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Deardorff v. Farnsworth

Court of Appeals of Oregon

February 4, 2015

Donald DEARDORFF, an individual; C. Brooke Deardorff, an individual; Allison Deardorff, an individual; and Deardorff Stable, LLC, an Oregon limited liability company, Plaintiffs,
v.
Robert FARNSWORTH, an individual; the Summit Group of Oregon, LLC, an Oregon limited liability company; and Mission Insurance Services, Inc., an Oregon corporation, Defendants-Respondents. and OREGON MUTUAL INSURANCE COMPANY, a California corporation, Defendant-Appellant, and DOES 1-2, Defendants

Argued and Submitted July 9, 2014

Clackamas County Circuit Court. CV10040782. Steven L. Maurer, Judge.

Robert S. May argued the cause for appellant. With him on the briefs was Smith Freed & Eberhard, P.C.

James M. Callahan argued the cause for respondents. With him on the brief was Callahan & Shears, P.C.

Before Armstrong, Presiding Judge, and Egan, Judge, and De Muniz, Senior Judge.

OPINION

Page 688

[268 Or.App. 846] DE MUNIZ, S. J.

The issue in this case is whether the trial court correctly held that defendant Oregon Mutual Insurance Company (OMI) was estopped from relying on an exclusion in an insurance policy. Plaintiffs were transporting horses in California that were owned by others when the trailer carrying the horses caught on fire, killing the horses. The insurers

Page 689

for the horse owners compensated the horse owners for their losses and then filed an action against plaintiffs in California, alleging that plaintiffs had negligently caused the death of the horses. Plaintiffs tendered the defense of the California action to their insurer, OMI. OMI refused to provide a defense for plaintiffs, contending that plaintiffs' insurance policy with OMI did not cover the cost of defending plaintiffs in the action. Plaintiffs also tendered the defense to insurance agent Robert Farnsworth, The Summit Group of Oregon, LLC, and Mission Insurance Services, Inc. (the agency defendants), who, like OMI, refused to provide a defense to plaintiffs. Plaintiffs successfully defended the California action, incurring costs in doing so.

Plaintiffs filed an action in Oregon against OMI and the agency defendants to recover their defense costs.[1] The trial court granted summary judgment for plaintiffs against OMI, concluding that OMI was estopped from denying liability coverage for the loss of the horses and that OMI had breached its written contract when it denied property coverage based on the policy's " other insurance" clause. The trial court also entered summary judgment for the agency defendants, concluding that they were not liable for the defense costs because OMI was estopped from denying liability coverage and was required to pay plaintiffs' defense costs.

Following the trial court's summary judgment rulings, plaintiffs and OMI reached a settlement agreement, leaving OMI and the agency defendants as the remaining parties to the action. As part of the settlement, plaintiffs [268 Or.App. 847] assigned their claims against the agency defendants to OMI. OMI, seeking to recover the amount that it had paid to plaintiffs in the settlement,[2] then filed a cross-claim against the agency defendants for indemnity and filed a motion for reconsideration of the trial court's previous rulings. The trial court denied OMI's motion for reconsideration regarding estoppel and granted the agency defendants' motion for summary judgment on OMI's cross-claim. OMI appeals the judgment entered on the summary judgment rulings.

On appeal, OMI raises multiple assignments of error. First, it challenges the trial court's grant of summary judgment to plaintiffs on the ground that OMI was estopped from relying on provisions of its policy to deny liability coverage for the loss of the horses. Second, OMI argues that the trial court erred in granting the agency defendants' summary judgment motion based on the trial court's ruling that OMI was estopped from denying care, custody or control (CCC) liability coverage to plaintiffs. Within the second assignment of error, OMI challenges the trial court's grant of summary judgment for agency defendants on OMI's cross-claim for indemnity.

Because the trial court granted summary judgment to the agency defendants, we must decide whether there are any genuine issues of material fact and whether the agency defendants are entitled to judgment as a matter of law.[3]See Double Eagle Golf, Inc. v. City of Portland, 322 Or. 604, 606, 910 P.2d 1104 (1996) (the court must determine whether the party that moved for summary judgment is entitled to judgment as a matter of law). When reviewing a trial court's grant of summary judgment, we view the evidence and all reasonable inferences to be drawn from it in the light most ...


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