Homeland Insurance Company of New York v. AAM, Inc. et al

Filing 58

OPINION & ORDER: Homeland's Motion for Summary Judgment 38 is Denied with respect to the duty to defend, Deferred with respect to the duty to indemnify, and Granted with respect to CentiMark's counterclaim for attorney fees. Defendants' Motion for Summary Judgment 45 is Granted with respect to the duty to defend and Denied in all other respects. Signed on 5/13/16 by Magistrate Judge Paul Papak. (gm)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF OREGON
HOMELAND INSURANCE COMP ANY OF
NEW YORK,
Plaintiff,

3: 15-cv-01745-PK
OPINION & ORDER

v.
AAM, INC.; CENTIMARK CORPORATION;
and DEL MONTE FOODS, INC.,
Defendants.

PAPAK, Magistrate Judge:
Plaintiff Homeland Insurance Company of New York ("Homeland") brings this insurance
coverage action against AAM, Inc. ("AAM"), CentiMark Corporation ("CentiMark"), and Del
Monte Foods, Inc. ("Del Monte"). 1 Homeland seeks a declaratory judgment that it does not have
a duty to defend or indemnify CentiMark or Del Monte against a Washington state personal
injury lawsuit filed by a former AAM employee. The court has jurisdiction on the basis of
diversity of citizenship. See 28 U.S.C. § 1332. Now before the court are the parties' CrossMotions for Summary Judgment. For the reasons provided below, Homeland's Motion for
Summary Judgment (#3 8) is granted in pmi and denied in part, and Defendants' Motion for
Summary Judgment (#45) is granted in part and denied in part.

1

AAM it not a pmiy to Defendants' Motion for Summary Judgment. AAM is named as a
defendant in this case only because it was the primary entity to which Homeland issued the
applicable insurance policy. See Plf.'s Mot. for Summ. J. 2 n. l (#38). Consequently, I refer to
CentiMark and Del Monte, collectively, as "Defendants."
OPINION & ORDER-PAGE 1

BACKGROUND 2

I.

The Insurance Policy
At all relevant times, AAM was an Oregon corporation that perfo1med asbestos

maintenance and removal. Homeland issued an insurance policy to AAi\1 that included
commercial general liability coverage (the "Policy"). Lindley Deel. Ex. A (#39). The Policy
period ran from April 1, 2013 to April l, 2014. Id Ex. A, at 8. The Policy provided, in pertinent

part: "We will pay those sums that the insured becomes legally obligated to pay as damages
because of bodily injury or prope1ty damage to which this insurance applies. We will have the
right and duty to defend the insured against any suit seeking those damages." Id. Ex. A, at 12.
Importantly, the Policy contained two endorsements that extended coverage to additional
insureds. The first endorsement ("Form l ")provided as follows:
This endorsement only modifies coverage provided under the following:
COMMERCIAL GENERAL LIABILITY COVERAGE PART
CONTRACTORS ENVIRONMENTAL LIABILITY COVERAGE PART
SCHEDULE
Name of Person or Organization:
Any person or organization for which the Named Insured has agreed to provide
insurance prior to loss as provided by this policy but only to the scope of
insurance agreed to by the Named Insured.

A SECTION II - WHO IS AN INSURED is amended to include as an insured
the person or organization shown in the SCHEDULE above, but only with respect
to liability arising out of your ongoing operations performed for that insured.

Id. Ex. A, at 54. The second endorsement ("Form B") provided as follows:
This endorsement only modifies coverage provided under the following:
2

Except where expressly indicated otherwise; I construe the evidentiary record according to the
legal standard governing motions for summary judgment under Federal Civil Procedure Rule 56.
OPINION & ORDER-PAGE 2

COMMERCIAL GENERAL LIABILITY COVERAGE PART
CONTRACTORS ENVIRONMENTAL LIABILITY COVERAGE PART
SCHEDULE
Name of Person or Organization:
Any person or organization for which the Named Insured has agreed to provide
insurance prior to loss as provided by this policy but only to the scope of
insurance agreed to by the Named Insured.

SECTION II - WHO IS AN INSURED is amended to include as an insured the
person or organization shown in the SCHEDULE above, but only with respect to
liability arising out of your work for that insured by or for you.

Id. Ex. A, at 55.
II.

The Subcontract
Del Monte hired CentiMark to perform repairs on Del Monte's warehouse in Yakima,

Washington. Id. Ex. B, at~ 3.2. CentiMark subcontracted pait of the project to AAM. Id. Ex.
B, at ~ 3 .1, Ex. C. Pati H of the subcontract required AAM to add CentiMark and Del Monte to
the Policy as additional insureds, providing in pertinent part:
Using an insurance company satisfactory to Contractor and in minimum dollar
amounts acceptable to Contractor, the Subcontractor shall provide . . . General
Liability (including Products/Completed Operations Coverage), Umbrella
Liability, and Automobile Liability Insurance covering the Owner, Contractor,
and any of their respective employees and agents (the Additional Insureds). The
obligation of the Subcontractor is to provide such adequate insurance to protect
the Subcontractor and the Additional Insureds from all risks and/or occurrences
that may arise or result, directly or indirectly, from the Subcontractor's work or
presence on the jobsite and all risks of injury to Subcontractor's employees ....
This obligation shall not be avoided by allegations of contributory or sole acts,
failure to act, omissions, negligence or fault of the Additional Insureds.

OPINION & ORDER-PAGE 3

Id Ex. C, at 2. 3 Pursuant to the subcontract, AAM obtained a certificate of insurance confitming
that CentiMark and Del Monte were named as additional insureds under the F01m 1 and Form B
endorsements. Id Ex. D, at 9, 11-12.

III.

The Workplace Injury
Juan 01ia-Carrizales was an AAM employee assigned to work on the Del Monte

warehouse project. Id Ex. B,

at~

3.1. While working on the project on November 25, 2013,

01ia-Carrizales fell through the warehouse roof and landed on the ground approximately fo1iy
feet below, suffering severe injuries as a result. Id Ex. B, at~~ 3.1-3.7. 01ia-Canizales then
filed a personal injury suit against CentiMark and Del Monte in Yakima County Superior Comi
on April 27, 2015, alleging those defendants were negligent in relation to the accident (the
"underlying suit"). Id Ex. B. The underlying suit is still pending, and Otia-Can'izales has not
named AAM as a defendant. Rather, he filed a workers' compensation claim with AAM's
workers' compensation insurer, Libe1iy Nmihwest. Johnston Deel. Ex. A (#49-1 ). AAM
subsequently dissolved. Lindley Deel.

~

3 (#39).

CentiMark and Del Monte tendered the underlying suit to Homeland, asse1iing they were
entitled to a defense as additional insureds. Id at ~ 6. Homeland agreed to defend CentiMark
and Del Monte, subject to a full reservation of rights, including the "right to pursue a declaratory
judgment action to resolve coverage disputes." See id Ex. E-Ex. F (#39). Then, on September
15, 2015, Homeland initiated the present suit, seeking a declaratory judgment that it does not
have a duty to defend or indemnify CentiMark or Del Monte against the underlying suit.

3

The subcontract futiher defines Del Monte as the "Owner," CentiMark as the "Contractor," and
AAM as the "Subcontractor." Id Ex. C, at 1.
OPINION & ORDER-PAGE 4

SUMMARY JUDGMENT STANDARD

Summary judgment is appropriate "if the movant shows that there is no genuine dispute
as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P.
56(a); Celotex Cmp. v. Catrett, 477 U.S. 318, 322 (1986); Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 248 (1986); Warren v. City of Carlsbad, 58 F.3d 439, 441 (9th Cir. 1995). A factual
dispute is genuine "if the evidence is such that a reasonable jury could return a verdict for the
nonmoving pmiy." Anderson, 477 U.S. at 248. The substantive law governing a claim or defense
determines which facts are material. See 1Vforelandv. Las Vegas 1\Ietro. Police Dep't, 159 F.3d
365, 369 (9th Cir. 1998). In adjudicating a motion for summary judgment, the court must draw
all reasonable inferences in favor of the nonmoving party and may neither make credibility
determinations nor weigh evidence. See, e.g., Reeves v. Sanderson Plumbing Products, Inc., 530
U.S. 133, 150 (2000); Lytle v. Household l'v!fg., Inc., 494 U.S. 545, 554-55 (1990). On crossmotions for summary judgment, the court must consider each motion separately to detennine
whether either pmiy has met its burden with the facts construed in the light most favorable to the
other. See Fed. R. Civ. P. 56; see also, e.g., Fair Haus. Council v. Riverside Two, 249 F.3d
1132, 1136 (9th Cir. 2001).
DISCUSSION

The paliies' Cross-Motions for Summary Judgment present two primary issues: (1)
whether Homeland has a duty to defend CentiMark and Del Monte against the underlying suit
and (2) whether Homeland has a duty to indemnify CentiMark and Del Monte against the
underlying suit. I address each issue separately. I then address whether Homeland is entitled to
summary judgment on CentiMark's counterclaim for attorney fees.

OPINION & ORDER-PAGE 5

I.

Duty to Defend
Defendants are granted summary judgment on Homeland's duty to defend. An insurer

has a duty to defend a suit against its insured when the injured claimant could recover under the
allegations in the complaint "upon any basis for which the insurer affords coverage." W. Hills
Dev. Co. v. Chartis Claims, Inc., 359 P.3d 339, 343 (Or. App. 2015) (citing Casey v. Nw. Sec.
Ins. Co., 491P.2d208, 210 (Or. 1971)); accord Ledfordv. Gutoski, 877 P.2d 80, 82 (Or. 1994)
(citations omitted). The comt examines "just two documents to determine whether an insurer has
a duty to defend an action against its insured: the insurance policy and the complaint in the
action against the insured." W. Hills Dev. Co., 359 P.3d at 343 (citing Oakridge Comm.
Ambulance v. US. Fidelity, 563 P.2d 164, 166 (Or. 1977)). "Any ambiguity in the complaint
with respect to whether the allegations could be covered is resolved in favor of the insured."
Ledford, 877 P .2d at 83 (citation omitted).
Both CentiMark and Del Monte are entitled to defense coverage under the express terms
of the Policy. The Policy affords defense coverage for liability arising out of AAM's work for
entitles identified as additional insureds in the Form 1 and F01m B endorsements. See Lindley
Deel. Ex. A, at 54-55 (#39). As stated above, both CentiMark and Del Monte are identified as
additional insureds in the Form 1 and Form B endorsements. See id. Ex. A, at 54-55, Ex. C, at 2,
Ex. D, at 9, 11-12. Orta-Carrizales alleges in the underlying complaint that, at the time of the
accident, he was working for AAM on a roofing project for CentiMark on Del Monte's property.
Id Ex. B, at iii! 3.1-3.2. Therefore, AAM was clearly performing work for additional insureds.
Moreover, because the liability alleged in the underling suit is directly related to AAM's roofing

OPINION & ORDER-PAGE 6

work for Centi Mark and Del Monte, it clearly arises out of that work. 4 Homeland therefore has a
duty to defend CentiMark and Del Monte against the underlying suit under the express terms of
the Policy.
However, Homeland argues that the subcontract is voided by Oregon's anti-indemnity
statute. 5 Because the Policy's additional insured endorsements would not have been triggered in
the absence of the subcontract, there is no duty to defend if the subcontract is void. See Lindley
Deel. Ex. A, at 54-55 (#39) (additional insured endorsements triggered by AAL\1's agreement to
insure third pmiies).
As an initial matter, I must resolve a choice of law issue. While Homeland argues that
Oregon's anti-indemnity statute applies to the subcontract, Defendants argue that Washington
supplies the applicable anti-indemnity statute. Because the comi is sitting in diversity, I must
apply Oregon's choice of law rules. See Klaxton Co. v. Sten/or Co., 313 U.S. 487, 496 (1941);

Coneff v. AT & T Corp., 673 F.3d 1155, 1161 (9th Cir.2012). I assume, without deciding, that
the Oregon and Washington anti-indemnity statutes are materially different. See Waller v. Auto4

The pmiies do not appear to argue that the te1ms "arising out of," "work," or "for" are
ambiguous, and in any event, I find that they are not. I therefore reach my conclusion under the
plain meanings of those terms. See 1'1lortgage Bancmporation v. New Hampshire Ins. Co., 677
P.2d 726, 728 (Or. App. 1984) ("When words of common understanding are used and the
meaning is clear and subject to only a single reasonable meaning, no interpretation is necessa1y,
and the words are to be taken in their plain, ordinary and popular sense."); see also lvlort v.
United of Omaha Life Ins. Co., 734 F. Supp. 2d 1118, 1120 (D. Or. 2010) ("This court uses
Oregon law when interpreting an insurance contract because it has jurisdiction based solely on
the diversity of the pmiies." (citation omitted)), affd, 444 F. App'x 208 (9th Cir. 2011). I note,
however, that the same conclusion would follow ifI found that the terms were ambiguous. See
Shadbolt v. Farmers Ins. Exch., 551P.2d478, 480 (Or. 1976) ("[W]e have said many times that
if there is an ambiguity in the terms of an insurance policy, any reasonable doubt as to the
intended meaning of such te1ms will be resolved against the insurance company and in favor of
extending coverage to the insured." (citations omitted)).
5
Homeland's Complaint identifies and relies on the subcontract. See Comp!.~~ 11, 13, 19 (#1).
The subcontract is therefore incorporated by reference into the Complaint. See, e.g., Knievel v.
ESPN, 393 F.3d 1068, 1076 (9th Cir. 2005); In re Silicon Graphics Inc. Sec. Litig., 183 F.3d 970,
986 (9th Cir.1999).
OPINION & ORDER-PAGE 7

Owners Ins. Co., 26 P .3d 845 (Or. App. 2001) (holding that, under Oregon choice-of-law rules,

the court must determine as a threshold issue whether there is a material difference between
Oregon law and the law of the other forum).
The subcontract expressly incorporates AAM's project bid. See Lindley Deel. Ex. C, at 1
~A (#39). The project bid contains the following choice of law provision: "This agreement shall

be construed in accordance with, and governed by, the laws of Oregon." Id. Ex. C, at 5. Thus,
the subcontract provides for the application of Oregon law.
Defendants argue that the choice of law provision is unenforceable because (1) it was not
expressly incorporated into the subcontract, (2) Oregon does not have a strong interest in
applying its anti-indemnity statute to the subcontract, and (3) Oregon choice oflaw rules for
construction litigation reflect a preference for the law of the place of performance. I am
unpersuaded.
Defendants' first argument fails because, as explained above, the choice of law provision
is expressly incorporated into the subcontract. See Id. Ex. C, at 1 ~A. Defendants' second and
third arguments are likewise unavailing. It appears that Defendants mistakenly premise those
arguments on Oregon's common law choice of law rules. See Capital One Bank v. Fort, 255
P .3d 508, 510-11 & n.3 (Or. App. 2011) (discussing Oregon's common law choice oflaw rules,
which focus on the relationship between the litigation and the law of the chosen state (citing
Restatement (Second) of Conflict of Laws§ 187(2) (1971))); Herron v. Wells Fargo Fin., Inc.,
No. 05-CV-659-ST, 2006 WL 2422831, at *10 (D. Or. May 22, 2006) (holding that Oregon's
statutory choice of law rules were intended to replace its common law choice of law rules
regarding contract issues). However, since neither of the parties to the subcontract is a financial
institution, as defined in 15 U.S.C. § 6827, Oregon's statutory choice of law rules govern. See

OPINION & ORDER-PAGE 8

Or. Rev. Stat.§ 15.305; CACV of Colorado, LLC v. Stevens, 274 P.3d 859, 863 n.6 (Or. App.
2012). Under the statutory framework, an express, conspicuous choice oflaw provision is
enforceable unless the chosen law would:
(a) Require a party to perform an act prohibited by the law of the state where the act
is to be perfonned under the contract;
(b) Prohibit a party from performing an act required by the law of the state where it is
to be perfonned under the contract; or
(c) Contravene an established fundamental policy embodied in the law that would
otherwise govern the issue in dispute under ORS 15.360.
Or. Rev. Stat.§ 15.350, .355(1).
In this case, the parties' choice of law provision is express and conspicuous. See Lindley
Deel. Ex. C, at 1 if A (#39). Defendants' second and third arguments do not fit within any of the
above-quoted statut01y exceptions to the enforceability of a choice of law provision. Defendants
do not offer any other argument for why one or more of those exceptions apply, and in any event,
I find that they do not. 6 Consequently, Oregon's anti-indemnity statute applies to the
subcontract. 7

6

Although section 15.355 does not list the chosen state's interest in the litigation as a relevant
factor in dete1mining whether to enforce a contractual choice oflaw provision, I note that
Oregon has an interest in applying its anti-indemnity statute to the patiies' subcontract. The
statute was enacted to protect Oregon subcontractors and their insurers from having to insure
against general contractors' negligence in order to obtain subcontracted work. See 1Vfontara
Owners Ass'n v. La Noue Dev., LLC, 353 P.3d 563, 569 (Or. 2015). AAM was an Oregon
subcontractor. See Lindley Deel. Ex. A, at 3 (#39) (insurance policy listing an Oregon address
for AAM). Oregon therefore has an interest in applying its anti-indemnity statute to the
subcontract. Thus, whether I apply Oregon's common law or statutory choice of law rules, I
reach the same conclusion: Oregon's anti-indemnity statute applies to the subcontract.
7
The patiies do not appear to dispute that the Policy itself is also governed by Oregon law. To
be sure though, because the Policy was issued to an Oregon insured, see id., and the additional
insured ce1iificate was issued by an Oregon broker, see id. Ex. D, at 9, the Policy is governed by
Oregon law. See Findings and Recommendation at 14-15, Tudor Ins. Co. v. Howard S. Wright
Const. Co. (D. Or., Dec. 23, 2004), No. CIV. 04-480-ST (#34) (applying Oregon law to an
insurance policy where the policy was issued to an Oregon entity and the additional insured
OPINION & ORDER-PAGE 9

Oregon's anti-indemnity statute prohibits construction agreements from requiring a
subcontractor or a subcontractor's insurer to indemnify or defend another party against liability
caused by the other party's own negligence. See Or. Rev. Stat. § 30.140. The statute provides, in
pertinent part:
(1) Except to the extent provided under subsection (2) of this section, any
provision in a construction agreement that requires a person or that person's surety
or insurer to indemnify another against liability for damage arising out of death or
bodily injury to persons or damage to prope1ty caused in whole or in part by the
negligence of the indemnitee is void.

(2) This section does not affect any provision in a construction agreement that
requires a person or that person's surety or insurer to indemnify another against
liability for damage arising out of death or bodily injury to persons or damage to
property to the extent that the death or bodily injury to persons or damage to
prope1ty arises out of the fault of the indemnitor, or the fault of the indemnitor's
agents, representatives or subcontractors.
(3) As used in this section, "construction agreement" means any written
agreement for the planning, design, construction, alteration, repair, improvement
or maintenance of any building, highway, road excavation or other structure,
project, development or improvement attached to real estate including moving,
demolition or tunneling in connection therewith.
Id. § 30.140(1 )-(3). Section 30.140 applies to both indemnity and defense agreements. See
Sunset Presbyterian Church v. Andersen Const. Co., 341P.3d192, 199-200 (Or. App. 2014).

The statute also applies to additional insured endorsements, like those at issue in this case, that
are obtained via indemnity and defense agreements. Walsh Const. Co. v. lvfut. ofEnumclaw, 104
P.3d 1146, 1147 (Or. 2005).
In this case, the subcontract is clearly a construction agreement. See Lindley Deel. Ex. C
(#39). Moreover, as stated above, the subcontract required AAL\1 to obtain insurance coverage
that would protect CentiMark and Del Monte from "all risks of injury" to AAM employees,

certificate was issued by an Oregon broker, notwithstanding the fact that the underlying
workplace accident took place in Washington).
OPINION & ORDER-PAGE 10

regardless of any "negligence or fault" on the part of CentiMark or Del Monte. Id. Ex. C, at 2.
As further explained above, AAM's assent to the subcontract triggered the additional insured
endorsements contained in Form 1 and Form B. See id. Ex. A, at 54-55. The subcontract and
resulting endorsements therefore run afoul of section 30.140.
However, neither the subcontract nor the additional insured endorsements are completely
voided by the statute. As this court recently explained:
In lvfontara Owners Ass'n, the Oregon Supreme Court held . . . that an
indemnification provision subject to O.R.S. 30.140 is not completely void when it
requires the indemnitor (usually a subcontractor) to indemnify another (the
indemnitee, usually a general contractor) for damages that arise in whole or in
part by the negligence of the indemnitee if the provision also allows
indemnification for damages that arise in whole or in pait out of the negligence of
the indemnitor. 353 P.3d at 567-70, 2015 WL 3791636, at **3-6. To the extent
the provision requires indemnification for the negligence of the indemnitee, it is
void under O.R.S. 30.140(1). Id. at 567-68, 2015 WL 3791636 at *3. But,
because the court read subsection (2) as an exception to subsection ( 1), it held that
the indemnity provision remained enforceable to the extent allowed by subsection
(2), meaning to the extent it required indemnification for the negligence of the
indemnitor. Id. at 568-70, 2015 WL 3791636 at **4-6. Such provisions are
"partially enforceable." Id. at 568, 2015 WL 3791636 at *3.
Portland Gen. Elec. Co. v. Liberty kiut. Ins. Co., 112 F. Supp. 3d 1160, 1165 (D. Or. 2015). The
lvlontara court's "partially enforceable" rule applies to defense agreements as well as indemnity

agreements. Id. at 1165-67. Thus, section 30.140 does not pe1mit Homeland to completely
disclaim its duty to defend CentiMark or Del Monte. See id. Rather, the subcontract and
additional insured endorsements are enforceable to the extent they require Homeland to defend
CentiMark and Del Monte against damages caused by AAM's negligence. See id.
Homeland argues that even under lvlontara, it does not have any duty to defend
CentiMark or Del Monte against the underlying suit because Oita-Carrizales does not allege
AAM's negligence. That argument is based on the fact that the underlying complaint names only
CentiMark and Del Monte as defendants; it does not assert claims against AAM.

OPINION & ORDER-PAGE 11

This court has previously rejected Homeland's argument. See, e.g., id at 1167; Hoffinan
Const. Co. of Oregon v. Travelers Indem. Ins. Co., No. CIV. 05-456-AA, 2005 WL 3689487, at

*4 (D. Or. Nov. 28, 2005). Those decisions recognize that an injured employee's failure to name
his employer in an underlying personal injury action is attributable to the exclusivity of Oregon's
workers' compensation law. 8 See Portland Gen. Elec., 112 F. Supp. 3d at 1166; Clarendon Nat.
Ins. Co. v. Am. States Ins. Co., 688 F. Supp. 2d 1186, 1192 (D. Or. 2010); Richardson v. Howard
S. Wright Const. Co., No. cv:o5-1419-ST, 2007 WL 1467411, at *6 (D. Or. May 18, 2007).

Consequently, when an injured employee fails to allege his employer's negligence, "the inquiry
focuses on whether fault is implied." Portland Gen. Elec., 112 F. Supp. 3d at 1166 (citing Arch
Ins. Group, Inc. v. Travelers Prop. Cas. Co., No. 03:10--cv-00801-HZ, 2011WL6778757, at *3

(D. Or. Dec. 23, 2011)); accord Hoffinan Const. Co. of Oregon, 2005 WL 3689487, at *4. The
duty to defend is triggered when the underlying complaint is ambiguous and implies negligence
by the employer. See Portland Gen. Elec., 112 F. Supp. 3d at 1166; see also Ledford, 877 P.2d
at 83 ("Any ambiguity in the complaint with respect to whether the allegations could be covered
is resolved in favor of the insured." (citation omitted)).
In Portland General Electric, Joel Belgarde was injured while performing construction
work for his employer, NAES, at a plant owned by Portland General Electric ("PGE"). 112 F.
Supp. 3d at 1162. Belgarde filed a personal injury lawsuit against PGE, but he did not name
NAES in the action. Id. at 1165-66. NAES had added PGE as an additional insured on its
insurance policy, which was issued by Libe1iy, pursuant to a contract between NAES and PGE.
Id at 1162. PGE sought a declaratory judgment that Libe1iy had a duty to defend and indemnify

it against the underlying suit. Id Liberty raised the same argument that Homeland raises here8

As stated above, 01ia filed a workers' compensation claim with AAM's workers' compensation
insurer. Johnston Deel. Ex. A (#49-1).
OPINION & ORDER-PAGE 12

because the injured employee did not allege his employer's negligence in the underlying suit,
there was no duty to defend under ORS section 30.140. Id. at 1165-66.
The Portland General Electric cou1i rejected that argument and granted summary
judgment in PGE's favor on the duty to defend claim. Id at 1167. In doing so, the court
analyzed whether the underlying suit implied NAES's fault. Id at 1165-67. Belgarde alleged in
the underlying complaint that PGE controlled, directed and monitored his work at the PGE plant.
Id. at 1162. He fmiher alleged that he "was instructed to move the air cannon from station to

station to propel heating elements in to [sic] place." Id. at 1166 (citation omitted) (internal
quotation marks omitted). According to Belgarde, PGE failed to properly install the safety catch
on the air cannon's main valve. Id. As Belgarde was moving the air cannon, the main valve
lever allegedly caught a loop in his overalls, activating the cannon's air supply. Id. Belgarde's
co-worker then allegedly closed the safety valve, which caused the cannon to shoot backwards
and injure Belgarde. Id.
The cou1i held that although the underlying complaint alleged that PGE was responsible
for the improperly installed safety catch mechanism, it also implied NAES's fault to the extent it
alleged that Belgarde was instructed to move the air cannon. See id. at 1166-67. The complaint
did not allege who instructed Belgarde to move the air cannon. Id. at 1166. However,
"[b]ecause NAES had a contract to perform maintenance at [PGE's] plant and Belgarde was
employed by NAES, it [was] reasonable to infer that someone at NAES provided the instruction
to move the air cannon, even though Belgarde allege[d] that [PGE] controlled and directed his
work." Id. at 1167. Because the underlying complaint implicitly alleged NAES's fault, Libe1iy
had a duty to defend PGE. Id.

OPINION & ORDER-PAGE 13

Similarly, the underlying complaint in this case implicitly alleges the fault of AAM.
Orta-Carrizales alleges that he was instructed to remove roofing materials and cany them across
the roof of Del Monte's warehouse. Lindley Deel. Ex. B,

at~

3.6 (#39). He further alleges that

he was instructed to walk along the roof joists only, so as to avoid falling through the corroded
roof. Id. Ex. B,

at~~

3.5-3.6. According to Orta-Carrizales, the joists were not marked, and he

fell through the roof while carrying the removed materials. Id. Ex. B,

at~~

3.5, 3.7, 4.6.

Because he was canying the materials as instructed, Orta-Carrizales was allegedly unable to
properly shorten the length of the grab rope on his safety harness as he moved to lower areas of
the roof. Id. Ex. B,

at~

3.6. Consequently, when Orta-Carrizales fell, the rope was too long to

catch him before he hit the ground. Id. Ex. B, at~ 3.7.
As in Portland General Electric, it is reasonable to infer that AAM provided the
instructions that lead to Orta-Carrizales's injury. Although Oita-Carrizales does not
affitmatively allege who instructed him how to remove the roofing materials, he does allege that
he was "acting within the course and scope of his employment" for AAM when he was injured.

Id. Ex. B,

at~

3.1. Therefore, it is reasonable to infer that AAM instructed Oita-Canizales how

to remove the roofing materials. See Portland Gen. Elec., 112 F. Supp. 3d at 1167. Because
Oita-Canizales also alleges that neither CentiMark nor Del Monte warned him of the dangers of
working on the corroded roof, Lindley Deel. Ex. B,

at~~

3.5, 3.8, 4.5 (#39), it is also reasonable

to infer that AAM provided the deficient safety instruction about walking along the unmarked
joists. See Portland Gen. Elec., 112 F. Supp. 3d at 1167; see also Hoffinan Const. Co. of
Oregon, 2005 WL 3689487, at *4 (holding that the underlying complaint was ambiguous and

therefore triggered a duty to defend where it did not expressly allege who was responsible for a
flight of temporary steps on which the underlying plaintiff was injured, and consequently, the

OPINION & ORDER-PAGE 14

allegations implicated nonpmiies, including the insured (citing Tudor Ins. Co. v. Howard S.

Wright Const. Co., No. CIV. 04-480-ST, 2005 WL 425464, at *2 (D. Or. Feb. 18, 2005),
amended, No. CV-04-480-ST, 2005 WL 783060)). Homeland therefore has a duty to defend
CentiMark and Del Monte against the underlying suit.
As a final matter, I reject Homeland's argument that it is entitled to summary judgment
based on the holding in Sunset Presbyterian Church v. Andersen Construction, 341P.3d192 (Or.
App. 2014). That case involved a breach of contract action for failure to defend. Id. at 194. The
court found that the plaintiff was not entitled to damages because it failed to separately identify
the expenses it incurred in defending against claims that "might implicate" the indemnitor's
negligence from the expenses it incurred in defending against claims that "indisputably did not
arise out of [the indemnitor's] negligence because they involved allegedly defective work outside
the scope of [the indemnitor's] subcontract." Id. at 194-95, 197.
Unlike Sunset Presbyterian Church, this case involves a claim for declaratory judgment,
not a claim for breach of contract. Therefore, CentiMark and Del Monte need not establish
damages. 9 Moreover, I have already determined that the personal injury claims alleged by OrtaCanizales in the underlying suit "might implicate" AAM's negligence. This is not a case where
some of the alleged inju1y in the underlying action was "indisputably" caused by someone other
than the indemnitor. Thus, Homeland has a duty to defend CentiMark and Del Monte against the
entire underlying suit. See id. 197; accord Portland Gen. Elec., 112 F. Supp. 3d at 1166-67.
In sum, construing the ambiguities in the underlying complaint against Homeland, there
are implicit allegations of AAl\i!'s fault underlying all of Orta-Carrizales's claims, and as a result,

9

Homeland's argument to the contrary is particularly untenable in light of the fact that it is the
plaintiff in this case.

OPINION & ORDER-PAGE 15

Homeland has a duty to defend CentiMark and Del Monte against the underlying suit.
Therefore, Defendants are granted summary judgment on Homeland's duty to defend.

II.

Duty to Indemnify
Neither party is granted summary judgment on Homeland's duty to indemnify. "The duty

to indemnify is separate from the duty to defend." Portland Gen. Elec., 112 F. Supp. 3d at 1167;
accord Ledford, 877 P.2d at 84 (citation omitted). The breach of one duty "does not, in and of

itself, establish the breach of the other." Nw. Pump & Equip. Co. v. Am. States Ins. Co., 925
P.2d 1241, 1243 (Or. App. 1996) (citation omitted). "Thus, although the duty to defend is
triggered by the bare allegations of the complaint, the duty to indemnify 'is established by proof
of actual facts demonstrating a right to recover."' Clarendon Nat. Ins., 688 F. Supp. 2d at 119293 (quoting Nw. Pump & Equip., 925 P.2d at 1243).
As stated above, under ORS section 30.140, CentiMark and Del Monte are entitled to
indemnification for only liability that did not result from their own negligence. AAM's
negligence would be the most likely source of such liability. 10 However, the issue of AAM's
potential liability for Orta-Can-izales's injury is fact-bound and not properly framed by the
present motions. Indeed, the underlying suit is still pending. At this point in the proceedings,
even assuming that the evidence establishes that AAM bears some fault for Orta-Carrizales's
injury, it remains unce1iain whether CentiMark or Del Monte also bear some fault. I therefore
defer on the issue of indemnity. 11 See Portland Gen. Elec., 112 F. Supp. 3d at 1168 ("[I]t is
premature at this summary judgment stage to make the final determination on indenmity. ");
10

Because the issue is not presently before the court, I do not decide whether section 30.140
voids contractual provisions that require a subcontractor to defend against claims caused by the
negligence of third paiiies, such as other subcontractors. See also Sunset Presbyterian Church,
341 P.3d at 198 (declining to address that issue).
11
At oral argument, Homeland conceded that its Motion for Summary Judgment on the duty to
indemnify is premature. See Plf.'s Reply 3, 11-12 (#52).
OPINION & ORDER-PAGE 16

Clarendon Nat. Ins., 688 F. Supp. 2d at 1192-93 (same); Richardson, 2007 WL 1467411, at *9
(same).

III.

CentiMark's Counterclaim for Attorney Fees
Homeland is granted summmy judgment on CentiMark's counterclaim for attorney fees.

CentiMark asse1ts the claim under ORS section 742.061, which provides as follows:
[I]f settlement is not made within six months from the date proof of loss is filed
with all insurer a!ld an action is brought in any couit of this state upon any policy
of insurance of any kind or nature, and the plaintiffs recovery exceeds the amount
of any tender made by the defendant in such action, a reasonable amount to be
fixed by the cou1t as attorney fees shall be taxed as pmt of the costs of the action
and any appeal thereon.
It is well-settled that, under that provision, "a defendant insured is not entitled to attorney fees
when he prevails in a declaratory judgment proceeding brought by his insurer to test coverage."

1'1fcGraw v. Gwinner, 578 P.2d 1250, 1252 (Or. 1978) (internal quotation marks omitted)
(quoting Hardware 1'1fut. Cas. Co. v. Farmers Ins. Exch., 474 P.2d 316, 322 (Or. 1970) (en
bane)). 12 Rather, "the insured must recover a money judgment against the insurer; it is not
sufficient that the insured establish coverage which may in turn lead to a subsequent recovery of
money." lv!cGraw, 578 P.2d at 1253. Consequently, Homeland is granted summary judgment
on CentiMark's counterclaim for attorney fees.

CONCLUSION
For the reasons provided above, the parties' Cross-Motions for Summary Judgment are
granted and denied as follows:

12

2v!cGraw discusses an earlier version of the fees statute, which was located at section 743.114.

However, the couit's analysis applies with equal force to the cunent renumbered version of the
statute located at section 742.061.
OPINION & ORDER-PAGE 17

1. Homeland's Motion for Summary Judgment (#38) is denied with respect to the
duty to defend, deferred with respect to the duty to indemnify, and granted with
respect to CentiMark's counterclaim for attorney fees.
2. Defendants' Motion for Summary Judgment (#45) is granted with respect to the
duty to defend and denied in all other respects.

lj~
Dated this HJth day of May, 2016.
S/~-lLli\,(..Lc___~----"--<~~~L

Honorable Paul Papak
United States Magistrate Judge

OPINION & ORDER-PAGE 18