A recent Law 360 story by Kat Sieniuc, “Ore. Justices Clarify Requirements for Attorney Fees in Coverage Battle,” reports that the Oregon Supreme Court tackled the state’s requirements for an individual to recover attorneys' fees from their insurer in a coverage suit, ruling that a homeowner with a leaky sink could be awarded such fees without a formal judgment.

In an order rejecting prior case law requiring an insured to obtain a formal judgment to qualify for an award of attorneys' fees and sending the case back to a lower court to award said fees, the state Supreme Court decided that a “judgment” memorializing Farmers Insurance Company of Oregon’s voluntary payments to plaintiff Cary Long isn't required for the law dealing with recovering attorneys fees to apply.

“The statute ensures that, when insureds file suit to obtain what is due to them under their policies, they do not win the battle but lose the war by expending much or all of what they obtained in the litigation on attorney fees,” the Supreme Court said, clarifying that “when an insured files an action against an insurer to recover sums owing on an insurance policy and the insurer subsequently pays the insured more than the amount of any tender made within six months from the insured’s proof of loss, the insured obtains a 'recovery' that entitles the insured to an award of reasonable attorney fees.”

The case at the center of the order dates back to 2012, when Farmers voluntarily paid plaintiff Cary Long $3,300 for damage caused from a leak under her sink.  Shortly after, Long handed Farmers new estimates of her mitigation costs and the actual cash value of her losses that far exceeded the sum that Farmers had paid her.  Long then brought a suit after a year of her claims going unresolved, after which Farmers made two additional voluntary payments of $2,467.09 and $4,766.80.  The case eventually went to trial, however, where Long did not end up recovering an amount greater than what Farmers had paid before the trial had begun.

Long eventually filed a petition for attorney fees under ORS 742.061, arguing that since Farmers paid her out at a greater amount than it had tendered within the six months after she submitted her initial proof of loss, the requirements for recovering attorneys' fees under the statute had been satisfied.  Those voluntary payments that Farmers had made after Long filed her action constituted a “recovery” under the recovery law, Long said.

The trial court, however, denied her petition and agreed with Farmers that an insured must obtain a judgment that exceeds a timely tender to constitute a “recovery.”  Long appealed that decision to the Court of Appeals and lost.

Oregon’s Supreme Court disagreed, and remanded those decisions.  The Supreme Court noted that ORS 742.061 is supposed to discourage expensive and lengthy litigation, saying that “requiring the insurer to pay the insured’s attorney fees if and only if the insured obtains more in the litigation than was timely tendered advances that purpose insofar as it encourages insurers to make reasonable and timely offers of settlement and also encourages insureds to accept reasonable offers and forego litigation.”

The case is Cary Long v Farmers Insurance Company of Oregon, case number SC S063701, in the Supreme Court of the State of Oregon.