05.11.2017

Oregon Court of Appeals holds that a Multi-Unit New Residential Construction Exclusion Does Not Apply

In Hunters Ridge Condo. Ass’n v. Sherwood Crossing, LLC, 285 Or App 416 (2017), the insured was a subcontractor on a condominium project.  The insured was sued in a construction defect lawsuit.  The insured failed to appear, and a default judgment was entered against it.  Based on the default judgment, the condominium association (“Association”) filed a garnishment proceeding against the subcontractor’s insurance company.  The Court of Appeals first held that the policy’s “Multi-Unit New Residential Construction” exclusion did not apply because the project was mixed use and included both residential and commercial units.  Next, the Court of Appeals found issues of fact on whether certain other exclusions could apply, such as the “your work” exclusion.  The court then addressed attorney fees that were included in the default judgment.  The court held that, to the extent the attorney fees were properly considered consequential damages, they could constitute “damages” within the meaning of the policy.  The Court also determined that the award of attorney fees could be “costs taxed against the insured” within the policy’s Supplementary Payments provision.  Finally, the court concluded that the insurer was entitled to a jury trial on disputed questions of fact pertaining to its liability under the policy and that the garnishment statute was unconstitutional to the extent it mandated a bench trial.

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.

Posted by Geoff Bedell