State Farm Fire & Cas. Co. v. Evans Constr. & Siding Corp.
| Decision Date | 06 July 2021 |
| Docket Number | 3:19-cv-00972-BR |
| Court | U.S. District Court — District of Oregon |
| Parties | STATE FARM FIRE AND CASUALTY COMPANY, an Illinois Company, Plaintiff, v. EVANS CONSTRUCTION & SIDING CORP., an Oregon corporation; FIRST MERCURY INSURANCE COMPANY, a Delaware company; NEVADA CAPITAL INSURANCE COMPANY, a Nevada corporation; PREFERRED CONTRACTORS INSURANCE COMPANY RISK RETENTION GROUP, LLC, a Montana limited liability company; HDI GLOBAL SPECIALTY SE f/k/a INTERNATIONAL INSURANCE COMPANY OF HANOVER SE f/k/a INTERNATIONAL INSURANCE COMPANY OF HANOVER PLC, a foreign insurance company; and CRESTON HOMES, LLC, an Oregon limited liability company, Defendants. |
Betts, Patterson & Mines, P.S.
Portland, OR 97204
(503) 961-6338
Attorneys for Plaintiff
Miller Insurance Law LLC
521 S.W. Clay St.
Portland, OR 97201
(971) 255-143
Attorneys for Defendant Evans Construction & Siding Corp.
Gordon & Polscer, L.L.C.
9020 S.W. Washington Square Rd., Ste. 560
Tigard, OR 97223
(503) 242-2922
Attorneys for Defendant First Mercury Insurance Company
Lether Law Group
1848 Westlake Ave. N., Ste. 100
Seattle, WA 98109
Attorneys for Defendant Nevada Capital Insurance Company
This matter comes before the Court on the following Motions as they pertain to State Farm's Claims:
1. Plaintiff State Farm Fire and Casualty Company's Motion (#90) for Summary Judgment on Claims1 One and Two; 2. Defendant Evans Construction & Siding Corp.'s Motion (#112) to Dismiss Plaintiff's Claims One and Two as moot for lack of subject-matter jurisdiction;
3. Evans Construction's Cross-Motion (#113) for Summary Judgment on Plaintiff's Claims One and Two and on Evans' Second Affirmative Defense (Mootness);
4. State Farm's Motion (#92) for Summary Judgment on Claims Three and Four;
5. Evans Construction's Cross-Motion (#107) for Summary Judgment on Claims Three and Four and on Its Affirmative Defenses;
6. State Farm's Motion (#94) for Summary Judgment on Claim Five;
7. Defendant First Mercury Insurance Company's Cross-Motion (#115) for Summary Judgment Regarding State Farm's Fifth Claim for Relief; and
8. Defendant Nevada Capital Insurance Company's Motion (#96) for Summary Judgment as to Claim Five.
The Court concludes the record is sufficiently developed and, therefore, oral argument is not required to resolve these Motions.
For the reasons that follow, the Court:
1. DENIES as moot State Farm's Motion (#90) for Summary Judgment on Claims One and Two based on the Court's lack ofsubject-matter jurisdiction;
2. GRANTS Evans Construction's Motion (#112) to Dismiss Plaintiff's Claims One and Two as moot based on the Court's lack of subject-matter jurisdiction;
3. DENIES as moot Evans Construction's Cross-Motion (#113) for Summary Judgment on Plaintiff's Claims One and Two and on Evans' Second Affirmative Defense (Mootness);
4. DENIES State Farm's Motion (#92) for Summary Judgment on Claims Three and Four;
5. GRANTS Evans Construction's Cross-Motion (#107) for Summary Judgment on Claims Three and Four and on Its Affirmative Defenses;
6. DENIES State Farm's Motion (#94) for Summary Judgment on Claim Five;
7. GRANTS First Mercury's Cross-Motion (#115) for Summary Judgment Regarding State Farm's Fifth Claim for Relief; and
8. GRANTS Nevada Capital's Motion (#96) for Summary Judgment as to Claim Five.
The following facts are taken from the parties' Joint Statement of Agreed Facts (#89), the pleadings, and the materials filed by the parties regarding the pending Motions. The facts are construed in the light most favorable to thenonmoving party on each Motion and accepted as undisputed unless otherwise indicated.
On June 21, 2019, State Farm filed a Complaint in this Court for declaratory judgment against Evans Construction. State Farm's claims arise from an action filed in Multnomah County Circuit Court alleging construction defects against Evans Construction and others (the Underlying Lawsuit).
On December 20, 2019, State Farm filed a First Amended Complaint (#20) and added First Mercury, Nevada Capital, and others as additional Defendants.
On January 6, 2020, State Farm filed a Second Amended Complaint (#33) in which it dismissed all Defendants except Evans Construction, First Mercury, and Nevada Capital.
State Farm asks this Court to determine State Farm's rights and duties as to Evans Construction under two Contractors Liability Policies (the Policies) that State Farm issued to Evans Construction effective December 26, 2006, through December 26, 2008. After December 26, 2008, State Farm did not issue any additional policies to Evans Construction.
In its Second Amended Complaint State Farm also asks the Court to determine the responsibilities between it, First Mercury, and Nevada Capital relating to defense costs incurred in the Underlying Lawsuit.
On May 15, 2018, Irvington Garden Apartments, LLC, filed a Second Amended Complaint in Multnomah County Circuit Court against Creston Homes, LLC, and others in which it alleged claims for negligence based on defects in the construction of the Irvington Garden Apartments (the Construction Project) in Portland, Oregon. The Construction Project was started in 2011. Creston Homes was the general contractor on the Construction Project, and Evans Construction was a subcontractor on the Construction Project. With its bid for the subcontract work Evans Construction provided a Certificate of Liability Insurance listing First Mercury as its Commercial General Liability carrier.
The Subcontract between Evans Construction and Creston Homes was signed by them on January 5, 2011, and January 12, 2011, respectively. Addendum 1 to the Subcontract states the "Construction Schedule" was "24 days total duration for the project."
Evans Construction's first invoice to Creston Homes for work on the Construction Project was dated February 14, 2011. The last invoice to Creston Homes that Evans Construction was able to locate regarding its work on the Construction Project was dated September 23, 2011.
On September 26, 2017, Irvington Garden sent a Notice ofConstruction Defect to Creston Homes regarding alleged defects on the Construction Project.
As noted, on May 15, 2018, Irvington Garden filed a lawsuit against Creston Homes in Multnomah County Circuit Court.
On May 25, 2018, Creston Homes sent a "Secondary Notice of Defect and Demand for Defense & Indemnification" letter to Evans Construction regarding the Construction Project. The Secondary Notice referenced the Subcontract dated January 4, 2011. Creston Homes also sent the Secondary Notice to, among others, First Mercury and Nevada Capital, which had provided insurance binders to Evans Construction. Creston Homes did not send the Secondary Notice to State Farm.
At some point Evans Construction hired Kenneth Walhood to act as defense counsel related to the Construction Project.
On June 19, 2018, Evans Construction tendered its defense regarding the Construction Project to First Mercury and Nevada Capital.
On August 22, 2018, Creston Homes filed a Third-Party Complaint against various subcontractors on the Construction Project including Evans Construction and alleged Evans Construction was at least in part responsible for the construction defects and damages claimed by Irvington Garden in the Underlying Lawsuit.
On September 4, 2018, Evans Construction tendered defenseof the Underlying Lawsuit to State Farm in an email that was sent by Walhood to James Nelon, a claims specialist with State Farm. In the email Walhood stated: According to Walhood, the statement "[b]ased on the pleadings" referred to the allegations of negligence and property damage in the Third-Party Complaint. The Third-Party Complaint, however, did not indicate the dates the Construction Project commenced, when damages occurred, or when Evans Construction started or completed the work.
On September 11, 2018, Nelon made the following note in State Farm's claim file: Nelon recommended to his team manager, Steve McAlister, that State Farm should review Evans Construction's tender as to coverage.
On September 11, 2018, Walhood also sent an updated tender of defense to First Mercury and Nevada Capital based on the Third-Party Complaint.
On September 17, 2018, McAlister gave approval for StateFarm to conduct a coverage analysis.
On September 18, 2018, Nevada Capital agreed to defend Evans Construction in the Underlying Lawsuit under a full reservation of rights.
On September 18, 2018, Walhood emailed Nelon to inform State Farm that Nevada Capital would be providing a defense for Evans Construction in the Underlying Lawsuit, and Walhood asked whether State Farm would be joining the defense. Nelon informed Walhood that State Farm was "performing a coverage evaluation."
On September 19, 2018, Nelon approved a coverage specialist to review the tender of Evans Construction. Nelon identified the coverage issues as follows:
[T]he policy [State Farm] had in place was cancelled in 2008. With this information will there be a DTD [Duty to Defend] or a . . . duty to indemnify? Should there be a DTD, the defense will be split 4 ways. Imdenity [sic](if any) would be per time on risk calculations. . . . Please review the complaint and provide direction as to the defense of the insured or not.
Jt. Statement of Agreed Facts (#89) ¶ 60.
On September 25, 2018, Linda Cummings, a State Farm...
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