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Factory Mutual Insurance Co. v. Peri Formworks Systems, Inc.

United States District Court, D. Oregon

August 24, 2017

FACTORY MUTUAL INSURANCE COMPANY, a Rhode Island corporation, Plaintiff,
v.
PERI FORMWORKS SYSTEMS, INC., a Maryland corporation, Defendant,

          Stuart D. Jones, Bullivant Houser Bailey PC, Of Attorneys for Plaintiff.

          Robert W. Wilkinson, Angela M. Otto, and Kevin S. Mapes, Ball Janik LLP, Of Attorneys for Defendant.

          OPINION AND ORDER

          Michael H. Simon United States District Judge.

         Plaintiff, Factory Mutual Insurance Company (“Factory Mutual”), brings this lawsuit against Defendant, PERI Formworks Systems, Inc. (“PERI”), seeking to recover payments made to its insureds, Turner Construction Company (“Turner”) and McClone Construction Company (“McClone”). Before the Court is PERI's motion for summary judgment. For the reasons that follow, PERI's motion is denied.

         STANDARDS

         A party is entitled to summary judgment if the “movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). The moving party has the burden of establishing the absence of a genuine dispute of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). The court must view the evidence in the light most favorable to the non-movant and draw all reasonable inferences in the non-movant's favor. Clicks Billiards Inc. v. Sixshooters Inc., 251 F.3d 1252, 1257 (9th Cir. 2001). Although “[c]redibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the facts are jury functions, not those of a judge . . . ruling on a motion for summary judgment, ” the “mere existence of a scintilla of evidence in support of the plaintiff's position [is] insufficient . . . .” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252, 255 (1986). “Where the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no genuine issue for trial.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (citation and quotation marks omitted).

         BACKGROUND

         This case involves a dispute arising out of the construction of a building on Intel's Hillsboro, Oregon campus. Intel contracted with Turner to serve as the general contractor for the project (the “Intel-Turner Contract”). Turner subcontracted with McClone to install concrete flooring decks (the “Turner-McClone Contract”). McClone subcontracted with PERI to supply concrete forms for the flooring decks (the “McClone-PERI Contract”). During the pouring of the floors, a problem allegedly arose with PERI's concrete forms. Construction was halted, and the already-poured concrete was removed and discarded. Factory Mutual, which provided a builder's risk insurance policy on the project (the “Insurance Policy”), paid $1, 108, 639.40 to McClone and $573, 249.50 to Turner. In this lawsuit, Factory Mutual seeks to “step into the shoes” of Turner and McClone to recover from PERI under a theory of subrogation the payments made by Factory Mutual to Turner and McClone.

         PERI has filed a motion for summary judgment, arguing that all claims asserted by Factory Mutual are barred by a subrogation waiver in the Intel-Turner Contract (the “Subrogation Waiver”), under which Intel and Turner, but not McClone, allegedly waived all claims against PERI. The Subrogation Waiver states:

RECOVERY LIMITED TO INSURANCE PROCEEDS.
The Owner [Intel] and the Contractor [Turner] waive all rights against (a) each other and their respective employees, agents and representatives, (b) the Subcontractors, the Sub-subcontractors, the Material Suppliers and the Sub-Suppliers and (c) the Architect/Engineer for loss or damage caused by the perils covered by the builder's risk property insurance under this Paragraph 10.03 (whoever provides it), except such rights as they may have, respectively and collectively, to the proceeds of the insurance under Subparagraphs 10.03-(2) and 10.03-(3) above.

ECF 66-1 at 121 (Intel-Turner Contract, § 10.03-(4)) (emphasis omitted).

         On June 14, 2017, the Court heard oral argument on PERI's motion and requested supplemental briefing on “whether McClone . . . waived its rights against PERI.” ECF 67. PERI argues that McClone also waived its rights against PERI because a provision in the Turner-McClone Contract incorporates the Subrogation Waiver by reference. On August 24, 2017, the Court heard additional oral argument on PERI's motion.

         DISCUSSION

         Factory Mutual advances three primary arguments in opposition to PERI's motion for summary judgment. First, Factory Mutual argues that PERI waived its affirmative defense that Turner and McClone waived their claims against PERI. Second, Factory Mutual argues that PERI is judicially estopped from raising this defense. Third, Factory Mutual argues that even if PERI may raise this defense, PERI cannot enforce the Subrogation Waiver in the Intel-Turner Contract. Although the circumstances of this case permit PERI to raise its affirmative defense for the first time on summary judgment, the Court agrees with Factory Mutual that PERI cannot enforce the Subrogation Waiver as a matter of law and thus denies PERI's motion.

         A. Waiver of PERI's Arguments

         Factory Mutual argues that PERI waived its waiver defense by not “affirmatively stat[ing]” this defense in its response to the Complaint. Fed.R.Civ.P. 8(c)(1) (listing “waiver” as an affirmative defense). PERI was required affirmatively to plead this defense. See Tokio Marine & Fire Ins. Co. Ltd. v. Emp'rs Ins. of Wausau, 786 F.2d 101, 103 ...


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