Goddard v. Farmers Insurance and 1987 and Foley and Munson and Ct of Appeals.

This case has, in one form or another, been percolating for more than 17 years. The facts that set off the chain of four different lawsuits that has, so far, resulted in four appellate court decisions, are easy to narrate. On October 29, 1987 John Munson, a day laborer for Mrs. Helen Foley, turned left in Mrs. Foley's pickup as he was heading south on S Commercial in Salem, intending to turn into the parking lot of the Stonefront Tavern. However, Munson, who had consumed at least 10 beers during the afternoon's "work" of delivering squash to friends (most of whom hung out in bars), instead rammed into a car driven by a 19 year-old young man, Marc Goddard, and killed him.

Both Munson and Foley had automobile insurance policies for $100,000 with Farmers. Each policy had an exclusion that turned out to be relevant for this case. Munson's policy contained the exclusion:

"The coverage does not apply to:..10. Bodily injury or property damage arising out of the ownership, maintenance or use of any vehicle other than your insured car, which is owned by or furnished or available for regular use by you."

The exclusion in Foley's policy denied coverage for:

"any person who uses a vehicle without having sufficient reason to believe that the use is with permission of the owner."

The former exclusion might be called the "regular use" exclusion while the latter is the "without owner's permission" exclusion. If Munson had habitually ("regular[ly]") used Foley's pickup, his policy would not be available for compensating the family of Marc Goddard. Also, if Munson used her vehicle without permission, coverage would not be available.

The Cases that Emerged

Over the next several years, the following cases were filed with respect to this event. First, the State of Oregon brought charges for criminally negligent homicide against Munson. He pled guilty to this crime in June 1988 and began serving a long prison term. He was out of money by this time, so any money that would eventually go to the Goddard's would have to come by way of insurance proceeds.

The second case filed was a civil action: a wrongful death action filed by Mrs. Goddard against Munson. This was filed sometime in Spring 1988 by the firm of Harris/Amala in Salem. The suit called for both compensatory and punitive damages. While the suit was pending, there were a few negotiations, many allegations of stonewalling and proposed settlements that fell through between Goddard and Farmers (I will discuss these more fully in the next essay). Trial was held in Salem in January 1990, and a jury found Munson liable for the death of Marc Goddard, and awarded his mother (as PR of the Estate of Marc Goddard) $863,000, with $250,000 of this being punitive damages. Two of the major issues implicated by this decision for insurance law are: (1) the liability of the insurer to pay beyond policy limits if it had neglected its duty to try to settle in good faith before the trial and (2) the insurer's continuing duty to negotiate with its client after a jury had reached a verdict. These are issues that would have considerable life to them after 1990. In 1991, the Court of Appeals upheld the wrongful death decision in all particulars. 816 P2d 619.

While the wrongful death action was proceeding, Farmers decided to file a declaratory judgment action (the third case) in Marion County Circuit Court to determine which policy would apply to the action. Would it be the Munson policy, the Foley policy, neither or both? Because Munson had assigned his interests against the insurance company to Goddard after the wrongful death trial, Farmers brought suit against both Goddard and Munson on this issue. A judge (Norblad) decided in 1991 that no jury trial would be available, because the issues were issues of law, and held that Foley's policy provided coverage for Munson's action while Munson's policy did not. The court also held that insurance endorsements excluding coverage for punitive damages, which Farmers put into effect late in 1986, would exclude any Farmers liability for punitive damages.

This decision was appealed, and the Ct of Appeals reversed the trial court on the issue of a jury trial. The court said that "regular use" required a factual inquiry into how often the pickup was available and whether Munson and Foley had an understanding that Munson could use the pickup when he desired. In addition, the exclusion in Munson's policy depended on whether Munson had "sufficient reason to believe" he was operating the pickup with Foley's permission--again a factual issue. Finally, the court remanded for a factual hearing on whether the insureds had received notice of the punitive damages endorsement before the accident. 873 P2d 370 (April 20, 1994).

On remand, then, the jury, after plaintiff's motions for directed verdict were denied, found coverage under both Munson's and Foley's policies. Therefore, $200,000 would be available to cover the 1990 wrongful death verdict.

This was appealed again to the Ct of Appeals. Goddard argued that the 1994 decision of the Ct of Appeals required a factual (i.e., jury) hearing on the issues, but the Ct of Appeals in 1996 held that the construction of insurance policy language ("regular use") was a matter for the court and that when the court considered the facts introduced into the case, no rational juror could have found coverage under Munson's policy. The Ct of Appeals reversed the lower court, however, because it had excluded some evidence that bore on the question of whether there would have been coverage under Foley's policy for Munson. Hence the issue had to be remanded for trial once again. 930 P2d 878.

Finally, in 1998, a third Marion County jury concluded that there was coverage under Foley's policy. Rather than appealing the decision, Farmers paid Mrs. Goddard the $100,000 policy limit on Mrs. Foley's policy on April 14, 1998, more than 10 years after the incident.

We haven't even yet gotten to the bad faith claim. Then next essay describes that.