Insured's Online Research Not Recoverable as Costs, Court Punts on Whether Recoverable as Fees

The Oregon Court of Appeals has once again confirmed that computerized legal research costs (Westlaw, Lexis, etc.) are not recoverable as costs under state law (in this case, the state law permitting recovery of costs on appeal), in a case arising out of a dispute over a homeowner's insurance policy.  The policyholder apparently argued that under the court's prior holdings awarding such research costs where a statute permits recovery of attorney fees.  Not so fast, noted the court: the policyholder didn't ask for research costs as fees, she asked for them as costs.  The court therefore declined to decide whether computerized legal research costs are recoverable as fees under ORS 742.061.  Although a small issue in the scheme of things, recovery of research costs in coverage cases is important because relatively few coverage issues have been addressed by the Oregon courts, requiring counsel to research out-of-state legal developments in order to render effective representation to policyholder clients.

In Case You Missed It - 2013 Wrap Up of Portland Harbor Coverage Cases

I am making an effort to get onto this blog every case of recent vintage touching on important coverage issues associated with the Portland Harbor Superfund Site (and there have been a lot of them).  Here's one from just before I started this blog last year - Siltronic Corp. v. Employers Ins. Co. of Wausau, 921 F. Supp. 2d 1099 (D. Or. 2013).  In this decision, Magistrate Judge Stewart (by consent of the parties) granted summary judgement in the insurer's favor on the issue of whether cleanup costs paid before there was a final agreement with DEQ/EPA on Siltronic's obligations exhausted the policy limits, thereby excusing any additional defense obligation.  Judge Stewart characterized Siltronic's argument as trying to add the term "final" to the exhaustion clause -- "exhaustion by payment of judgments or settlements" -- and rejected it, looking to Washington and Texas court decisions for guidance on what constitutes such payments in the environmental arena.  Somewhat ironically (given that this argument usually benefits the policyholder in a duty to defend dispute) Judge Stewart gave strong recognition to the somewhat unique structure of environmental "suits" as part of the decision.

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Carrier Must Show Prejudice to Rely on Late Notice

Federal judge Anna Brown recently confirmed that under Oregon law, a carrier must demonstrate that it was prejudiced by allegedly late notice of a claim before the court will inquire into whether the delay in providing notice was reasonable.  This case arose from a collision between a commercial vehicle and a train in Texas allegedly caused by the policyholder, whose auto-insurance policy was governed by Oregon law.  The policyholder waited for eight months before notifying her carrier that she had been sued in connection with the accident.  The carrier claimed that because the delay was unreasonable, there was a presumption of prejudice.  But as Judge Browns recognized, that is not Oregon law.  Because the carrier did not put forward any evidence that it had been prejudiced by the delay, the court rejected the carrier's motion for summary judgment on whether it had a duty to defend, due to late notice.  This case is another reminder that Oregon law is, in some respects, much more policyholder-friendly than other states' law, and that "technical" defenses such as late notice rarely get much traction.

It is worth noting that Judge Brown also rejected the carrier's more substantive argument against there being a defense obligation, finding that although the allegations of wrongdoing in the underlying case did not directly implicate the use of the vehicle, they indirectly referred to it.  Therefore, under Oregon's generous duty-to-defend standard, most recently explained in Bresee Homes v. Farmers, the carrier is on the hook for the defense.

Adjuster Read Canceled Policy, Denied Claim, Committed Bad Faith

One assumption that even many commercial-lines policyholders make is to assume that the insurance adjuster that they are dealing with is an "expert" on their insurance coverage (ref. "You're in good hands...").  As if anyone needed one more example that that simply is not a safe assumption to make, read in disbelief the case linked below, from Judge Suko in the Eastern District of Washington.  The insured tendered a massive lawsuit to its carrier, whose adjuster apparently read only a canceled policy form as part of his "investigation" prior to denial, and did not catch the fact that coverage was specifically provided by an endorsement to other policies.  Judge Suko very property found that reviewing the wrong policy is per-se bad faith on the part of an insurer.  Fortunately, in Washington the insured is at least in a position to be fairly compensated in extra-contractual damages for that kind of behavior, through Washington's robust bad-faith set of laws.  In Oregon, the story would be different, unfortunately.

DYE SEED, INC. v. FARMLAND MUTUAL INSURANCE COMPANY, Dist. Court, ED Washington 2013 - Google Scholar:

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