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Marandas Family Trust v. Pauley

Court of Appeals of Oregon

June 28, 2017

MARANDAS FAMILY TRUST, by John J. Marandas, Trustee, Plaintiff-Appellant,
v.
John F. PAULEY, personally and dba Arrow Mobile Home Service, aka Arrow Home Service, aka Arrow Home Service, LLC; and Arrow Home Service, LLC, dba Arrow Home Service, aka Arrow Mobile Home Service, Defendants-Respondents.

          Argued and submitted August 11, 2015

         Multnomah County Circuit Court 120405338 Stephen K. Bushong, Judge.

          Eli D. Stutsman argued the cause for appellant. With him on the briefs was Eli D. Stutsman, A Professional Corporation.

          Thomas M. Christ argued the cause for respondents. With him on the brief were Cosgrave Vergeer Kester LLP; Michael D. Kennedy, Kennedy Bowles, P. C.; Gregory P. Fry and Preg O'Donnell & Gillett, PLLC.

          Before Armstrong, Presiding Judge, and Egan, Judge, and Schuman, Senior Judge.

         Case Summary: Plaintiff appeals a judgment that affirmed an arbitration award that denied plaintiff an award of attorney fees under ORS 20.080(1). Plaintiff assigns error to the determination that, under ORS 20.080(1), it was required to serve a written pre-litigation demand on an insurer that plaintiff was not aware had a responsibility to provide liability coverage for the tort claim at issue. Held: The arbitrator misconstrued, and consequently missaplied, ORS 20.080(1) in denying plaintiff an award of attorney fees, and thus the circuit court erred in upholding the arbitrator's decision.

         Reversed and remanded.

         [286 Or. 382] ARMSTRONG, P. J.

         Plaintiff, the Marandas Family Trust, appeals a judgment that affirmed an arbitration award that denied it an award of attorney fees under ORS 20.080 (1).[1] After plaintiff hired defendants to repair the roof of a cabin, plaintiff discovered that, due to defendants' faulty workmanship, the roof had leaked rainwater that had caused damage to the interior of the cabin. In court-annexed arbitration, plaintiff was awarded nearly all the damages that it sought for the harm caused by defendants' faulty work, as well as costs and disbursements. However, the arbitrator denied plaintiff an award of attorney fees on the ground that plaintiff had failed to comply with the requirements for an award of attorney fees under ORS 20.080(1) by failing to serve a written prelitigation demand on one of defendants' insurers, Brookwood Insurance Company (Brookwood). Plaintiff filed exceptions to the arbitrator's decision to deny it an award of attorney fees, which the circuit court denied. We conclude that the arbitrator misconstrued and, consequently, misapplied ORS 20.080(1) in denying plaintiff an award of attorney fees, and that the circuit court erred in upholding the arbitrator's decision. We therefore reverse and remand.

         The following facts are undisputed. Plaintiff owns a cabin near Mt. Hood. In February 2006, plaintiff hired defendants to repair the cabin's roof. Defendants completed the work in April 2006. The roof subsequently began to leak rainwater, causing damage to the interior of the cabin. Plaintiff discovered the damage in August 2011 when the cabin had become uninhabitable due to mold.

         On March 23, 2012, plaintiff sent a written demand under ORS 20.080 to defendants, to defendants' then-current liability insurer, to defendants' liability insurer at the time [286 Or. 383] of the original repair work, and to defendants' insurance broker for payment of the damage to the cabin. Plaintiff did not send a written demand to Brookwood, which insured defendants from June 2008 to June 2010-that is, for the period that began two years after defendants performed the work on plaintiffs cabin and that ended more than a year before plaintiff discovered the damage to the cabin.

         Plaintiff brought an action for damages against defendants on April 27, 2012. The case proceeded to court-annexed arbitration, where plaintiff prevailed. However, the arbitrator denied plaintiff's request for attorney fees, concluding that plaintiff had failed to meet the requirements of ORS 20.080(1), which required plaintiff to send a "written demand for the payment of [its] claim * * * on the defendant, and on the defendant's insurer, if known to the plaintiff, not less than 30 days before the commencement of the action."

         Among the evidence presented to the arbitrator in support of plaintiff's attorney-fee request were two affidavits from Sill, a paralegal with the law firm that represented plaintiff. Sill stated that, for "purposes of serving [an ORS] 20.080 demand notice, " she had searched the website of the Oregon Construction Contractors Board to determine which insurance companies provided liability coverage to defendants. She learned that Century Insurance Group aka Century Surety Company (Century) provided coverage that applied at the time of her search (March 2012), and that Maxum Specialty Insurance Group aka Maxum Indemnity Company (Maxum) had provided coverage at the time that defendants had performed and completed the repair work (February to April 2006). Plaintiff sent a written demand under ORS 20.080 to both Century and Maxum.

         Sill also learned that defendants had used A.L. Insurance Group as their insurance broker over the relevant time period. Sill spoke with Fritz, an employee of A.L. Insurance Group, and explained that plaintiff wanted to file a complaint against defendants and was trying to determine which insurance companies would need to be served under ORS 20.080 with a written demand for payment. Fritz told Sill that she was "the 'official representative' to accept a claim" and that she "would then pass on the claim, [286 Or. 384] complaint, or information ...


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