Argonaut Great Central Ins. v. Paul Danoff

• Court: Court of Appeals for the Ninth Circuit
• Decided: March 23, 2018
• Docket: 16-35483
• Status: Unpublished

Opinion

FILED NOT FOR PUBLICATION MAR 23 2018 UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS

FOR THE NINTH CIRCUIT

ARGONAUT GREAT CENTRAL No. 16-35483 INSURANCE COMPANY, D.C. No. 6:15-cv-01466-MC Plaintiff-Appellee,

v. MEMORANDUM*

C&K MARKET, INC.,

Defendant-Appellee,

PAUL R. DANOFF; KIM L. DANOFF; DANOFF FAMILY TRUST 2000,

Defendants-Appellants.

Appeal from the United States District Court for the District of Oregon Michael J. McShane, District Judge, Presiding

Argued and Submitted March 7, 2018 Portland, Oregon

Before: FISHER, N.R. SMITH, and HURWITZ, Circuit Judges.

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. Paul R. Danoff, Kim L. Danoff, and the Danoff Family Trust 2000

(collectively “Danoff”) appeal the district court’s grant of summary judgment to

Argonaut Great Central Insurance Company. We have jurisdiction under 28 U.S.C.

§ 1291, and we affirm.

Under Oregon law, the loss payee “must claim in the right of the insured,

and not in his own right.” Armbrust v. Travelers Ins. Co., 376 P.2d 669, 671 (Or.

1962) (en banc). “The party named [as loss payee] does not recover in the event of

loss as the party insured, but as the beneficiary under the policy in the right of the

insured. . . . Hence it is the damage sustained by the party insured and not by the

party appointed to receive payment that is recoverable from the insurer.” Transp.

Equip. Rentals, Inc. v. Or. Auto Ins. Co., 478 P.2d 620, 623 (Or. 1970) (quoting

Charles R. Allen, Inc. v. R.I. Ins. Co., 60 S.E.2d 609, 613 (S.C. 1950)). Therefore,

to recover under the Argonaut policy, Danoff (as loss payee) must be able to

demonstrate that C&K Market, Inc. (the insured) sustained a loss. Danoff argues it

is entitled to payment for (1) missing fixtures and equipment; (2) damage to the

building; and (3) business income.

First, Danoff is not entitled to payment for the fixtures and equipment. C&K

Market has not claimed any losses regarding the equipment and fixtures. Any

liability between Danoff and C&K Market was settled in the bankruptcy court, and

2 Danoff has not represented that it obtained the rights to C&K Market’s claim

against Argonaut. Further, there is no evidence that C&K Market did not the own

the equipment and fixtures it removed. A representative of C&K Market testified

that it removed only its own items, and (a) Danoff admits he never inspected the

building, (b) there is no sale evidence demonstrating that the missing equipment

was actually purchased by Danoff, (c) the sale agreement for the sale from C&K

Market to Crest Net Lease, Inc. is silent regarding fixtures and equipment, and (d)

evidence about the various building plans does not demonstrate ownership.

Second, Danoff is not entitled to payment for damage to the building. C&K

Market did not make a claim for losses and any liability between C&K Market and

Danoff was settled in the bankruptcy action. Further, even if C&K Market caused

damage, Danoff has not proven that C&K Market suffered a loss, and, under the

policy, Danoff cannot bring a claim for its own damages.

Finally, under the loss payee terms of the insurance policy, Danoff has no

right to recover for business income losses (if any) suffered by C&K Market.

AFFIRMED.

3 FILED Argonaut v. Danoff, No. 16-35483 MAR 23 2018 FISHER, Circuit Judge, dissenting: MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS

For a loss payee to recover under an insurance policy in Oregon, the named

insured must (1) have an insurable interest and (2) must have sustained a loss. See

Transp. Equip. Rentals, Inc. v. Or. Auto Ins. Co., 478 P.2d 620, 623 (Or. 1970).

In the majority’s view, Danoff has not presented a triable issue of fact as to

whether he is entitled to payment for: (1) missing fixtures and equipment; (2)

physical damage to the building; and (3) lost business income. Although I agree

Danoff has not raised a genuine issue of material fact with respect to the missing

fixtures and equipment and lost business income, I disagree Danoff failed to do so

with respect to physical damage to the building. On this point, the majority

misapplied Oregon law and misapprehended the factual record.

The majority appears to offer three rationales to support its conclusion that

Danoff failed to present a triable issue as to physical damage to the building. First,

the majority says C&K Market did not make a claim to Argonaut for losses. But

C&K Market was not required to make a claim for Danoff to recover. Under

Oregon law, Danoff needed to show only that C&K Market had an insurable

interest and sustained a loss. See id. The majority points to no authority to support

the further requirement that C&K needed to make a claim for losses. This added

requirement has no basis in Oregon law. Second, the majority says any liability between C&K Market and Danoff

was settled in the bankruptcy action. But whether there is ongoing liability

between C&K Market and Danoff is not relevant to whether Danoff can recover

under the insurance policy as a loss payee. The relevant inquiry is whether C&K

Market had an insurable interest and sustained a loss, see id., not whether C&K

Market itself remained liable to Danoff. The majority again points to no authority

under Oregon law to support the added requirement that C&K Market must remain

liable to Danoff for him to recover as a loss payee.

Third, the majority says Danoff has not proven C&K Market suffered a loss

with respect to the physical damage to the building. At the summary judgment

stage, however, Danoff was not required to prove C&K Market suffered such a

loss. Danoff needed only to raise a genuine issue of material fact, drawing all

inferences in his favor. He easily did so. Although Argonaut argued any physical

damage to the building was normal wear and tear, the only evidence it submitted

was testimony in which several of C&K Market’s own employees stated in

conclusory and cursory fashion that the damage to the building was not beyond

normal wear and tear. Danoff rebutted this testimony in his own affidavit, in

which he stated the building sustained direct physical loss and damage “to, among

other property, wires and lights, a sliding-glass door, plumbing components, and

the ceiling and floor.” Danoff further stated he observed damage upon visiting the building: “[i]n addition to physical damages caused by demolishing and tearing off

parts of the building, including demolished walls that had been built into the store

for [a] walk-in freezer, there are numerous holes [in] the walls, scrapes in the

flooring, and instances of plumbing and wiring damaged when the fixtures that had

been permanently affixed to the building were torn off and removed.” Danoff also

provided photographs corroborating much of the alleged damage. Although it is

unclear what several of the photographs depict, others clearly show missing and

damaged walls, missing and damaged ceiling tiles, and missing and damaged

flooring – all of which are damages Danoff described in his affidavit.

Given Oregon law and the evidence in the record, I cannot join in the

majority’s conclusion that Danoff did not present a triable issue of fact with respect

to physical damage to the building. Therefore, I respectfully dissent.