36 Trial Lawyer • Spring 2023 clients (Justin and Kaleb, from the case above) won against USAA in Multnomah County before Judge von Ter Stegge (22CV12063). Anecdotally, UM/UIM carriers seem to be getting the message that they are likely on the losing end of this argument unless and until the statute is amended. In my own practice, GEICO and Farmers have expressly or impliedly accepted punitive damage coverage, and Progressive chose to pay the limit rather than litigate a 2022 suit challenging a denial of coverage for punitive damages. From a practice perspective, in any case that could plausibly seek punitive damages against the tortfeasor, claimants should demand that carriers confirm in writing that no matter what language to the contrary might be stated in the policy, the carrier concedes that punitive damages are covered. If the carrier refuses and fights unsuccessfully to enforce the clause, it has likely left any safe harbor protection it previously enjoyed. Finally, note that because of this area’s emerging nature, many practical questions remain concerning the actual mechanics of pleading, litigating and recovering punitive damages in UM/UIM claims, as their first-party contractual nature does not map perfectly onto the statutory procedures used in liability cases (ORS 31.725 - .735). I suggest that instead of following a procedure that treats the insurer as if it were the tortfeasor, punitive damages should be treated as part of the “case within a case,” just like any other forms of compensatory damages. The core question should be, “What punitive damages could have likely been recovered in a judgment against the tortfeasor?” Remember that pursuant to the Uniform Arbitration Act, even parties in private arbitration retain subpoena power over the tortfeasor and their relevant records. ORS 36.675. Stacking It is likely well-understood by now that the signature change of 2015’s SB 411 was to cause UIM benefits to “stack” on top of liability coverage limits. A perennial, but less-clear question is, “when may a claimant stack UM/UIM benefits from multiple policies potentially available to then?” First, what is colloquially known as “external stacking” (multiple policies) must be differentiated from “internal stacking” (multiple coverages within the same policy), the latter of which is essentially never available absent very poor drafting choices from the insurer. For external stacking, however, carriers have routinely utilized lawful “anti-stacking” language in policies to defeat this possibility. Such clauses may limit all available policies to only the highest available single policy’s limit (sometimes known as an “other coverage” clause). Carriers may further chip away at stacking possibilities by using statutory definitions for “insured” or “insured vehicle.” ORS 742.504(2)(c-d). Before 2016, ORS 742.504(9) expressly permitted “other coverage” limitations, but SB 411 removed that portion of the statute. In 2021, the Oregon Supreme Court decided Batten v. State Farm Mut. Auto. Ins. Co., 368 Or 538. Batten accepted claimants’ argument that “other coverage” limitations such as the one described above prevented insureds from receiving the minimum protections Oregon requires every policy to provide, because the exclusion no longer had any textual basis and was accordingly unenforceable. (This had major consequences for State Farm, which had an unusual practice of issuing separate policies for each vehicle in any household.) While Batten represents a major victory, it should be noted that its practical effects are limited if the insurance policy at issue contains standard definitions for who may claim under a policy. Batten opened the door for victims who could not be excluded (e.g. pedestrians, cyclists, passengers in nonInsurance Update Continued from p 35
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