Rains v. Stayton Builders Mart, Inc.

610 May 26, 2016 No. 34
IN THE SUPREME COURT OF THE
STATE OF OREGON
Kevin RAINS
and Mitzi Rains,
Petitioners on Review,
v.
STAYTON BUILDERS MART, INC.;
John Doe Lumber Supplier;
John Doe Lumber Mill;
and Five Star Construction, Inc.,
Defendants.
STAYTON BUILDERS MART, INC.,
Third-Party Plaintiff-Respondent,
v.
RSG FOREST PRODUCTS, INC., et al.,
Third-Party Defendants,
and
WEYERHAEUSER COMPANY,
Respondent on Review.
WEYERHAEUSER COMPANY,
Fourth-Party Plaintiff,
v.
RODRIGUEZ & RAINS CONSTRUCTION,
an Oregon corporation,
Fourth-Party Defendant.
WITHERS LUMBER COMPANY,
Fourth-Party Plaintiff,
v.
SELLWOOD LUMBER CO., INC.,
an Oregon corporation;
and Weyerhaeuser Company,
Fourth-Party Defendants.
WESTERN INTERNATIONAL
FOREST PRODUCTS, INC.,
Fourth-Party Plaintiff,
Cite as 359 Or 610 (2016) 611
v.
Benito RODRIGUEZ,
Kevin Rains,
and Rodriguez & Rains Construction,
Fourth-Party Defendants.
SELLWOOD LUMBER CO., INC.,
an Oregon corporation,
Fifth-Party Plaintiff,
v.
SWANSON BROS. LUMBER CO., INC.,
an Oregon corporation,
Fifth-Party Defendant.
(S062939)(Control)
Kevin RAINS
and Mitzi Rains,
Respondents on Review,
v.
STAYTON BUILDERS MART, INC.;
John Doe Lumber Supplier;
John Doe Lumber Mill;
and Five Star Construction, Inc.,
Defendants.
STAYTON BUILDERS MART, INC.,
Respondent on Review,
v.
RSG FOREST PRODUCTS, INC., et al.,
Third-Party Defendants,
and
WEYERHAEUSER COMPANY,
Petitioner on Review.
WEYERHAEUSER COMPANY,
Fourth-Party Plaintiff,
v.
RODRIGUEZ & RAINS CONSTRUCTION,
an Oregon corporation,
Fourth-Party Defendant.
612 Rains v. Stayton Builders Mart, Inc.
WITHERS LUMBER COMPANY,
Fourth-Party Plaintiff,
v.
SELLWOOD LUMBER CO., INC.,
an Oregon corporation;
and Weyerhaeuser Company,
Fourth-Party Defendants.
WESTERN INTERNATIONAL
FOREST PRODUCTS, INC.,
Fourth-Party Plaintiff,
v.
Benito RODRIGUEZ,
Kevin Rains,
and Rodriguez & Rains Construction,
Fourth-Party Defendants.
SELLWOOD LUMBER CO., INC.,
an Oregon corporation,
Fifth-Party Plaintiff,
v.
SWANSON BROS. LUMBER CO., INC.,
an Oregon corporation,
Fifth-Party Defendant.
(S062959)
(CC 06C21040; CA A145916;
SC S062939 (Control), SC S062959)
On review from the Court of Appeals.*
Argued and submitted October 14, 2015.
Maureen Leonard, Portland, argued the cause and filed
the briefs for petitioners on review/respondents on review
Kevin and Mitzi Rains. With her on the briefs were Brian
Whitehead, Salem, and J. Randolph Pickett, Portland.
Michael T. Garone, Schwabe Williamson & Wyatt P.C.,
Portland, argued the cause and filed the briefs for respondent
______________
*  Appeal from Marion County Circuit Court, Dennis J. Graves, Judge. 264
Or App 636, 336 P3d 483 (2014).
Cite as 359 Or 610 (2016) 613
on review/petitioner on review Weyerhaeuser Company. With
him on the briefs were Sara Kobak, W. Michael Gillette, and
Jordan R. Silk.
Thomas W. Brown, Cosgrave Vergeer Kester LLP,
Portland, argued the cause and filed the briefs for third-
party plaintiff/respondent on review Stayton Builders Mart,
Inc. With him on the briefs was Julie A. Smith.
James N. Westwood, Stoel Rives LLP, Portland, filed the
brief on behalf of amici curiae Washington Legal Foundation
and Allied Educational Foundation.
Keith M. Garza, Oak Grove, filed the brief on behalf
of amici curiae Associated Oregon Industries and Oregon
Business Association.
Sharon A. Rudnick, Harrang Long Gary Rudnick P.C.,
Eugene, filed the brief on behalf of amici curiae Chamber
of Commerce of the United States of America, NFIB Small
Business Legal Center, American Tort Reform Association,
and Coalition for Litigation Justice, Inc. With her on the
brief were William F. Gary, Mark A. Behrens and Cary
Silverman, Shook, Hardy & Bacon LLP, Washington, D.C.
Kathryn H. Clarke, Portland, filed the brief on behalf of
amicus curiae Oregon Trial Lawyers Association.
Before Balmer, Chief Justice, and Kistler, Walters,
Landau, Baldwin, Brewer, and Nakamoto, Justices.**
BREWER, J.
The decision of the Court of Appeals is affirmed in part,
reversed in part, and vacated in part and remanded. The
limited judgment in favor of Stayton against Weyerhaeuser
and the general judgment for Stayton’s costs against
Weyerhaeuser are reversed.
______________
**  Linder, J., retired December 31, 2015, and did not participate in the deci-
sion of this case.
614 Rains v. Stayton Builders Mart, Inc.
Case Summary: Before the trial court, plaintiffs prevailed on strict-products-
liability and loss-of-consortium claims against the retailer and the manufacturer
of a defective wood board, and the retailer prevailed on an indemnification claim
against the manufacturer. The trial court rejected the manufacturer’s argu-
ments that a partial settlement agreement between plaintiffs and the retailer
defeated the justiciability of plaintiffs’ claims against the retailer; that the par-
tial settlement agreement should be admitted into evidence to establish the
retailer’s insurance coverage; that the jury should have been allowed to allocate
fault to plaintiff’s employer; that Article I, section 17, precluded the legislature
from limiting noneconomic damages with respect to plaintiffs’ claims for both
strict products liability and loss of consortium; and that the retailer prevailed on
its indemnification claim and was entitled to defense costs. The Court of Appeals
reversed the trial court’s rulings that the statutory cap on noneconomic damages
could not apply plaintiff’s strict-products-liability claim and that the retailer pre-
vailed on its indemnity claim against Weyerhaeuser. The Court of Appeals other-
wise affirmed the trial court’s rulings and held that the manufacturer failed to
preserve arguments related to the admissibility of the partial settlement and
agreement and the verdict form. Held: (1) a partial settlement agreement does
not defeat justiciability if the parties continue to have adverse interests with
respect to the amount of a potential damage award; (2) the trial court may refuse
to admit a partial settlement agreement in evidence if the proponent of the evi-
dence intends to use it to establish insurance coverage; (3) to preserve a claim of
error with respect to excluded evidence, the substance of the evidence must have
been made known to the trial court; (4) to preserve an argument that a statute
requires certain information on a jury form, the party must do more than offer
a proposed jury form containing that information; (5) the parties’ assignments
of error concerning a statutory cap on noneconomic damages should be recon-
sidered by the Court of Appeals in light of Horton v. OHSU, 359 Or 168, ___
P3d ___ (2016); and (6) ORS 20.220(3) requires reversing a general judgment
awarding defense costs related to a limited judgment that the Court of Appeals
had reversed on appeal.
The decision of the Court of Appeals is affirmed in part, reversed in part,
and vacated in part and remanded. The limited judgment in favor of the retailer
against the manufacturer and the general judgment for the retailer’s defense
costs are reversed.
Cite as 359 Or 610 (2016) 615
BREWER, J.
This is an action brought by an injured construc-
tion worker and his wife. The injury occurred when a defec-
tive board broke. Plaintiffs Kevin Rains and Mitzi Rains
obtained a judgment based on claims of strict products lia-
bility and loss of consortium, respectively, against both the
retailer, Stayton Builders Mart (Stayton), and the manufac-
turer, Weyerhaeuser Company (Weyerhaeuser), of the defec-
tive wooden board. Stayton, in turn, obtained a judgment
against Weyerhaeuser based on its cross-claim for common-
law indemnity. Prior to trial, plaintiffs and Stayton had
partially settled their claims in an agreement that required
Stayton to pay at least $1.5 million in damages to plaintiffs,
but capped Stayton’s liability at $2 million.
Weyerhaeuser appealed, assigning error to numer-
ous trial court rulings. The Court of Appeals agreed with
Weyerhaeuser that the trial court had erred by refusing
to apply a statutory cap on noneconomic damages to plain-
tiff’s claim for strict products liability and by refusing
to require Stayton to discharge its liability to plaintiffs
before Stayton could prevail on its indemnity claim against
Weyerhaeuser. The Court of Appeals, however, largely
rejected Weyerhaeuser’s remaining arguments, affirming
the trial court’s decisions (1) refusing to dismiss Stayton as
a defendant for lack of adversity after it had partially set-
tled plaintiffs’ claims; (2) refusing to admit the partial set-
tlement agreement in evidence at trial; (3) failing to allow
the jury to allocate fault to the general contractor, Five Star
Construction, on the verdict form; and (4) refusing to apply
the statutory cap on noneconomic damages to Mitzi Rains’
claim for loss of consortium. And, although the Court of
Appeals deducted some of the expenses that Weyerhaeuser
challenged in Stayton’s award for defense costs, the deduc-
tions were small, and the Court of Appeals largely upheld
the trial court’s calculation of Stayton’s defense costs.
For the reasons that follow, we affirm most aspects
of the decision of the Court of Appeals, but we vacate the
decision of the Court of Appeals with respect to the par-
ties’ assignments of error concerning the statutory cap on
noneconomic damages based on Article I, section 17, of the
616 Rains v. Stayton Builders Mart, Inc.
Oregon Constitution, and we remand those assignments of
error to that court for reconsideration in light of this court’s
decision in Horton v. OHSU, 359 Or 168, ___ P3d ___ (2016).
Further, we conclude that ORS 20.220(3) requires the gen-
eral judgment in favor of Stayton against Weyerhaeuser
awarding defense costs to be reversed, and we therefore
reverse the decision of the Court of Appeals to the extent
that it is inconsistent with that conclusion. We reverse the
limited judgment for indemnity in favor of Stayton against
Weyerhaeuser, and we reverse the general judgment in favor
of Stayton for costs on Stayton’s indemnity claim against
Weyerhaeuser.
I. BACKGROUND
The parties do not dispute the underlying facts of
this case. We state those facts consistently with the determi-
nations reached by the factfinders at trial. Baker v. English,
324 Or 585, 587, 932 P2d 57 (1997). Because of preservation
arguments raised on appeal and review, the issues before us
require an examination of the specific arguments presented
to the trial court. Where relevant, we examine those argu-
ments more closely in later sections of this opinion.
Five Star hired plaintiff Kevin Rains and his part-
ner to construct a barn, and it purchased grade No. 2 wood
boards from Stayton for that project. Wood boards graded as
No. 2 must meet certain minimum strength requirements
and may be used as structural components in building con-
struction. Stayton sold Five Star boards manufactured by
Weyerhaeuser, which graded each board as No. 2. At least
one board manufactured by Weyerhaeuser and sold by
Stayton was defective. The defective board contained a large
knot that compromised its integrity. Because of that knot,
Weyerhaeuser should not have graded that board as a No. 2,
and Stayton should not have sold the board to Five Star as a
No. 2.
Kevin and his partner used that defective board in
the construction of the barn. At the time of the accident,
Kevin was standing on the defective board 16 feet above the
ground and was not wearing safety gear. A properly graded
No. 2 board should have been able to hold the weight that
Kevin placed on the board. But, because of its defect, the
Cite as 359 Or 610 (2016) 617
board broke, causing Kevin to fall to the ground and sustain
injuries resulting in paraplegia.
Kevin sued Five Star under ORS 654.305 for failing
to “use every device, care and precaution that is practicable
to use for the protection and safety of life and limb.” Kevin
also sued Stayton for negligence and strict products liability.
Kevin’s wife, Mitzi, brought additional claims against Five
Star and Stayton for loss of consortium. Stayton, in turn,
brought third-party claims for common-law indemnity and
contribution against Weyerhaeuser and several other lum-
ber companies that Stayton believed could have manufac-
tured the defective board.
Early in the litigation, plaintiffs entered into an
agreement with Five Star, resulting in a default judgment
against Five Star for $18 million.1 At some point, Stayton
tendered its own defense to Weyerhaeuser, which refused
the tender. After discovery, Stayton maintained that
Weyerhaeuser manufactured all the boards that it had sold
to Five Star. Consequently, the trial court granted sum-
mary judgment to the other manufacturers that Stayton
had joined in the action as third-party defendants. The trial
court, however, denied Weyerhaeuser’s motions for summary
judgment against plaintiffs, which Stayton had joined, and
against Stayton, which Stayton had opposed.
Because the trial court denied summary judgment
on plaintiffs’ claims against Stayton and Stayton’s claims
against Weyerhaeuser, the case proceeded to trial on those
claims alone. Five days before the start of trial, Stayton
and plaintiffs entered into an agreement partially settling
plaintiffs’ claims against Stayton. Plaintiffs and Stayton
disclosed that agreement to Weyerhaeuser and the trial
court.
Under the terms of the partial settlement agree-
ment, plaintiffs agreed to dismiss their negligence claim
against Stayton and pursue only the strict-products-liability
and loss-of-consortium claims. Plaintiffs also agreed to cap
Stayton’s potential liability on those remaining claims at
1
Plaintiffs did not disclose that agreement to the other parties. See Rains v.
Stayton Builders Mart, Inc., 258 Or App 652, 656, 310 P3d 1195 (2013).
618 Rains v. Stayton Builders Mart, Inc.
$2 million. For its part, Stayton agreed to pay plaintiffs at
least $1.5 million on those claims regardless of its liability at
trial. Further, if the jury returned a verdict against Stayton
in excess of $1.5 million, Stayton would pay plaintiffs up
to $2 million, but not more. The agreement also required
Stayton to continue prosecuting its indemnity claim against
Weyerhaeuser and to pay plaintiffs any damage award
that Stayton might receive from Weyerhaeuser in excess of
$2 million.
Based on the partial settlement agreement, plain-
tiffs dismissed their negligence claim against Stayton at
a hearing held on the first day of jury selection. Because
of that dismissal, Stayton dismissed its contribution claim
against Weyerhaeuser, a claim that Stayton had premised
on its potential negligence liability. At the same hearing,
Weyerhaeuser moved to dismiss Stayton from the action,
arguing that the partial settlement agreement defeated the
requisite adversity between plaintiffs and Stayton; alterna-
tively, Weyerhaeuser sought to admit the agreement in evi-
dence. The trial court denied both of those motions.
The case then proceeded to trial on plaintiffs’ strict-
products-liability and loss-of-consortium claims, which were
tried to a jury, and on Stayton’s indemnity claim, which was
tried to the court. At Weyerhaeuser’s request, the trial court
read preliminary jury instructions before opening argu-
ments that described very generally the fact that plaintiffs
and Stayton had entered into a settlement agreement and
that Stayton was asserting an indemnity claim against
Weyerhaeuser.
During trial, plaintiffs presented evidence that,
based on the construction plan, the location of the boards
within the barn, and Stayton’s delivery schedules, the defec-
tive board had been manufactured by Weyerhaeuser and
sold by Stayton, even though the barn contained boards of
the same size and length as the defective board that had
been manufactured by companies other than Weyerhaeuser.
In its defense, Weyerhaeuser attempted to establish that
Kevin was comparatively negligent and that another lumber
company manufactured the defective board.
Cite as 359 Or 610 (2016) 619
Stayton did not present evidence attempting to
establish that the board came from a different retailer or
from a manufacturer other than Weyerhaeuser. In its clos-
ing arguments, Stayton explained the consumer protec-
tion goals of strict-products-liability standards, admitted
Stayton’s liability under those standards, and repeated
the trial court’s earlier instruction regarding Stayton’s
settlement with plaintiffs and its indemnity claim against
Weyerhaeuser. Stayton argued that, although it should be
held liable, the jury should apportion Stayton only a small
percentage of fault. It contended instead that Weyerhaeuser
had been the party most capable of avoiding the accident
in this case and therefore should bear the lions’ share of
liability.
Following closing arguments, the trial court gave
final jury instructions that again referred to the partial set-
tlement agreement and gave the jury a verdict form that did
not refer to Five Star. After the jury was excused to delib-
erate, the court asked the parties whether there were any
objections to the verdict form. Weyerhaeuser noted that the
verdict form that it had originally submitted to the court
had included Five Star among the parties to whom the jury
could allocate fault. Weyerhaeuser observed that the court
had removed that wording.
The jury returned a verdict in favor of plaintiffs
and found that Kevin had suffered $5,237,700 in economic
damages and $3,125,000 in noneconomic damages, and it
found that Mitzi had suffered $1,012,500 in noneconomic
damages. The jury further found Weyerhaeuser 45 percent
at fault, Stayton 30 percent at fault, and Kevin 25 percent
at fault. Weyerhaeuser moved to reduce plaintiffs’ noneco-
nomic damages to $500,000 on each claim, based on ORS
31.710(1).2 The trial court denied that motion, concluding
that Article I, section 17, precluded the legislature from lim-
iting noneconomic damages on the claims brought by plain-
tiffs. Accounting for Kevin’s comparative fault, the trial
court entered a limited judgment against Weyerhaeuser and
Stayton for a total of $6,272,025 as to Kevin and $759,375
as to Mitzi.
2
We set that statute out below. 359 Or at 638.
620 Rains v. Stayton Builders Mart, Inc.
The trial court later heard arguments on Stayton’s
indemnity claim against Weyerhaeuser. Weyerhaeuser
argued that Stayton could not prevail on its indemnity
claim because it had failed to establish that it actually
had paid plaintiffs the amount Stayton was seeking from
Weyerhaeuser, and it also argued that it had not wrongfully
denied Stayton’s tender of a defense and that the tender was
untimely. The trial court rejected those arguments, ulti-
mately entering a limited judgment in favor of Stayton for
$2 million, plus defense costs. After hearing Weyerhaeuser’s
objections to Stayton’s claim for defense costs, the trial court
determined those costs to be $265,458.70, which it awarded
in a general judgment against Weyerhaeuser.
Weyerhaeuser appealed, raising numerous assign-
ments of error that related to the partial settlement agree-
ment, the verdict form, the statutory cap on noneconomic
damages, and Stayton’s indemnity claim. The Court of
Appeals agreed with Weyerhaeuser on two issues. First,
rejecting plaintiffs’ argument, the Court of Appeals held
that the trial court erred by refusing to apply the statutory
cap on noneconomic damages, ORS 31.710(1), to Kevin’s
claim for strict products liability. Rains v. Stayton Builders
Mart, Inc., 264 Or App 636, 665, 336 P3d 483 (2014). Second,
rejecting Stayton’s argument, the Court of Appeals held that
the trial court erred in entering a judgment in Stayton’s
favor for indemnity because Stayton had failed to prove that
it had discharged its liability to plaintiffs. Id. at 669.
The Court of Appeals, however, rejected Weyer-
haeuser’s remaining arguments, affirming the trial court’s
denial of Weyerhaeuser’s motion to dismiss Stayton as a
defendant due to lack of adversity; its exclusion of the partial
settlement agreement from evidence; its failure to include
Five Star as a defendant on the verdict form; and its failure
to apply the statutory cap on noneconomic damages to Mitzi’s
claim for loss of consortium. Id. at 647-48, 651, 656, 666. As
noted, the Court of Appeals largely affirmed the trial court’s
determination of Stayton’s defense costs. Id. at 677.
After the Court of Appeals issued its decision, Weyer-
haeuser moved for reconsideration, arguing that, in revers-
ing the trial court’s judgment in favor of Stayton on its
Cite as 359 Or 610 (2016) 621
indemnity claim, the Court of Appeals should have reversed
the award for defense costs as well. The Court of Appeals
denied that motion without explanation.
Stayton did not seek review of the Court of Appeals
decision vacating its indemnity award. Plaintiffs and
Weyerhaeuser, however, both petitioned this court to review
the issues on which the Court of Appeals ruled against
them. We granted those petitions.
II. DISCUSSION
Before this court, Weyerhaeuser seeks review with
respect to five issues: (1) whether the trial court erred in
declining to dismiss Stayton as a defendant for lack of jus-
ticiability; (2) whether the trial court erred in excluding the
partial settlement agreement from evidence; (3) whether
the trial court should have provided a verdict form that
would have allowed the jury to allocate fault to Five Star;
(4) whether the Court of Appeals properly applied Article I,
section 17 to exclude Mitzi’s loss-of-consortium claim from
the statutory cap on noneconomic damages; and (5) whether
the Court of Appeals was required to vacate Stayton’s
defense cost award after concluding that Stayton was not
entitled to prevail on its indemnity claim. Plaintiffs addi-
tionally seek review of the Court of Appeals’ application of
the statutory cap on noneconomic damages to Kevin’s strict-
products-liability claim. We address each of those issues in
turn.
A.  Partial Settlement Agreement
As described above, plaintiffs and Stayton entered
into a partial settlement agreement five days before the com-
mencement of trial. In overview, the agreement required
plaintiffs to dismiss their negligence claim against Stayton,
guaranteed plaintiffs a payment from Stayton of at least
$1.5 million, capped Stayton’s potential liability at $2 mil-
lion, and required Stayton to pursue its indemnity claim
against Weyerhaeuser, providing plaintiffs with any pro-
ceeds from that claim in excess of $2 million.3
3
The agreement states in its entirety:
“1.  In the event of a verdict, net of plaintiffs’ comparative fault, in favor of
plaintiffs against Stayton Builders Mart in an amount less than $1.5 million,
622 Rains v. Stayton Builders Mart, Inc.
On the first day of jury selection, Weyerhaeuser
made the following motions related to the partial settlement
agreement: (1) to dismiss plaintiffs’ claims against Stayton
because the agreement eliminated adversity between them
and, therefore, their dispute was no longer justiciable; (2) to
limit Weyerhaeuser’s liability to $2 million because the only
claim made directly against Weyerhaeuser was Stayton’s
indemnity claim and Stayton’s liability was capped at
$2 million; (3) to admit the agreement in evidence at trial;
and (4) to give the jury a cautionary instruction.
The trial court agreed to give the jury a cautionary
instruction, the content of which raised no objections from
Weyerhaeuser. But the trial court denied Weyerhaeuser’s
remaining motions. Weyerhaeuser appealed the trial court’s
rulings denying its motion to dismiss plaintiffs’ claims
or in the event of a defense verdict, Stayton Builders Mart will pay plaintiffs
the sum of $1.5 million. Stayton Builders Mart will be free to collect any
amount it is awarded in its contribution or indemnity claims from third-party
defendant.
“2.  In the event of a net verdict in excess of $ 1.5 million, Stayton Builders
Mart will pay the amount of the verdict up to $2 million. Any excess over
$2 million that is recovered by Stayton Builders Mart on its indemnity or con-
tribution claims against third-party defendant Weyerhaeuser, if any, shall be
paid to the plaintiffs.
“3.  In exchange for the defendant entering into this High–Low Agreement,
the plaintiffs agree to dismiss their negligence claims against Stayton
Builders Mart, Inc.
“4.  Both plaintiffs and Stayton Builders Mart agree not to appeal the jury
verdict on plaintiffs’ claim against Stayton Builders Mart. Stayton Builders
Mart retains the right to appeal the jury verdict on its third-party indemnity
and contribution claims.
“5.  Stayton Builders Mart agrees to pursue its indemnity claim based upon
strict liability against third-party defendant through trial to verdict.
“6. In the event of an appeal by third-party defendant that could affect
Stayton Builders Mart’s obligations under this Agreement, Stayton Builders
Mart and its insurer will pay the sum of $1.5 million within 60 days after
the jury verdict. The potential obligation of Stayton Builders Mart and its
insurer for the remaining $500,000 will then be determined by the ultimate
outcome of the appeals process, pursuant to the terms of this Agreement.
“7. Should any disputes arise out of the interpretation or implementation
of the terms of the Agreement, the parties agree that the matter shall be
referred back to Eric B. Lindauer as Mediator with full authority to resolve
the disputes, either through mediated resolution, or, in the event that a set-
tlement cannot be reached between the parties, the Mediator shall have the
authority to arbitrate the issue, which would be final and binding on both
parties.”
Cite as 359 Or 610 (2016) 623
against Stayton and denying its motion to admit the par-
tial settlement agreement in evidence. The Court of Appeals
affirmed those rulings, which Weyerhaeuser now challenges
before this court.
Before addressing those justiciability and eviden-
tiary issues, we note that the parties frame their arguments
as if they hinge on different characterizations of the par-
tial settlement agreement. Weyerhaeuser contends that the
agreement is a “Mary Carter agreement.” Under a Mary
Carter agreement, the settling defendant remains in the
lawsuit but obtains some financial interest in the success of
the plaintiff’s claims against the nonsettling defendant. The
settling defendant’s financial interest is often based on an
inverse relationshLip to the nonsettling defendant’s finan-
cial interest in the lawsuit: The more money the nonsettling
defendants are required to pay the plaintiff, the less money
the settling defendant will be required to pay. See Grillo v.
Burke’s Paint Co., 275 Or 421, 425 n 1, 551 P2d 449 (1976)
(explaining nature of such agreements). Plaintiffs, however,
contend that the partial settlement agreement is not a Mary
Carter agreement but is, instead, a “high-low agreement.”
Under a high-low agreement, “ ‘a defendant agrees to pay
the plaintiff a minimum recovery in return for the plain-
tiff’s agreement to accept a maximum amount regardless
of the outcome of the trial.’ ” Rains, 264 Or App at 643 n 6
(quoting Black’s Law Dictionary 797 (9th ed 2009)).
The Court of Appeals declined to characterize the
agreement as either a Mary Carter agreement or a high-low
agreement, noting that “the agreement has aspects consis-
tent with each label.” Rains, 264 Or App at 643. Instead,
the Court of Appeals concluded that “the precise label is not
material in this case; it is the substance of the agreement
that drives our analysis.” Id.
We agree with the Court of Appeals’ framing of the
matter. There is no reason to treat the two terms as describ-
ing mutually exclusive categories of settlement agreements.
Both terms are flexible enough to allow for overlap. There
are no rules of justiciability or evidence that are spe-
cific to Mary Carter agreements or high-low agreements.
Agreements falling within those categories may implicate
624 Rains v. Stayton Builders Mart, Inc.
issues of justiciability and admissibility differently depend-
ing on their specific terms and the factual and legal context
of the cases in which they arise. Ultimately, our analysis
requires applying the appropriate legal standards to the
particular partial settlement agreement and the specific
factual and legal context of this case.
1.  Justiciability
For a controversy to be justiciable: (1) “the interests
of the parties to the action are adverse” and (2) “the court’s
decision in the matter will have some practical effect on the
rights of the parties to the controversy.” Brumnett v. PSRB,
315 Or 402, 405, 848 P2d 1194 (1993); see also Brown v.
Oregon State Bar, 293 Or Or 446, 449, 648 P2d 1289 (1982)
(describing a justiciable controversy as “an actual and sub-
stantial controversy between parties having adverse legal
interests” that “results in specific relief through a binding
decree”).4
Weyerhaeuser’s motion to dismiss plaintiffs’ claims
against Stayton was made orally following an off-the-record
colloquy between the attorneys and the trial court. When it
moved to dismiss, Weyerhaeuser stated:
“Because they had entered into a Mary Carter Agreement
with the plaintiffs, it’s Weyerhaeuser’s position that there
is no longer a justiciable controversy between those parties;
that instead, we believe that they are essentially work-
ing in concert. Stayton Builders Mart has agreed to pay
$1.5 million in this case.
“And if a plaintiffs’ verdict is received, then Stayton
Builders Mart is going to be paid $1.5 million. They stand to
gain $1.5 million by the verdict in this case. Because of that
damage setting, we believe that dismissal is appropriate.”
The trial court rejected Weyerhaeuser’s argument
and concluded that plaintiffs and Stayton retained adverse
4
We recently held that courts have constitutional authority to adjudicate
“public actions or cases involving matters of public interest,” even when the
court’s decision will not have a practical effect on the parties’ rights. See Couey
v. Atkins, 357 Or 460, 520, 355 P3d 866 (2015) (so stating). Because the argu-
ments in this case relate to the adversity requirement in a private action, no
party argues that our decision in Couey changes the manner in which the trial
court should have considered the issue of justiciability.
Cite as 359 Or 610 (2016) 625
interests with respect to a potential judgment against
Stayton falling within the range of the $1.5 million mini-
mum and $2 million cap. The Court of Appeals reached a
similar conclusion:
“[T]he agreement did not absolutely establish Stayton’s
potential financial exposure. Instead, it set up a range of
liability for Stayton that, at least on some level, maintained
an adversarial position between the parties. The remain-
ing adversity was that every dollar above $1.5 million
that the jury awarded to plaintiff against Stayton, up to a
maximum of $2 million, equaled an additional dollar that
Stayton had to pay to plaintiffs.”
Rains, 264 Or App at 647-48.
Weyerhaeuser argues that the trial court and the
Court of Appeals erred in failing to consider the extent to
which the partial settlement agreement affected Stayton’s
incentives in litigating the case. According to Weyerhaeuser,
before entering the partial settlement agreement, Stayton
had an incentive to defend itself against plaintiffs’ claims
and seek to minimize any damage award for plaintiffs. In
other words, minimizing plaintiffs’ recovery minimized
Stayton’s liability.
But, Weyerhaeuser argues, after entering the par-
tial settlement agreement, Stayton had an interest in estab-
lishing its own liability as well as that of Weyerhaeuser.
According to Weyerhaeuser, the agreement created that
incentive by requiring Stayton to pay at least $1.5 million
regardless of the jury’s verdict, while allowing Stayton
to recoup that payment through its indemnity claim
against Weyerhaeuser. Stayton could recover its payment
to plaintiffs only if it proved its indemnity claim against
Weyerhaeuser. And Stayton could prove its indemnity claim
only if it proved that both it and Weyerhaeuser were liable
for plaintiffs’ injuries. Eclectic Investment, LLC v. Patterson,
357 Or 25, 33, 346 P3d 468, opinion adh’d to as modified on
recons, 357 Or 327, 354 P3d 678 (2015) (describing the ele-
ments of common-law indemnity).
Further, Weyerhaeuser insists, not only did Stayton
have an interest in establishing its own liability, but it
also had an interest in maximizing plaintiffs’ recovery. If
626 Rains v. Stayton Builders Mart, Inc.
plaintiff recovered less than $1.5 million—for example,
$70,000—then Stayton could recover a maximum of $70,000
from Weyerhaeuser on its indemnity claim, leaving Stayton
to pay the remaining portion of the $1.5 million itself. So,
according to Weyerhaeuser, Stayton had an incentive for
plaintiffs to receive a damage award of at least $1.5 mil-
lion to cover the entire amount that Stayton already had
agreed to pay plaintiffs. And, because the partial settlement
agreement capped Stayton’s liability at $2 million, exposing
Stayton to an additional $500,000 in liability, Weyerhaeuser
asserts that Stayton’s interest in an award of at least
$1.5 million outweighed any interest that it had in avoiding
the additional liability it might incur if plaintiffs obtained
a very large damage award. In other words, Stayton would
prefer that plaintiffs obtain a $7 million judgment rather
than a $70,000 judgment.
Weyerhaeuser maintains, based on that analysis,
that Stayton’s interests were completely aligned with plain-
tiffs’ interests, thus defeating justiciability. According to
Weyerhaeuser, a justiciable controversy does not exist “when
a settling defendant’s strongest pecuniary interest under a
Mary Carter agreement is to maximize the recovery for the
plaintiff at trial.”
The problem with Weyerhaeuser’s argument is that
the standard it proposes is not grounded in this court’s prec-
edents. And Weyerhaeuser’s proposed standard, focusing on
the settling defendant’s “strongest” interest, implicates a
difficulty that Weyerhaeuser fails to resolve—namely, that
a party may have interests pulling in different directions,
each contingent on uncertain future events. How a party
resolves those competing interests is not always a matter
of logic, but will often turn on strategic decisions that are
based on how the party views the strengths and weaknesses
of the parties’ respective positions in a case.
As noted, Weyerhaeuser discounts the $500,000
that separates Stayton’s minimum exposure of $1.5 million
and its maximum exposure of $2 million, by positing that
Stayton would prefer a large plaintiffs’ judgment, such as
$7 million, to a small plaintiffs’ judgment, such as $70,000.
But that is true only if Stayton sufficiently valued its odds of
Cite as 359 Or 610 (2016) 627
prevailing on its indemnity claim against Weyerhaeuser—a
claim that Weyerhaeuser contested at trial. If Stayton lost
on its indemnity claim, then a $7 million plaintiffs’ judg-
ment would require Stayton to pay up to the cap under the
partial settlement agreement, $2 million. That payment
would be $500,000 beyond the $1.5 million Stayton already
owed plaintiffs under the partial settlement agreement. But,
assuming again that Stayton lost on its indemnity claim, a
$70,000 plaintiffs’ verdict would cost Stayton nothing. Of
course, Stayton would still owe plaintiffs the $1.5 million
under the partial settlement agreement, but Stayton would
owe that amount regardless of whether plaintiffs prevailed
on their claims or whether Stayton prevailed on its indem-
nity claim.5 Thus, Weyerhaeuser’s argument is premised on
the assumption that Stayton would prevail on its indemnity
claim, even though Weyerhaeuser was attempting to defeat
that claim.
We conclude, consistent with the views of the trial
court and the Court of Appeals, that the $500,000 differ-
ence between Stayton’s minimum and maximum litigation
exposure preserved the requisite adversity between plain-
tiffs and Stayton, even though Stayton’s own evaluation of
its likelihood of prevailing on the indemnity claim might
have affected how it valued the risk of having to pay that
$500,000. At most, the expected cost to Stayton of a large
plaintiffs’ judgment would be reduced by its perception of its
chances of prevailing on the indemnity claim. So if Stayton
thought it had a 50 percent chance of prevailing on its
indemnity claim, it might value the risk of a large plaintiffs’
judgment at $250,000. And, if Stayton thought it had a 90
percent chance of prevailing, then it might value the risk of
a large plaintiffs’ judgment at $50,000.
The point is that as long as Stayton’s indemnity
claim remained unadjudicated, Stayton would prefer a judg-
ment in favor of plaintiffs for $1.5 million over a judgment
in favor of plaintiffs for $2 million. Plaintiffs’ interests, how-
ever, ran in the other direction. All other things being equal,
5
As a result, the $1.5 million is a sunk cost and the proper measure of
Stayton’s incentives is the extent to which it would be subject to liability beyond
that $1.5 million.
628 Rains v. Stayton Builders Mart, Inc.
plaintiffs would prefer a $2 million judgment to a $1.5 mil-
lion judgment. That was sufficient to establish the adversity
required for justiciability.
Attempting to avoid that conclusion, Weyerhaeuser
relies on the dissenting opinion by then-Judge Landau in
Bocci v. Key Pharmaceuticals, Inc., 158 Or App 521, 974 P2d
758 (1999), decision vac’d, 332 Or 39 (2001), a case in which
an evenly divided Court of Appeals split with respect to the
justiciability of a plaintiff’s claims after the plaintiff entered
into a Mary Carter agreement with a defendant. In Bocci,
the plaintiff brought claims on behalf of a patient who had
become incapacitated by a toxic condition resulting from the
interaction of two prescribed medications. Id. at 523. The
plaintiff brought claims against the patient’s doctor, who
had failed to diagnose the condition, and the manufacturer
of one of the medications, who had failed to provide warn-
ings about the potential problem. Id. The doctor then cross-
claimed against the drug manufacturer for negligence and
fraud. Id.
Prior to trial, the plaintiff and the doctor entered
into a Mary Carter agreement. Id. at 527. Under that agree-
ment, the plaintiff agreed not to enforce a judgment against
the doctor and the doctor agreed to pay the plaintiff $1 mil-
lion. Id. at 527-28. Of that sum, $200,000 was paid in cash
and $800,000 was paid in the form of a loan, the repayment
of which depended on the amount that the plaintiff obtained
in a judgment against the nonsettling defendant, the drug
manufacturer. Id. The more money the plaintiff obtained
against the drug manufacturer, the more money the plain-
tiff would repay the doctor, thus decreasing the doctor’s net
exposure under the settlement agreement. Id. Ultimately,
if the plaintiff obtained $3 million from the drug manufac-
turer, then the plaintiff would repay the doctor the entire
$800,000 loan. Id. The trial court denied the drug manu-
facturer’s motion to dismiss the doctor as a defendant after
concluding that the dispute between the plaintiff and the
doctor remained justiciable. Id. at 529. A jury found in favor
of the plaintiff against both the doctor and the drug manu-
facturer, and it found in favor of the doctor against the drug
manufacturer. Id. at 527.
Cite as 359 Or 610 (2016) 629
The drug manufacturer appealed. Because it was
equally divided, the Court of Appeals affirmed the trial court
without a majority opinion. The concurring judges insisted
that the trial court properly found adversity because the
plaintiff and the doctor disputed whether the doctor was at
fault. Id. at 529. But in dissent, Judge Landau concluded
that the plaintiff had no incentive at trial to prove that the
doctor was at fault because doing so would only decrease the
award that the plaintiff could obtain against the drug man-
ufacturer. Id. at 556 (“If plaintiff established at trial that
Edwards was negligent, the percentage of fault that the jury
assigned to Edwards would only lessen any recovery from
Key. Thus, plaintiff’s sole objective at trial was to establish
Key’s—not Edwards’s—liability.”). And, in fact, the plaintiff
dismissed his claims against the doctor after the presenta-
tion of evidence and before the case was submitted to the
jury. Id.
Weyerhaeuser argues that this case resembles
Bocci and asks this court to adopt the analysis of the dis-
senting opinion. Without deciding how the justiciability
issue in Bocci should have been resolved, we note only that
this case is unlike Bocci, even though both cases involve ele-
ments of a Mary Carter agreement.6 In Bocci, the dissent’s
analysis turned not on the fact that the agreement was
a Mary Carter agreement, but on the conclusion that the
agreement eliminated any incentive at all for the plaintiff to
prosecute his claim against the settling defendant, the doc-
tor. Id. at 556. The doctor agreed to pay the plaintiff a fixed
sum of $200,000 plus a variable amount on a sliding scale
between zero and $800,000. The sliding scale went up or
down depending on the plaintiff’s recovery against the non-
settling defendant. Thus, proving the doctor’s fault could
not have increased either the fixed or the variable amount.
Instead, proving the doctor’s fault created the potential of
decreasing the variable amount by allocating some of the
damage award to the doctor and reducing the plaintiff’s
recovery against the nonsettling defendant.
6
This court vacated the decision of the Court of Appeals in Bocci and remanded
the case for consideration in light of new case law on the standards for awarding
punitive damages. Bocci v. Key Pharmaceuticals, Inc., 332 Or 39, 40, 22 P3d 758
(2001). This court never addressed the justiciability of the dispute in Bocci.
630 Rains v. Stayton Builders Mart, Inc.
That is not true in this case. As an initial matter,
Stayton and Weyerhaeuser were jointly and severally liable
for plaintiffs’ damage award. Thus, establishing Stayton’s
fault would not detract from plaintiffs’ award; it merely
would provide plaintiffs with a second source of recovery if
they were unable to prove that Weyerhaeuser was at fault.
The partial settlement agreement made Stayton a more
limited source of recovery because of the $2 million cap.
Nevertheless, as noted above, plaintiffs would prefer a larger
recovery against Stayton rather than a smaller one even
though the larger recovery would add, at most, $500,000
to the amount that plaintiffs could recover from Stayton.
Plaintiffs would rather have that $500,000 than not have it.
Thus, unlike the plaintiff in Bocci, plaintiffs in this case had
an incentive to prosecute their claims against Stayton.
Accordingly, we conclude that there was sufficient
adversity between plaintiffs and Stayton to maintain the
justiciability of their dispute, and we affirm the trial court’s
denial of Weyerhaeuser’s motion to dismiss.
2.  Admissibility of the partial settlement agreement
Weyerhaeuser also assigns error to the trial court’s
ruling denying Weyerhaeuser’s request to admit the par-
tial settlement agreement in evidence at trial. According to
Weyerhaeuser, that alleged error is prejudicial and justifies
reversing the judgments entered against it in favor of plain-
tiffs and Stayton. Because plaintiffs and Stayton argue that
Weyerhaeuser failed to preserve some of the arguments that
it now makes, we review the procedural history of this issue
in further detail.
As noted above, on the first day of jury selection,
Weyerhaeuser made four oral motions to the trial court.
After presenting its arguments on the justiciability and
damages issues, Weyerhaeuser presented its arguments on
the evidentiary proffer:
“The third point that was raised was that Weyerhaeuser
would like to make use of the Mary Carter Agreement
during the course of the presentment of evidence. We
believe the jury has a right to know of this agreement.
They have a right to know the terms of this agreement.
Cite as 359 Or 610 (2016) 631
They also have a right to know that it’s insurance that’s
paying these terms as opposed to Stayton Builders Mart, a
small, local lumber yard.
“The Oregon Rule of Evidence, I believe it’s 811,[7] dealing
with the presentment of insurance information, details that
you can only discuss insurance—you cannot discuss insur-
ance in front of a jury when it’s being used to show liability
or negligence. But there are exceptions to that. Exceptions
include a discussion of prejudice and other such things.
“The concern is that in typical cases where a defendant has
insurance, a plaintiff would use that against the defendant
and essentially show the jury, well, don’t worry about this
defendant, whether they can pay. They have got insurance.
And that heightens the likelihood that a jury would find
negligence. In this case, it’s different.
“In this case, the jury will be left with the impression that
this small, local lumber yard is potentially on the hook for a
very large settlement. And they might think differently as
to how to deal with the apportionment of damages if they
were under that false impression.
“The true impression is that the money is being paid by a
very large insurance company in Ohio, and the jury has a
right to know that. And it is not within the exclusion as
detailed in Oregon Rules of Evidence.”
On the fourth issue—whether to give the jury a cautionary
instruction about the agreement—Weyerhaeuser noted that
the trial court had already given such an instruction to most
of the jury pool.
When Weyerhaeuser completed its arguments on all
four issues, the trial court heard opposing arguments from
plaintiffs and Stayton on the justiciability and damages
issues and denied those motions. Next, the court returned
to the question whether the settlement agreement would
be admitted in evidence. Weyerhaeuser’s counsel stated, “I
think the final point was just whether that agreement was
going to be admissible for any purpose during the course of
trial.” The court never heard arguments from plaintiff or
Stayton in opposition to Weyerhaeuser’s motion. Instead, the
7
In fact, it is Oregon Rule of Evidence 411.
632 Rains v. Stayton Builders Mart, Inc.
court rejected the proffer, relying on the Court of Appeals
decision in Bocci:
“And as I understand the Bocci case, a copy of which was
provided to me earlier * * *. Based upon the ruling in Bocci,
the Court would be consistent with that ruling and say that
the terms of the agreement and the fact that insurance is
involved would not be admissible at trial.”
On appeal, Weyerhaeuser challenged that ruling.
The Court of Appeals rejected that assignment of error.
According to the Court of Appeals, Weyerhaeuser offered
the agreement to inform the jury of Stayton’s insurance cov-
erage and improperly influence the jury’s allocation of fault
and calculation of damages, which, according to the Court of
Appeals, violated OEC 411. Rains, 264 Or App at 651 (“The
trial court did not err by excluding the agreement on the
basis that such an offer was improper under OEC 411.”).
Weyerhaeuser had further argued to the Court of
Appeals that, beyond the insurance information, the agree-
ment should have been admitted for the purpose of showing
Stayton’s bias toward plaintiffs, thereby undermining the
credibility of Stayton’s witnesses. With respect to those prof-
fered grounds, the Court of Appeals faulted Weyerhaeuser
for not offering a redacted copy of the agreement that omit-
ted the insurance information:
“Where a party attacks the exclusion of an exhibit that con-
tains some irrelevant material, that party has ‘the burden
of excising the irrelevant portions of the exhibit to preserve
the claimed error.’ ”
Id. at 651 (quoting Fazzolari v. Portland School Dist. No. 1J,
78 Or App 608, 614, 717 P2d 1210 (1986), aff’d on other
grounds, 303 Or 1, 734 P2d 1326 (1987)). Regardless, the
Court of Appeals concluded that Weyerhaeuser had failed
to preserve its arguments based on bias and credibility
because the arguments that Weyerhaeuser had made to the
trial court had focused exclusively on the relevance of the
agreement’s insurance information. Id. at 653-54.
Moreover, the Court of Appeals interpreted the scope
of the trial court’s ruling more narrowly than Weyerhaeuser.
Weyerhaeuser claimed that the trial court’s pretrial ruling
Cite as 359 Or 610 (2016) 633
precluded it from presenting arguments or cross-examining
witnesses based on the agreement. The Court of Appeals
pointed out, however, that the trial court itself informed the
jury that plaintiffs and Stayton had settled and that the
jury could use that fact only “ ‘as it might bear on the issues
of credibility or believability of the witnesses who testify.’ ”
Id. at 654. As a result, the Court of Appeals concluded that
the trial court had not precluded Weyerhaeuser from relying
on the agreement insofar as it might be relevant to Stayton’s
bias and the credibility of its witnesses.
On review, the parties essentially reprise the argu-
ments before this court that they made in the Court of
Appeals. We begin with Weyerhaeuser’s argument that the
Court of Appeals erred by upholding the trial court’s exclu-
sion of the partial settlement agreement under OEC 411.
OEC 411 states,
“(1)  Except where lack of liability insurance is an
element of an offense, evidence that a person was or was
not insured against liability is not admissible upon the
issue whether the person acted negligently or otherwise
wrongfully.
“(2)  Subsection (1) of this section does not require the
exclusion of evidence of insurance against liability when
offered for another purpose, such as proving agency, own-
ership or control, or bias, prejudice or motive of a witness.”
OEC 411.
Evidence is relevant if it has a “tendency to make
the existence of any fact that is of consequence to the deter-
mination of the action more probable or less probable than
it would be without the evidence.” OEC 401. In this case,
lack of liability insurance is not an element of any claim at
issue. As a result, the trial court could not admit evidence
tending to establish that Stayton had liability insurance if
Weyerhaeuser offered the evidence for the purpose of prov-
ing that Stayton “acted negligently or otherwise wrongfully.”
OEC 411(1). Thus, to the extent that Weyerhaeuser offered
the agreement to show that its references to insurance bore
on the issue of Stayton’s fault, the trial court did not err in
excluding the agreement from evidence on that ground.
634 Rains v. Stayton Builders Mart, Inc.
But, the trial court could have admitted the
agreement—including its references to liability insurance—
if Weyerhaeuser had offered that evidence for a permissible
purpose. OEC 411(2). Weyerhaeuser had argued before the
trial court that the agreement was relevant to defeat the
inference that Stayton was a small company that—in con-
trast to Weyerhaeuser—would find it difficult to pay a large
damage award. However, whether a damage award against
Stayton would be paid by a large and well-heeled company
or a small company was not a fact of legal consequence—i.e.,
a material fact—in this case. As a result, the partial settle-
ment agreement was irrelevant, and thus inadmissible, for
that purpose. See State v. Cunningham, 337 Or 528, 536,
99 P3d 271 (2004) (holding that relevancy determinations
present questions of law).
As noted, the only remaining ground for admitting
the agreement that Weyerhaeuser has asserted is that it
was relevant to show Stayton’s bias and to attack the cred-
ibility of its witnesses. And, as further noted, the Court of
Appeals rejected that argument as unpreserved. Rains, 264
Or App at 654. We now turn to that issue.
To preserve a claim of error with respect to excluded
evidence, “the substance of the evidence [must have been]
made known to the court by offer or was apparent from the
context within which questions were asked.” OEC 103(1)(b).
“One method of making an offer of proof is by question and
answer. It also is acceptable, however, for a party’s counsel
to state what the proposed evidence is expected to be.” State
v. Phillips, 314 Or 460, 466, 840 P2d 666 (1992).
We review the sufficiency of Weyerhaeuser’s prof-
fer by considering whether the offer fulfilled the purposes
that underlie the preservation requirement. See State v.
Stevens, 328 Or 116, 122, 970 P2d 215 (1998) (“[I]n consid-
ering whether an objection at trial raised the ‘issue’ being
advanced on appeal, an appellate court must view the facts
in light of the purposes of fairness and efficiency that under-
lie the requirement.”). “One purpose of an offer of proof is to
assure that appellate courts are able to determine whether
the ruling was erroneous.” State v. Olmstead, 310 Or 455,
461, 800 P2d 277 (1990). “Another purpose of an offer of proof
Cite as 359 Or 610 (2016) 635
is to assure that the trial court can make an informed deci-
sion. An offer of proof permits the parties to raise additional
arguments, if appropriate, and gives the court an opportu-
nity to reconsider its ruling and correct any error.” Id.The parties dispute whether Weyerhaeuser suffi-
ciently informed the trial court that it wanted to use the
agreement to establish Stayton’s bias and to attack the
credibility of Stayton’s witnesses. Before discussing the
insurance information in the partial settlement agreement,
Weyerhaeuser told the trial court,
“The third point that was raised was that Weyerhaeuser
would like to make use of the Mary Carter Agreement
during the course of the presentment of evidence. We believe
the jury has a right to know of this agreement. They have
a right to know the terms of this agreement.”
Weyerhaeuser insists that those statements suffi-
ciently raised the issues of bias and witness credibility. As
noted above, the evidentiary issue was the third of four issues
that Weyerhaeuser raised in its oral motions, all related to
the partial settlement agreement. The first concerned jus-
ticiability and was premised on the claim that the partial
settlement agreement provided Stayton with the motivation
to help plaintiffs establish Weyerhaeuser’s liability. The
fourth motion sought a cautionary jury instruction on the
partial settlement agreement. Weyerhaeuser appeared to
find acceptable the instruction that the trial court had given
earlier that day, which informed the jury pool of the partial
settlement agreement and stated that jurors could consider
the fact of the settlement only for the purposes of assessing
the bias and credibility of the witnesses. Given that context,
it is not wholly implausible to read the sentences quoted
above as indicating that Weyerhaeuser intended to use the
partial settlement agreement during the presentation of evi-
dence because it believed that the jury had a right to know
that the agreement created financial incentives for Stayton
to assist plaintiffs.
But that impression of Weyerhaeuser’s focus—as
a continuation of earlier arguments focused on bias and
motive—ignores other context indicating that Weyerhaeuser
was offering the agreement to show that Stayton had
636 Rains v. Stayton Builders Mart, Inc.
insurance coverage. After stating that the jury had a right
to know the terms of the agreement, Weyerhaeuser devoted
the remainder of its argument to discussing how the jury
could make use of the fact that a large company would likely
pay Stayton’s liability. The closest Weyerhaeuser came to
referring to bias and credibility is when its counsel stated
that OEC 411 does not prohibit offering evidence of insur-
ance information to establish “prejudice.” But in the context
of Weyerhaeuser’s argument, the reference to “prejudice”
referred to Weyerhaeuser’s concern that the jury would
improperly base its verdict on sympathy for the smaller com-
pany, Stayton.
Because, in offering the partial settlement agree-
ment in evidence at trial, Weyerhaeuser did not apprise the
trial court that the agreement—appropriately redacted—
was independently relevant to show Stayton’s bias and to
attack the credibility of Stayton’s witnesses, and because
the agreement was inadmissible for the purposes that
Weyerhaeuser did assert before the trial court, we conclude
that the trial court did not err in excluding it from evidence.
B.  Verdict Form
Before jury deliberations commenced, Weyerhaeuser
submitted a proposed verdict form that allowed the jury to
apportion fault to Five Star. After the close of evidence, the
court gave the jury instructions and a verdict form that did
not refer to Five Star. When the jury was excused to deliber-
ate, the court asked the parties whether they had any excep-
tions to the jury instructions. Weyerhaeuser made exceptions
to the jury instructions that were unrelated to whether Five
Star should be included in the verdict form. Then Stayton
raised an objection to the verdict form. Weyerhaeuser joined
in that objection and then added another objection to the
verdict form, stating,
“[W]ith the original verdict form that was submitted we
requested that Five Star be added. I understand that was
taken off by the court, and that plaintiffs’ counsel stipu-
lated back in chambers that by removing it from the ver-
dict form that it would not be a waiver of any argument
Weyerhaeuser may make at a later date, offset from any
sums obtained from Five Star Construction.”
Cite as 359 Or 610 (2016) 637
There is no further record establishing the reason Weyer-
haeuser gave to the trial court for why it believed Five
Star should have been included in the verdict form and
no further record establishing why the trial court denied
Weyerhaeuser’s request.
Before the Court of Appeals, Weyerhaeuser argued
that the trial court erred because ORS 31.600(2) required
the inclusion of Five Star on the verdict form so that the
jury would have the option of allocating some fault to Five
Star, rather than having only the options of apportioning
fault among Kevin Rains, Stayton, and Weyerhaeuser. ORS
31.600(2) provides, in part:
“The trier of fact shall compare the fault of the claim-
ant with the fault of any party against whom recovery is
sought, the fault of third party defendants who are liable in
tort to the claimant, and the fault of any person with whom
the claimant has settled.”
The Court of Appeals rejected Weyerhaeuser’s
assignment of error on the ground that Weyerhaeuser had
failed to make a record of any argument based on ORS
31.600(2):
“Although the parties and the court may have had a lengthy
off-the-record discussion about the proper verdict form that
included discussion of whether Five Star should be on the
form because of ORS 31.600(2), the record on appeal con-
tains nothing that demonstrates that Weyerhaeuser made
such an argument to the trial court. All we are left with is
evidence that Weyerhaeuser submitted a verdict form that
had a place to allocate fault to Five Star. We cannot say
that, in doing so, Weyerhaeuser provided the court with
an explanation of its objection that was specific enough to
ensure that the court could identify its alleged error with
enough clarity to permit it to consider and correct the error
immediately, if correction was warranted.”
Rains, 264 Or App at 656. We agree with the Court of the
Appeals that the record does not show that Weyerhaeuser
asserted before the trial court the objection that it presses
on appeal. See Shields v. Campbell, 277 Or 71, 77, 559 P2d
1275 (1977) (“A party owes the trial court the obligation of a
sound, clear and articulate motion, objection or exception, so
638 Rains v. Stayton Builders Mart, Inc.
as to permit the trial judge a chance to consider the legal con-
tention or to correct an error already made.”). Accordingly,
even though Weyerhaeuser objected on a different ground—
one that it has not pursued on appeal—the trial court did
not err in submitting the verdict form to the jury.8
C.  Statutory Damages Cap
As noted above, the jury found that Kevin had suf-
fered $5,237,700 in economic damages and $3,125,000 in
noneconomic damages and that Mitzi was entitled to dam-
ages in the amount of $1,012,500 for noneconomic injuries.
After accounting for the fact that the jury had allocated 25%
of the fault to Kevin, plaintiffs submitted a form of limited
judgment against Weyerhaeuser and Stayton for a total of
$6,272,025 as to Kevin and $759,375 as to Mitzi. Of those
amounts, approximately $2,343,750 of the damages awarded
to Kevin was for noneconomic injuries and the entire amount
awarded to Mitzi was for noneconomic injuries.
Weyerhaeuser objected based on ORS 31.710(1),
which provides that “the amount awarded for noneconomic
damages shall not exceed $500,000” in cases for damages
arising out of bodily injury or loss of consortium. Because
plaintiffs’ damages arose out of claims for bodily injury and
loss of consortium, Weyerhaeuser argued that the noneco-
nomic damage awards for both Kevin and Mitzi should be
reduced to $500,000.
Plaintiffs responded by arguing that application of
the statutory cap on noneconomic damages in ORS 31.710(1)
to plaintiffs’ claims in this case would violate Article I, sec-
tion 17, of the Oregon Constitution, which states that, “[i]n
all cases the right of Trial by Jury shall remain inviolate.”
Plaintiffs relied on this court’s opinion in Lakin v. Senco
Products, Inc., 329 Or 62, 987 P2d 463 (1999), opinion clari-
fied, 329 Or 369, 987 P2d 476 (1999), which held that Article I,
section 17, “guarantees a jury trial ‘in those classes of cases
in which the right was customary at the time the [Oregon]
constitution was adopted or in cases of like nature.’ ” Id. at
69 (quoting Molodyh v. Truck Insurance Exchange, 304 Or
8We reject without discussion Weyerhaeuser’s alternative argument that the
trial court plainly erred by giving the verdict form to the jury.
Cite as 359 Or 610 (2016) 639
290, 295, 744 P2d 992 (1987)). Plaintiffs argued that the
strict-products-liability and loss-of-consortium claims either
were recognized at the time that the Oregon Constitution
was adopted or were claims of a like nature.
The trial court agreed with plaintiffs, concluding
that both claims had roots in the common law predating the
adoption of the Oregon Constitution. Thus, the trial court held
that Article I, section 17, precluded the legislature from lim-
iting noneconomic damages with respect to plaintiffs’ claims.
The trial court therefore denied Weyerhaeuser’s motion
to limit plaintiffs’ noneconomic damages.9 On appeal, the
Court of Appeals agreed with the trial court that Article I,
section 17, shielded Mitzi’s claim for loss of consortium from
the statutory damages cap in ORS 31.710(1), but it held that
Kevin’s claim for strict products liability was not afforded
the same protection and that the legislature could subject
that claim to a statutory cap on noneconomic damages.
Rains, 264 Or App at 659-66.
Weyerhaeuser sought review of the Court of Appeals’
determination that Article I, section 17, protects Mitzi’s
claim for loss of consortium from the statutory damages cap
in ORS 31.710(1). Petitioners, in turn, challenged the Court
of Appeals conclusion that Article I, section 17, did not simi-
larly protect Kevin’s claim for strict products liability.
Following the briefing in this case, this court decided
Horton, 359 Or 168, which overturned Lakin based on this
court’s conclusion that Article I, section 17, does not inde-
pendently restrict the legislature’s ability to impose a statu-
tory damage cap on specific claims. Id. at 244-54.10 Because
the Court of Appeals did not have the benefit of our deci-
sion in Horton in addressing the parties’ arguments under
Article I, section 17, we vacate its decision with respect to
90
Although plaintiffs’ written response to Weyerhaeuser’s motion was based
solely on Lakin and Article I, section 17, plaintiffs amended that response days
before the hearing, adding arguments based on Article I, section 10, and Article
VII (amended), section 3, of the Oregon Constitution. The trial court, however, did
not consider those arguments and denied Weyerhaeuser’s motion based entirely
on Article I, section 17.
10
In Horton, this court further held that Article I, section 10, of the Oregon
Constitution, substantively ensures a remedy for persons injured in their person,
property, or reputation. Id. at 218-21.
640 Rains v. Stayton Builders Mart, Inc.
the parties’ assignments of error relating to the application
of the statutory damage cap to plaintiffs’ noneconomic dam-
age awards and remand to that court for reconsideration of
those assignments of error in light of Horton.11
D.  Defense Costs
After the jury trial resulted in a plaintiffs’ verdict,
the trial court heard arguments on Stayton’s common-law
indemnity claim against Weyerhaeuser. The elements of a
common-law indemnity claim are:
“ ‘[T]he claimant must plead and prove that (1) he has dis-
charged a legal obligation owed to a third party; (2) the
defendant was also liable to the third party; and (3) as
between the claimant and the defendant, the obligation
ought to be discharged by the latter.’ ”
Eclectic Investment, 357 Or at 33 (quotation omitted). Among
other arguments, Weyerhaeuser argued that Stayton failed
to establish the first element. According to Weyerhaeuser,
even if Weyerhaeuser and Stayton were jointly and sever-
ally liable to plaintiffs under the limited judgment, thus
establishing that both Stayton and Weyerhaeuser were both
liable to a third party—namely, plaintiffs—Stayton could
not prevail, because there was no evidence that it had dis-
charged its liability to plaintiffs. In fact, Stayton conceded
that it had not paid any money to plaintiffs. Despite that
concession, the trial court ruled in favor of Stayton and
entered a limited judgment that provided:
“1.  Third-party plaintiff [Stayton] is entitled to judg-
ment against third-party defendant [Weyerhaeuser] on
[Stayton]’s indemnity claims in the amount of $2.0 million.
“2.  [Stayton] is entitled to an additional judgment from
Weyerhaeuser for its attorney fees, costs, disbursements
and prevailing party fee to be determined under ORCP 68.”
11
Depending on the Court of Appeals’ resolution of the parties’ arguments
under Article I, section 17, it may be appropriate for that court to consider plain-
tiffs’ alternative challenges to the application of the statutory damage cap to
their claims based on Article I, section 10, as interpreted in Horton. We express
no opinion on that issue, nor do we express any opinion as to whether that issue
was properly raised, preserved, or developed below, and leave those questions, in
the first instance, to the Court of Appeals on remand.
Cite as 359 Or 610 (2016) 641
After conducting proceedings under ORCP 68, the trial court
determined that the additional judgment from Weyerhaeuser
to Stayton would be in the sum of $265,458.70. The trial
court included that award in the general judgment against
Weyerhaeuser.
On appeal, Weyerhaeuser renewed its challenge to
Stayton’s indemnity claim and asked the Court of Appeals
to reverse the limited judgment quoted above. The Court of
Appeals agreed and held that Stayton was required to dis-
charge its liability to plaintiffs in order to prevail on its indem-
nity claim against Weyerhaeuser. Rains, 264 Or App at 669.
According to the Court of Appeals, to satisfy that element,
Stayton either was required to actually discharge the limited
judgment or establish that its settlement agreement with plain-
tiffs “ ‘brought peace’ for Weyerhaeuser.” Id. Because Stayton
acknowledged that neither of those acts had occurred, id., the
Court of Appeals “reverse[d] the limited judgment entered for
Stayton on its indemnity claim[.]” Id. at 678.12
In addition to arguing that the limited judgment in
favor of Stayton should be reversed, Weyerhaeuser raised
assignments of error that challenged the amount that the
trial court awarded to Stayton as defense costs. Ultimately,
the Court of Appeals concluded that the general judgment
overstated Stayton’s defense costs by $1,512 dollars. As a
result, the Court of Appeals “reverse[d] and remand[ed] the
general judgment for the trial court to reduce the judgment
by $1,512.” Id.
Weyerhaeuser thereafter sought reconsideration
in the Court of Appeals, asserting that it was error to
direct the trial court to “reduce the judgment by $1,512”
and, instead, that the Court of Appeals simply should have
reversed the general judgment because the limited judg-
ment establishing Stayton’s right to defense costs was itself
reversed. The Court of Appeals denied reconsideration with-
out explanation.
On review, Weyerhaeuser asks this court to reverse
the general judgment without directing the trial court to
enter a new dollar amount as defense costs owed to Stayton.
12
Stayton did not petition for review on that issue.
642 Rains v. Stayton Builders Mart, Inc.
According to Weyerhaeuser, the outcome it seeks is required
by ORS 20.220(3), which states:
“When an appeal is taken from a judgment under ORS
19.205 to which an award of attorney fees or costs and dis-
bursements relates:
“(a)  If the appellate court reverses the judgment, the
award of attorney fees or costs and disbursements shall be
deemed reversed[.]”
We agree with Weyerhaeuser’s reading of ORS
20.220(3). The limited judgment establishing that Stayton
prevailed on its indemnity claim “relates” to the award of
attorney fees and costs in the general judgment. That is so
because a claimant seeking common-law indemnification
has no right to recover defense costs without first estab-
lishing its success on the common-law indemnity claim. See
Eclectic Investment, 357 Or at 331 (“Even if the county is
correct that a claim for common-law indemnity includes a
claim for attorney fees, it is incorrect that a defendant has
an independent claim for attorney fees when the plaintiff’s
claim for restitution itself is not viable.”); see also ZRZ Realty
v. Beneficial Fire and Casualty Ins., 349 Or 117, 150, 241
P3d 710, 729 (2010), opinion adh’d to as modified on recons,
349 Or 657, 249 P3d 111 (2011) (holding that the Court of
Appeals erred by reversing a fee award based on its rever-
sal of another claim that had no effect on the party’s right
to attorney fees). Because the limited judgment establish-
ing Stayton’s right to indemnification relates to the general
judgment awarding Stayton defense costs, the reversal of
the limited judgment means that the general judgment
awarding Stayton defense costs “shall be deemed reversed.”
ORS 20.220(3).13
The Court of Appeals decision states that the gen-
eral judgment is “reversed,” rather than modified. Rains,
13
Stayton briefly asserts that Weyerhaeuser failed to preserve its statutory
argument because Weyerhaeuser did not raise it until its motion for reconsider-
ation to the Court of Appeals. We reject that assertion. Weyerhaeuser asked the
Court of Appeals to reverse both the limited judgment for indemnity that was
the only possible source of Stayton’s entitlement to defense costs as well as the
general judgment for defense costs. ORS 20.220(3) was a source of authority that
supported Weyerhaeuser’s preserved argument. On the merits, Stayton’s oppos-
ing interpretation of the statute is difficult to follow and not well taken.
Cite as 359 Or 610 (2016) 643
264 Or App at 678. But the decision also remanded the gen-
eral judgment “with instructions to reduce the judgment by
$1,512, otherwise affirmed.” Id. It is not clear whether the
Court of Appeals intended for the trial court to reduce its
calculation of Stayton’s defense costs and award that amount
in a judgment that is immediately enforceable or reduce its
calculation of Stayton’s defense costs that would be awarded
should Stayton ever establish its claim for common-law
indemnification.
There is no need to parse the Court of Appeals deci-
sion for an answer. We conclude that ORS 20.220(3) requires
the general judgment awarding defense costs to be reversed
along with the underlying judgment for common-law indem-
nity. To the extent that the Court of Appeals decision is
inconsistent with that conclusion, it is reversed.
III. CONCLUSION
The decision of the Court of Appeals with respect to
the parties’ assignments of error concerning the statutory
cap on noneconomic damages based on Article I, section 17, is
vacated, and those assignments are remanded to that court
for reconsideration in light of this court’s decision in Horton.
Further, the decision of the Court of Appeals is reversed to
the extent that it is inconsistent with our holding that ORS
20.220(3) requires the general judgment awarding defense
costs to be reversed. The decision of the Court of Appeals is
otherwise affirmed. The limited judgment for indemnity in
favor of Stayton against Weyerhaeuser is reversed, and the
general judgment in favor of Stayton for costs on Stayton’s
indemnity claim against Weyerhaeuser is reversed.
The decision of the Court of Appeals is affirmed in part,
reversed in part, and vacated in part and remanded. The
limited judgment in favor of Stayton against Weyerhaeuser
and the general judgment for Stayton’s costs against
Weyerhaeuser are reversed.