Stakes rise in the Aaron Campbell suit

by Steve Duin of The Oregonian, January 9, 2012

As the City of Portland prepares to sue its former insurance company for $1.5 million in unrecovered legal costs, that carrier — Chartis Inc. — has become increasingly vigilant over another wrongful death suit that might ding the Seattle company again.

Aaron Campbell - Dad

Aaron Campbell - Dad

The city insists that Chartis should reimburse Portland for legal defense costs in nine cases, including the contentious James Chasse suit, which eventually led to a $1.6 million settlement for Chasse’s family. Chartis reportedly coughed up $800,000 of that settlement.

Most of the legal fees in dispute are the hourly billings by the city’s own attorneys. Several lawyers I spoke with contend that the city’s argument is a stretch.

City Attorney Linda Meng‘s response? “I don’t believe we have had a case before in which we have reached the self-insured retention and sought recovery for our defense costs based on our in-house attorneys.

“It is not appropriate for me to lay out our legal argument on the merits here. The claim we are making comes from an interpretation of the entire policy.”

Chartis only belatedly was involved in the protracted settlement negotiations between the city and the Chasse family, but the insurer has been all over the pending federal civil rights lawsuit against the city in the January 2010 death of Aaron Campbell.

Officer Ronald Frashour fatally shot Campbell as Campbell walked backward out of a Northeast Portland apartment with his hands locked behind his head. The Portland Police Bureau fired Frashour nine months later for that use of deadly force.

From the beginning of depositions in the Campbell family’s federal suit, Chartis lawyers — from the Seattle firm of Stafford Frey Cooper — have had seats at the table.

Other attorneys involved in the suit said this level of involvement by insurance lawyers is unusual.

Michael Lehner — who represented Sgt. Liani Reyna before she was dropped from the list of defendants — said he has been involved in six similar cases with the city the past 15 years: “It’s the first time I’ve seen it.

“They (Chartis) probably surmised this would reach into their level of coverage,” Lehner added.

Or well beyond the city attorneys’ level of expertise.

“The insurance company is on the hook,” said attorney William Blair, whose client, Sgt. John Birkinbine, was also dropped from the case. “If I’m the insurance company in a case like Campbell, I’d want to be involved so I could decide when to step in and take over the defense.”

It’s hard to generate sympathy for Chartis here. As Commissioner Nick Fish notes, “Insurance companies make money by reading their policies very narrowly.” Consumers are required to buy their product, and state regulators work overtime to guarantee their profits.

But the timing of the city’s decision to sue Chartis for $1.5 million is curious, coming, as it does, one month before the Campbell trial is set to begin.

By firing Frashour and disciplining Officer Ryan Lewton — who hit Campbell with six beanbag rounds — the city has conceded that the Campbell shooting violated the police bureau’s directives on deadly force.

Are we arguing, then, over a true accounting of responsibility in the death of Aaron Campbell … or simply over how the city and Chartis will split the check?