U.S. Fidelity & Guar. Co. v. Batinich

Citation899 F.2d 1226
Decision Date13 April 1990
Docket NumberNo. 89-35223,89-35223
PartiesUnpublished Disposition NOTICE: Ninth Circuit Rule 36-3 provides that dispositions other than opinions or orders designated for publication are not precedential and should not be cited except when relevant under the doctrines of law of the case, res judicata, or collateral estoppel. UNITED STATES FIDELITY & GUARANTY COMPANY, a Maryland corporation, Plaintiff-Appellee, v. Wanda Lynn BATINICH, Defendant-Appellant, and FARMERS INSURANCE COMPANY OF OREGON; Leslie Howard; L.J. Howard Company; Jeffrey Adam Sanders, Defendants.
CourtUnited States Courts of Appeals. United States Court of Appeals (9th Circuit)

Before WALLACE, SKOPIL and BRUNETTI, Circuit Judges.


This is an appeal from a declaratory judgment action arising out of a one-car accident in which the passenger, Wanda Lynn Batinich ("Batinich" or "appellant"), was severely injured. Batinich filed an action for damages in state court against the driver of the automobile, its owner, L.J. Howard ("Howard"), and the driver's employer, the L.J. Howard Company ("Company"). Howard's insurer appeared under a reservation of rights but tendered the defense to Company's insurer, United States Fidelity & Guaranty Company ("USF & G" or "appellee"). USF & G then brought this declaratory judgment action in federal district court seeking reformation of the insurance policy it had issued to Company, arguing that the provisions of its contract as written did not reflect the terms of the parties' antecedent agreement. The district court held that USF & G and Company had intended for the policy in question to cover only Company's commercial vehicles and not Howard's personal autos. The court granted reformation.

Batinich argues on appeal that the district court erred by holding that the necessary prerequisites for contract reformation existed and that Oregon public policy did not bar reformation under these facts. We review the district court's findings of fact for clear error and its conclusions of law de novo, see Kimbro v. Atlantic Richfield Co., 889 F.2d 869, 873 (9th Cir.1989), while we examine its decision to reform the contract for clear error, see Bentley Ranches, Inc. v. Borgerson, 732 F.2d 1395, 1396 (9th Cir.1984) (per curiam) (applying Oregon law). We affirm.


Under Oregon law a party seeking reformation of a written contract must prove (1) the existence of an antecedent agreement between the parties to which the contract can be reformed; (2) a mutual mistake, or a unilateral mistake on the part of the one seeking reformation and inequitable conduct by the other party to the agreement; and (3) the absence of gross negligence on the part of the one seeking reformation. Jensen v. Miller, 280 Or. 225, 228-29, 570 P.2d 375, 377 (1977). Each element must be proven by clear and convincing evidence. Allen & Gibbons Logging, Inc. v. Ball, 91 Or.App. 624, 629, 756 P.2d 669, 672 (1988).

The evidence shows that Ball, acting as agent for USF & G, 1 understood that Howard wanted commercial liability insurance for a truck acquired by Company and that this coverage was to be neither for Howard himself nor for his personal automobile(s). The fact that Ball's application on behalf of Company misidentified the insured as "L.J. Howard DBA: L.J. Howard Co.", an error perpetuated in the policy as issued, bears solely on the question of mistake and not whether an antecedent agreement existed between the parties. Based on these facts, we concur in the district court's finding that an antecedent agreement existed.

The appellant argues with respect to the second element that any mistake here was unilaterally made by the appellee. We disagree. The evidence clearly shows that the application for insurance submitted to USF & G accurately reflected Howard's instructions to Ball that Company needed commercial liability insurance on its truck. It is not at all clear, however, that Howard communicated to the appellee via Ball his desire that the policy be in Company's name prior to the fall of 1985, at which time Ball admittedly failed to correct the name of the insured on the policy despite receiving such instructions from Company. We conclude under these facts that both USF & G and Howard were mistaken, the former as to what was wanted and the latter as to what was obtained.

Because Batinich has...

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