Kiryuta v. Country Preferred Ins. Co

An insurer is not entitled to a safe harbor for attorney fees under ORS 742.061(3), when an arbitration agreement limits the issues to be arbitrated, and the insurer raises an affirmative defense to the award that exceeds the scope of that agreement.

Kiryuta filed an underinsured motorist benefits claim, for which Country Preferred Ins. (Country) timely filed a letter accepting coverage in compliance with ORS742.061(3), which provides a safe harbor for attorney fees. However, the Country limited arbitration to the underinsured motorist's liability and damages. After arbitration, the Kiryuta prevailed on an award for attorney fees and Country appealed. The Court of Appeals agreed with Kiryuta. Subsequently, The Supreme Court found that because Country alleged a contractual defense against the award that references the insurance policy, Country exceeded the scope of issues to be arbitrated as agreed upon in the letter. The Supreme Court, in agreement with the Court of Appeals, found that because the scope of arbitration was exceeded in Country's affirmative defense to the attorney fees award, Country was precluded from being awarded a safe harbor for the attorney fees. Affirmed.