State Farm Fire and Casualty Company v. Sauer et al

Filing 31

ORDER: The Court GRANTS Plaintiff's Motion 11 for Partial Summary Judgment, DECLARES Plaintiff is not obligated to defend Brandon Sauer in the underlying action, and DECLARES Plaintiff may withdraw from the defense of Sauer in the u nderlying action. The Court STRIKES the current case management deadlines in this matter and DIRECTS the parties to file a joint status report no later than May 6, 2015, advising the Court of the status of the underlying matter and, if the claims i n this action have not been resolved by that date, to include in their report a jointly proposed case management schedule to resolve this matter. Signed on 02/06/2015 by Judge Anna J. Brown. See attached 12 page Opinion and Order for full text. (bb)

IN THE UNITED STATES DISTRICT COtJRT
FOR THE DISTRICT OF OREGON

STATE FARM FIRE AND CASUALTY
COMPANY, an Illinois
corporation,

3:14-CV-01274-BR
OPINION AND ORDER

Plaintiff,

v.
BRANDON SAUER, an individual,
and CARSON STAHL, by and
through Guardian Ad Litem,
CRAIG STAHL,
Defendants.

BRIAN C. HICKMAN
Gordon· & Polscer, LLC
9755 S.W. Barnes Road
Suite 650
Portland, OR 97225
[phone]
Attorneys for Plaintiff
RANDALL J. WOLFE
15573 S.W. Bangy Road
Suite 250
Lake Oswego, OR 97035
[phone]
Attorney for Defendant Carson Stahl
1 - OPINION AND ORDER

BRANDON SAUER
15546 S.E. River Forest Drive
Milwaukie, OR 97267
[phone]

Defendant, Pro Se
BROWN, Judge.

This matter comes before the Court on Plaintiff's Motion
(#11) for Partial Summary Judgment.

The Court heard oral

argument on Plaintiff's Motion on February 5, 2015.

For the

reasons that follow, the Court GRANTS Plaintiffs' Motion.

BACKGROUND

At some point Defendant Brandon Sauer entered into a Renters
Policy with Plaintiff State Farm Fire and Casualty Company
effective February 23, 2013, through August 15, 2014.
On January 22, 2014, Defendant Carson Stahl filed an action
against Sauer and others in Multnomah County Circuit Court (the
underlying action) for negligence related to injuries Stahl
sustained on May 9, 2013.

The underlying action was transferred

to Clackamas County Circuit Court.

At some point after the

underlying action was transferred, Stahl filed a Second Amended
Complaint seeking an award of damages in excess of $500,000.
On August 7, 2014, State Farm filed a Complaint for
Declaratory Relief in this Court in which State Farm seeks a
declaration that it does not have a duty to defend or to
2 - OPINION AND ORDER

indemnify Sauer in the underlying action.
On October 3, 2014, Plaintiff filed a Motion for Partial
Summary Judgment on the issue of the duty to defend.
a Response on November 19, 2014.

Stahl filed

On December 12, 2014, Sauer

filed a Response in which he joined in the arguments made by
Stahl in his Response.
Reply.

On January 2, 2015, Plaintiff filed a

As noted, the Court heard oral argument on Plaintiff's

Motion on February 5, 2015.

DISCUSSION
Plaintiff State Farm asserts the business-pursuits exclusion
in Sauer's insurance policy establishes Plaintiff does not have a
duty to defend Sauer in the underlying action.

Plaintiff seeks a

declaration that it is not obligated to defend Sauer and,
accordingly, requests the Court to issue an order permitting
Plaintiff to withdraw from the defense of Sauer in the underlying
action.
Defendants, in turn, assert the business-pursuits exclusion
does not relieve Plaintiff from the obligation to defend Sauer in
the underlying action.
I.

Insurance Contract Interpretation.
Under Oregon law the construction of a contract is a

question of law for the court.

Holloway v. Republic Indem. Co.

of Am., 341 Or. 642, 649 (2006) (citing Hoffman Const. Co. of

3 - OPINION AND ORDER

Alaska v. Fred S. James & Co. of Ore., 313 Or. 464, 470 (1992)).
The Court's task is to "ascertain the intention of the parties to
the insurance policy."
§

742.016).

Id. at 649-50 (citing Or. Rev. Stat.

The Court accomplishes this "based on the terms and

conditions of the insurance policy."

Id.

''If an insurance policy explicitly defines the phrase in
question,

[the Court] appl[ies] that definition."

Id. at 650.

See also Joseph Educ. Ass'n v. Joseph Sch. Dist. No. 6, 180 Or.
App. 461, 467 (2002).
If the policy does not define the phrase in
question, [the Court] resort [s] to various aids of
interpretation to discern the parties' intended
meaning.
Under that interpretive framework, we
first consider whether the phrase in question has
a plain meaning,· i.e. , whether it is susceptible
to only one plausible interpretation.
If the
phrase in question has a plain meaning, we will
apply that meaning and conduct no further
analysis.
If the phrase in question has more than
one plausible interpretation, we will proceed to
the second interpretive aid.
That is, we examine
the phrase in light of 'the particular context in
which that [phrase] is used in the policy and the
broader context of the policy as a whole.
If the
ambiguity remains after the court has engaged in
those analytical exercises, then any reasonable
doubt as to the intended meaning of such [a]
term[] will be resolved against the insurance
company.
However,
. a term is ambiguous
. only if two or more plausible interpretations of that term withstand scrutiny, i.e.,
continue[] to be reasonable despite our resort to
the interpretive aids outlined above.

Id.
When "evaluating whether an insurer has a duty to defend[,]
the court looks only at the facts alleged in the complaint" and
4 - OPINION AND ORDER

the terms of the policy.
(1994).

Ledford v. Gutoski, 319 Or. 397, 400

See also Nat' 1 Union Fire Ins. Co. of Pittsburgh v.

Starplex Corp., 220 Or. App. 560, 573 (2008) (" [w]hether an
insurer has a duty to defend an action against its insured
depends on two documents:

the complaint and the insurance

policy.") .
II.

Insurance Policy Language.

Sauer's insurance policy with Plaintiff provides in
pertinent part:
COVERAGE L - PERSONAL LIABILITY (INCLUDING
PROVISIONS POTENTIALLY RESTRICTING OR ABRIDGING
THE RIGHTS OF THE INSURED)

If a claim is made or a suit is brought against an
insured for damages because of bodily injury
to which this coverage applies, caused by an
occurrence, we will:

* * *
2.

provide a defense at our expense by
counsel of our choice.

Compl., Ex. 1 at 30 (emphasis in original).

The policy also

provides the following limitation of coverage:
1.

Coverage L and Coverage M do not apply to:

* * *
b.

Id.

bodily injury
arising out of
business pursuits of any insured or the
rental or holding for rental of any part
of any premises by any insured.

The policy defines business as

5 - OPINION AND ORDER

~a

trade, profession or

occupation.

This includes farming."

Compl., Ex. 1 at 18.

III. Analysis.

Stahl alleges two claims for relief in his second amended
complaint in the underlying action:

negligence and negligence

per se, both arising from injuries Stahl sustained.

Specifically, Stahl alleges "[o)n . . . May 9, 2013,

[Stahl) was

at the Milwaukie Investment Property with his family, at
[Sauer's) invitation, and for [Sauer's] business purpose, in that
[Stahl's) family was a potential purchaser of the Milwaukie
Investment Property" when Stahl was injured.
~

7 (emphasis added).

Compl., Ex. 2 at

Stahl also alleges in his second amended

complaint that "[a)t all material times [he) had the legal status
of an invitee."

Compl., Ex. 2

at~

7.

For purposes of this Motion, the parties do not dispute
Stahl suffered "bodily injury" as that term is defined in the
insurance policy.

Based on the allegation

in~

7 of Stahl's

second amended complaint, however, Plaintiff contends the
business-pursuits exclusion applies and establishes Plaintiff
does not have a duty to defend Sauer in the underlying action.·
Defendants do not contest Plaintiff's assertion as to the
content

of~

7 of Stahl's second amended complaint.

Response, however, Defendants assert

~

In their

4 of the second amended

complaint has effectively been amended by interlineation as
follows:

6 - OPINION AND ORDER

At all material times, Defendant Brandon Sauer,
was:
acting in his individual capacity
unaffiliated with any other person or entity; was
acting in his individual capacity doing a favor
for his father who is a member of Defendant
FAIRWAY PROPERTIES, LLC; and/or was acting in his
employment capacity, representative capacity
and/or agency capacity or H & H PREFERRED REAL
ESTATE, STONECREEK DEVELOPMENT LLC and/or FAIRWAY
PROPERTIES, LLC.
Resp. at 2.

In

~

4 of the second amended complaint, Stahl stated

"[a]t all material times [Sauer] was acting in his individual
capacity and/or acting in his employment capacity, representative
capacity and/or agency capacity for H&H PREFERRED REAL ESTATE
and/or STONECREEK DEVELOPMENT, LLC."

Defendants assert the

referenced amendment by interlineation "creates a genuine dispute
of material fact" as to whether Sauer "was acting in a business
activity, or merely was running a

'personal errand.'"

Resp. at

3.

In its Reply Plaintiff asserts the second amended complaint
has not been amended by interlineation and, even if it has been
amended, the amendment does not create a genuine dispute of
material fact.
A.

The second amended complaint in the underlying action
has not been amended.

To support their assertion that the second amended
complaint has been amended, Defendants rely on an email from
Stahl's attorney, Randall J. Wolfe, addressed to the three
defense counsel in the underlying action in which Wolfe states:

7 - OPINION AND ORDER

I would like to amend our Second Amended Complaint
by INTERLINEATION regarding an allegation related
to Mr. Sauer.
Specifically, I would like to amend
paragraph 4 to read as indicated below.
Please
advise if you have any objections to the same.
If
no one has an objection, the Second Amended
Complaint will be considered amended.
Resp., Ex. 1 at 1.
The record reflects only two of the three defense
counsel responded to Wolfe's email.
Procedure 23 provides a complaint

Oregon Rule of Civil

~may

be amended by a party once

as a matter of course at any time before a responsive pleading is
served.

Otherwise a party may amend the pleading only by

leave of court or by written consent of the adverse party."
Because the record does not reflect Stahl obtained written
consent to amend the second amended complaint from all of the
adverse parties in the underlying action, Stahl could only amend
the second amended complaint by leave of Clackamas County Circuit
Court.

The docket in the underlying action, however, does not

reflect any motion to amend the second amended complaint was
filed or any order issued by the court permitting such an
amendment.

Deel. of Brian Hickman, Ex. A at 1-2.

Instead the

docket reflects the second amended complaint was filed on
February 24, 2014; no further amended complaints were filed; and
the underlying action was stayed on September 29, 2014.
Deel., Ex. A. at 1-2.

In addition, at oral argument defense

counsel confirmed there had not been any formal,

8 - OPINION AND ORDER

Hickman

filed amendment

to the second amended complaint in the underlying action.
The Court notes Defendants did not offer any authority
at oral argument for the proposition that the Court can look to a
proposed amendment to a complaint in the underlying matter when
evaluating a liability insurer's duty to defend in such an
action.
The Court, therefore, concludes on this record that the
second amended complaint in the underlying action has not been
amended and the evaluation of Plaintiff's duty to defend depends
upon the "four corners" of Stahl's last-filed complaint.

B.

Even if the second amended complaint had been amended,
it would not establish a genuine issue as to
Plaintiff's duty to defend.
Plaintiff asserts even if the second amended complaint

had been amended as asserted by Defendants, the amendment does
not establish a genuine issue as to Plaintiff's duty to defend
because the alleged amendment "touches [only] upon the capacity
in which Defendant Sauer was allegedly acting; it does not
address the purpose of Mr.
(emphasis in original).

Sauer'~

conduct."

Reply at 3

The Court agrees.

As noted, the business-pursuits exclusion relieves
Plaintiff from its otherwise-existing duty to defend for "bodily
injury or property damage arising out of business pursuits of any
insured."

Sauer alleges in

'l[

7 of the second amended complaint

that Stahl was at the Milwaukie Investment Property "at [Sauer's]

9 - OPINION AND ORDER

invitation, and for [Sauer's] business purpose" in that Stahl's
family was a potential purchaser of the Milwaukie Investment
Property.

The alleged amendment does not modify

~

7 of the

second amended complaint and, therefore, does not alter Sauer's
allegations that Stahl and Sauer were on the property for Sauer's
business purpose.

The alleged amendment addresses only the

capacity in which Sauer was acting rather than his purpose in
being at the property.

The business-pursuits exclusion by its

plain language excludes coverage if the conduct was undertaken as
part of a business pursuit or purpose.

As noted, Sauer alleges

in the second amended complaint that he was on the property for
business purposes.

Thus, at best the alleged amendment might

establish a dispute exists as to whether Sauer was acting in an
individual capacity or on behalf of a company or another entity
but that potential issue is not relevant to the duty-to-defend
analysis.
On this record the Court concludes even if the second
amended complaint was amended as alleged by Defendants, the
alleged amendment does not establish a genuine issue as to
whether the business-pursuits exclusion establishes Plaintiff
does not have a duty to defend in the underlying action.
Accordingly, the Court grants Plaintiff's Motion for
Partial Summary Judgment, declares Plaintiff is not obligated to
defend Sauer in the underlying action, and declares Plaintiff may

10 - OPINION AND ORDER

withdraw from the defense of Sauer in the underlying action.

IV.

Case Management Schedule
At oral argument the parties advised the Court that

proceedings in the underlying matter may lead to resolution of
this.matter.

The parties requested the Court suspend the current

case management deadlines for 90 days to avoid potentially
unnecessary further litigation of this matter.

The Court agrees

with the parties' proposal and, therefore, STRIKES all current
case management deadlines in this matter.

The Court DIRECTS the

parties to file a joint status report no later than May 6, 2015,
advising the Court of the status of the underlying matter and, if
the claims in this action have not been resolved by that date, to
include in their report a jointly proposed case management
schedule to resolve this matter.

CONCLUSION
For these reasons, the Court GRANTS Plaintiff's Motion (#11)
for Partial Summary Judgment, DECLARES Plaintiff is not obligated
to defend Brandon Sauer in the underlying action, and DECLARES
Plaintiff may withdraw from the defense of Sauer in the
underlying action.
The Court STRIKES the current case management deadlines in
this matter and DIRECTS the parties to file a joint status report
no later than May 6, 2015, advising the Court of the status of
11 - OPINION AND ORDER

the underlying matter and, if the claims in this action have not
been resolved by that date, to include in their report a jointly
proposed case management schedule to resolve this matter.
IT IS SO ORDERED.
DATED this 6th day of February, 2015.

ANN~-u./

United States District Judge

12 - OPINION AND ORDER