Richard W. Green and Nancy L. Green v. State Farm Fire and Casualty Company, an Illinois Corporation

A jury awarded the Greens $50,000 general damages and $250,000 punitive damages in a diversity action against State Farm arising out of the insurance company’s conduct in dealing with the Greens after they had filed a claim for a fire loss. The appeal presents a number of questions that are controlled by Oregon law.

A barn, which was insured by both State Farm and Travelers, burned under circumstances that suggested the fire had been set. Green told the fire marshal that he had had trouble in the past with two juveniles who had committed acts of vandalism against his property. He reported the possibility of double coverage to the fire marshal and later to State Farm with whom he had insured the barn for 20 years. Green offered to produce the Travelers policy for the State Farm adjuster. The adjuster did not inquire further but reported the double coverage to the state police.

The police suggested that a possible criminal indictment against Green for arson would be aided by deposing him. Assuring Green that the information gathered would be used in confidence and only for the purpose of determining coverage, State Farm took his sworn statement. Two days later State Farm’s…