Seneca Insurance Company v. James River Insurance Company
Filing
22
OPINION AND ORDER ON MOTION FOR SUMMARY JUDGMENT: Plaintiff's Motion for Summary Judgment 10 is granted in part and reserved in part. The court finds James River has a duty to defend Superwall, and the duty commenced upon the filing of the underlying action. The court reserves ruling on the amount of Senecas damages until Seneca files its detailed motion for defense costs. Signed on 7/17/14 by Magistrate Judge Dennis J. Hubel. (kb)
1
2
UNITED STATES DISTRICT COURT
3
DISTRICT OF OREGON
4
PORTLAND DIVISION
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6
7
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10
11
SENECA INSURANCE COMPANY,
a New York corporation,
)
)
)
Plaintiff,
)
No. 03:14-cv-00108-HU
)
vs.
)
)
JAMES RIVER INSURANCE COMPANY,
)
OPINION AND ORDER ON
an Ohio corporation,
) MOTION FOR SUMMARY JUDGMENT
)
Defendant.
)
_____________________________
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13
14
John Loring Langslet
Martin Bischoff Templeton Langslet & Hoffman
888 SW Fifth Avenue, Suite 900
Portland, OR 97204
15
Attorney for Plaintiff
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17
18
Elizabeth E. Lampson
davis Rothwell Earle & Xochihua, PC
111 SW 5th Avenue, Suite 2700
Portland, OR 97204
19
Attorney for Defendant
20
21
22
23
HUBEL, Magistrate Judge:
24
The
plaintiff
Seneca
Insurance
Company
(“Seneca”)
brings
25
this action against the defendant James River Insurance Company
26
(“James River”), seeking a declaratory judgment that James River
27
has
28
(“Superwall”),
a
duty
to
in
defend
an
1 - OPINION AND ORDER
its
action
insured
pending
Superwall
in
the
Design,
Multnomah
LLP
County
1
Circuit Court entitled S.D. Deacon Corp. of Oregon v. Superwall
2
Design,
3
Seneca also seeks a money judgment for 50% of its defense costs
4
in defending Superwall and one of its principals, Paul Maughan,
5
in the underlying action.
6
LLP,
Case
No.
1209-11587
(the
“underlying
action”).
The case is before the court on Seneca’s motion for summary
7
judgment, Dkt. #10.
The motion is fully briefed, and the court
8
heard oral argument on the motion on July 17, 2014.
9
have consented to jurisdiction and the entry of final judgment
10
by a United States Magistrate Judge, in accordance with Federal
11
Rule of Civil Procedure 73(b).
12
consideration of the motion.
The parties
Accordingly, the court turns to
13
Notably, as James River pointed out during oral argument,
14
Seneca’s Complaint only makes a claim for relief regarding James
15
River’s duty to defend Superwall; the Complaint asks nothing
16
with regard to Maughan.
17
to amend its Complaint to include a claim for Maughan’s defense,
18
without prejudice to the filing of a formal motion to amend,
19
should Seneca so desire.
20
current
21
River’s duty to defend Superwall, not Maughan.
motion
for
The court denied Seneca’s oral motion
Similarly, the court’s ruling on the
summary
judgment
applies
only
to
James
22
I.
23
SUMMARY JUDGMENT STANDARDS
24
Summary judgment should be granted “if the movant shows that
25
there is no genuine dispute as to any material fact and the
26
movant is entitled to judgment as a matter of law.”
27
Civ. P. 56(c)(2).
28
the court “must not weigh the evidence or determine the truth of
Fed. R.
In considering a motion for summary judgment,
2 - OPINION AND ORDER
1
the matter but only determine whether there is a genuine issue
2
for trial.” Playboy Enters., Inc. v. Welles, 279 F.3d 796, 800
3
(9th Cir. 2002) (citing Abdul-Jabbar v. General Motors Corp., 85
4
F.3d 407, 410 (9th Cir. 1996)).
5
The
Ninth
Circuit
Court
of
Appeals
has
described
“the
6
shifting burden of proof governing motions for summary judgment”
7
as follows:
8
9
10
11
12
13
14
15
16
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19
20
21
22
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The moving party initially bears the burden
of proving the absence of a genuine issue of
material fact.
Celotex Corp. v. Catrett,
477 U.S. 317, 323, 106 S. Ct. 2548, 91 L.
Ed. 2d 265 (1986).
Where the non-moving
party bears the burden of proof at trial,
the moving party need only prove that there
is an absence of evidence to support the
non-moving party’s case. Id. at 325, 106 S.
Ct. 2548. Where the moving party meets that
burden, the burden then shifts to the nonmoving party to designate specific facts
demonstrating
the
existence
of
genuine
issues for trial.
Id. at 324, 106 S. Ct.
2548. This burden is not a light one. The
non-moving party must show more than the
mere existence of a scintilla of evidence.
Anderson v. Liberty Lobby, Inc., 477 U.S.
242, 252, 106 S. Ct. 2505, 91 L. Ed. 2d 202
(1986).
The non-moving party must do more
than show there is some “metaphysical doubt”
as
to
the
material
facts
at
issue.
Matsushita Elec. Indus. Co., Ltd. v. Zenith
Radio Corp., 475 U.S. 574, 586, 106 S. Ct.
1348, 89 L. Ed. 2d 528 (1986). In fact, the
non-moving
party
must
come
forth
with
evidence from which a jury could reasonably
render a verdict in the non-moving party’s
favor. Anderson, 477 U.S. at 252, 106 S. Ct.
2505. In determining whether a jury could
reasonably render a verdict in the nonmoving
party’s
favor,
all
justifiable
inferences are to be drawn in its favor.
Id. at 255, 106 S. Ct. 2505.
25
In re Oracle Corp. Securities Litigation, 627 F.3d 376, 387 (9th
26
Cir. 2010).
27
28
3 - OPINION AND ORDER
II.
1
2
Both
Seneca
and
CHOICE OF LAW
James
River
are
foreign
corporations
3
authorized to write insurance in Oregon.
It is undisputed that
4
both Superwall’s conduct, and the resulting injury alleged in
5
the underlying action, occurred in Oregon.
6
law controls the resolution of the parties’ dispute.
7
§ 15.440(3)(a).
Therefore, Oregon
See ORS
8
III.
9
BACKGROUND FACTS
10
The underlying action alleges construction defects in the
11
Sand & Sea Condominiums, a 60-unit complex located in Seaside,
12
Oregon. In its original Complaint in the underlying action, S.D.
13
Deacon
14
entered
15
association
16
renovation of various portions of Sand & Sea, including to the
17
curtain wall assemblies at the Project[.]”
18
Deacon subcontracted with Superwall “for work on the Curtain
19
Wall Renovation. . . .” Id., ¶ 6.
20
Corp.
At
(“Deacon”)
into
a
(the
some
alleged
contract
with
“Association”)
point
not
that
the
February
Sand
“for
specified
in
&
the
in
Sea
2011,
unit
it
owners
reconstruction
and
Dkt. #11-1, ¶ 5.
the
Complaint,
the
21
Association “notified Deacon of property damage and construction
22
defect issues
23
Curtain Wall Renovation at Sand & Sea.”
24
investigated the Association’s allegations, a process in which
25
Deacon claims Superwall declined to participate.
26
10.
27
alleged property damage was “the result of . . . construction
28
defects,
allegedly
arising
out
of,
or
relating
Id., ¶ 8.
to,
the
Deacon
Id., ¶¶ 9 &
As a result of its investigations, Deacon concluded the
inadequate
4 - OPINION AND ORDER
or
inappropriate
usage
of
materials,
1
violations of the applicable state and local building codes, and
2
violations of the relevant industry standards, arising from, or
3
relating to, the work performed by Superwall as part of the
4
Curtain Wall Renovation.”
5
problems resulting from Superwall’s work).
6
Deacon
claimed
Id., ¶ 11 (listing over 50 alleged
these
conditions
“caused
significant
and
7
ongoing property damage at Sand & Sea, including damage to the
8
structure, damage to the exterior and interior components, and
9
damage to various other components of the Project, as well as
10
loss of use and enjoyment damages.”
11
alleged all of the listed “defects, deficiencies, and property
12
damage”
13
faulty workmanship; inadequate or inappropriate application and
14
usage
of
15
local
building
16
specifications and/or installation instructions; and, violation
17
of relevant industry standards.”
18
were
directly
materials;
and
proximately
noncompliance
codes;
Id., ¶ 12.
violation
caused
with
of
by
“Superwall’s
applicable
relevant
state
and
manufacturers’
Id., ¶ 13.
Deacon claimed it incurred costs exceeding $1.78 million to
19
effect repairs to Sand & Sea.
20
declined to participate in any of the repairs.
21
Further, Deacon
It
appears
Deacon
put
It further claimed Superwall
Superwall
on
Id., ¶¶ 14 & 15.
notice
of
the
22
construction defect claims in a letter dated January 24, 2012.
23
See Dkt. #11-5, p. 1 (referencing the letter).
24
2012,
25
Insurance Company of America (“Travelers”), Deacon tendered its
26
claim “as additional insured on Superwall’s policy of insurance”
27
issued by James River and Travelers.
28
underlying action against Superwall, and provided James River
in
a
letter
5 - OPINION AND ORDER
to
James
River
and
Id.
On June 18,
Travelers
Casualty
Deacon filed the
1
with a copy of the Complaint via e-mail on October 25, 2012.
2
See Dkt. #11-6.
3
first notice that the underlying action had been filed.
According to James River, the e-mail was its
Id.
4
Deacon amended its Complaint in the underlying action twice;
5
its First Amended Complaint is not part of the record before
6
this court.
7
defendant one of Superwall’s principals, Paul Maughan.
8
alleged Maughan’s
9
financial problems that “materially affected the outcome of the
10
Project as Superwall was incapable of paying the wages of [its]
11
employees and/or laborers and the material suppliers for the
12
Project.”
13
Beeline Glass Company of Oregon (“Beeline”), which Deacon hired
14
“[o]n or about July 8, 2011, . . . to supplement and assist
15
Superwall’s labor needs. . . .”
16
In its Second Amended Complaint, Deacon added as a
under-funding
Dkt. #11-2, ¶ 5.
Superwall
of
caused
Superwall
Deacon also added as a defendant
Id., ¶ 9; see id., ¶ 4.
filed third-party
the project’s
18
numerous subcontractors and materials suppliers.
19
1. In its pleading, Superwall alleged that after it was notified
20
by
21
Superwall both performed extensive investigations to find the
22
causes
23
alleged
24
allegedly
25
improper design, oversight, and administration of the project,
26
and defects in the work and/or materials supplied by the other
27
third-party defendants.
Id.
28
performed
Project,
of
leaks
the
leaking.”
deficiencies
resulting
work
in
on
6 - OPINION AND ORDER
in
the
property
against
architect,
of
Association’s
claims
17
Deacon
the
Superwall
Deacon
curtain
Id.,
its
therefrom,
the
¶
work,
manager,
wall
10.
and
resulted
Beeline,
See Dkt. #16-
system,
Superwall
the
from
and
“Deacon
claims
property
the
and
the
damage
architect’s
On the issue of when Superwall
Superwall
alleged
it
was
1
subcontractor
on
the
Project
“[i]n
2011,”
id.,
¶
1;
and
it
2
“performed work on the Project in the summer of 2011,” id., ¶ 9.
3
Superwall alleged remedial work was performed on the Project in
4
the fall of 2011, id., ¶¶ 2 & 3; “late 2011,” id., ¶ 10; in
5
2012, id., ¶ 5; and “between March and June 2012,” id., ¶ 12.
6
See id., ¶¶ 15, 20.
7
twice, but did not clarify its allegations regarding when its
8
work was performed or when any damage allegedly occurred.
9
Dkt. ##16-2 & 16-3.
Superwall amended its Third-Party Complaint
See
10
On October 11, 2013, Deacon, through its attorney, issued
11
a supplemental tender of defense and indemnity to James River.
12
Dkt. #18, ECF p. 3.
13
had insured Superwall from September 16, 2011, to January 11,
14
2012, under policy number 00050164-0.
15
requested “a formal coverage decision” from James River.
16
In response, on December 5, 2013, James River issued a denial of
17
coverage, “[b]ased on the allegations [in the underlying action]
18
and policy terms,” with no accompanying explanation.
19
p. 9.
In the letter, Deacon indicated James River
Id., ECF p. 4.
Deacon
Id.
Id., ECF
Seneca filed the present action on January 21, 2014.
20
IV.
21
RELEVANT POLICY PROVISIONS
22
James River insured Superwall under commercial general lia-
23
bility policy No. 00050164-0 (the “Policy”), evidencing a policy
24
period of September 26, 2011, to September 26, 2012.
25
3, ECF p. 1.
26
2012. Id., ECF p. 63.
27
28
In
their
Dkt. #11-
The policy was canceled effective January 11,
summary
judgment
papers,
the
parties
identify
several policy provisions as relevant to Seneca’s motion for
7 - OPINION AND ORDER
1
summary
judgment.
The
court
2
policy provisions
3
which those
4
shown below are in the policy itself.)
identified
provisions
has
by
appear
quoted,
in
the
below,
parties
the Policy.
all
in the
SECTION I - COVERAGES
6
COVERAGE A BODILY INJURY AND PROPERTY DAMAGE
LIABILITY
7
Insuring Agreement
8
a.
14
We will pay those sums that the insured
becomes legally obligated to pay as
damages because of “bodily injury” or
“property
damage”
to
which
this
insurance applies.
We will have the
right and duty to defend the insured
against
any
“suit”
seeking
those
damages. However, we will have no duty
to defend the insured against any
“suit”
seeking
damages for
“bodily
injury” or “property damage” to which
this insurance does not apply. . . .
15
*
9
10
11
12
13
16
b.
*
*
This
insurance
applies
to
“bodily
injury” and “property damage” only if:
17
(1)
18
19
(2)
20
21
22
23
24
25
26
27
28
(3)
The “bodily injury” or “property
damage”
is
caused
by
an
“occurrence” that takes place in
the “coverage territory”;
The “bodily injury” or “property
damage” occurs during the policy
period; and
Prior to the policy period, no
insured listed under Paragraph 1.
of Section II - Who Is An Insured
and no “employee” authorized by
you to give or receive notice of
an “occurrence” or claim, knew
that
the
“bodily
injury”
or
“property damage” had occurred, in
whole or in part.
If such a
listed
insured
or
authorized
“employee”
knew,
prior
to
the
policy period, that the “bodily
injury” or “property damage” occurred,
then
any
continuation,
change
or
resumption
of
such
8 - OPINION AND ORDER
the
order in
(All emphases
5
1.
of
1
“bodily
injury”
or
“property
damage” during or after the policy
period will be deemed to have been
known prior to the policy period.
2
3
c.
“Bodily injury” or “property damage”
which occurs during the policy period
and was not, prior to the policy
period, known to have occurred by any
insured listed under Paragraph 1. of
Section II - Who Is An Insured or any
“employee” authorized by you to give or
receive notice of an “occurrence” or
claim,
includes
any
continuation,
change or resumption of that “bodily
injury” or “property damage” after the
end of the policy period.
d.
“Bodily injury” or “property damage”
will be deemed to have been known to
have occurred at the earliest time when
any insured listed under Paragraph 1.
of Section II - Who Is An Insured or
any “employee” authorized by you to
give
or
receive
notice
of
an
“occurrence” or claim:
4
5
6
7
8
9
10
11
12
13
14
*
*
*
15
(2)
Receives
a
written
or
verbal
demand
or
claim
for
damages
because of the “bodily injury” or
“property damage”; or
(3)
Becomes aware by any other means
that “bodily injury” or “property
damage” has occurred or has begun
to occur.
16
17
18
19
20
*
*
*
21
Dkt. #11-3, ECF p. 4.
22
2.
Exclusions
23
This insurance does not apply to:
24
*
*
*
25
j.
Damage To Property
26
“Property damage” to:
27
*
*
28
9 - OPINION AND ORDER
*
(5)
That particular part of real property
on
which
you
or
any
contractors
or
subcontractors
working directly or indirectly on
your behalf are performing operations, if the “property damage”
arises out of those operations; or
(6)
1
That
particular
part
of
any
property that must be restored,
repaired or replaced because “your
work” was incorrectly performed on
it.
2
3
4
5
6
7
8
*
9
Paragraph (6) of this exclusion does
not apply to “property damage” included
in the “products-completed operations
hazard”.
10
*
*
11
*
*
*
12
l.
Damage To Your Work
13
“Property
damage”
to
“your
work”
arising out of it or any part of it and
included
in
the
“products-completed
operations hazard”.
14
15
16
This exclusion does not apply if the
damaged work or the work out of which
the damage arises was performed on your
behalf by a subcontractor.
17
18
Id., ECF pp. 7-8.
19
SECTION V - DEFINITIONS
20
*
*
*
21
13.
“Occurrence”
means
an
including
continuous
or
exposure
to
substantially
general harmful conditions.
22
23
24
*
25
17.
26
27
*
accident,
repeated
the same
*
“Property damage” means:
a.
Physical injury to tangible property, including all resulting loss
of use of that property. All such
loss of use shall be deemed to
28
10 - OPINION AND ORDER
1
occur at the time of the physical
injury that caused it; or
2
b.
Loss of use of tangible property
that is not physically injured.
All such loss of use shall be
deemed to occur at the time of the
“occurrence” that caused it.
3
4
5
*
*
*
6
22.
“Your work”:
7
a.
Means:
8
(1)
Work or operations performed
by you or on your behalf; and
(2)
Materials, parts or equipment
furnished in connection with
such work or operations.
9
10
11
12
b.
Includes
(1)
Warranties or representations
made at any time with respect
to
the
fitness,
quality,
durability,
performance
or
use of “your work”; and
(2)
13
The providing
to
provide
instructions.
14
15
16
17
of or failure
warnings
or
18
Id., ECF pp. 17-19.
19
CLAIM(S) IN PROGRESS EXCLUSION
20
a.
21
22
23
24
25
26
27
28
This policy does not apply to
“bodily
injury”,
“personal
and
advertising injury” or “property
damage”
which
begins
or takes
place before the inception date of
coverage,
whether
such
“bodily
injury”, “personal and advertising
injury” or “property damage” is
known to an insured, even though
the nature and extent of such
damage or injury may change and
even though the damage may be
continuous,
progressive,
cumulative, changing or evolving, and
even
though
the
“occurrence”
causing
such
“bodily
injury”,
11 - OPINION AND ORDER
1
“personal and advertising injury”
or “property damage” may be or may
involve a continuous or repeated
exposure to substantially the same
general harm.
2
3
4
b.
All “property damage” to units of
or within a single project or
development, and arising from the
same general type of harm, shall
be deemed to occur at the time of
damage to the first such unit,
even though the existence, nature
and extent of such damage or
injury may change and even though
the
“occurrence”
causing
such
“property
damage”
may
be
or
involve a continuous or repeated
exposure to substantially the same
general harm which also continues
or takes place (in the case of
repeated exposure to substantially
the same general harm) during the
policy term.
5
6
7
8
9
10
11
12
13
Id., ECF pp. 46-47.
14
15
V.
DISCUSSION
16
A.
Duty to Defend
17
“The seminal case regarding the duty to defend under Oregon
18
law is Ledford v. Gutoski, 319 Or. 397, 877 P.2d 80 (1994).”
19
Fred Shearer & Sons, Inc. v. Gemini Ins. Co., 237 Or. App. 468,
20
475, 240 P.3d 67, 72 (2010).
In Ledford, the Oregon Supreme
21
Court explained the general standards for determining whether an
22
insurer has a duty to defend its insured against a particular
23
claim.
The Ledford court held the insurer’s duty to defend
24
“depends
on
two
documents:
the
complaint
and
the
insurance
25
policy,” with the duty to defend arising when “the claim against
26
the insured stated in the complaint could, without amendment,
27
impose liability for conduct covered by the policy.”
28
12 - OPINION AND ORDER
Ledford,
1
319 Or. at 399-400, 877 P.2d at 82 (citations omitted).
2
making this analysis, “the court looks only at the facts alleged
3
in the complaint to determine whether they provide a basis for
4
recovery that could be covered by the policy[.]”
5
Or. at 400, 877 P.2d at 82 (citations omitted).
6
complaint, itself, should allow the insurer to determine whether
7
it has a duty to defend the insured.
8
Birmingham Fire Ins., 254 Or. 496, 505-06, 460 P.2d 342, 346
9
(1969)).
10
In
Ledford, 319
The face of the
Id. (citing Ferguson v.
The duty to defend arises “if the complaint provides any
11
basis for which the insurer provides coverage.”
12
Or.
13
omitted).
14
the
15
ambiguity
as
16
insured.”
Id.
17
complaint[] rather than the claims identified in it.”
18
Union Fire Ins. Co. of Pittsburgh Pa. v. Starplex Corp., 220 Or.
19
App.
20
original;
21
Anderson Bros., Inc. v. St. Paul Fire & Marine Ins. Co., 729
22
F.3d 923, 936 (9th Cir. 2013) (quoting Starplex).
23
at
400,
877
P.2d
at
83
(emphasis
in
Ledford, 319
original;
citation
This is true even if some of the conduct alleged in
complaint
560,
falls
to
outside
coverage
the
policy’s
being
coverage,
“resolved
in
with
any
of
the
favor
The “analysis focuses on the allegations in the
584,
188
P.3d
332,
internal quotation
346-47
marks,
(2008)
citation
Nat’l
(emphasis
omitted);
in
accord
The Oregon Supreme Court has rejected the notion that a com-
24
plaint
must
25
occurred. In Bresee Homes, Inc. v. Farmers Insurance Exchange,
26
353
27
“noteworthy” that the insurer could not determine from a reading
28
of
Or.
the
allege
112,
293
complaint
the
P.3d
specific
1036
whether or
13 - OPINION AND ORDER
time
when
(2012),
not the
the
alleged
a
covered
court
damage
event
found
it
occurred
1
during the policy period. Bresee, 353 Or. at 122, 293 P.3d at
2
1042.
3
for
4
occurred was one that would be determined in the litigation, and
5
its resolution could affect the insurer’s duty to indemnify, but
6
the duty to defend was based solely on the language of the
7
complaint and the policy.
8
at 1042.
9
focuses on those allegations [in the complaint,] whether or not
The court noted that at the time the claim was tendered
defense,
the
issue
of
when
the
claimed
damage
actually
Bresee, 353 Or. at 123-24, 293 P.3d
The court held, “Our analysis of the duty to defend
10
different
or
additional
facts
might
be
11
adduced
at
trial.”
Bresee, 353 Or. at 123, 293 P.3d at 1042.
12
In the present case, the quoted provisions indicate the
13
Policy will pay for “property damage” that (1) is caused by an
14
“occurrence”; (2) occurs during the policy period; and (3) was
15
unknown to the insured prior to the policy period.
16
excludes, among other things, property damage resulting from the
17
insured’s work “incorrectly performed,” except work performed by
18
a subcontractor; and property damage which begins prior to the
19
inception date of the Policy, even though such damage may be
20
“continuous,
21
whether or not the damage is known to the insured.
progressive,
cumulative,
changing
or
The Policy
evolving,”
22
Seneca argues that under Ledford and its progeny, James
23
River clearly has a duty to defend Superwall in the underlying
24
action. Deacon’s Complaint alleges property damage to Sand & Sea
25
caused by an occurrence.
26
Amended Complaint are silent with regard to when the alleged
27
damage occurred, and when Superwall knew of the alleged damage.
28
Thus, Seneca argues, Deacon’s claim against Superwall as stated
14 - OPINION AND ORDER
Both the original Complaint and the
1
in the Complaint could impose liability for conduct covered by
2
the Policy.
3
Dkt. #10.
James River argues Deacon’s pleadings contain allegations
4
from
which
James
5
occurred before the Policy’s effective date of September 26,
6
2011,
7
James River relies on Deacon’s allegation that it had to hire
8
Beeline to supplement and assist Superwall’s work in July 2011.
9
Thus, James River reasons, the fact that Superwall performed
10
work on the Project in the summer of 2011, coupled with Deacon’s
11
allegations
12
demonstrates the alleged damage occurred, or began to occur,
13
prior to the Policy’s effective date.
excluding
River
such
that
could
damage
conclude
from
Superwall’s
the
coverage
work
was
alleged
under
the
defective,
damage
Policy.
clearly
14
James River further argues it is undisputed that “rain fell”
15
and “air moved” in Seaside, Oregon, “at some point between the
16
summer of 2011 and the inception of [the Policy] in late Septem-
17
ber.”
18
“[t]he laws of nature dictate that at least some alleged damage
19
in
20
effective date of [the Policy].”
21
these “undisputed” facts are not alleged in the Complaint and do
22
not appear in the Policy.
23
might be helpful in considering a duty-to-indemnify question,
24
they are useless when considering the duty to defend.
25
the
Dkt. #15, ECF p. 3.
form
of
air
and
Thus, according to James River,
water
intrusion
Id.
occurred
before
the
Whether or true or not,
Whether or not the weather conditions
James River also argues Superwall’s allegations in it third-
26
party
pleadings
constitute
27
River
owes
duty
28
Superwall’s “affirmative allegations . . . that it performed
no
15 - OPINION AND ORDER
to
a
“judicial
defend.
admission”
James
River
that
argues
James
that
1
work in the summer of 2011 and that remedial work was performed
2
in the fall of that year” establish that the damage would have
3
had to occur prior to inception of the James River policy.
4
ECF pp. 7-8.
Id.,
5
The court finds James River’s arguments are inconsistent
6
with Oregon law, and often are looking through the wrong end of
7
the telescope.
The fact that Superwall performed work on the
8
Project
summer
9
finished prior to inception of the Policy.
in
the
2011
its
work
was
Nor does the fact
began work on the Project and the Policy’s issuance reasonably
12
lead
13
occurred
14
above, the Complaint contains no factual allegations regarding
15
the weather.)
16
performed in the fall of 2011 does not establish when in the
17
fall
18
Hemisphere, fall, or autumn, generally is defined as extending
19
from the autumnal equinox, occurring on September 22nd or 23rd,
20
and the winter solstice, occurring on December 21st or 22nd.
21
See,
22
“Autumn,”
23
topic/45215/autumn (Jul. 2, 2014).
24
days of the fall season occurred after the inception of the
25
Policy.
26
prior
the
to
“at
Policy’s
least
the
some
issuance.
time
alleged
(Further,
Superwall
damage”
as
noted
Similarly, an allegation that remedial work was
remedial
e.g.,
the
that
between
mean
11
conclusion
moved”
not
that “rain
a
and “air
does
10
to
fell”
of
work
Encyclopaedia
was
performed.
Britannica
Online
In
the
Academic
Northern
Edition,
http://www.britannica.com/EBchecked/
Thus, all but three or four
James River’s attempt to rely on Superwall’s third-party
27
pleadings is misplaced, for two reasons.
28
only at the language of the applicable policy and the Complaint
16 - OPINION AND ORDER
First, the court looks
1
that raises the claim; the allegations of third-party pleadings
2
are irrelevant as to the insurer’s original duty to defend.
3
another way, it is the Complaint, if anything, against which
4
James River must defend, not the third-party complaint.
Second,
5
Superwall’s
further
6
clarification regarding when Superwall’s work was performed, or
7
when damage allegedly occurred.
third-party
pleadings
do
not
provide
any
Put
8
Although the evidence at trial may show that, indeed, damage
9
occurred, or began to occur, prior to the Policy’s inception,
10
thereby eliminating James River’s duty to indemnify Superwall,
11
nothing in Deacon’s or Superwall’s pleadings requires such a
12
conclusion.
13
that the alleged damage occurred during the policy period based
14
on the allegations of the Complaint.
15
122,
16
River’s
17
Deacon’s original Complaint, and the duty was not extinguished
18
by
19
motion for summary judgment on James River’s duty to defend is
20
granted.
293
any
James River could not eliminate the possibility
P.3d
duty
at
to
1042.
defend
allegation
in
See Bresee, 353 Or. at
Accordingly,
was
the
triggered
Deacon’s
by
amended
court
the
finds
James
allegations
pleadings.
in
Seneca’s
21
22
23
B.
Participation in Defense Costs
The Oregon Supreme Court has long held that “the loss as
24
between insurers
should
25
limits of the policies bear to the total coverage.’”
26
Underwriters at Lloyd’s London & Excess Ins. Co., Ltd. v. Mass.
27
Bonding & Ins. Co., 235 Or. App. 99, 112, 230 P.3d 103, 112
28
(2010) (quoting Lamb-Weston, Inc. v. Or. Auto Ins. Co., 219 Or.
17 - OPINION AND ORDER
be
‘prorated
in
the
ratio
which
the
Certain
1
130, 137, 341 P.2d 643, 647 (1959)).
2
the policy limits of its own policy and the James River policy
3
are $1 million per occurrence, therefore, Seneca and James River
4
each should be responsible for 50% of the defense costs in the
5
underlying action.
6
Seneca argues that because
However, the parties have agreed that the court should not
7
decide
the
issue
of
8
juncture,
9
detailed
10
respond.
11
Further, it makes sense, in terms of judicial economy, for the
12
court to take up the matter of damages after ruling on any
13
motion Seneca files to amend its Complaint to add a claim for
14
Maughan’s
15
regard to Maughan’s defense.
reserving
motion
the
that
and
amount
of
decision
exhibits
to
defense
until
which
costs
Seneca
James
at
has
River
this
filed
then
a
may
The court agrees, and reserves ruling on the issue.
defense,
and
any
motion
for
summary
judgment
with
16
VI.
17
18
CONCLUSION
Seneca’s motion for summary judgment (Dkt. #10) is granted
19
in part and reserved in part.
20
a duty to defend Superwall, and the duty commenced upon the
21
filing of the underlying action.
22
23
24
The court finds James River has
The court reserves ruling on the amount of Seneca’s damages
until Seneca files its detailed motion for defense costs.
IT IS SO ORDERED.
25
Dated this 16th day of July, 2014.
26
27
/s/ Dennis J. Hubel
28
18 - OPINION AND ORDER
1
Dennis James Hubel
Unites States Magistrate Judge
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3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
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27
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19 - OPINION AND ORDER
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