United States District Court, D. Oregon, Portland Division
ALTERRA AMERICA INSURANCE COMPANY, a Delaware corporation, Plaintiff,
JAMES W. FOWLER CO. an Oregon corporation; and NORTHWEST RENTAL EQUIPMENT, INC., an Oregon corporation, Defendants.
OPINION AND ORDER
Aiken U.S. District Judge
case arises out of an insurance contract between plaintiff
Alterra America Insurance Company ("Alterra") and
defendant James W. Fowler Company ("JWF").
Defendant suffered a loss of equipment and made a claim
pursuant to the contract which was paid in part and denied in
part by plaintiff. Plaintiff filed the present suit seeking
declaratory relief that it has satisfied the terms of the
insurance agreement. Defendant filed affirmative defenses and
raised counterclaims against plaintiff for breach of
insurance contract, promissory estoppel, reformation, bad
faith claims handling, declaratory judgment, and violations
of Washington's Consumer Protection Act ("CPA")
and Washington's Insurance Fail Conduct Act
("IFCA"). Plaintiff now moves for partial summary
judgment (doc. 53) on its claim for declaratory judgment that
it fulfilled its obligations under the coverage in effect at
the time of the loss. Plaintiff also seeks summary judgment
in its favor regarding defendant's counterclaims for
breach of contract, promissory estoppel, reformation, and
declaratory judgment. Plaintiff also moves for partial
summary judgment (doc. 37) in its favor on three of
defendant's counterclaims for bad faith claims handling
as well as the alleged violations of Washington's CPA and
IFCA. Defendant has also filed a cross-motion for summary
judgment (doc, 55) regarding the choice-of-law on these
counterclaims. For the reasons that follow, Defendant's
motion (doc.55) is DENIED and plaintiffs motions (docs. 37
and 53) are GRANTED.
JWF is a diversified general contractor that provides heavy
civil and tunneling construction solutions to municipalities,
agencies, and private owners across North
America. Defendant is incorporated in Oregon and is
registered to do business in Washington, Hawaii, Oregon,
California, and North Dakota, among other states.
is incorporated in Delaware and has its principal place of
business in Virginia. Plaintiff sole agent in Washington was
Parker Smith & Feek ("PS&F"), an insurance
producer and defendant's insurance broker. PS&F is
incorporated and has its principal place of business in
Washington. At all relevant times in this case PS&F's
office was in Washington.
insure its equipment from damage or loss, JWF purchased
contractor's equipment insurance coverage from plaintiff
through PS&F and paid its premiums to PS&F. Thus,
plaintiff has provided contractor's equipment coverage to
JWF since 2011. Kathy Bare was the primary contact at
PS&F for both JWF and Alterra. JWF renewed its
contractor's equipment coverage with Alterra each year
from 2012 through 2015 through PS&F.
August 2013, defendant entered into a contract with the North
Dakota State Water Commission to construct approximately 2,
800 lineal feet of pipeline under Lake Sakakawea near Beulah,
North Dakota. The project called for lake water to be pumped
from the bottom of the Lake Sakakawea, piped to the shore,
and screened by a water treatment plant operated by the North
Dakota State Water Commission. The treated water would then
be used to supply potable water for both domestic and
livestock use in Southwest North Dakota.
August 2015, PS&F sent a letter to JWF starting the
renewal process for the 2015-2016 policy period effective
November 1, 2015 to November 1, 2016. In October 2015, JWF
prepared to renew its insurance. It updated and revised its
original Equipment Schedule, listing the machinery,
equipment, and tools that it wanted to insure under the next
policy. JWF provided that Revised Equipment Schedule to
PS&F, which in turn provided it to Alterra on October 16,
about October 28, 2015, Alterra issued a renewal binder to
JWF for commercial output insurance coverage effective during
the November 1, 2015 to November 1, 2016 coverage period. The
renewal binder contained the Revised Equipment Schedule
submitted by JWF on October 16, 2015, identifying the
individual items of contractors' equipment covered and
their respective limits. According to the Renewal Binder, the
Contractors Equipment coverage was subject to limits of $9,
working on the North Dakota Project, JWF employed a
Micro-Tunnel Boring Machine ("MTBM") and other
related equipment to tunnel horizontally under the lake in
order to install an underground intake pipeline. Early on
November 1, 2015, the first day of the policy, while
defendant was working on project, the tunnel caved in and
caused a total loss of some of JWF's equipment. JWF made
a claim under the policy seeking to recover for the lost
days later, on November 13, 2015, JWF submitted to Alterra,
through PS&F, a Revised Equipment Schedule with deletions
and additions of various equipment, revisions of the stated
equipment values, and other modifications. Some of the added
equipment to be covered by the policy included the equipment
lost in the North Dakota cave-in. One such item that was
listed on the November 13, 2015 Equipment Schedule-that was
previously unlisted-was an "Umbilical system" with
a reported value of $2, 926, 300. The umbilical system was
comprised of a collection of equipment put together to create
one line-time for the November 13, 2015 Revised Equipment
Schedule. Some of the equipment in the system had been
included in the October 16, 2016 Revised Equipment Schedule.
January to March, 2016, Alterra issued payments to JWF for
items listed on the October 16, 2015 Amended Equipment
Schedule, including a payments for five components of the
umbilical system which were listed in that Amended Equipment
Schedule, for a total amount of $2, 255, 134. However, the
remaining amount associated with the umbilical system as
listed in the November 13, 2016 Revised Equipment Schedule
was not reimbursed to JWF, on the basis that it was not
included in the October 16, 2015 Revised Equipment Schedule.
then filed the present action on March 24, 2016 before this
Court seeking a declaratory judgment that it had no duty to
indemnify JWF for the loss of any equipment not included in
the October 16, 2015 Revised Equipment Schedule. The parties
have filed several motions for the Court's consideration,
The parties have filed Cross-Motions for Summary Judgment
(doc. 37 and 55) on whether Oregon or Washington law applies
to defendants' counterclaims. Plaintiff has also filed a
Motion for Partial Summary Judgment (doc. 53) on its
declaratory relief claims, as well as defendants'
counterclaims. I address each motion in turn.
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 patty, 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).
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. Id. at 1136.
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 Hans. 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 courts resolves
ambiguity by construing the tern against the
drafter-generally, the insurance company. Hoffinan,
836 P.2d at 706-07. In the context of insurance contracts,
courts determine plain meaning from the perspective of a
reasonable insured. Id.
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.
Wausau, 156 P.3d at 119. It is also the
insured's burden to ...