United States District Court, D. Oregon, Portland Division
OPINION AND ORDER
A. HERNANDEZ UNITED STATES DISTRICT JUDGE.
action, the parties dispute insurance coverage for
water-damaged apartment buildings. The parties now move for
summary judgment on whether Oregon or Washington law applies.
The owner of the apartment buildings, Defendant and
Third-Party Plaintiff SIR Columbia Knoll Associates Limited
Partnership (Columbia Knoll), contends that Washington law
applies. The two insurers, Plaintiff Great American Alliance
Insurance Co. (Great American), and Third-Party Defendant
Philadelphia Indemnity Insurance Co. (Philadelphia)
(collectively the Insurers), contend that Oregon law applies.
conclude that Oregon law applies. I therefore dismiss
Columbia Knoll's claims for violations of the Washington
Consumer Protection Act and for tortious breach of the
implied covenant of good faith and fair dealing because
Oregon does not recognize such claims for alleged breaches of
an insurance policy.
facts relevant to the choice of law analysis are largely
undisputed. Columbia Knoll is an Oregon limited partnership
domiciled in Oregon. Columbia Knoll owns the apartment
buildings at issue, which are adjacent complexes in northeast
Portland: The Terrace at Columbia Knoll, which contains 118
income-restricted apartments in nine separate buildings, and
The Heights at Columbia Knoll Senior Residence, which
contains 208 income-restricted apartments in one four-story
building. See Great Am.'s Suppl. Br. 3 (aerial
photo of the Property), ECF No. 60.
Columbia Knoll's two general partners, Columbia Grotto
Partners, LLC (Columbia Grotto), is an Oregon limited
liability company whose principal place of business is
Bellevue, Washington. Miller Suppl. Decl. ¶ 2, ECF No.
54. Shelter Investment Resources, LLC (Shelter Investment)
"is the 99% member" of Columbia Grotto.
Id. Columbia Knoll submits declarations from Mark
Miller, who states that he is "a principal in Shelter
Investment," and is "primarily responsible for
executive-level decisions regarding the operations of
Columbia Knoll. Day-to-day operations at Columbia Knoll are
handled by on-site property managers. Executive-level
decisions, however, including decisions regarding major
construction or repair projects, are made by me and my
business partners in Bellevue, Washington." Id.
American is domiciled in Ohio. Philadelphia is domiciled in
Pennsylvania. Between 2011 and 2017, the Insurers issued
property insurance policies to Evergreen Portfolio,
LLLP, which is based in Bellevue, Washington.
Evergreen Portfolio is not a party to this action.
American issued policies to Evergreen Portfolio that were
effective from June 30, 2011 until June 30,
2014. Philadelphia issued policies to Evergreen
Portfolio that were effective from June 30, 2014 to June 20,
2019. The policies were negotiated and purchased through an
insurance brokerage based in the State of Washington.
Columbia Knoll's Resp. 4, ECF No. 40. In addition to the
Property at issue, the Insurers' policies covered other
properties in Oregon, as well as properties in Washington,
Arizona, Texas, Utah, and other states. See Hauser
Decl., Exs. A, C, & E (Great American policies); Kirby
Decl., Exs. A, B, C, D, & E, ECF Nos. 31-1, 31-2, 31-3,
31-4, & 31.5 (Philadelphia policies). The number of
properties covered by the Insurers' policies varied year
to year from about 145 to 179 properties. More than half of
the insured properties were in Washington. Columbia
Knoll's Resp. 4.
September 2016, Columbia Knoll brought a lawsuit in Multnomah
County Circuit Court against a general contractor and two
subcontractors, alleging that the defendants' faulty
workmanship on the Property and violations of Oregon building
codes had allowed water intrusion, causing extensive damage
to the buildings. Hauser Decl., Ex. I (copy of complaint in
SIR Columbia Knoll Limited Partnership v. Synergy
Constr., `No. 16CV28622 (Multnomah Cty. Cir. Ct.)). In
its Multnomah County complaint, Columbia Knoll sought $8
million in damages.
October 2016, Columbia Knoll reported the loss to its
insurance broker, which then reported the loss to Great
American. The loss notice described the loss as
'"recently discovered water damage at 2
properties.'" Great Am.'s Compl. ¶ 8, ECF
receiving Columbia Knoll's loss notice, Great
American's senior claim technical director, Donna Szydlo,
who was based in Illinois, assigned an independent adjuster
to investigate the claim and an engineer to inspect the
Property. After visiting the Property several times, the
adjuster and engineer reported their findings to Szydlo.
Szydlo "made the ultimate decision to deny coverage of
Columbia Knoll's claim." Szydlo Decl. ¶ 5, ECF
April 2018, Columbia Knoll sent Great American a proof of
loss statement, estimating the cost of repairs to the
Property at more than $14 million. Hauser Decl, Ex. UU. Great
American denied Columbia Knoll's claim.
2018, Great American filed its complaint in this action,
seeking declaratory relief. In July 2018, Columbia Knoll
filed its answer, asserting counterclaims against Great
American for breach of contract, breach of the implied
covenant of good faith and fair dealing, and violation of the
Washington Consumer Protection Act.
Knoll also sought coverage under Philadelphia's policies.
Philadelphia denied coverage. In September 2018, Columbia
Knoll filed a third-party complaint against Philadelphia,
asserting the claims it asserts as counterclaims against
Great American. ECF No. 14.
STANDARDS FOR SUMMARY JUDGMENT
court must grant summary judgment if there are no genuine
issues of material fact and the moving party is entitled to
judgment as a matter of law. Fed.R.Civ.P. 56(c). If the
moving party shows that there are no genuine issues of
material fact, the nonmoving party must go beyond the
pleadings and designate facts showing an issue for trial.
Celotex Corp. v. Catrett, 477 U.S. 317, 322-23
(1986). When parties file cross-motions for summary judgment,
the court considers "each motion on its merits."
Am. Tower Corp. v. City of San Diego, 763 F.3d 1035,
1043 (9th Cir. 2014).
Choice of Law in Diversity Actions
courts sitting in diversity look to the law of the forum
state . . . when making choice of law determinations."
Nguyen v. Barnes & Noble Inc.,763 F.3d 1171,
1175 (9th Cir. 2014). I therefore apply Oregon "choice
of law rules to determine the controlling substantive
law." Patton v. Cox,276 F.3d 493, 495 (9th
Cir. 2002). "The threshold question in a choice-of-law
problem is whether the laws of the different states actually
conflict." Spirit Partners, LP v. Stoel Rives
LLP,212 Or.App. 295, 301, 157 P.3d 1194, 1198 (2007).
"The proponent of applying a different state's law
has the obligation to identify a material difference between
Oregon law and the law of the other state."
Portfolio Recovery Assocs., LLC v. Sanders, 292
Or.App. 463, 468, 425 P.3d 455, 459 (2018) (citing Spirit
Partners, 212 Or.App. at 301, 157 P.3d at 1198).
"Where no material difference exists between Oregon law
and the law of the proposed alternative forum, Oregon courts
will apply Oregon law without regard to the relative
significance of the relationship between the dispute and the
proposed alternative forum." Powell v. System
Transp., Inc.,83 F.Supp.3d ...