SC Number:
CA Number:
Case Title:
Gonzales v. Farmers Insurance Company of Oregon
01:15 PM
Supreme Court
James N. Westwood for petitioners on review
Terrell W. Oxford, Jeremy Brandon for respondent on review
Statement of Issues:
Gonzales v. Farmers Insurance Company of Oregon, S054486, A128598. Petitioners, Farmers Insurance Company of Oregon, et al., (defendants below), seek review of a Court of Appeals decision that reversed and remanded a trial court decision granting summary judgment to defendants on a claim by plaintiff (Jose Gonzales) for recovery of the inherent diminished value (IDV) of his vehicle, after repair, following a collision.

Plaintiff's truck was damaged in a collision. Defendants insured plaintiff under a policy issued by defendant Farmers Insurance Company of Oregon. Defendants paid the repair costs, minus the deductible. Plaintiff filed a complaint, contending that defendants owed him additional compensation. The complaint averred, in part, that "damaged automobiles, by the very nature of their damage and subsequent repair, are worth less than similar automobiles which have not been damaged." The complaint also averred that because diminished market value was not a loss excluded by the policy, defendants were required to compensate plaintiff for the loss corre-sponding to IDV.

Defendants moved for summary judgment, contending that under the terms of the policy, their liability was limited to the actual cost of repairs. Defendants relied on several provisions in the policy, including a "Rights and Responsibilities" provision that stated that "[t]he insured has the right to payment for the loss in money or repair or replacement of the damaged or stolen property, at the option of the Company." Plaintiff responded that two Oregon Supreme Court decisions were disposi-tive – Rossier v. Union Automobile Ins. Co., 134 Or 211, 297 P 498 (1930) ("replacement" means restoration of property to its condition prior to injury by repair or replacement of broken or damaged parts, and complete restoration means there has been no diminution of value after repair of car), and Dunmire Co. v. Or. Mut. Fire Ins. Co., 166 Or 690, 114 P2d 1005 (1941) (citing Rossier for the proposition that insured was entitled to recover difference in value of car before and after collision). The trial court granted summary judgment to defendants. The court based its decision on a dictionary definition of "repair, " in conjunction with the absence of any reference to "diminution of market value" in the policy.

Plaintiff appealed, and the Court of Appeals reversed and remanded. The court concluded that the Dunmire and Rossier cases are controlling and dispositive. The court also opined that, to the extent Dunmire and Rossier might have been wrongly decided in the first instance – as defendants argued – defendants' recourse lies with the Oregon Supreme Court. The decision of the Court of Appeals is reported at 210 Or App 54, ___ P3d ___ (2006).

On review, the issues are:

(1) Where an automobile insurance policy limits the insurer's liability for collision damage to an insured's vehicle to repair or replacement, at the insurer's option, does the policy thereby require an insurer who chooses the "repair" option to pay for an alleged diminution in the vehicle's market value, or IDV?

(2) To the extent that they control the outcome of this case, should Rossier v. Union Automobile Ins. Co., 134 Or 211, 291 P 498 (1930), and Dunmire Co. v. Or. Mut. Fire Ins. Co., 166 Or 690, 114 P2d 1005 (1941), be overruled?

(3) Should the Oregon Supreme Court adopt the reasoning of the majority of appellate courts that have held that the insurance policy text at issue does not cover IDV arising from a collision?

These summaries of cases in which the Supreme Court has allowed review are prepared for the benefit of members of the media to assist them in reporting the court’s activities to the public. Parties and practitioners should not rely on the summaries, or the statement of issues to be decided in the summaries, as indicating the questions that the Supreme Court will consider on review. Regarding the questions that the Supreme Court may consider on review, see Oregon Rule Of Appellate Procedure 9.20.
Justice(s) NOT Participating:
Merit Briefs

Last Revised: 05/03/2007