Rediger, et al v. Country Mutual Insurance Company

Filing 138

OPINION AND ORDER: Plaintiffs' Motion for Summary Judgment 120 is DENIED. Signed on 11/30/2022 by Judge Ann L. Aiken. (ck)

Case 6:16-cv-02263-AA

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IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF OREGON
EUGENE DIVISION

JARED REDIGER; MYRANDA
REDIGER; HAYSTORM
HARVESTING & FIBER, INC.,
Plaintiffs,

Civ. No. 6:16-cv-02263-AA

OPINION & ORDER

v.
COUNTY MUTUAL INSURANCE
COMPANY,
Defendant.
_______________________________________
AIKEN, District Judge.
This matter comes before the Court on Plaintiffs’ Motion for Summary
Judgment. ECF No. 120. The Court concludes that this matter is appropriate for
resolution without oral argument. For the reasons set forth below, the motion is
DENIED.
LEGAL STANDARDS
Summary judgment is appropriate if the pleadings, depositions, answers to
interrogatories, affidavits, and admissions on file, if any, show “that there is no
genuine dispute as to any material fact and the [moving party] is entitled to judgment
as a matter of law.” Fed. R. Civ. P. 56(a). Substantive law on an issue determines the
materiality of a fact. T.W. Elec. Serv., Inc. v. Pac. Elec. Contractors Ass’n, 809 F.2d

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626, 630 (9th Cir. 1987). Whether the evidence is such that a reasonable jury could
return a verdict for the nonmoving party determines the authenticity of the dispute.
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
The moving party has the burden of establishing the absence of a genuine issue
of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). If the moving party
shows the absence of a genuine issue of material fact, the nonmoving party must go
beyond the pleadings and identify facts which show a genuine issue for trial. Id. at
324.
Special rules of construction apply when evaluating a summary judgment
motion: (1) all reasonable doubts as to the existence of genuine issues of material fact
should be resolved against the moving party; and (2) all inferences to be drawn from
the underlying facts must be viewed in the light most favorable to the nonmoving
party. T.W. Elec., 809 F.2d at 630-31.
BACKGROUND
I.

The Loss Event
Plaintiff Haystorm Harvesting & Fiber, Inc. is a business owned by Plaintiffs

Jared and Myranda Rediger. In June 2014, the Redigers met with Third-Party
Defendant Bob Bronson, an insurance agent for Defendant and Third-Party Plaintiff
Country Mutual Insurance Company (“Country”), to apply for insurance coverage for
their business property in Linn County, Oregon. Plaintiffs filled out an insurance
application and gave Bronson a $5,000 check as a down payment on the premium for
the intended policy.

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On December 6, 2014, a fire caused significant damage to Plaintiffs’ property.
At the time of the fire, Bronson had not submitted the application or down payment
check to Country and Country had not issued a written policy.
II.

The TMR Machine
Among the property destroyed by the fire was a “total mix ration” or “TMR”

operation. The TMR machine was constructed by the Plaintiffs from parts that were
commercially available, although the machine itself is not manufactured
commercially. Spooner Decl. Ex. 2, at 6. ECF No. 125. Mr. Rediger testified that the
entire TMR operation consisted of a power source; an enclosure with power controls;
a hydraulic power unit; feed belts; four feeder tables; a mixer; two scaled hoppers; a
baler; an accumulator; two chaff return belts; augers; a bulk bin; mounting and
walkways; a control room; lighting; electrical motors; and support rigs. Spooner Decl.
Ex. 11, at 5-7.
III.

The Application and the Post-Loss Policy

In their application, Plaintiffs sought coverage for Farm Personal Property
(“FPP”) including $350,000 for “TMR Machine,” and $510,000 for “TMR Equip.”
Gower Decl. Ex. 2, at 9,11. ECF No. 121. When Bronson took Plaintiffs’ insurance
application, he included the TMR operation, although he testified that he did not
know the meaning of the term “TMR.” Spooner Decl. Ex. 4, at 4. When he was asked
in his deposition if the TMR operation was to be included, Bronson answered “Not as
a separate. It was just the machinery was on there. It is not identified as TMR

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machinery.” Id. at 5. In total, Plaintiffs sought blanket coverage for $1,318,000.
Gower Decl. Ex. 2, at 11.
After the fire, Country issued Policy No. A36L4955907 (the “Post-Loss Policy”)
which was backdated to be effective at the time of the fire. Gower Decl. Ex. 1, at 1-2.
As relevant to the present motion, the Post-Loss Policy provided two different
categories of coverage for Farm Personal Property—Scheduled FPP and Blanket FPP.
The distinction is significant because the Blanket FPP coverage provided by the PostLoss Policy does not include “[p]roperty that is separately described and specifically
insured by this or any other insurance.” Gower Decl. Ex. 1, at 35. In other words, if
an item is specifically covered under the Scheduled FPP, it cannot be covered by the
Blanket FPP.
The Post-Loss Policy included the “TMR Machine” in the Scheduled FPP with
a liability limit of $350,000. Gower Decl. Ex. 1, at 5. The Post-Loss Policy also
included a limit on liability for FPP of $1,318,000. Id. at 4.
Jennifer Reid was the underwriter for the Post-Loss Policy. Spooner Decl. Ex.
6, at 4. In her deposition, Reid testified that she did not know the difference between
TMR Equip and TMR Machine, or what the components of each were, but she
understood that TMR Machine was meant to be included as Scheduled FPP while
TMR Equip was to be unscheduled Blanket FPP. Spooner Decl. Ex. 6, at 6-7. Reid
did not speak with Bronson about the difference between TMR Machine and TMR
Equip, but she based her understanding that the two were distinct on the fact that
they were listed in the application with different values. Id. at 8-9.

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Confusion arose, however, because the Scheduled FPP listed the TMR Machine
at $350,000 and four feeder tables each listed at $40,000 and so the total value of the
TMR Machine and the feeder tables combined was $510,000, the same value as the
“TMR Equip” listed in the Blanket FPP. Spooner Decl. Ex. 10. Country’s agents
became concerned that, rather than there being two categories of TMR-related
property separately listed in the Scheduled FPP as “TMR Machine” and in the
Blanket FPP as “TMR Equip,” there was only one set of TMR-related property that
had been listed in both categories. Id.
Tim Ekberg testified that he sought clarification from Bronson on what the
TMR machine was. Spooner Decl. Ex. 8, at 5. Ekberg also sought clarification on
what, among the items claim under the Post-Loss Policy, was meant to be part of the
TMR machine, as opposed to the TMR equipment. Id. at 7. Ekberg testified that
Bronson told him that all TMR-related items were meant to be scheduled and that
the TMR-related items were not intended to be included in both the Scheduled FPP
and the Blanket FPP. Id. at 8-9.
Charlie Strube also participated in the meeting with Bronson where he and
Ekberg sought clarification about whether the TMR-related items were meant to be
scheduled or unscheduled under the Post-Loss Policy. Spooner Decl. Ex. 9, at 5.
Strube testified that Bronson told them that they did not intend for the TMR-related
items to appear in both the Scheduled FPP and the Blanket FPP and that all TMRrelated property was meant to be included in the Scheduled FPP. Id. at 6-7.

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As a result, Country did not issue payment for the TMR materials under the
Blanket FPP of the Post-Loss Policy.
IV.

Procedural History
Plaintiffs brought this action for breach of contract against Country. Country,

in turn, brought a third-party complaint against Bronson. ECF No. 16. During the
pendency of this action, Bronson suffered a stroke which caused memory loss and left
Bronson unable to complete depositions. ECF Nos. 84, 88. Country and Bronson
were subsequently able to reach a settlement of the third-party claims. ECF No. 95.
In May 2021, the Court denied Country’s motion for summary judgment. ECF
No. 116. In its Order, the Court found that Plaintiffs had sufficiently alleged the
existence of an oral insurance binder and that the parole evidence rule did not
prohibit the binder. The Court also found that questions of fact precluded summary
judgment concerning the existence of the binder and on the application of the statute
of frauds.
DISCUSSION
The dispute at the heart of this motion concerns whether the Scheduled FPP
item “TMR Machine” includes all TMR components or only a portion of the
components. If “TMR Machine” refers to the entirety of the TMR components, then
the Post-Loss Policy does not permit coverage for the balance of the claimed value of
“TMR Equip” under the Blanket FPP coverage.
Plaintiffs also assert that Country waived its right to dispute the actual cash
value (“ACV”) and replacement cash value (“RCV”) of the TMR materials because its

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adjuster, working with Plaintiffs’ adjuster, submitted a request for authority to pay
the claimed value of the TMR material.
Before advancing to the substance of the motion, the Court must resolve an
evidentiary objection raised by Plaintiffs.

Plaintiffs object to portions of the

depositions of Tim Ekberg, Spooner Decl. Ex. 8, and Charlie Strube, Spooner Decl.
Ex. 9, in which those witnesses recount discussions they held with Bronson in
September 2015 concerning whether the TMR material was intended to be scheduled
only or both scheduled and unscheduled. Plaintiffs also object to an activity log note
created by Strube on September 16, 2015 in which Strube recounts the substance of
his discussion with Bronson concerning whether the TMR material was intended to
be scheduled or unscheduled. Spooner Decl. Ex. 10. Plaintiffs contend that these
exhibits contain inadmissible hearsay not covered by any exception.
Country responds that the Ekberg and Strube testimony is admissible because
Bronson in an unavailable witness, as well as a party opponent to Country, and that
the activity log is admissible as a business record.
The Court will first address the issue of whether the testimony is admissible
under the unavailable witness exception to the bar on hearsay evidence. Bronson
was initially deposed by the Plaintiffs’ counsel on August 30, 2017. Gower Decl. Ex.
7. In that deposition, Bronson testified that he and Plaintiffs intended some of the
TMR material to be scheduled and some to be unscheduled under the planned policy.
Id. at 20, 25.

The August 30, 2017 deposition ended at 2:50 p.m. with an

understanding between the parties that the deposition would be left open for another

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session during which Country’s counsel would have an opportunity to question
Bronson for a few hours. Second Spooner Decl. Ex. 1, at 4-5. ECF No. 134.
The parties reconvened to resume deposing Bronson on March 8, 2018. Second
Spooner Decl. Ex. 2. In the months between the first and second sessions, Bronson
suffered a serious stroke which caused him to experience memory loss. Id. at 4-5.
Among other things, Bronson could not remember when he transmitted Plaintiff’s
insurance application to Country, including whether he did so before the fire. Id. at
6-7. The parties agreed that Bronson’s medical condition did not permit him to
continue with the deposition and the session ended. Id. at 7-8.
The matter was put before this Court, which conducted an in camera review of
Bronson’s medical records before concluding that Bronson was unable to provide
deposition testimony as a result of his condition. ECF Nos. 84, 88.
Federal Rule of Evidence (“FRE”) 804(a) provides that a declarant is considered
unavailable as a witness if he (1) “testifies to not remembering the subject matter” or
(2) “cannot be present or testify at the trial or hearing because of death or a thenexisting infirmity, physical illness, or mental illness.” Fed. R. Evid. 804(a)(3), (4).
Bronson, who suffered memory loss from a stroke, qualifies as “unavailable” under
both of these subsections.
Under FRE 804(b), the Rules provide categories of testimony that are not
excluded by the rule against hearsay in the case of an unavailable declarant. These
categories are (1) former testimony; (2) statements made under the belief of imminent
death; (3) statements against interest; (4) statements of personal or family history;

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and (5) statements offered against a party that wrongfully caused the declarant’s
unavailability. Fed. R. Evid. 804(b). Of these, Country relies on FRE 804(b)(3), which
covers statements against interest. Such a statement is one that
a reasonable person in the declarant’s position would have made only if
the person believed it to be true because, when made, it was so contrary
to the declarant’s proprietary or pecuniary interest or had so great a
tendency to invalidate the declarant’s claim against someone else or to
expose the declarant to civil or criminal liability . . .
Fed. R. Evid. 804(b)(3)(A).
Here, Ekberg and Strube testified that Bronson told them that the TMR
equipment was meant to be scheduled only and not included in both the Scheduled
and Blanket FPP coverage. This is contrary to what he later testified in his prestroke deposition. The statements Bronson allegedly made to Ekberg and Strube, if
actually made, would be contrary to Bronson’s interest if the original intent of the
policy was, as Plaintiffs claim and as Bronson later testified, to include the TMR
machine in both Scheduled FPP and Blanket FPP because Bronson would have
understood that Country would act in accordance with what he told Ekberg and
Strube and that the denial of coverage would result in civil litigation in which
Bronson himself might be named as a defendant. This is, in fact, what ultimately
occurred when Country declined to provide Blanket FPP coverage for the TMR
material, which led to Plaintiffs bringing this action against Country and Country,
in turn, bringing a third-party complaint against Bronson. The Court concludes,
therefore, that Ekberg and Strube’s testimony about what Bronson allegedly told
them concerning the TMR coverage is admissible under the hearsay exception for an

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unavailable witness. It is not, therefore, necessary to determine if it would also be
admissible as an admission by a party opponent.
Turning to the activity log entry memorializing what Bronson told Strube and
Ekberg, Country asserts that this is admissible as a business record. Plaintiffs assert
that, even accepting that the log entry is a business record, it contains hearsaywithin-hearsay and so remains inadmissible. Records of regularly conducted activity
are admissible if:
(A) the record was made at or near the time by—or from information
transmitted by—someone with knowledge;
(B) the record was kept in the course of a regularly conducted activity of
a business, organization, occupation, or calling, whether or not for profit;
(C) making the record was a regular practice of that activity;
(D) all these conditions are shown by the testimony of the custodian or
another qualified witness, or by a certification that complies with Rule
902(11) or (12) or with a statute permitting certification; and
(E) the opponent does not show that the source of information or the
method or circumstances of preparation indicate a lack of
trustworthiness.
Fed. R. Evid. 803(6).
Here, Plaintiffs object that the activity log does not represent a
“contemporaneous” record of the meeting with Bronson, based on testimony that none
of the participants in that meeting took notes. This goes beyond the requirements of
the Rule 803, however, which do not demand that the record be contemporaneous,
only that it be made “at or near the time by—or from information transmitted by—
someone with knowledge.” A post-meeting memorialization made near in time to the
meeting by one of the participants is sufficient to meet this standard. The Court
concludes that the activity log meets the requirements for the business record

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exception. And, because Bronson is an unavailable witness under FRE 804, the Court
likewise rejects Plaintiffs’ “hearsay-within-hearsay” argument.
In sum, the Court concludes that the challenged portions of the Ekberg
deposition and the Strube deposition are admissible, as is the activity log
memorializing Strube’s discussions with Bronson. Plaintiffs’ evidentiary objections
are overruled.
Having resolved the evidentiary issue, the Court turns to the substantive
question of whether the TMR material was intended to be included only under the
Scheduled FPP or under both the Scheduled FPP and the Blanket FPP. The Court
observes that Bronson gave contradictory information in his statements to Ekberg
and Strube and in his subsequent and incomplete deposition testimony.

This

contradiction must be resolved by the trier of fact. The Court concludes that material
questions of fact exist, which precludes the grant of summary judgment in favor of
Plaintiffs.
In the Court’s previous Order denying Country’s Motion for Summary
Judgment, the Court concluded that there were questions of fact concerning the
binder that necessitated that the finder of fact “determine the coverage that the
parties contracted for.” Opinion & Order, at 7, 10. Those questions of fact continue
to exist and must be resolved by the trier of fact.
Finally, the Court turns to Plaintiffs’ claim that Country has waived the right
to contest that the value of the unpaid TMR components is less than $774,780 RCV
or $736,041.30 ACV. “Waiver is the intentional relinquishment or abandonment of a

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known right or privilege.” Moore v. Mutual of Enumclaw Ins. Co., 317 Or. 235, 240
(1993). Plaintiffs assert that because Country’s adjuster worked with Plaintiffs’
adjuster to assess the RCV and ACV of the TMR materials and that Country’s
adjuster requested permission to pay $736,041.30 in ACV for TMR material which
had $774,780 RCV under the Blanket FPP of the Post-Loss Policy, Country has
therefore waived the right to contest the values identified by the adjusters. The Court
concludes that the actions of Country’s adjuster do not demonstrate the intentional
relinquishment of Country’s right to contest that value and so declines to grant
summary judgment in Plaintiffs’ favor on the issue of waiver.
The Court therefore DENIES Plaintiffs’ Motion for Summary Judgment.
CONCLUSION
For the reasons set forth above, Plaintiffs’ Motion for Summary Judgment,
ECF No. 120, is DENIED.
It is so ORDERED and DATED this

30th

day of November 2022.

/s/Ann Aiken
ANN AIKEN
United States District Judge

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