United States District Court, D. Oregon
U.S. SPECIALTY INSURANCE COMPANY, a Texas corporation, Plaintiff,
ELCON ASSOCIATES, INC., an Oregon corporation Defendant.
JASMINE C. HITES Troutman Sanders, LLP TERRENCE R. MCINNIS
BINH DUONG T. PHAM Troutman Sanders LLP Attorneys for
GREGORY L. BAIRD Gordon & Polscer, LLC PETER J. MORGAN
Morgan Rider Riter Tsai, P.C. Attorneys for Defendant
OPINION AND ORDER
J. BROWN UNITED STATES SENIOR DISTRICT JUDGE.
matter comes before the Court on Plaintiff U.S. Specialty
Insurance Company's Request (#45) for Judicial Notice and
Defendant Elcon Associates's Motion (#42) to Dismiss
Pursuant to the Federal Declaratory Judgment Act. The Court
has reviewed the record on these Motions and concludes it is
sufficiently developed such that oral argument would not be
helpful. For the reasons that follow, the Court
GRANTS in part and DENIES in
part Plaintiff's Request for Judicial Notice and
DENIES Elcon's Motion to Dismiss.
following facts are taken from the Amended Complaint and the
parties' materials related to Defendant's Motion to
Fluor/HDR Global Design Consultant's (F/HDR) is a limited
liability company with two shareholders: Fluor Corporation
and HDR Engineering, Inc. F/HDR is incorporated in Delaware,
and its principal place of business is Greenville, South
Carolina. F/HDR was established for the purpose of pursuing
and delivering transportation “design-build projects
[in North America] with anticipated construction values in
excess of $500 million.” In 2009 F/HDR developed a
“specific and unique Business Plan . . . addressing how
[it] intended to get awarded” those kinds of projects.
Second Aff. of Bruce Gerhardt at ¶ 2.
9, 2008, F/HDR and Defendant Elcon Associates, Inc.,
“entered into a Teaming Agreement, . . . which was
amended on January 29, 2009.” Am. Compl. at ¶ 16.
The Teaming Agreement related to the design and construction
of the Eagle P3 commuter rail in Denver, Colorado (the Eagle
Project). The Teaming Agreement and Task Order No. 13
“tasked” Elcon with “preliminary design of
the Overhead Contact Systems (OCS) poles.” Am. Compl.
at ¶ 17. Elcon was also “required to design the
OCS in sufficient detail to quantify the construction work
required and [to] determine typical details for the OCS poles
and foundations for cost estimating purposes.”
Id. (quotation omitted).
point in 2010 Denver Transit Constructors (DTC) was awarded
the contract to perform work on the Eagle Project
“based on the . . . cost proposal [it submitted] that
relied in part on the information provded by F/HDR and Elcon,
including Elcon's design parameters for the OCS poles
prepared for cost estimating purposes.” Am. Compl. at
September 1, 2010, DTC entered into a design contract with
F/HDR for the “final design and construction on the
[Eagle] Project. Once that agreement was executed, [F/HDR]
executed subcontracts with its subconsultants, including
Elcon.” Am. Compl. at ¶ 21.
point DTC “discovered . . . the information and design
parameters Elcon provided during the Proposal Phase regarding
the sizes and height of the OCS poles were significantly
underestimated, resulting in a substantial price difference
between the proposal and final design and construction of the
OCS poles (the ‘OCS Pole Allocation Design
Dispute').” Am. Compl. at ¶ 22.
February 2014 DTC and FHDR agreed the OCS Pole Allocation
Design Dispute “remain[ed] open and should be submitted
as an [errors & omissions] claim under a professional
liability insurance policy. DTC agreed to provide a formal
notice to [F/HDR] of the remaining potential errors &
omissions claims that had not been resolved, including the
OCS Pole Allocation Design Dispute.” Am. Compl. at
¶ 26 (quotation omitted).
March 14, 2014, DTC sent F/HDR a letter in which it asserted
F/HDR failed to meet the standard of care for providing
professional services in connection with “certain
proposal and execution related services” and demanded
“repayment of costs incurred as a result of these
errors and/or omissions” (the DTC Demand Letter). The
DTC Demand Letter set out several alleged deficiencies
“in support of DTC's proposal, ” including
the “Design of OCS Poles.” Am. Compl. at ¶
May 2014 Elcon had been insured by Plaintiff “under
successive professional liability policies . . . with limits
of $1 million per Claim.” Am. Compl. at ¶ 32
(emphasis in original).
April 2, 2014, Elcon submitted a “renewal application
for the May 6, 2014 to May 6, 2015 policy year with
[Plaintiff] seeking limits of liability of $1 million per
Claim.” Am. Compl. at ¶ 33 (emphasis in original).
April 28, 2014, Elcon requested Plaintiff to increase the
limits of liability from $1 million per claim to $5 million
per claim. Plaintiff agreed to increase the liability limits.
Plaintiff issued Policy No. USS 15 25806 to Elcon for the
period of May 6, 2015, to May 6, 2016. The Policy provided in
The Company shall pay Loss and Claim Expenses . . . that an
Insured shall become legally obligated to pay as a result of
a Claim made against an Insured for a Wrongful Act arising
from Professional Services, provided always that: (1) the
Claim is first made against an Insured during the Policy
Period . . .; [and] (2) an Insured's partners,
principals, officers, directors, members or insurance
managers had no knowledge of any circumstance, dispute,
situation or incident that gave rise to such Claim or could
reasonably have been expected to give rise to such Claim
prior to the Knowledge Date [of May 6, 2014].
Compl., Ex. 1 at 1(A)(emphasis in original). The policy also
contained a Limit of Liability of $5 million “for each
Claim . . . and in the aggregate.” Am. Compl. at ¶
13. The Limit of Liability, however, also contained an
endorsement amending coverage as follows: “That portion
of the Limit of Liability in excess of $1, 000, 000/$2, 000,
000 shall have a Retroactive Date of 05/06/2014.” Am.
Compl., Ex. 1 at 26.
November 10, 2015, Elcon “first provided notice to
[Plaintiff] of its dispute with ...