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Veloz v. Foremost Insurance Company Grand Rapid

United States District Court, D. Oregon, Eugene Division

January 25, 2018

SABINO VELOZ, Plaintiff,
v.
FOREMOST INSURANCE COMPANY GRAND RAPIDS, MICHIGAN, Defendant.

          OPINION AND ORDER

          Ann Aiken United States District Judge.

         In this diversity action, plaintiff Sabino Veloz moves for partial summary judgment against defendant Foremost Insurance Company for damages relating to the flooding of plaintiffs property. Defendant cross-moves for summary judgment, citing three provisions from the parties' insurance policy ("the policy") that purportedly exclude the flood damage from coverage. For the reasons set forth below, plaintiffs motion is granted in part and denied in part. Defendant's motion is also granted in part and denied in part.

         BACKGROUND

         The following facts are undisputed. Plaintiff owns a rental property in Eugene, Oregon. On September 4, 2016, a water main owned and regulated by the Eugene Water and Electric Board ("EWEB"), located on a hill behind plaintiffs house, burst. The water flowed downhill onto plaintiffs land and caused damage to the residence. Plaintiff filed a claim with defendant, On September 16, 2017, after an inspection of the damage, defendant denied plaintiffs claim. Defendant's denial letter cited three provisions of the policy: Insured Peril subsection 15 and Exclusions 7 and 17. Plaintiff then filed this action, asserting claims for breach of contract and breach of the duty of good faith and fair dealing.

         STANDARDS

         Summary judgment is appropriate if "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). A fact is material if it "is relevant to an element of a claim or defense and [its] existence might affect the outcome of the suit." T.W. Elec. Serv., Inc. v. Pac. Elec. Contractors Ass'n 809 F.2d 626, 630 (9th Cir. 1987). A dispute is genuine "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). Special rules of construction apply when evaluating a summary judgment motion: (1) all reasonable doubts as to the existence of genuine issues of material fact should be resolved against the moving party; and (2) all inferences to be drawn from the underlying facts must be viewed in the light most favorable to the nonmoving party. T.W. Elec, 809 F.2d at 630. "Summary judgment is inappropriate if reasonable jurors, drawing all inferences in favor of the nonmoving party, could return a verdict in the nonmoving party's favor." Diaz v. Eagle Produce Ltd. P'ship, 521 F.3d 1201, 1207 (9th Cir. 2008).

         When cross-motions for summary judgment are presented, the court must "review the evidence properly submitted in support of [each] motion to determine whether it present[s] a disputed issue of material fact[.]" Fair Hous. Council of Riverside Cty., Inc. v. Riverside Two, 249 F.3d 1132, 1135 (9th Cir. 2001). The court must evaluate each motion independently on its own merits. See Id. at 1136.

         The interpretation of an insurance policy is a matter of law. Emp'rs Ins. of Wausau v. Tektronix, Inc., 156 P.3d 105, 116 (Or. Ct. App. 2007). The court's objective in construing an insurance contract is to determine the intent of the parties. Hoffman Constr. Co. of Alaska v. Fred S. James & Co., 836 P.2d 703, 706 (Or. 1992). To make that determination, the court uses a three step process. Id. at 706-07. The first step is to examine the text of the policy to determine whether it is ambiguous, that is, whether it is susceptible to more than one plausible interpretation. Tualatin Valley Hous. v. Truck Ins. Exch, 144 P.3d 991, 993 (Or. Ct. App. 2006). The court will apply any definitions that are supplied by the policy itself and will otherwise presume that words have their plain, ordinary meanings. Id. If a term has only one plausible interpretation, it is interpreted in accordance with that unambiguous meaning. Andres v. Am. Standard Ins. Co., 134 P.3d 1061, 1063 (citing Hoffman, 836 P.2d at 706). If the wording of the policy is susceptible to more than one plausible interpretation, the court must examine the disputed terms in the context of the policy as a whole. Id. As a last resort, the court resolves ambiguity by construing the term against the drafter-generally, the insurance company. Hoffman, 836 P.2d at 706-07. In the context of insurance contracts, courts determine plain meaning from the perspective of a reasonable insured, Id.

         The insured bears the initial burden of proving that a loss is covered under an insurance policy, while the insurer bears the burden of proving that a loss is excluded from coverage. Wausan, 156 P.3d at 119. It is also the insured's burden to establish that a claim is within an exception to an exclusion. Id. at 121-22.

         DISCUSSION

         Plaintiff moves for partial summary judgment and defendant cross-moves for summary judgment. Plaintiff contends that defendant breached the policy by denying coverage for damage to the structure as well as by denying coverage for mitigative repairs, lost rent, and debris removal. Defendant asserts that the water damage to the structure falls within two policy exclusions-7 and 17-and that there is no coverage for mitigative repairs, rent, and debris removal because no Insured Peril caused the damage.

         I. Structural Damage

         The pertinent sections of Exclusions 7 and 17 state We do not insure loss caused directly or indirectly by any of the following regardless of any other cause of event contributing concurrently or in any sequence to the loss:

7. Loss caused by:
a. Flood Water, surface water, waves, tidal water, tidal waves, storm surge, tsunami or overflow of a body of water or spray from any of these whether or not driven by wind ....
This exclusion applies whether or not there was widespread damage and whether or not it was caused by a human activity or an act of nature.
17. Loss caused by:
a. The conduct, act, failure to act or decision of any person, group, organization or governmental body whether intentional, wrongful, negligent or without fault.
b. A defect, weakness, inadequacy, fault or unsoundness in:
(1) Planning, zoning, development, surveying, siting;
(2) Design, specifications, workmanship, construction, grading, compaction during construction;
(3) Materials used in construction or repair; or
(4) Maintenance;
of any property, including but not limited to, land, structures, or improvements of any kinds, whether on or ...

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