Rains v. Stayton Builders Mart, Inc.

Settlement agreements that make reference to insurance are properly excluded under OEC 411, and do not automatically, as a matter of law, destroy diversity between parties. ORS 31.710(1) is properly applied to cap plaintiffs’ noneconomic damages claim but not plaintiffs’ loss of consortium claim.

Plaintiffs Kevin and Mitzi Rains sued Stayton Builders Mart, Inc. (Stayton), who joined Weyerhouser as a third party defendant, in a strict liability action arising from an accident due to a defective board Kevin was working with that was purchased from Stayton. Plaintiffs entered into a settlement agreement with Stayton ahead of trial that guaranteed payment of $1.5 million regardless of the outcome at trial, and up to $2 million if indemnified by third party defendant; additionally, anything Stayton collected over $2 million would go to plaintiffs. The trial court found for plaintiffs, and also found that Weyerhouser should indemnify and pay the defense fees of Stayton. Weyerhouser appealed, alleging 14 errors; the Court addressed some of those errors, dismissing the remaining errors. First, the Court found that the presence of a settlement agreement and indemnification did not, as a matter of law, destroy all adversity between the parties; upon the facts of this case the Court held the settlement agreement and indemnification against liability did not destroy all adversity between plaintiff and Stayton and thus the court did not err in refusing to dismiss Stayton from the suit. Second, the settlement agreement contained references to Stayton’s insurance and thus was properly excluded from evidence under OEC 411. Third, the court did not err in holding the the jury verdict form did not affect the verdict because it did not treate an erroneous impression of law in the jurors’ minds. Fourth, the trial court erred in failing to apply the cap to noneconomic damages under ORS 31.710(1), but correctly refused to apply the cap to plaintiffs’ loss of consortium claim. Fifth, the trial court erred in failing to dismiss Stayton’s common law indemnity claim because Stayton failed to meet its burden of proof that Stayton extinguished some of Weyerhouser’s liability to plaintiffs or “bought peace” that released some of Weyerhouser’s liability to plaintiffs. Finally, the trial court did not err in awarding defense-related expenses to Stayton with the exception of appeal-related expenses that the parties stipulated were awarded erroneously. Judgment reversed and remanded as to noneconomic damages awarded to Kevin, otherwise affirmed. Defense-related expenses awarded to Stayton affirmed less the stipulated amount erroneously awarded.