American Hallmark Insurance Company of Texas v. American Family Mutual Insurance Company et al

Filing 89

Findings of Fact and Conclusions of Law. Signed on 12/17/10 by Chief Judge Ann L. Aiken. (lae)

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12 IN THE UNITED STATES DISTRICT COURT 13 FOR THE DISTRICT OF OREGON 14 15 16 Plaintiff, 17 vs. 18 19 20 21 Defendants. 22 23 24 25 26 27 28 AIKEN, ef Judge: American Hallmark Insurance Company of Texas AMERICAN FAMILY MUTUAL INSURANCE COMPANY, a foreign corporation; and JRP DRYWALL ENTERPRISES, INC., an Oregon corporation, AMERICAN HALLMARK INSURANCE COMPANY OF TEXAS, a foreign corporation, FINDINGS OF FACT AND CONCLUSIONS OF LAW CV 09 976 -AA

Plaintiff

brought this insurance coverage act Mutual ("JRP"). Insurance Company and JRP

against American Fami Drywall Ente ises, Inc.

On December 9, 2010, a bifurcated court trial was held

concerning the terms of a mediated agreement and whether that 1 - F I N D I N G S OF FACT AND CONCLUSIONS OF LAW

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reement between plaintiff and defendant was en court ously found that plaintiff and de reached at a mediation held on July 14, court found, as to the the however, that genuine terms including parties, issues the of

able.

This

concluded an 2009. The ct After and the

material

existed

material evidence, fing

agreement. testimony

considering its,

witness the

and

court

enters

following Findings of Fact and Conclusions of Law:

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1.

PIa

iff is a property and casua

insurance company ss in

domicil

in the State of Texas and authorized to do bus

the State of Texas.
2.

with its principal place of business in

Defendant is a property and casualty insurance company

domiciled in the State of Wisconsin and authorized to do business in the State of Oregon, with its son, Wisconsin. 3. Defendant JRP is a construction company that is ncipal ace of business in

domiciled, has its principal place of business, and is authorized to do business in the State of Oregon. 4. insured William Popoff of pIa iff's was a general a contractor and a named

under

commercial

general

liability

insurance policy, poli
5.

number 44-CL-435288 02/000.

was a named insured of defendant's under a commercial

general liability insurance policy, policy number 36XO-7385 03.
6. Popoff hired JRP as a subcontractor on a construction job

and JRP's

oyee Gerardo Herrera was

ured on that job s fendant jointly

7. Herrera sued Popoff, and plaintiff and

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fended Popoff. that de 8. Plaintiff

Defendant was defending Popoff on

basis

ff was an additional

through JRP's policy with

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and

defendant

disagreed

about

defendant's

indemnity obligation in the Herrera lawsuit. 9. On July 14, 2009, a global mediation was held. and plaintiff each had a representative who was an De attorney

present at the mediation.

representative acted as an agent

of their respective insurers, with apparent authority to act on their principals' behalf. 10. At the mediation, Herrera's counsel agreed to accept aintiff defendant could

$900,000 to settle the lawsuit if obtain this amount of authority.

11. At the mediation, d e ' s representative, Eric Tait, stated to plaintiff that if p intiff paid the $900,000 to settle the dol amount s by

the Herrera lawsuit, defendant would agree

of the settlement was reasonable and agree to limit the de de nt could raise in a subsequent coverage ts its lawsuit

plaintiff.

Defendant stated that it would '1 es had identified

fenses to

the specific ri

its reservation of ORS 30.140 fendant's policy

s letters to Popoff. the oyer's

defenses were of

liability exclusion

precl

any indemnity

igation to Popoff.

Defendant stated

that it would also reserve the r Herrera proposal, conce and Popoff as de s.

to raise the negligence of Finally, under defendant's

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defendant and plaintiff preserved their disagreement which of the policies would be primary versus excess ion attributable to JRP's fault.

for the indemnity obI

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12. Plaintiff stated that it accepted that pIa i n t i a ement would ne a writ

fendant's

fer but

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defendant to reiterate the terms of the Later in day on y 14, 2009,

defendant's representative, Eric Tait, sent a email

terating

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and containing the terms of the agreement between defendant and plaintiff. 13. this tr The mediator, 1, John Barker, testified as a ss in

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and stated that he was present for the discussion iff and defendant. Mr. Bar r testified that in The court

between pIa his opinion,

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the parties had reached an agreement.

finds Mr. Barker's testimony credible. 14. On or around July 17, 2009, plaintiff agreed to fund $900,000 settlement with Herrera. lly executed on Popoff assigned pIa iff y 31, 2009. The settlement agreement was Under the settlement agreement

s rights arising out of the Herrera lawsuit to Herrera and released plaintiff accident and/or from any lawsuit.

liabili t y arising out

of Herrera's

Defendant was not a signatory to the settlement agreement and was not released by the underlying 15. On August 19, 2009, ies. plaintiff JRP. witness Eric Tait filed an insurance

coverage lawsuit against

fendant

16. After the July 14, irmed t the reta Herrera

2009 mediat

defendant had no contact with anyone involved in lawsuit,· including the defense counsel defendant

along with plaintiff, until after

aintiff's coverage

lawsuit was filed. 17. In the coverage lawsuit defendant raised the affirmative defense that defendant and plaintiff had either not formed an Page 4 - FINDINGS OF FACT AND CONCLUSIONS OF LAW

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agreement or that

aintiff had so breached that agreement so as formance. Defendant argued there These ng that

to excuse defendant's were addit

1 terms that were part of the agreement. ted to assi intiff,

additional terms were that Popoff was proh his pIa rights a sing out of the lawsuit

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iff could only sue defendant in its coverage lawsuit and be released in the Herrera settlement.

that defendant wou

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Defendant also argued that the agreement with plaintiff was not valid because it had not been reduced to a signed writing. ss Ta confi formally executed

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that these additional

terms did not appear in the July 14, 2009 email defendant sent to pIa iff and that defendant did not discuss these additional

terms with anyone involved in the Herrera lawsuit until after plaintiff's coverage lawsuit was filed. Conclusions of Law 1. The court has jurisdiction over this matter pursuant to diversity jurisdiction. 28 U.S.C.
§

1332.

2. To form a contract parties must agree to certain terms and mani st their assent. R.J. Taggart, Inc. v. Douglas County, The parties need contract,

31 Or. App. 1137, 1140, 572 P.2d 1050 (1977).

only agree on the essential or material elements of not on every possible term. 131 Or. omitted) . 3. Oregon re1 App. 301, 307, 884

Pacificorp v. Lakeview Power Co., P.2d 897 (1994) (internal ation

s on the objective theory of contract.

Estate Loan Fund of Or. v. Hevner, 76 Or. App. 349, 354, 709 P.2d 727 (1985). Under s theory, undis osed or ideas are

not relevant to 5

determination of whether a contract exists or

FINDINGS OF FACT AND CONCLUSIONS OF LAW

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what terms are part of the contract. the meaning which a reasonable view of the surrounding

Id.·

Acts and words have

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son would ascribe to them in in which they are 307

circumstances

undertaken or spoken.

Kitzke v Turnidge, 209 Or. 563, 573,

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P.2d 522 (1957); see also, Groshong v. Mut. of Enumclaw Ins. Co., 329 Or. 303, 308, 985 P.2d 1284 (1999). 4. The mediation and email on July 14, 2009, resulted in a legally binding agreement with an of objective theory of contract. De and ance under the offered to agree, if

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plaintiff agreed to pay $900,000 to settle the Herrera case, that defendant would not contest the settlement. reasonableness of the amount of ed this offer and wanted Defendant then sent an email t mediation. A fully

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Plaintiff said it

the terms reflected in writing. rei t e r a t i n g agreement

reached at

binding agreement resulted from this offer and acceptance and partial performance. by paying Plaintiff $900,000 to fulfilled Herrera and its requi his

performance lawsuit.

settling

5. Under the objective theory of contract, the rties agreed upon

only the terms

that were reiterated in defendant's the contract. Thus, the terms of

July 14, 2009 email are part contract were if

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id the $900,000 to settle

the Herrera lawsuit, defendant would agree that the amount of the settlement was reasonable and defenses letters or d limit its defenses to certain

ifically set out in its prior reservation of rights agreed to by the part s at the mediation, and

reiterated in defendant's July 14, 2009, email. were ORS 30.140,

Those defenses

the defendant's policy's employer's liability

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exclusion,

the negligence of Herrera two

Popoff and the proper

construction of

ies "other insurance clauses" with

regard to which policy was primary and which was excess for t percentage of the Herrera loss attribut 6. Defendant Ie to JRP's fault.

iled to preserve the defense that Popoff was or any other de ses that may have fendant's policy but

not an additional insured,

existed under the terms and conditions of

which were not expressly preserved under the parties agreement. 7. The ot r terms defendant believes were part of the ntiff were never communicated to or refore not part of the agreement.

agreement reached with scussed plaintiff and

The court does not find Tait's testimony credible in this regard. These purported terms were that Popoff was prohibited from

assigning his rights arising out of the lawsuit to plaintiff, that pI ntiff could only sue defendant in its coverage lawsuit

and that defendant would be released in the Herrera settlement. 8. Upon plaintiff's completion of Herrera settlement, to in the

fendant was bound to limit parties agreement.

s defenses as

As a result, the only defenses defendant may the employer's liability the negligence of Herrera

raise in this lawsuit are ORS 30.140, usion of the defendant's policy,

and Popoff and the proper construction of the two parties "other insurance clauses" with regard to which policy was primary and which was excess for the age of the Herrera loss

attributable to JRP's fault. 9. Accordi y, defendant is from raising any defense includi not an but not additional

not preserved under the parties agreement, limited Page 7 to, the se Popoff was

FINDINGS OF FACT AND CONCLUSIONS OF LAW

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insured.

Consistent wi

this rul

,

plaintiff may renew its

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summary judgment motion on the 1 parties agreement. 10. Finally, both

defenses preserved under the

ies are to bear their own attorney

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s in this action. IT IS SO ORDERED.
Dated this
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~llday

of December 2010.

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Unit

Ann Alken States strict

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