37 Trial Lawyer • Spring 2023 See Insurance Update p 38 household vehicles) and particularly victims in State Farm-insured households with multiple vehicles, but the stacking door may lawfully remain closed to those who do not fit these limited descriptions. Safe harbor For over a century, ORS 742.061 has provided one-way fee shifting to prevailing consumers in insurance disputes. However, since 1999, ORS 742.061(3) provides a “safe harbor” from fee liability to UM/UIM insurers who, within six months of receiving proof of loss, a) concede coverage, b) consent to binding arbitration and c) promise to limit all remaining issues to liability and damages. As a result, there has been much litigation about whether carriers have entered or exited the harbor. Entering the harbor First, there is a rich body of case law demonstrating that carriers’ safe harbor communications will be very closely read to ensure compliance with ORS 742.061(3), and practitioners should be on guard for any potential deficiencies that could turn the tables drastically in their clients’ favor. Concessions of coverage should be clear, and arbitration must be both specifically “binding” and unambiguously consented to. Lizama v. Allstate Fire & Cas. Ins. Co., 292 Or App 611, 620-621 (2018). The third requirement of safe harbor (issue-limiting) tends to get the least attention, but it is the part of the promise that carriers most often state in confusing terms in safe harbor letters. In Daniels v. Allstate Fire & Cas. Co., 289 Or App 698 (2018) rev den 2018 Ore. LEXIS 288 (2018), the Court of Appeals spelled out the level of clarity required. Allstate’s letter in Daniels stated, “We will now focus our efforts on liability issues and damages related to this claim.” The Court of Appeals ruled, “To invoke the safe harbor, an insurer must have, in writing, ‘accepted coverage and the only issues are the liability of the *** underinsured motorist and the damages due the insured.’” Id. at 700. “ORS 742.061(3) demands more from an insurer wishing to invoke the safe harbor. An insurer's commitment to concentrate on the issues of liability and damages is not enough. The insurer must commit that those are the only issues, to the exclusion of all other issues — that is, if the insurer wishes to secure the benefit of the safe harbor. Although it would have been simple for defendant to make that commitment, if that is what defendant intended to do, defendant did not do so here.” Id. at 701. In the spring of 2022, I litigated the efficacy of a GEICO safe harbor letter, specifically, the following stock language, identical across many thousands of GEICO cases, “If a dispute were to arise between us with regard to [UM/UIM] liability and / or the amount of damages, we agree to submit the dispute to binding arbitration restricted to those issues only.” The case was in Multnomah County, styled Le v. GEICO Cas. Co. (21CV13666). We argued a very close point, that the language only limited the scope of issues within the offered arbitration, rather than the claim’s remaining issues as a whole. GEICO’s arguments in the case reflected its fundamental error. While safe harbor protection requires three separate promises, GEICO wanted to blur three promises into two: a) conceding coverage and b) consenting to binding arbitration limited to liability and damages. However, Lizama forbids this blurring, “The statute states the several requirements of subsection (3) in the conjunctive […] we cannot assume that if defendant’s letter satisfies the first two requirements of ORS 742.061(3), it also satisfies the third.” Lizama, 292 Or App at 619. Judge Lavin agreed with the plaintiff that the letter was deficient, and the case quickly settled on the plaintiff’s terms. Exiting the harbor The more momentous recent shift in safe harbor law concerned exiting the harbor rather than entering. In Kiryuta v. Country Preferred Ins. Co., 360 Or 1 (2016), the Supreme Court announced what was essentially a bright-line policy that carriers break their issue-limiting promise and leave the safe harbor whenever they raise an issue outside of liability or damages. The insurer in Kiryuta responded to the plaintiff’s complaint with a list of boilerplate affirmative defenses, including a failure to comply with all relevant policy terms and conditions. By doing so, the insurer “necessarily opened the arbitration to issues beyond motorist liability and damages due.” Id. at 8. Despite the clarity this approach provides, a pair of Court of Appeals decisions muddied the waters. First, several months before the Supreme Court’s Kiryuta decision in July 2016, the Court of Appeals decided Robinson v. TriCounty Metro Transp. Dist. of Or., 277. Or App 60) rev den 2017 Or LEXIS 646. Robinson clarified that it was not enough for a carrier to merely “raise” a matter outside of liability and damages to lose safe harbor protection — to count as an impermissible third “issue,” the matter must be “a matter of live controversy, active contest, or actual dispute.” Robinson, at 72. Referring to its own previous opinion, the Court of Appeals added, “Even in Kiryuta, where an insurer had gone too far, we noted that we did not foreclose the possibility that the insurer could be eligible for the fee exemption by timely amending its pleadings or by ‘otherwise demonstrating’ that only the issues of fault and damages were ‘in dispute.’ 273 Or App at 475 fn 1. In other words, we may look at the whole of the case as it has unfolded to determine whether, in the end, the insurer has otherwise demonstrated an adherence to the limited issues.” Robinson, at 73. The Supreme Court declined to review Robinson the following year. In 2020, a second “actual dispute” opinion further weakened Kiryuta’s prac-
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