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Scottsdale Insurance Co. v. Horowitz

United States District Court, D. Oregon, Medford Division

July 29, 2019

SCOTTSDALE INSURANCE COMPANY, Plaintiff,
v.
JAY HOROWITZ; KIM HOROWITZ; ELITE MOVING SYSTEMS, INC., Defendants.

          OPINION & ORDER

          Ann Aiken United States District Judge.

         This matter comes before the Court on a Motion for Summary Judgment, ECF No. 38, filed by Plaintiff Scottsdale Insurance Company ("Scottsdale") and a Motion to Strike and to Supplement the Record, ECF No. 41, filed by Defendants Jay Horowitz and Kim Horowitz (collectively, the "Horowitzes"). Defendant Elite Moving Systems, Inc. ("EMS") has not appeared in this case or responded to the motions. Oral argument was held on the motion on July 10, 2019. ECF No. 49. For the reasons set forth below, the Horowitzes' Motion to Strike is DENIED and Scottsdale's Motion for Summary Judgment is GRANTED.

         BACKGROUND

         Plaintiff Scottsdale is an insurance coiporation organized under the laws of Ohio, with its principal place of business in Arizona. Defendant EMS is a now-inactive corporation organized under the laws of California with its principal place of business in California. Defendants Jay and Kim Horowitz are residents of Oregon, I. The Policy

         In 2014, Scottsdale issued a general liability insurance policy to EMS, policy number CPS1851193, which was to run from March 4, 2014, to March 4, 2015 (the "Policy"). First Am. Compl. ("FAC") Ex. B. ECF No. 34-2. The Policy covered "bodily injury" and "property damage" occurring "during the policy period." FAC Ex. B, at 10.

         EMS financed the premium for the Policy through IPFS Corporation ("IPFS"), a premium finance company. EMS executed a Premium Finance Agreement (the "Agreement"), which set forth the terms of the premium financing relationship between EMS and IPFS, including terms granting power of attorney to IPFS with respect to the Policy and establishing IPFS's right to cancel the Policy if EMS defaulted on its obligations to IPFS. Second Jones Decl.Ex. 1. ECF No. 22.

         EMS subsequently failed to pay installments to IPFS as required by the Agreement. Pursuant to the terms of the Agreement, IPFS mailed a Notice of Cancellation to EMS on April 28, 2014. FAC Ex. C. In the Notice of Cancellation, IPFS exercised its authority under the Agreement and notified Scottsdale that the Policy was cancelled, effective May 1, 2014.

         II. The Underlying Action

         On July 25, 2013, the Horowitzes contracted with EMS to move their belongings from West Hills, California, to Talent, Oregon, FAC Ex. A., at 1. In August or September 2013, EMS hired Curtis Wiles and Jason Morgan to unload the Horowitzes' belongings in Talent and paid Wiles and Morgan "under the table in cash." Id. EMS did not perform background checks and so did not discover that Morgan and Wiles had criminal histories or were otherwise unsuited for their positions. Id. at 2. While unloading the Horowitzes' property, Morgan and Wiles learned about the layout of the Horowitzes' home and the value of the Horowitzes' property. Id.

         On May 3, 2014, Morgan and an accomplice named James Turner entered the Horowitzes' home and stole property worth $83, 000.[1] Id. at 2-3. During the robbery, Morgan and Turner brutally assaulted Jay Horowitz, leaving him with severe physical and psychological injuries and considerable medical expenses. Id.

         On March 18, 2016, the Horowitzes filed a complaint in Jackson County Circuit Court against EMS, Case Number 16CV08738 (the "Underlying Action"). In an amended state court complaint, filed March 30, 2016, the Horowitzes alleged a claim against Elite Moving Solutions, Inc. ("Solutions"), a successor entity to the now-defunct EMS. Compl. Ex. A. ECF No. 1.

         On May 5, 2016, the Horowitzes' counsel was contacted by attorney Michael B. Hallinan, who identified himself as counsel for EMS. Am. Ans. Ex. 3. ECF No. 35-3. HalHnan informed the Horowitzes that he had "not yet received a file from our client's insurer, and we have not reviewed any investigation in this matter." Id. A follow-up letter on May 16, 2016, indicated that Hallinan was also counsel for Solutions. Am. Ans. Ex. 4.

         On June 6, 2016, Hallinan and the Horowitzes' counsel agreed to dismiss Solutions in favor of retaining EMS as a defendant in the Underlying Action on the understanding that EMS had liability insurance coverage. Am. Ans. Ex. 5. In reply, Hallinan wrote "I can confirm $1 million in coverage, and will send the dec page/policy [sic], and the adjuster has confirmed no reservation of rights has been asserted." Am, Ans. Ex. 6.

         On June 20, 2016, the Horowitzes entered into a stipulated motion to dismiss Solutions from the Underlying Action and substitute EMS as the defendant, which was accepted by the state court. Am Ans. Exs. 7, 8, On January 12, 2017, Scottsdale's coverage counsel sent a letter to EMS notifying it that Scottsdale was asserting a reservation of rights on the basis that the robbery of the Horowitzes' home occurred on May 3, 2014, which was two days after IPFS cancelled the Policy. Second Jones Decl. Ex. 2. In that letter, Scottsdale reserved its right to deny coverage and to withdraw from EMS's defense in the Underlying Action. Id. Scottsdale also reserved the right to file a declaratory judgment action to determine its rights and obligations under the Policy. Id. The Horowitzes learned of the reservation of rights on January 19, 2017. Anderson Decl. ECF No. 39-3.

         The present action followed on March 7, 2017. ECF No. 1. On May 17, 2017, the Horowitzes moved for summary judgment, which was denied in an Opinion and Order issued on September 21, 2017. ECF Nos. 10, 25. The present Motion for Summary Judgment, this time filed by Scottsdale, followed.

         LEGAL ...


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