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Insurer Not Entitled to Contribution Where Its Insured Did Not Assume Contingent Liabilities

Allianz Global Risks v. ACE Property & Casualty Ins. Co., 297 Or App 434 (2019) involved a contribution action brought by the plaintiff insurers against several defendant insurers. The defendant insurers had issued insurance to the same insured, Con-way, prior to 1981. These policies included Con-way’s subsidiary as an insured. In 1981, Con-way sold the subsidiary to Daimler, which was insured by plaintiffs. After defending and indemnifying Daimler, as successor to the subsidiary, in three Superfund claims and more than 1,500 asbestos personal injury claims, the plaintiffs sued the defendant insurers seeking contribution. The Oregon Court of Appeals addressed whether the plaintiffs’ insured, Daimler, had assumed the subsidiary’s contingent liabilities with the 1981 sale. It found that a letter written at the time of the sale clarified that Daimler had not assumed the contingent liabilities: “The letter states explicitly that its purpose is to clarify the terms of the [sale] agreement. It is signed by the parties and unequivocally and unambiguously states that [the subsidiary] has not transferred, and Daimler has not assumed, [the subsidiary’s] contingent liabilities.” Id. at 444. Because Daimler had not assumed the continent liabilities, the court held that the plaintiffs could not seek contribution from the defendant insurers. Soha & Lang, P.S., represented one of the insurer defendants in the action.

Disclaimer: The opinions expressed in in this blog are those of the author and do not necessarily reflect those of Soha and Lang, P.S. or its clients.

Risk Pool Had Authority to Assess Former Member for Capitalization Assessment

On October 17, 2018, the Oregon Court of Appeals held that a risk pool had the authority for its assessment of a former member.  In Capital Credit & Collection Serv., Inc. v. Kerr Contractors, Inc., 294 Or App 486 (2018), a workers’ compensation risk pool assessed current and former members in response to the state raising capitalization requirements.  A former member (the “Member”) refused to pay the assessment, contending that the risk pool did not have the authority on two grounds.  First, the Member contended that, under the terms of the pooling agreement, the risk pool’s authority to assess former members was limited to two situations, neither of which was involved:  payments to injured workers; and payments to the Workers’ Compensation Division.  The Oregon Court of Appeal rejected the contention, finding that the assessment authority was broader.  Second, the pooling agreement permitted assessments for former members as follows:  “You are assessable while this agreement is in effect and for three years following its termination.”   (Emphasis added).  Focusing on the word “termination,” the Member contended that it was not subject to the assessment because its participation had been “cancelled” rather than “terminated.”  The court rejected the argument, finding that the pooling agreement used the two words interchangeably.

 

Disclaimer: The opinions expressed in this blog are those of the author and do not necessarily reflect those of Soha and Lang, P.S. or its clients.

Ongoing Operations Exclusion j.(5) Bars Coverage

In two related cases, Unigard Ins. Co. v. Metro Metals Nw., Inc., 17-CV-05743-RBL (W.D. Wash. Oct. 11, 2018) and Alaska Nat’l Ins. Co. v. Metro Metals Nw., Inc., 1:17-CV-05765-RBL (W.D. Wash. Oct. 11, 2018), the federal district court held that the insurance companies’ policies did not provide coverage for the underlying claims against their mutual insureds.

 

The insureds had entered into an agreement with a port to use a dock for loading scrap metal onto ships. The dock was damaged, and the port demanded reimbursement for repairs, consistent with their agreement.  The port subsequently sued the insureds.  In separate opinions, the federal district court held that there was no coverage for the port’s underlying claims against the insureds.  It reasoned that Exclusion j.(5), the Ongoing Operations Exclusion, applied to the claims.  This exclusion bars coverage for property damage to “[t]hat particular part of real property on which you or any contractors or subcontractors working directly or indirectly on your behalf are performing operations, if the ‘property damage’ arises out of those operations[.]”  Soha & Lang, P.S., represented one of the insurance companies.

 

Disclaimer: The opinions expressed in this blog are those of the author and do not necessarily reflect those of Soha and Lang, P.S. or its clients.

Insureds Failed to State a Claim for the Wrongful Withholding of Money or Property from Vulnerable Persons

In Bates v. Bankers Life and Cas. Co., 362 Or 337 (2018), the Oregon Supreme Court addressed the certified question involving ORS 124.110(1)(b), which addresses financial abuse of vulnerable persons.  The certified question was:  “Does a plaintiff state a claim under Oregon Revised Statutes 124.110(1)(b) for wrongful withholding of money or property where it is alleged that an insurance company has in bad faith delayed the processing of claims and refused to pay benefits owed under an insurance contract?”  The plaintiffs were elderly persons who had purchased long-term care insurance policies from the defendant insurance company.  The plaintiffs claimed that the insurer developed onerous procedures to delay and deny insurance claims.  The court held that plaintiffs had failed to state a claim under the statute:  “[W]e answer in the negative:  Allegations that an insurance company, in bad faith, delayed the processing of claims and refused to pay benefits owed to vulnerable persons under an insurance contract do not state a claim under ORS 124.110(1)(b) for wrongful withholding of ‘money or property.’”  The court reasoned that Section (1)(b) of the statute applies where a vulnerable person entrusts his or her money or property to another, who in bad faith refuses to return that money or property.  This requirement was not satisfied because the plaintiffs were not seeking the return of the money that they had transferred to the insurer but were seeking contractual benefits under the insurance policies.

 

Disclaimer: The opinions expressed in in this blog are those of the authors and do not necessarily reflect those of Soha and Lang, P.S. or its clients

Insurer’s Duty to Defend Its Additional Insured Limited to Claims Relating to the Named Insured’s Work

In Security National Ins. Co. v. Sunset Presbyterian Church, 289 Or App 193 (2017), the named insured was a subcontractor that performed masonry work on the project in question.  The general contractor was an additional insured on the subcontractor’s insurance policy based on a provision in the subcontract with this requirement.  The Oregon Court of Appeals rejected the insurance company’s contention that the additional insured provision in the subcontract was void under ORS 30.140, which prohibits provisions in construction contracts requiring one party to procure insurance to indemnify another party for the second party’s own negligence.  Instead, the provision was enforceable to the extent it did not contravene the statute.  The appellate court also addressed the extent of the additional insured obligation owed.  The issue was whether the insurer had an obligation to defend all claims asserted against the general contractor or whether its duty to defend was limited to the claims relating to liability arising out of the fault of the subcontractor.  The court reasoned that, under ORS 30.140, the duty to defend was limited to claims arising out of the fault of the subcontractor, and the insurance company did not have to defend all claims that were unrelated to the subcontractor.  Other holdings were as follows.  The court rejected the insurer’s argument that there was no duty to defend because the underlying complaint did not mention the subcontractor.  The court reasoned that the complaint alleged that the general contractor relied on the work of subcontractors and specified defects in the building envelope including problems with stone masonry.  These allegations were sufficient for the purpose of triggering the duty to defend.  In addition, the insurer contended there was no duty to defend because the additional insured obligation was limited to the named insured’s “ongoing operations.”  The court rejected this contention, finding that the underlying complaint did not allege when the damage occurred and was thus sufficient for the purposes of the duty to defend.

 

Disclaimer: The opinions expressed in in this blog are those of the authors and do not necessarily reflect those of Soha and Lang, P.S. or its clients.