Nelson v. Liberty Ins. Corp

For purposes of estoppel by silence, “the duty to speak does not arise until the party against whom estoppel is urged knows or should know that the failure to speak will likely mislead the other party to act to his or her detriment.” Pfaendler, 195 Or App at 570.

Defendant appealed from a general judgment entered by the trial court. Defendant assigned error to the trial court’s ruling on plaintiff’s summary judgment motion regarding defendant’s affirmative defense of subrogation as well as a supplemental judgment for attorney fees, costs, and prejudgment interest. Prior to the entry of judgment, Plaintiffs pursued contract claims against their insurer, Defendant, as well as a negligence claim against the party who damaged plaintiffs’ property. On appeal, Defendant argued that by releasing the third party from liability through settlement, plaintiffs effectively interfered with defendant’s right to subrogation. “Generally, an insured’s settlement with the tortfeasor—particularly one that releases the tortfeasor from further claims—'results in the insurer’s loss of its right to subrogation against the tortfeasor.’ Armintrout v. Transportation Ins. Co., 137 Or App 86, 90, 903 P2d 407, rev den, 322 Or 361 (1995). For purposes of estoppel by silence, “the duty to speak does not arise until the party against whom estoppel is urged knows or should know that the failure to speak will likely mislead the other party to act to his or her detriment.” Pfaendler, 195 Or App at 570. The Court determined that a genuine issue of material fact as to whether the defendant remained silent when it had a duty to speak existed. Reversed and remanded.