In Re Helicopter Crash Near Weaverville

• Decision Date: 18 May 2010
• Docket Number: Nos. 09-md-2053-MO, 09-cv-705-MO.,s. 09-md-2053-MO, 09-cv-705-MO.
• Citation: 714 F.Supp.2d 1098
• Parties: In re HELICOPTER CRASH NEAR WEAVERVILLE, CALIFORNIA 8/5/08.
• Court: U.S. District Court — District of Oregon

714 F.Supp.2d 1098

In re HELICOPTER CRASH NEAR WEAVERVILLE, CALIFORNIA 8/5/08.

Nos. 09-md-2053-MO, 09-cv-705-MO.

United States District Court, D. Oregon.

May 18, 2010.

Matthew K. Clarke, Robert B. Hopkins, Landye Bennett Blumstein LLP, Susan D. Marmaduke, Sivhwa Go, Harrang Long Gary Rudnick, PC, Portland, OR, Michael L. Slack, Slack & Davis, L.L.P., Austin, TX, Arthur C. Johnson Douglas G. Schaller, Johnson Clifton Larson & Schaller, PC, Eugene, OR, Agnes Marie Petersen, Van Natta & Petersen, St. Helens, OR, Brian James Malloy, Thomas J. Brandi, Brandi Law Firm, San Francisco, CA, Michael B. Sayre, Frantz Law Group, APLC, San Diego, CA, Todd Edward MacAluso, MacAluso & Associates, Carlsbad, CA, David Lee Tayman, Dickstein Shapiro LLP, Washington, DC, John J. Glenn, Anderson Glenn LLC, Boca Raton, FL, Jennifer C. Anderson, Andersonglenn, LLC, Ponte Vedra Beach, FL, Roland W. Johnson, Roland W. Johnson, LLC, Enterprise, OR, Carolyn Roberts Linsey, Jeffers & Ireland, Fairfield, CT, Jeffrey James Williams, Jon A. Kodani, Law Offices Of Jon A. Kodani, Santa Monica, CA, John A. Greaves, Paul J. Hedlund, Roger D. Drake, Baum, Hedlund, Aristei & Goldman, Los Angeles, CA, Steven Campora, Dreyer, Babich, Buccola, Callaham & Wood, LLP, Sacramento, CA, Kevin K. Strever, William A. Barton, Barton & Strever, PC, Newport, OR, for Plaintiff.

Andrew M. Weiner, Kristi Singleton, Dickstein Shapiro LLP, Washington, DC, Stephen Lester Nelson, Wilson Elser Moskowitz Edelman & Dicker LLP, San Francisco, CA, for Plaintiff and Defendant.

Nancy M. Erfle, Jeffrey D. Hern, Schwabe Williamson & Wyatt, PC, Jonathan M. Hoffman, Martin Bischoff Templeton Langslet & Hoffman, Scott A. Brooksby, Brooksby Kaempf, PC, Eric J. Neiman, Williams Kastner & Gibbs, PLLC, Portland, OR, Kevin M. Smith, Shaun S. Sullivan, Wiggin & Dana, New Haven, CT, Christopher S. Hickey, James W. Hunt, Mendes & Mount, LLP, Roger W. Clark, Robert D. Goldberg, Clark, Goldberg & Madruga, Los Angeles, CA, Marina Ocher Slavin, Morrison & Foerster, San Diego, CA, Clement L. Glynn, James M. Hanlon, Jr., Glynn & Finley, LLP, Walnut Creek, CA, Frank G. Usseglio, Garrett F. O'Keefe, Richard J. Kenny, Kenny, O'Keefe & Usseglio, Hartford, CT, for Defendant.

OPINION AND ORDER

MOSMAN, District Judge.

Insurance coverage plaintiffs Carson Helicopters, Inc. and Carson Helicopter Services, Inc. and insurance coverage defendant Houston Casualty Company filed cross-motions for partial summary judgment regarding choice of law in the coverage action within this multi-district litigation. For the reasons below, I grant in part and deny in part both parties' motions. I find that no conflict exists between Oregon and Pennsylvania's laws regarding use of extrinsic evidence in insurance contract cases. Because neither state permits extrinsic evidence to resolve an ambiguity in an insurance policy, no choice-of-law analysis is necessary. Additionally, because Oregon does not have a governmental interest in Carson's bad faith tort claim that would be impaired by the application of Pennsylvania law, I will apply Pennsylvania law to that claim.

BACKGROUND

On August 5, 2008, a Sikorsky S-61N helicopter crashed (the “Accident”) during takeoff from a remote mountain site in the Shasta-Trinity National Forest in Northern California. The helicopter was transporting ten firefighters working on the Iron 44 Fire, and three pilots were also on board. The crash claimed the lives of seven firefighters and two pilots, while the remaining three firefighters and one pilot were severely injured. These firefighters, pilots, and representatives have separate claims for wrongful death and personal injury as a part of this multi-district litigation.

Carson Helicopters, Inc. (“Carson Helicopters”) is a Pennsylvania corporation with its principal place of business in Perkasie, Pennsylvania. (Pls.' Concise Statement of Facts (# 270) ¶ 1.) Carson Helicopter Services, Inc. (“Carson Services”) is a subsidiary of Carson Helicopters (together, they are “Carson”), organized as an Oregon corporation with its principal place of business in Grants Pass, Oregon. Carson owned the Sikorsky S-61N helicopter involved in the Accident. The U.S. Forest Service contracted to use the helicopter to transport firefighters, and insurance coverage intervenor-plaintiff Columbia Helicopters, Inc. (“Columbia”) performed maintenance on the helicopter.

Insurance coverage plaintiff Carson purchased an insurance policy (“Carson-Houston Casualty policy”) from coverage defendant Houston Casualty Company (“Houston Casualty”) for the period April 1, 2008 to April 1, 2009. (Pls.' Second Am. Compl. (# 144) ¶ 3.) Endorsement 8 of the policy provides, inter alia, coverage for bodily injury, including death, arising out of a helicopter accident when the helicopter ceases to be in Carson's possession or under Carson's control. ( Id. at ¶ 18.) At least at the time Carson purchased the policy, it provided a $25 million per occurrence and annual aggregate coverage limit. ( Id.) When Carson became aware that Houston Casualty might deny coverage under Endorsement 8, Carson filed suit in the Eastern District of Pennsylvania for anticipatory breach of contract and a declaratory judgment. ( Id. at ¶¶ 27-28; see also Carson Helicopters, Inc. v. Houston Cas. Co., No. 08-5301, 2009 WL 1688472 (E.D.Pa. June 16, 2009).) In the action before Judge Shapiro of the Eastern District of Pennsylvania, Houston Casualty successfully argued to transfer venue pursuant to 28 U.S.C. § 1404(a). See Carson Helicopters, 2009 WL 1688472, at *3 (analyzing venue under Jumara v. State Farm Ins. Co., 55 F.3d 873, 879 (3d Cir.1995).)

Soon after Carson filed its initial complaint against Houston Casualty in Pennsylvania, Columbia filed a separate lawsuit against Carson in this district, alleging Carson was obligated to defend Columbia against the wrongful death and personal injury lawsuits. See Columbia Helicopters, Inc. v. Carson Helicopters, Inc. No. 08-6415-AA, 2009 WL 2153029 (D.Or. July 16, 2009). This obligation arose from a Repair/Overhaul Services Agreement under which Columbia agreed to perform repair and maintenance services for Carson's helicopters. (Pls.' Second Am. Compl. (# 144) ¶ 4.) Judge Aiken's grant of summary judgment required Carson to defend Columbia in the pending wrongful death and personal injury lawsuits. Columbia Helicopters, 2009 WL 2153029, at *4.

Following Judge Aiken's ruling, Carson filed its First Amended Complaint (# 39), then a Second Amended Complaint (# 144), against Houston Casualty in this court, adding several claims regarding Endorsement 3 of the Carson-Houston Casualty policy. Endorsement 3 “extends coverage for covered risks to entities with whom Carson has entered into contractual arrangements in the course of its aviation operations.” (Pls.' Second Am. Compl. (# 144) ¶ 5.) Carson asserts that Houston Casualty's obligation to defend Carson ¹ extends to Columbia through Endorsement 3, given Judge Aiken's ruling. Carson alleges breach of contract regarding Houston Casualty's failure to accept defense of Columbia, seeks a declaratory judgment that Houston Casualty is obligated to defend Columbia, and asserts a bad faith claim against Houston Casualty for its refusal to defend Columbia. ( Id. at ¶¶ 43-58.)

The disputed threshold issue in this coverage action is which state's laws apply to Carson's contractual claims and its claim for bad faith denial of coverage. Several related issues also arose in the briefing, as discussed below.

DISCUSSION

I. Standard of Review

Summary judgment is proper when “the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(c)(2). When “the record taken as a whole could not lead a rational trier 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, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) (quotation omitted). For cross-motions for summary judgment, the court “evaluate[s] each motion separately, giving the nonmoving party in each instance the benefit of all reasonable inferences.” ACLU of Nev. v. City of Las Vegas, 466 F.3d 784, 790-91 (9th Cir.2006) (quoting ACLU of Nev. v. City of Las Vegas, 333 F.3d 1092, 1097 (9th Cir.2003)).

II. Choice of law

These cross-motions for partial summary judgment identify several potential conflicts of law. The parties primarily discuss the insurance policy interpretation principles employed by Oregon and Pennsylvania courts. They also point to differences in the way each state addresses retention of independent counsel as well as allegations of a bad faith denial of contract benefits. Houston Casualty argues that law of the case applies, given the transfer from the Eastern District of Pennsylvania. Finally, both parties spend considerable time arguing that the significant contacts between a claim and a state warrant application of that state's law, assuming a substantive conflict exists.

To begin, both parties agree that the choice-of-law analysis is issue-specific. ( See Def.'s Mem. in Supp. (# 194) 8-9; Pls.' Am. Mem. in Supp. & Resp. (# 278) 7-8.) I agree, and I address the tort (bad faith denial of contract benefits) and contract (insurance policy interpretation) issues separately. Houston Casualty agrees that Pennsylvania choice-of-law rules apply to the Endorsement 8 issue because it was raised prior to the § 1404(a) transfer. It then argues, however, without any helpful authority, that Oregon choice-of-law rules apply to the Endorsement 3 and bad faith claims not present before the Eastern District of Pennsylvania at the time of transfer. (Def.'s Mem. in Supp. (# 194) 8.) Houston Casualty does agree, however, that Oregon and Pennsylvania utilize “substantially similar” choice-of-law rules, which come from...