After a liability carrier denied all coverage under several liability policies including any duty to defend and any duty to indemnify, the policyholder settled the underlying claims which had been made against it. As a part of the settlement, the policyholder assigned all claims against its liability carrier to the underling plaintiff, a condominium association.
The underlying plaintiff sued the carrier as the policyholder's assignee for alleged breaches of contract and of the covenant of good faith and fair dealing. The carrier defended on the ground, among others, that its liability policies at issue contained provisions which the Oregon Court of Appeals named "anti-assignment clauses, which provide that [the policyholder] cannot assign any rights or claims under the policy without defendant's consent." Clinton Condos. Owners Ass'n v. Truck Ins. Exch., 282 Or. App. 484, 485, 385 P.3d 1279, 1280 (Or. Ct. App. 2016).
The trial judge granted the defendant liability carrier's motion for summary judgment on the basis of this "anti-assignment clause." The Oregon Court of Appeals affirmed.
Apparently, an alleged breach of this policy provision is a good defense to at least some extracontractual claims in Oregon as a result of judicial interpretation and application of an Oregon statute including in this case. The Oregon statute has been held to validate only an assignment of a bad-faith failure-to-settle claim, and then only when an excess judgment has already been entered.
In this case, there was no excess judgment at the time of the assignment, of course. The assignment in this case was written as a part of a settlement which never went to judgment. Therefore, the Oregon trial and appellate courts ruled, the assignee had no standing to sue; the assignment was invalid. Clinton Condos. Owners Ass'n v. Truck Ins. Exch., 282 Or. App. 484, 485-87, 385 P.3d 1279, 1280-81 (Or. Ct. App. 2016).
The net effect of this statutory interpretation is that in Oregon, an assignment of bad faith claims (at least against a liability carrier) is valid only after an excess judgment and then only when the bad faith claim that is assigned is a bad-faith-failure-to-settle claim.
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