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State Farm Fire and Casualty Company v. Evans Construction & Siding Corp.

United States District Court, D. Oregon

September 26, 2019

STATE FARM FIRE AND CASUALTY COMPANY, an Illinois Company, Plaintiff,
v.
EVANS CONSTRUCTION & SIDING CORP., an Oregon corporation, Defendant.

          DAVID P. ROSSMILLER ELISS M. BOYD Betts, Patterson & Mines, P.S. Attorneys for Plaintiff

          EMILY S. MILLER RACHEL C. NIES Miller Nies, LLC Attorneys for Defendant

          OPINION AND ORDER

          ANNA J. BROWN UNITED STATES SENIOR DISTRICT JUDGE.

         This matter comes before the Court on Defendant Evans Construction & Siding Corp.'s Motion (#8) to Dismiss for Failure to State a Claim (Rule 12(b)(6)). The Court concludes the record is sufficiently developed and, therefore, oral argument would not be helfpul to resolve this Motion.

         For the reasons that follow, the Court DENIES Defendant's Motion to Dismiss.

         BACKGROUND

         On June 21, 2019, Plaintiff State Farm Fire and Casualty Company filed an action in this Court against Evans for declaratory judgment in which it seeks an order from this Court that it does not have a duty to defend or to indemnify Evans in an underlying lawsuit (Underlying Lawsuit) filed in Oregon state court. Plaintiff also alleges claims for breach of contract and misrepresentation based on Evans's tender of defense.

         I. The Underlying Lawsuit in State Court

         On May 15, 2018, Irvington Garden Apartments, LLC, filed a second amended complaint in Multnomah County Circuit Court against Creston Homes, LLC, and others, in which it alleged claims for negligence based on defects in the construction of the Irvington Garden Apartments (the Construction Project) in Portland, Oregon. Creston was the general contractor on the Construction Project. Irvington alleges on September 26, 2017, it notified Creston of defects in the Construction Project.

         On August 22, 2018, Creston filed a third-party action against Evans, a subcontractor on the Construction Project, in which it alleged Evans was at least responsible in part for the construction defects Irvington claimed. Irvington's second amended complaint was attached as an exhibit to Creston's third-party complaint.

         II. The Declaratory-Judgment Action

         As noted, State Farm filed in this Court a declaratory-judgment action against Evans on June 21, 2019. State Farm alleges it issued two Contractors Liability Policies (the Policies) that named Evans as the insured and that were effective from December 26, 2006, through December 26, 2008. State Farm also alleges the Construction Project identified in the Underlying Lawsuit was commenced in 2011, and the subcontract between Evans and Creston was signed in 2011. State Farm alleges the Policies issued to Evans had expired before the Underlying Lawsuit was commenced, and any damages alleged in the Underlying Lawsuit "could not have occurred during the time periods the Policies were in effect." Accordingly, State Farm alleges it does not have a duty to defend or to indemnify Evans in the Underlying Lawsuit.

         In addition, State Farm asserts two separate claims against Evans for breach of contract and misrepresentation. State Farm alleges the Cooperation Clauses of the Policies require the insured to "cooperate with [State Farm] in the investigation, settlement[, ] or defense of the claim or suit" and that Evans knew when it tendered defense of the Underlying Lawsuit that the damages could not have occurred during the effective period of the Policies. Accordingly, State Farm alleges Evans breached its duty to cooperate in the investigation of the claims in the Underlying Lawsuit by making a knowingly false tender of defense.

         State Farm also alleges a claim for misrepresentation that Evans made a knowingly false representation that it was entitled to coverage when it made the tender of defense. State Farms asserts it relied on the false representation by Evans and was damaged as a result of such reliance. State Farm states it is, therefore, relieved of any performance required by the Policies as a result of the false representation by Evans.

         On August 2, 2019, Evans filed a Motion to Dismiss State Farm's Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim.

         On August 30, 2019, the Court took Evans's Motion under advisement.

         STANDARDS

         To survive a motion to dismiss a complaint must contain sufficient factual matter, accepted as true, to “state a claim for relief that is plausible on its face.” Bell Atlantic v. Twombly, 550 U.S. 544, 545 (2007). A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. Id. at 556. “The plausibility standard is not akin to a ‘probability requirement, ’ but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)(quoting Twombly, 550 U.S. at 546). When a complaint is based on facts that are “merely consistent with” a defendant's liability, it “stops short of the line between possibility and plausibility of entitlement to relief.” Iqbal, 556 U.S. at 678 ...


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