Ass'n of Unit Owners of Marina Riverhouse v. State Farm Fire & Cas. Co.
| Decision Date | 29 September 2011 |
| Docket Number | No. 3:11-cv-307-MO,3:11-cv-307-MO |
| Court | U.S. District Court — District of Oregon |
| Parties | ASSOCIATION OF UNIT OWNERS OF MARINA RIVERHOUSE, Plaintiff, v. STATE FARM FIRE AND CASUALTY COMPANY, Defendant. |
This case involves an insurance claim by the Association of Unit Owners of Marina Riverhouse (the "Unit Owners") against State Farm Fire and Casualty Company ("State Farm") regarding the alleged "collapse" of wood pilings in two units of the Marina Riverhouse. State Farm now moves for judgment on the pleadings, and alternatively, for summary judgment [5]. State Farm argues that under the relevant policies, there is no coverage because no "collapse" occurred, and regardless, the two-year suit limitation clause contained in the policies bars recovery by the Unit Owners. The Unit Owners argue that the discovery rule applies and so recovery is not barred by the suit limitation clause, and that the "collapse" of the wood pilings constitutes covered loss.
On August 2, 2011, I held a hearing on State Farm's motion. I made several rulings at that hearing, and asked the parties to prepare supplemental briefing on the discovery rule issue. Following a careful review of the record, including the supplemental briefs filed by the parties on the discovery rule issue, and for the reasons discussed at the August 2, 2011, hearing and below, I grant State Farm's motion as to the post-1999 insurance policy. I deny State Farm's motion as to the pre-1999 insurance policy because I find that, drawing reasonable inferences in favor of the Unit Owners from the undisputed facts in this case, State Farm has not established that it is entitled to judgment as a matter of law.
Marina Riverhouse was built in 1972. (Pl.'s Resp. in Opp'n to J. on the Pldgs. [14] 2). The property is comprised of eleven buildings consisting of two units per building. (Id.). The subject of this claim is a riverfront building that houses units 704 and 708. (Id.). This building is supported by nine wood pilings. (Id.). The Unit Owners allege that in 2009, upon undertaking a reconstruction project on the decks associated with those two units, some of the pilings that had previously been completely hidden from view were exposed. (Id.). The Unit Owners allege that the below-grade (underground) portion of three of the pilings "had disintegrated and fallen into pieces." (Id.). Therefore, the Unit Owners allege they suffered a "collapse." (Id.).
The Unit Owners purchased property insurance from State Farm in 1986, and renewed the policy every year. (Id. at 3.). Prior to November of 1999, the policy read in pertinent part:
We will pay for any accidental direct physical loss to covered property involving collapse of a building or any part of a building caused only by one or more of the following . . . hidden decay.
(Id.). State Farm later amended the collapse coverage, effective November of 1999. The amended policy reads in pertinent part:
(Id.). Both policies also provide an identical suit limitation clause that reads in pertinent part:
No one may bring legal action against us under this insurance unless: ... the action is brought within two years after the date on which the accidental direct physical loss occurred.
(Id. at 12.).
The Unit Owners filed this claim on or about February 9, 2011, in the Circuit Court of the State of Oregon for Multnomah County, and State Farm removed the case to this Court on March 11, 2011. (Notice of Removal [1] 1).
State Farm moves for judgment on the pleadings under Fed. R. Civ. P. 12(c), or alternatively summary judgment under Fed. R. Civ. P. 56. In considering a motion for judgment on the pleadings the court may not rely on evidence outside the pleadings. Hal Roach Studios, Inc. v. Richard Feiner & Co., Inc., 896 F.2d 1542, 1550 (9th Cir. 1990). If outside evidence is considered the motion should be treated as a motion for summary judgment. Id. A party is entitled to summary judgment if 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(c). Summary judgment is not proper if material factual issues exist for trial. Warren v. City of Carlsbad, 58 F.3d 439, 441 (9th Cir. 1995). A genuine dispute arises "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." State of California v. Campbell, 319 F.3d 1161, 1166 (9th Cir. 2003) (quotation omitted). "Where the record taken as a whole could not lead a rationaltrier of fact to find for the non-moving party, there is no genuine issue for trial." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (quotation omitted). On a motion for summary judgment, the court "must view the evidence on summary judgment in the light most favorable to the non-moving party and draw all reasonable inferences in favor of that party." Nicholson v. Hyannis Air Serv., Inc., 580 F.3d 1116, 1122 n.1 (9th Cir. 2009) (quotation omitted). I have looked to outside evidence in order to resolve State Farm's motion as to the policy in effect before November of 2009, and I therefore apply the summary judgment standard to that portion of the motion.
In a hearing on August 2, 2011, I ruled that the policy language effective after November of 1999 does not cover the type of loss suffered by the Unit Owners, and I therefore granted in part State Farm's motion for judgment on the pleadings. I further ruled that the policy language in effect before November of 2009 is ambiguous in reference to the term "collapse" such that I would resolve it against the drafter to provide for coverage for hidden decay of the pilings. Finally, I held that the discovery rule applies because I found it likely that the Oregon courts would apply the discovery rule to a policy such as the one applicable here when hidden decay is involved. I requested that the parties prepare supplemental briefs regarding the discovery rule issue.
Under Oregon law, the discovery rule tolls the limitations period under a suit limitation clause until, in the exercise of reasonable care, injury or loss that is covered by the pertinent policy is discovered or should have been discovered. See, e.g., Greene v. Legacy Emanuel Hosp.& Health Care Ctr., 60 P.3d 535, 538 (Or. 2002); Parker v. Worcester Ins. Co., 247 F.3d 1, 4-5 (1st Cir. 2001). In Greene, the Oregon Supreme Court held that "actual knowledge that each element of an injury is present" is not required under the discovery rule. 60 P.3d at 539 (quoting Gaston v. Parsons, 864 P.2d 1319, 1324 (Or. 1994)) (internal alterations omitted). "[I]f the facts satisfy the 'should have been discovered' standard ... then the period of limitations commences notwithstanding the plaintiff's complete failure to acquire actual knowledge of the injury." Id. at 539-40. Thus, in order for State Farm to prevail, it must show that the Unit Owners, in the exercise of reasonable care, discovered or should have discovered the damage to the pilings before February of 2009.
Whether or not the injury or loss has been discovered or should have been discovered is "a question of fact." Cole v. Sunnyside Marketplace, LLC, 160 P.3d 1, 6 (Or. App. 2007). The issue "can be resolved against the plaintiff on summary judgment only if the plaintiff should have achieved that awareness as a matter of law." Id. The inquiry is "how a reasonable person of ordinary prudence would have acted in the same or similar situation." Gaston, 864 P.2d at 1324. The inquiry includes whether a plaintiff made "a further inquiry if a reasonable person would have done so." Id. "There are no hard and fast rules for determining what facts or circumstances will compel inquiry by the injured party and render him chargeable with knowledge." United States Liab. Ins. Co. v. Haidinger-Hayes, Inc., 463 P.2d 770, 776 (Cal. 1970).
Whether or not discovery occurred before February of 2009 is a factual question that turns on whether the reasonable inferences drawn from the evidence, viewed in the light most favorable to the Unit Owners, is enough that they discovered or should have discovered theproblems with the pilings, or at least should have made "a further inquiry" that would have led them to discover the problems with the pilings at an earlier date.
State Farm proffers the following in support of their...
To continue reading
Request your trial