Century Sur. Co. v. Francisco Lopez Dba Neri Auto Sales
| Decision Date | 08 December 2016 |
| Docket Number | No. 3:16-cv-00571-HZ,3:16-cv-00571-HZ |
| Parties | CENTURY SURETY COMPANY, Plaintiff, v. FRANCISCO LOPEZ dba NERI AUTO SALES; HERIBERTO BARAJAS; TANIA DENISE OROZCO, as Conservator for Eric Barajas, a Minor Child; RIGOBERTO OROZCO-GONZALES, JR., Personal Representative for the Estate of Ivon C. Barajas-Orozco; MARIA BARAJAS-BALLINES; Defendants. |
| Court | U.S. District Court — District of Oregon |
Andrew E. Passmore
Ronald J. Clark
BULLIVANT HOUSER BAILEY, PC
300 Pioneer Tower, 888 SW Fifth Avenue
Portland, OR 97204
Attorneys for Plaintiff
Jay Richard Chock
Jeffrey Hansen
CHOCK BARHOUM LLP
121 SW Morrison Street, Suite 415
Portland, OR 97204
Attorneys for Defendant Francisco Lopez
Douglas P. Oh-Keith
Thomas D. D'Amore
D'AMORE LAW GROUP, P.C.
Tania Denise Orozco, and Rigoberto
Orozco-Gonzales, Jr.
Plaintiff Century Surety Company ("Century Surety") brings this motion for partial summary judgment on the issue of whether it has a duty to defend Defendant Francisco Lopez, dba Neri Auto Sales ("Neri Auto"), in an underlying state court lawsuit. Century Surety brings this motion against Defendants Neri Auto, Maria Barajas Ballines, Heriberto Barajas, Tania Denise Orozco, and Rigoberto Orozco-Gonzales, Jr. (collectively, "Defendants," with the exception of Ms. Barajas Ballines, who failed to appear and was subject to an entry of default).
According to Century Surety, two clauses in the insurance policy issued to Neri Auto serve to exclude Century Surety from any duty to defend Neri Auto in the underlying lawsuit: (1) a "Transfer of Ownership Exclusion," and (2) a "Tires Exclusion." The Court agrees that both exclusions relieve Century Surety from the duty to defendNeri Auto and, therefore, Century Surety's motion for partial summary judgment is granted.
On June 1, 2015, Mr. Barajas, Ms. Orozco, and Mr. Orozco-Gonzales, Jr. filed suit ("Underlying Lawsuit") against Neri Auto, among others, in Multnomah County Circuit Court. Clark Decl. Ex. B, ECF 26-2. On November 9, 2015, the plaintiffs in the Underlying Lawsuit filed an Amended Complaint. Clark Decl. Ex. C ("Underlying Complaint"), ECF 26-3.
The relevant allegations in the Underlying Complaint are that Neri Auto sold Ms. Barajas Ballines a 2003 Ford Expedition SUV equipped with a defective tire. Id. at ¶¶ 7, 13. Within days of purchasing the SUV, the tire tread separated from the tire carcass while Ms. Barajas Ballines was driving, causing an accident in which passengers Heriberto Barajas and Eric Barajas were injured and Ivon Barajas-Orozco, who was pregnant, was killed. Id. at ¶¶ 14-18.
The Underlying Complaint contains four claims against Neri Auto: (1) product liability for failure to warn, instruct, and train as to the defective tire; (2) general negligence regarding the risks of the defective tire; (3) strict liability as to the sale of the defective tire; and (4) negligent infliction of emotional distress connected to injuries and the witnessing of Ms. Barajas-Orozco's death. Id. at ¶¶ 50-65, 72-76. Century Surety is currently providing a defense to Neri Auto in the Underlying Lawsuit subject to a full reservation of rights.
Century Surety issued a "Commercial Lines Policy" ("the Policy") to Neri Auto. Clark Decl. Ex. A, ECF 26-1. The Policy provides liability coverage for certain "covered 'autos.'" Id. at 20. The Policy provides that Century Surety will defend and indemnify Neri Auto against "suits"1 seeking damages for bodily injury and property damage caused by an accident involving the ownership or use of covered autos. Id. at 21.
However, the Policy also contains several "exclusions." Century Surety has no duty to defend any insured against a suit seeking damages for bodily injury or property damage to which the Policy does not apply. Id. For example, the Policy does not cover bodily injury or property damage occurring after possession of an auto "has been surrendered to another person pursuant to sale, conditional sale, gift, abandonment, or lease." Id. at 40. In addition, the Policy excludes coverage for bodily injury and property damage resulting from the sale of any tires, the failure to issue warnings related to the condition of the tires, and various other circumstances under which tires are the cause of an injury. Id.
Summary judgment is appropriate if 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). The moving party bears the initial responsibility of informing the court of the basis of its motion, and identifying those portions of "'the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any,' which itbelieves demonstrate the absence of a genuine issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986) (quoting Fed. R. Civ. P. 56(c)).
Once the moving party meets its initial burden of demonstrating the absence of a genuine issue of material fact, the burden then shifts to the nonmoving party to present "specific facts" showing a "genuine issue for trial." Fed. Trade Comm'n v. Stefanchik, 559 F.3d 924, 927-28 (9th Cir. 2009) (internal quotation marks omitted). The nonmoving party must go beyond the pleadings and designate facts showing an issue for trial. Bias v. Moynihan, 508 F.3d 1212, 1218 (9th Cir. 2007) (citing Celotex, 477 U.S. at 324).
The substantive law governing a claim determines whether a fact is material. Suever v. Connell, 579 F.3d 1047, 1056 (9th Cir. 2009). The court draws inferences from the facts in the light most favorable to the nonmoving party. Earl v. Nielsen Media Research, Inc., 658 F.3d 1108, 1112 (9th Cir. 2011).
If the factual context makes the nonmoving party's claim as to the existence of a material issue of fact implausible, that party must come forward with more persuasive evidence to support his claim than would otherwise be necessary. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).
Century Surety asks this Court to grant partial summary judgment declaring that Century Surety does not have a duty to defend Neri Auto in the Underlying Lawsuit. According to Century Surety, the SUV had been sold to Ms. Barajas Ballines and, thus, is not a "covered auto" because of the Policy's Transfer of Ownership Exclusion. In addition, Century Surety argues that it does not have a duty to defend because the bodily injury or property damage at issue in the Underlying Complaint resulted from or wasrelated to the defective tire and, thus, is subject to the Policy's Tires Exclusion clause. The Court grants Century Surety's motion.
Oregon law governs this Court's construction of the Policy and Century Surety's duty to defend. Larson Const. Co. v. Or. Auto. Ins. Co., 450 F.2d 1193, 1195 (9th Cir. 1971); Allstate Ins. Co. v. Morgan, 123 F. Supp. 3d 1266, 1272 (D. Or. 2015). Under Oregon law, "[a]n insurer has a duty to defend if the claimant can recover against the insured under the allegations of the complaint on any basis for which the policy affords coverage." Falkenstein's Meat Co. v. Md. Cas. Co, 91 Or. App. 276, 279, 754 P.2d 621, 623 (1988).
"Whether an insurer has a duty to defend presents a question of law, which is determined by comparing the terms of the insurance policy with the allegations of the complaint against the insured." Drake v. Mut. of Enumclaw Ins. Co., 167 Or. App. 475, 478, 1 P.3d 1065, 1068 (2000).
Even if the complaint alleges some conduct outside the coverage of the policy, the insurer may still have a duty to defend if certain allegations of the complaint, without amendment, could impose liability for conduct covered by the policy. Any ambiguity in the complaint with respect to whether the allegations could be covered is resolved in favor of the insured.
Ledford v. Gutoski, 319 Or. 397, 400, 877 P.2d 80, 82 (1994) (citation omitted). Conversely, "[i]f the complaint does not contain allegations of covered conduct ..., then the insurer has no duty to defend." Abrams v. Gen. Star Indem. Co., 335 Or. 392, 400, 67 P.3d 931, 935 (2003); see also Siltronic Corp. v. Employers Ins. Co. of Wausau, No. 3:11-CV-1493-ST, 2015 WL 181785, at *4 (D. Or. Jan. 14, 2015).
Century Surety does not have a duty to defend Neri Auto because of the Policy's Transfer of Ownership Exclusion. The Policy provides that "this insurance does not apply to":
The Underlying Complaint alleges that Neri Auto "sold" the SUV to Ms. Barajas Ballines on June 10, 2013, two weeks before the accident. Underlying Complaint ¶¶ 7, 12. Century Surety contends that it does not have a duty to defend Neri Auto because the Policy does not...
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