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Airport Concession Consulting Services, LLC v. Sentinel Insurance Co., Ltd.

United States District Court, D. Oregon, Portland Division

June 6, 2018

AIRPORT CONCESSION CONSULTING SERVICES, LLC, and PATRICK GLEASON, Plaintiffs,
v.
SENTINEL INSURANCE COMPANY, LTD, Defendant.

          Michael E. Farnell W. Blake Mikkelsen Parsons Farnell & Grein, LLP Attorneys for Plaintiffs.

          Francis J. Maloney, III Maloney Lauersdorf & Reiner, PC. Attorneys for Defendant.

          OPINION & ORDER

          MARCO A. HERNÁNDEZ UNITED STATES DISTRICT JUDGE.

         This matter comes before the Court on the parties' Cross-Motions for Summary Judgment. ECF 16, 17. For the reasons that follow, the Court grants Plaintiffs' Motion for Summary Judgment [17] and denies Defendant's Cross-Motion for Summary Judgment [16].

         FACTUAL BACKGROUND

         Plaintiffs Airport Concession Consulting Services (“ACCS”) and Patrick Gleason bring this action against Defendant Sentinel Insurance Company alleging Defendant breached its insurance contract with Plaintiffs when it declined to defend Plaintiffs in an underlying lawsuit in California state court.

         The plaintiff in the underlying lawsuit, Diego Concession Group (“DCG”), alleged the San Diego County Regional Airport Authority issued a request for proposals (“RFP”) on February 2, 2011, for food service and retail concessions at San Diego County Regional Airport. The Airport Authority hired Plaintiffs in this case, ACCS and Gleason, to provide consulting services; to prepare the RFP, accompanying materials, and the criteria for evaluation of the proposals; to conduct the evaluation of the proposals submitted; and to assist the Airport Authority in making the final decisions as to which proposals to accept.

         DCG submitted a proposal in response to the RFP. In July 2011 the Airport Authority informed DCG that its proposal had not been selected, but that a second RFP regarding food service and retail concessions at the airport was forthcoming. After the Airport Authority issued that second RFP, DCG submitted another proposal. The Airport Authority again did not select DCG's proposal.

         On December 19, 2012, DCG filed a lawsuit stemming from the rejections of their proposals in which Gleason was named as a defendant. On June 5, 2013, DCG amended its complaint in the underlying lawsuit to add claims and to name ACCS as a defendant.

         On October 25, 2013, Plaintiffs tendered to Defendant their defense in the underlying lawsuit. Together with the October 25, 2013, letter, Plaintiffs sent to Defendant the then-operative first amended complaint and a proposed (but not yet filed) second amended complaint.

         On December 11, 2013, DCG filed its second amended complaint in the underlying lawsuit. That second amended complaint was the same in all material respects as the proposed second amended complaint that Plaintiffs sent to Defendant. On January 25, 2014, counsel for Plaintiffs informed Defendant that the second amended complaint had been filed and was then the operative complaint in the underlying lawsuit. By letter dated January 31, 2014, Defendant denied coverage for Plaintiffs' defense in the underlying lawsuit.

         In the second amended complaint DCG alleged the Airport Authority hired ACCS and Gleason as independent consultants to assist with the RFP and proposal-selection process as follows:

[P]reparation of the concessions RFP and second RFP, the preparation of RFP materials that would be disseminated to the public for bidding purposes; the preparation of criteria for evaluation of RFP submissions; the actual evaluation of RFP submissions; the provision of information to the Authority evaluation panel so that the latter could make decisions as to qualifications of RFP bidders; and consultation with Authority Board Members, staff and evaluation panel members to facilitate decisions concerning the RFPs.

         Joint Stipulated Facts and Exhibits [15] Ex. 7, ¶ 32. DCG further alleged Gleason and ACCS engaged in the following improper conduct:

(1) Improperly communicating with other RFP bidders while the first concessions RFP was still pending;
(2) Representing to prospective bidders and the general public that the RFP process would be transparent, fair, impartial, free from personal financial gain, and consistent with the standards identified in paragraphs 18 through 28 above, whereas in fact Gleason and ACCS acted in a manner that would maximize the potential benefit to Gleason and his future employer, SSP America;
(3) Misrepresenting and misstating the qualifications of DCG to Authority officers, employees, consultants and evaluation panel members, including false statements to the foregoing that Plaintiff DCG was not qualified financially, did not properly respond to the Authority's request for financial information, was “nonresponsive” and did not meet the RFP's minimum qualifications when, in fact, DCG was responsive and met such qualifications;
(4) Engaging in other conduct that violated public contracting and bidding statutes, and Authority codes, by not being impartial, independent, and fair and because Gleason and ACCS were undertaking actions aimed at maximizing the award of contracts to Gleason's future employer, SSP America.

Id. Ex. 7, ¶ 34. In addition, DCG alleged Gleason took a job with the largest winning bidder, SSP America, “just weeks” after Gleason's consulting work with the Airport Authority concluded, and that Gleason intentionally “misevaluated” DCG's proposal in order to benefit SSP America. Id. Ex. 7, ¶¶ 25-27.

         DCG brought several claims against Plaintiffs. First, DCG brought a claim for negligent misrepresentation on the basis that Plaintiffs made false statements to DCG regarding (1) limitations on communications between the Airport Authority and other parties involved in the RFP process, and (2) the fairness and transparency of the RFP process. Second, DCG brought a claim against Plaintiffs for fraud on the basis of their statements to DCG concerning the RFP process. Third, DCG brought a claim against Plaintiffs for trade libel on the basis of their statements to the Airport Authority that DCG did not meet minimum qualifications, did not respond to requests for financial information, and was not financially responsive. Fourth, DCG brought a claim against Plaintiffs for intentional interference with prospective economic advantage on the basis that Plaintiffs intentionally interfered with the relationship between DCG and the Airport Authority. Fifth, DCG brought a claim for negligent interference with prospective economic advantage on largely the same basis. Sixth, DCG brought a claim for unfair competition against Plaintiffs on the basis that Plaintiffs' actions violated California Business & Professions Code § 17200.

         On September 15, 2017, Plaintiffs filed this case in the Circuit Court of the State of Oregon in Clackamas County alleging Defendant breached its insurance contract with Plaintiffs when it declined to provide a defense to Plaintiffs in the underlying lawsuit. On October 20, 2017, Defendant removed the case to this Court on the basis of diversity jurisdiction under 28 U.S.C. § 1332(a)(1).

         STANDARD

         Summary judgment is appropriate if there is no genuine dispute as to any material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a). The moving party bears the initial responsibility of informing the court of the basis of its motion, and identifying those portions of “‘the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, ' which it believes demonstrate the ...


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