Oregon Supreme Court holds that partial payments of undisputed amounts do not relieve Insurance companies from paying attorney fees.

Long v. Farmers Ins. Co., 360 Ore. 791

Say your kitchen sink pipe bursts in the middle of winter, and you make a homeowner’s insurance claim.  Say the insurance company pays for the immediate repair to stop the leak, but then refuses to pay any more for months, ultimately leaving you without a functioning kitchen for a year, because they disagree how much cabinets should cost.  Under Oregon law, if you have to wait more than 6 months for payment of the value of the loss, the insurance company has to pay all of your lawyer fees for any lawsuit you bring to get what you are owed.  ORS 742.061. For several years, however, the courts had ruled you needed to secure a favorable judgment in a lawsuit to collect those fees.

In this Oregon Supreme Court appeal I handled with another lawyer, a rough and ready old Marine named Mr. Kelly Vance (I was not involved at the Court of Appeals), the trial court refused to award fees at all because the insurance company eventually paid all they were required to pay (according to the jury) prior to trial, and so a favorable judgment could not be obtained by the homeowner.  So even though the lawyer eventually obtained an extra ~$11,000 over Farmer’s initial payment, she could not collect her lawyer fees, including fees up to trial (a lot more than $11,000).

What this meant in practice is that the insurance company could fix a leak, make you hire a lawyer, not pay any repairs until the day of trial, and then bring a check for the full amount and avoid any lawyer fee liability—meaning you had to pay for your own lawyer, out of your own pocket, usually for far more than the repair check.  A real scam.

The Oregon Supreme Court was having none of it.  The court easily saw the problems with requiring a judgment in this kind of situation and  held that once the insurance company refused to pay the full amount in 6 months, they are on the hook for any fees incurred to obtain a better result.  In our case, Kelly didn’t get a better result at trial, so the court didn’t give fees for the trial itself.  Although that was unfortunate (trail should not be that big of a gamble for a homeowner after nearly two years of delay), the removal of the judgment requirement was a huge win for Oregon insurance consumers.