On January 26, 2022, the Court of Appeals, in Moody v. Oregon Community Credit Union, et al., 317 Or App 233 (2022), held that the trial court erred in dismissing plaintiff’s negligence per se claim and striking her allegation of emotional distress. This decision will likely be appealed to the Oregon Supreme Court. As it stands, policyholder counsel will likely cite the decision as representing a significant change in Oregon law and a basis for the expansion of extra-contractual damages in Oregon.
ORS 746.230, Unfair Claim Settlement Practices, provides, among other things, that an insurer may not refuse to pay claims without conducting a reasonable investigation or fail to attempt in good faith to promptly and equitably settle claims when liability is reasonably clear. Plaintiff alleged that defendant violated ORS 746.230 when it unreasonably denied her claim for accidental loss of life benefits arising out of the accidental death of her husband. Defendant asserted its policy excluded accidents caused by or resulting from the insured being under the influence. Plaintiff advanced a number of claims for relief, including a claim for breach of contract and for negligence per se, based on defendant’s alleged failure to conduct a reasonable investigation and its failure, in good faith, to settle her claim – all in breach of ORS 746.230(1). Plaintiff claimed economic damages as well as noneconomic damages for emotional distress.
Plaintiff relied on Abraham v. T. Henry Construction, Inc., 230 Or App 564, 572, 217 P3d 212 (2009), aff’d on other grounds, 350 Or 29, 249 P3d 534 (2011), to support her position that defendant’s breach of its policy of insurance violated an independent, statutory standard of care spelled out in ORS 746.230(1), thereby supporting her claim for negligence per se. Defendant maintained that the Oregon Supreme Court’s decision in Farris v. U.S. Fid. and Guar. Co., 284 Or 453, 587 P2d 1015 (1978) foreclosed a negligence per se claim based on a violation of ORS 746.230(1). The Court of Appeals determined that defendant read too much into the Farris decision in which the plaintiffs did not make a claim for statutory liability for defendant’s violation of ORS 746.230 and concluded that the Supreme Court’s discussion of ORS 746.230 was “plainly dictum.” Moody, 317 Or App at *6. The Court of Appeals found that the present matter posed a different question from the Court’s dictum in Farris. Here, the question is whether the statute establishes a standard of care for purposes of a claim for negligence per se, which was not addressed in Farris. The Court of Appeals held that “[w]hether the legislature intended … to create direct statutory liability does not preclude courts from determining … the enactment [establishes] a standard of care for purposes of stating a claim for negligence per se.” Id. at *6. The Court of Appeals further held that “[t]he fact that the legislature may not have intended to create a private right of action for recovery of emotional distress damages does not necessarily mean that the legislature did not enact ORS 746.230, at least in part, to prevent such emotional distress from occurring.” Id. at *7.
Disclaimer: The opinions expressed in this blog are those of the author and do not necessarily reflect those of Soha & Lang, P.S. or its clients.