[00:00:02] Speaker 04:
And just please watch your clock if you want to save time for rebuttal.

[00:00:06] Speaker 03:
Thank you, Your Honor.

[00:00:19] Speaker 03:
Thank you for agreeing to hear oral argument.

[00:00:21] Speaker 03:
I would like to reserve five minutes for rebuttal.

[00:00:26] Speaker 03:
In this case, we all agree about the basic facts.

[00:00:30] Speaker 03:
The question is how the law resolves these issues.

[00:00:33] Speaker 03:
Specifically, what would the Oregon Supreme Court do if presented with these facts and these arguments?

[00:00:40] Speaker 03:
Or which limit of liability applies to Lucas West's permissive use of the covered loaner van?

[00:00:47] Speaker 03:
I want to start with the two arguments that have not been addressed in the prior cases cited by the parties.

[00:00:53] Speaker 03:
The first one of those is ORS 742.028, which is the simplest way to decide the case.

[00:01:01] Speaker 03:
Under 742.028 sub 3, a policy may contain provisions that are not in the insurance code and neither prohibited by law nor in conflict with any statutorily required provisions.

[00:01:14] Speaker 03:
The customer exclusion here, of course, is contrary to law in that it excludes coverage for permissive users of the covered vehicle.

[00:01:27] Speaker 03:
It's in conflict with the statually required provisions.

[00:01:30] Speaker 03:
We all agree about that.

[00:01:31] Speaker 03:
Some coverage is required.

[00:01:32] Speaker 03:
Even Maori versus farmers said on the face of the opinion,

[00:01:39] Speaker 03:
that the insurance code, the exclusion there was inconsistent with the coverage required by the insurance code.

[00:01:46] Speaker 03:
Safeco versus American Hardware, also heavily relied upon by the insurer here, found that permissive user exclusion is a violation of the FRL.

[00:01:56] Speaker 00:
It would be helpful for me if you would just move to the question of why we can't just reform the policy a la Collins.

[00:02:06] Speaker 03:
Sure.

[00:02:08] Speaker 03:
One, Collins on its face refers to Collins hinged on 742-464, which the court there observed says you have to provide, you have to do certain things for the minimum base coverage.

[00:02:25] Speaker 03:
You can do anything you want that is lawful for coverage in excess of that.

[00:02:30] Speaker 03:
So there was a passage in Collins.

[00:02:38] Speaker 03:
It's the paragraph that starts with the manifest purpose of ORS 742.464.

[00:02:46] Speaker 03:
That paragraph ends with the quote, the insurer may limit such additional coverage by any exclusion not otherwise prohibited by law.

[00:02:55] Speaker 03:
Collins did not analyze or discuss 742-028.

[00:02:58] Speaker 03:
That statute says that policy provisions cannot violate the insurance code in any way rather than being partially in violation of the insurance code.

[00:03:12] Speaker 03:
There is no Oregon case law that cites or analyzes ORS 742.028, which is inexplicable to me, but here we are.

[00:03:22] Speaker 03:
So this is an argument that, if accepted, I think the court doesn't have to go any further.

[00:03:27] Speaker 02:
The court can simply say... Your argument isn't a crazy argument, but am I correct in saying your argument is not consistent with

[00:03:39] Speaker 02:
Collins, Safeco, and Mowry, right?

[00:03:42] Speaker 02:
Like, you acknowledge that if those courts had accepted your argument, those cases would have come out different.

[00:03:48] Speaker 02:
So I think your position has to be that those cases represent some sort of island over here of kind of weird cases that aren't consistent with you, but everything else should be interpreted consistent with the argument you're making now, which is you don't reform repugnant

[00:04:06] Speaker 02:
provisions in policies just get eliminated and then... I think it's a different basis.

[00:04:14] Speaker 03:
I think if those courts were presented with the statutory argument, the results would have been different.

[00:04:20] Speaker 02:
I think if the Oregon Supreme Court today was presented with... You agree they were presented with it in Maori at least.

[00:04:27] Speaker 02:
They'd had all that time to think about Collins.

[00:04:31] Speaker 02:
And those arguments were presented in Mowry.

[00:04:34] Speaker 03:
Similar arguments with a different ground, Your Honor.

[00:04:38] Speaker 03:
Nobody has cited those opinions do not cite to ORS 742.028, which, again, I can't explain.

[00:04:47] Speaker 03:
I can simply say that they do not appear on the face of the opinions.

[00:04:52] Speaker 02:
So this, at least in terms... Do you know if that provision was... Sometimes when judges are writing something a certain way, you just avoid the inconvenient law that doesn't go in your direction.

[00:05:08] Speaker 02:
But that doesn't mean that the argument wasn't made to you.

[00:05:10] Speaker 02:
Do you know if... Is your position... I haven't looked at the briefing in Maori and such, but do you think it wasn't... Those arguments weren't made to the Oregon Supreme Court?

[00:05:20] Speaker 03:
To my knowledge, that argument was not made.

[00:05:24] Speaker 03:
I will say I did not check the Maori briefing or Collins for that matter.

[00:05:30] Speaker 03:
So in terms of a new argument that was not made in the prior cases, that statute, which has been part of the insurance code for a while, is a simple way to avoid those cases.

[00:05:45] Speaker 03:
You can simply decide that this exclusion

[00:05:48] Speaker 03:
is contrary to the insurance code, which Maori, I think, would agree with based on what they said in the opinion, and then apply the statute which would end up excluding, sorry, would end up invalidating the customer exclusion in this case.

[00:06:07] Speaker 03:
Another thing to consider in that is there is another Oregon statute, 731-008,

[00:06:15] Speaker 03:
The insurance code is for the protection of the public and to allow an insurance company to write a provision which is partly contrary to law, does not protect the insurance buying public.

[00:06:30] Speaker 02:
Again, that makes sense.

[00:06:33] Speaker 02:
is exactly what Collins and Mowry actually encourage.

[00:06:39] Speaker 02:
When I first looked at this case and read all your briefing, I said, why don't the insurance companies try to adjust their policies to actually fit the law?

[00:06:55] Speaker 02:
And then, do I understand correctly that they kind of tried to do that in, whatever those, Northwest Pacific versus Hamilton, and I think there's one other case.

[00:07:04] Speaker 02:
They tried to do that and kind of got punished for it a little bit in the sense that then that's when it was found ambiguous and sort of got the result that you're asking for in this case.

[00:07:15] Speaker 02:
And so, am I correct in thinking that the reason

[00:07:18] Speaker 02:
The reason insurance companies are doing this in Oregon is because they're relying on Collins and Mowry to say, if we write something that everybody knows, or at least we know is inconsistent, but it's at least not ambiguously inconsistent, then it will get

[00:07:37] Speaker 02:
it will just get revised under Collins.

[00:07:40] Speaker 02:
But if we write something that actually tries to thread the needle and do what we're supposed to do, but it's deemed to be ambiguous, then we get punished for it.

[00:07:52] Speaker 02:
So we've got this kind of perverse.

[00:07:54] Speaker 02:
That's how I read all of this.

[00:07:56] Speaker 02:
Would you agree that that's sort of the situation we're in?

[00:07:59] Speaker 02:
And then if so, what do we, as not an Oregon court, a federal court reviewing Oregon law, do with that?

[00:08:06] Speaker 03:
So there are a few things there.

[00:08:08] Speaker 03:
I will try to address all of them.

[00:08:10] Speaker 03:
Wright versus State Farm and North Pacific versus Hamilton, I would certainly agree took an aggressive approach toward determining whether or not there's an ambiguity there.

[00:08:23] Speaker 03:
I think anybody who practices in the tort and insurance realm reading those policies has an idea about what the insurers were trying to accomplish.

[00:08:33] Speaker 03:
The Supreme Court in those cases reviewed them.

[00:08:37] Speaker 03:
It's they fly spec them is the word that I would use to describe what they did there to find ambiguity and to apply the stated limits rather than the unstated FRL limits to

[00:08:54] Speaker 03:
In terms of an insurance company relying on Collins after Maori, I think that has to be very limited to only an insured versus an insured exclusion.

[00:09:07] Speaker 02:
The court in Maori... It doesn't say that, I don't think.

[00:09:11] Speaker 02:
The other way to look at it would be to say the Oregon Supreme Court had squarely before an opportunity to overturn Collins and could have done so and did not do so.

[00:09:24] Speaker 02:
and basically distinguished the Hamilton and the other case.

[00:09:30] Speaker 02:
And so I understand that's your argument.

[00:09:32] Speaker 02:
I'm just trying to figure out.

[00:09:34] Speaker 02:
I think what you said was exactly what I thought.

[00:09:36] Speaker 02:
I appreciated your candidacy.

[00:09:37] Speaker 02:
It did look like those Hamilton and the other case.

[00:09:41] Speaker 02:
The state courts were very aggressive.

[00:09:45] Speaker 02:
So it's hard to feel sorry for insurance companies.

[00:09:48] Speaker 02:
But if you're an insurance company, what do you do in that circumstance?

[00:09:53] Speaker 02:
You've got this precedent that says, if you write it wrong,

[00:09:56] Speaker 02:
but is clearly wrong, we'll just reform it.

[00:10:00] Speaker 02:
But if you try to actually write it the right way, we'll flyspeck it and determine that it's ambiguous, and then you're punishing them.

[00:10:10] Speaker 02:
So what do you do with that?

[00:10:11] Speaker 02:
What do insurance companies do with that?

[00:10:12] Speaker 03:
And that's the third point.

[00:10:14] Speaker 03:
What you do is draft the exclusion similar to the way that they drafted the terrorism exclusion in this case, essentially state that the minimums apply when a certain fact exists.

[00:10:27] Speaker 03:
There are several ways they could do it.

[00:10:29] Speaker 03:
They could, in the declarations page, general limit of liability is $2 million.

[00:10:35] Speaker 03:
The limit for customers is $25.50, and then have policy language which accomplishes that effect.

[00:10:42] Speaker 03:
There are ways to do this to separate the required coverage from the not required coverage.

[00:10:50] Speaker 03:
They could do what many insurers did for a number of years, have the policy, and then as the policy in Collins did, have something, a provision which says we provide the FRL minimum coverage with an endorsement that says that.

[00:11:05] Speaker 04:
In your opening brief, you seem to concede that the exclusion here isn't as ambiguous as the one in Hamilton and Wright.

[00:11:13] Speaker 04:
In your reply brief, you seem to kind of walk that back a little.

[00:11:17] Speaker 04:
Can you clarify that?

[00:11:18] Speaker 04:
Are you still saying the exclusion here is ambiguous?

[00:11:23] Speaker 04:
Not so, and you're relying on your earlier arguments, really, primarily.

[00:11:26] Speaker 03:
There is ambiguity in the policy in terms of what limit applies to a permissive user who has required coverage.

[00:11:35] Speaker 03:
In terms of the customer exclusion itself, I think if Lucius West, our permissive user here, were driving, or were to read the policy A,

[00:11:46] Speaker 03:
He wouldn't know whether or not he is covered.

[00:11:49] Speaker 03:
B, he wouldn't know that the FRL says that he's covered even though the policy, if read carefully, says he doesn't.

[00:11:57] Speaker 03:
And C, the policy, the customer exclusion in the sub one and sub two provisions where it talks about we're going to apply 2550 or a $60,000 combined single limit does not specify which one of those it is.

[00:12:12] Speaker 03:
So in that sense, there's ambiguity in that particular provision.

[00:12:17] Speaker 03:
The larger ambiguity argument that I think we're making is a contract-based ambiguity argument for failure to state the limits.

[00:12:26] Speaker 03:
The limits for an insured are either the amount that are stated in the policy, which is the thing that we are trying to get to, or the policy is ambiguous about whether the stated limit or a $25,000 unstated limit

[00:12:43] Speaker 03:
is something that's going to be imported into the policy, when that is also not mentioned in the policy.

[00:12:49] Speaker 03:
And the source that that comes from, the statute, the FRL, also not mentioned in the policy.

[00:12:55] Speaker 04:
It seems like you're asking us to fly-spec this even more.

[00:12:58] Speaker 04:
Because you may be right.

[00:12:59] Speaker 04:
I think the Oregon courts fly-spec right into Hamilton.

[00:13:04] Speaker 04:
And do we do that even more now?

[00:13:07] Speaker 04:
I'm sorry?

[00:13:08] Speaker 04:
Do we even fly-spec these policies even further to find ambiguity?

[00:13:12] Speaker 03:
I think they do need to be fly-specked, yes, because insurance companies have the burden to draft clear exclusions, to draft clear limitations on the policy, and they also, by statute, 742-028, are not allowed to have things contrary to law.

[00:13:31] Speaker 04:
You have less than two minutes.

[00:13:32] Speaker 04:
You can continue if you want, but I just wanted to let you know.

[00:13:35] Speaker 03:
OK.

[00:13:35] Speaker 03:
So the last thing that I wanted to say, the failure to state limits, which is another statutory basis.

[00:13:42] Speaker 03:
It is required by 742-450.

[00:13:44] Speaker 03:
State means to set forth or to explain the particulars of, and here the policy fails to state a $25,000 limit because that is nowhere in the policy for Mr. West.

[00:14:03] Speaker 03:
All right, I think that's all I have for right now.

[00:14:06] Speaker 03:
And I see about a minute 15 left.

[00:14:08] Speaker 03:
Thank you, Your Honor.

[00:14:09] Speaker 03:
Thank you.

[00:14:18] Speaker 01:
May it please the court, Jay Beatty appearing on behalf of Mid-Century Insurance Company.

[00:14:24] Speaker 01:
The trial court concluded that the who is the insured provision in the mid-century policy wasn't ambiguous.

[00:14:30] Speaker 01:
The defendants didn't assign error to that conclusion, nor did they raise that argument in their opening brief.

[00:14:38] Speaker 01:
The ambiguity argument appears for the first time in the reply brief.

[00:14:41] Speaker 01:
And under the law of this circuit, that's too late.

[00:14:44] Speaker 01:
It's not preserved and it's waived.

[00:14:46] Speaker 01:
The ambiguity argument really isn't currently before this court and doesn't need to be decided by this court.

[00:14:52] Speaker 01:
In their opening brief, what defendants stated was that there was only one issue in this case.

[00:14:59] Speaker 01:
And the issue was, how does a court deal with an exclusion that reports to limit the coverage required by the financial responsibility law?

[00:15:07] Speaker 01:
Is that exclusion completely void, or is it void only to the extent that it conflicts with the financial responsibility law and is enforceable above the minimum amounts required by the financial responsibility law?

[00:15:20] Speaker 01:
That is the 2550 limits that are required by ORS 80606, excuse me, 070.

[00:15:32] Speaker 01:
The answer to that question is simple and it's the one that was chosen by the trial court.

[00:15:36] Speaker 01:
Every reported case in Oregon holds that if an exclusion in an auto policy violates the required coverage under the financial responsibility law,

[00:15:48] Speaker 01:
The policy is reformed, and the exclusion is unenforceable to the extent of the coverage required by the financial responsibility law.

[00:15:58] Speaker 01:
806.080 requires to satisfy the financial responsibility law that the insured obtain an insurance policy.

[00:16:08] Speaker 01:
The insurance policy must contain the minimum limits, and if it doesn't, those will be read into the policy.

[00:16:14] Speaker 01:
For example, if you had a policy that simply had no permissive user coverage, what an Oregon court clearly would do is read that permissive user coverage into the policy to the extent of the limits required by the financial responsibility law.

[00:16:30] Speaker 01:
That is the 2550 limits.

[00:16:33] Speaker 01:
That's exactly what the cases say, and those cases bind this court.

[00:16:38] Speaker 01:
That's the rule in Collins v. Farmer, Farmer v. Mallory, and Safeco v. American Hardware, which is a virtual template of this case.

[00:16:47] Speaker 01:
There is no case reported in Oregon that holds that.

[00:16:53] Speaker 01:
an exclusion that violates the financial responsibility law is just void.

[00:16:58] Speaker 01:
It goes away.

[00:17:00] Speaker 01:
And that an insured is entitled to the full limits of the policy, notwithstanding a clear and unambiguous exclusion.

[00:17:08] Speaker 01:
And just touching briefly on the ambiguity issue, in the mid-century policy, the who is an insured provision

[00:17:19] Speaker 01:
has an exclusion for permissive users who are customers.

[00:17:24] Speaker 01:
It's clear and unambiguous.

[00:17:27] Speaker 01:
Customers aren't covered.

[00:17:29] Speaker 01:
There is an exception to the exclusion if the customer does not have a minimum limits insurance policy.

[00:17:39] Speaker 01:
The defendants in this case would have the burden of proving that exception to the exclusion.

[00:17:44] Speaker 01:
They have conceded in this case that the exception to the exclusion doesn't apply because Mr. West, the at-fault driver, had a minimum limits insurance policy in force at the time of the accident, which really bounces us into the Safeco versus American Hardware case, where depending on the amount of damages in this case, you end up with a Lam Weston argument between two insurance companies, both of whom have minimum limits.

[00:18:11] Speaker 01:
Probably not an issue that will arise in this case due to the magnitude of the injuries.

[00:18:17] Speaker 01:
But the bottom line is that the defendants are asking you to basically reevaluate controlling Oregon case law, and that's not the role of this court.

[00:18:27] Speaker 01:
It has to give effect to Oregon case law and not project what it

[00:18:33] Speaker 01:
The courts have arguably gotten it wrong because they haven't.

[00:18:39] Speaker 01:
And they've reconsidered the decision in Collins vigorously in Maori.

[00:18:46] Speaker 01:
The defendants in this case are basically relying on a concurring opinion of Justice Durham, who thought that Collins was wrongly decided.

[00:18:55] Speaker 01:
Well, with all due respect to Justice Durham, I would disagree that it was wrongly decided.

[00:19:02] Speaker 01:
But it's a concurring opinion.

[00:19:03] Speaker 01:
He agrees with the majority that Collins will be upheld on stare decisis basis.

[00:19:09] Speaker 01:
And to the extent that he disagrees with the reasoning in Collins, it's a dissenting opinion, which certainly isn't Oregon case law, and it's not binding on this court or any other court.

[00:19:20] Speaker 01:
There really, in my estimation, is no avenue for this court to reconsider what is clear and controlling Oregon case law.

[00:19:28] Speaker 01:
And under the Erie Doctrine, it is binding on this court.

[00:19:32] Speaker 04:
I mean, you would agree, though, the apparent rule in Collins-Mauri really doesn't make much sense, right?

[00:19:40] Speaker 04:
I mean, it seems like you

[00:19:42] Speaker 04:
insurance companies blatantly ignore the law and you benefit from it.

[00:19:45] Speaker 04:
I understand the argument that's what the court said and they've started to size this, but you agree the rule really doesn't make much sense.

[00:19:53] Speaker 01:
I think that the rule makes absolutely perfect sense.

[00:19:56] Speaker 01:
The legislature has said that every policy has to provide an insured with the minimum coverage is required under the financial responsibility law.

[00:20:04] Speaker 01:
So anybody who gets into a car as a permissive user can be certain that they're getting at least those limits.

[00:20:09] Speaker 04:
I mean, it maybe makes sense with insurers, because it's good for the insurer's bottom line, but it really doesn't make sense that

[00:20:14] Speaker 04:
But if the insurer's language is ambiguous versus clearly violating the law, I mean, just so counterintuitive.

[00:20:25] Speaker 01:
Well, looking at this from the standpoint of the actual insured in this case, Carcare, it looks at the policy and it says, gee, I don't have coverage.

[00:20:35] Speaker 01:
There's no permissive user coverage under my policy for my customers, which to Carcare's or from Carcare's perspective is perfect.

[00:20:44] Speaker 01:
because they don't want to pay premium based on the bad driving record of their various loaner car users.

[00:20:51] Speaker 01:
And interestingly, under the self-insurance provision of the financial responsibility law,

[00:20:57] Speaker 01:
rental car companies that are self-insured are expressly permitted to offer self-insurance that has a cutout in it exactly like the mid-century policy that says, we will provide coverage only in the event that your auto users don't have their own coverage.

[00:21:15] Speaker 01:
And if they don't have their own coverage, we will only provide coverage up to the minimum limits required by the financial responsibility law.

[00:21:23] Speaker 01:
I believe that's 806-130.

[00:21:24] Speaker 02:
And that's... It sounds like your answer to Judge Lee's question is that it makes sense because you just... But it sounds to me like you're arguing based on your policy views of whether insurance companies should not be able to offer certain types of insurance, which is...

[00:21:44] Speaker 02:
So yeah, that's fine, but the Oregon legislature makes you provide all kinds of insurance.

[00:21:53] Speaker 02:
They say you can't opt out.

[00:21:55] Speaker 02:
If you're going to provide this kind, you have to also provide this kind.

[00:21:57] Speaker 02:
And so if you take all that as a given, you put all those policy issues aside and assume that as courts we don't... I guess I'll ask the question slightly differently.

[00:22:08] Speaker 02:
It is true

[00:22:11] Speaker 02:
Under Collins and Marbury, the problem, one problem with this is that people are under your argument, they're provided a certain type of insurance, but their policy doesn't say it.

[00:22:22] Speaker 02:
So if you read the policy, you wouldn't even know you had those basic limits of insurance because it actually excludes them.

[00:22:28] Speaker 02:
So that's a, I mean, that seems a little weird, doesn't it?

[00:22:33] Speaker 02:
By weird, I mean not that your insurance company doesn't like it because they don't make a claim.

[00:22:39] Speaker 02:
By weird, I mean people should be able to know what kind of insurance they bought.

[00:22:45] Speaker 01:
Yes.

[00:22:46] Speaker 01:
Subject to this caveat that these policies are written on a nationwide basis.

[00:22:50] Speaker 01:
They're rated by ISO.

[00:22:52] Speaker 01:
They're basically submitted in each state with

[00:22:55] Speaker 02:
Oregon has all kinds of weird rules.

[00:23:07] Speaker 02:
It's not our job to second-guess that.

[00:23:12] Speaker 02:
That is a problem.

[00:23:15] Speaker 02:
Judge Lee's question, that is a problem.

[00:23:17] Speaker 02:
I'm not saying that we can do anything about that, but the problem with the Collins slash Mulberry circumstance is insurance companies are incentivized instead of writing an insurance policy that actually makes, that actually says what is in the insurance policy.

[00:23:31] Speaker 02:
You have an insurance policy that says stuff that's not true, and your average insurer doesn't, maybe your lawyers know, but your average insurer doesn't know.

[00:23:40] Speaker 02:
I don't know what we do with that, but that's true, right?

[00:23:43] Speaker 01:
Right, and I do want to point out the fact that the insured in this case is Car Care.

[00:23:46] Speaker 01:
It's not Lucas West.

[00:23:48] Speaker 01:
He probably had no idea what kind of insurance policy had been issued to Car Care.

[00:23:52] Speaker 01:
Car Care knew exactly what insurance it had because it had a copy of the policy, obviously.

[00:23:58] Speaker 01:
You point out something that is important, and that is after

[00:24:02] Speaker 01:
the opinion in Collins and about the time of the Safeco opinion versus American hardware, the legislature amended 742-450 and prohibited insured versus insured or family member exclusions.

[00:24:18] Speaker 01:
And in passing that statute, it mentions Collins.

[00:24:23] Speaker 01:
It endorses sort of the analytical framework of Collins.

[00:24:27] Speaker 01:
It just says, we don't like family member exclusions.

[00:24:31] Speaker 01:
We think that the kind of exclusion discussed in Mallory and Collins in particular is unusual for insureds because it's not an exclusion of who is covered under the policy, but it's an exclusion of what is covered.

[00:24:46] Speaker 02:
So we could talk all day about whether this makes good policy to allow certain exclusions and not other exclusions, but none of that really.

[00:24:52] Speaker 02:
The issue that's odd and the perverse thing, it seems to me, and I want to know if you will at least acknowledge that or agree, is that

[00:25:03] Speaker 02:
If you allow, and this I think is what's discussed in the concurrence in Maori, which is if you allow the Collins Maori sort of where you're able, where you just reform the contract, it creates a perverse situation where insurance companies don't actually write the contract consistent with what's actually, what people are actually getting with their insurance.

[00:25:25] Speaker 02:
And so people don't know by reading their contract.

[00:25:28] Speaker 02:
They have to get a lawyer or something to know what kind of coverages they have.

[00:25:31] Speaker 02:
You would agree that that's the outcome of these cases that I was talking about earlier with your colleague on the other side, where the insurance companies, I think, I don't know that this is the insurance company's fault, because they tried to do it, as best I could tell.

[00:25:46] Speaker 02:
And then they got punished for doing so.

[00:25:48] Speaker 02:
So they went back to the, we're just going to write blatantly wrong.

[00:25:51] Speaker 02:
As long as they're clearly wrong, we want them to just write wrong contracts or incorrect contracts.

[00:25:57] Speaker 02:
That's the world we're in, right?

[00:25:59] Speaker 01:
I think that's a fair statement.

[00:26:04] Speaker 01:
The insurance companies are obligated to provide the coverage provided by statute, obviously.

[00:26:11] Speaker 01:
Nobody is arguing that point.

[00:26:13] Speaker 01:
And really, we are looping back to the original question in this case, what happens when they don't?

[00:26:19] Speaker 01:
And it's true that in many cases, they don't.

[00:26:21] Speaker 01:
They have exclusions, including the exclusion in this policy, that purports to eliminate coverage that's required by law.

[00:26:29] Speaker 01:
And it just brings us back to where we started.

[00:26:30] Speaker 01:
What do you do in that circumstance?

[00:26:33] Speaker 01:
And the Oregon courts have already come up with the rule.

[00:26:36] Speaker 01:
You read that coverage into the policy, but no more.

[00:26:40] Speaker 01:
There is no basis for anyone looking at this policy believing that they're going to get $2 million in liability coverage.

[00:26:48] Speaker 01:
Neither CARICARE could believe that nor Mr. West when he borrowed this van.

[00:26:52] Speaker 01:
In fact, when he borrowed the van, the record below will show that he signed a statement saying that he was fully liable for everything and that there was no liability on the part of CARICARE.

[00:27:04] Speaker 01:
As a matter of fact, that's a permissible provision.

[00:27:08] Speaker 01:
Under the Oregon tort law, people who loan cars out are not liable.

[00:27:14] Speaker 01:
I mean, absent some other basis of liability for the negligence of those who borrow the car.

[00:27:19] Speaker 01:
So from Mr. West's standpoint, he probably had no expectation of any coverage.

[00:27:25] Speaker 04:
Assume Collins and Maorani disagreed.

[00:27:28] Speaker 04:
The rules don't make much sense.

[00:27:29] Speaker 04:
Just assume that.

[00:27:31] Speaker 04:
And both of those cases dealt with insured versus insured exclusions.

[00:27:36] Speaker 04:
I mean, would it make sense for us to read those opinions narrowly if we think the opinions really don't make much sense, but just read it very narrowly that way?

[00:27:44] Speaker 01:
Another interesting point, because that brings you back to Viking vs. Peterson and Viking vs. Parati, which were two cases that pre-existed, Collins and Mowry, and in Viking vs. Peterson there was an exclusion for any driver under 25 years of age.

[00:28:00] Speaker 01:
Course, a 19-year-old is driving a car, gets in an accident, and the policy completely excludes liability for that 19, well, liability coverage for that 19-year-old driver.

[00:28:11] Speaker 01:
The court said, no, you can't do that.

[00:28:13] Speaker 01:
We're going to read the minimum financial responsibility law requirements into the policy.

[00:28:19] Speaker 01:
So that 19-year-old driver got a 25-50 coverage policy, notwithstanding the fact

[00:28:25] Speaker 01:
that the policy excluded all coverage, comprehensive, collision, PIP, all coverage for anybody who was under 25 years of age.

[00:28:34] Speaker 01:
So even ignoring Maury and Collins, you have Viking versus Peterson, which is right on point.

[00:28:42] Speaker 01:
You also have American Hardware versus Safeco, which is this case.

[00:28:46] Speaker 01:
It's the almost identical policy, and the court in that case said that the policy had to be reformed to provide at least the minimum coverage as required by the financial responsibility law.

[00:28:59] Speaker 01:
And I know this court has oscillated back and forth over the binding effect of appellate court opinions as opposed to the Supreme Court, intermediate appellate opinions as opposed to the Supreme Court, but

[00:29:11] Speaker 01:
Safeco versus American Hardware is entirely consistent with Mallory and Collins.

[00:29:15] Speaker 01:
And it's applied in this situation to this policy, and it echoes the holding in Viking versus Peterson.

[00:29:23] Speaker 01:
So to put a point on it, there's just no Oregon case that contradicts the position that has been taken by mid-century in this case.

[00:29:31] Speaker 01:
And whether it's good policy, whether it's good Oregon law or not, that's what the Oregon law is.

[00:29:39] Speaker 01:
And there's no basis for contradicting these clear opinions that are well considered, particularly in Maori, that looked at all of the arguments that are currently being raised.

[00:29:51] Speaker 01:
So it's not like something new has come up and it is an epiphany for this court or any other.

[00:29:57] Speaker 01:
These are well-worn arguments.

[00:29:59] Speaker 01:
They were all addressed and considered in the Maori opinion.

[00:30:05] Speaker 04:
Thank you.

[00:30:15] Speaker 03:
To the court's point about reformation, since that comes up in Safeco versus American Hardware, and the court below, the district court judge wrote, reformation is the remedy based on Safeco versus American Hardware.

[00:30:30] Speaker 03:
The reformation in that case was requiring coverage of a permissive user.

[00:30:35] Speaker 03:
That case, Safeco versus American Hardware, did not address the limits of liability.

[00:30:41] Speaker 03:
If you look at it, even the amount of the damages, the amount that Safeco paid in that case is not apparent.

[00:30:47] Speaker 03:
There's only a vague statement that it was apparently more than one FRL minimum limit.

[00:30:54] Speaker 03:
It did not say that it was more than two, which it would have to be to address the issue in this case where the damages are in excess of two FRL minimum limits.

[00:31:04] Speaker 03:
The other thing about reform is how far does it go in the context of this policy where there's an endorsement that says the only changes to the policy have to be in writing approved by mid-century.

[00:31:20] Speaker 03:
That is essentially a waiver of any kind of reformation in their favor.

[00:31:28] Speaker 03:
Collins and Mowry are the only two cases that address the limits.

[00:31:32] Speaker 03:
The remainder of the policies, the remainder of the cases about the FRL identify why the particular provisions violate the law, not covering somebody who's required to be covered, but they do not address the limits.

[00:31:48] Speaker 03:
And the court is correct.

[00:31:50] Speaker 03:
The issue with this case is about whether insurers can break the law by having provisions that are contrary to the law.

[00:31:58] Speaker 03:
And I understand that they want that and they want that to continue.

[00:32:02] Speaker 03:
But we did identify a new basis that they cannot do that, which is the statute, 742-028, which was not cited in any of the other opinions.

[00:32:17] Speaker 03:
And with that, thank you.

[00:32:19] Speaker 03:
Great.

[00:32:19] Speaker 04:
Thank you both for the helpful argument.

[00:32:21] Speaker 04:
The case has been submitted.