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 appel- lant. 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 respon- dents 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 respon- dent 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) (collec- tively “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 sig- nificant 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 contri- bution. 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 tar- geted 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 recover- able costs allocated among insurers should include (a) attor- ney 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 attor- ney fees incurred in defense of the underlying environmen- tal 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 “recov- erable costs” that are allocated in contribution under ORS 465.480(5), (a) Continental’s debt for Schnitzer’s attor- ney 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 stat- utory fees to be properly included as the recoverable costs under ORS 465.480(5) so as to be apportioned among insur- ers. 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 recov- ery 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 prob- lem had been a failure to pay the full amount of the bills of Bingham McCutchen, Schnitzer’s California defense attor- neys, 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 stat- ute 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 consider- ation 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 dam- ages 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 spec- ificity, 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 pol- icy; that inclusion of those fees in the contribution calcula- tion 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 deter- mine 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 argu- ment, the “all costs” language is not written so broadly as to contemplate an insurer’s statutory liability for later attor- ney 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 indi- cates 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 insur- ers, 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 “environ- mental claim,” and, as defined in ORS 465.475(1), an “envi- ronmental 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 pol- icy but instead are awarded under the separate statutory authority of ORS 742.061. Next, we recognize that the legislature used a syn- onymous 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 recov- erable 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 cov- erage, 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 equi- table allocation between insurers * * *.” (Emphases added.) When that provision speaks of “appor- tionment of recoverable costs” and “allocating covered dam- ages,” 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 “envi- ronmental 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) (refer- ring 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 realloca- tion 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 quo- tation marks omitted.)). As the trial court recognized, under- lying coverage cases may be as different as the different rea- sons 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, litiga- tion on one insurer’s policy may turn on facts, promises, lim- its, 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 applica- ble 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 lit- igation off to nonparty insurers in contribution. Moreover, the legislature enacted no statutory pro- vision 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 real- location 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 stat- utory 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 environ- mental 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 sum- mary 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 lia- bility 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 contri- bution 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 con- tribution. 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 stat- utory 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 recov- erable in contribution. The dissent underscores our inciden- tal 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, recover- able 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 inter- preted to mean two different things, rather than two differ- ent 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, how- ever, reads “recoverable costs” to be a broader term than “cov- ered 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 appor- tioning 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 con- sideration 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 fed- eral 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 con- tract is imposed under ORS 82.010(1), which provides in rel- evant 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 con- ditions 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 pre- judgment interest). Although the determination of the amount of pre- judgment 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 defend- ing 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 communi- ty-rate limitation on attorney fees of independent coun- sel, 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 dis- pute 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 con- tinue representation due to professional standards involv- ing 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 liti- gation. 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. “cov- ered 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 reason- able 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 coun- sel. 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 pro- visions 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, how- ever, 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 mean- ing 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 legisla- tion. The jury was instructed that Schnitzer would be enti- tled 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 consid- ered 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 contri- bution 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 inde- pendently determined that “under the circumstances the out-of-market rates charged by the Bingham firm and its successors were reasonably necessary for competent repre- sentation 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 lit- tle” if the insured had to pay the difference between local and nonlocal rates. In Continental’s view, the statute’s pro- vision 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 com- plex 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