positions in more simple terms, they differ as to the meaning of the statement in the Supreme Court’s prior cases that the cap would violate Article I, section 17, in “cases of like nature” to those causes of action that existed in 1857. Both parties acknowledge that, as of 1857, a party could recover in negligence for injuries sustained as a result of a product defect. For plaintiffs, that is enough — Kevin’s strict products liability claim is simply a “right of action now clothed in statutory garb, but with common law origins.” Weyerhaeuser counters that, given the substantial differences between the elements of a strict products liability claim and the common-law negligence product liability claim that existed in 1857, the legislative alteration of the amount of recoverable damages in a strict products liability claim does not run afoul of Article I, section 17.
Resolving this dispute is difficult given the state of the law. See Klutschkowski,
In resolving the issue, we find Hughes,
As explained below, we conclude that in 1857, there was no common-law tradition with respect to a strict products liability claim that could provide the basis for a conclusion that the legislature is prohibited by Article I, section 17, from altering the measure of damages available for such an action.
As a starting point, actions for strict products liability are governed by statute, not the common law. Griffith v. Blatt,
“(1) One who sells or leases any product in a defective condition unreasonably dangerous to the user or consumer or to the property of the user or consumer is subject to liability for physical harm or damage to property caused by that condition, if:
“(a) The seller or lessor is engaged in the business of selling or leasing such a product; and
“(b) The product is expected to and does reach the user or consumer without substantial change in the condition in which it is sold or leased.”
ORS 30.920(2) provides that subsection (1) applies even when “[t]he seller or lessor has exercised all possible care” and the injured party has no contractual relationship with the sellor or lessor.
The common law, as it existed in 1857, did not recognize the type of action that is now codified in ORS 30.920. Although the recognition of negligence actions based on product defects generally predated the Oregon Constitution, see Winterbottom v. Wright, 152 Eng Rep 402 (1842), the general rule that developed during the mid-nineteenth century in the United States was that “the original seller of goods was not liable for damages caused by their defects to anyone except his immediate buyer, or one in privity with him.” W. Page Keeton ed., Prosser and Keeton on the Law of Torts § 96, 681 (5th ed 1984). Almost immediately, exceptions to that general rule were carved out, including an exception that originated in the case of Thomas v. Winchester,
In addition, the concept of strict liability for product defects did not develop in the law until the early twentieth century. Keeton, Prosser and Keeton on the Law of Torts § 97 at 690. The first acknowledged case that “discarded the requirement of privity of contract” in product liability negligence actions was a Washington case, but even that case was based on the legal theory of implied warranty. Mazetti v. Armour & Co., 75 Wash 622,
Given that information, and acknowledging that Weyerhaeuser is correct that a strict products liability claim under ORS 30.920 differs in significant ways from a common-law negligence claim for a product defect, we cannot conclude that the legislature lacked authority, despite Article I, section 17, to define the right to recover for strict products liability actions, to decide who could recover, and to establish the nature of the damages that are recoverable. See Hughes,
Next, we address the cap on noneconomic damages as applied to Mitzi’s loss of consortium claim. There is little dispute that a common-law claim for loss of consortium predates 1857. Keeton, Prosser and Keeton on the Law of Torts § 125 at 931 (explaining that, by 1619, a husband could recover loss of consortium damages from a tortfeasor who had injured his wife). However, Weyerhaeuser points to Sheard v. Oregon Electric Ry. Co.,
As the Supreme Court explained in Sheard,
“The reason why at common law a husband could recover for loss of consortium, but his wife could not, is historical in character. In the bygone generations when the customs, conduct, and belief of the English people were crystallizing themselves into the rules of human conduct which are now known as the common law, a woman was not regarded socially or civilly as the equal of her husband. * * * Marriage operated as a suspension for most purposes of the legal existence of the wife.”
ORS 31.710 violates Article I, section 17, in those classes of cases in which a jury trial was customary in 1857, or in cases of “like nature.” See Klutschkowski,
D. Stayton’s indemnity claim: tenth assignment
In its tenth assignment of error, Weyerhaeuser challenges the trial court’s entry
To establish a common-law indemnity claim, the indemnity plaintiff must plead and prove:
“(1) [it] has discharged a legal obligation owed to a third party; (2) the defendant was also liable to the third party; and (3) as between the [plaintiff] and the defendant, the obligation ought to be discharged by the [defendant].”
Fulton Ins. v. White Motor Corp.,
The parties do not dispute the state of the record as it relates to this assignment. Stayton entered into the agreement with plaintiffs, which limited Stayton’s financial exposure to plaintiffs, but kept Stayton in the action as a defendant through trial. The jury returned a verdict against Stayton and Weyerhaeuser. Stayton and Weyerhaeuser had agreed that the court would determine Stayton’s indemnity claim after the jury trial, and the court decided that issue in Stayton’s favor. Accordingly, the court entered a limited judgment for plaintiffs against Stayton and Weyerhaeuser on May 28, 2010, and on that same day, entered a limited judgment for Stayton against Weyerhaueser for indemnity in the amount of $2 million. Stayton acknowledges that, at the time the court entered the indemnity judgment, Stayton had presented no evidence that it had made any payment to plaintiffs on their judgment or under the terms of the agreement. Stayton also acknowledges that nothing in the agreement explicitly addressed Weyerhaeuser’s liability to plaintiffs.
Weyerhaeuser contends that Stayton could have proved that it had discharged a legal obligation owed to a third party if it had introduced evidence that it (1) had actually paid plaintiffs’ judgment against Stayton, which would have, in turn, extinguished some of Weyerhaeuser’s liability to plaintiffs, or (2) “bought peace” for Weyerhaeuser in the settlement agreement through a release by plaintiffs of at least some portion of Weyerhaeuser’s liability to them.
Stayton disagrees, contending that actual discharge of its obligation to plaintiffs is not required to prove a common-law indemnity claim and that the trial court was therefore authorized to enter the limited judgment for Stayton. In so arguing, Stayton contends that
“[t]he agreement set the amount that Stayton would owe plaintiffs depending on the jury’s verdict. The agreement did not purport to discharge anyone’s liability because any payment by Stayton made pursuant to its terms would be made pursuant to a judgment which, of course, plaintiffs eventually obtained against Stayton and Weyerhaeuser.”
We understand Stayton to be asserting that the limited judgment entered for plaintiffs was the source of Stayton’s obligation to plaintiffs, not the agreement, and, in that circumstance, whether the settlement agreement “bought peace” for Weyerhaeuser is irrelevant. Instead, Stayton maintains that ORCP 22, as understood and, applied in two of our previous cases, Kahn v. Weldin,
As we explain below, we disagree with Stayton’s view of the law. Although we acknowledge that ORCP 22 C may have an effect on the appropriate timing of entry of an indemnity judgment in a case like this, we ultimately conclude that the rule does not “abrogate” the discharge element or allow the trial court to enter an executable judgment without proof of actual discharge. Instead, ORCP 22 C might have allowed the court to enter a conditional judgment for Stayton after it concluded that Weyerhaeuser should indemnify Stayton, but that did not happen in this case.
Regardless, we conclude that the “discharge a legal obligation” element in the circumstances presented in this case required Stayton to prove either (1) it had actually paid plaintiffs pursuant to the limited judgment against Stayton and Weyerhaeuser or (2) its settlement agreement with plaintiffs “bought peace” for Weyerhaeuser. Because Stayton acknowledges that, at the time that the trial court entered the judgment for Stayton, neither (1) nor (2) had occurred, it was error for the trial court to enter an executable judgment at that time. It may have been appropriate for the court to enter a conditional judgment for Stayton, subject to execution upon proof of actual discharge by Stayton of Weyerhaeuser’s liability to plaintiffs, but there is no indication that that is what happened here.
We begin with Stayton’s contention that the court could enter the indemnity judgment without proof that Stayton had discharged any of Weyerhaeuser’s legal obligation to plaintiffs. First, it relies on Kahn and Freeport to advance the argument that the court could enter an indemnity judgment without evidence that, at that time, Stayton had discharged any obligation owed to plaintiffs. In doing so, Stayton argues that, when an indemnity claim is brought pursuant to ORCP 22 C, “discharge” is not required before the trial court can enter a judgment for indemnity.
The Supreme Court in Savelich recognized that, barring some other form of release of liability, actual payment of a judgment is necessary to discharge a liability so as to entitle the indemnity plaintiff to indemnity from the indemnity defendant.
That understanding of the discharge element — that actual payment is required before an indemnity plaintiff has a right to indemnity — has not since been called into question by any Oregon cases and is consistent with the treatment of the issue in the Restatement (Third) of Torts § 22 comment b (2000) (explaining that an indemnitee may extinguish the liability of the indemnitor “by a settlement with the plaintiff that by its terms or by application of law discharges the indemnitor from liability or by satisfaction of judgment that by operation of law discharges the indemnitor from liability”). In addition, contrary to Stayton’s assertions, nothing in the law leads to the conclusion that ORCP 22 C has abrogated that requirement.
ORCP 22 C(l) provides, in relevant part:
“After commencement of the action, a defending party, as a third party plaintiff, may cause a summons and complaint to be served upon a person not a party to the action who is or may be liable to the third party plaintiff for all or part of the plaintiff’s claim against the third party plaintiff [.]”
In Kahn, the Kahns had sued the Weldins and other parties, including Kirsten Corporation for a debt owed.
This court noted that the purpose of the third-party pleading rule, ORCP 22, was to “promote the expeditious and economical adjudication in a single action of the entire subject matter arising from a set of facts, including claims contingent on the determination of other issues in the case.” Id. Accordingly, we stated, “To require a defendant who raises an indemnity cross-claim to plead and prove actual discharge of a judgment before the judgment is entered against the defendant raising it would contravene the purpose and destroy the usefulness of the cross-claim rule.” Id. The Kahn court concluded, therefore, that the indemnity claim was properly presented to the trial court, was decided in the trial court’s judgment, and was properly before the court on appeal. Id. at 371-72.
In our view, Kahn stands for a proposition that we recently restated in Marton: “ORCP 22 is a procedural rule that affects the timing — not the elements — of third party claims.”
Freeport is similarly unavailing to Stayton. In that case, the plaintiff in an earlier action, Klimp, had sued Freeport for breach of contract related to construction defects.
As part of that appeal, Freeport argued that, under ORCP 22 C, its third-party breach of contract claim was improperly brought and was not capable of being decided in the prior action. We noted that ORCP 22 C abrogated the requirement of separate actions, explaining that ORCP 22 C was patterned after the federal impleader rule, FRCP 14(a), which was “designed to decide contingent liability as well as primary liability and the third-party claim can accelerate determination of the liability, if any, between the third-party plaintiff and the third-
Based on that understanding of the law, we stated that “ [u] nder ORCP 22 C, Freeport’s third-party claim accelerated the determination of Gray’s liability. Because the court made findings favorable to Freeport on its breach of contract claim, and its damages were ascertained on the findings made, Freeport was entitled to a judgment against Gray in the prior action.” Id. at 653.
Stayton maintains that, under Freeport, (1) “the discharge requirement *** was abrogated by ORCP 22 C(l)” and (2) Freeport was “entitled to judgment” on the third-party indemnity claim that it had brought in the prior action, even though it had not yet discharged any legal obligation on the underlying judgment. Freeport does not stand for the former proposition. The court in Freeport never stated that ORCP 22 C abrogated the “discharge requirement”; it simply held that the requirement of separate actions had been abrogated. Moreover, as we have since reaffirmed, ORCP 22 C is a procedural rule that did not alter the substance of a common-law indemnity claim. Marton,
The court’s statement that Freeport was “entitled to judgment” ultimately does not go as far as Stayton’s contention that the “discharge requirement” was not required in this case for the trial court to enter the indemnity judgment. Stayton’s understanding of the court’s statement that Freeport was “entitled to judgment” ignores the context of that statement. We reached that conclusion after acknowledging that federal impleader is designed to accelerate the determination of liability and that “a court may grant a conditional judgment against the third-party defendant that does not become enforceable until the third-party plaintiff is otherwise determined to be entitled to judgment or payment of the judgment.” Freeport,
Instead, Freeport concluded that ORCP 22 C is intended to “accelerate the determination of liability” for third-party claims and further suggests that the rule allows a court to “grant a conditional judgment against the third-party defendant” that is not immediately enforceable. Even assuming that ORCP 22 C authorized the trial court to enter a conditional judgment in this case, that is not what happened here. Instead, the court entered an executable judgment without evidence that Stayton had satisfied the first element of its common-law indemnity claim. Accordingly, the trial court erred in entering Stayton’s limited judgment.
E. Stayton’s defense expenses: twelfth and thirteenth assignments of error
Finally, in its twelfth and thirteenth assignments, Weyerhaeuser challenges the trial court’s general judgment that awarded Stayton’s defense expenses against Weyerhaeuser in indemnity. Following trial, and after the trial court had entered the limited judgment on Stayton’s indemnity claim, the trial court determined that Weyerhaeuser should indemnify Stayton for the expenses that Stayton
Weyerhaeuser’s argument in its twelfth assignment of error is narrow. It asserts that Stayton failed to prove two prerequisites for obtaining indemnity for its defense expenses. First, according to Weyerhaeuser, the court could award defense costs in indemnity only if Weyerhaeuser had “wrongfully” refused to defend Stayton from plaintiffs’ claims. Second, Weyerhaeuser contends that Stayton’s tender of defense was untimely, which Weyerhaeuser asserts precludes an award of defense expenses to Stayton. Stayton counters that the law does not contain a “wrongful refusal” requirement, nor is there a specific requirement in the law that an indemnity plaintiff “timely tender” its defense in a case like this one. Stayton also disputes whether its tender was in fact untimely.
We agree with Stayton that the authority on which Weyerhaeuser relies does not establish that defense expenses are recoverable in indemnity only if the indemnity defendant wrongfully refused to defend the indemnity plaintiff in the action brought by the original plaintiff. Weyerhaeuser simply points us to C.I.T Group/Equipment Financing, Inc. v. Young,
We also agree with Stayton that the trial court did not err in awarding defense costs even though Stayton tendered its defense to Weyerhaeuser 18 months after it served its third-party complaint. Based on the authorities presented by Weyerhaeuser to the trial court in support of its contention, none of which bear on whether a timely tender affects the trial court’s ability to award defense costs in the circumstances presented in this case, we cannot say that the trial court erred in awarding defense costs because of the timing of Stayton’s tender of defense.
In its final assignment of error, Weyerhaeuser asserts that the trial court erred in awarding Stayton defense expenses incurred while prosecuting its indemnity claim. On appeal, Weyerhaeuser argues that the “recovery of attorney fees on an indemnity claim is limited to fees incurred in defense of the claim from which the claimant is seeking indemnity, and not fees incurred in connection with litigation over the entitlement to indemnification.” Accordingly, Weyerhaeuser asserts that the trial court erred “in awarding the entire amount of Stayton’s requested defense expenses, ignoring any distinction between expenses incurred relative to Stayton’s defense of plaintiffs’ claims as opposed to its prosecution of the indemnity claims.”
The most glaring problem with Weyerhaeuser’s assignment of error is that its argument is not preserved — at least with respect to the majority of the expenses awarded. Several months after trial, Stayton sought defense costs in the amount of $248,327.20, which represented costs incurred from the date Stayton served its third-party complaint on Weyerhaeuser through a date six weeks after the jury verdict. Weyerhaeuser objected, arguing several points, none of which included the argument Weyerhaeuser now makes in this assignment.
In the meantime, after the hearing but before the trial court issued its letter opinion on the original request, Stayton filed a supplemental request, seeking expenses of $17,657.12 that it had incurred since the date that it filed its original request. Weyerhaeuser objected to the supplemental request, reiterating some of the objections it made to Stayton’s original request and for the first time raising the argument that it now makes on appeal — that any expenses sought related to prosecution of its indemnity claim cannot be recovered. However, Weyerhaeuser’s argument in that vein was explicitly limited to an objection to the supplemental request and was also limited to challenging expenses based on the argument that Stayton had settled the claims for which it seeks indemnity when it entered into the agreement with plaintiffs. Alternatively, Weyerhaeuser argued that it should not be obligated to pay for expenses related to Weyerhaeuser’s appeal or for “post-verdict” disputes between Stayton and plaintiffs arising out of the settlement agreement. Specifically, Weyerhaeuser objected to $4,003 in expenses related to the appeal and settlement agreement disputes.
Given that history, we conclude that Weyerhaeuser has preserved its challenge, on the basis it now raises, only to $4,003 in expenses sought by Stayton in its supplemental request. For one, the argument that Weyerhaeuser makes on appeal was not presented to the trial court for it to consider when evaluating Stayton’s original request. And second, Weyerhaeuser’s argument was explicitly linked to expenses sought in Stayton’s supplemental request.
Stayton concedes, as it did in the trial court, that the trial court should not have awarded $1,512 in appeal-related fees and that the general judgment should be reversed and remanded for a reduction in that amount. We accept Stayton’s concession on that point, and reverse and remand the general judgment for a reduction of $1,512.
However, we reject Weyerhaeuser’s other argument, that the trial court erred in awarding $2,491 in expenses related to “post-verdict” disputes between Stayton and plaintiffs. In short, Weyerhauser has not provided any argument as to why the expenses that it apparently identified below as objectionable could not be awarded by the trial court as expenses “incurred in defense of the claim from which the claimant is seeking indemnity.” Weyerhaeuser’s conclusory statement of proposed law, without any attempt to develop the argument, or any attempt to explain how the facts might apply to such an argument, precludes meaningful review of that issue. See Beall Transport Equipment Co. v. Southern Pacific,
III. CONCLUSION
In summary, we reverse and remand the limited judgment entered for plaintiffs
Plaintiffs’ limited judgment reversed and remanded for application of ORS 31.710(1) to plaintiffs’ strict products liability claim, otherwise affirmed; Stayton Builders Mart’s limited judgment for indemnity reversed; general judgment reversed and remanded with instructions to reduce the judgment by $1,512, otherwise affirmed.
Notes
Plaintiffs also brought a claim against Five Star under ORS 654.305 (the “Employer Liability Law”). Plaintiffs obtained a default judgment against Five Star, and Five Star is not a party to this appeal.
Stayton also named several other lumber companies in its third-party complaint. Several of those parties filed what they labeled “fourth-party” complaints, and the defendant to one of those actions filed a “fifth-party complaint.” Other than Weyerhaeuser, all of the third-, fourth-, and fifth-party defendants were eventually dismissed from the action, and they are not parties to this appeal.
Weyerhaeuser requests de novo review of its tenth through thirteenth assignments of error. Stayton disputes that common-law indemnity — the claim that is at issue in those assignments of error — is an equitable proceeding, such that we would have discretion to exercise de novo review. See ORS 19.415(3) (granting discretion to review certain equitable proceedings de novo). We need not resolve the parties’ disagreement on that issue because, even assuming that we have discretion to exercise de novo review as to those assignments, we do not find this an “exceptional” case requiring such review. See ORAP 5.40(8)(c).
Weyerhaeuser, as part of its second assignment of error, argues that plaintiffs and Stayton failed to disclose all terms of the agreement, in violation of ORS 31.815(2)’s requirement that, when a covenant not to sue is given, the claimant shall give notice of all terms of the covenant to all persons against whom the claimant makes claims. We reject Weyerhaeuser’s contention that it was not informed of all terms of the agreement, and thus, for purposes of this appeal, accept the written terms of the agreement as the entire agreement.
In Grillo v. Burke’s Paint Co., 275 Or 421, 425 n 1,
“now appears to be used rather generally to apply to any agreement between the plaintiff and some (but less than all) defendants whereby the parties place limitations on the financial responsibility of the agreeing defendants, the amount of which is variable and usually in some inverse ratio to the amount of recovery which the plaintiff is able to make against the non-agreeing defendant or defendants.”
A high-low agreement, according to Black’s Law Dictionary 797 (9th ed 2009), is “[a] settlement in which a defendant agrees to pay the plaintiff a minimum recovery in return for the plaintiffs agreement to accept a maximum amount regardless of the outcome of the trial.”
At times in this opinion, we use the labels that the parties have given the agreement. Our use of those labels is merely for ease of reference to the parties’ arguments or the authority relied upon by the parties and should not be taken as something more.
In Bocci v. Key Pharmaceuticals, Inc.,
Ultimately, we determined that the error was not reversible error because it did not substantially prejudice the physician in the conduct of his case. Stephens,
OEC 411 provides:
“(1) Except where lack of liability insurance is an element of an offense, evidence that a person was or was not insured against liability is not admissible upon the issue whether the person acted negligently or otherwise wrongfully.
“(2) Subsection (1) of this section does not require the exclusion of evidence of insurance against liability when offered for another purpose, such as proving agency, ownership or control, or bias, prejudice or motive of a witness.”
As we previously noted, Bocci has no precedential value to this case.
Weyerhaeuser did not object to those jury instructions.
The verdict form also instructed the jury, depending on the answer to each question, to which question it should next proceed. It also asked the jury to assign a percentage of fault to each of the parties and to designate the amount of damages to plaintiffs.
Article I, section 17, provides: “In all civil cases the right of Trial by Jury shall remain inviolate.”
The policy justifications that developed to support strict liability in tort
“can be condensed into about three ideas: (1) The costs of damaging events due to defectively dangerous products can best be borne by the enterprisers who make and sell these products. *** (2) The cause of accident prevention can be promoted by the adoption of strict liability and the elimination of the necessity for proving negligence,” and (3) even when fault or negligence is present, it is difficult to prove “and because of the costs of litigation, proof of the existence of fault or negligence in the sale of a defective product should no longer be required.”
Keeton, Prosser and Keeton on the Law of Torts § 98 at 692-93.
The Restatement at § 22 comment b recognizes this distinction, stating that “[a]n indemnitee may, however, assert a claim for indemnity and obtain a contingent judgment in an action where the indemnitee is sued by the plaintiff as permitted by procedural rules, even though liability of the indemnitor has not yet been discharged.”
We reject without discussion Stayton’s second argument that it was entitled to the limited judgment for $2 million merely because it incurred some defense expenses. In addressing Weyerhaeuser’s twelfth and thirteenth assignments of error, we examine the validity of the general judgment awarding Stayton its defense costs.
Specifically, Weyerhaeuser first argued that Stayton was not entitled to recover fees and costs incurred prior to its tender of defense because the tender was untimely. Second, Weyerhaeuser argued that Stayton was not entitled to recover costs related to its prosecution of third-party claims against parties that were not Weyerhaueser. Third, Weyerhaeuser maintained that Stayton was not entitled to costs incurred after it entered into the agreement with plaintiffs because, according to Weyerhaeuser, “those expenses were not incurred to defend [Stayton] from plaintiffs’ claims.” That is, because there was no longer a justiciable controversy between Stayton and plaintiffs, Weyerhaeuser should not have to pay for expenses incurred after that date. Fourth, Weyerhaeuser objected to specific costs, such as deposition-related costs, overhead expenses, and electronic research costs, as not recoverable under ORCP 68. Finally, Weyerhaeuser objected to any recovery by Stayton of costs and fees incurred to defend itself from the “portions of plaintiffs’ claims that were directed at [Stayton’s] conduct.” Weyerhaeuser specifically noted any costs related to plaintiffs’ negligence claim against Stayton, and any costs related to allegations that it had altered the defective board prior to distribution.