United States District Court, D. Oregon
OPINION AND ORDER
F. BECKERMAN UNITED STATES MAGISTRATE JUDGE
and Jessica Stanton (collectively “the Stantons”)
filed a complaint against QBE Insurance Corporation
(“QBE”),  alleging two state law contract claims
arising from QBE's alleged failure to pay the costs
necessary to restore the Stantons' townhome to its
pre-loss condition. (ECF No. 1.) The parties filed
cross-motions for summary judgment on the question of whether
the Stantons have standing to bring an action against QBE.
The Court heard oral argument on November 6, 2017. For the
reasons that follow, the Court denies the Stantons'
Motion for Summary Judgment (ECF No. 34) and grants
QBE's Motion for Summary Judgment (ECF No. 38).
Stantons own a townhome in Portland, Oregon, that is a part
of the Renaissance at Peterkort Woods Homeowners Association
(“HOA”). The HOA's Declaration of Protective
Covenants, Conditions, Restrictions, and Easements
(“CC&Rs”) and Bylaws provide for the rights
and responsibilities between the HOA and its townhome owners.
(Donald E. Templeton Decl. ¶¶ 2 and 3, Ex.
1 and 2, Aug. 4, 2017.) Pursuant to the
requirement in the CC&Rs and Bylaws that the HOA provide
insurance coverage for its members, including the Stantons,
the HOA purchased a Homeowners Association Policy
(“HAP”) from QBE. Community Association
Underwriters of America (“CAUA”) was a managing
general agent for QBE and served as the third-party program
administrator of the HAP during the relevant time period.
(William Walsh Decl. ¶¶ 2 and 3, Aug. 4,
5, 2015, a fire originating from the garage of an adjoining
unit caused damage to the Stantons' townhome. CAUA, who
oversaw the adjustment of the HOA's first party damage
claim arising from the fire, made all payments from the claim
directly to the HOA. (Walsh Decl. ¶ 3.) The HOA
chose the contractors to perform the repairs for the loss.
(Walsh Decl. ¶ 3.)
to the Stantons, a dispute arose as to the cost of repairs
and whether the work the contractors performed was sufficient
to restore their townhome to its pre-loss condition. In order
to recover damages from QBE for covered losses caused by the
fire, the Stantons filed this action against QBE to enforce
its rights as a third-party beneficiary under the HAP. QBE
argues that the Stantons are barred from bringing this action
because they have no standing under the HAP.
judgment is appropriate where there are no genuine issues of
material fact and the moving party is entitled to judgment as
a matter of law. Fed.R.Civ.P. 56(a). On a motion for summary
judgment, the court must view the facts in the light most
favorable to the non-moving party, and all reasonable
inferences must be drawn in favor of that party. Porter
v. Cal. Dep't of Corr., 419 F.3d 885, 891 (9th Cir.
2005) (citations omitted). The court does not assess the
credibility of witnesses, weigh evidence, or determine the
truth of matters in dispute. Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 249 (1986). “Where the record
taken as a whole could not lead a rational trier of fact to
find for the nonmoving party, there is no ‘genuine
issue for trial.'” Matsushita Elec. Indus. Co.
v. Zenith Radio Corp., 475 U.S. 574, 587 (1986)
sole issue for the Court is whether the Stantons may enforce
the HAP as third-party beneficiaries. The Stantons argue that
they are intended third-party beneficiaries of the insurance
contract. QBE, however, contends that the Stantons are merely
incidental beneficiaries and, as such, have no right of
Oregon, “a third party's right to enforce a
contractual promise in its favor depends on the intention of
the parties to the contract.” Sisters of St. Joseph of
Peace, Health, & Hosp. Servs. v. Russell, 318 Or.
370, 374 (Or. 1994). There are “three
categories of third-party beneficiaries: donee beneficiaries,
creditor beneficiaries, and incidental beneficiaries.”
Id. at 374- 75. While donee and creditor
beneficiaries “are entitled to enforce directly
contractual promises intended to be for their benefit, even
though they are strangers to the contract[, ]”
incidental beneficiaries have no right of enforcement.
Id. at 375. Below, the Court considers whether the
Stantons qualify as either donee or creditor beneficiaries,
i.e., intended beneficiaries, and thus have standing to bring
this action against QBE.
INTENDED OR INCIDENTAL BENEFICIARY
Stantons assert that they are intended beneficiaries, either
donee or creditor, of the HAP. A third party is a donee
beneficiary if “it appears from the terms of the
contract that the purpose of the promisee in obtaining the
promise is ‘to make a gift to the beneficiary or to
confer upon him a right against the promisor.'”
Stonecrest Prop., LLC v. City of Eugene, 280 Or.App.
550, 557 (Or. App. 2016) (quoting Restatement (First) of
Contracts § 133 (1932); Lord v.
Parisi, 172 Or.App. 271, 277-78 (Or. App. 2001)). A
third party is a creditor beneficiary if “no purpose to
make a gift appears from the terms of the promise in view of
the accompanying circumstances and performance of the promise
will satisfy an actual or supposed or asserted duty of the
promisee to the beneficiary.” Lord, 172
Or.App. at 278. Oregon courts examine the intent of the
parties to determine “whether a nonparty is more than
an incidental beneficiary.” Stonecrest, 280 Or.App.
at 557. Finally, although not required to confer
beneficiary status, a failure expressly to name a third party
as a beneficiary may serve as “an indication that the
promisee did not intend to confer a right upon it.”
Nw. Airlines v. Crosetti Bros., 258 Or. 340, 346-47
response, QBE argues that QBE and the HOA never intended to
confer a direct right to enforce the relevant terms of the
HAP to the individual owners. (Def.'s Resp. 3.)
QBE contends that the Stantons are “only incidental
beneficiaries” under the HAP Property Coverage
provisions. (Def.'s Resp. 3.) In support, QBE
recites § 133 of the Restatement (First) of
(1) Where performance of a promise in a contract will benefit
a person other than the promise, that person is . . .:
(a) a donee beneficiary if it appears from the terms of the
promise in view of the accompanying circumstances that the
purpose of the promisee in obtaining the promise of all or
part of the performance thereof is to make a gift to the
beneficiary or to confer upon him a right against the
promisor to some performance neither due nor supposed or
asserted to be due from the promise to the beneficiary[.]
concludes that the HOA “obviously did not intend to
confer a gift to individual unit owners” and thus the
Stantons “clearly do not qualify as donee
beneficiaries.” (Def.'s Resp. 4.)
support of their respective arguments regarding standing, the
parties rely on the HOA Bylaws, the terms of the HAP, and
support of their contention that they are intended
beneficiaries of the HAP, the Stantons rely first on the HOA
Bylaws, which state in part:
7.1 Types of Insurance. For the benefit of the Association
and the Owners, the Board of Directors shall obtain and
maintain at all times, and shall pay for out of the
Operations Fund, the following insurance:
(a) Property Damage Insurance
(1) The Association shall maintain a policy or policies of
insurance covering loss or damage from fire, with standard
extended coverage and “all risk” endorsements,
and such other coverages as the Association may deem
(2) The amount of the coverage shall be for not less than one
hundred percent (100%) of the current replacement cost of the
Units and any improvements on the Common Areas . . . .
(3) The policy or policies shall include . . . all fixtures,
improvements and alterations comprising a part of each Unit
as may be further defined by resolution of the Board of
(4) Such policy or policies shall name the Association, for
the use and benefit of the individual Lot Owners, as insured,
and shall provide for loss payable in favor of the
Association, as a trustee for each Owner and each such
Owner's mortgagee, as their interests may appear.
(Douglas M. Bragg Decl. Ex. 2 at 28-29, Aug. 4,
Stantons maintain that by express terms the “Bylaws
make abundantly clear that the HOA's purpose[, ] in
obtaining the QBE policy to insure the Stantons'
townhome[, ] was intended to be for the Stantons'
benefit, mandated by the Bylaws.” (Pls.' Mot.
Summ. J. 4 (noting that the Bylaws required the HAP
“be for the ‘use and benefit' of the Owners,
with the loss payable being the [HOA] as a trustee for the
Owners” (emphasis omitted)).) Additionally, the
Stantons contend that “QBE had actual notice of the
HOA's obligation to procure insurance of the use and
benefit of the Unit Owners . . . .” (Pls.' Mot.
Summ. J. 5 (noting that QBE was in possession of the HOA
Bylaws and the CC&Rs during the underwriting process).)
According to the Stantons, “[f]rom the perspective of
the HOA, there can be no doubt that the Owners were intended
beneficiaries . . . .” (Pls.' Mot. Summ. J.
argues that the terms of the Bylaws support the conclusion
that QBE and the HOA did not intend to provide the Stantons
with a direct right of enforcement. Relying on the same
language in the Bylaws, QBE maintains that the “Bylaws
make clear that for the benefit of the [HOA] and the Owners,
the [HOA] shall maintain property damage insurance covering
the Units and all fixtures, improvements and alterations in
each Unit.” (Def.'s Mot. Summ. J. 26.) In
addition, while the HAP clearly ...