Oregon Court of Appeals Rejects Personal Injury Settlement

Posted on Jan 23, 2014


The Oregon Court of Appeals issued a decision regarding the enforceability of a personal injury settlement
An attorney representing an injured plaintiff filed a lawsuit in the Multnomah County Circuit Court for personal injuries. Within weeks of the scheduled trial date, the insurance company, Allstate, made a “policy limits” offer to resolve the case. The insurance company, as well as its attorney, mistakenly believed that the policy limits were $50,000.00. The plaintiff’s attorney accepted this offer on behalf of his client. However, the parties later discovered that the policy limits were in fact $100,000.00. When Allstate discovered this oversight, it claimed that the case was not settled. Litigation ensued, and the court at the trial level ruled for the Plaintiff.

However, the Court of Appeals saw things differently. Looking at the requirements for "reforming" a contract, the court felt that there was insufficient evidence that the parties would have nonetheless resolved the case for $100,000.00 if they each had a correct understanding of the applicable policy limits. The case was reversed.

The settlement amount was an important issue because the injured plaintiff in this case carried $500,000.00 in underinsured motorist coverage, and the underlying settlement what affect how much the injured plaintiff could recover from his own insurance.

If this case goes to trial, the defendant will be covered for any liability up to and including $100,000.00. However, if the plaintiff’s attorney obtains a verdict exceeding the policy limits of $100,000.00, Allstate may be liable for negotiating an “bad faith.” Its own insured, who is the defendant in the case, would then have a potential claim against Allstate.

If you have a personal injury case, and need to learn more about how insurance policy limits can affect your recovery, call us at 503-325-8600. We can explain how the other driver’s insurance policy and your insurance policy relate to each other in terms of potential recovery.