Country Mut. Ins. Co. v. Pittman

• Decision Date: 16 November 2012
• Docket Number: No. 03:11–CV–00806–HU.,03:11–CV–00806–HU.
• Citation: 910 F.Supp.2d 1233
• Parties: COUNTRY MUTUAL INSURANCE COMPANY, dba Country Insurance and Financial Services, Inc., an Indiana corporation, Plaintiff, v. Ronald PITTMAN, an individual, Defendant.
• Court: U.S. District Court — District of Oregon

910 F.Supp.2d 1233

COUNTRY MUTUAL INSURANCE COMPANY, dba Country Insurance and Financial Services, Inc., an Indiana corporation, Plaintiff,

v.Ronald PITTMAN, an individual, Defendant.

No. 03:11–CV–00806–HU.

United States District Court, D. Oregon.

Nov. 16, 2012.

John A. Bennett, Stephen F. Deatherage, Andrew E. Passmore, Bullivant Houser Bailey PC, Portland, OR, for Plaintiff.

Laura N. Althouse, Richard A. Lee, Bodyfelt Mount LLP, Portland, OR, for Defendant.

MEMORANDUM OPINION AND ORDER ON MOTIONS FOR SUMMARY JUDGMENT

HUBEL, United States Magistrate Judge.

This matter is before the court on the parties' motions for summary judgment. For the reasons discussed below, the plaintiff's motion (Dkt. # 18) is denied, and the defendant's motion (Dkt. # 21) is granted in part and denied in part.

SUMMARY JUDGMENT STANDARDS

Summary judgment should be granted “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(c)(2). In considering a motion for summary judgment, the court “must not weigh the evidence or determine the truth of the matter but only determine whether there is a genuine issue for trial.” Playboy Enters., Inc. v. Welles, 279 F.3d 796, 800 (9th Cir.2002) (citing Abdul–Jabbar v. General Motors Corp., 85 F.3d 407, 410 (9th Cir.1996)).

The Ninth Circuit Court of Appeals has described “the shifting burden of proof governing motions for summary judgment” as follows:

The moving party initially bears the burden of proving the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Where the non-moving party bears the burden of proof at trial, the moving party need only prove that there is an absence of evidence to support the non-moving party's case. Id. at 325, 106 S.Ct. 2548. Where the moving party meets that burden, the burden then shifts to the non-moving party to designate specific facts demonstrating the existence of genuine issues for trial. Id. at 324, 106 S.Ct. 2548. This burden is not a light one. The non-moving party must show more than the mere existence of a scintilla of evidence. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). The non-moving party must do more than show there is some “metaphysical doubt” as to the material facts at issue. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). In fact, the non-moving party must come forth with evidence from which a jury could reasonably render a verdict in the non-moving party's favor. Anderson, 477 U.S. at 252, 106 S.Ct. 2505. In determining whether a jury could reasonably render a verdict in the non-moving party's favor, all justifiable inferences are to be drawn in its favor. Id. at 255, 106 S.Ct. 2505.

In re Oracle Corp. Securities Litigation, 627 F.3d 376, 387 (9th Cir.2010).

BACKGROUND FACTS

The plaintiff Country Mutual Insurance Company (“Country”) is part of a group of “personal lines insurance companies” that distributes various types of insurance products to “farmers, individuals and small businesses.” ¹ From January 1, 1993, until he retired on September 30, 2005, the defendant Ronald Pittman was a registered insurance agent for Country, doing business in McMinnville, Oregon.² This case arises from a lawsuit filed against Country and Pittman by an individual named John Stuart (the “Stuart case”).

At oral argument on the pending motions, the parties clarified the history of the Stuart case. In March 2003, Stuart bought property in Yamhill County, Oregon, on which he planned to build a home. Stuart owned an existing residence, and Country issued a homeowner's policy (which Pittman's attorney referred to as an “ag plus policy”) to Stuart to cover the existing residence. At some point, Stuart met with Pittman to discuss insurance for the new residence he planned to build. As the attorneys described the facts during oral argument on the current motions, the “new” policy was not to be an entirely new insurance policy at all, but rather was to be an amendment or rider to Stuart's existing “ag plus” policy covering Stuart's existing residence. During their discussions, Stuart outlined the types of coverage he wanted, and Pittman made certain representations regarding what was available. In Stuart's Complaint in the Stuart case, he alleged Pittman provided him with an oral binder for insurance that would cover “any and all claims arising out of the course of construction of [the new residence], including ‘Acts of God.’ ” ³ According to Stuart, Country issued a “Builder's Risk or course of construction policy” (as Country refers to it ⁴) that did not contain the “course of construction” terms Stuart had requested.⁵ In particular, the policy Country issued to Stuart excluded “the perils of faulty workmanship, mold, and damage caused by water backup from sewer drains.” ⁶ Stuart claims he was never provided with a copy of the insurance policy, despite several requests for a copy of the Declarations page, and despite Pittman's assurance, in January 2004, “that a written binder for the Policy was forthcoming.” ⁷

In January or February 2004, the home being built for Stuart suffered damage when it “was left open to the weather, and as a result, the interior sheathing split, water accumulated in the crawl space, and mold grew.” ⁸ Stuart timely reported the loss to Country. In the present case, Country alleges “Pittman told Stuart that the damage caused by the weather would be covered and the mold damage also might be covered.” ⁹ According to Stuart, a field underwriter for Country inspected the damage in March 2004, before any repairs were made, and Stuart “was advised to chronicle the repairs and to submit his claim in writing after repairs were complete.” ¹⁰ Based on the exclusions contained in the policy issued by Country, it ultimately denied Stuart's claim.¹¹

Stuart obtained judgments against the architect/builder for the damage to the residence under construction; however, it appears the architect was insolvent and unable to satisfy the judgments.¹² Stuart filed suit against Country and Pittman in Yamhill County Circuit Court (the “trial court”), asserting claims against Country for breach of contract, negligent misrepresentation, and attorney's fees; and a claim against both Country and Pittman for negligent failure to procure insurance.¹³

Pittman moved for summary judgment in the Stuart case, and his motion was granted.¹⁴ Country also moved for summary judgment on Stuart's claims.¹⁵ The parties explained at oral argument that Country was granted summary judgment on Stuart's negligent misrepresentation claim against Country. In a Second Amended Complaint, Stuart asserted claims against Country for breach of contract and attorney's fees. ¹⁶

The case was tried to a jury, which found: (1) Pittman “entered into an oral contract of insurance different than the policy later issued by Country Mutual”; (2) the oral insurance contract eliminated the requirement of direct physical loss, and the exclusions for damage caused by mold, water (whether or not backed up through drains), and “faulty workmanship or construction”; (3) Country's “failure to provide insurance coverage consistent with the oral contract of insurance” damaged Stuart; (4) and Country failed “to mail or deliver the policy within a reasonable time,” which also damaged Stuart. ¹⁷ The jury awarded Stuart $268,417.00 in damages, and the trial court awarded Stuart $168,035.91 in attorney's fees. These awards were memorialized in, respectively, a General Judgment entered December 4, 2006, and a Supplemental Judgment dated May 29, 2007.¹⁸

Country appealed. Country and Pittman entered into a Tolling Agreement, effective December 3, 2007 (notably, as will be seen, one day short of one year after judgment was entered), for the purpose of “stop[ping] the passing of time, as to any contractual or statutory period of limitation applicable to Country Mutual's proposed claims against Pittman, ... until 30 days after the final decision and mandate of the appellate courts[.]” ¹⁹

On May 5, 2010, the Oregon Court of Appeals reversed, finding there was “no evidence from which the jury could find that [Country's] agent bound terms that clearly and expressly superseded the usual terms of a course of construction policy or that [Stuart] was damaged as a result of [Country's] failure to timely deliver the policy,” and therefore it was error for the trial court to submit the case to the jury.²⁰ The Court of Appeals based its decision on ORS § 742.043(1), which provides that an oral binder for insurance is “ ‘deemed to include all the usual terms of the policy as to which the binder was given ..., except as superseded by the clear and express terms of the binder.’ ” ²¹ The court noted the statute creates “a presumption that a binder includes those terms that are usually contained in the policy for which the binder was issued.” ²² The court reviewed the evidence presented at trial and concluded it was “simply too vague and obscure” to show Pittman had clearly and expressly “modified or waived the terms of the ‘usual’ course of construction policy or its exclusions from property coverage for faulty work, water damage, and mold.” ²³

The Oregon Supreme Court allowed review ²⁴, and on June 3, 2011, that court reversed the decision of the Oregon Court of Appeals. The Oregon Supreme Court found the evidence was sufficient for the trial court to submit the issues in the case to the jury for decision, and further, the trial court did not err in its attorney's fee award.²⁵ The Oregon Supreme Court also granted Stuart appellate attorney's fees in the amount of $201,288.50, and costs of $682.77.²⁶ According to Country, it paid $819,738.62 to Stuart on September 15, 2011, $180,738.62 of which “was post-judgment interest at nine percent per...