Lachenmeier, Enloe & Rall - February, 2004 Publication

PREMATURE UIM CLAIMS
Subject to Dismissal?

     Who has seen a UIM insurer added to third party liability litigation before the underlying liability claim has been concluded, when it is anybody’s guess if the plaintiff’s damages will ever implicate the UIM policy? In recent years, plenty of these premature claims have been brought, putting UIM insurers to unnecessary litigation expense. A recent Multnomah County ruling may help bring an end to this practice.

     This tactic has at times been used to gain Multnomah County venue for a case that would otherwise have to be filed in a more conservative Washington or Clackamas County venue or even beyond the Portland area. When the accident happens and the defendant resides in a particular county, venue rules require the litigation to be filed in that county. It is immaterial whether the plaintiff resides in another county or whether the plaintiff’s attorney has an office in Portland. Proper venue is still in the county where the accident happened or where the defendant resides when the litigation is commenced.

     Most insurers do some business in Multnomah County. As a result, if the UIM insurer can be added as a defendant to a case filed against the individual defendant in the underlying liability case, then Multnomah County becomes a proper venue for the case. Or, at least that is what some plaintiffs’ attorneys have thought, putting UIM insurers to the expense of engaging counsel and trying to limit their defense expense by seeking abatement or pursuing some such procedural device to defer having to handle the UIM claim until it is known if the insured’s damages exceed the liability policy limit. When some plaintiff attorneys have objected to abatement of the UIM claim, some judges have refused to intervene and have required the UIM insurer to stay in the case.

     As of January 2008, there is hope. I successfully persuaded the Honorable Cheryl Albrecht, Multnomah County Circuit Court judge, that a UIM claim attached to a liability claim that had not been resolved was not “ripe” and should be dismissed, without prejudice to be refiled at a later time if it were to ever become ripe. I argued that Oregon UIM statutory law (ORS 742.504) requires either the liability policy limits to be exhausted or partial limits to be offered, the latter combined with an offer by the plaintiff to allow the UIM insurer credit against damages for the entire liability limit as if it had been offered, before a UIM claim can be made.

     In my case, the plaintiff’s attorney argued that the statute is unclear (it is true that the statute could have been better written) and that all that is required to bring the UIM insurer into the litigation is the UIM insurer’s consent that the liability claim can proceed. Judge Albrecht ruled that the correct interpretation of the statute is that either the liability claim must be fully resolved by exhaustion of limits or an offer must be made by the liability insurer which the plaintiff wants to accept (with the UIM insurer’s consent), before the UIM claim will be ripe. The Motion to Dismiss that I filed was granted.

     The result of this ruling is that my client, the UIM insurer, was dismissed from the case and was awarded costs and disbursements for having to participate in the litigation for as long as it did. The liability defendant’s Motion to Change Venue was also granted and the liability case is about to be transferred to Marion County, which is the proper venue for this particular case. This UIM claim will come back only if the liability claim is settled properly under the statute or if it goes to trial in Marion County and the jury awards more damages than the liability policy will cover. In the meantime, the UIM insurer will not have to incur further defense expense.

     I plan to cite Judge Albrecht’s correct ruling to plaintiffs’ attorneys in other cases who insist upon improperly joining premature UIM claims with unresolved liability cases. If a plaintiff’s attorney is not persuaded by this sensible ruling, I intend to cite Judge Albrecht’s ruling in support of a Motion to Dismiss the premature UIM claim and thereby assist the UIM insurer from having to incur unnecessary defense expense.

     If there are any questions about this case or about any pending litigation in which a premature UIM claim has been brought, please feel free to contact the writer Jay Enloe by email at jay@lerlaw.com or by phone at 503-768-9600..