Silver Ridge Homeowners' Ass'n, Inc. v. State Farm Fire & Cas. Co., Case No. 3:19-cv-01218-YY

Docket NumberCase No. 3:19-cv-01218-YY
Decision Date15 March 2022
Citation591 F.Supp.3d 918
Parties SILVER RIDGE HOMEOWNERS’ ASSOCIATION, INC., an Oregon nonprofit corporation, Plaintiff, v. STATE FARM FIRE AND CASUALTY COMPANY, an Illinois company, Defendant.
CourtU.S. District Court — District of Oregon

James Lee Guse, Barker Martin, Portland, OR, for Plaintiff.

Michael J. Walker, Parks Bauer Sime Winlker and Fernety, LLP, Salem, OR, for Defendant.


YOU, Magistrate Judge.

Plaintiff Silver Ridge Homeowners’ Association ("Silver Ridge") is a nonprofit corporation that maintains twenty-two buildings containing sixty-four residential units in Portland, Oregon. Compl. ¶¶ 1, 3, ECF 1-1; see also Mot. Summ. J., Ex. 32 at 3, ECF 17-37. Plaintiff alleges a single claim for breach of contract against its insurer, defendant State Farm Fire and Casualty ("State Farm") for failure to pay for "property damage." Id. ¶ 14. This court has diversity jurisdiction pursuant to 28 U.S.C. § 1332(a), as there is complete diversity of citizenship between the parties and the amount in controversy exceeds $75,000. Id. ¶¶ 1-2, 4, 11.

Defendant has filed a Motion for Summary Judgment (ECF 17). For the reasons that follow, defendant's motion is GRANTED.

I. Legal Standards and Relevant Law
A. Summary Judgment Standard

Under Federal Rule of Civil Procedure 56(a), "[t]he court shall grant summary judgment 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." The party moving for summary judgment bears the initial responsibility of informing the court of the basis for the motion and identifying portions of the pleadings, depositions, answers to interrogatories, admissions, or affidavits that demonstrate the absence of a triable issue of material fact. Celotex Corp. v. Catrett , 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Once the moving party does so, the nonmoving party must "go beyond the pleadings" and "designate ‘specific facts showing that there is a genuine issue for trial.’ " Id. at 324, 106 S.Ct. 2548 (citing FED. R. CIV. P. 56(e) ).

The court "does not weigh the evidence or determine the truth of the matter, but only determines whether there is a genuine issue for trial." Balint v. Carson City, Nev. , 180 F.3d 1047, 1054 (9th Cir. 1999). "Reasonable doubts as to the existence of material factual issue are resolved against the moving parties and inferences are drawn in the light most favorable to the non-moving party." Addisu v. Fred Meyer, Inc. , 198 F.3d 1130, 1134 (9th Cir. 2000).

B. Relevant Law on the Interpretation of Insurance Policies

A federal court, sitting in diversity jurisdiction, applies state law to interpret an insurance policy. Travelers Prop. Cas. Co. of Am. v. ConocoPhillips Co. , 546 F.3d 1142, 1145 (9th Cir. 2008). Under Oregon law, "[t]he overriding goal in construing an insurance policy is to ‘ascertain the intention of the parties.’ " Hunters Ridge Condo. Ass'n v. Sherwood Crossing , LLC, 285 Or. App. 416, 422, 395 P.3d 892 (2017) (citation omitted). The court determines "the intention of the parties by analyzing the policy's express terms and conditions." Id. (citing Hoffman Const. Co. v. Fred S. James & Co. , 313 Or. 464, 469, 836 P.2d 703 (1992), and O.R.S. 742.016(1) (providing that, with some exceptions, "every contract of insurance shall be construed according to the terms and conditions of the policy")). The court interprets the terms of the policy from the perspective of an "ordinary purchaser of insurance." Id. (quoting Congdon v. Berg , 256 Or. App. 73, 87, 299 P.3d 588 (2013) ) (quotation marks omitted). "The language used in a contract of insurance is entitled to a construction as favorable to the insured as in good conscience will be permitted, and every reasonable intendment will be allowed to support a view that will protect the insured and prevent forfeiture." Schweigert v. Beneficial Standard Life Ins. Co. , 204 Or. 294, 301, 282 P.2d 621 (1955) (citations omitted).

If an insurance policy explicitly defines a phrase, the court must apply that definition. Holloway v. Republic Indemn. Co. of America , 341 Or. 642, 650, 147 P.3d 329 (2006). "If the policy does not define the phrase in question, [the court] ‘resort[s] to various aids of interpretation to discern the parties intended meaning." Id. (quoting Groshong v. Mutual of Enumclaw Ins. Co. , 329 Or. 303, 307-08, 985 P.2d 1284 (1999) ). "Under that interpretive framework, [the court] first consider[s] whether the phrase in question has a plain meaning, i.e., whether it ‘is susceptible to only one plausible interpretation.’ " Id. (quoting Groshong , 329 Or. at 308, 985 P.2d 1284 ). "If the phrase in question has a plain meaning, [the court] will apply that meaning and conduct no further analysis." Id. "If the phrase in question has more than one plausible interpretation, [the court] will proceed to the second interpretive aid""[t]hat is, [the court] examine[s] the phrase in light of ‘the particular context in which that [phrase] is used in the policy and the broader context of the policy as a whole.’ " Id. (quoting Hoffman Const. , 313 Or. at 470, 836 P.2d 703 ) (alteration in original).

"If the ambiguity remains after the court has engaged in those analytical exercises, then ‘any reasonable doubt as to the intended meaning of such [a] term[ ] will be resolved against the insurance company....’ " North Pacific Ins. Co. v. Hamilton , 332 Or. 20, 25, 22 P.3d 739 (2001) (quoting, among other cases, Hoffman Const. , 313 Or. at 470, 836 P.2d 703 (alteration in original)); see also Allen v. Cont'l Cas. Co. , 280 Or. 631, 633, 572 P.2d 617 (1977) ("[I]n the event of an ambiguity in the terms of an insurance policy any reasonable doubt will be resolved against the insurance company and in favor of extending coverage to the insured."). "[A] term is ambiguous ... only if two or more plausible interpretations of that term withstand scrutiny, i.e., continue[ ] to be reasonable...." Hoffman Const. , 313 Or. at 470, 836 P.2d 703 (emphasis in original).

Exclusions are interpreted like any other terms in the policy. Bighorn Logging Corp. v. Truck Ins. Exch. , 295 Or. App. 819, 828-89, 437 P.3d 287 (2019). Generally, the insured bears the initial burden of proving coverage, the insurer has the burden of proving exclusions to coverage, and the insured has the burden of proving exceptions to exclusions. Employers Ins. of Wausau, A Mut. Co. v. Tektronix, Inc. , 211 Or. App. 485, 509, 514, 156 P.3d 105 (2007) (reasoning the party seeking the benefit of a particular provision generally bears the burden of proving its application).

II. Suit Limitations Provision

Defendant first contends that plaintiff's lawsuit is untimely due to the suit-limitation provision found within plaintiff's insurance policy, FP-6109.1 Mot. Summ. J. 14, ECF 17. The suit-limitation provision requires that legal action be "brought within two years after the date on which the accidental direct physical loss occurred." Onken Decl. 82, ECF 17-3. In an earlier ruling, this court found that the term "occurred" was ambiguous, and recognized that plaintiff's interpretation—that the suit limitation provision does not begin to run until a loss is discovered or exposed—was cognizable. See Opinion and Order 4-9, ECF 16. Defendant now alleges, based on evidence obtained through discovery, that plaintiff "discovered the damage occurring at its complex by 2012 at the latest." Mot. Summ. J. 15, ECF 17 (quotation removed).

A. Relevant Law on Statute of Limitations and the Discovery Rule

Oregon courts have adopted the "discovery rule" to determine the appropriate limitations period within a suit-limitations clause. This rule provides that the limitations period is tolled until a policy holder, in exercising reasonable care, discovered or should have discovered injury or loss that is covered by the pertinent policy. Greene v. Legacy Emanuel Hosp. & Health Care Ctr. , 335 Or. 115, 120, 60 P.3d 535 (2002). Put differently, the limitations period begins to run when the insured knows or, "in the exercise of reasonable care, should know every fact which it would be necessary ... to prove ... to support his right to judgment."

Stevens v. Bispham , 316 Or. 221, 227, 851 P.2d 556 (1993) (citation omitted).

To be clear, the discovery rule does not require the insured to have "actual knowledge that each element is present" for the limitations period to begin. Gaston v. Parsons , 318 Or. 247, 256, 864 P.2d 1319 (1994). However, "a mere suspicion is insufficient to begin the statute of limitations to run." Id. Between those two extremes is a "quantum of awareness" that is guided by "an objective test" inquiring "what a plaintiff should have known in the exercise of reasonable care." Id. Importantly, the "discovery rule does not protect those who sleep on their rights, but only those who, in exercising the diligence expected of a reasonable person, are unaware that they have suffered legally cognizable harm." Id.

The question of "whether the injury or loss has been discovered or should have been discovered" is a question of fact. Ass'n of Unit Owners of Marina Riverhouse v. State Farm Fire & Cas. Co. , No. 3:11-CV-307-MO, 2011 WL 4544630 (D. Or. Sept. 29, 2011). It can be resolved "against the plaintiff on summary judgment only if the plaintiff should have achieved that awareness as a matter of law." Id.

B. Background Facts

After reviewing all the submitted exhibits, the court finds it prudent to outline the various incidents, damage, and associated repairs, that occurred at Silver Ridge between its construction in the mid-1990s and 2018, when plaintiff claims it actually discovered the damage. In doing so, the court categorizes the record in five groups: siding-related damage that occurred prior to 2012, roof-related damage that occurred prior to 2012, window-related damage that occurred prior to 2012, all assessed damage between 2012 and ...

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