In Bingenheimer v. State Farm, 196 Or App 316 (2004), plaintiff lost control of her car entering a curve on the freeway. A witness observed an "oil-like" substance on the road. Plaintiff made a UIM claim, alleging that the accident was caused by a "phantom vehicle" responsible for depositing the substance on the road. The court upheld summary judgment in favor of State Farm. Even if a jury could find that plaintiff lost control because of the substance, and that a single vehicle had been the source of the substance, there was no evidence that the driver of that vehicle was negligent. As the court noted, mechanical objects frequently break down in the absence of any negligence.

In Cassidy v. Bonham, 196 Or App 481(December 8, 2004), plaintiff, a potential tenant, decided, after looking at defendant’s rental, that she was not interested in it because of lack of storage space. Defendant then invited plaintiff into her own home to look at some portable storage units. Defendant went in just to be "sociable" because she had already decided she and her husband were not interested in renting. While in defendant’s home, plaintiff fell, injuring herself. The court held that there was a question of fact as to whether plaintiff was an invitee or a licensee.

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PIP IME PROTECTED FROM USE BY TORTFEASOR

Harris v. Drake, 152 Wn 2d 480 (2004)

A rear-ender caused by Drake injured Harris’ back and shoulder. USAA, Harris’s PIP insurer, required Harris to undergo an IME with Dr. Bede. Dr. Bede’s IME report concluded that Harris had an impingement syndrome as a result of the accident. Dr. Bede wrote a second report after reviewing additional records. In the second report, Dr. Bede concluded that Harris’ impingement syndrome was not caused by the accident. Harris sued Drake, who sought to call Dr. Bede at trial. The trial court granted Harris’ motion to exclude the testimony. The Court of Appeals affirmed (see Lex Loci, March/April 2003).

The Washington Supreme Court ruled that the work product privilege applied to this case and prevented Drake from calling Dr. Bede as a witness. Harris had a contractual obligation to undergo the IME and had a reasonable expectation that the PIP insurer would keep the results from the tortfeasor. The court further held that the work product privilege did not terminate at the conclusion of the PIP dispute between Harris and USAA.

The Harris court suggested that "taking a position opposed to its insured might be interpreted as a violation of [the PIP insurer’s] quasi-fiduciary duty to [its insured]." Plaintiff’s attorneys will likely assert work product privilege on behalf of the PIP insurer to prevent any discovery of the PIP file by a defendant, but the PIP insurer should also take great care in responding to a defense subpoena for its file without providing notice of its intent or obtaining permission to do so.

WASHINGTON BRIEFS

In Del Rosario v. Del Rosario, 152 Wn 2d 375 (2004), the Washington Supreme Court limited the Finch exception to binding personal injury releases to only those situations involving unknown or latent injuries when the release was not fairly or knowingly made. The Finch exception does not apply to instances where the claimant does not speak English.

In Mutual of Enumclaw v. Patrick Archer Construction, 122 Wn App 1073, 97 P3d 751 (2004), siding problems with the insured general contractor’s condominium project caused damage to the building and personal property within the building. The court held that the building was the insured’s "product," and coverage for damage was excluded by exclusion (n) in the CGL policy. The court held that the Broadform Extended Liability Endorsement did not expand coverage to negate exclusion (n), and the efficient proximate cause rule did not apply. The policy was not ambiguous because of a blank portion of the premium schedule related to "products hazard." The court also held that the Independent Contractors and Completed Operations coverages were also subject to exclusion (n).

In American States Insurance Co. v. Bolin, 122 Wn App 717, 94 P3d 1010 (2004), the court held that an insured was not entitled to UIM benefits after being injured in a snowmobile accident. The accident occurred in Alaska on an established "snow road." The court ruled that a snowmobile is not a "motor vehicle" for purposes of the UIM statute. The court relied principally on the distinction between motor vehicle and snowmobiles in the statutes and that only drivers of vehicles registered under the "motor vehicles" statutes are required to purchase liability insurance.

In Perry v. Costco, __ Wn App __, 98 P3d 1264 (2004), the court ruled that the employer’s duty to take prompt corrective action of on-the-job sexual harassment depends not necessarily on whether an investigation is prompt or adequate, but rather on whether the remedial action by the employer is effective. The action taken against the offender must be reasonably calculated to prevent further harassment. According to the court, "it is not enough simply to stop the sexual harassment as to the plaintiff, when the harasser is left free to sexually harass others." The court ruled that an employer may have a duty to provide "proactive" assistance to a sexual harassment victim, i.e., that it cannot shift the burden to the victim to come up with reasonable protection from harassment.

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Highway workers are exempt from the rules of the road while actually working on the highway and thus a DOT driver was the "favored driver" as a matter of law when a motorcycle collided with a DOT truck moving across a freeway on-ramp. The DOT driver must still meet the ordinary standard of care. Caldwell v. Washington State Dept of Transportation, 121 Wn App1053, 96 P3d 407 (2004).

In Michael v. Laponsey, __Wn App __, 99 P3d 1254 (2004), defendant rear-ended plaintiff’s car on the way to work. Defendant, a salesman, owned the car, but was given a car allowance by his employer. In addition to driving to and from work, defendant sometimes used his car on the job. The court held that a jury could find under these circumstances that defendant was within an exception to the "going and coming" rule and his employer could be vicariously liable for the accident.

A product may operate precisely as designed, and the design may include functions that the customer wants, but if the social value of those functions do not compare favorably with the risk of injury, the case may go to the jury on the issue of design defect. In Higgins v. Intex Recreation Corp., __Wn App __, 99 P3d 421 (2004) plaintiff was severely injured in a sledding accident. The manufacturer defended on the basis that its product, a snow tube, did what it was designed to do, i.e., go fast on snow and spin around. The evidence showed that the tube would only spin until the rider was backwards. The court commented that "the ride down a snow-covered hill backward at 30 miles per hour may be a thrill," but had "very little social value." The court also borrowed from the wrongful death statute in holding that a step-child could sue for loss of consortium for the injury of the step-parent.

On the issue of family relationships and tort actions, the court in Blumenshein v. Voelker, __Wn App __, 100 P3d 344 (2004) ruled that a neglectful mother could not reinstate her right to sue for injury to her child by re-establishing contact with the child after the accident. In this case, a child was injured in a car/pedestrian accident. At the time and for several years before, the child’s mother had virtually no contact with the child. A year and a half after the accident, mother went through the necessary steps to acquire custody of the child, then sued the driver as the parent of the injured child. The court summarily dismissed her claim.

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In Dussalt v. AIG, __Wn App __, 99 P3d 1256 (2004) AIG allegedly agreed, in a settlement conference, to make a settlement payment on behalf of its insured to a claimant no later than a certain date. AIG actually made the payment about 2 weeks later. The claimant then sued AIG directly. The court held that the claimant, as a third party to the insurance contract, has no claim under the unfair claims settlement statutes or for breach of the duty of good faith and fair dealing. The court also ruled that no oral contract arose for the payment as promised because the insurer received no consideration for its alleged promise so as to create a contract. The court did reverse summary dismissal of the claimant’s claim for intentional infliction of emotional distress and fraud. Those two claims are not dependant upon the existence of an insured/insurer relationship.

In Pickford v. Masion, __ Wn App __, 98 P3d 1232 (2004), the court refused plaintiff’s claims for negligent infliction of emotional distress when her neighbor’s dogs wandered into her yard and caused permanent injury to plaintiff’s dog. The court also rejected plaintiff’s invitation to recognize a claim for destruction of the guardian-companion animal relationship.

In White v. Allstate, __ Wn App __, 98 P3d 496 (2004), water intrusion problems in a condominium project resulted in a settlement with the developer in 1997. In 1999, the Whites purchased a condo in the project and a condo owners policy from Allstate. In 2001, the condo owners association realized that the settlement amount did not cover the costs of repair and assessed all of the owners for the balance. The Whites sought reimbursement for their share of the assessment from Allstate. Allstate refused because the assessment was for a loss that occurred prior to the policy period. The Whites claimed that the assessment was the "loss." The court recognized a distinction in the policy language between assessment and "loss" and concluded that Allstate’s position was correct: the loss meant the original water intrusion.

In American States Insurance v. Rancho San Marcos Properties, LLC, __ Wn App __, 97 P3d 775 (2004), an unknown person drove a car into an abandoned building insured by American States. The car was set on fire as was another portion of the building. The American States policy insured the building for arson, but excluded coverage for vandalism. The court held that coverage applied. An average person purchasing an all-risks policy that excluded vandalism would believe coverage applied here. Vandalism refers to the intent for the damage, but the resulting damage here was an intentionally set fire; in other words, "arson."

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Lyons v. Walsh & Sons Trucking Co., 337 Or 319 (2004)

Oregon State Patrol Trooper Lyons died in an accident involving an OSP vehicle driven by co-worker Rector and a truck driven by Walsh’s employee. Both Rector and OSP were immune from liability because of the workers comp exclusive remedy provision. Lyons’ representatives sued Walsh. At trial, plaintiff argued that, because Rector was immune, the jury should not consider the fault of Rector in causing the accident unless he was the "sole and exclusive" cause of the accident. The trial court instructed the jury that it could consider Rector’s conduct as "part of the overall circumstances" of the accident, but that it could not compare Rector’s fault with that of defendant. The Court of Appeals agreed that Rector’s actions were properly considered as part of the overall circumstances of the accident and as part of the analysis of whether defendant’s conduct was a substantial factor in causing the accident.

Elvig v. Ackles, __Wn App__ (September 27, 2004)

Plaintiff, an ordained Presbyterian minister at Calvin Presbyterian Church, claimed that she was sexually harassed by the Church’s senior minister. Plaintiff pursued her claim through the internal adjudicatory system of the Church, which concluded that no charges would be brought against the senior minister. Plaintiff also filed with EEOC, but EEOC found no civil rights violation. Church officials voted to dissolve plaintiff’s pastoral relationship with Calvin Presbyterian Church and prohibited her from seeking other ministerial relationships until she resolved her issues with Calvin Presbyterian Church. Plaintiff sued for sex discrimination. Plaintiff named as defendants the Church and two ministers.

The Washington Court of Appeals affirmed summary judgment in favor of the Church and ministers. Civil courts may adjudicate church-related disputes only if the dispute does not involve ecclesiastical or doctrinal issues. In a specific application of this rule, the courts may not interfere in a church’s selection of its leaders. Here, plaintiff’s claims relied on her allegation that she complained of sexual harassment but that Church officials failed to take appropriate remedial action and took employment action against her instead. The court concluded that adjudicating plaintiff’s claims would require it to impermissibly review and interpret the Church’s rules and conclusion. The court also ruled that dismissal of the claims against the senior minister would be affirmed. According to the court, "it would be counterintuitive to hold that a court may not interfere with church doctrine and ecclesiastical decision-making but that it may examine claims made against individual religious authorities."

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In Kirby v. the City of Tacoma, (Wn App, Sept. 14, 2004), Kirby sued the police department for age and disability discrimination. Even though qualified as a captain, the 52-year-old Kirby was twice passed over for promotion in favor of other officers, who were 45 and 42 years old. The Court of Appeals held that Kirby failed to prove a prima facie case of age discrimination. The officers promoted to captain were "within the same protected age group" (i.e., 40-70 years old). The court also held that Kirby needed more evidence than his own belief that his disability played a role in the department’s decision, especially when he acknowledged that the department’s reason for the decision was accurate.

In Nobl Park, LLC v. Shell Oil Co., 95 P3d 1265 (Wn App, 2004), the purchaser of an apartment complex sued plumbing materials suppliers under the Products Liability Act for damages caused by failed plumbing. The Court of Appeals ruled that plaintiff’s damages were "economic losses" not recoverable under the WPLA. The damage caused was due to gradual deterioration rather than a sudden catastrophe caused by a defect apparent on first use. Further, the risk was foreseeable because the purchaser knew of the leaks before buying. These factors more closely matched an "economic loss" than a product liability action.

In Mulcahy v. Farmers Ins., 95 P3d 313 (Wn App, 2004), the Supreme Court held that Farmers was obligated to provide no-fault first party coverage to its insured up to $150,000 Canadian after she was in a car accident in Canada with an at-fault Canadian driver. In exchange for participation in Canada’s reciprocal insurance scheme, Farmers had agreed to compensate its insureds on the same terms as those of ICBC, B.C.’s compulsory auto insurance provider. The Court held that Canadian law applied, and that the Washington court could enforce the agreement. ICBC provides $150,000 Canadian no fault coverage to its insureds: therefore, Farmers was likewise obligated to its insured.

In Sheldon v. American States Ins., 95 P3d 391 (Wn App, 2004), the Court of Appeals dismissed a class action against American States for charging its insureds a $2 fee for premiums paid in installments. Plaintiffs argued that the fee was an "illegal premium." The court held that even if the fee should have been disclosed as part of the premium, plaintiffs suffered no damage. The fees were optional based on the method used to pay the premium and were fully disclosed on the billing statement.

In Marks v. Washington Ins. Guaranty Assn., 94 P3d 352 (Wn App, 2004), the court held that an employer’s rejection of UIM limits was valid even though there was a mistake in the description of the coverage on the rejection form. The Court said that the mistake was immaterial to an informed decision (in part, no doubt, because the insured got more coverage than if the mistake was correct).

In Chen v. State Farm, 94 P3d 326 (Wn App, 2004), the Court held that State Farm did not have to pay attorney fees on its recovery of property damage benefits paid to its insured. The "common fund" doctrine does not apply when the insurer has a "classic" subrogation right and the efforts to enforce that right are solely the insurer’s.

In Wright v. Safeco, 124 Wn App 263 (2004), defendant paid for water damage as a result of a leaking and overflowed indoor fountain in plaintiff's condo.  Engineers hired by plaintiff concluded that other water damage and mold was caused by construction defects and defendant refused to pay on the basis of policy exclusions for construction defect damages and mold.  Plaintiff claimed that water caused the damage and mold, and, under the efficient proximate cause rule, water-caused damages should be covered.  The Court held that the engineer's report established that the efficient proximate cause of the water and mold damage was excluded construction defects, which defendant was not obligated to pay.

TOBACCO PUNITIVE DAMAGES VERDICT REINSTATED (AGAIN)

Here, that meant that the jury could consider the number of smokers in Oregon who had been defrauded over the decades by defendant’s conduct and would be affected if defendant’s conduct was not deterred. Even a "conservative calculation" of potential compensatory damages "thus would cause the ratio between compensatory and punitive damages, whatever it is, to fall within State Farm’s 4 to 1 boundary." The court also went on to add that, irrespective of other potential harm, "it is difficult to conceive of more reprehensible misconduct for a longer duration of time on the part of a supplier of consumer products to the Oregon public" and that such reprehensible conduct may well justify the size of the award in any event.

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UIM PROOF OF LOSS REQUIREMENT NOT SATISFIED BY PIP APPLICATION

Weatherspoon v. Allstate Insurance Co., 193 Or App 330 (May 12, 2004)

ORS 742.061 provides for recovery of attorneys fees in actions on an insurance policy, but fees are not available for a UM claim if the insurer, within six months of the date the proof of loss is filed with the insurer, accepts coverage and consents to binding arbitration. (The insurer may reserve the right to contest the liability of the tortfeasor and the damages due.) Because the "proof of loss" triggers the commencement of the six month period, what constitutes "proof of loss" is crucial to determination of whether an insured is entitled to attorney’s fees in a particular case.

In Weatherspoon, plaintiff (insured) applied for and received PIP benefits following an accident. She settled her case against the at-fault party for policy limits and then sought UIM benefits. A jury awarded her benefits, and plaintiff petitioned for attorneys fees under ORS 742.061. Plaintiff claimed that she had submitted a "proof of loss" when she gave defendant a completed PIP application, a statement regarding the accident, and a release to obtain medical records and wage loss information. The Court of Appeals disagreed. Nothing in the documents submitted indicated that plaintiff was seeking UIM benefits. "[P]roof of loss for a UM or UIM claim must include the full particulars of the nature and extent of the insured’s

injuries, treatment and other material details so as to permit an insurer to estimate its obligations under the UIM coverage in its policy....Plaintiff’s submissions to defendant notified defendant only that plaintiff had been in an accident and that plaintiff was seeking PIP benefits."

It thus appears that claimants must not only provide information necessary for the insurer to estimate the amount of exposure, but must also affirmatively communicate that a UM or UIM claim is being made.

COURT REJECTS BLANKET SUBROGATION-AGAINST-TENANT BAR

Koch v. Spann, 193 Or App 608 (2004)

USAA insured plaintiff’s duplex. Defendant, one of plaintiff’s tenants, decorated a Christmas tree and allegedly caused a fire and damaged the duplex. After USAA paid for the damage, it brought this subrogation claim against the tenant. The trial court dismissed the claim based on the rule that no subrogation is permitted against an insured, holding that the tenant is, as a matter of law, an "implied co-insured" on the USAA policy.

On appeal, USAA argued that the trial court erred in adopting the so-called "Sutton rule," named after an Oklahoma case that held that tenants are implied insureds of the landlord’s insurance policy. The court declined to accept a blanket rule that would foreclose subrogation against a tenant, holding instead that waiver of subrogation depends on the facts of each case and the terms of the rental agreement.

Here, the Court of Appeals rejected defendant’s argument that the landlord waived negligence claims against tenants in the rental agreement. The terms of the rental agreement expressly provided that the tenant was responsible for any damages to the premises other than normal wear and tear. The agreement did not provide that the landlord would maintain fire insurance for the benefit of the tenant.

In Lea v. Farmers, 194 Or App 557 (2004), the Oregon Court of Appeals reaffirmed that a plaintiff may not recover medical expenses unless there is some evidence that the charges are reasonable.

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                                WASHINGTON CASES

UIM INSURERS: PREPARE TO PAY

Butzberger v. Foster, 151 Wn2d 396, 89 P3d 689 (2004)

While attempting to rescue Foster, who was trapped inside his truck, Butzberger was struck and killed by another driver. Butzberger’s estate settled with the driver, then claimed UIM benefits from the policies insuring the Foster and Butzberger vehicles.

The Washington Supreme Court first reminds us that UIM benefits must be extended to anyone who is "using" the insured vehicle. The court then moved on to an analysis of "use" and decided on factors to consider, while ruling that the ultimate question is whether the named insured would reasonably expect coverage under the circumstances. Previously, the test for "use" of a vehicle has depended on four factors. The court concluded that one of the factors, that the injured person be "vehicle oriented rather than highway or sidewalk oriented" at the time of the accident, added nothing to the analysis and limited the inquiry in all cases to the remaining three factors.

The first requires a causal relation or connection between the injury and the use of the insured vehicle. As to the Foster truck, "but for" Butzberger’s attempt to rescue Foster, Butzberger would not have been killed. As to Butzberger’s vehicle, again, Butzberger "would have been able to continue on his way to work and would not have been killed but for his attempt to rescue Foster."

The second factor requires that the injured person be in "reasonably close geographic proximity to the insured vehicle, although the person need not be actually touching it." In the case of Foster’s truck, this factor was easily satisfied because Butzberger was either touching or within a few feet of the vehicle. As to the Butzberger vehicle, the court struggled only slightly in finding the necessary proximity even though it was parked approximately 75 feet away.

The final factor is that the injured person must be "engaged in a transaction essential to the use of the vehicle at the time" of injury. Here, the court concluded that "a rescue effort to assist an occupant of another vehicle is a transaction essential to the use of that vehicle." Further, "when a motorist interrupts his or her travel to rescue a victim in another vehicle, the rescue is a transaction essential to the rescuer’s vehicle" as well.

There may be good policy reasons to want to fully compensate "Good Samaritans," and the court unquestionably wanted to get to this end result, regardless of the necessity of stretching the concept of UIM coverage to its very limit.

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In Auto Sox USA, Inc. v. Zurich, __Wn App__, 88 P3d 1008 (2004), the holder of a patent for an improvement to vehicle roof advertising signs sued the insured, a manufacturer and seller of roof-top signs, for patent infringement. The insured claimed that Zurich owed a duty to defend the claims as an "advertising injury." The court disagreed, noting the distinction between an advertising idea, infringement of which is covered, and an advertised product. Here, the patent holder claimed the insured infringed in the manufacture of its product and no coverage applied. The court also held that a patent infringement is not covered as an "infringement of copyright, title or slogan."

In Howard v. Royal Specialty Underwriting, __Wn App__, 89 P3d 265 (2004), the Washington Court of Appeals held that the reasonableness determination in the tort case was binding on the insurer in a bad faith action. The insurer had defended another of its insureds in the same tort case, and therefore had adequate notice and opportunity for discovery, a meaningful opportunity to be heard and the settlement amount of $17.4 million was supported by sufficient evidence of reasonableness.

In Allstate v. Bowen, __Wn App__, 91 P3d 897 (2004), Allstate’s insured sold a home, "intentionally or negligently or innocently" failing to disclose certain plumbing problems to the buyers. Because the buyers’ complaint did not expressly rule out coverage for the property damage, Allstate had a duty to defend. However, the property damage did not arise out of the misrepresentation, so Allstate had no duty to indemnify.

In Coulson v. Huntsman Packaging Products, Inc., __Wn App __, 92 P3d 278 (2004), plaintiff ran a stop sign he claimed was obscured by tree growth on the parking strip owned by the city adjacent to defendant’s property. The Court of Appeals held that defendant’s duty to maintain the parking strip turned on whether it "possessed" the area. Plaintiff submitted evidence that defendant regularly maintained the parking strip, but that it made no attempt to control the parking strip to the exclusion of the city or the public in general. As a result, defendant was not a "possessor" in the sense required to give rise to a duty to maintain the area.

In O’Brien v. Hafer, __Wn App__, 93 P3d 930 (2004), Miller called her roommate/boyfriend Hafer and asked him to come pick up her up in her car. On the way, Hafer ran a red light and hit plaintiffs’ car. The court ruled that there was a fact question on the issue of whether Hafer was Miller’s agent at the time of the accident, making Miller vicariously liable for Hafer’s conduct.

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Clark v. DSU Peterbilt & GMC, Inc., __ Or App__ (April 14, 2004)

Clark worked for defendant for 26 years, working his way up to manager of the body shop. In 2001, defendant’s business suffered because of the economic downturn and increased competition. Defendant considered making cuts in the body shop, including Clark’s position. Over the course of several months, Clark had to lay off several employees in his shop.

Meanwhile, Clark saw a doctor who excised a lesion from his leg. The doctor told him that the lesion was non-cancerous. Clark missed a total of three days from work. When he returned to work, he told his manager that the doctor "got it all" and that he had a clean bill of health.

Clark had to lay off more employees in his shop. Finally, in early 2002, defendant decided to terminate Clark’s position. He then sued for employment discrimination, claiming that he had been terminated because of a perceived disability. Defendant successfully moved for summary judgment and Clark appealed.

On appeal, the Oregon Court of Appeals concluded that the evidence was insufficient to create a triable issue of fact. While Clark acknowledged that there was no direct evidence that defendant considered him disabled, he insisted that "the record as a whole" created a triable inference. Clark pointed to the timing of the disclosure of possible cancer and stigma associated with the disease, the fact that Clark was competently performing his job and that there were others who could have been laid off. The court disagreed and affirmed.

Hudson-Connor v. Putney, __ Or App __ (March 17, 2004)

Defendant, a 14 year old girl, lived with her grandparents in central Oregon. Defendant’s grandfather purchased a golf cart that defendant was allowed to use and to let other children drive on the grandparent’s property. Defendant permitted an 11 year old boy to drive while defendant’s friend, plaintiff, was nearby. The boy drove around for awhile, and as he was coming back toward plaintiff, he accidently stepped on the accelerator. The cart ran into plaintiff and broke her leg.

Plaintiff alleged that defendant negligently entrusted the golf cart to the boy. At trial, the court, at defendant’s request, instructed the jury regarding the standard of care for minors ("it is the duty of a minor to use the same care that a reasonably prudent person of the same age, intelligence, and experience would use under the same or similar circumstances"). Plaintiff objected, arguing that operation of the golf cart is an "adult activity" to which the adult standard of care should apply.

The Oregon Court of Appeals noted that minors are held to a "lesser" standard of care, except when engaged in an "adult activity." An "adult activity," said the court, is one that "is normally undertaken only by adults, and for which adult qualifications are required." According to the court, an activity demands "adult qualifications" if its safe performance requires a level of skill and judgment not typically associated with children. In addition, the level of skill and judgment required to perform an activity safely logically increases in proportion to the danger the activity poses. The lower the risk, the less likely the activity would be treated as an adult activity.

Plaintiff argued that all motorized vehicles are inherently dangerous and operation therefore requires "adult qualifications." The court rejected this position, contrasting the activity in this case to the operation of a motor vehicle on a public highway. The court noted that driving on a public highway is an adult activity because of the risk of serious harm from accidents, the necessity of learning traffic laws and complex driving skills associated with traffic and varying road conditions. Operation of a golf cart that could only go 12 mph on private property did not compare. Because operation of the a golf cart is not an adult activity "it follows that entrustment of a golf cart to another also is not an adult activity."

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In Montoya v. Housing Authority of Portland, __ Or App __, (March 10, 2004), the Court of Appeals ruled that the trial court did not have jurisdiction to enter a default judgment in amount greater than the prayer. This ruling may have additional significance because of the all-too-familiar pleading of damages in plaintiff’s complaint. The allegations of damages include amounts "to be proven more accurately at trial" and "approximately" and "continuing and to be proven more accurately at trial." The court ruled that the trial court’s jurisdiction extended only to those damages specifically pleaded, in the absence of additional notice to the defaulted defendant. This suggests that the pleading of "approximate" or "continuing" damages is insufficient notice that a higher amount is sought at the time trial comes around, unless discovery specifically shows increased damages.

In Newton/Boldt v. Newton, 192 Or App 386 (2004) the court required enforcement of an oral settlement agreement. At a hearing before the trial court, plaintiff expressed her agreement to the settlement, but later refused to sign the settlement documents. When defendant moved to enforce the settlement, plaintiff claimed that she did not understand one of the effects of the agreement. The Oregon Court of Appeals held that the oral agreement was enforceable. The proceedings at the hearing created a binding contract. If a party expresses agreement to the terms of a contract, uncommunicated subjective misunderstandings do not avoid enforcement of the contract, unless the other party knew or reasonably should have known that first party held a mistaken understanding. Here, no evidence suggested that defendant should have been aware of plaintiff’s "mistake."

In Day v. Advanced M&D Sales, Inc., 336 Or 511 (2004), the Oregon Supreme Court ruled that application for and acceptance of workers compensation benefits does not estop the claimant from contending later that he was not an employee. Plaintiff worked for defendant in two capacities, as a salesman employee and as a installation contractor. After plaintiff was injured, he filled out claim forms indicating his job was as a salesman.The claim was accepted and benefits paid. Plaintiff then filed suit against his employer. Defendant employer successfully moved for summary judgment, arguing that the employee was estopped from asserting that he was not an employee. The Oregon Supreme Court disagreed, finding that one element of estoppel was missing: a misrepresentation. According to the court, if a worker files a claim in a mistaken, but good faith belief that he is an employee, he can later correct his error and sue the alleged employer.

PIP Statutes Interpretation. The Insurance Division’s administrator issued a bulletin to clarify the Division’s interpretation of the 2003 changes to the PIP statutes. According to the bulletin, if a PIP insurer is paying, a medical provider may not charge a fee that exceeds the amount charged to the general public or the amount set out in the applicable workers comp fee schedule, "whichever amount is less." The limitation of services contained in the workers comp schedules do not apply, only the fee schedule amounts. Regarding the requirement that expenses be "reasonable and necessary," the Division opines that this standard still applies but is further defined for purposes of costs by the "lesser-than" standard (although this opinion is "not free from doubt"). The entire bulletin may be found at http://www.cbs.state.or.us/external/ins/docs/bulletins/bulletin2003-07.htm.

Plaintiffs received a Graco baby walker as a gift shortly after their son, Tyler, was born. The walker was purchased at a yard sale and did not have the original instructions or warning information. On one occasion, while Tyler was in the walker, he was able to propel it backwards and grab the dangling cord to an electric teapot that was brewing. Tyler pulled the teapot until it fell on him, causing burns. Plaintiffs sued Graco claiming that the walker was defectively designed and that Graco failed to provide adequate warnings. The trial court granted summary judgment in favor of Graco.

On appeal, the Washington Court of Appeals ruled that plaintiffs failed to establish a product liability case under either of the two tests for proving a design defect. The risk/utility test failed because, given the nature and purpose of a baby walker, no feasible alternative design would have prevented harm caused by the mobility of the walker, the very feature that plaintiffs claimed was dangerous. Nor could plaintiffs recover under the consumer expectation test. Plaintiffs were obviously aware of the mobility of the child in the walker, and given that this was the very purpose of the walker, plaintiffs could not establish that the walker was more dangerous than the ordinary consumer would expect.

The court also ruled that the warnings were adequate. Plaintiffs claimed that they should have been warned that babies often move backward in the walker and can do so quickly. The court held that Graco’s warnings of risks associated with mobility were adequate.

In Petersen-Gonzales v. Garcia, __ Wn App __, 86 P3d 210 (2004), the court held that a UIM insurer has the right to participate in a trial against the tortfeasor in accordance with policy language to that effect. The court held that it was not contrary to public policy, noting that the "enhanced obligation" of good faith does not apply because the UIM insured is in an adversarial relationship with the insurer. The court also noted that it is not unfair to permit the UIM to participate because of the nature of UIM insurance as a second layer of coverage for damages the insured is legally entitled to recover. Finally, the court concluded that participation was not precluded by the collateral source rule. The rule, a rule of evidence, does not bar the participation of a party, only evidence pertaining to payments made by a source unrelated to the tortfeasor.

In State v. Maguire, __ Wn App __ (March 8, 2004), the court ruled that two defendants who had entered into a covenant not to execute with the plaintiff should be dismissed on the motion of a third defendant, the State. The State moved for the dismissal of the other defendants because, it argued, the continued presence of the two settling defendants was designed to create joint and several liability among the three defendants, which would potentially expose the State to liability for the damages caused by the other defendants if all three were present at trial. The court ruled that the covenant was the equivalent to a release, pursuant to the statutes pertaining to joint and several liability. As such, the settling defendants should be dismissed from the lawsuit.

In Anica v. Wal-Mart, __ Wn App __, 84 P3d 1231 (2004), plaintiff failed to sustain her claim that her former employer’s reason for firing her was pretext. Plaintiff claimed that she was terminated because of her second workers compensation claim and inability to perform physical labor after her injuries. Defendant claimed it fired her because she could not provide a valid social security number. The court ruled that none of plaintiff’s theories of recovery were valid. Plaintiff did not produce a valid Social Security number and despite her assurance that she would resolve the problem, she failed to do so for several months.

In Sepuveda-Esquivel v. Central Machine Works, __ Wn App __, 84 P3d 895 (2004), an aluminum plant worker was injured when a load fell from a hook. He brought a product liability claim against the forger of the hook. The Washington Court of Appeals affirmed summary judgment for the forger because the hook did not fail. The forger did not design the hook, did not know of the use to be made of it by plaintiff’s employer and did not make the latch that was incorporated into the hook and supposed to hold the hook in place. Component sellers are not liable when the component itself is not defective.

In Travis v. Tacoma Public School Dist., __ Wn App __, 85 P3d 959 (2004), plaintiff, a teacher, submitted his resignation, then tried to rescind and sue for wrongful termination. The Washington Court of Appeals held that the resignation could not be rescinded because it had already been accepted by the school board. Plaintiff also failed to overcome the presumption that his resignation was voluntary. Neither encouragement to resign by the employer nor a worker’s subjective belief that he must resign to avoid non-renewable of his contract overcomes the presumption. Voluntary resignation waives any claim for wrongful termination.

In Clark v. Baines, __ Wn 2d __, 84 P3d 245 (2004), the court held that an Alford plea (pleading guilty while maintaining innocence) does not have collateral estoppel

effect so as to preclude litigation of the probable cause element of a malicious prosecution civil action.

In Commonwealth Insurance Co. v. Grays Harbor County, __ Wn App __, 84 P3d 304 (2004), the county and its insurer were at odds over the scope of covered repairs following earthquake damage to the county courthouse. The building department required upgrades in the building because of the extent of the repairs the county proposed. Commonwealth argued that it covered only the "minimum requirements" of the code, not the "substantial alteration" proposed by the county. The court reproved Commonwealth for its policy language because it incorporated the building code into its coverage definition, thereby requiring consultation with an attorney to understand coverage, and "frustrat[ing] the law’s intent to encourage insurance companies to plainly write their coverage so laypersons can understand it." The court ruled that the alterations were covered if the earthquake damage caused the enforcement of the code resulting in the alterations. But, the court ruled, an issue of fact remained as to whether the building official required the upgrades because of the earthquake damage or because of the scope of the proposed work.

In Hadley v. Maxwell, __ Wn App __, 84 P3d 286 (2004) the court held that an appeal solely on liability did not change damages "liquidated" in a 1998 judgment to unliquidated for purposes of prejudgment interest on retrial of a personal injury case in 2003. Because the damages were "liquidated" by the prior judgment, plaintiff was entitled to prejudgment interest on the 2003 judgment dating to the previous judgment.

In Amazon.com International, Inc. v. American Dynasty Surplus Lines Insurance Co., __ Wn App __, 85 P3d 974 (2004), the court held that the insured should have been defended in a patent infringement suit. The court noted that patent infringement may constitute advertising injury when an entity uses an advertising technique that is, itself, patented. In the underlying claim, a software manufacturer alleged that Amazon.com infringed on its patents by misappropriating its software for use on Amazon’s website to allow potential customers to preview music over the Internet prior to purchasing it. The court held that the allegations "conceivably amounted to an advertising injury." Amazon’s insurer had a duty to defend.

Oregon Steel Mills, Inc. v. Coopers & Lybrand, Inc., 336 Or 329 (2004)

Defendant provided accounting advice to plaintiff in connection with plaintiff’s plans to make a public offering of its stock and debt. Because of errors in the advice, plaintiff had to await correction of its financial statement. Plaintiff alleged that during the delay caused by defendant, the stock price decreased, resulting in a loss of $35 million when the shares were actually offered. The trial court granted defendant’s motion for summary judgment and the Oregon Court of Appeals reversed. The Oregon Supreme Court granted review on the issues of causation and foreseeability.

First, the Supreme Court distinguished between cause in fact and "proximate cause." The court said that defendant’s negligence had clearly been a cause in fact of the loss, but that Oregon had rejected "proximate" causation to signify the bounds of tort liability. Instead, when the plaintiff proves a causal link, the defendant’s legally responsibility for the plaintiff's harm "depends on what constitutes negligence in a particular case" (for instance, professional malpractice in this case). That analysis, in turn, depends on foreseeability as a limitation of liability for negligent conduct.

Here, the court held that the intervening action of market forces on the price of plaintiff's stock was the "harm-producing force," and defendant's actions did not "cause" the decline in the stock price so as to support liability for that decline because the decrease was not foreseeable. Therefore, the trial court had correctly granted summary judgment.

Barackman v. Anderson, 192 Or App 176 (2004)

Plaintiff claimed she was injured in an automobile accident. In addition to filing a lawsuit, she sought PIP benefits for her injuries, including a claimed injury to her teeth. The PIP arbitrators decided that plaintiff had not injured her teeth in the accident. Defendant in the personal injury action then added

an affirmative defense of issue preclusion as a bar to plaintiff’s claimed damages to her teeth. Plaintiff moved for summary judgment to strike the affirmative defense, which the court granted. A jury ultimately awarded plaintiff damages that included damages for injury to her teeth.

On appeal, the Oregon Court of Appeals held that claim preclusion applied, in spite of plaintiff’s several arguments to the contrary. The binding PIP arbitration decision precluded plaintiff’s claim for injured teeth in the subsequent proceedings against the tortfeasor.

Glorioso v. Ness, 191 Or App 637 (2004)

Defendants hired plaintiff to photograph their son’s wedding at their home. Before the ceremony, plaintiff arrived to view the two-level deck area where the ceremony was to take place. While walking toward an arch that had been set up for the wedding, plaintiff tripped on a step between the two levels of the deck. In her deposition, plaintiff testified that she was aware the deck had two levels, the lighting was fine, the deck was not wet or slippery and the deck had no flaws other than the step was of the same color and appearance as the rest of the deck. The trial court granted defendants’ motion for summary judgment.

The Oregon Court of Appeals affirmed. A step located in a place where steps normally may be found, with no deceptive lighting, slippery surface or history of accidents is not unreasonably dangerous.

Clinical Research Institute of Southern Oregon v. Kemper Insurance Co., 191 Or App 595 (2004)

Plaintiff’s former employee brought suit against it for "interference with economic opportunity." The employee alleged that she would have been hired had plaintiff not communicated "false and defamatory" information to a prospective employer. Plaintiff’s insurer, Kemper, defended briefly, then withdrew its defense, relying on the Employment Related Practices (ERP) exclusion. Plaintiff then commenced this declaratory action, arguing that the ERP exclusion applies only to prospective and current employees, not former employees. Following summary judgment for Kemper, plaintiff appealed.

On appeal, the Oregon Court of Appeals ruled that the ERP language was unambiguous and broad enough to include the claims of plaintiff’s former employee. The broad language "arising out of" when referring to "employment related practices" and other language in the policy convinced the court that the exclusion applied to plaintiff’s facts.

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In Stevens v. Czerniak, 336 Or 392 (2004), the Oregon Supreme Court put to rest any argument that the Oregon Rules of Civil Procedure require pre-trial disclosure of the names and opinions of expert witnesses. Although the rules themselves do not specifically deal with the issue, the court relied on the history and context of the rules, in particular, the legislative refusal, in 1979, to amend the rules to specifically require such a disclosure.

In Lozano v. Schlesinger, 191 Or App 400 (2004), the court held that the construction statute of ultimate repose did not apply to a house occupied by the builder for five years. Plaintiffs, subsequent purchasers who sued for construction defects, were not barred by the 10 year statute from "substantial completion" because of the definition of that term in the statute. "Substantial completion" occurs when the "contractee accepts in writing the construction." Because the builder lived in the house, no "contractee" ever accepted the construction.

In Schmidt v. Lloyds of London, 191 Or App 340 (2004), plaintiff purchased a home for her son. Although the son began paying rent and moved most of his possessions there, he stayed in the house for only one weekend in early April. On May 30, a fire destroyed the house. Plaintiff’s insurer denied coverage on the grounds that the house was unoccupied for more than 60 days prior to the fire. The court held that summary judgment for

the insurer was proper. Visits to the house are not sufficient, as the house must be in actual use by a person using it as his usual place of habitation.

In Lansford v. Georgetown Manor Inc., 192 Or App 261 (2004), plaintiff sued for employment discrimination based on her "disability" of "panic attacks." The court ruled that plaintiff’s short term attacks did not substantially limit her "major life activity" of working. In addition to the short duration of the attacks and the lack of evidence of residual effect, plaintiff did not make the required showing of inability to work in a broad class of jobs. However, the court overturned summary judgment for defendant on the grounds that a jury could find that defendant terminated plaintiff because of a perceived disability. Plaintiff had evidence that her employer considered firing her because of her health problems prior to plaintiff’s actual termination for "misappropriating company property."

In Mark v. the State of Oregon, 191 Or App 563 (2004), the court determined that plaintiffs were entitled to injunctive relief requiring the State to abate a private nuisance. Plaintiffs, who lived adjacent to a nude beach on state lands, were entitled to relief because the state failed to adequately control the activities of its invitees. According to the court, landowners who do not themselves engage in activity constituting a nuisance may nevertheless be liable for the acts of third parties if the owner both knows the nuisance-causing activity is occurring and fails to take reasonable care to prevent it.

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EMPLOYEE MANUAL CREATES ENFORCEABLE PROMISES NOT DISCLAIMED

Carlson v. Lake Chelan Community Hospital, ___ Wn App ___, 66 P3d 1080 (2003)

Plaintiff, a former employee of defendant, sued for wrongful termination. Plaintiff argued that defendant’s employee manual required progressive discipline and that, contrary to the manual, he was terminated for one act of insubordination. After a verdict for plaintiff, defendant appealed, arguing that a disclaimer in the employee manual effectively precluded reliance on the manual as an enforceable promise.

The Washington Court of Appeals reviewed the language used in other manuals at issue in other cases. Unlike the language in other cases, the language here did not specifically disclaim modification of employment at will. In addition, the disclaimer did not indicate that the employer could depart from the guidelines in the manual, only that management could revise the manual at any time. The court held, therefore, that the disclaimer was ineffective and that there was evidence to support plaintiff’s claim that the manual created enforceable obligations against defendant.

Truck Insurance Exchange v. BRE Properties, ___ Wn App ___, 81 P3d 929 (2003)

BRE contracted with West Star to provide framing work on an apartment complex. In the subcontract, West Star agreed to indemnify BRE for any damages arising out of its work. West Star also purchased insurance with Truck Insurance Exchange ("Truck") naming BRE as an additional insured. After one of West Star’s employees was injured on the job, BRE sought coverage for the employee’s claim against it under the Truck policy. West Star also sought coverage for its liability under the indemnity agreement. The trial court granted summary judgment for Truck.

Truck prevailed on the grounds of an exclusion for liability for injury to an employee of "the insured." On appeal, BRE argued that the exclusion did not apply to it because the injured employee was not its employee. BRE asserted, and the appellate court agreed, that the policy applied to each insured separately. Coverage was only precluded for employees of "the insured" seeking coverage, not any insured.

West Star argued that the exclusion did not apply to it because its indemnity agreement was an "insured contract," exempt from the policy exclusion. The Washington Court of Appeals analyzed whether the indemnity agreement was an "insured contract" as defined in the policy. The court first noted that, under Washington law, subcontractors may enter into a contract making the subcontractor liable for its own fault (but may not agree to assume liability for the fault of any other party). The law of the state upholds enforcement of indemnity agreements despite the exclusive remedy provision of workers compensation law, as there is no prohibition in the law from an employer contractually assuming liability that it no longer has because of workers comp law. And because West Star was voluntarily assuming liability that it no longer had under tort law, the agreement fell within the definition of an insured contract. Truck was obligated to cover West Star’s liability under the contract.

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In Safeco v. Woodley, __Wn 2d __, 82 P3d 660 (2004) the Washington Supreme Court ruled that an insurer who desires to offset PIP from a UIM claim must pay a pro-rata share of attorney fees incurred by the insured to recover from the tortfeasor and to arbitrate the UIM claim. The fees are to be calculated by dividing the PIP reimbursement by total damages and multiplying that result against the total legal fees. The court ruled that the insured is not entitled to pre-judgment interest on the amount of fees, but that the insured was entitled to fees on appeal as this case involved the right of the insured to "receive the full benefit of her PIP and UIM coverages."

In Barker v. Skagit Speedway, __ Wn App __, 82 P3d 244 (2003) plaintiff, a racing fan, claimed he was bumped by a sprint car after he was allowed into the pit area. The court upheld summary judgment on the grounds that plaintiff had failed to prove that the pit area was unreasonably dangerous or that defendant had control over the persons moving the car.

In Ganno v. Lanoga Corp., __ Wn App__, 80 P3d 180 (2003), the court upheld summary judgment for a building products store. Plaintiff customer sued after a beam that a store employee loaded with a forklift on to plaintiff’s truck fell from the truck onto the highway. Plaintiff was injured trying to retrieve the beam. In accordance with store policy, the store employee had made no effort to tie down the beam. The court held that defendant owed no duty to secure the load and that, in fact, it was plaintiff’s duty to make sure the load was secure before he drove away, pursuant to Washington statutory law.

In Malted Mousse, Inc. v. Steinmetz, __Wn __, 79 P3d 1154 (2003), defendant prevailed in arbitration but the arbitrator denied defendant’s claim for attorney’s fees. Defendant requested a trial de novo on the attorney’s fees issue alone. The Washington Supreme Court held that requests for trial de novo are all or nothing. In addition, because defendant’s request sought a partial trial de novo, the request was not in the proper "form" and was ineffective so that defendant’s right to any review was terminated. The court also ruled that a reviewing court may not bypass the trial de novo procedure for "manifest procedural errors" in mandatory arbitration. Bottom line: the only way to resolve any erroneous ruling in mandatory arbitration is to request a trial de novo of the entire matter.

In Hutson v. Rehrig International, Inc., __ Wn App ___, 80 P3d 615 (2003), plaintiff claimed injury while using a shopping cart. Plaintiff sued the owner of the cart, Costco, and its manufacturer, Rehrig. In arbitration, plaintiff prevailed against Costco, but not against Rehrig. Costco requested a trial de novo and the jury awarded $20,000 less in damages against Costco, and also found in favor or Rehrig. Rehrig then requested attorney’s fees against Costco, arguing that Costco did not "improve its position" as to Rehrig. The court determined that Rehrig’s argument was unavailing because there were no claims between Rehrig and Costco, and thus no "position" to improve.

In Fuentes v. Port of Seattle, __ Wn App __, 82 P3d 1175 (2003), the court held that a driver at the airport to pick up passengers disembarking from a flight was an invitee on the premises even though she herself was not a passenger. However, injury caused by a car jacking at the airport was not reasonably foreseeable. Evidence of a history of car prowls and other crimes "does not establish foreseeability of a carjacking at the airport’s passenger pick-up drive."