United States District Court, D. Oregon
AMERICAN HALLMARK INSURANCE COMPANY OF TEXAS, a foreign corporation, Plaintiff,
OREGON INTERIORS, INC., an Oregon corporation; AARON ENSLEY, an individual; and BROOKE ENSLEY, an individual, Defendants.
OPINION AND ORDER
F. BECKERMAN, UNITED STATES MAGISTRATE JUDGE.
Hallmark Insurance Company of Texas (“Plaintiff”)
brings this action against Oregon Interiors, Inc.
(“Oregon Interiors”), an Oregon corporation,
Aaron Ensley (“Mr. Ensley”), president of Oregon
Interiors, and Brooke Ensley (“Ms. Ensley”), an
Oregon Interiors employee and Mr. Ensley's daughter
(collectively, “Defendants”). Plaintiff seeks a
declaratory judgment pursuant to 28 U.S.C. § 2201 (ECF
No. 23), and Defendants assert a breach-of-contract
counterclaim (ECF No. 24).
and Defendants now move for summary judgment (ECF Nos. 37 and
40, respectively) pursuant to Fed.R.Civ.P. 56 on the
following question of law: whether Plaintiff has a duty under
either of two insurance policies to defend any of the
Defendants in an underlying lawsuit. All parties consent to
the jurisdiction of a U.S. Magistrate Judge pursuant to
Fed.R.Civ.P. 73(b). (ECF No. 36.) The Court has jurisdiction
over this matter pursuant to 28 U.S.C. § 1332. For the
reasons explained below, the Court grants Plaintiff's
motion for summary judgment and denies Defendants' motion
for summary judgment.
and Purchase of Insurance Policies and Exclusion of Named
early 2016, Elliott, Powell, Baden & Baker, Inc.
(“EPBB”) and its employee Noah Baker
(“Baker”) acted as insurance agency and agent,
respectively, for Oregon Interiors. (Perucca Decl.
¶¶ 1-4.) On February 26, 2016, Iza Padron
(“Padron”), an underwriter at Hallmark Commercial
Insurance Solutions, emailed a draft insurance policy for
Oregon Interiors to Baker and Jeanette Simmons
(“Simmons”), a commercial account manager at
EPBB. (Decl. David P. Rossmiller Supp. Pl.'s Resp.
Defs.' Mot. Summ. J. ¶ 3, ECF No. 44 (hereinafter
“Rossmiller Resp. Decl.”), Ex. 2, at 12.) Padron
requested “confirmation that we have a complete drivers
list” and stated that “we will need to pull MVRs
for all employees regardless of if they are drivers or
not[.]” (Id. Ex. 2, at 12.) MVRs are motor
vehicle reports, also known as driving records.
same morning, Padron emailed Simmons the same request,
stating “I would love to get this over for issuance
today” and “I cannot issue this without running
MVRs.” (Id. at 11-12.) Simmons sent Padrone
the MVRs later that morning, and Padron then responded,
asking for “specifics of the two accidents [Ms. Ensley]
was involved in, ” namely, whether Ms. Ensley was
“at fault[.]” (Id. at 11.) Still that
same morning, Simmons emailed Padron that she would
“find out about [Ms. Ensley's] two accidents and
get back to [him].” (Id. at 10;
seeDecl. David. P. Rossmiller Supp. Pl.'s Mot.
Summ. J. ¶ 2, ECF No. 38 (hereinafter “Rossmiller
MSJ Decl.”), Ex. 1, at 1-2 (showing Ms. Ensley's
driving record history).)
March 2, 2016, Padron emailed Simmons, asking for “any
news on [Ms. Ensley's] accidents?” (Rossmiller
Resp. Decl. Ex. 2, at 9.) On March 11, 2016, Padron forwarded
the prior email to Simmons and wrote, “Following up on
the below; please advise ASAP.” (Id.) Still
that morning, Simmons forwarded the email to Baker, who
responded to Padron that the May accident “was a very
small fender bender” where “[Ms. Ensley] lightly
rear-ended someone[, ]” and the October accident
“was not [Ms. Ensley's] fault.” (Id.
at 7-8.) Later that day, Debi Holl (“Holl”), a
commercial multi-line underwriter for Plaintiff (Holl Decl.
¶ 1), emailed Baker the following:
I'm afraid we cannot cover [Ms. Ensley]. First, we'll
need proof that the October accident was not her fault
(police report?) but I don't think it's going to
matter. She has an excessive speeding ticket that is enough
to exclude her as far as I'm concerned. We will be
processing an endorsement to exclude her; we will need it
signed and returned asap.
(Rossmiller Resp. Decl. Ex. 2, at 7.)
March 16, 2016, Holl emailed Baker a copy of the Named Driver
Exclusion (the “NDE Endorsement”), writing
“[i]t's in the quote also. Please get it signed
& returned to us.” (Id. at 5-6.) Baker
responded that afternoon, asking whether the “exclusion
exclude[s] Brook (sic) from non-owned liability[.]”
(Id. at 4.) Holl responded later that afternoon,
“Yes. It excludes from covered vehicles and covered
vehicles would be those specified, those that are non-owned
and those that are hired.” (Id.) That same
day, Baker emailed Mr. Ensley the NDE Endorsement for
signature with the following message:
Unfortunately due to [Ms. Ensley's] heavily checkered
motor vehicle record and young age [Plaintiff] has excluded
her from your auto policy. This means [Ms. Ensley] will not
be able to drive company vehicles moving forward (once the
exclusion is signed.) We can readdress this exclusion once
the speeding ticket (over 25mph) falls off her record. This
will be in September of 2017. I have set myself a reminder.
I'm not sure what role [Ms. Ensley] has in your business.
If [Ms. Ensley] doesn't drive often in the course of
business then this isn't a large issue. Just make sure
she rides with another employee when she does need a ride.
However if [Ms. Ensley] needs to drive a vehicle on a regular
basis then there are ways we can work around this. I will
give you a call this afternoon to go over your options.
I will need you to sign the attached driving exclusion and
return to me at (sic) as soon as you can.
(Perucca Decl. Ex. 1, at 1-4.)
March 18, 2016, Baker emailed Holl, “I am working on
getting the exclusion signed…hopefully will get it to
you today.” (Rossmiller Resp. Decl. Ex. 2, at 1.) On
March 22, 2016, Baker emailed Mr. Ensley again, writing
“I will need the attached driving exclusion signed and
returned soon. Otherwise [Plaintiff] will set up your account
for cancellation.” (Perucca Decl. Ex. 1, at 6.) Mr.
Ensley sent the signed NDE Endorsement to Baker that day.
(Id. at 5-8.) Still that day, Baker emailed the
signed NDE Endorsement to Holl. (Id. at 5.)
Interiors purchased from Plaintiff two insurance policies
with itself as named insured: policy number 44-CL-490548-00
(the “Business Auto Policy”) and policy number
44-CU-490549-00 (the “Umbrella Policy”)
(collectively, the “Policies”).
(SeeRossmiller MSJ Decl. ¶¶ 3-4, Ex. 2,
Ex. 3.) Both policies had effective dates of February 25,
2016, to February 25, 2017. (Id. Ex. 2, at 2; Ex. 3,
Business Auto Policy provides liability coverage and
exclusions as follows, in pertinent part:
We will pay all sums an ‘insured' legally must pay
as damages because of ‘bodily injury' or
‘property damage' to which this insurance applies,
caused by an ‘accident' and resulting from the
ownership, maintenance or use of a covered ‘auto'.
(Id. Ex. 2 at 11.) The term “insureds”
includes “[y]ou for any covered ‘auto'[, ] .
. . [a]nyone else while using with your permission a covered
‘auto' you own, hire or borrow except . . . [t]he
owner or anyone else from whom you hire or borrow a covered
‘auto'.” (Id.) “The words
‘you' and ‘your' refer to the Named
Insured shown in the Declarations.” (Id. at
10.) The Named Insured is Oregon Interiors. (Id. at
Umbrella Policy provides two types of liability coverage: (1)
Coverage A, referred to as excess liability coverage
(“Umbrella Coverage A”); and (2) Coverage B,
referred to as extended liability coverage (“Umbrella
Coverage B”). (Id. Ex. 3, at 7-9.)
Coverage A provides liability coverage and exclusions as
follows, in pertinent part:
We will pay those sums, in excess of the amount payable under
the terms of any ‘underlying insurance,' that the
insured becomes legally obligated to pay as damages because
of ‘injury' or damage to which this insurance
applies, provided that the ‘underlying insurance'
also applies, or would apply but for the exhaustion of its
applicable limits of insurance . . . .
We will have the right to participate in the defense of
claims or suits against the insured seeking damages because
of ‘injury' or damage to which this insurance may
apply. We will have a duty to defend such claims or suits
when the applicable limit of insurance of the
‘underlying insurance' has been used up by payment
of judgments, settlements and any cost or expense subject to
This insurance is subject to the same terms, conditions,
agreements, exclusions and definitions as the
‘underlying insurance' . . .
The exclusions applicable to the ‘underlying
insurance' also apply to this insurance.
(Id. at 7.) The Business Auto Policy is listed on
the Schedule of Underlying Insurance. (Id. at 3.)
Coverage B provides liability coverage and exclusions as
follows, in pertinent part:
We will pay those sums that the insured becomes legally
obligated to pay as damages because of ‘injury' to
which this insurance applies. This insurance applies only to
‘injury' which occurs during the policy period. The
‘injury' must be caused by an
‘occurrence.' This insurance applies only to
‘injury' which occurs in the ‘coverage
This insurance does not apply to . . . ‘[i]njury'
that is the subject of the insurance policies shown in the
Schedule of ...