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Ionian Corp. v. Country Mutual Insurance Corporation

United States District Court, D. Oregon

July 21, 2015

IONIAN CORP., an Oregon corporation, Plaintiff,
COUNTRY MUTUAL INSURANCE CORPORATION, a foreign corporation, Defendant/Interpleader Plaintiff
IONIAN CORP., an Oregon corporation, PRECISION SEED CLEANERS, INC., an Oregon corporation, Interpleader Defendants.

Gordon T. Carey, Attorney at Law, Portland, Oregon, Attorney for Plaintiff/Interpleader Defendant Ionian Corp.

Frederick M. Millard, Douglas M. Bragg, Oregon City, Oregon, Attorneys for Interpleader Defendant Precision Seed Cleaners, Inc.


MARCO A. HERNANDEZ, District Judge.

On instructions from the Ninth Circuit in a May 12, 2014 Memorandum Disposition, Ionian Corp. v. Country Mut. Ins. Co., 572 F.Appx. 513 (9th Cir. 2014), this Court allowed Ionian to amend its crossclaims against Precision Seed to assert a new crossclaim of unjust enrichment. Trial of that claim is presently scheduled for October 6, 2015. In an October 8, 2014 hearing on Precision's motion to strike Ionian's newly asserted unjust enrichment crossclaim, I told the parties that I considered this new crossclaim as an equitable claim to be tried to the Court. Presently, Ionian moves for a jury trial on the claim. I deny the motion.

II. Relevant Procedural History

A. From Filing to August 29, 2012 Judgment in the District Court

This case began when Ionian filed suit in Multnomah County Circuit Court against Country Mutual Insurance Company. Ionian brought a breach of contract claim against Country Mutual, contending that Ionian owned a warehouse which was destroyed by fire, that Precision was Ionian's lessee, that Precision had obtained an insurance policy on the warehouse from Country Mutual, and that Ionian was a "loss payee, additional insured, and/or third-party beneficiary under the policy." Compl. at ¶¶ 1-6 (Ex. A to Notice of Removal). Ionian alleged that despite a demand for payment and despite its and Precision's performance of all conditions precedent, Country Mutual had failed to pay the proceeds of the policy to Ionian. Id. at ¶¶ 7-10. Ionian also brought a separate claim of rent in which it alleged that because Country Mutual "had entered upon and taken possession of [Ionian's] real property[, ]" after the fire, Country Mutual owed Ionian rent. Id. at ¶¶ 12-14.

Country Mutual removed the case to this Court on the basis of diversity jurisdiction. Ionian moved to amend its Complaint to add Precision as a Defendant. Ionian sought to bring breach of lease and negligence claims directly against Precision. Proposed Am. Compl. at ¶¶ 12-20 (Ex. 1 to Mtn to Amend; ECF 6). It also named Precision as a Defendant in the rent claim previously asserted against Country Mutual. Id. at ¶¶ 21-22. In the motion to amend, Ionian acknowledged that adding the claims against Precision would destroy the diversity jurisdiction upon which Country Mutual removed the case to federal court. Judge Stewart granted Ionian's motion to amend in a June 23, 2010 Opinion & Order, but, because the addition of Precision would destroy the Court's jurisdiction, she instructed Ionian not to file its amended complaint until thirty days after a ruling on a then-pending motion for summary judgment filed by Country Mutual against Ionian. June 23, 2010 Op. & Ord.; ECF 25. Judge Stewart resolved what ended up as cross-motions for summary judgment between Ionian and Country Mutual in an October 5, 2010 Opinion & Order. ECF 49. She set a November 4, 2010 deadline for filing the previously-allowed amended complaint.

In a November 5, 2010 filing, Ionian represented that based on the summary judgment rulings, it would not file an amended complaint. The case remained in this Court.

On February 2, 2011, Country Mutual filed an Amended Answer to the claims brought against it in Ionian's original, and still controlling, Complaint. ECF 61. Country Mutual also brought an interpleader counterclaim against Ionian and added Precision as a Defendant to that claim. There, Country Mutual alleged that it faced competing claims from Ionian and Precision to the insurance proceeds for the covered property. It deposited $372, 750 with this Court on February 23, 2011, representing $350, 000 for property loss, $12, 750 for separate coverage for a motor control system, and $10, 000 for cleanup costs.

Next, Ionian and Precision both filed Answers to the interpleader claim. ECF 66, 69. Precision's Answer included unjust enrichment and conversion crossclaims against Ionian. ECF 69. Ionian then answered Precision's crossclaims and brought its own crossclaims for rent and cleanup costs against Precision. ECF 72. Precision answered Ionian's crossclaims. ECF 73.

In early May 2011, all counterclaims brought by Precision against Country Mutual were dismissed by stipulation. ECF 75, 76. On May 16, 2011, Judge Stewart granted the parties' oral motion to dismiss Country Mutual from the case. ECF 84. Thus, at this point, the only claims remaining were the crossclaims between Ionian and Precision as interpleader Defendants. Precision amended its Answer on May 24, 2011, deleting any affirmative defenses to the interpleader claim and any counterclaims against Country Mutual. ECF 87. Precision added three new crossclaims against Ionian. Id . Precision now had five crossclaims against Ionian: unjust enrichment, conversion, breach of purchase agreement, rescission of lease, and fraud. Ionian filed another Answer to Precision's amended crossclaims against Ionian, raising several affirmative defenses and retaining its previously asserted two crossclaims against Precision for rent and cleanup costs. ECF 88.

Ionian and Precision then filed cross motions for summary judgment. In a September 27, 2011 Findings & Recommendation, Judge Stewart made several rulings. ECF 125. I adopted the Findings & Recommendation in a December 2, 2011 Order. ECF 133.

Relevant to the current motion is that several of the crossclaims were dismissed for lack of jurisdiction. As Judge Stewart explained in the September 27, 2011 F&R, Federal Rule of Civil Procedure 13(g) governs this Court's subject matter jurisdiction over the crossclaims. The crossclaim must "arise[] out of the transaction or occurrence that is the subject matter of the original action" or "relate[] to any property that is the subject matter of the original action." Fed.R.Civ.P. 13(g). "The property that is the subject matter of the original action' filed by Ionian against Country Mutual is the insurance proceeds deposited with the Court payable under the policy as a result of the fire." Sept. 27, 2011 F&R at 10. Judge Stewart explained that as a result of Country Mutual's deposit of the insurance proceeds, the case involved the competing claims of Ionian and Precision to those insurance proceeds, as well as the other crossclaims between those parties. Id.

Given the limited jurisdiction under Rule 13(g), only the crossclaims involving entitlement to any part of the insurance proceeds were properly before this Court. Id. at 11. Upon the filing of my December 2, 2011 Order adopting Judge Stewart's F&R, the following crossclaims were dismissed for lack of subject matter jurisdiction: (1) breach of the purchase agreement to the extent the claim sought specific performance; (2) ...

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