Lessons from an Oregon court case: a bar shooting, a liquor liability claim, and questions about duty to defend
When it comes to insurance contracts, the devil is often in the details, as a recent Oregon Court of Appeals case illustrated. In The Final Table, LLC v. Acceptance Casualty Insurance Co.,[1] an individual was seriously injured when he was shot. The victim sent a statutorily required notice of a liquor liability claim to a bar that allegedly overserved the shooter.[2] The bar tendered the claim to its insurer.[3] The insurer rejected the tender, stating that the claim fell within an exclusion in the insurance policy.[4]
Over a year later, the victim filed a lawsuit against the bar.[5] The bar did not tender the lawsuit to its insurer or otherwise notify the insurer that a lawsuit had been filed.[6] After the victim obtained a money judgment against the bar, the bar assigned its claims against the insurance company to the victim.[7] The victim then sued the insurance company, alleging that it breached its duty to defend and indemnify the bar.[8]
The Oregon Court of Appeals held that the insurance company's duty to defend was never triggered.[9] The court noted that while the insurance policy required the bar to provide notice of any "claim" or "suit," the insurance company only had a duty to defend against a "suit."[10] Because the bar had only provided notice of the pre-litigation "claim," and not the actual lawsuit, the court concluded that the insurance company had no duty to defend.[11]
Takeaways
Construction companies can take two lessons from this case. First, if you receive a notice of claim (whether from an owner or another contractor) and tender it to your insurance company, remember to also tender any subsequent lawsuit that is filed. Do not assume that, just because you tendered the "claim," tendering the lawsuit is superfluous. Second, review your insurance policies and be aware that "claims" and "suits" could trigger different obligations with your insurer. Even if your insurance company has rejected your tender of a "claim," the insurer might later have a duty to accept your tender of a subsequently filed lawsuit, whether because the insurer has broader obligations with respect to "suits" or because the lawsuit contains different allegations than the claim.[12]
[1] 328 Or App 620, --- P3d ---- (2023).
[2] Id. at 622.
[3] Id. at 623.
[4] Id.
[5] Id.
[6] Id.
[7] Id.
[8] Id.
[9] Id. at 632.
[10] Id. at 631.
[11] Id. at 631-32.
[12] In Final Table, the court concluded that the failure to tender the lawsuit did not prejudice the insurer because the insurer admitted that, had the bar tendered the lawsuit, it would have rejected the tender based on the same policy exclusion that it relied on in rejecting the claim tender (although the court ultimately agreed that the lawsuit fell within an exclusion in the policy, so there was no coverage). Id. at 632-33. You should not count on your insurer making the same admission, and instead should make sure to tender the lawsuit, regardless whether the insurer rejected an earlier tender.
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