FILED: July 12, 2000

STEVE FOX,
Representative of the Estate of
William Daryl Fox, Deceased,

Appellant,

v.

COUNTRY MUTUAL INSURANCE CO.,
and NORTHWEST FARM BUREAU INSURANCE COMPANY,

Respondents.

On remand from the Oregon Supreme Court, Fox v. Country Mutual Ins. Co., 327 Or 500, 964 P2d 997 (1998).

Appeal from Circuit Court, Coos County.

Richard L. Barron, Judge.

Submitted on remand December 16, 1998.

Argued on remand January 20, 2000.

Margaret H. Leek Leiberan argued the cause and filed the briefs for appellant.

Bernard S. Moore argued the cause and filed the brief for respondents.

Before Haselton, Presiding Judge, and Edmonds and Wollheim, Judges.

HASELTON, P. J.

Affirmed.

HASELTON, P. J.

These consolidated actions are before us on remand. Fox v. Country Mutual Ins. Co., 327 Or 500, 964 P2d 997 (1998). We affirm.

In August 1990, William Fox was killed in a staged auto accident in Coos County. Plaintiff, the personal representative of Fox's estate, appealed from judgments for defendants Country Mutual Insurance Co. and Northwest Farm Bureau Insurance Co. determining, inter alia, that defendants were not obligated to pay benefits to Fox's estate under the uninsured and underinsured (UM) coverage in Fox's automobile insurance policy. In our original opinion, we affirmed the trial court's summary judgment for defendants based on our conclusion that the incident that killed Fox was not "caused by an accident" within the meaning of defendants' policy. Fox v. Country Mutual Ins. Co., 132 Or App 336, 888 P2d 111 (1995), rev'd and rem'd 327 Or 500, 964 P2d 997 (1998). The Supreme Court reversed on that issue and remanded to us to consider defendants' alternative arguments for affirming summary judgment, as well as plaintiff's other assignments of error. On remand, we conclude that the trial court properly granted summary judgment for defendants on plaintiff's claim for declaratory relief, because the vehicle in which Fox was killed was neither uninsured nor underinsured. Additionally, as explained below, we conclude that the trial court did not err in dismissing plaintiff's claims for breach of contract and intentional interference with an economic relationship. Accordingly, we affirm.

We recounted the material facts and procedural history in our previous opinion:

"During the summer of 1990, Tim Vincent, one of Fox's close friends and a high school classmate, decided to intentionally wreck his Nissan pickup so that he could collect the insurance proceeds and purchase a Toyota pickup. Fox and Vincent discussed Vincent's plans, and Fox agreed to participate, initially, as a look-out for oncoming traffic. On the night of August 27, 1990, Vincent, with Fox as a passenger, not a look-out, intentionally drove his Nissan off Seven Devils Road near Bandon. Vincent survived the wreck, but Fox did not.

"At the time of the wreck, Vincent was a named insured under a $500,000 automobile liability policy from North Pacific Insurance Co. Fox was a named insured under his family's UM coverage, which defendants issued with a limit of $500,000.

"For more than a year following the wreck, Vincent falsely maintained that he accidentally drove off the road because he was blinded by the headlights of a 'phantom' oncoming car as he came around a sharp curve. However, in December 1991, Vincent finally confessed to intentionally causing the wreck to collect insurance proceeds and subsequently pleaded no contest to criminally negligent homicide.

"In January 1992, plaintiff sued Vincent for wrongful death. Because plaintiff feared that Vincent's insurer, North Pacific, might deny coverage, based on Vincent's intentional and fraudulent conduct, he contacted defendants' agent, Jack Waters, to ask about his family's UM coverage at the time of the wreck. Waters erroneously told plaintiff that the policy limit was $100,000, not $500,000.

"In April 1992, North Pacific filed an action against Vincent [and plaintiff, the personal representative of Fox's estate], seeking a declaration that it had no duty to defend or indemnify [Vincent] because of his intentional and fraudulent conduct. Despite the pendency of that action, North Pacific and plaintiff began negotiating a settlement of the wrongful death action. In June 1992, plaintiff wrote to defendants, giving them notice of North Pacific's declaratory judgment action, advising them of a potential settlement with North Pacific, and demanding arbitration to determine coverage under the UM policy. Defendants did not reply. Thereafter, and without receiving defendants' consent,2 plaintiff accepted $150,000 from North Pacific in settlement of the wrongful death action against Vincent. In July 1992, North Pacific dismissed without prejudice its declaratory judgment action.

"In August 1992, plaintiff brought a product liability suit against Nissan, alleging that the truck had a defective seat belt system. Nissan, in turn, impleaded Vincent causing North Pacific to revive its declaratory judgment action. On August 13, 1993, the court entered a judgment declaring Vincent's liability policy void because of his intentional and fraudulent conduct. North Pacific Ins. Co. v. Vincent and Nissan Corp., Coos County Circuit Court Case No. 92CV-1026. That judgment was never appealed.

"In November 1992, while North Pacific's revived action was pending, defendants informed plaintiff that the UM policy limit at the time of Fox's death was $500,000, not $100,000. Plaintiff then sued defendants, seeking a declaration of coverage under the UM policy and asserting further claims of breach of contract for nonpayment of UM benefits, and intentional interference with plaintiff's settlement with North Pacific.3 The trial court dismissed the breach of contract and intentional interference claims under ORCP 21 A(8) and entered summary judgment against plaintiff on the declaratory judgment claim. Plaintiff then moved to set the judgment aside so that he could amend his complaint to allege fraud. When the court denied that motion, plaintiff filed a second action against defendants alleging fraud. The court dismissed that action as barred by res judicata.

___________________________

"2 Plaintiff's policy provides:

"'We do not provide coverage * * * for bodily injury sustained by anyone * * * if, without our consent, the bodily injury or death claim is settled or is resolved by a judgment in a court of law.'

"3 The gravamen of plaintiff's tortious interference claim was that, by misrepresenting the amount of the UM coverage, defendants caused plaintiff to settle for an amount less than plaintiff would have, had plaintiff known the true limits of his own UM coverage." Fox, 132 Or App at 338-340.

Plaintiff then appealed the judgments in both of his actions against defendants, and those appeals were consolidated for our review. (1) In our original opinion, we addressed only plaintiff's first assignment of error, which asserted that the trial court erred in entering summary judgment against plaintiff's claim for declaratory relief. Defendants responded that the trial court's summary judgment for them was correct for the three separate, alternative reasons that they had offered in support of their motion for summary judgment. We affirmed on defendants' first proffered ground, that Fox's death was not "caused by accident" and, thus, was not within the coverage of the UM policy, and we therefore did not reach the other grounds. Fox, 132 Or App at 340. That conclusion, in turn, obviated any consideration of plaintiff's other assignments of error. Id. at 348.

On review, the Supreme Court reversed and remanded to us, concluding "that the Court of Appeals erred in sustaining summary judgment for defendants on the theory that Fox's death was not 'caused by accident' under the coverage required by ORS 742.504(1)(a)." Fox, 327 Or at 516-17. The court explained that, because "the Court of Appeals did not address plaintiff's other assignments of error and defendants' responsive arguments, * * * we must remand this case * * * for further consideration." Id.

On remand, plaintiff raises four assignments of error: (1) The trial court erred in dismissing his breach of contract claim against defendants for nonpayment of benefits under Fox's UM policy. (2) The court erred in dismissing his claim for intentional interference with his alleged "economic relationship" with Vincent's liability insurer, North Pacific. (3) The court erred in granting defendants' motion for summary judgment on plaintiff's request for a declaratory judgment, i.e., in determining that there was no entitlement to UM benefits under the Fox policy. (4) The court erred in denying plaintiff's cross-motion for summary judgment on his request for a declaration of coverage. (2)

Plaintiff's first, third, and fourth assignments of error all ultimately turn on the same legal issue: Was the Vincent vehicle "uninsured" or "underinsured" for purposes of triggering the UM coverage in Fox's insurance policy with defendants? That is so because plaintiff's request for a declaratory judgment on his entitlement to UM coverage and his claim that defendants breached their UM policy agreement by not paying UM benefits are ultimately two sides of the same coin. If the Vincent vehicle was uninsured or underinsured, plaintiff was entitled to declaratory judgment on his entitlement to benefits under the UM policy, and defendants' failure to provide that coverage was a breach of that agreement. Conversely, if the Vincent vehicle was not uninsured or underinsured, plaintiff was not entitled to a declaration of his entitlement to coverage under the UM policy, and defendants' failure to pay UM benefits was not a breach of contract. Given that common, and ultimately dispositive, question, we begin by addressing plaintiff's third assignment of error, which most cogently presents the issue of whether the Vincent vehicle was uninsured or underinsured.

In moving for summary judgment against plaintiff's claim for declaratory relief, defendants argued that the UM policy did not cover claims arising from Fox's death because (1) Fox's death was not "caused by accident"; (2) the Vincent vehicle was neither uninsured nor underinsured; or (3) even if Fox's death were otherwise covered, plaintiff's settlement with Vincent's insurer, North Pacific, without defendants' consent barred recovery under the UM policy. As we explained in our original opinion, the trial court's judgment did not specify its grounds for granting summary judgment. Fox, 132 Or App at 340 n 4. Given the Supreme Court's rejection of defendants' first argument, which underlay our original holding, we proceed to address defendants' alternative grounds for affirmance. (3) As explained below, we conclude that, as a matter of law, the Vincent vehicle was neither "uninsured" nor "underinsured" and, on that basis, affirm the entry of summary judgment against plaintiff's claim for declaratory relief. (4)

In seeking declaratory relief, plaintiff asserted that he was entitled to benefits under the UM policy either because the Vincent vehicle was "uninsured" or because, even if the Vincent vehicle was insured, it was "underinsured." Defendants argue, and we agree, that the Vincent vehicle was neither "uninsured" nor "underinsured." Although "uninsured" and "underinsured" are related terms, see Wright v. State Farm Mutual Auto. Ins. Co., 152 Or App 101, 110-11, 952 P2d 73 (1998), rev allowed 328 Or 275 (1999) (explaining relationship of terms), they involve different statutory provisions and are analytically distinct. Accordingly, we address each issue in turn, beginning with whether the Vincent vehicle was "uninsured."

"Uninsured motorist coverage" (UM) is "coverage * * * insuring the insured, the heirs or legal representative of the insured for all sums which the insured or they shall be legally entitled to recover as damages for bodily injury or death caused by accident and arising out of the ownership, maintenance or use of an uninsured motor vehicle." ORS 742.500(1).

Because ORS 742.504 requires all auto insurance liability policies to provide UM coverage that "in each instance is no less favorable in any respect to the insured or the beneficiary" than if the statutory coverage provision were reproduced in the policy, the terms of defendants' UM policy are dictated by statute. See Fox, 327 Or at 506.

ORS 742.504(2)(d)(A) defines "uninsured vehicle" as a vehicle for which there is "no collectible automobile bodily injury insurance" or a vehicle for which there was a liability policy in place at the time of the accident, but the insurer "denies coverage thereunder." (5) In support of their motion for summary judgment, defendants argued that the Vincent vehicle, in which Fox was killed, was not "uninsured" because, on the date of the accident, the Vincent vehicle had an applicable liability policy with a limit of $500,000. Therefore, defendants argued, plaintiff was not entitled to benefits under Fox's UM policy, and they were entitled to summary judgment as a matter of law.

Plaintiff argues that the trial court erred in granting summary judgment because, even though there was an applicable liability policy at the time of the accident, North Pacific subsequently denied coverage, thereby rendering the Vincent vehicle "uninsured" within the meaning of ORS 742.504(2)(d)(A). Specifically, plaintiff argues that North Pacific "denied" coverage within the meaning of ORS 742.504(2)(d)(A) in April 1992, when it filed the declaratory judgment action against Vincent and plaintiff asserting that its policy with Vincent was void due to Vincent's fraudulent and intentional acts. See ___ Or App at ___ (slip op at 2-3) (quoting Fox, 132 Or App at 338-340) (procedural history). Plaintiff contends that "there would have been no reason for North Pacific to file the declaratory judgment proceeding if it were not denying coverage, [because] an insurance company which accepts coverage merely pays the claim." According to plaintiff, "under any reasonable interpretation of the facts, North Pacific denied coverage for this accident."

Defendants respond to plaintiff's "denial" argument by asserting that North Pacific's filing of a declaratory judgment action against plaintiff was not a "denial" but simply an acknowledgment that a controversy existed. Defendants highlight that North Pacific did, in fact, hire defense counsel for Vincent, enter into settlement negotiations with plaintiff on Vincent's behalf, and ultimately settle plaintiff's wrongful death claim for $150,000. Thereafter, North Pacific dismissed its declaratory judgment action against Vincent and plaintiff. Defendants argue that, in light of North Pacific's ultimate settlement of plaintiff's claim, North Pacific did not deny coverage and the Vincent vehicle was therefore not "uninsured." We agree.

Jurisdictions that have considered this question have uniformly concluded that

"[u]nder an uninsured motorist policy defining an 'uninsured motor vehicle' to include a vehicle for which the potential insurer denies coverage, the insured's acceptance of a settlement offer from the tortfeasor's liability carrier precludes recovery of uninsured motorist benefits, notwithstanding the liability carrier's continued denial of coverage." Lee R. Russ, 9 Couch on Insurance 3d,