Kiryuta v. Country Preferred Ins. Co.

When a defendant insurance company files a safe-harbor provision but takes steps to pursue litigation outside of damages sought by the plaintiff insured, the safe-harbor provision is nullified.

Kiryuta was injured in an automobile accident and obtained insurance benefits and damage settlements. Kiryuta then made a claim for underinsured motorist (UM) benefits, which Country Preferred Insurance (CPI) denied. Kiryuta sued CPI for breach of the insurance policy. CPI filed for an attorney fee "safe-harbor" letter, and alleged the affirmative defenses of "Contractual Compliance" and "Offset." The arbitrator found in favor of Kiryuta and awarded him attorney fees. CPI filed exceptions to the fees and contended that its safe harbor letter precluded the fees. The trial court reversed Kiryuta's award of attorney fees. Kiryuta appealed, contending that CPI was not entitled to the safe-harbor protection because CPI raised issues unrelated to the underinsured status of the other motorist and the damages due to Kiryuta, which nullified CPI's safe-harbor provision. The Oregon Court of Appeals recognized that CPI raised affirmative defenses at trial which were not related to the other motorist's underinsured status or to Kiryuta's damages. The Court found that CPI's pleadings were meant to pursue litigation beyond that of the original arbitration, which was inconsistent with the requirements of the safe-harbor provision. The Court concluded that the trial court made an error when it failed to award Kiryuta attorney fees. Reversed and remanded.