Speciality Risk Services v. Royal Indemnity Co.

164 P.3d 300, 213 Or. App. 620, 2007 Ore. App. LEXIS 950
CourtCourt of Appeals of Oregon
DecidedJuly 5, 2007
Docket050403895; A130618
StatusPublished
Cited by9 cases

This text of 164 P.3d 300 (Speciality Risk Services v. Royal Indemnity Co.) is published on Counsel Stack Legal Research, covering Court of Appeals of Oregon primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Speciality Risk Services v. Royal Indemnity Co., 164 P.3d 300, 213 Or. App. 620, 2007 Ore. App. LEXIS 950 (Or. Ct. App. 2007).

Opinion

ARMSTRONG, J.

Defendant, a workers’ compensation insurer, appeals the denial of its motion to set aside a default judgment entered against it in an action by plaintiff, another workers’ compensation insurer, seeking restitution for unjust enrichment. According to defendant, the judgment is void because the trial court lacked subject matter jurisdiction over the action. Defendant argues that, under the Workers’ Compensation Law, exclusive jurisdiction over the matter lay with the Workers’ Compensation Board (WCB) and the Department of Consumer and Business Services (DCBS). Plaintiff responds that, as a court of general jurisdiction under the Oregon Constitution, the trial court had jurisdiction over its unjust enrichment claim. We conclude that the trial court did have subject matter jurisdiction and therefore affirm.

The relevant facts are not in dispute. Plaintiff and defendant are both insurance companies licensed to provide workers’ compensation insurance in Oregon. As luck would have it, in 2002 they happened to be providing coverage for two different insureds with similar names: one of plaintiffs insureds was “Keystone Automotive,” while one of defendant’s insureds was “Keystone RV.” Duvall was an employee at Keystone RV. In January 2002, Duvall filed a workers’ compensation claim, and the Workers’ Compensation Division (WCD) mistakenly submitted the claim to plaintiff rather than to defendant. Plaintiff mistakenly accepted the claim and began processing it under its “Keystone Automotive” account. In May 2002, Keystone Automotive informed plaintiff that Duvall was not one of its employees, and never had been.

Realizing that it had mistakenly accepted the claim, plaintiff asked defendant to assume responsibility for it, but defendant declined to do so. Plaintiff then attempted to revoke its acceptance by issuing a “backup denial” letter pursuant to ORS 656.262(6)(a), a statute that allows an insurer to revoke its acceptance of a claim if, among other things, it “later obtains evidence” that it is not responsible for the claim. At a subsequent hearing, in which defendant was joined, an administrative law judge (ALJ) ruled that plaintiff [623]*623was barred from issuing a backup denial because the evidence on which the denial was based — i.e., that plaintiff was not the correct insurer — did not qualify as later-obtained evidence. See Barrett Business Services, Inc. v. Stewart, 178 Or App 145, 151, 35 P3d 1055 (2001) (“ ‘Later obtained evidence’ does not include evidence that the employer either had, or in the exercise of reasonable diligence should have had, at the time of acceptance * * *.”). The WCB affirmed the ALJ’s order, explaining that ORS 656.262(6)(a) plainly prevented plaintiff from backing out of its acceptance and that, as an administrative agency, it was a “creature of statute” that lacked “the powers of a court of equity’ to reach any other result. Plaintiff did not seek review of the WCB order.

Plaintiff reached a global settlement with Duvall and paid his claim. Plaintiff then initiated a circuit court action against defendant for unjust enrichment. Plaintiffs complaint alleged that defendant was the insurer who should have covered the claim and that defendant had been unjustly enriched when plaintiff was forced to pay the claim. Plaintiff sought $49,497 in damages, including the cost of the settlement and attorney fees and costs that plaintiff had incurred in attempting to defend against the claim. Defendant did not timely answer. On June 8, 2005, the trial court entered a default judgment against defendant.

Pursuant to ORCP 71 B(l), defendant then moved to set aside the judgment as void. Defendant argued that the circuit court lacked subject matter jurisdiction over plaintiff’s action because the legislature, in creating the workers’ compensation system, had vested exclusive jurisdiction for such matters in the WCB and the DCBS. The trial court denied the motion, concluding that the circuit court that had entered the default judgment, as a court of general jurisdiction, did have jurisdiction over plaintiffs unjust enrichment claim.

Defendant now appeals, renewing its argument that the default judgment that the court entered is void because the circuit court that entered it lacked subject matter jurisdiction. Defendant contends that at the core of plaintiffs complaint is just the kind of workers’ compensation dispute that the legislature intended to remove from the courts when it passed the Workers’ Compensation Law. Indeed, according to [624]*624defendant, plaintiffs complaint — although clothed as an action for unjust enrichment — is really nothing more than an effort to litigate the question already decided in the backup denial hearing, namely, which insurer is responsible for paying Duvall’s workers’ compensation claim. Defendant argues that the legislature created specific administrative procedures for addressing such a question, before the WCB and the DCBS, and that it intended those procedures and the resulting remedies to be exclusive and to foreclose an equitable action like the one brought by plaintiff.

Plaintiff responds that the default judgment is not void because the trial court had jurisdiction over its claim. Plaintiff denies that its equitable claim raises the same issue already decided in the backup denial hearings. The issue it raised in its lawsuit, plaintiff argues, was not whether it was “responsible,” under the workers’ compensation statutes, for paying Duvall’s claim, but simply whether, as a matter of equity, defendant should have to reimburse plaintiff for a claim that plaintiff mistakenly accepted and that plaintiff had already paid. Plaintiff argues that none of the administrative remedies cited by defendant is even applicable under circumstances of this case, and nothing in the workers’ compensation statutes demonstrates that the legislature intended to divest the courts of jurisdiction over a claim for unjust enrichment of the type at issue here. Jurisdiction over that kind of equitable action, plaintiff argues, remains vested in the circuit courts.

Whether a court has subject matter jurisdiction is a question of law. See Estate of Selmar A. Hutchins v. Fargo, 188 Or App 462, 466, 72 P3d 638 (2003). Subject matter jurisdiction exists when the constitution or the legislature authorizes a specific court to do something about the specific kind of dispute at issue. School Dist. No. 1, Mult. Co. v. Nilsen, 262 Or 559, 566, 499 P2d 1309 (1972). Under the Oregon Constitution, circuit courts have subject matter jurisdiction over all actions unless a statute or rule of law divests them of jurisdiction. State v. Terry, 333 Or 163, 186, 37 P3d 157 (2001), cert den, 536 US 910, 122 S Ct 2368, 153 L Ed 2d 189 (2002); see Or Const, Art VII (Original), § 9 (“All judicial power, authority, and jurisdiction not vested by this Constitution, or [625]*625by laws consistent therewith, exclusively in some other Court shall belong to the Circuit Courts[.]”); Or Const, Art VII (Amended), § 2 (retaining the jurisdictional scheme set out in original Article VII). As a general rule, in order to divest the circuit courts of jurisdiction, the legislature must do so expressly. The legislature may also do so, however, by creating administrative procedures and remedies that “ “by necessary implication’ ” are intended to be exclusive. SAIF v. Anderson/DeShaw,

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Cite This Page — Counsel Stack

Bluebook (online)
164 P.3d 300, 213 Or. App. 620, 2007 Ore. App. LEXIS 950, Counsel Stack Legal Research, https://law.counselstack.com/opinion/speciality-risk-services-v-royal-indemnity-co-orctapp-2007.