Continental Casualty Co. v. Argonaut Ins. Co. (A176763)

No. 639 July 8, 2026 301

IN THE COURT OF APPEALS OF THE

STATE OF OREGON

CONTINENTAL CASUALTY COMPANY

and Transportation Insurance Company,

Plaintiffs-Respondents,

v.

ARGONAUT INSURANCE COMPANY

et al.,

Defendants,

and

INSURANCE COMPANY OF THE

STATE OF PENNSYLVANIA,

Defendant-Respondent,

and

EMPLOYERS INSURANCE COMPANY OF WAUSAU,

Defendant-Appellant.

INSURANCE COMPANY OF NORTH AMERICA,

Third-Party Plaintiff,

v.

ARGONAUT INSURANCE COMPANY

et al.,

Third-Party Defendants.

Multnomah County Circuit Court

16CV14319; A176763

David F. Rees, Judge.

Argued and submitted March 5, 2026.

David C. Linder (Minnesota) argued the cause for appellant. Also on the briefs were Larson • King, LLP (Minnesota)

and Thomas W. Sondag, Carter M. Mann, and Lane Powell

PC.

Laurie J. Hepler (California) argued the cause for respondents Continental Casualty Company and Transportation

Insurance Company. Also on the brief were Rachel A. Beyda

and Greines, Martin, Stein & Richland LLP (California)

302 Continental Casualty Co. v. Argonaut Ins. Co. (A176763)

and Lawrence Gottlieb, Jeremy R. Schulze, H. Matthew

Munson, and Betts Patterson & Mines PS (Washington).

Thomas W. Brown, Julie A. Smith, and Cosgrave Vergeer

Kester LLP; Stephen R. Wong, Kenneth H. Sumner, and

Sinnott, Puebla, Campagne & Curet APLC (California);

Timothy R. Macdonald, Robert Reeves Anderson, and

Arnold & Porter Kaye Scholer LLP (Colorado); and William

C. Perdue, Samuel I. Ferenc, and Arnold & Porter Kaye

Scholer LLP (Washington, D.C.) filed the brief for respondent Insurance Company of the State of Pennsylvania.

Louis A. Ferreira, Cameron Zangenehzadeh, and Stoel

Rives LLP, filed the brief amicus curiae for Schnitzer Steel

Industries, Inc., and MMGL, LLC.

Before Kamins, Presiding Judge, Egan, Judge, and

DeVore, Senior Judge.

DeVORE, S. J.

Reversed in part; affirmed in part; and remanded for

reconsideration of allocation.

Kamins, J., dissenting.

Cite as 351 Or App 301 (2026) 303

304 Continental Casualty Co. v. Argonaut Ins. Co. (A176763)

DeVORE, S. J.

This case is a contribution action by plaintiffs

Continental Casualty Company and Transportation

Insurance Company (collectively, Continental) that arises

under the Oregon Environmental Cleanup Assistance Act

(OECAA) in the context of the Portland Harbor Superfund

Site cleanup. The case is on remand to us from the Oregon

Supreme Court. Continental Casualty Co. v. Argonaut Ins.

Co., 373 Or 389, 567 P3d 1059, adh’d to as modified on

recons, 374 Or 144, 574 P3d 476 (2025) (Continental Casualty

II), to address Employers Insurance Company of Wausau’s

(Wausau) remaining assignments of error. To continue, we

recount portions of the prior proceedings where relevant to

each of the remaining assignments of error. We reverse in

part, affirm in part, and remand for reconsideration of the

allocation to be made in contribution.

I. RESOLVED ISSUE

Schnitzer Steel Industries, Inc. (SSI), and MMGL

Corp (formerly Schnitzer Investment Corp) (SIC) (collectively “Schnitzer”) were named as potentially liable parties

for cleanup of the Portland Harbor. Schnitzer designated

Continental as the “targeted” insurer under ORS 465.480(3)

(b). That statute permits an insured to choose a more significant general liability insurer among others to respond

to a loss to the extent of its policies. In 2018, Continental

paid the defense costs of Schnitzer for the Portland Harbor

claims and then, under the OECAA, sought contribution

from Schnitzer’s other insurers, including Wausau.

In our original opinion on Wausau’s appeal, we held

that the trial court had erred in denying Wausau’s motion

to dismiss Continental’s claim for contribution because

the claim was barred by ORS 465.480(4)(a). Continental

Casualty Co. v. Argonaut Ins. Co. (A176763), 331 Or App 38,

51, 545 P3d 173 (2024) (Continental Casualty I). As relevant,

ORS 465.480(4)(a) provides:

“An insurer that has paid all or part of an environmental

claim may seek contribution from any other insurer that is

liable or potentially liable to the insured and that has not

entered into a good-faith settlement agreement with the

insured regarding the environmental claim.”

Cite as 351 Or App 301 (2026) 305

Under that statute, we held that Wausau’s settlement with

its insured Schnitzer barred Continental’s claim for contribution. Because we agreed with Wausau’s first assignment

of error, we did not reach the other assignments. Continental

Casualty I, 331 Or App at 51.

On Continental’s petition for review, the Supreme

Court reversed our opinion and reinstated the trial court’s

ruling rejecting Wausau’s motion to dismiss. Continental

Casualty II, 373 Or at 404. The Supreme Court focused on

the meaning of the phrase “the environmental claim” in

ORS 465.480(4)(a), which, as noted, provides that an insurer

that has paid all or part of an environmental claim may

seek contribution from another insurer that has coverage

and that has not made a good-faith settlement with the

insured “regarding the environmental claim.” Id. at 400-02.

The Supreme Court determined that

“Schnitzer’s settlement with Wausau was not a settlement

of the environmental claim that Continental, as the targeted insurer, had already paid. Thus, it is not a settlement

that extinguishes Continental’s right to contribution.”

Id. at 403 (emphasis in original). The Supreme Court

explained:

“[T]o the extent that Schnitzer recovered the defense costs

that had been reduced to judgment against Continental,

Schnitzer had no remaining claim for those costs against

Wausau that it could settle.”

Id. at 403-04. The Supreme Court concluded:

“Thus, Wausau has not ‘entered into a settlement with

the insured regarding the environmental claim,’ and

Continental’s right to contribution is not barred. The Court

of Appeals’ contrary conclusion was in error.”

Id. at 404 (paraphrasing ORS 465.480(4)(a)). The Supreme

Court remanded the case to us for consideration of the four

remaining assignments of error.

Those assignments ask: (2) whether the recoverable costs allocated among insurers should include (a) attorney fees awarded under ORS 742.061 in favor of Schnitzer

against Continental in the preceding policy claim or

306 Continental Casualty Co. v. Argonaut Ins. Co. (A176763)

(b) prejudgment interest under ORS 82.010 on unpaid attorney fees incurred in defense of the underlying environmental claim; (3) whether a fee limitation under ORS 465.483(3)

(a) on the rates of independent counsel applied to the fees of nonlocal attorneys who defended the environmental claim;

(4) whether certain Wausau policies contained an aggregate

liability limit; and (5) whether other Wausau policies should

be excluded from the contribution calculations because their

liability limits had been exhausted.

II. SECOND ISSUE

Did the trial court err, when including among the “recoverable costs” that are allocated in contribution under ORS

465.480(5), (a) Continental’s debt for Schnitzer’s attorney fees under ORS 742.061 in the policy claim against

Continental and (b) Continental’s debt for prejudgment

interest under ORS 82.010 on unpaid attorney fees from

defense of the underlying environmental claim?

A. Attorney Fees Under ORS 742.061

In the underlying contract claim on Continental’s

policy, the federal court had awarded Schnitzer $3,756,037

in attorney fees to be paid by Continental, not under the

terms of its policy promising a defense of the environmental

claim, but under ORS 742.061 for Continental’s failure to

have settled within six months of the claim on its policy.1

In this contribution case, the trial court deemed those statutory fees to be properly included as the recoverable costs

under ORS 465.480(5) so as to be apportioned among insurers. The trial court did not engage in statutory analysis of

terms, but the court did observe that “[w]hen the Legislature

drafted the OECAA, it was certainly aware of an insured’s

ability to recover attorney fees under ORS 742.061.” For that

reason, the trial court declared that the legislature must

have intended to include statutory fees as recoverable costs

under ORS 465.480(5). Because claims on policies may vary,

1

ORS 742.061(1) provides, in relevant part:

“[I]f settlement is not made within six months from the date proof of loss

is filed with an insurer and an action is brought in any court of this state

upon any policy of insurance of any kind or nature, and the plaintiff’s recovery exceeds the amount of any tender made by the defendant in such action,

a reasonable amount to be fixed by the court as attorney fees shall be taxed

as part of the costs of the action and any appeal thereon.”

Cite as 351 Or App 301 (2026) 307

the trial court assumed it was the judge’s task to decide

“whether it is fair to apportion these costs to other insurers.”

In the policy claim against Continental, the problem had been a failure to pay the full amount of the bills of

Bingham McCutchen, Schnitzer’s California defense attorneys, due to a dispute over whether the California firm had

billed at rates that were more than were reasonable and

necessary in defense of the local environmental claim. Other

insurers, including Wausau, had not been made defendants

in Schnitzer’s action against Continental. Nevertheless,

because the nonparty insurers privately shared Continental’s

opinion that the Bingham fees were too high, the trial court

concluded it was “fair” to impose Continental’s liability for

Schnitzer’s litigation with Continental on other insurers,

specifically Wausau, under ORS 465.480(5).

We review the trial court’s interpretation of ORS

465.480(5) as a question of law. State v. Gaines, 346 Or 160,

171-72, 206 P3d 1042 (2009). Our interpretation of the statute is governed by a three-part test. Id. The first and most

important step is an examination of the text and context of

the statute itself. Id. at 171. That is followed by a consideration of the legislative history if it is useful for our analysis. Id. at 172. If the legislature’s intent remains unclear after

examining text, context, and legislative history, we may

resort to general maxims of statutory construction to aid in

resolving the uncertainty, if any. Id.; State v. Moore, 319 Or App 136, 140, 510 P3d 907, rev den, 370 Or 303 (2022).

Both parties agree that the term “recoverable costs”

in ORS 465.480(5) is not defined by statute. Neither party

offers legislative history on point, and we are aware of none.

Wausau challenges the trial court’s interpretation of

ORS 465.480(5), relying on statutory context. Citing several

other provisions of the OECAA, Wausau contends that the

term “recoverable costs,” which may be allocated under ORS

465.480(5), refers to the defense costs of the claim against

the insured and the indemnity costs from payment of damages that an insured owes. Wausau reasons that defense

and indemnity costs—referenced in ORS 465.480(5) and

elsewhere—are what policies pay; that insurers’ policies are

308 Continental Casualty Co. v. Argonaut Ins. Co. (A176763)

parallel contractual obligations to their common insured;

and it is the commonality of parallel policies that gives rise to the contribution action under the OECAA. In other words,

what the insurers collectively owe the insured under their

policies is what the term “recoverable costs” means.

Continental supports the trial court’s conclusion by

referring to a general sense of purpose, albeit with less specificity, but with an appeal to equity. Taking in the scope of

the OECAA, Continental argues that, as a targeted insurer,

it had a duty to pay “all sums” due under its own policies

and was reassured of its prospect to seek contribution later

from other insurers; that it was equitable to include sums

Continental owed under ORS 742.061 in the action on its policy; that inclusion of those fees in the contribution calculation is compelling when the other insurers happened to have

agreed with Continental about unreasonably high attorney

fees; and that the trial judge should have discretion to determine what are “recoverable costs” under ORS 465.480(5).

Our construction of that statute begins with one

of the express definitions in the OECAA, considers related

subsections, and finds meaning with a synonymous phrase

within ORS 465.480(5) itself. First, ORS 465.475(1) provides:

“ ‘Environmental claim’ means a claim for defense or

indemnity submitted under a general liability insurance

policy by an insured facing, or allegedly facing, potential

liability for bodily injury or property damage arising from

a release of pollutants onto or into land, air or water.”

In so saying, the OECAA defines an “environmental claim”

in terms of the demand for the “defense or indemnity” that

a policy provides.

Next, the OECAA declares an insurer’s duty to “pay

all costs” but does so with specific reference to the defense or indemnity costs owed under that policy. At ORS 465.480(3)

(a), the statute provides:

“An insurer with a duty to pay defense or indemnity

costs, or both, to an insured for an environmental claim

under a general liability insurance policy that provides

that the insurer has a duty to pay all sums arising out of a

risk covered by the policy, must pay all defense or indemnity

Cite as 351 Or App 301 (2026) 309

costs, or both, proximately arising out of the risk pursuant

to the applicable terms of its policy, including its limit of

liability, independent and unaffected by other insurance

that may provide coverage for the same claim.”

(Emphases added.) Thus, contrary to Continental’s argument, the “all costs” language is not written so broadly as to contemplate an insurer’s statutory liability for later attorney fees owed for delayed settlement under ORS 742.061;

instead, the “all costs” language refers to an insurer’s duty

to pay an insured’s defense costs and to indemnify the

insured for damages that the insured owes.

It is certainly true that the OECAA allows an insured

to choose to sue fewer than all insurers with coverage and

that the targeted insurer may not refuse payment because

other insurers with coverage have not paid. ORS 465.480

(3)(b).2 Presumably, the insured targets the insurer with the

greatest coverage. That is because ORS 465.480(3)(b) requires

the insured to choose that insurer based on the insurer’s time on the risk, policy limits, and appropriate coverage. Id. Even when targeted, however, that insurer’s exposure is limited by

its policy. At ORS 465.480(3)(d), the statute assures that:

“An insurer chosen by an insured under paragraph (b)

of this subsection may not be required to pay defense or

indemnity costs in excess of the applicable policy limits,

if any, on such defense or indemnity costs, including any

exclusions to coverage.”

The statute gives that reassurance in terms of what the

insurer owes as “defense or indemnity costs” under its policy, and that reference to “defense or indemnity costs” further indicates that the costs to be paid and reallocated, as we shall see, are the defense and indemnity costs promised in the policy.

It is also true that the targeted insurer who has paid

part or all of an environmental claim may seek contribution

2

In relevant part, ORS 465.480(3)(b) provides:

“If * * * the insured files suit on the claim against less than all the insurers, the insured may choose which of the general liability insurance policies

respond to the loss if not all are required to satisfy the insured’s claim. * * *

[A]n insurer that has an obligation to pay may not fail to make payment

to the insured on the grounds that another insurer has not made payment,

unless the insurer has no obligation to respond to a claim until the limits of

the underlying policy have been paid.”

310 Continental Casualty Co. v. Argonaut Ins. Co. (A176763)

from other insurers who provide coverage to the insured. As

noted above, ORS 465.480(4)(a) provides:

“An insurer that has paid all or part of an environmental

claim may seek contribution from any other insurer that is

liable or potentially liable to the insured and that has not

entered into a good-faith settlement agreement with the

insured regarding the environmental claim.”

(Emphasis added.) That provision, of course, must be read in

context. What the targeted insurer has paid is an “environmental claim,” and, as defined in ORS 465.475(1), an “environmental claim” is a “claim for defense or indemnity” under

a policy. Later attorney fees for failure to settle within six months of a claim are not awarded under terms of a policy but instead are awarded under the separate statutory

authority of ORS 742.061.

Next, we recognize that the legislature used a synonymous phrase when referring to apportioning “recoverable

costs” between insurers. In relevant part, ORS 465.480(5)

provides:

“If a court determines that the apportionment of recoverable costs between insurers is appropriate, the court shall

allocate the covered damages between the insurers before

the court, based on the following factors:

“(a) The total period of time that each solvent insurer

issued a general liability insurance policy to the insured

* * *;

“(b) The policy limits, including any exclusions to coverage, of each of the general liability insurance policies

* * *;

“(c) The policy that provides the most appropriate type

of coverage for the type of environmental claim;

“(d) The terms of the policies that related to the equitable allocation between insurers * * *.”

(Emphases added.) When that provision speaks of “apportionment of recoverable costs” and “allocating covered damages,” the provision is using the phrases interchangeably.

As written, the phrase “recoverable costs” is synonymous

with “covered damages.” To apportion “recoverable costs”

is to allocate “covered damages.” What is “covered” by a

Cite as 351 Or App 301 (2026) 311

policy, as indicated throughout the OECAA, is the insurer’s

promise of “defense or indemnity” under a general liability

insurance policy. See ORS 465.475(1) (definition of an “environmental claim”); ORS 465.480(3)(a) (“duty to pay defense

or indemnity costs”); ORS 465.480(3)(d) (shall not pay more

than limits of “defense or indemnity costs”).

Our consideration of a provision’s context includes

related provisions and, here especially, words within the same sentence. “It is a familiar rule that the meaning of words

in a statute may be clarified or confirmed by other words

in the same sentence or provision.” Goodwin v. Kingsmen

Plastering, Inc., 359 Or 694, 702, 375 P3d 463 (2016) (referring to the canon of noscitur a sociis). This is not an occasion in which to invoke the canon that, when the legislature uses

different words, the legislature intends a different meaning.

See Marshall v. PricewaterhouseCoopers, LLP, 371 Or 536,

555-56, 539 P3d 766 (2023) (recognizing that such “rules”

of interpretation are mere assumptions that “always” give

way to better evidence of legislative intent). Rather, this is an occasion in which the legislature used “recoverable costs”

synonymously with “covered damages” while elsewhere

using “defense or indemnity costs” to mean what is covered.

Taken together, text and context indicate that

the term “recoverable costs” to be allocated under ORS

465.480(5) are the “covered damages”—that is, the “defense

or indemnity costs”—that are covered under the terms of

the several insurers’ general liability policies. Because

attorney fees awarded under ORS 742.061 are awarded

independently under authority of a statute, not an insurer’s

policy, they are not “recoverable costs” subject to reallocation in contribution.

That is a logical and not absurd construction of the

statute. See Kupillas v. Sage and Social LLC, 337 Or App 67,

77, 563 P3d 394 (2024), rev den, 373 Or 444 (2025) (“Avoiding

absurd results is a maxim of statutory construction that

courts use when the statute is truly ambiguous and the

result is truly absurd.” (Emphasis in original; internal quotation marks omitted.)). As the trial court recognized, underlying coverage cases may be as different as the different reasons insurers may deny or delay defense or indemnity. In

312 Continental Casualty Co. v. Argonaut Ins. Co. (A176763)

the prior case, Continental and nonparty insurer Wausau

happened to share the opinion that the rates of California

counsel were not necessary and reasonable. However, litigation on one insurer’s policy may turn on facts, promises, limits, or exclusions that differ from other, nonparty insurers

on their coverage. The reasons one insurer delays payment

and incurs liability under ORS 742.061 may be unique.

Consequently, the legislature could sensibly choose

to provide for allocation of “recoverable costs” when they

are a shared liability for “covered damages” under applicable policies. The legislature could sensibly choose to leave

statutory liability under ORS 742.061 to the litigating

insurer that chose not to settle within six months of proof

of a claim—particularly the leading insurer with the most

coverage. The risk of solo liability under ORS 742.061 would

pressure that insurer to promptly settle rather than litigate

in hopes of later shifting attorney fees from its coverage litigation off to nonparty insurers in contribution.

Moreover, the legislature enacted no statutory provision to empower the trial judge to redefine “recoverable

costs” on a case-by-case basis so as to decide what added

expenses, beyond shared policy coverage, are subject to reallocation to other insurers. Continental’s appeal to a general

sense of purpose is ungrounded and contrary to the statute’s

specific language.

We have previously rejected allocation of statutory attorney fees in a contribution claim.3 In Certain

Underwriters v. Mass. Bonding and Ins. Co., 245 Or App

101, 260 P3d 830 (2011), the plaintiff insurers asserted a

contribution claim against defendant insurers that arose

out of their insured’s underlying environmental cleanup

action. We agreed with the defendant insurers’ arguments

that an attorney fee award under ORS 742.061 is not the

3

We appreciate that ORS 465.480(4)(d) provides:

“Contribution rights by and among insurers under this section preempt all

common law contribution rights, if any, by and between insurers for environmental claims.”

However, no provision of the OECAA preempts the principle that it is the shared obligation for defense and indemnity that is subject to contribution. Rather, the terms of ORS 465.475(1) and ORS 465.480(3) and (5) confirm the principle of a shared obligation.

Cite as 351 Or App 301 (2026) 313

type of common liability among insurers that gives rise to

equitable contribution—at least in the posture of that case.

245 Or App at 107. We observed that the plaintiff insurers’

liability for attorney fees under ORS 742.061 did not arise

out of a contractual obligation shared with other insurers;

“rather, the liability is statutory and * * * is not a liability that plaintiffs and defendants have ever shared.” Id. at 109.

We held that the trial court had not erred in granting summary judgment for the defendant insurers. Id.

Here, the attorney fees awarded to Schnitzer

against Continental under ORS 742.061 were awarded for

Continental’s failure to settle or to pay Schnitzer within six months of a proof of claim against Continental, and that liability for attorney fees was not attributable to conduct by

Wausau. Continental is obligated to pay the fees for its own

resistance to Schnitzer’s federal claim on the Continental

policy. By reason of precedent and statutory construction, we

conclude that the trial court erred in including Continental’s obligation for attorney fees under ORS 742.061 in the contribution calculation.4

A reasonable, dissenting opinion reaches a different

conclusion. We are unpersuaded for reasons that need no

repetition. Yet, three particular responses are necessary.

First, in Continental Casualty II, the Supreme Court

did not make an “interpretation of ‘environmental claim’,”

351 Or App at 337, 341 (Kamins, J., dissenting), that implies

that Continental’s newly incurred obligation for attorney fees under ORS 742.061 in the federal action is recoverable in contribution. The Supreme Court did not interpret the scope of

the contribution right nor the meaning of “recoverable costs”

in ORS 465.480(4)(a) and (5). Rather, the Supreme Court

recognized that Schnitzer had an environmental claim, as

everyone agreed, and held that Wausau’s settlement did not

bar Continental’s contribution suit. 373 Or at 404. If the

Supreme Court had interpreted an “environmental claim”

for purposes of “recoverable costs,” there would have been no

need to remand the case for us to determine whether statutory attorney fees under ORS 742.061 in the contribution

4

We add that the particular prejudgment interest on attorney fees awarded under ORS 742.061 is also not subject to allocation.

314 Continental Casualty Co. v. Argonaut Ins. Co. (A176763)

action were “recoverable costs,” or, that is, “covered damages” under ORS 465.480(5). (Emphasis added.)

Second, the dissenting opinion dismisses Certain

Underwriters, where, in its context, we held that attorney

fees under ORS 742.061 in the contribution suit were not

the sort of common liability among insurers that is recoverable in contribution. The dissent underscores our incidental acknowledgement that OECAA preempts common law.

See 351 Or App at 312 n3. The salient point, however, is

that Certain Underwriters was a decision under the OECAA,

and the statutory terms—environmental claim, recoverable costs, and covered damages—were the same statutory

terms that governed then and now.

Third, the dissent offers an alternative analysis in

which “recoverable costs” and “covered damages” are interpreted to mean two different things, rather than two different ways to say the same thing, in ORS 465.480(5). 351 Or

App at 341-45 (Kamins, J., dissenting). As discussed, a court

can understand terms to be synonymous. The dissent, however, reads “recoverable costs” to be a broader term than “covered damages,” thereby allowing “recoverable costs” to include statutory attorney fees in the contribution action, whereas

“covered damages” would not. The problem with the dissent’s

construction is that it makes the statutory factors for apportioning contribution applicable only to “covered damages” and

not to “recoverable costs.” The result is that the supposedly

larger term, “recoverable costs,” would not be governed by consideration of time on the risk, type of coverages, policy limits, policy terms, or other factors that might have had a great deal to do with generating a multitude of disputes. A reasonable

construction requires reading “recoverable costs” and “covered damages” synonymously and, as the same things, all subject to

the factors for apportioning contribution.

B. Prejudgment Interest Under ORS 82.010

In the prior action on Continental’s policy, the federal court awarded Schnitzer $2,812,185 in prejudgment

interest on the unpaid portion of the bills of the California

defense counsel. In this contribution claim, the trial court

included that prejudgment interest among “recoverable

costs” to be apportioned among insurers.

Cite as 351 Or App 301 (2026) 315

Generally, prejudgment interest for breach of contract is imposed under ORS 82.010(1), which provides in relevant part:

“The rate of interest for the following transactions, if the

parties have not otherwise agreed to a rate of interest, is

nine percent per annum and is payable on:

“(a) All moneys after they become due[.]”

We have recognized that prejudgment interest

“begins to run when (1) the exact amount of damages is

either ascertained or readily ascertainable; and (2) the

time from which the interest runs is easily ascertained.”

Cascade Corp. v. American Home Assurance Co., 206 Or

App 1, 15, 135 P3d 450 (2006), rev dismissed, 342 Or 645

(2007) (internal quotation marks omitted). When those conditions are satisfied, an insurer owes prejudgment interest

on unpaid bills to defend the insured. See id. (holding that

the trial court erred in denying the insured recovery of prejudgment interest).

Although the determination of the amount of prejudgment interest was a matter of elaborate calculation by

an accountant testifying for Schnitzer, as well as a jury’s

determination of when prejudgment interest began to run,

Wausau does not claim here that the unpaid defense bills

were not readily ascertainable or that the time from which

interest would run cannot be ascertained. Wausau’s only

argument is that prejudgment interest should not be included

in “recoverable costs” under ORS 465.480(5). Continental

disagrees.

So do we. The duty to defend the insured is one of the

shared duties of insurers with coverage, be they Continental

or Wausau. Accordingly, sums due on unpaid bills defending the insured are likewise within the scope of “covered

damages” or “recoverable costs” under ORS 465.480(5). See

generally Cascade Corp., 206 Or App at 15-16 (prejudgment

interest on unpaid fees).5 Therefore, we conclude that the

5

Because prejudgment interest is a matter of statute, ORS 82.010(1), the dissenting opinion views our conclusion as inconsistent with our treatment of attorney fees under ORS 742.061.351 Or App at 341 n 2 (Kamins, J., dissenting). There is no inconsistency. The difference is that the duty to defend is an insurer’s 316 Continental Casualty Co. v. Argonaut Ins. Co. (A176763)

trial court did not err in apportioning prejudgment interest

among the insurers for purposes of contribution.

III. THIRD ISSUE

Did the trial court err in determining that the community-rate limitation on attorney fees of independent counsel, provided in ORS 465.483(3)(a), was not applicable to

Schnitzer’s California counsel?

A. Prior Case

Wausau’s third assignment turns on the dispute in

the prior case over the unpaid portion of the attorney bills of the California firm that defended Schnitzer. That was a dispute about whether Continental should have paid the rates

of attorneys charging more than local attorneys. We recount

the facts of that case—those which are not now contested—

in order to explain how the dispute here becomes a question

of statutory construction.

When agencies identified the Schnitzer entities

as potentially responsible parties in 1999 and 2000, Stoel

Rives, a Portland law firm, was retained to defend Schnitzer.

In 2001, Continental, Wausau, and other insurers reached a

temporary agreement to share those defense costs. In 2003,

however, Stoel Rives advised that it was unable to continue representation due to professional standards involving a conflict of interest. Continental proposed a different

Portland attorney and firm and, if they were not acceptable

to Schnitzer, then an alternate Portland attorney and firm.

Schnitzer responded that it was not satisfied that

either local counsel had the same experience as Stoel Rives

and that such experience was necessary for Superfund litigation. Schnitzer reported that it had chosen the California

firm of Bingham McCutchen “for outside counsel.” After much

disagreement, Continental and other insurers eventually

obligation under a policy and is within the meaning of “recoverable costs,” i.e. “covered damages” within the scope of contribution under ORS 465.480(5). (Emphasis added.) When failing to timely pay defense fees in the underlying claim of the injured parties, an insurer becomes obligated for prejudgment interest as part and parcel of the original defense fees. Later arising attorney fees resulting from resisting an environmental claim of the insured under ORS 742.061 are not under a policy and are not the same as prejudgment interest, for the reasons previously explained.

Cite as 351 Or App 301 (2026) 317

acquiesced in Schnitzer’s choice of California counsel, but

the insurers insisted that they would only pay attorney fees

comparable to local attorneys’ rates, and Schnitzer insisted

that it reserved its rights to seek payment for defense work

at full rates later.

In 2010, Schnitzer filed the prior claim against

Continental over delays and short payment of the defense

bills. In a pretrial ruling, made before the effective date of ORS 465.483(3), Magistrate Judge Papak determined that,

because an insurer has a duty to defend and use reasonable care, an insured may recover attorney fees based on

rates higher than those within the litigation’s locale, if the insured can show it to be necessary to retain outside counsel. Schnitzer Steel Industries, Inc. v. Continental Cas. Co., CV 3:10-1174-PK, 2012 WL 3879276 at *16-18 (D Or Mar 9,

2012). Judge Mosman adopted that ruling. Schnitzer Steel

Industries, Inc. v. Continental Cas. Co., No 3:10-cv-01174-PK, 2012 WL 3879250 (D Or Sep 5, 2012).

Before the case went to trial, the Oregon legislature

passed Senate Bill (SB) 814 in early 2013. Or Laws 2013,

ch 350, §§ 1-9. We will quote the terms of that legislation,

now ORS 465.483, when we turn to examine its several provisions later. Among other things, the legislation created an

insured’s right to “independent counsel” in environmental

claims in certain circumstances and addressed the rates of

those attorney fees. Or Laws 2013, ch 350, § 7. Schnitzer

considered the specifics of the legislation more favorable

than the generality of the Papak ruling and filed a motion in

limine on the issue; so did Continental. As it happened, however, Schnitzer had previously argued on a discovery issue

that the California firm had a confidential relationship with

insurers. Due to that argument, the federal court declared

Schnitzer to be judicially estopped from asserting that the

California firm was “independent counsel” within the meaning of the new statute, ORS 465.483(3).

When the case came to trial in 2014, the jury was

instructed about nonlocal fees according to the terms of the

Papak ruling in that case, not the terms of the new legislation. The jury was instructed that Schnitzer would be entitled to be repaid at rates higher than rates of local attorneys, 318 Continental Casualty Co. v. Argonaut Ins. Co. (A176763)

if no local counsel could reasonably have been expected to

provide competent representation and a reasonable effort to

find nonlocal counsel to work at local rates would not have

succeeded. The jury found in favor of Schnitzer and awarded

Schnitzer $8,601,700 in unpaid, nonlocal attorney fees to

the date of that trial.

In this case, Wausau argued that the new ORS

465.483(3) limited the rates of “independent counsel” to the

customary rates of local counsel. Wausau did so by way of

a motion in limine, a motion to dismiss akin to ORCP 60,

and a written closing argument. The trial court denied the

motions, stating, “That’s not what the statute says.”

In its findings of fact and conclusions of law, the

court recounted that the jury in the prior case had rejected

Continental’s argument that qualified local counsel were

available and found that the higher rates of the California

firm were reasonable. The trial court wrote:

“Wausau argued that had Continental argued in the

federal case that [Schnitzer’s] lawyers were ‘independent

counsel’ under ORS 465.483, this would have changed the

result in the federal trial because the statute ‘caps’ rates

for independent counsel at the prevailing rates in the

community where the claim arose. This is a misreading

of the statute, which requires independent counsel that is

competent to handle the complexity of the claim, and also

expressly states that out-of-forum counsel must be considered if there are no available local counsel competent to

handle the claim. ORS 465.483(2). Given the jury found

no local attorneys were available to represent [Schnitzer]

competently, the application of this statute would not have

changed the outcome.”

Apparently, the trial court read ORS 465.483, not only to

provide for nonlocal counsel in the absence of experienced

local counsel, but to permit reimbursement at reasonable

and necessary rates higher than the rates of attorneys in

the litigation’s locale. The trial court did not specifically

indicate whether Schnitzer’s California counsel should be

considered as independent counsel, but the court did find

that the fees of Bingham McCutchen were reasonable and

necessary. The court concluded that Wausau owed in contribution its proportionate share of the full amount of attorney

Cite as 351 Or App 301 (2026) 319

fees of the California firm from April 28, 2010 to May 15,

2018.

On appeal, Wausau argues, in terms of the new

statute, that the insurers had a duty to defend under their

policies; that the California firm took over the defense of

the environmental claims; that Schnitzer, not the insurers,

chose the California firm in its belief that qualified local

counsel was unavailable; and that the federal jury agreed.

Wausau notes that, whatever unique reason precluded

Schnitzer from arguing that Bingham McCutchen was

“independent counsel,” Wausau was not a party to the prior

case and is not estopped here from insisting that the new

ORS 465.483(3) applies to limit attorney fees of nonlocal

“independent counsel.”

Continental responds that the trial court independently determined that “under the circumstances the

out-of-market rates charged by the Bingham firm and its

successors were reasonably necessary for competent representation of [Schnitzer] at the PHSS.” Continental asserts:

“The statute does not contain a ‘rate cap’ that prevents

insureds from obtaining covered defense costs from their

insurers where those costs are reasonable and necessary to

secure a competent defense, but greater than what Oregon

lawyers typically charge.”

That is so, claims Continental, because it would “mean little” if the insured had to pay the difference between local

and nonlocal rates. In Continental’s view, the statute’s provision for competent counsel would be “illusory” if insureds

must pay the difference in rates.

B. Independent Counsel

We conclude that the statutory text is plain in its

limitation on attorney fees, even if not so plain as to the

new role of “independent counsel” who undertakes the complex role of defending the insured while interacting with

the insurer on behalf of the insured, who still has a duty to

cooperate with the insurer. To explain, we take the statute’s

subsections in turn.

320 Continental Casualty Co. v. Argonaut Ins. Co. (A176763)

The statute begins simply with the provision that

triggers the right to “independent counsel” where an insurer

who defends warns that coverage may be problematic. At

subsection (1), ORS 465.483, the statute provides:

“If the provisions of a general liability insurance policy

impose a duty to defend upon an insurer, and the insurer

has undertaken the defense of an environmental claim on

behalf of an insured under a reservation of rights, or if the

insured has potential liability for the environmental claim

in excess of the limits of the general liability insurance policy, the insurer shall provide independent counsel to defend

the insured who shall represent only the insured and not the

insurer.”

(Emphases added.) Subsection (1) contains several features.

First, it is the risk that an insured may have uninsured

exposure that triggers the right to independent counsel.

Second, independent counsel serves “to defend” against the

environmental claim, not simply to serve as separate counsel

to the insured on the potential problem of coverage. Third,

independent counsel shall represent the insured, not the

insurer—hence the term, “independent counsel.” (Emphasis

added.)

The role of independent counsel is a shift from

the typical form of defense counsel provided by an insurer.

Generally, “[w]hen an insured is represented by attorneys

provided by the insurer, the insured relinquishes control

over the defense of the claim, and a fiduciary relationship is created between the insured and insurer[.]” FountainCourt

Homeowners v. FountainCourt Develop., 360 Or 341, 354,

380 P3d 916 (2016). A tripartite relationship arises among

the insurer who undertakes to defend, the attorney who is

hired to defend, and the insured who has a duty to cooperate

with the insurer in defense. See OSB Formal Ethics Op No.

2005-121 (rev 2026) (“As a general proposition, a lawyer who

represents an insured in an insurance defense case has two

clients: the insurer and the insured.”).6 In that situation, the

6

The ethics opinion posits that:

“Any assumption that a tripartite relationship exists can be overcome by the specific facts and circumstances in a particular matter. See

In re Weidner, 310 Or 757, 801 P2d 828 (1990) (articulating the test for an

attorney-client relationship); Evraz Inc., N. A. v. Continental Ins. Co., Civ No Cite as 351 Or App 301 (2026) 321

defense lawyer must treat the insured as the “primary client” whose protection must be the lawyer’s “dominant” concern. Id.

Subsection (1) of ORS 465.483 makes the role of

“independent counsel” different than typical insurance

defense insofar as it provides that “independent counsel

* * * shall represent only the insured and not the insurer.”

Before concluding, however, subsection (4) of ORS 465.483

reassures that:

“The provisions of this section do not relieve the insured of

its duty to cooperate with the insurer under the terms of

the insurance contract.”

To avoid unintended change, subsection (4) preserves the

insured’s duty to cooperate with its insurer in the processing and defense of the claim. Cf. Bailey v. Universal Underwriters Ins., 258 Or 201, 218-28, 474 P2d 746 (1970) (coverage lost

due to breach of insured’s duty to cooperate).

Because the insured must cooperate with the

insurer, so too must “independent counsel,” to the extent

necessary to defend, seek payment of experts, and facilitate

settlement before judgment. That is so because, as a practical matter, the insurer still retains control of its purse in paying experts or a settlement before judgment. Put another

way, nothing in ORS 465.483 forbids “independent counsel”

from periodic reporting and communicating confidentially

with the client’s insurer on behalf of the insured as necessary for trial strategy or pretrial settlement, presumably

done within the confidentiality of “work product doctrine”

of ORCP 36 B(3), if nothing else. In part, ORCP 36 B(3)(a)

provides:

“[A] party may obtain discovery of documents and tangible things otherwise discoverable under subsection B(1)

of this rule and prepared in anticipation of litigation or for

trial by or for another party or by or for that other party’s

representative (including an attorney, consultant, surety,

indemnitor, insurer, or agent) only on a showing that the

3:08-cv-00447-AC, 2013 WL 6174839 (D Or Nov 21, 2013) (finding no tripartite relationship when insurer did not hire lawyer and when lawyer had made

it clear to insurer that she only represented insured).”

OSB Formal Ethics Op No. 2005-121 at 2 n 1.

322 Continental Casualty Co. v. Argonaut Ins. Co. (A176763)

party seeking discovery has substantial need of the materials in the preparation of such party’s case and is unable

without undue hardship to obtain the substantial equivalent of the materials by other means. In ordering discovery of such materials when the required showing has

been made, the court shall protect against disclosure of the

mental impressions, conclusions, opinions, or legal theories

of an attorney or other representative of a party concerning

the litigation.”

(Emphases added.) See, e.g., Lectrolarm Custom Sys., Inc. v.

Pelco Sales, Inc., 212 FRD 567, 572 (ED Cal 2002) (granting

protective order against subpoenaed communications where

independent counsel defended insured, because the policy

imposed insured’s duty to insurer and the commonality of

interest meant privilege and work product doctrine were not

waived).7

Subsection (2) of ORS 465.483 addresses the qualifications of independent counsel and the potential to retain

counsel from elsewhere. Subsection (2) provides in part:

“(a)(A) Independent counsel retained by the insurer

to defend the insured under the provisions of this section

must be experienced in handling the type and complexity

of the environmental claim at issue.

“(B) If independent counsel who meet the requirements specified in this paragraph are not available within

the insured’s community, then independent counsel from

outside the insured’s community who meet the requirements of this paragraph must be considered.

“* * * * *

“(c) As used in this subsection, ‘experienced’ means an

established environmental practice that includes substantial defense experience in the type and complexity of environmental claim at issue.”

7

We do not here determine the protection from disclosure that may be afforded communications of independent counsel with an insured’s insurer. Rather, we note the potential for confidentiality insofar as the trial court in these circumstances is asked, after-the-fact, to determine whether Bingham McCutchen was independent counsel. We caution that the fact that the firm may have interacted with the insurer, in whatever way confidentially, may not foreclose a post hoc determination that the firm was independent counsel. Cite as 351 Or App 301 (2026) 323

Subsection (2) resembles the pivotal jury instruction in the

prior case concerning the need for “competent representation” and the reasonableness of seeking nonlocal counsel,

but subsection (2) addresses the concern with more specificity. Subsection (2) requires that counsel have an “established environmental practice” and “substantial defense experience in the type and complexity of the environmental claim

at issue.” (Emphases added.)8

Paragraph (3)(a) of ORS 465.483 provides the limitation on the rates that are at issue here. That paragraph

provides:

“The obligation of the insurer to pay fees to independent

counsel and environmental consultants is based on the regular and customary rates for the type and complexity of

environmental claim at issue in the community where the

underlying claim arose or is being defended.”

The trial court seems to have read the fee limitation of paragraph (3)(a) only to apply to local counsel. We respectfully

disagree. Subsection (1) provides generally the “obligation of the insurer” to provide independent counsel under specified

circumstances, and that general obligation includes the specific circumstance in which subparagraph (2)(a)(B) requires

consideration of nonlocal counsel when necessary to assure

experienced independent counsel. The fee limitation in subsection (3) on the “obligation of the insurer” applies to all of ORS 465.483. To say that the obligation “is based” on regular and customary rates of attorneys in the community

where the claim is litigated is a polite way of saying that

the obligation is to pay at the community rate. Therefore,

the statute does contain a limitation on attorney fees of

8

Testimony before legislative committees stressed the concern for an insured’s right to experienced, independent counsel, including consideration of nonlocal counsel when qualified local counsel is unavailable. Joan Snyder of Stoel Rives, who had been Schnitzer’s defense attorney in the early years of the claim, was the leading witness expressing this concern and explaining the bill to legislative committees. Audio Recording, Senate Committee on General Government, Consumer and Small Business Protection, SB 814, Mar 22, 2013, at 23:60-24:09, https://olis.oregonlegislature.gov (accessed Mar 13, 2026); Testimony, Senate Committee on General Government, Consumer and Small Business Protection, SB 814, Mar 22, 2013 (written statement of Joan Snyder); Audio Recording, House Committee on Consumer Protection and Government Efficiency, SB 814, May 9, 2013, at 13:00-24:12, https://olis.oregonlegislature.gov (accessed Mar 13, 2026).

324 Continental Casualty Co. v. Argonaut Ins. Co. (A176763)

independent counsel, whether local or nonlocal. Accordingly,

the trial court erred when construing ORS 465.483 to provide no limitation on nonlocal attorney fees.

It is not clear from the trial court’s findings, however, whether the trial court took the step to determine

if California counsel was serving as independent counsel

after the statute took effect.9 Wausau urges us to do so.

Considering the earmarks of independent counsel in ORS

465.483, there appears to be no dispute on this record

that Continental undertook the defense of Schnitzer; that

Continental issued a reservation of rights or warned of a

potential shortfall of coverage; that Schnitzer rejected counsel proffered by insurers; that Schnitzer did so based on concerns about the experience of local counsel to defend complex environmental claims; that Schnitzer chose Bingham

McCutchen as “outside counsel”; and that California counsel qualified as “experienced.” Also, there appears to be no

dispute for purposes of this case as against Continental—a

party here and in the prior case—about the adverse effect

of the jury’s determination about the reasonableness and

necessity of retaining Bingham McCutchen as nonlocal,

competent counsel.10

Nevertheless, it remains the task for the trial

court to determine in the first instance whether Bingham

McCutchen served, in substantial form, as independent

counsel as we have described that role, or instead served as

traditional insurance defense counsel.11 Also, the trial court should address in the first instance the effect of the statute’s limitation on fees incurred before the statute became

9

Because Wausau was not a party in the prior case, Wausau was not bound by the federal court’s determination that Schnitzer was estopped from asserting that California counsel was independent counsel.

10

The trial court indicated in colloquy on cross-motions for summary judgment that the insurers here are not in a position to “second-guess the jury verdict.”

11

By “substantial form,” we recognize that the statute prescribes what “independent counsel” should be. That prescriptive perspective looks forward. Here, however, the court is given the task to look backward to characterize the role of counsel retained before ORS 465.483 was enacted. We recognize the challenge of a retrospective characterization, particularly where the original relationship was created before and continued after, enactment of the statute, however imperfectly and in whatever form.

Cite as 351 Or App 301 (2026) 325

effective on June 10, 2013.12 Therefore, we remand to the

trial court to make those determinations.

IV. FOURTH ISSUE

Did the trial court err in concluding that certain Wausau

policies did not contain aggregate liability limits and so

should be included in the calculations for contribution?

Wausau’s fourth assignment of error challenges

the trial court’s granting of Continental’s motion for partial summary judgment on the availability of Wausau’s 1965-70 policies for inclusion in the contribution calculations. In opposition to the motion, Wausau had contended that the

policies had “aggregate limits” and that those limits had

been exhausted by Wausau’s previous indemnity settlement

payment of $400,000 to Schnitzer. Wausau contended that

those policies should not be counted for contribution. After

reviewing those policies, we agree with Continental that the

policies did not contain an applicable aggregate limit and

that the trial court did not err in granting its motion for

summary judgment.

Each of those Wausau policies issued to Schnitzer

included a potential “aggregate limit” of $100,000 under its

“Limits of Liability” with respect to property damage for

operations pertaining to the appropriate policy periods. The

later policies (1967-70), akin to the earlier policies (1965-67), described their aggregate limit with these terms:

“[T]he total liability of the company for all damages

because of property damage to which this coverage applies

* * * shall not exceed the limit of property damage liability

stated in the schedule as ‘aggregate’:

“1. all property damage arising out of premises or operations rated on a remuneration basis[.]”

(Boldface omitted; emphasis added.) Read carefully, the

aggregate limit was one that applied to property damage

arising out of operations “rated on a remuneration basis.”

The parties agree that the question whether an aggregate

12

Or Laws 2013, ch 350, §§ 7-9 (Section 7 added ORS 465.483; section 8 applied section 7 to environmental claims arising before, on or after the effective date of the act; section 9 provided the effective date of the act is its passage, June 10, 2013).

326 Continental Casualty Co. v. Argonaut Ins. Co. (A176763)

limit governs property damage from operations depends

on whether the operations were rated on a “remuneration

basis,” and the parties further agree that “remuneration”

means payroll.

There is no dispute that the declarations pages

provide one column that describes the “premium bases” for

“operations and premises” with several printed options, but

the form instead stated in manuscript form, in typewritten

capital letters, that the premium base was “ESTIMATED

SALES,” not remuneration (i.e., payroll). The next column

on the page pertains to “Rates” for property damage liability with several printed options, but the form instead

stated again in capital letters “PER $1000,” reflecting that

the rates were determined for estimated sales per $1,000 in

sales.

Wausau contends that the declarations’ statement

of the premium base was not dispositive. Wausau argues

that the calculation of premiums and the rating of risks are

different things. Assuming that there was no rating of risks

in the declarations, Wausau says that policy terms require

reference to Wausau manuals. A retired Wausau underwriter had declared that Wausau’s practice, according to its

manuals, was to develop a composite premium in which the

rating for operations was remuneration. Wausau concludes

that the declarations’ purported silence on rating and a reference to manuals together should mean that the policies’

aggregate limits applied.

Continental responded, and the trial court agreed,

that the aggregate limit provisions were not applicable,

because the aggregate limits applied only when the risk

of loss was rated on a remuneration basis, and the policies

plainly stated premiums and rates that were rated based on

estimated sales, not remuneration. Because that was so, the

trial court explained, there was no need for reference to the

manuals.

We review the trial court’s ruling on summary

judgment for whether there is a genuine issue of material

fact and whether Continental was entitled to judgment as a

matter of law. ORCP 47 C; Lewis v. Carson Oil Company, 204

Cite as 351 Or App 301 (2026) 327

Or App 99, 101, 127 P3d 1207, rev den, 341 Or 245 (2006).

The interpretation of an insurance policy is a question of

law to be decided by the court. Allianz Global Risks v. ACE

Property & Casualty Ins. Co., 367 Or 711, 734, 483 P3d

1124 (2021), adh’d to as modified on recons, 368 Or 229, 489

P3d 115 (2021). Contracts of insurance are to be construed

according to the plain meaning of the terms and conditions

of the policy, according to the “four-corners” rule, which

excludes consideration of evidence outside the “four corners”

of the policy itself. Id. (citing West Hills Development Co. v. Chartis Claims, 360 Or 650, 653, 385 P3d 1053 (2016)); ORS

742.016(1).

We understand the policies as did the trial court.

The earlier policies (1965-67), like the later policies (1967-70), provided that the aggregate limits apply to claims arising out of injury “caused by the ownership, maintenance, or

use of the premises or operations rated on a remuneration

premium basis[.]” (Emphasis added.) The declarations stated

that the premium basis was to be estimated sales and the

declarations further provided that the rates for that determination would be “per $1,000” of sales. It is true that the

policies contained a potential reference to the manuals, but

they did so stating,

“The premium bases and rates for hazards described

in the declarations are stated therein. Premium bases and

rates for hazards not so described are those applicable in

accordance with the manuals in use by the company.”

(Emphases added.) Because the declarations did state the

bases for premiums and rating—that is, estimated sales

and per $1,000, the declarations were not silent. Therefore,

as Continental contends, it was not necessary or appropriate for the trial court to consider Wausau’s manuals or its

practice of rating on remuneration. The trial court did not

err in finding that those policies lacked an aggregate limit,

were not exhausted by the payments made, and were properly included in the contribution calculation.

V. FIFTH ISSUE

Did the trial court err in determining that Wausau had

failed to prove that aggregate indemnity limits had been

reached on its Northwest Pipe policies?

328 Continental Casualty Co. v. Argonaut Ins. Co. (A176763)

In its fifth assignment, Wausau contends that the

trial court erred in finding, after trial, that Wausau’s two

policies from 1983 to 1985 for Schnitzer’s tenant, Northwest

Pipe—policies in which Schnitzer was an additional

insured—were not exhausted by a December 2014 settlement, as well as prior indemnity payments by Wausau for

Northwest Pipe. The settlement agreement between Wausau

and Northwest Pipe stated:

“Northwest Pipe and Wausau agree that the above

[$500,000] payment shall fully and finally exhaust the limits of the Wausau policies, such that Wausau shall have no

further obligations of defense, indemnity, or any further

obligations of any kind under the Wausau policies with

regard to these or any other claims. Northwest Pipe and

Wausau further agree that the payment is final and nonrefundable. $80,236.59 of the settlement is allocable through

indemnity and exhausts the remaining indemnity limits of

the Wausau policies.”

In the Northwest Pipe case, the federal court had granted a

motion from Wausau for entry of a good-faith finding on the

settlement and a contribution bar under ORS 465.480(4).

At trial, Wausau presented the settlement agreement and the testimony of the claims adjuster who had

signed the agreement and explained its contents. He also

explained a spreadsheet document, which he identified as a

“loss run.” It had been prepared by Wausau’s financial office

at his request based on payment records, and it reflected

payments made by Wausau on the Northwest Pipe policy

claims. The document identified by code the type of payment

on a claim such as a defense cost, an indemnity cost, or a

litigation cost.

The adjuster testified that he understood the statutes that applied to the differentiation of payments as

indemnity or defense and that he applied that understanding in determining the code to be applied to each payment

made by Wausau to Northwest Pipe. He explained that

he would review an invoice on a claim and authorize payment in a particular amount and under a particular payment code, whereupon staff would issue the check. He testified that the insurer maintained a payment record in an

Cite as 351 Or App 301 (2026) 329

electronic database like a checkbook and that a report could

be issued for payments made on a policy. He testified that he

had requested the loss-run document on the Northwest Pipe

policies and that payments with the code 531-1 reflected

indemnity payments. The adjuster testified that the two

policies issued to Northwest Pipe each had aggregate limits

of $100,000, and that, between indemnity payments made

on the policies, as reflected on the loss-run document, and

the indemnity payment of $80,236.59 made under the settlement agreement, Wausau’s payments to Northwest Pipe

under the policies exceeded aggregate limits. Continental

did not present any contrary evidence or argue that the payments were not, in fact, made for indemnity.

The trial court concluded that Wausau had not

proven its limits were exhausted. The court stated that,

although Wausau’s adjuster testified that Wausau had paid

Northwest Pipe $200,000 that it described as indemnity,

“Wausau presented no evidence to allow the Court to determine what payments to Northwest Pipe were for indemnity,

and specifically how the approximately $80,000 payment to

Northwest Pipe in connection with [the settlement agreement] reimbursed Northwest Pipe for indemnity payments

it made.”

Wausau argues that the trial court erred as a matter of law, because the uncontroverted evidence required the

finding that the policies had been exhausted.

Continental responds that Wausau’s evidence was “limited

and conclusory” and failed to describe why the payments

should be considered as indemnity payments. Continental

argues that the trial court was entitled to disbelieve the

claims adjuster’s testimony although it had not been challenged in any way.

We review the trial court’s findings to determine

whether they are supported by any evidence in the record,

Vukanovich v. Kine, 268 Or App 623, 633, 342 P3d 1075,

adh’d to as modified on recons, 271 Or App 133, 349 P3d

567 (2015), viewing the evidence, “as supplemented and buttressed by permissible derivative inferences, in the light

most favorable to the trial court’s disposition and assess[ing] 330 Continental Casualty Co. v. Argonaut Ins. Co. (A176763)

whether, when so viewed, the record was legally sufficient to

permit that outcome.” Wilson v. Gutierrez, 261 Or App 410,

411, 323 P3d 974 (2014) (internal quotation marks and citation omitted).

We are unable to conclude that the record is legally

sufficient to support the trial court’s adverse determination

as to Wausau’s payments for indemnity. The trial court did

not explain how it found the evidence to be insufficient; and

the court did not find that the witness lacked credibility.

Instead, the court appeared to state that, without more

detail or corroboration, it could not confirm that the payments were indeed for indemnity. Be that as it may, the

court could not avoid the indemnity evidence before it.

Wausau put on uncontroverted testimony and documentation that Wausau had treated the payments as indemnity at the time they were made, and Continental did not

dispute or disagree with that evidence. Further, the settlement agreement reflected that the indemnity limit had been

reached, and Continental did not challenge that evidence,

either.

In the trial court, Continental’s question on crossexamination of Wausau’s adjuster had been whether the

adjuster recalled that, in earlier litigation with Northwest

Pipe, a judge had denied Wausau’s motion for partial summary judgment that, “as a matter of undisputed fact,” the

Wausau policy limits had been exhausted. The adjuster

did not recall. Continental does not pose the question as an

argument on appeal, and that is no oversight. The denial of

summary judgment in April 2014 predated the Northwest

Pipe settlement agreement in December 2014—not to mention its statement agreeing that the indemnity limits had

been exhausted.13 On appeal, Continental inveighs that

the court’s finding of a good-faith settlement in the earlier

Northwest Pipe litigation did not actually decide whether

limits had been exhausted. Be that as it may, that distinction does not draw into question the adjuster’s testimony or

documentation.

13

Northwest Pipe Co. v. RLI Ins. Co., No 3:09-CV-01126-BR, 2014 WL 1406595 at *10 (D Or Apr 10, 2014) (denying motion in part because no judgment or settlement had occurred yet).

Cite as 351 Or App 301 (2026) 331

In this case, Wausau’s evidence amounted to a

prima facie showing that the settlement payments were for

indemnity, and there was no evidence to dispute that showing. As a result, the record does not support the trial court’s determination contrary to Wausau’s characterization of the

payments as indemnity. Consequently, we conclude that the

trial court erred in finding that Wausau had failed to establish that the aggregate limits on Northwest Pipe’s policies

had been exhausted. Those policies should not have been

included in the contribution calculation.

VI. CONCLUSION

The complexity of the trial court’s task has been

substantial, and this review does not tell the breadth of that court’s careful work. That said, we conclude that the trial

court erred in including Continental’s attorney fee obligation under ORS 742.061 in the allocation of “covered damages.” The trial court did not err in considering prejudgment

interest in that allocation. The trial court erred in determining that the cap on attorney fees in ORS 465.483(3)

(a) would make no difference in limiting the fees of nonlocal counsel. On remand, the trial court should determine

whether, in substantial form, California counsel served as

“independent counsel” and, if so, calculate the impact of the

community-rate cap on fees, when it became applicable. The

trial court did not err in including, as without aggregate

limits, certain Wausau 1965-70 policies in the contribution

calculation. The court did err in including Wausau’s policies on Northwest Pipe in the contribution calculation. On

remand, the trial court should reconsider the allocation for

contribution among the insurers accordingly.

Reversed in part; affirmed in part; and remanded

for reconsideration of allocation.

KAMINS, P. J., dissenting.

I concur with the majority’s decision in every

respect except for its conclusion that the trial court erred

in including the federal environmental claim attorney fees

as “recoverable costs” to be allocated under ORS 465.480(5).

The majority reaches that conclusion because, in its view,

the text and context of ORS 465.480(5) limit the term

332 Continental Casualty Co. v. Argonaut Ins. Co. (A176763)

“recoverable costs” to only “defense or indemnity costs” that

are covered under the terms of the insurers’ general liability policies. Because the federal environmental claim attorney

fees are awarded under ORS 742.061 rather than an insurer’s policy, the majority reasons that they are not subject to reallocation in a contribution action.

In my view, the text and context of the relevant provisions of the Oregon Environmental Cleanup Assistance

Act (OECAA) indicate that the legislature intended to

include within the scope of the contribution right attorney

fees awarded to the insured under ORS 742.061 because

those fees are a necessary and foreseeable cost paid on the

environmental claim. Here, where Wausau and Continental

were both responsible for the defense costs; argued for the

same position as to what those costs should be in communications with Schnitzer; and Schnitzer targeted Continental

under a provision of the OECAA to successfully recover costs

in the federal action beyond what Wausau and Continental

decided to pay, the trial court did not err in allocating the

federal environmental claim attorney fees in the contribution action. Therefore, I respectfully dissent.

I. BACKGROUND

The key difference between the majority’s view of

the facts and mine is that Continental did not just “happen[ ] to share” the same position as “nonparty insurer Wausau” in

the federal environmental claim. 351 Or App at 312. Rather,

both insurers fought together vigorously for years in support of that position but, because and only because of the

OECAA, Continental was required to sit alone in defense

of that shared position in the federal court action. In those

circumstances, because the OECAA was designed to compensate a targeted insurer for costs it bore solely because

it was the targeted insurer under the OECAA, Continental

was entitled to contribution for all of those costs, including attorney fees under ORS 742.061.

A little background helps clarify the extent of the

insurers’ “shared position.” Continental and Wausau, along

with a third insurer, Century, issued comprehensive general liability policies to Schnitzer. After the Environmental

Cite as 351 Or App 301 (2026) 333

Protection Agency identified Schnitzer as a potentially

responsible party for contamination of the Portland Harbor

Superfund Site, Schnitzer tendered its legal defense to

its insurers. Those insurers, including Continental and

Wausau, “in an attempt to agree on a method for sharing

the costs of defense,” “coordinated their efforts to determine the reasonable hourly rates to pay Schnitzer’s defense counsel.” The insurers entered into a cost-sharing agreement

where Continental would pay 70 percent of the defense costs

incurred, Wausau would pay 20 percent, and Century would

pay 10 percent.

In 2003, the Portland law firm that had been defending Schnitzer determined that it could no longer continue

the representation due to a conflict of interest. Schnitzer

selected a Los Angeles-based firm to represent it after concluding that there were no suitable local firms. The insurers, including Wausau and Continental, collectively objected

because the rates charged by the Los Angeles firm were

much higher than Oregon firms, and argued that local qualified counsel was available. Ultimately, Schnitzer retained

the Los Angeles firm and the insurers agreed to reimburse

Schnitzer at the lower hourly rate charged by the Oregon

firms, with Schnitzer reserving the right to seek complete

reimbursement from all insurers, including Wausau, at a

later date.

Between approximately 2003 to 2014, Continental,

Wausau, and Century generally paid Schnitzer’s defense

costs at the reduced hourly rates, splitting the bills as set

out in the cost-sharing agreement. In 2010, Schnitzer filed

a federal action to recover past defense costs at the Los

Angeles firm’s full rates, as well as future defense costs

based on those rates. As noted, leading up to the federal

action, Schnitzer’s coverage disputes involved all three

insurers. However, in the federal action, rather than filing a claim against all three insurers, Schnitzer targeted

Continental under the provision of the OECAA that authorizes an insured to choose one of its general liability policies to respond to the entire loss if not all policies are required to satisfy the insured’s claim. ORS 465.480(3)(b). Thus, under

that provision, Schnitzer sought all of its unpaid defense

334 Continental Casualty Co. v. Argonaut Ins. Co. (A176763)

costs from Continental and a declaration that Continental

would pay 100 percent of Schnitzer’s defense costs going

forward, subject to its policy limits. Thus, Schnitzer sought

reimbursement for Wausau’s payment at the reduced rates

via a federal lawsuit from Continental alone, not Wausau.

In that federal action, Continental took the same

position that it and the other insurers, including Wausau,

had taken when Schnitzer first retained the Los Angeles

firm—that it was not required to pay the Los Angeles firm’s

higher rates because less expensive local counsel was available and qualified. A jury found in favor of Schnitzer, determining that Schnitzer had been justified in hiring the Los

Angeles firm and that the firm’s higher rates were reasonable under the circumstances. The district court awarded

Schnitzer a judgment in the amount of $8.6 million, which

represented all of the unpaid defense costs up to that point.

The district court also awarded Schnitzer $3,756,037 in

attorney fees under ORS 742.061 and $2,812,185 in prejudgment interest under ORS 82.010. ORS 742.061 (providing for

attorney fees as costs in an action after an insurer’s failure to settle or pay within six months of a proof of claim); ORS

82.010 (providing for the accrual of prejudgment interest).

Continental satisfied the federal judgment and subsequently brought this contribution action against its co-insurers, including Wausau. ORS 465.480(3)(b) (if the insured

files suit against one insurer, the targeted insurer has a

right to contribution under ORS 465.480(4) from all other

insurers whose policies are triggered); ORS 465.480(4)(a)

(“An insurer that has paid all or part of an environmental

claim may seek contribution from any other insurer that is

liable or potentially liable to the insured and that has not

entered into a good-faith settlement agreement with the

insured regarding the environmental claim.”).

Below, Wausau argued, among other things, that the

federal environmental claim attorney fees that Continental

paid to Schnitzer under ORS 742.061 are not subject to allocation as “recoverable costs” under ORS 465.480(5) because

“recoverable costs,” for purposes of that statute, include only defense or indemnity costs. See ORS 465.480(5) (“[i]f a court

determines that the apportionment of recoverable costs

Cite as 351 Or App 301 (2026) 335

between insurers is appropriate, the court shall allocate the

covered damages between the insurers” based on certain

factors). The trial court rejected that argument, reasoning

that when the legislature enacted the OECAA, “it was certainly aware of an insured’s ability to recover attorney fees

under ORS 742.061,” and thus the legislature intended those

fees to be “recoverable costs” subject to apportionment under

ORS 465.480(5). The trial court indicated that whether

the federal environmental claim attorney fees should be

allocated in a contribution action is a matter of discretion

and depends on circumstances such as the “conduct of the

defendant insurer in the underlying litigation.” The court

found that Wausau shared Continental’s position in the federal case that the Los Angeles firm’s rates were too high

and thus concluded that the environmental-claim-litigation

attorney fees should be included as “ ‘recoverable costs’ subject to equitable apportionment among insurers who have

duties to defend [Schnitzer].”

II. ANALYSIS

With that background in mind, I turn to my disagreement with the majority’s conclusion that Continental

was not entitled to contribution from Wausau for the attorney fees that Continental paid to Schnitzer in the federal

action. Determining the scope of a targeted insurer’s contribution rights under the OECAA is a question of statutory construction. In construing a statute, we “begin with a

review of the statute’s text and context because they are the

best evidence of the legislature’s intent * * * [and] consider relevant legislative history or statutory development, when

helpful.” Progressive Universal Ins. Co. v. Voyles, 337 Or App 381, 387, 563 P3d 371, rev den, 373 Or 736 (2025) (citation

omitted).

A. Overview of Relevant Statutes

The relevant provisions that refer to and govern

the right to contribution include ORS 465.480(3)(b), ORS

465.480(4)(a), and ORS 465.480(5). ORS 465.480(3)(b) allows

an insured with multiple policies to target one insurer to

respond to the entire loss if not all are required to satisfy the insured’s claim and provides that the targeted insurer has

336 Continental Casualty Co. v. Argonaut Ins. Co. (A176763)

a right to contribution from other insurers whose policies

are triggered. That statute provides that “[i]f the insured’s

claim is not fully satisfied and the insured files suit on the claim against less than all the insurers,” the insured may

choose which of the policies respond to the loss. (Emphasis

added.) The next sentence provides that the “insured or the

insurers have a right to contribution [under ORS 465.480(4)]

from all other insurers whose policies are triggered.” Thus,

by its plain terms, that provision contemplates a suit filed

by an insured against a targeted insurer—a suit in which

that targeted insurer may be liable for attorney fees under

ORS 742.061—and refers to the targeted insurer’s right to

contribution in that context.

Turning to ORS 465.480(4)(a), that statute provides

that “[a]n insurer that has paid all or part of an environmental claim may seek contribution from any other insurer

that is liable or potentially liable to the insured and that

has not entered into a good-faith settlement agreement with

the insured regarding the environmental claim.” The term

“environmental claim” is defined in ORS 465.475(1) as “a

claim for defense or indemnity submitted under a general

liability insurance policy by an insured facing, or allegedly

facing, potential liability for bodily injury or property damage arising from a release of pollutants onto or into land, air or water.”

As construed by the Supreme Court, the first clause

of ORS 465.480(4)(a) “permit[s] an insurer that has paid

‘all or part of an environmental claim’ to seek contribution, and, in barring contribution if there has been a settlement ‘regarding the environmental claim,’ the second

use of the term should be understood to refer to the environmental claim that has been paid.” Continental Casualty

Co. v. Argonaut Ins. Co., 373 Or 389, 401-02, 567 P3d 1059

(2025) (Continental Casualty II) (emphases in original). In

other words, an environmental claim, for purposes of ORS

465.480(4)(a), is an insured’s claim for defense or indemnity

costs that has been paid by the targeted insurer, including a

claim that has been reduced to judgment and recovered on.

Finally, ORS 465.480(5) directs a court who has

“determine[d] that the apportionment of recoverable costs

Cite as 351 Or App 301 (2026) 337

between insurers is appropriate” to “allocate the covered

damages between the insurers” based on certain factors,

such as time on the risk, policy limits, and type of coverage under the policies. That is, when a targeted insurer who

has paid an environmental claim and brings a contribution action under ORS 465.480(4)(a) against other insurers

whose policies have been triggered, the court must determine which costs or “covered damages” the insurer is entitled to recover and allocate those costs according to the

mandatory factors.

B. “Environmental Claim” for Purposes of ORS 465.480

(4)(a)

To summarize, under the OECAA, an insured with

multiple policies can sue one targeted insurer for an environmental claim—defense or indemnity costs covered under

those policies—and after the targeted insurer has paid that

environmental claim, which has been reduced to a judgment

as a result of litigation, the targeted insurer is authorized

to seek contribution from other liable or potentially liable

insurers for the environmental claim that it has paid. The

OECAA does not define the scope of the contribution right.

However, in my view, for purposes of ORS 465.480(4)(a),

which is the operative statute that authorizes a targeted

insurer to seek contribution, the “environmental claim”

that the insurer has paid and may seek contribution for

includes the necessary and foreseeable costs (including an

attorney fee judgment) that the targeted insurer has paid

to the insured on that claim. I reach that conclusion based

on the context of ORS 465.480(4)(a), including the reference

to the contribution right in ORS 465.480(3)(b), the Supreme

Court’s interpretation of “environmental claim” in ORS

465.480(4)(a), and the express purpose of the OECAA.

First, as noted, ORS 465.480(3)(b) refers to the contribution right in the context of an insured targeting one

insurer—i.e., bringing its environmental claim against

that insurer in a lawsuit. Presuming that the legislature

was aware that the insured would be entitled to statutory

attorney fees and interest in a lawsuit that it brought to

enforce the targeted insurer’s defense obligation, that context suggests that the legislature intended those costs to be

338 Continental Casualty Co. v. Argonaut Ins. Co. (A176763)

recoverable in a contribution action. See Blachana, LLC v.

Bureau of Labor and Industries, 354 Or 676, 691, 318 P3d

735 (2014) (for purposes of statutory interpretation, “[w]e

presume that the legislature was aware of existing law”).

Second, the Supreme Court interpreted the term

“environmental claim” in ORS 465.480(4)(a) to include all

or part of a claim for defense or indemnity costs that the

targeted insurer paid to the insured after the insured’s

claim was reduced to a judgment in a coverage-litigation

suit—specifically here, the federal environmental claim.

Continental Casualty II, 373 Or at 403 (holding that an

insurer that has paid all or part of an environmental

claim, including a claim for defense costs reduced to a judgment, has a right to contribution for those costs from other

non-settling insurers). That interpretation, in combination

with the legislature’s reference to the contribution right in

the context of an insured bringing an environmental claim

against a targeted insurer, indicates that the legislature

intended to encompass necessary costs paid to the insured

on the environmental claim—such as attorney fees and prejudgment interest—within the targeted insurer’s right to

contribution.

Third, the express purpose of the OECAA, which

is to “promot[e] the fair and efficient resolution of environmental claims” in order to address the “many insurance

coverage disputes involving insureds who face potential liability for their ownership of roles at polluted sites in this

state,” indicates that the legislature intended the contribution right to include costs directly associated with the environmental claim. See ORS 465.478 (legislative findings); see

also Sundermier v. PERS, 269 Or App 586, 595, 344 P3d

1142, rev den, 357 Or 415 (2015) (“Statements of statutory

policy are also considered useful context for interpreting a

statute.”).

Specifically, the OECAA promotes efficiency “by

permitting an insured to target one among multiple insurers for payment of all or part of an environmental claim,”

and by encouraging settlement of environmental claims.

Continental Casualty II 373 Or at 402-03 (pointing to legislative history showing that the legislature intended ORS

Cite as 351 Or App 301 (2026) 339

465.480(4)(a) to encourage settlement of environmental

claims). And the OECAA promotes fairness by permitting

“a targeted insurer that has borne more than its share of

the cost of the environmental claim” to bring an action for

contribution. Id. at 403.

The context of those legislative goals indicates that

the legislature intended to include within the scope of the

contribution right the necessary and foreseeable costs paid

by a targeted insurer to the insured on an environmental

claim. That interpretation promotes both fairness to the

targeted insurer and efficiency by encouraging a non-targeted insurer with a shared obligation under its policy to

settle with the insured. By contrast, allowing a non-settling

insurer to receive a windfall by virtue of not being targeted

by the insured in a lawsuit directly contravenes those legislative goals. Absent the targeting provision in the OECAA,

Wausau would have been a defendant in the federal action.

Thus, in my view, under the OECAA, Continental is entitled

to contribution from Wausau for the costs Continental paid

to Schnitzer on the environmental claim, including attorney

fees and interest.

In the majority’s view, the text and context of ORS

465.480(5) indicate that the terms “recoverable costs” and

“covered damages” refer to defense or indemnity costs that

are covered under the terms of the several insurers’ general liability policies, and because attorney fees under ORS

742.061 are awarded independently under a statute rather

than an insurer’s policy, they are not “recoverable costs”

subject to allocation in a contribution action.1 351 Or App

at 310-11. To support that conclusion, the majority points

to references in the OECAA to “defense or indemnity

costs” paid under a policy. See ORS 465.475(1) (defining

1

The majority also relies on Certain Underwriters v. Mass. Bonding and Ins. Co., 245 Or App 101, 260 P3d 830 (2011), in which we rejected allocation of statutory attorney fees in a contribution claim. As the majority acknowledges, however, under ORS 465.480(4)(d), which was enacted after Certain Underwriters, “[c]ontribution rights by and among insurers under this section preempt all common law contribution rights, if any, by and between insurers for environmental claims.” 351 Or App at 312 n3; Or Laws 2013, ch 350, § 4. Thus, the scope of an insurer’s contribution rights is purely a statutory question, and, as discussed, the text and context of the OECAA indicate that the legislature intended to include within the scope of the contribution right attorney fees awarded to an insured under ORS 742.061.

340 Continental Casualty Co. v. Argonaut Ins. Co. (A176763)

“environmental claim” as a “claim for defense or indemnity submitted under a general liability insurance policy”);

ORS 465.480(3)(a) (requiring an insurer with a duty to pay

“defense or indemnity costs” under a policy that provides

that the insurer must pay all sums, to pay all “defense or

indemnity costs” regardless of other insurance that may

provide coverage for the same claim); ORS 465.480(3)(d)

(providing that a targeted insurer “may not be required

to pay defense or indemnity costs in excess of the applicable policy limits”); 351 Or App at 307-09. That context, in

the majority’s view, indicates that “environmental claim”

in ORS 465.480(4)(a), and “recoverable costs” and “covered

damages” in ORS 465.480(5) refer only to the defense and

indemnity costs promised in the policy.

In my view, the majority’s conclusion is inconsistent

with the context of the OECAA. First, the provisions that

the majority relies on for the proposition that the contribution right is limited to defense or indemnity costs covered

under a policy do not govern or even refer to the contribution right. Rather, the references to “defense or indemnity costs”

in those provisions are in the context of the insurer’s duties under the policies.

By contrast, ORS 465.480(3)(b), which expressly

refers to the contribution right, does so in the context of a

lawsuit brought by the insured against the targeted insurer.

In determining what the legislature intended the scope of

the contribution right to be, a provision that specifically

references the contribution right provides more relevant

context in which to make that determination than provisions that do not reference the contribution right. And as

discussed above, ORS 465.480(3)(b)’s reference to a targeted

insurer’s right to contribution in the context of a lawsuit

brought by the insured—a lawsuit that may expose the targeted insurer to attorney fees under ORS 742.061—indicates that the legislature intended to include in the scope

of the contribution right the necessary costs associated with

the lawsuit.

Second, the Supreme Court’s interpretation of

“environmental claim” in ORS 465.480(4)(a) to include a

judgment paid by the targeted insurer suggests a broader

Cite as 351 Or App 301 (2026) 341

meaning of that term that would include not just defense

and indemnity costs covered under the policy, but also the

necessary and foreseeable costs that the targeted insurer

paid to the insured on the claim. In the appeal of this case,

the Supreme Court determined that the federal claim

that Schnitzer brought against Continental under the

OECAA and the ensuing judgment that Continental paid

to Schnitzer was an “environmental claim” for purposes

of Continental’s right to contribution under the OECAA.

Continental Casualty II, 373 Or at 401. In other words, the

“environmental claim” was not just the costs owed under the

policy but was the federal litigation that resulted in a judgment against Continental. Accordingly, under that interpretation, the “recoverable costs” and “covered damages”

subject to allocation under ORS 465.480(5) would include

attorney fees and prejudgment interest paid to the insured

as part of the environmental claim—here, the federal claim

brought under the OECAA—notwithstanding the fact that

those costs are awarded under separate statutes and not the

insurer’s policy.2

Third, as discussed above, the purpose of the

OECAA is to promote the fair and efficient resolution of

environmental claims and to encourage settlement. As discussed above, the limitation that the majority places on the

contribution right is inconsistent with that purpose because

it would reward a non-settling insurer who shared the same

obligations as the targeted insurer. Thus, I conclude that the more consistent and equitable interpretation of the relevant

provisions of the OECAA indicate that an “environmental

claim” for purposes of the contribution right includes the

necessary and foreseeable costs paid by the targeted insurer

to the insured.

2

Although prejudgment interest is awarded under a separate statute, the majority concludes that because the “duty to defend the insured is one of the shared duties of insurers with coverage, * * * sums due on unpaid bills defending the insured are likewise within the scope of ‘covered damages’ or ‘recoverable costs’ under ORS 465.480(5).” 351 Or App at 315-16. That conclusion, in my view, is inconsistent with the majority’s conclusion that attorney fees awarded under ORS 742.061 are not within the scope of the contribution right. Both prejudgment interest and attorney fees arise out of the insurers’ shared duties because they are incurred in enforcing the insured’s right to unpaid defense costs covered under a policy.

342 Continental Casualty Co. v. Argonaut Ins. Co. (A176763)

C. Alternatively, “recoverable costs” are not limited to “defense

or indemnity costs” owed under the policy.

Alternatively, if the majority is correct that “environmental claim” for purposes of the contribution right

under ORS 465.480(4)(a) includes only defense and indemnity costs covered under the policy, the legislature’s use of

“recoverable costs” in ORS 465.480(5) provides an alternative construction of the OECAA that would permit a trial

court to include attorney fees awarded to the insured under

ORS 742.061 as costs to be allocated in a contribution action.

That statute provides that “[i]f a court determines

that the apportionment of recoverable costs between insurers

is appropriate, the court shall allocate the covered damages

between the insurers before the court,” based on certain factors. (Emphases added.) Adhering to the principle that when

the legislature uses different terms, we generally assume

that it intends different meanings for those terms, it is significant that the legislature used “recoverable costs” in the

first clause and “covered damages” in the second clause. See

State v. Newell, 238 Or App 385, 392, 242 P3d 709 (2010) (“If

the legislature uses different terms in statutes, we generally will assume that the legislature intends different meanings

for those terms.” (Internal quotation marks omitted.)).

In the first clause, the statute refers to “recoverable

costs” in the context of the costs that a court determines are appropriate to apportion between insurers. In the second

clause, the statute directs the trial court to allocate “covered damages” between the insurers based on certain mandatory factors. Assuming, as we “generally” do, that the legislature intended those terms to have different meanings,

“recoverable costs” refers to the broad category of costs that a court has discretion to determine is appropriate to apportion between insurers, and “covered damages” refers to a

specific subset of those costs that the legislature intended

to be allocated based on mandatory factors.3 Id. Had the

3

In my view, under this alternative construction of ORS 465.480(5), the statute’s reference to a trial court’s “determin[ation] that the apportionment of recoverable costs between insurers is appropriate,” suggests that the legislature intended to grant the court discretion to not only determine that certain costs that are not “covered damages” are “recoverable,” but also to deviate from the mandatory factors in allocating those costs if appropriate. (Emphasis added.) Cite as 351 Or App 301 (2026) 343

legislature intended for only “covered damages” to be allocated in a contribution action, it would have used “covered

damages” in both clauses.

The majority justifies reading different terms in

the same sentences to mean the same thing through the

proposition that rules of interpretation, including the rule

that when the legislature uses different words, we assume

it intends those words to mean different things, “are mere

assumptions that ‘always’ give way to better evidence

of legislative intent.” 351 Or App at 311; see Marshall v.

PricewaterhouseCoopers, LLP, 371 Or 536, 555-56, 539

P3d 766 (2023) (rejecting plaintiffs’ argument that because

the legislature used different terms in the same statute it

intended different meanings because “the text and legislative history supply more direct evidence” of the legislature’s intent). I am not persuaded that there is “better” or “more

direct” evidence of legislative intent that overcomes the

assumption that the legislature’s use of different terms—“recoverable costs” and “covered damages”—indicates that the

legislature intended those terms to have different meanings. To begin with, as the majority notes, we are not aware

of any legislative history that sheds light on what the legislature intended when it used “recoverable costs” in ORS

465.480(5). Thus, the majority’s conclusion that “recoverable

costs” and “covered damages” mean the same thing—notwithstanding the general assumption that when the legislature uses different words it intends those words to have

different meanings—rests on the proposition that there is

“better” evidence that the legislature intended those terms

to mean the same thing, and that “better evidence” is the

context of ORS 465.480(5) that indicates that “covered damages” are defense or indemnity costs.

In my view, the context of the statute supports the

opposite conclusion—that the term “recoverable costs” is

not synonymous with “covered damages” and thus does not

refer only to “defense or indemnity costs.” First, none of the relevant statutes expressly limit an insurer’s contribution

rights to “defense or indemnity costs.” See, e.g., Blacknall v. Board of Parole, 348 Or 131, 140-41, 229 P3d 595 (2010) (legislative silence can be an indicator of policy choices). I begin 344 Continental Casualty Co. v. Argonaut Ins. Co. (A176763)

with ORS 465.480(3)(b), which, as noted, provides that “[i]f

the insured’s claim is not fully satisfied and the insured files suit on the claim against less than all the insurers,” the

insured may target one insurer, and that insurer has a right

to contribution [under ORS 465.480(4)]. Notably, the statute

does not expressly provide that insurers have a “right to contribution for defense or indemnity costs.” Thus, the statute

contemplates a lawsuit brought by an insured against a targeted insurer and provides that the targeted insurer has a

“right to contribution” for the costs incurred due to its being targeted from other insurers whose policies are triggered,

and the statute does not expressly limit the scope of that

“right to contribution” to defense or indemnity costs.

Similarly, ORS 465.480(4)(a) provides that “[a]n

insurer that has paid all or part of an environmental claim

may seek contribution from any other” non-settling insurer,

but it does not expressly provide that an insurer “may seek

contribution for defense or indemnity costs.” And although

it references an “environmental claim,” which is defined

as “defense or indemnity” costs, it does so for the purpose

of prescribing who may seek contribution, not for the purpose of limiting the scope of the costs an insurer may seek

from other insurers in a contribution action. ORS 465.475(1)

(defining environmental claim).

That subsection is followed by subsection (5), which,

as discussed above, refers to the trial court’s “determin[ation] that the apportionment of recoverable costs between

insurers is appropriate” and directs the court to allocate

“covered damages” based on certain mandatory factors.

Again, similar to every other provision in the OECAA that

governs or refers to contribution rights, that provision does

not expressly limit allocation to “defense or indemnity costs.” Rather, it refers to “recoverable costs” and then narrows that term to “covered damages.” Thus, the absence of an express

limitation on the scope of a targeted insurer’s contribution

rights indicates that the legislature did not intend to restrict “recoverable costs” to just defense or indemnity costs and

not any of the costs associated with defense or indemnity.

Second, the stated purpose of the OECAA, which,

as noted, is to “promot[e] the fair and efficient resolution

Cite as 351 Or App 301 (2026) 345

of environmental claims,” provides additional context that

supports the contention that “recoverable costs” are not limited to just defense or indemnity costs. ORS 465.478. As discussed above, in the context of that express purpose, allowing a targeted insurer to broadly recover the costs it paid

to the insured in litigating the insured’s claim—including

attorney fees and prejudgment interest—is consistent with

that purpose.

III. CONCLUSION

In sum, I construe “environmental claim” for purposes of the contribution right to include attorney fees and

prejudgment interest paid to the insured by the targeted

insurer, or, alternatively, that the term “recoverable costs”

in ORS 465.480(5) refers to a broader category of costs than

defense or indemnity costs covered under a policy. And under

the circumstances here, where both Wausau and Continental

underpaid on the environmental claim (Schnitzer’s defense

costs); Wausau shared Continental’s position in the federal

environmental claim targeting Continental that the insurers should not be required to reimburse Schnitzer at the

higher rates; and Continental paid the entire claim as the

targeted insurer, including fees and interest, after Schnitzer prevailed in the federal environmental claim, the trial court

did not err in allocating the attorney fees in the federal

action. Thus, I respectfully dissent.