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FILED: November 3, 2010

IN THE COURT OF APPEALS OF THE STATE OF OREGON

DEAN LONGSTREET,

Plaintiff-Respondent,

v.

LIBERTY NORTHWEST INSURANCE CORPORATION,
a domestic corporation,

Defendant-Appellant.

Linn County Circuit Court
081795
A140638

Daniel R. Murphy, Judge.

Argued and submitted on September 17, 2009.

Eric D. Virshbo argued the cause for appellant. With him on the briefs was MacMillan, Scholz & Marks, P.C.

Patrick L. Hadlock argued the cause for respondent. With him on the brief was Ringo, Stuber, Ensor & Hadlock, P.C.

Before Wollheim, Presiding Judge, and Brewer, Chief Judge, and Sercombe, Judge.*

WOLLHEIM, P. J.

Affirmed.

*Brewer, C. J., vice Edmonds, P. J.

WOLLHEIM, P. J.

Plaintiff, while in the course and scope of his employment, was injured as a result of an accident with an underinsured motorist. Plaintiff obtained workers' compensation benefits from defendant, Liberty Northwest Insurance Corporation, his employer's workers' compensation insurer, and later accepted underinsured motorist (UIM) benefits from Nationwide Insurance Company of America, which insured the car in which plaintiff was a passenger. Plaintiff then filed this declaratory judgment action, seeking a declaration that he is not required to reimburse Liberty Northwest from UIM benefits received from Nationwide. Liberty Northwest responded that the trial court lacked jurisdiction to grant the requested relief, and that plaintiff had misinterpreted the relevant UIM statute. The trial court rejected the jurisdictional argument and ruled in favor of plaintiff on the merits. We affirm.

The relevant facts are undisputed. While in the course and scope of his employment, plaintiff was injured in a car accident with an underinsured motorist. Plaintiff filed a workers' compensation claim with Liberty Northwest, his employer's workers' compensation insurer. Liberty Northwest accepted the claim and paid workers' compensation benefits to plaintiff. Plaintiff also made a claim against Lopez, the driver of the other car. Lopez's automobile liability insurance limits were $50,000, and his insurer offered to settle with plaintiff for the policy limits. With Liberty Northwest's consent, plaintiff settled the claim against Lopez. See ORS 656.593(3) (providing that a workers' compensation claimant "may settle any third party case with the approval of the paying agency"). Of that $50,000, plaintiff then paid $22,222 to Liberty Northwest. See ORS 656.593(1) (setting forth formula for distribution of claimant's third-party recovery).

The car in which plaintiff was a passenger was insured under a policy with Nationwide, and under that policy, plaintiff was entitled to UIM benefits in the amount of $50,000. Nationwide offered those benefits to plaintiff, and plaintiff accepted them.(1)

The distribution of those UIM benefits is the subject of the present dispute. Liberty Northwest takes the position that, having paid workers' compensation benefits, it is entitled to reimbursement from the UIM recovery because the payments constitute damages recovered from a third party. In plaintiff's view, however, one of the UIM statutes, ORS 742.504(4)(c), prevents Liberty Northwest from claiming any entitlement to a share of his UIM recovery. That statute provides,

"This [UIM] coverage does not apply so as to inure directly or indirectly to the benefit of any workers' compensation carrier, any person or organization qualifying as a self-insurer under any workers' compensation or disability benefits law or any similar law or the State Accident Insurance Fund Corporation."

ORS 742.504(4)(c) (emphasis added).

Based on his reading of the UIM and workers' compensation statutes, plaintiff filed this declaratory judgment action. Specifically, he sought a declaration that he "is not required to reimburse [Liberty Northwest] any monies he may receive from his underinsured motorist claim against Nationwide Insurance Company[.]" Plaintiff thereafter moved for summary judgment on the claim for declaratory relief.

In its written response to the summary judgment motion, Liberty Northwest argued that plaintiff misinterpreted ORS 742.504(4)(c), and that ORS 656.593 directs that a workers' compensation insurer be reimbursed from any third-party recovery "irrespective of whether such a recovery includes proceeds from an underinsured claim." That is, Liberty Northwest engaged the merits of plaintiff's arguments. At the hearing, though, Liberty Northwest apparently raised--for the first time--an issue of subject matter jurisdiction.(2) The parties then submitted additional briefing on the jurisdictional issue.

The trial court, in a letter opinion, agreed with plaintiff regarding the jurisdictional issue. The court ruled:

"The defense raised a jurisdiction issue citing ORS 656.593 and SAIF v. Wright, 312 Or 132 (1991) for the proposition that the Workers' Compensation Board has primary jurisdiction over this issue and should be allowed to decide it. In this discussion, the defendant mentions that the court may properly exercise its jurisdiction to review the Board's decision citing a general treatise on administrative law. However, this court does not have jurisdiction to review Board decisions in most cases and while the Board and court may have concurrent jurisdiction over this issue no law was cited providing for resolution before the Board before a case was filed in court. There was no authority cited precluding the court from deciding this matter either."

The court likewise agreed with plaintiff on the merits, ruling that "defendant has not articulated any good reason why [ORS] 742.504 does not apply and control." The court then entered a declaratory judgment in accord with plaintiff's requested relief.

On appeal, Liberty Northwest now focuses primarily on its jurisdictional argument, contending that the trial court lacked subject matter jurisdiction to determine a "matter concerning a claim" under the Workers' Compensation Law. Our analysis starts, then, with the issue of subject matter jurisdiction--an issue of law.

Under the Oregon Constitution, circuit courts have subject matter jurisdiction over all actions unless some statute or other source of law divests them of jurisdiction. State v. Terry, 333 Or 163, 186, 37 P3d 157 (2001), cert den, 536 US 910 (2002); see Or Const, Art VII (Original),