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Chartis Specialty Insurance Co. v. American Contractors Insurance Company Risk Retention Group

United States District Court, D. Oregon

January 27, 2015

CHARTIS SPECIALTY INSURANCE COMPANY, f/k/a American International Specialty Lines Insurance Company, Plaintiff,
v.
AMERICAN CONTRACTORS INSURANCE COMPANY RISK RETENTION GROUP, HOFFMAN CORPORATION, and HOFFMAN CONSTRUCTION COMPANY OF OREGON, Defendants.

Matthew J. Fink Charles A. Hafner Nicolaides Fink Thorpe Michaelides Sullivan LLP Chicago, IL.

Christopher J. Nye Reed McClure Seattle, WA. Attorneys for Plaintiff

Michael E. Farnell Ian Hale Parsons Farnell & Grein, LLP Portland, OR.

Patrick J. Wielinski Cokinos, Bosien & Young Irving, Texas. Attorneys for Defendants.

OPINION AND ORDER ON SUPPLEMENTAL CROSS-MOTIONS FOR SUMMARY JUDGMENT

GARR M. KING, District Judge.

This is an insurance coverage dispute between Chartis Specialty Insurance Company ("Chartis") and American Contractors Insurance Company Risk Retention Group ("ACIG"), both of which provided insurance policies covering the development of the Meriwether Condominium Complex. Hoffman Corporation and Hoffman Construction Company of Oregon (collectively, "Hoffman") successfully intervened as defendants in this dispute and filed counterclaims against Chartis. I previously resolved the parties' cross-motions for partial summary judgment, in favor of ACIG and Hoffman and against Chartis, on the sole issue of whether more than one "occurrence" "caused" the "property damage." The parties have filed supplemental crossmotions for summary judgment to resolve the case once and for all.

For the following reasons, I grant in part Chartis' Motion for Summary Judgment, grant in part defendants' motion for declaratory judgment, and deny Hoffman's Motion for Summary Judgment on its breach of contract claim.

BACKGROUND

Chartis issued a Commercial Umbrella Policy to Hoffman and a group of developers ("Developers") who were building a mixed-use, multi-unit condominium complex called the Meriwether Condominiums. The Chartis Policy provides coverage for "those sums in excess of the Retained Limit that the Insured becomes legally obligated to pay by reason of liability imposed by law... because of... Property Damage... that takes place during the Policy Period and is caused by an Occurrence happening anywhere in the world." Chartis Policy 46. The "Retained Limit" is $2 million per occurrence with a $4 million aggregate limit.

ACIG issued a Commercial General Liability Policy to Hoffman and the developers for the same project. The ACIG Policy provides coverage for "property damage'... caused by an "occurrence'" in an amount of $2 million for each occurrence. ACIG Policy 29. Its products-completed operations aggregate limit is $4 million. For each "occurrence, " Hoffman is required to pay a retention of $500, 000 in indemnity and $250, 000 in defense costs.

The Meriwether developed structural problems, triggering a lawsuit by the Meriwether Condominium Owners Association against the Developers in 2011.[1]

ACIG and Chartis together paid $3.6 million to settle that lawsuit in February 2013. ACIG paid $2 million and Chartis paid $1.6 million with a reservation of rights to seek reimbursement from ACIG.

Chartis then sought a declaratory judgment that the property damage alleged in the lawsuit was caused by more than one "occurrence, " such that the ACIG Policy should have been exhausted up to the $4 million aggregate limit; Chartis alleged it should be reimbursed the $1.6 million it paid to help settle the lawsuit.[2] ACIG denied the allegations and alleged several affirmative defenses. It did not assert a counterclaim.

I permitted Hoffman to intervene in the case. Hoffman filed a breach of contract counterclaim and a counterclaim for a declaratory judgment against Chartis. Hoffman's breach of contract counterclaim alleges:

91. The Chartis Policy is a valid and enforceable contract between Chartis and Hoffman, among others.
92. The damages alleged by the Association as part of the Claims against the Developers involve only a single "occurrence, " or must be treated as involving only one occurrence under the facts and circumstances that existed when the Claims were resolved.
93. Pursuant to the Chartis Policy and applicable law, Chartis had a duty to indemnify or otherwise pay all amounts required to compromise the damages alleged by the Association as part of the Claims in excess of the Schedule of Retained Limits of the Chartis Policy.
94. The Schedule of Retained Limits of the Chartis Policy provides for Retained Limits of "$2M OCC/$4 AGG Each Occurrence."
95. The Chartis Policy defines the relevant portions of the term, "occurrence, " as an "accident, including continuous or repeated exposure to conditions, which results in Bodily Injury or Property Damage neither expected nor intended from the standpoint of the Insured. All such exposure to substantially the ...

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