Investigation of Property Loss Doesn’t Establish Estoppel in Oregon

Under Oregon statute O.R.S. §742.056, an insurance company’s investigation of a loss or claim under the policy does not estop the insurance company from asserting any provision of the policy or any defense that the insurer may have under the policy. Recently, the Oregon Court of Appeals considered the issue of whether an insurer’s continued investigation of a property claim created an estoppel relieving the insurer of the policy two-year lawsuit limitation clause.

In Brockway v. Allstate Property and Casualty Insurance Co., 284 Or. App. 83, 391 P.3d 871 (Or. App. 2017) the insured reported a property theft claim to Allstate. Allstate assigned an investigator to the claim within a couple of days after the theft was reported. In discussing the theft with the insured, the Allstate investigator did not mention that the Allstate policy contained a contractual provision which required the insureds to file a lawsuit or any other claim arising from the loss against Allstate within two years from the date of the loss. Approximately one year after the theft, Allstate advised the insured that they were required to submit a sworn statement of proof of loss, including the insured’s providing relevant documentation supporting the ownership and value of the stolen property. In that correspondence, Allstate informed the insureds that the statute of limitations on the claim expired two years from the date of the loss and that Allstate would insist upon complete compliance with all of the terms of the policy and Oregon law. Thereafter, Allstate sent the insureds numerous letters seeking additional documentation or information while indicating that Allstate was continuing to investigate the loss. Allstate conducted an examination under oath of the insured approximately one year following the loss. In fact, Allstate continued to seek additional information and documents from the insured as part of its investigation of the loss up through February 2012. The theft occurred on or about September 6, 2009 when the insureds discovered that a hole had been cut in their fence and that property had been stolen from their backyard.

In February 2012, Allstate denied the insured’s claim based upon alleged misrepresentations and the insured’s failure to cooperate with the investigation. Allstate also relied upon its two-year lawsuit limitation provision of the policy.

After the claim was denied, the insured sued Allstate for breach of contract and bad faith. The trial court granted Allstate’s motion for summary judgment, relying upon the two-year suit limitation provision. During the trial court proceeding the insured argued that Allstate was estopped from relying upon the two-year suit-limitation clause.

The Oregon Court of Appeals affirmed the trial court’s grant of summary judgment. The Court of Appeals found that for equitable estoppel to be applicable, an insurance company had to do something that amounted to an affirmative inducement that would cause the insured to delay in bringing the action. Additionally, the insured was required to establish justifiable reliance. The Court of Appeals found that the record did not support an equitable estoppel claim.

First, the Court of Appeals noted that by statute, insurance companies were not estopped from asserting any provision of the insurance policy or any defense of the insurer thereunder arising from the insurance company’s investigation. See O.R.S. §742.056. The Court also found that Allstate’s numerous communications with the insured indicated that Allstate was continuing to investigate the insured’s claim but there was no language in those letters which would give rise to an estoppel. Allstate had repeatedly stated that it reserved all of its rights and defenses and that no waiver or estoppel was intended or should be inferred. Additionally, Allstate informed the insureds that their time to file an action relating to their claims expired two years from the date of the loss.

In finding in favor of Allstate, the court noted that Allstate had repeatedly informed the insureds that it continued to investigate their claims and that Allstate did not make any representation that could reasonably have led the insureds to believe that their claims would inevitably be accepted. There was no evidence that, despite Allstate’s communications, Allstate was not, in fact, investigating the claims. In fact, the record demonstrated Allstate’s communications reflected Allstate’s continued attempts to ascertain the losses attributed to the theft of the property and the insureds did not identify any conduct during the investigation that was improper. There was no evidence that Allstate engaged in behavior to reasonably induce the insureds not to commence any legal action prior to the expiration of the suit limitation period. Instead, Allstate repeatedly informed the insureds that Allstate would insist on compliance with all policy terms, reserve all of Allstate’s rights and defenses, and that no waiver or estoppel of any kind was intended or should be inferred from Allstate’s communications. In light of those admonishments, along with the circumstances demonstrated by the record, the Court concluded that no reasonable juror could find that Allstate breached its duty of good faith and fair dealing in the case by relying upon its suit-limitation provision.