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Eclectic Investment, LLC v. Patterson

Court of Appeals of Oregon

February 26, 2014

ECLECTIC INVESTMENT, LLC, Plaintiff,
v.
RICHARD PATTERSON, et al., Defendant. JACKSON COUNTY, Cross-Claim Plaintiff-Appellant,
v.
BYRON MCALLISTER, JR., dba Greater Crater Construction Company, Cross-Claim Defendant-Respondent

Submitted May 17, 2013

Jackson County Circuit Court. 070197L3. Daniel Leon Harris, Judge.

Michael Jewett filed the briefs for appellant.

James A. Wallan and Hornecker, Cowling, Hassen & Heysell, L.L.P., filed the brief for respondent.

Before Duncan, Presiding Judge, and Wollheim, Judge, and Schuman, Senior Judge.

OPINION

Page 474

[261 Or.App. 458] SCHUMAN, S. J.

Respondent McAllister performed some excavation work on property owned by Eclectic Investment, LLC (Eclectic), as part of Eclectic's plan to expand its parking lot. Appellant Jackson County (the county) inspected the work and issued a permit approving it. The excavation created a dirt bank that failed after a rain storm and damaged Eclectic's property. Eclectic brought a negligence action against, among others, McAllister for performing substandard excavation and the county for approving it. The jury found that Eclectic was 55 percent at fault. See ORS 31.600(1). Therefore none of the defendants--including appellant and respondent in this case--had to pay damages. However, the county sought indemnity for its litigation costs from McAllister, contending that the county's negligence, if any, in issuing a permit for the construction project after having inspected it, was " passive or secondary," while McAllister's negligent construction was " active or primary." See Astoria v. Astoria & Columbia River R. Co., 67 Ore. 538, 136 P 645 (1913) (distinguishing between active and passive negligence for purposes of entitlement to common-law indemnification). The indemnity issue was severed from the negligence claim and tried to the court, which found that the county was not entitled to indemnity from McAllister. The county appeals, and we affirm.

The parties stipulated to the following facts. In December 2004, Eclectic wanted to enlarge its parking lot and hired McAllister, doing business as Greater Crater Construction Company, to do the job. To create more space, McAllister excavated a dirt bank at the rear of the lot and, in the process, increased the existing bank's slope. At the time, the county had not issued Eclectic an excavation permit; the county first became aware of the project after the slope had been cut, when a county inspector observed McAllister doing some of the work at the job site. Eclectic subsequently applied for an excavation permit. The county denied the application because it was not sufficiently detailed. Eclectic then submitted a second application and received a preliminary permit. However, when a county inspector went to the site

Page 475

the next day, he withheld final approval because [261 Or.App. 459] he found no site plan on the premises, noted minor erosion problems, and had concerns about gravel compaction and a small retaining wall near a structure on the premises. After another county inspection on March 23, 2005, the county gave final approval for the project. In December 2005, a significant rainstorm caused topsoil to wash off the slope onto Eclectic's parking lot and into a building, resulting in damage to Eclectic's property.

Eclectic then brought a negligence action against McAllister, the county, and two neighbors, seeking damages resulting from the failed slope. Eclectic alleged that McAllister was negligent in creating a slope that was too steep for soil conditions, performing work without first obtaining a permit, and failing to take remedial action after observing some erosion on the slope. Eclectic alleged that the county was negligent in approving the slope of the excavation and in issuing a permit when the county knew the slope was too steep; in failing to enforce the Oregon Structural Specialty Code; in failing to issue a stop work order or requiring McAllister to take remedial measures to prevent the slope's failure; and in failing to require remedial measures when erosion was observed during inspection. The county then filed a cross-claim against McAllister for indemnity. The court severed that claim for a separate trial.

On Eclectic's claim, the jury allocated fault as follows: 55 percent to Eclectic, 7 percent to the county, 4 percent to McAllister, and a total of 34 percent to two neighbors. Because Eclectic's contributory negligence exceeded 50 percent, the court entered judgment in favor of all defendants.

Thereafter, the county pursued its cross-claim against McAllister, seeking indemnification for $23,345 expended by the county in the litigation.[1] The cross-claim was tried [261 Or.App. 460] to the court on stipulated facts. In a judgment in favor of McAllister, the court determined that the county had failed to satisfy the standards for establishing indemnity. Commenting on cases that appear to hold that one defendant is entitled to indemnity from another defendant only if the indemnitee is passively negligent and the indemnitor is actively negligent, Astoria, 67 Ore. at 547-48, the court found that the two parties had " different levels of 'activity' in relation to the harm[,]" characterizing McAllister as " minorly 'active'" and the county as " barely 'passive.'" The court noted that the jury's allocation of fault did not determine whether the parties were actively or passively negligent, but that it was " an important factor that should be taken into consideration when performing the analysis in an indemnity claim." Finally, the court found that " [t]he question appears ultimately to be one of equity" which asks " whether the defendant should have discharged the obligation rather than the plaintiff." (Emphasis in original.) The trial court concluded that, while " McAllister clearly was more active * * * in creating the harm," the county " was not completely passive because it inspected the excavation twice[,]" and that the quality of the parties' conduct did not " ...


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