Espinosa v. Southern Pacific Transportation Co.

ROBERTS, J.,

dissenting in part.

I dissent from the majority’s conclusion that the liability limits of ORS 30.270 bar the plaintiff from recovering damages which exceed those limits from proceeds of the school district’s insurance.1 In my view, the majority is incorrect for two reasons: first, its reasoning is based on the assumption that certain statutory language is relevant to the issue which I think is not; and second, even if the majority’s assumption were correct, it misconstrues that language and its relationship to the purposes and provisions of the Tort Claims Act.

Former ORS 30.280(2) provided that "[t]he procurement of such insurance shall not be deemed a waiver of immunity.” The majority opinion’s treatment of the relationship between the liability limits of the Act and the insurance provision rests on the assumption that that language has bearing on claims which can be brought under the Act. The assumption is wrong. The authority to insure against claims which are actionable under the Act was originally granted by ORS 30.280(1). That subsection contains no non-waiver language of the kind set forth in former ORS 30.280 (2). The latter provided:

"(2) Such insurance may include coverage for the claims specified in subsection (2) of ORS 30.265. The procurement of such insurance shall not be deemed a waiver of immunity.”

Former ORS 30.265(2) enumerated claims from which public bodies remained immune. Hence, it was only in connection with claims which the Act expressly left immune from suit that ORS 30.280 stated that the procurement of insurance was not to be deemed a waiver of immunity.2 The *580non-waiver language had nothing to do with claims for which recovery can be had under the Act or with insurance covering such claims.3

The key point in the majority’s analysis is that the non-waiver language in ORS 30.280 was designed to legislatively overrule Vendrell v. School Dist. No. 26C et al., 226 Or 263, 360 P2d 282 (1961), for purposes of the Tort Claims Act. Because the non-waiver language never related to insurance for claims which could be made pursuant to the Act, the majority’s point is at best a straw man argument.

It would follow from my understanding of what the non-waiver language in ORS 30.280(2) applied and did not apply to, that nothing ever in the Tort Claims Act provided that "immunity” from liability in excess of the ORS 30.270 limits was to exist to the extent insurance above those limits was available to compensate persons making non-immune claims. Indeed, since the legislature did expressly provide in ORS 30.280(2) that immunity was not waived by insuring against immune claims, it is most noteworthy that ORS 30.280(1) did not contain a parallel provision, to the effect that the liability limits for actionable claims are not "waived” by procuring insurance in excess of the limits.

Assuming, however, that I am wrong in my understanding that former ORS 30.280(2)’s non-waiver language has nothing to do with the case and that I am therefore too harsh in characterizing the majority’s central point as a straw man argument, I would nevertheless conclude that the majority has failed to knock its straw man down. I do not agree that, if the non-waiver language of former ORS *58130.280 is relevant, the legislature’s abandonment of that language in ORS 30.282 is not relevant.

The majority states that the legislative history is silent on the intent of the legislature in repealing the statutory language mentioning the effect of the purchase of insurance on immunity. That is true. But that does not prevent the making of certain assumptions regarding the deletion of that language. It can be assumed that the legislature acted with knowledge of the decisional law relevant to the matter, including Vendrell v. School Dist. No. 26C et al, supra, see Harris v. Board of Parole, 39 Or App 913, 593 P2d 1292 (1979); State v. Waterhouse, 209 Or 424, 307 P2d 327 (1957). Further, it can be assumed that by making this essential change in the phraseology of the statute, the legislature intended to change the meaning of the statute. Roy L. Houck & Sons v. Tax Com. 229 Or 21, 32, 366 P2d 166 (1961).

The Supreme Court stated in Swift & Co. and Armour & Co. v. Peterson, 192 Or 97, 125, 233 P2d 216 (1951), that " 'if words used in a prior statute are omitted, * * * it will be presumed that a change of meaning was intended.’ ” Therefore, here, even if there were no indicia of legislative intent other than the words the legislature chose to use and chose not to use, its abandonment of the non-waiver language in 1975 is compelling evidence that it intended that the liability limits of the Tort Claims Act no longer apply to injuries covered by insurance — if it ever intended otherwise.

Moreover, the presumption of an intent to change the law is not the only support for the conclusion I reach regarding the legislature’s purpose. Through the same 1975 Act which repealed ORS 30.280 and enacted ORS 30.282, the legislature also enacted ORS 30.287, relating to the defense of government employes by the employing body. Or Laws 1975, ch 609,§ 20. Subsection (5) of ORS 30.287 provides generally that nothing in that section "shall be deemed to increase the limits of liability * * * under ORS 30.270 * * The omission of the pre-existing non-waiver language from the insurance provision of the 1975 Act and the inclusion of language of similar import in an unrelated section of the same Act clearly demonstrates *582what is already presumptive — that the removal of the language from the insurance provision was not inadvertent.

In addition to undermining the majority’s peculiar presumption that the omission of ORS 30.280’s non-waiver language from ORS 30.282 was intended to mean nothing, the use of comparable language in ORS 30.287 also negates another proposition critical to the majority’s reasoning: That the abandonment of the non-waiver language was nothing more than an "elimination of anachronistic verbiage,” 50 Or App at 573, because the legislature understood that the express limitation on liability in ORS 30.270 made reference to the limitation in other sections unnecessary. Moreover, the majority’s insistence that the liability limits of ORS 30.270 are necessarily applicable in this context, notwithstanding the authority apparently conferred on public bodies by ORS 30.282 to buy coverage which exceeds the limits, disregards the principle that statutory languge is to be construed with a view to its context and purpose. See, e.g., Gilbertson et al v. Culinary Alliance et al., 204 Or 326, 340, 282 P2d 632 (1955).

The majority states that the purpose of the original non-waiver language, if any, may have been "to make sure that the Supreme Court would get the message that Vendrell had been specifically overruled by the enactment of the Tort Claims Act.” 50 Or App at 572. Apparently, the majority feels that that message survives the repeal of the language imparting it. I disagree. Nothing in the Tort Claims Act except that repealed language was ever even arguably inconsistent with Vendrell.

I conclude that the Vendrell reasoning is applicable in this case and I would hold that liability under the Tort Claims Act is limited to the amounts set forth in ORS 30.270, except where insurance is procured pursuant to ORS 30.282, in which case liability is limited to the amount of insurance actually available or the ORS 30.270 limit, whichever is greater.4

*583ORS 30.282 is a general law of the sort described in Vendrell and does not limit the purchase of insurance to the dollar limitations found in ORS 30.270. It is true that ORS 30.270(4) provides that "Liability * * * shall not exceed * * * [the given amounts].” However, when Vendrell was decided, total immunity to suit existed and this immunity was considered waived by the purchase of insurance pursuant to statute. Similarly, the purchase of insurance pursuant to the Tort Claims Act in excess of the dollar ceiling on liability should be read as lifting that ceiling to the extent of the coverage purchased.

My application of the Vendrell reasoning to this case is in the spirit of recent Supreme Court decisions which note that the Tort Claims Act is remedial legislation which should be liberally construed to allow for redress. Dowers Farms v. Lake County, 288 Or 669, 607 P2d 1361 (1980); Adams v. State Police, 289 Or 233, 611 P2d 1153 (1980); Stevenson v. State of Oregon, 290 Or 3, 619 P2d 247 (1980); Hall v. State, 290 Or 19, 619 P2d 256 (1980). In light of these decisions, I see no reason to apply a harsher rule here than was applied in Vendrell prior to passage of the Tort Claims Act.

The policy behind the doctrine of sovereign immunity, i.e., protection of the public purse, would in no way be subverted by this position, since liability above the statutory limit cannot exceed the insurance protection held by the governmental body. This would do no more than provide that insurance coverage, purchased with public funds pursuant to statute, be used for the purpose for which it was purchased.

The school board argues that it bought the excess coverage in order to protect itself from possible liability *584arising out of out-of-state trips which might take it out of the protection of the Tort Claims Act. The insurance policy, however, was not so limited and the school district did not counter Southern Pacific’s assertion that the coverage was applicable to the instant case.

Obviously, public bodies may be motivated to buy liability insurance to cover contingencies which the Tort Claims Act does not reach. However, that is no reason for concluding that, when a governmental body procures insurance which covers injuries subject to the Act but which provides dollar coverage in excess of the Act’s limits, the insurer should not pay to the extent of its risk. Presumably, the quality and quantity of hazards which the insurance covers and the amount of coverage are reflected in the premiums the public pays. It is noteworthy that neither ORS 30.282 nor its predecessor placed any limitation on the amount of coverage a public body could procure, and did not restrict what the public body could insure against to hazards outside the ambit of the Tort Claims Act. In that context, the conclusion the majority reaches provides a windfall to insurers in the form of premiums paid for by the public for coverage which in fact cannot exist. Speaking of a rule similar to the one propounded by the majority, Prosser comments:

"The effect of this is to defeat an honest effort to protect the plaintiff, on the part of both the legislature and the insured state agency, merely because the insurance carrier has seen fit to welsh on its agreement; and it scarcely will appeal to anyone who favors honest dealing.” W. Prosser, Law of Torts, § 125, p 1011 (3rd ed 1964).

I do not agree that the legislature intended the majority’s result.

I would hold that the trial court erred in amending the judgment, and would order the original judgment reinstated.5

I respectfully dissent.

Campbell, J., Pro Tempore, joins in this dissenting opinion.

Southern Pacific asked that we consider its assignment of error on the lookout issue only if we concluded that the school district’s liability was limited to the amounts set forth in ORS 30.270 rather than to the amount of available insurance. Because I would not so conclude, I would not reach the lookout issue.

Undoubtedly, the language the majority quotes from Lansing, The King Can Do Wrong! The Oregon Tort Claims Act, 47 Or L Rev 357 (1968) (see 50 Or *580App at 571), was directed at the Act’s authorization to purchase insurance for immune claims, and not, as the majority indicates, at any effect of insurance on the limits of liability for actionable claims. The incongruous situation to which Lansing adverted was that "a public body is authorized to purchase liability insurance to cover situations where there can be no liability. ”47 Or L Rev at 370. The emphasis in the quote is Lansing’s. Had the author not done so, I would add my own emphasis to the word "no.”

As the majority points out, the nonwaiver language was deleted in 1975 when ORS 30.280 was repealed and ORS 30.282 was enacted to replace it. The majority does not point out, however, that ORS 30.282 also omits the specific authorization which ORS 30.280 contained for public bodies to insure against immune claims.

I am aware of the Supreme Court’s language in Brennan v. City of Eugene, 285 Or 401, 591 P2d 719 (1979), stating, after noting that governmental bodies are protected from unlimited liability by ORS 30.270,

*583"* * * [wjithin this range of limited liability, municipalities can further protect themselves by obtaining liability insurance, the cost of which can be allocated through taxation and licensing fees. ORS 30.282. * * *” 285 Or at 408.

However, the effect of the purchase of insurance on the limitation on liability was not the issue before the court. The court was discussing whether to hold a government licensing agent to the "reasonable person” standard of care, and made the above comments to demonstrate that holding the government to this standard would not subject it to unlimited liability.

The parties do not address the question of how a plaintiff suing a public body under the Tort Claims Act must plead and prove the availability of applicable insurance coverage in excess of the Act’s limits. Some of the procedural aspects following from the holding I would reach are addressed in Vendrell, 226 Or at 285.