No. 46	                November 19, 2015	223

            IN THE SUPREME COURT OF THE
                  STATE OF OREGON

                  BROWNSTONE HOMES
              CONDOMINIUM ASSOCIATION,
               an Oregon non-profit corporation,
                     Petitioner on Review,
                               v.
          BROWNSTONE FOREST HEIGHTS, LLC,
           an Oregon limited liability company, et al,
                          Defendants,
                              and
           CAPITOL SPECIALTY INSURANCE, CO.
                    Respondent on Review.
          (CC 0606-06804; CA A145740; SC S061273)

   En Banc
   On review from the Court of Appeals.*
   Argued and submitted March 11, 2014.
   Wendy M. Margolis, Cosgrave, Vergeer, Kester, LLP,
Portland, argued the cause and filed the briefs for petitioner
on review. With her on the briefs was Thomas W. Brown.
   Brian C. Hickman, Gordon & Polscer, LLC, Portland,
argued the cause and filed the briefs for respondent on
review. With him on the briefs was Gregory A. Baird.
    Travis Eiva, The Corson & Johnson Law Firm, Eugene,
filed the brief for amicus curiae Oregon Trial Lawyers
Association.
   LANDAU, J.
   The judgment of the circuit court and the decision of the
Court of Appeals are reversed, and the case is remanded to
the circuit court for further proceedings.

______________
	 * Appeal from Multnomah County Circuit Court, Peter R. Chamberlain,
Judge pro tempore. 255 Or App 390, 298 P3d 1228 (2013).
224	 Brownstone Homes Condo. Assn. v. Brownstone Forest Hts.

    Case Summary: An insurer declined to defend or indemnify its insured, A&T
Siding, when A&T was sued by a homeowners association (Brownstone) over
alleged construction defects. A&T thereafter entered into a settlement agree-
ment with Brownstone which included a stipulated judgment against A&T, a cov-
enant by Brownstone not to enforce the judgment against A&T, and an assign-
ment to Brownstone of A&T’s claims against the insurer for, among other things,
breaching its contractual obligations to A&T. After the stipulated judgment was
entered, Brownstone sought to garnish the amount of the judgment from the
insurer under ORS 18.352, a statute that allows a plaintiff who has obtained
a judgment against an insured defendant in an action for damages to garnish
the defendant’s insurer for the amount of the judgment covered by the insur-
ance policy. The insurer resisted the garnishment and, in the ensuing litigation,
moved for summary judgment on the ground that, under Stubblefield v. St. Paul
Fire & Marine, 267 Or 397, 517 P2d 262 (1973), the covenant not to sue in the
settlement agreement had extinguished A&T’s liability to Brownstone and, con-
sequently, the insurer’s liability as well. The trial court agreed with the insurer
that Stubblefield controlled and granted the motion for summary judgment. The
Court of Appeals affirmed. Brownstone then sought review on grounds that: (1)
Stubblefield is distinguishable; (2) Stubblefield was legislatively overruled by the
enactment of ORS 31.825; and (3) Stubblefield was wrongly decide and should
be overruled. Held: Stubblefield was incorrect in holding that a covenant not to
execute, obtained in an exchange for an assignment of rights, effects a complete
release of an insured’s liability and, by extension, the insurer’s liability as well;
accordingly, the trial court erred in granting summary judgment based on the
rule from Stubblefield.
    The judgment of the circuit court and the decision of the Court of Appeals are
reversed, and the case is remanded to the circuit court for further proceedings.
Cite as 358 Or 223 (2015)	225

	          LANDAU, J.
	        This is a construction defect case in which a con-
dominium homeowners association sued a contractor for
negligence. The contractor’s insurer refused to defend the
contractor against the action, and the contractor and the
homeowners association thereafter entered into a settle-
ment that included a stipulated judgment against the con-
tractor, a covenant by the homeowners association not to
execute that judgment, and an assignment to the home-
owners association of the contractor’s claims against its
insurer. When the homeowners association then initiated
a garnishment action against the insurer, however, the
trial court dismissed the action on the ground that, under
Stubblefield v. St. Paul Fire & Marine, 267 Or 397, 517 P2d
262 (1973), the covenant not to execute had released the con-
tractor from any obligation to pay the homeowners associa-
tion and, in the process, necessarily released the insurer as
well. The homeowners association appealed, arguing that
Stubblefield either is distinguishable on its facts or has been
superseded by statute. In the alternative, it argued that
Stubblefield was wrongly decided and should be overruled.
The Court of Appeals affirmed. Brownstone Homes Condo.
Assn. v. Brownstone Forest Hts., 255 Or App 390, 401, 298
P3d 1228 (2013). For the reasons that follow, we conclude
that, although Stubblefield is not distinguishable and has
not been superseded by statute, it was wrongly decided. We
therefore reverse and remand for further proceedings.
                                 I. FACTS
	       The relevant facts are largely those set out in A&T
Siding, Inc. v. Capitol Specialty Ins. Corp., 358 Or 32, ___
P3d ___ (2015), a related case recently decided by this
court on a certified question from the United States Court
of Appeals for the Ninth Circuit.1 The Brownstone Homes

	1
      In A&T Siding, this court was asked about the legal effect of an addendum
to the settlement agreement at issue in this case, which addendum plaintiff and
A&T executed while this case was pending before the Court of Appeals. 358 Or at
37-40 (describing addendum and argument about its legal effect). That addendum
to the settlement agreement also was the basis for a motion to dismiss, brought
by Capitol in this case on the theory that it had rendered the present case moot.
We denied that motion in Brownstone Homes Condo. Assn. v. Brownstone Forest
Hts., 358 Or 26, ___ P3d ___ (2015). The addendum to the settlement agreement
226	 Brownstone Homes Condo. Assn. v. Brownstone Forest Hts.

Condominium Association discovered various defects in the
construction of its condominium complex and initiated a
negligence action against, among others, A&T Siding, one of
the subcontractors on the project. A&T had purchased lia-
bility coverage from two different insurers, Capitol Specialty
Insurance Co. and Zurich Insurance, and it tendered its
defense in the matter to both companies. A&T’s policy with
Capitol provided coverage for, among other things, “those
sums that the insured becomes legally obligated to pay as
damages because of ‘bodily injury’ or ‘property damage.’ ”
Although both Capitol and Zurich initially undertook the
defense of the action, Capitol later concluded that the policy
it had issued to A&T did not cover the damage for which
Brownstone sought recovery, so it declined to defend or
indemnify A&T.
	        Brownstone eventually settled with A&T and
Zurich. The settlement agreement called for a $2 million
stipulated judgment in favor of Brownstone and against
A&T, $900,000 of which Zurich agreed to pay as A&T’s
insurer. The agreement also included (1) an assignment to
Brownstone of any claims A&T had against Capitol relat-
ing to Brownstone’s action against A&T; (2) a covenant by
Brownstone that, “in no event [would] it execute upon or
permit execution of the stipulated judgment against A&T
or its assets,” but that it would seek recovery of the unexe-
cuted portion of the judgment from Capitol; (3) a promise by
A&T that it would cooperate with Brownstone in pursuing
the assigned claims against Capitol; and (4) an agreement
“to release each and every other settling party * * * from
all past, present and future claims” except for claims by or
between Brownstone and Capitol.
	        The stipulated judgment was entered in the
Multnomah County Circuit Court. Brownstone then served
a writ of garnishment on Capitol for $1.1 million, the unpaid
portion of the judgment. Brownstone relied on ORS 18.352,
which provides:
   “Whenever a judgment debtor has a policy of insurance
   covering liability, or indemnity for any injury or damage

is not relevant to the issues we decide today, and we therefore omit it from our
factual account.
Cite as 358 Or 223 (2015)	227

   to person or property, which injury or damage constituted
   the cause of action in which the judgment was rendered,
   the amount covered by the policy of insurance shall be
   subject to attachment upon the execution issued upon the
   judgment.”
	        Capitol rejected the writ, and Brownstone applied to
the trial court for an order requiring Capitol to appear. See
ORS 18.778 (process for obtaining order to appear). Capitol
continued to resist the garnishment and moved for sum-
mary judgment, arguing that Brownstone’s covenant not to
execute against A&T had released A&T from any legal obli-
gation to pay Brownstone damages. Because the terms of
its policy limited Capitol’s liability to “those sums that the
insured becomes legally obligated to pay,” Capitol argued,
the effect of the covenant not to execute was to eliminate its
obligation of coverage. In support of its summary judgment
motion, Capitol relied on this court’s decision in Stubblefield.
	In Stubblefield, the plaintiff sued his wife’s doctor
for alienation of affection and criminal conversation. The
doctor was insured, but the insurer declined to defend. The
plaintiff and the defendant eventually settled. Under the
terms of the settlement agreement, the defendant agreed to
pay the plaintiff $5,000. The parties also agreed to the entry
of a money judgment against the defendant for $50,000, a
covenant by the plaintiff not to execute that judgment for
any amount in excess of the $5,000 that the defendant had
agreed to pay, and the defendant’s assignment of any claims
he might have against his insurer in the matter over and
above the $5,000 payment.
	       The plaintiff then initiated an action against the
insurance company under the assignment, but the trial
court found in favor of the insurance company. This court
affirmed, explaining:
   “[The defendant’s] insurance policy provided that ‘the
   Company will indemnify the Insured for all sums which
   the Insured shall be legally obligated to pay as damages
   and expenses * * * on account of * * * personal injuries * * *.’
   Assuming, without deciding, that [the] plaintiff suffered
   ‘personal injuries’ which were within the coverage of the
   policy, the result of the separate ‘covenant not to execute’
   was that the amount which the insured in this case was
228	 Brownstone Homes Condo. Assn. v. Brownstone Forest Hts.

   ‘legally obligated’ to pay to plaintiff as damages for such
   personal injuries was the sum of $5,000. The insured
   agreed, however, to pay that amount to plaintiff himself
   and that amount was expressly excluded from the assign-
   ment and was reserved to the insured. It follows that by the
   terms of the assignment in this case plaintiff acquired no
   rights which are enforceable by it against defendant.”
Stubblefield, 267 Or at 400-01 (emphasis and omissions in
original).
	         In this case, Capitol argued that Stubblefield con-
trolled, because the settlement agreement between Brownstone
and A&T was, in all material respects, identical to the one at
issue in Stubblefield, and the terms of coverage were as well.
In response, Brownstone argued that Stubblefield does not
apply to garnishment actions brought under ORS 18.352.
According to Brownstone, the plain wording of that statute
independently authorizes a judgment creditor to proceed
directly against an insurer. In the alternative, Brownstone
urged that the legislature abrogated Stubblefield in 1989,
when it enacted what is now ORS 31.825, which expressly
provides that “a defendant in a tort action against whom a
judgment has been entered” may assign a claim that the
defendant may have against an insurer and that any release
or covenant not to sue given for that assignment “shall not
extinguish” the claim.
	        The trial court rejected Brownstone’s contentions,
concluded that Stubblefield controlled, and granted Capitol’s
motion for summary judgment. Brownstone appealed,
reprising its arguments that Stubblefield does not apply
to garnishment proceedings brought against a judgment
debtor’s insurer under ORS 18.352, and that, in any event,
Stubblefield has been abrogated by the legislature’s enact-
ment of ORS 31.825. The Court of Appeals rejected both
arguments and affirmed.
                        II. ANALYSIS
	       On review, Brownstone advances three arguments:
(1) Stubblefield does not apply to garnishment proceedings
brought against a judgment debtor’s insurer under ORS
18.352; (2) the legislature abrogated Stubblefield when
it enacted what is now ORS 31.825; and (3) in all events,
Cite as 358 Or 223 (2015)	229

Stubblefield was incorrectly decided and should be over-
ruled. We consider each of the three arguments in turn.
A.  Whether Stubblefield Applies to Garnishment Proceedings
	        Brownstone first argues that Stubblefield does
not apply to this case. In Brownstone’s view there is a key
distinction between the facts of Stubblefield and this case:
namely, the legal mechanism used to satisfy the judgment
from the insurer. Brownstone observes that, in Stubblefield,
the plaintiff proceeded directly against the judgment debtor’s
insurer under the assignment of claims in the parties’ settle-
ment agreement. Brownstone notes that, in this case, it
did not assert a common-law claim under an assignment
of rights, but instead proceeded under ORS 18.352, which
statutorily authorizes parties who have obtained a judg-
ment in an action for damages to proceed directly against
the judgment creditor’s insurance assets. Plaintiff contends
that, although the circumstances in Stubblefield might other-
wise mirror those of this case, a garnishment proceeding
under ORS 18.352 should be controlled by the terms of that
statute and not a judge-made rule that speaks specifically to
the assignment of a judgment debtor’s assignment of claims
against its insurer.
	        As Brownstone sees it, the statute sets out only two
requirements for recovery from a judgment debtor’s insur-
ance policy: (1) that a judgment has been rendered against
the judgment debtor for injury or damage to person or prop-
erty; and (2) that the judgment debtor has a covered liability
for any injury or damage to person or property. Brownstone
asserts that both of those requirements are satisfied in this
case. Capitol responds that, in fact, Brownstone did not sat-
isfy the second requirement—that “the amount covered”
is subject to garnishment. In Capitol’s view, “the amount
covered” is affected by the fact that the covenant not to exe-
cute eliminated A&T’s liability to Brownstone and, under
Stubblefield, eliminated any amount covered as well.
	        We agree with Capitol. As we have noted, ORS
18.352 provides that, when a judgment has been rendered
for injury or damage to person or property and the judg-
ment debtor has a policy of insurance covering liability for
such injury or damage to person or property, “the amount
230	 Brownstone Homes Condo. Assn. v. Brownstone Forest Hts.

covered” by that policy is subject to garnishment. (Emphasis
added.) Stubblefield plainly holds that a covenant not to exe-
cute against an insured judgment debtor releases the judg-
ment debtor from any legal obligation to pay damages to the
judgment creditor as a matter of law, and, as a result, elim-
inates any damages that the insurer is “legally obligated to
pay” under the policy. The fact that Stubblefield happened
to be a case in which the plaintiff brought an action against
the insurer on an assigned claim had no effect on the court’s
reasoning and provides no basis for limiting its holding in
this case.
	         This court’s cases construing ORS 18.352 confirm
that conclusion. In State Farm Fire & Cas. v. Reuter, 299 Or
155, 700 P2d 236 (1985), for example, Reuter was charged
with sexually assaulting Bullen. Reuter pleaded not guilty
by reason of mental disease or defect, but the jury rejected
the claim of mental disorder and found him guilty. At the
time of the assault, Reuter had a liability policy with State
Farm Fire & Casualty. The policy contained an exclusion for
intentional injury. Bullen initiated a civil action for dam-
ages against Reuter, alleging that the latter had committed
the assault when suffering from a mental disorder that ren-
dered the assault something other than an intentional act.
State Farm responded with an action for a declaration of
its obligations under Reuter’s policy, arguing that the crimi-
nal conviction established, as a matter of law, that damages
arising out of the sexual assault were subject to the exclu-
sion for intentional injuries. Id. at 157-58.
	        This court was thus confronted with the issue of
how Reuter’s criminal conviction affected Bullen’s claim.
The court began by noting that, clearly, Reuter was bound by
that conviction. Id. at 163. The question remained whether
Bullen, because of her legal relationship to Reuter, was
bound as well. Id. at 164. The court explained that, if Bullen
obtained a judgment against Reuter under the allegations
of her complaint, her remedies included garnishing State
Farm under what is now ORS 18.352. Id. (discussing ORS
23.230 (1989)). The problem was, the court continued, that
if she did that, then “Bullen’s rights against State Farm are
no greater than that of Reuter. As garnishor, she stands in
the shoes of the subrogor.” Id. at 166. The court noted that,
Cite as 358 Or 223 (2015)	231

   “[Bullen’s] status is now no more or less derivative than it
   was before the criminal trial, or will be after the trial of
   her claim against Reuter, or at any other time. The point is
   that, although her present status is that of a claimant, her
   future status, insofar as any claim against State Farm is
   concerned, would be as a judgment creditor of Reuter (if she
   prevails on her claim against Reuter). Within that status,
   she is subject to the claims or defenses that the insurer has
   against the one from whom she derives her claim.”

Id. at 167 (emphasis added).
	        Returning to this case, that means that Brownstone,
in bringing the garnishment action against Capitol, stands
in the shoes of the insured, A&T, and is subject to any
defenses that Capitol could assert against A&T, includ-
ing Capitol’s defense that Stubblefield applies to eliminate
Capitol’s obligation to pay. In short, Brownstone’s argument
that Stubblefield is inapplicable in the present garnishment
proceeding under ORS 18.352 is not well taken.
B.  Whether Stubblefield Was Legislatively Abrogated by
    ORS 31.825
	       Brownstone argues that, in any event, Stubblefield
was legislatively “overruled” in 1989 when the legislature
enacted ORS 31.825, which we set out again for the reader’s
convenience:
   	 “A defendant in a tort action against whom a judgment
   has been rendered may assign any cause of action that the
   defendant has against the defendant’s insurer as a result of
   the judgment to the plaintiff in whose favor the judgment
   has been entered. That assignment and any release or cov-
   enant given for the assignment shall not extinguish the
   cause of action against the insurer unless the assignment
   specifically so provides.”

Plaintiff contends that, insofar as the statute provides that
a release or covenant given in exchange for an assignment
“shall not extinguish the cause of action against the insurer,”
it strikes at the very heart of the Stubblefield decision.
	        Capitol argues that, by its terms, the statute applies
only to a settlement by a “defendant in a tort action against
232	 Brownstone Homes Condo. Assn. v. Brownstone Forest Hts.

whom a judgment has been rendered.” According to Capitol,
the tense of the emphasized phrase makes clear that the
statute applies only to a particular sequence of events: First,
a judgment is rendered, and then, once that has occurred,
an assignment and covenant not to execute are given. That,
Capitol notes, is not what happened in this case; rather, the
parties first negotiated the assignment and covenant and
only later obtained a judgment.
	        Brownstone acknowledges that the tense of the
statute’s wording “might suggest” such a sequence. But it
insists that the statute should not be constrained by what
it views as a technicality. In Brownstone’s view, the stat-
ute is at least ambiguous, and that ambiguity is resolved by
legislative history showing the legislature intended no such
temporal restriction.
	        Capitol replies that, if Brownstone were correct, then
ORS 31.825 would have the effect of abrogating Stubblefield
entirely, and there is a complete absence of evidence of any
such intention in the legislative history. To the contrary,
Capitol contends, that history shows that the legislature
intended the statute to address not Stubblefield generally,
but rather the application of Stubblefield to a particular type
of case.
	        Again, we agree with Capitol. We first note that the
wording of ORS 31.825 suggests a particular sequence of
events in which assignments, releases, and covenants “shall
not extinguish” the cause of action against the insurer. In
stating that “a defendant in a tort action against whom a
judgment has been rendered” may assign his or her claims,
and in thereafter referring to the plaintiff “in whose favor the
judgment has been entered,” the statute appears to describe
circumstances in which a judgment resolving a claim against
the defendant precedes the defendant’s assignment of his or
her claims against the insurer to the plaintiff. As this court
explained in Martin v. City of Albany, 320 Or 175, 181, 880
P2d 926 (1994), “[t]he use of a particular verb tense in a stat-
ute can be a significant indicator of the legislature’s inten-
tion.” See also Washburn v. Columbia Forest Products, Inc.,
340 Or 469, 479, 134 P3d 161 (2006) (verb tense may be dis-
positive of statutory construction); V. L. Y. v. Board of Parole,
338 Or 44, 50, 106 P3d 145 (2005) (same).
Cite as 358 Or 223 (2015)	233

	        In a related vein, we also note that the statute limits
the defendant’s power to assign causes of action “that the
defendant has against the defendant’s insurer as a result
of the judgment.” The cause of action that may be assigned
is one that “result[s]” from the judgment, which again sug-
gests a particular sequence and a particular type of claims.
If, for example, an insurer refused in bad faith to settle
within the applicable policy limits, leading to a judgment
against the insured in excess of the policy limits, such a
claim could be said to be “as a result of a judgment.” In this
case, however, the claims at issue are directed at Capitol’s
asserted breach of a contractual duty to defend and indem-
nify A&T: They do not appear to “result” in any direct sense
from a judgment.
	        The legislative history confirms what the text of
ORS 31.825 suggests. The statute was enacted in 1989 as
SB 519 (1989). The original bill, introduced at the request
of the Oregon Trial Lawyers Association (OTLA), provided
injured plaintiffs with a direct claim against a defendant’s
insurer in the sort of “excess judgment” cases that we have
just described:
   	 “The plaintiff in a tort action may commence a direct
   action against an insurer of a defendant to recover the
   amount of a judgment in excess of the amount of limits
   of insurance available to the defendant in the tort action
   if the defendant is otherwise entitled to maintain the
   action against the insurer. The plaintiff need not obtain
   any assignment of rights against the insurer from the
   defendant.”
That focus on excess judgment claims also is evident from
the testimony of Mick Alexander, who represented OTLA.
He testified to the Senate Judiciary Committee that the bill
“allows a plaintiff in a tort action to directly commence an
action against an insurer of a defendant to recover an excess
judgment.” Testimony, Senate Judiciary Committee, SB
519, Mar 27, 1989, Ex D (statement of Mick Alexander). He
explained that the bill was prompted by a Court of Appeals
case, Oregon Mutual Ins. Co. v. Gibson, 88 Or App 574, 746
P2d 245 (1987), which applied Stubblefield to an “excess
judgment” case, thereby “ma[king] it very difficult for a
plaintiff to be able to proceed to recover an excess judgment
234	 Brownstone Homes Condo. Assn. v. Brownstone Forest Hts.

and also release the insured defendant from the litigation.”
According to Alexander,
    “[t]his bill involves traditional ‘bad faith’ claims in a third
    party setting. In other words, a third party has brought an
    action against an insured, and the insured’s own company
    has failed to take reasonable grounds to settle the case
    within the policy limits. Oregon recognizes that under such
    [a] setting, if a judgment is recovered in excess of the policy
    limits, then the insured has a potential claim against his
    own insurance company for this excess judgment.”
Id. He also explained that the bill would provide the same
kind of direct action against insurers in excess judgment
cases that ORS 743.772 (1989) (now codified at ORS 742.031) 2
provides for judgments against insured defendants that are
within policy limits. Id.
	        The Oregon Association of Defense Counsel, repre-
sented by John Buehler, objected to the bill. Buehler explained
to the Senate Judiciary Committee that providing third-party
claimants with a direct cause of action against a defendant’s
insurer in “bad faith” and negligence cases was contrary to
public policy principles that this court had recognized in
Pringle v. Robertson, 258 Or 389, 483 P2d 814 (1971).3 He
also noted that, under then-extant law, an insured defendant
could assign a “bad faith” refusal to settle claim against the
	2
       The referenced statute, ORS 742.031, provides:
    	 “A policy of insurance against loss or damage resulting from accident
    * * * for which the person insured is liable shall contain within said policy a
    provision substantially as follows: ‘Bankruptcy or insolvency of the insured
    shall not relieve the insurer of any of its obligations hereunder. If any per-
    son or legal representative of the person shall obtain final judgment against
    the insured because of any such injuries, and execution thereon is returned
    unsatisfied by reason of bankruptcy, insolvency or any other cause, or it such
    judgment is not satisfied within 30 days after it is rendered, then such per-
    son or legal representatives of the person may proceed against the insurer
    to recover the amount of such judgment, either at law or in equity, but not
    exceeding the limit of this policy applicable thereto.’ ”
	3
      In Pringle, this court considered a plaintiff’s attempt to garnish a judgment
against an insured defendant, in excess of the limits of the defendant’s policy,
from the defendant’s insurer, on the theory that the defendant’s claim against the
insurer for negligently or in bad faith failing to settle within the policy limits was
“property” of the defendant in the hands of the insurer and subject to garnish-
ment. This court held that it was against public policy to allow a third party to
prosecute the defendant’s claim against the insurer without an assignment, and
that the claim therefore was not subject to garnishment. 258 Or at 390-94.
Cite as 358 Or 223 (2015)	235

defendant’s insurer to a plaintiff who had obtained an excess
judgment against the defendant. Finally, he noted that ORS
23.230 (1989) (now codified at ORS 18.352) and ORS 743.772
(1989) (now codified at ORS 742.031) already provided plain-
tiffs with a means of collecting the policy limits from insur-
ers, and he argued that the insured “should have the sole
power and authority to decide whether any bad faith claim
should be pursued against his insurer for any excess liabil-
ity.” Testimony, Senate Judiciary Committee, SB 519, Mar 27,
1989, Ex E (statement of John Buehler).
	       After Buehler testified, the committee discussed
a proposed amendment to the bill that would require an
assignment by the defendant of his or her claims against
the insurer, but would provide that the assignment “shall
not extinguish the cause of action against the insurer.” At
that point, Buehler and the committee’s counsel, Webber,
discussed the timing of the assignment under the modified
wording, which roughly follows the wording of ORS 31.825:
   	 “COUNSEL WEBBER:  SB 519 would only kick in and
   the assignment would only take place after the court has
   issued the judgment in excess of policy coverage?
   	   “MR. BUEHLER:  That is the reading of the bill * * *.
   	 “COUNSEL WEBBER:  But a judgment under the
   underlying coverage is a precursor to getting the assign-
   ment.
   	   “MR. BUEHLER:  That is correct.”
Tape Recording, Senate Judiciary Committee, SB 519, Mar 27,
1989, Tape 82, Side A (emphasis added).
	       The Senate Judiciary Committee passed the
amended bill and sent it on to the Civil Law Subcommittee
of the House Committee on the Judiciary. There, the bill’s
OTLA proponents continued to describe the bill’s purpose
in terms of “excess judgments.” Tape Recording, House
Committee on Judiciary, Civil Law Subcommittee, SB 519,
May 22, 1989, Tape 103, Side B (Testimony of Charles
Williamson). Also in that subcommittee, OTLA proposed a
further amendment to the bill to clarify that not only an
assignment of a defendant’s claims against his or her insurer,
but “any release or covenant given for the assignment,”
236	 Brownstone Homes Condo. Assn. v. Brownstone Forest Hts.

would not extinguish the cause of action against the insurer.
The subcommittee passed the bill with the proposed amend-
ment. The staff measure summary prepared at the time
again described the bill (which, at that point, was in the
form that the legislature would enact into law) in terms of
an insurer’s bad faith refusal to settle within policy lim-
its. Exhibit K, House Committee on Judiciary, Civil Law
Subcommittee, SB 519A, May 22, 1989 (staff measure sum-
mary) (“The measure would allow a defendant to assign a
bad faith claim to the plaintiff without extinguishing the
cause of action by the act of assignment.”).
	        The foregoing legislative history dispels any doubt
about what the legislature intended by enacting ORS 31.825.
It intended to allow insured defendants to assign a specific
type of claim against their insurer—claims that the insurer’s
negligent or bad faith failure to settle within policy limits
had resulted in an “excess judgment”—to the plaintiff, in
exchange for a covenant not to execute against the defen-
dant, without extinguishing the underlying liability. And it
intended to permit that outcome only when the excess judg-
ment is in place before the assignment is given. Contrary to
Brownstone’s theory, there is no evidence that the legisla-
ture intended to abrogate Stubblefield in its entirety.
C.  Whether Stubblefield Should Be Overruled
	        There remains Brownstone’s argument that Stubble-
field was wrongly decided and should be overruled. Our con-
sideration of that argument is constrained by the doctrine
of stare decisis, which requires that we “begin with the
assumption that issues considered in our prior cases are cor-
rectly decided.” Farmers Ins. Co. v. Mowry, 350 Or 686, 698,
261 P3d 1 (2011). At the same time, however,
      “this court’s obligation * * * when formulating the common
      law is to reach what we determine to be the correct result
      in each case. If a party can demonstrate that we failed in
      that obligation and erred in deciding a case, because we
      were not presented with an important argument or failed
      to apply our usual framework for decision or adequately
      analyze the controlling issue, we are willing to reconsider
      the earlier case.”
Id.
Cite as 358 Or 223 (2015)	237

	        In this case, Brownstone argues that the court in
Stubblefield failed to apply the usual framework for inter-
preting policies of insurance and failed to offer any reasoned
explanation for its conclusion about the effects of the settle-
ment agreement. According to Brownstone, the court simply
declared, ipse dixit, that, when a policy covers damages that
an insured is “legally obligated to pay” and the insured agrees
to entry of a stipulated judgment against it in exchange for
the plaintiff’s covenant not to execute the stipulated judg-
ment, that settlement eliminates the liability of both the
insured and the insurer. That conclusion, Brownstone con-
tends, is incorrect, because a covenant not to execute does
not extinguish a claim or eliminate liability, but rather con-
stitutes an agreement by the settling plaintiff not to execute
on the judgment. At the very least, Brownstone contends, the
Stubblefield court should have acknowledged that the phrase
“legally obligated to pay” is ambiguous, triggering the rule
that such ambiguous terms must be construed against the
insurer. Brownstone observes that Stubblefield, in reaching
a contrary conclusion, stands virtually alone. Nearly every
other state court that has addressed the issue, it asserts, has
concluded that covenants not to execute do not extinguish
claims so as to preclude recovery from an insurer.
	        Capitol argues that Stubblefield has stood as prece-
dent for more than four decades and should not be disturbed.
The phrase “legally obligated to pay,” the insurer argues,
has a plain meaning—the meaning that the court identified
in that decision. In Capitol’s view, we should be undeterred
by decisions of other state courts, however many of them
there may be.
	       On this issue, Brownstone has the better of the
argument. As it correctly notes, this court’s reasoning in
Stubblefield was sparse, to say the least. The entirety of
its analysis of the meaning of the policy and its effect on
the insurer’s liability consisted of the four sentences that
we have quoted above, without any reference to our usual
approach to interpreting policies of insurance, see Hoffman
Construction Co. v. Fred S. James & Co., 313 Or 464, 470-
71, 836 P2d 703 (1992) (summarizing analysis), and indeed,
without citation to any authority. The court engaged in no
examination of the wording of the policy, no consideration of
238	 Brownstone Homes Condo. Assn. v. Brownstone Forest Hts.

its context, no determination whether the policy was ambig-
uous, and no discussion of what considerations weighed in
favor of resolving any ambiguity one way or the other. The
court simply concluded summarily that an insured who has
received a covenant not to execute a judgment for damages
is not “legally obligated to pay” those damages.
	        As it turns out, however, there is much more to the
issue than that. The court’s bare conclusion in Stubblefield
glosses over a number of issues that lead us to conclude that
its holding must be reconsidered.
	First, Stubblefield paid inadequate attention to the
court’s own prior case law, in particular, Groce v. Fidelity
General Insurance, 252 Or 296, 448 P2d 554 (1968). In that
case, Stayton was involved in an auto accident in which
one person was killed and another injured. Fidelity, which
insured Stayton, declined to settle for its insured’s policy
limits. Thereafter, the plaintiffs obtained a judgment against
Stayton for well in excess of those policy limits. Stayton
settled with the plaintiffs. Under the terms of the settle-
ment agreement, he assigned his claims against Fidelity
for wrongful refusal to settle in exchange for a release of
liability. Fidelity meanwhile paid its policy limits, but no
more. When the plaintiffs then proceeded against Fidelity,
the insurer argued that the claim was not assignable. The
court, however, rejected Fidelity’s arguments.
	        Fidelity began by arguing that allowing assign-
ability of such claims would “foster collusion and mili-
tate against settlements.” The court found that argument
“unconvincing.” Id. at 304. “All an insurance company need
to do to avoid the evils of collusion is to exercise good faith
with reference to the rights of its insured.” Id.
	        Fidelity then argued that, because Stayton had
been released, there was no further liability for Fidelity to
cover. The court rejected that argument as well, explaining
that accepting it would “defeat the purpose of these assign-
ments. An injured plaintiff would be reluctant to accept an
assignment unless it provided that the insured would be
released only upon full recovery from the insured,” and the
result would be a “needlessly complicated and unjust proce-
dure.” Id. at 310-11.
Cite as 358 Or 223 (2015)	239

	        The court’s rationale concerning the latter point
would seem directly applicable to Stubblefield. But the
court in Stubblefield was apparently unaware. It did
mention Groce, but then—oddly—declared that it did not
have to address the applicability of the decision because
the policy at issue in Stubblefield required the insurer to
cover only those sums its insured was “legally obligated
to pay,” and the covenant not to execute eliminated any
such legal obligation. 267 Or at 400. To be sure, there is
no indication that the policy in Groce contained the same
“legally obligated to pay” phrase. But the insurer’s argu-
ment in that case was essentially the same argument that
the insurer made in Stubblefield—that the settlement, by
eliminating the insured’s further liability, extinguished
the insurer’s, as well. Stubblefield did not even address
the point.4
	         Second, apart from prior precedent, there is the
doctrinal question whether a covenant not to execute con-
stitutes a release that, of its own force, extinguishes any
further liability. Courts in other jurisdictions that have
considered that question have concluded, almost uniformly,
that it does not. See generally Justin A. Harris, Judicial
Approaches to Stipulated Judgments, Assignments of Rights,
and Covenants Not To Execute in Insurance Litigation, 47
Drake L Rev 853, 858 (1999) (“The majority rule is that a
covenant not to execute is a contract and not a release—tort
liability on behalf of the insured still exists and the provider
is still obligated to indemnify its insured. * * * The trend
seems to lean overwhelmingly toward the majority rule.”).
They have concluded, instead, that, when a covenant not to
execute is given in the context of a settlement agreement
for valuable consideration (specifically, an assignment of
claims), it is a contractual promise not to sue the defendant
on the judgment and not a release or extinguishment of the
defendant’s legal obligation to pay it.

	4
       Stubblefield suggested that Groce was distinguishable on the theory that it
arose under a statute that provided tort plaintiffs who obtain a judgment against
an insured defendant with a direct action against the defendant’s insurer, if the
judgment was not paid within 30 days. Stubblefield, 267 Or at 401. But that sug-
gestion, if intended, was incorrect: As described, the plaintiffs in Groce proceeded
against the defendant’s insurer under an assignment, not under the statute.
240	 Brownstone Homes Condo. Assn. v. Brownstone Forest Hts.

	        The Illinois Supreme Court’s decision in Guillen
ex rel. Guillen v. Potomac Ins. Co. of Illinois, 203 Ill 2d 141,
785 NE2d 1 (2003), serves to illustrate. In that case, the
plaintiff initiated an action against her landlords for lead
poisoning resulting from exposure to lead-based paint and
dust in her apartment. The landlords’ insurer denied any
obligation to defend or indemnify. The plaintiff eventually
settled with her landlords, who agreed to a judgment against
them for $600,000 in exchange for a covenant not to execute
that judgment and an assignment of their claim against the
insurer. The plaintiff then initiated an action against the
insurer under the assignment. The insurer argued that, in
light of the settlement, there remained nothing that defen-
dants were “legally obligated” to pay and, as a result, noth-
ing for the insurer to indemnify. Id. at 142-46.
	          The court rejected the argument, explaining:
    	 “When confronted by a settlement agreement consisting
    of a stipulated judgment, an assignment and a covenant
    not to execute, insurers have maintained * * * that the cov-
    enant not to execute effectively extinguishes the insured’s
    legal obligation to pay since the insured has no compelling
    obligation to pay any sum to the injured party. The major-
    ity of courts, however, have rejected this argument.
    	 “The construction of the ‘legally obligated to pay’ lan-
    guage adopted by the majority of the courts is a technical,
    rather than practical, one. Courts accepting the conclusion
    that the insured remains ‘legally obligated to pay’ when the
    settlement consists of a judgment, covenant not to execute,
    and an assignment hold that a covenant not to execute is a
    contract and not a release. The insured still remains liable
    in tort and a breach of contract action lies if the injured
    party seeks to collect on the judgment. Thus, under this
    construction, the insured is still ‘legally obligated’ to the
    insured plaintiff, and the insured retains the right to
    indemnification from the insurer.”
Id. at 160 (citations omitted).5
	5
       See also Gray v. Grain Dealers Mut. Ins. Co., 871 F2d 1128, 1133 (DC Cir
1989) (“[W]e see no reason why, under D.C. and North Carolina law, we should
not construe the assignment and release to give full effect to its terms.”); Globe
Indemnity Co. v. Blomfield, 115 Ariz 5, 8, 562 P2d 1372, 1375 (1977) (“A covenant
not to execute is merely a contract and not a release. It seems reasonable to con-
clude, therefore, that the insured’s tort liability remains but that he has an action
Cite as 358 Or 223 (2015)	241

	        Other courts adopt the majority view, but for a
slightly different reason: namely, that the phrase “legally
obligated to pay,” if undefined in the policy, is ambiguous
and, as a result, must be construed against the insurer. See,
e.g., Metcalf v. Hartford Accident & Indemnity Co, 176 Neb
468, 126 NW2d 471 (1964); Coblenz v. American Surety Co,
416 F2d 1059, 1062-63 (5th Cir 1969) (applying Florida law);
American Mutual Insurance Co. v. Kivela, 408 NE2d 805,
812-13 (Ind Ct App 1980).
	        There is a minority view, which holds that even if,
doctrinally speaking, a covenant not to execute does not
extinguish liability, it nevertheless has that practical effect.
Courts adopting that view invoke a competing public policy
of avoiding the possibility of collusion between the plaintiff
and the insured defendant. Freeman v. Schmidt Real Estate
& Insurance, Inc., 755 F2d 135 (8th Cir 1985), is the leading
decision for that the minority view. In that case, the defen-
dant confessed judgment and assigned his claim against his
insurer to the plaintiff in exchange for the plaintiff’s covenant
not to execute the judgment. When the plaintiff brought the
assigned claim against the insurer, the trial court entered
summary judgment against the plaintiff, concluding that
the covenant not to execute relieved the defendant of any
obligation to pay the plaintiff and, as a result, relieved the
insurer of any obligation to indemnify. Id. at 136-37.

for breach of contract if the plaintiff attempts to collect the judgment in violation
of the covenant.”); McLellan v. Atchison Ins. Agency, Inc., 81 Haw 62, 68, 912 P2d
559, 565 (1996) (“[T]he better choice is to hold that a covenant not to execute does
not per se eliminate the fact of damages and then to permit an injured plaintiff to
recover damages from the insurer.”); Campione v. Wilson, 422 Mass 185, 192-93,
661 NE2d 658, 662 (1996) (“[W]e discern no compelling reason not to recognize
the assignment of the negligence claims.”); J & J Farmer Leasing, Inc. v. Citizens
Ins. Co. of America, 472 Mich 353, 696 NW2d 681, 684 (2005) (“[A] covenant not
to sue is merely an agreement not to sue on an existing claim. It does not extin-
guish a claim or cause of action.”); Kobbeman v. Oleson 574 NW2d 633, 636 (SD
1998) (A covenant not to execute is “merely a contract * * * such that the under-
lying tort liability remains and a breach of contract action lies in favor of the
insured if the injured party seeks to collect his judgment.”); Tip’s Package Store,
Inc. v. Commercial Ins. Managers, Inc., 86 SW3d 543, 555 (Tenn 2001) (“covenant
not to execute * * * was a contract between these parties which did not extinguish
the underlying liability”); Gainsco Ins. Co. v. Amoco Production Co., 53 P3d 1051,
1061 (Wyo 2002) (“We agree with * * * those cases that find that the inclusion of
a covenant not to execute in the settlement agreement between an insured and a
claimant * * * does not bar the claimant, an assignee of the insured, from pursu-
ing a claim against the insurer.”).
242	 Brownstone Homes Condo. Assn. v. Brownstone Forest Hts.

	         The Court of Appeals for the Eighth Circuit
affirmed. The federal court noted that the issue was one
of first impression under Iowa state law, but that consider-
ations of public policy weighed in favor of giving a practical
construction to covenants not to execute and holding that
they extinguishing further liability. Id. at 139. Specifically,
the Eighth Circuit explained that existing Iowa case law
reflected concern about encouraging “collusive settlements,”
which might result from allowing the assignment of claims
against insurers under the circumstances of that case. Id.6

	        It is worth noting, however, that when the Iowa
Supreme Court later addressed the issue, it rejected the
Eighth Circuit’s view of that state’s law. In Red Giant Oil
Co. v. Lawlor, 528 NW2d 524 (Iowa 1995), the Iowa Supreme
Court concluded that the Eighth Circuit’s concern about
the possibility of collusive settlements was misplaced.
“Prejudgment assignments * * * in return for covenants not
to execute,” the court explained, “are not inherently collu-
sive or fraudulent.” Id. at 533. Moreover, the court contin-
ued, such agreements are supported by a countervailing
policy that insureds should be entitled to protect themselves
against insurers who wrongfully refuse to defend. Id. In the
end, the Iowa Supreme Court concluded that, consistently
with the majority view, a covenant not to execute “was
merely an agreement * * * and was not a release,” leaving
the insured still “legally obligated” to the plaintiff. Id. at

	6
       Two other courts of which we are aware have concluded that a covenant not
to execute extinguishes any legal obligation to pay. In Huffman v. Peerless Ins.
Co., 17 NC App 292, 294, 193 SE2d 773, 774 (1973), the North Carolina Court
of Appeals held that a plaintiff proceeding under assignment of rights from
insured defendants with whom it settled could not obtain indemnity from the
defendant’s insurer. The court’s sole explanation was that “[o]bviously, under the
terms of the consent judgment [the insureds] were not legally obligated to pay
damages to plaintiff.” In Bendall v. White, 511 F Supp 793, 794 (ND Ala 1981),
a federal district court reached a similar conclusion, based on its own under-
standing of Alabama law. However, the Supreme Court of Alabama effectively
rejected Bendall as a correct statement of Alabama law in Liberty Mut. Ins. Co. v.
Wheelwright Trucking Co., Inc., 851 So2d 466, 488-91 (Alabama 2002). In a third
case, American Cas. Co. of Reading, Pa. v. Griffith, 107 Ga App 224, 227, 129
SE2d 549, 551-52 (1963), the court appeared to embrace something akin to the
minority rule in the context of a completely different kind of agreement. Griffith
was found to be distinguishable in Dowse v. Southern Guarantee Ins. Co., 263 Ga
App 435, 441-42, 588 SE2d 234, 238 (2003), a later Georgia case holding that a
covenant not to execute does not extinguish the insured defendant’s liability.
Cite as 358 Or 223 (2015)	243

532. Citing Metcalf, the court added that, at best, the refer-
ence in the policy to amounts that the insured was “legally
obligated to pay” was ambiguous, and, because of that ambi-
guity, the phrase must be construed against the insurer,
leaving the insurer obligated to indemnify the insured from
liability if there is coverage under the terms of the policy. Id.
at 533.
	         Of course, the terms of a particular settlement
agreement could make it clear that the parties to that agree-
ment intended the covenant not to execute to have the effect
of extinguishing further liability. Cf. James v. Clackamas
County, 353 Or 431, 441-42, 299 P3d 526 (2013) (to deter-
mine intent of contract term, court looks at contract as a
whole); Yogman v. Parrott, 325 Or 358, 361, 937 P2d 1019
(1997) (court determines meaning of contract term in the
context of the parties’ entire agreement). In that regard, this
court’s decision in Lancaster v. Royal Ins. Co. of America, 302
Or 62, 726 P2d 371 (1986), warrants careful attention. In
that case, the plaintiff was injured in an auto accident. He
brought an action against the defendant and the defendant’s
insurer, which had denied coverage and refused to defend
its insured. Plaintiff ultimately settled with the defendant.
Under the terms of that settlement, the defendant agreed to
a stipulated judgment against him and to assign his rights
against his insurer to the plaintiff. In return, the plaintiff
agreed not to execute the judgment against the defendant
“personally.” When the plaintiff later sued the defendant’s
insurer as the defendant’s assignee, the insurer invoked
Stubblefield for the contention that the covenant not to exe-
cute had extinguished both the defendant’s and the insurer’s
liability. The trial court granted summary judgment for the
insurer on that ground. Id. at 64-65.
	          This court reversed, concluding that whether a set-
tlement including a covenant not to execute extinguishes
liability depends on the wording of the particular settlement
agreement. “When an insured gives an injured party an
assignment of rights in exchange for a ‘covenant not to exe-
cute,’ ” the court explained, “the agreements are a contract
and their effect is determined by standard contract princi-
ples, i.e., interpretation of the language of the agreements.”
Id. at 67. The particular wording of the covenant—promising
244	 Brownstone Homes Condo. Assn. v. Brownstone Forest Hts.

not to execute against defendant personally—led the court
to conclude that “the covenant involved here is ambigu-
ous as to whether the insured was legally obligated to the
plaintiff.” Id. Consequently, the court held, it was error for
the trial court to have granted summary judgment to the
insurer. Id. at 68-69.

	         Lancaster has been read by some to have overruled,
implicitly, this court’s earlier Stubblefield decision. See, e.g.,
Harris, 47 Drake L Rev at 858-59 n 25 (citing Lancaster
as “having the practical effect of overruling Stubblefield”).
We need not determine whether that characterization of
Lancaster is accurate because we conclude, expressly, that
Stubblefield was wrongly decided. The decision stands
unsupported by any explanation or analysis. It cannot eas-
ily be reconciled with then-existing precedents, in partic-
ular, Groce. And it is contradicted by the well-considered
decisions of nearly every other court to have considered
the question whether a covenant not to execute, in and of
itself, acts as a release that extinguishes further liability.
The argument that agreements containing assignments in
exchange for such covenants invite collusion was anticipated
and summarily rejected in Groce. And, in any event, there
is no argument in this case that any collusion occurred. We
leave for another day the issue whether collusion or fraud in
a settlement might supply grounds for rejecting a stipulated
or consent judgment given in exchange for a covenant not to
execute.7
	7
      Some courts have suggested that, because of the danger of collusion or
fraud, insurers can never be bound by a stipulated judgment arising out of a set-
tlement agreement involving an assignment of rights in exchange for a covenant
not to execute. See, e.g., State Farm Fire and Cas. Co. v. Gandy, 925 SW2d 696,
714 (Tex 1995). Others appear to treat the stipulated judgment as presumptive
evidence of the insured’s liability and the amount of the damages, which pre-
sumption the insurer may rebut by showing that the settlement was unreason-
able or in bad faith. See, e.g., Kershaw v. Maryland Casualty Co., 172 Cal App
2d 248, 342 P2d 72 (1959). Still others treat the issues of reasonableness and
collusion/good faith as entirely separate issues, requiring the party seeking to
recover from the insurer to bear the burden of proof on the issue of reasonable-
ness and then allowing the insurer to raise collusion and bad faith as affirmative
defenses. See, e.g., Red Giant Oil, 528 NW2d at 534-35 (describing and applying
that approach). Finally, some courts employ a burden shifting approach, under
which the party seeking recovery must bear the initial burden of producing evi-
dence sufficient to establish a presumption of reasonableness and good faith: If
that burden of production is satisfied, the burden shifts to the insurer to persuade
Cite as 358 Or 223 (2015)	245

	        At the very least, we agree with other courts
that have concluded that the phrase “legally obligated to
pay”—at least as it is commonly used in liability insurance
policies—is ambiguous, thus triggering the well-worn rule
that such ambiguities in insurance policies are to be con-
strued against the insurer. Hoffman Construction, 313 Or at
469-70 (“[A]mbiguous terms contained within an insurance
policy are to be construed against the insurer, who drafted
the policy.”); Chalmers v. Oregon Auto Ins. Co., 262 Or 504,
509, 500 P2d 258 (1972) (same); Farmers Mut. Ins. Co. v. Un.
Pac. Ins., 206 Or 298, 305, 292 P2d 492 (1956) (same).
	        As we have just noted, it certainly is possible that
parties can frame settlements in such a way as to make
clear an intention that a covenant not to execute has the
effect of completely releasing the insured from liability. In
this case, however, the parties do not refer to any particular
provision of the settlement agreement that unambiguously
evinces that intention. To the contrary, the terms of the
settlement agreement spell out the parties’ shared intent
that Brownstone would be able to satisfy the judgment from
A&T’s insurance assets. The settlement agreement does
contain a release, but the agreement also expressly excepts
from that release claims by Brownstone against Capitol.
	        In overruling Stubblefield, we are mindful of the fact
that it has remained the law of this state for more than 40
years. See Mowry, 350 Or at 700-01 (noting the importance
of reliance on existing precedents in the area of commercial
transactions). But there is no indication that, during that
time, the decision has been relied on extensively. In fact,
this court has addressed Stubblefield in only two subsequent
cases. The first was Collins v. Fitzwater, 277 Or 401, 560 P2d
1074 (1977), in which this court distinguished Stubblefield on
the ground that the assignment and nonexecution covenant
at issue had preceded the judgment against the defendant.
The court declined to conclude that the covenant at issue,
which had post-dated the stipulated judgment in the case,

the court by a preponderance of the evidence that the settlement is unreasonable,
collusive, or fraudulent. See, e.g., Griggs v. Bertram, 88 NJ 347, 364-68, 443 A2d
163, 171-74 (1996) (using burden shifting approach); Pruyn v. Agricultural Ins.
Co., 36 Cal App 4th 500, 528-30, 42 Cal Rptr 2d 36 (1995) (same).
246	 Brownstone Homes Condo. Assn. v. Brownstone Forest Hts.

had released the insurer along with the defendant/insured.
Id. at 409-11. The second case was Lancaster, which, if it did
not implicitly overrule Stubblefield, significantly limited it
to cases in which the settlement agreement unambiguously
and unconditionally eliminates insurance liability. In both
cases, the court limited the reach of Stubblefield. In neither
did the court have the opportunity to consider Stubblefield’s
doctrinal or logical underpinnings.
	         Likewise, the Court of Appeals has applied Stubble-
field in only a handful of cases over the past four decades. In
Leach v. Scottsdale Indemnity Co., 261 Or App 234, 248, 323
P3d 337, rev den, 356 Or 400 (2014), the Court of Appeals
followed Lancaster and concluded that the ambiguity of the
relevant settlement agreement rendered Stubblefield inap-
plicable. The court did the same thing in Terrain Tamers v.
Insurance Marketing Corp., 210 Or App 534, 541, 152 P3d
915, rev den, 343 Or 115 (2007), and Warren v. Farmers Ins.
Co., 115 Or App 319, 332, 838 P2d 620 (1992). In Portland
School Dist. v. Great American Ins. Co., 241 Or App 161, 175-
76, 249 P3d 148, rev den, 350 Or 573 (2011), the court con-
cluded that Stubblefield did not apply because the underlying
agreement expressly reserved claims against the insurer. In
only two decisions of which we are aware, Far West Federal
Bank v. Transamerica Title Ins. Co., 99 Or App 340, 345, 781
P2d 1259 (1989), rev den, 309 Or 441 (1990), and Gibson, 88
Or App at 574-78, did the Court of Appeals conclude that
Stubblefield controlled.
	Moreover, Stubblefield did not announce the sort
of rule that later became the basis for structuring common
commercial transactions, as for example, the rule at issue in
Mowry, on which insurers relied in drafting standard insur-
ance policies. 350 Or at 700-01. Under the circumstances,
the passage of time does not weigh particularly heavily in
our evaluation of the continuing vitality of the Stubblefield
decision.
	        In short, we conclude that Stubblefield erred when
it concluded that a covenant not to execute obtained in
exchange for an assignment of rights, by itself, effects a com-
plete release that extinguishes an insured’s liability and,
by extension, the insurer’s liability as well. It necessarily
Cite as 358 Or 223 (2015)	247

follows that the trial court in this case likewise erred in con-
cluding that the existence of such a covenant not to execute
as a component of the parties’ settlement agreement had the
effect of extinguishing A&T’s liability to Brownstone and,
as a result, had the effect of extinguishing Capitol’s liability
as well.
	        The judgment of the circuit court and the decision of
the Court of Appeals are reversed, and the case is remanded
to the circuit court for further proceedings.
