Dept. of Forestry v. PacifiCorp

237 P.3d 861, 236 Or. App. 326
CourtCourt of Appeals of Oregon
DecidedJuly 28, 2010
Docket042975L3 A137295
StatusPublished
Cited by3 cases

This text of 237 P.3d 861 (Dept. of Forestry v. PacifiCorp) is published on Counsel Stack Legal Research, covering Court of Appeals of Oregon primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Dept. of Forestry v. PacifiCorp, 237 P.3d 861, 236 Or. App. 326 (Or. Ct. App. 2010).

Opinion

237 P.3d 861 (2010)
236 Or. App. 326

STATE of Oregon, acting by and through the DEPARTMENT OF FORESTRY, Plaintiff,
v.
PACIFICORP, an Oregon corporation, dba PacifiCorp Power, Defendant.
PacifiCorp, an Oregon corporation, dba PacifiCorp Power, Third Party Plaintiff-Appellant,
v.
Central Oregon Logging, an Oregon corporation, Third Party Defendant-Respondent, and
American States Insurance Company, a Washington corporation; and BP Reforestation, an Oregon corporation, Third Party Defendants.

042975L3; A137295.

Court of Appeals of Oregon.

Argued and Submitted July 15, 2009.
Decided July 28, 2010.

*862 Scott J. Kaplan, Portland, argued the cause for appellant. With him on the briefs were Louis A. Ferreira and Stoel Rives LLP.

William G. Wheatley, Eugene, argued the cause and filed the brief for respondent.

Before HASELTON, Presiding Judge, and ARMSTRONG, Judge, and ROSENBLUM, Judge.

*863 HASELTON, P.J.

Third-party plaintiff PacifiCorp appeals from a limited judgment dismissing its breach of contract claim against Central Oregon Logging (COL). PacifiCorp alleged that it was entitled to indemnification from COL and assigns error to the trial court's grant of COL's motion for summary judgment and to the court's denial of PacifiCorp's cross-motion for summary judgment. The trial court determined that the indemnification agreement was unenforceable as a matter of law. We conclude that the trial court erred in its legal analysis as to the general enforceability of the parties' indemnification agreement and that there are disputes of material fact as to the agreement's application. Consequently, we reverse and remand for the trier of fact to determine whether PacifiCorp is entitled to indemnification in light of the facts presented in this case.

This appeal arises out of litigation pertaining to indemnification for property damage and fire suppression costs from a 2002 large-scale fire in Jackson County. That fire, commonly known as the East Antelope Fire, originated on privately owned forestland, allegedly when electricity from a high-voltage transmission line owned by PacifiCorp arced to a nearby madrone tree. The transmission line was located within a right-of-way easement granted to PacifiCorp.

The Oregon Department of Forestry (the DOF) filed a complaint against PacifiCorp to recover costs associated with suppression of the fire. The DOF alleged that the madrone tree had grown to within four feet of the power line and that, in failing to remove the tree, PacifiCorp violated its own vegetation management standards, which require the removal of all trees within 50 feet of a high-voltage transmission line. PacifiCorp paid the DOF $3.2 million to settle the DOF's claims. PacifiCorp also paid approximately $585,000 to certain private parties who allegedly were damaged by the fire. PacifiCorp filed a third-party breach of contract claim against COL seeking to recover those amounts, plus its attorney fees and costs.[1]

The basis of PacifiCorp's third-party claim, which is the subject of this appeal, is a Contract for Right-of-Way Logging (the contract), which PacifiCorp and COL executed in 1995, seven years before the fire. Under the contract, COL agreed to "perform right-of-way logging services for [PacifiCorp's] distribution and transmission facilities, when and as directed by [PacifiCorp] * *." Of central importance here, under Article 13 of the contract, COL agreed to "indemnify, defend, and hold harmless" PacifiCorp

"against and from any and all claims, demands, suits, losses, costs and damages of every kind and description, including attorneys' fees and/or litigation expenses * * * resulting from, arising out of, or in any way connected with any act, omission, fault or negligence of [COL] in the performance or nonperformance of [COL's] obligations under this Contract or in any way related to this Contract."

COL's indemnification obligation was not, however, unlimited. Rather, Article 13 explicitly provided that

"[COL's] indemnity obligation under this Article shall not extend to any liability caused by the sole negligence of any of the Indemnitees."[2]

In Article 14 of the contract, COL also agreed to obtain, at PacifiCorp's expense, a $5 million general liability insurance policy to cover any loss arising out of COL's operations under the contract. The contract expressly requires that the policy cover fire-fighting losses and obligates COL to maintain the insurance coverage for at least five years after completion of its work. Consistent with those contractual requirements, *864 COL obtained a liability policy from American States Insurance Company.

In its third-party claim, PacifiCorp alleged that COL was obligated under the contract to indemnify PacifiCorp for all of its expenses associated with the fire, including the payments to the DOF and private parties, because

"[t]he East Antelope Fire resulted from COL's actions, including but not limited to its negligent failure to trim or remove the madrone tree * * * in January 1998."

COL answered, alleging that the fire resulted from PacifiCorp's sole negligence in, inter alia, failing to identify and remove hazardous vegetation, including the madrone tree. COL alleged that it had no duty to indemnify PacifiCorp because the fire did not result from any act or omission of COL.

After preliminary procedural sparring, COL eventually filed two separate summary judgment motions.[3] In its first motion, COL argued that it was entitled to summary judgment on PacifiCorp's breach of contract claim because the indemnification clause was unenforceable. In its second motion, COL argued that, even if the indemnification clause was otherwise enforceable, it was entitled to summary judgment because the fire resulted from PacifiCorp's sole negligence. PacifiCorp filed a cross-motion, arguing that it was entitled to summary judgment because (a) the indemnification provision of Article 13 was enforceable and (b) the fire was not caused by PacifiCorp's sole negligence.

The trial court entered an order that granted COL's first motion, denied COL's second motion, and denied PacifiCorp's cross-motion. The court concluded that the indemnification clause was unenforceable under the analysis of Southern Pac. Co. v. Layman, 173 Or. 275, 145 P.2d 295 (1944), and Cook v. Southern Pac. Transp. Co., 50 Or.App. 547, 623 P.2d 1125, rev. den., 291 Or. 1, 631 P.2d 340 (1981), as distilled in Blanchfill v. Better Builds, Inc., 160 Or.App. 527, 534, 982 P.2d 53, rev. den., 329 Or. 447, 994 P.2d 126 (1999). As we amplify and address below, the court reasoned that the indemnification provision of Article 13 was sufficiently broad as to require resort to various circumstantial considerations identified in Blanchfill, 160 Or.App. at 540, 982 P.2d 53, to determine the scope and enforceability of the indemnity obligation. After assessing those considerations, the trial court concluded:

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Related

Hazell v. Brown
242 P.3d 743 (Court of Appeals of Oregon, 2010)
State Ex Rel. Department of Forestry v. PacifiCorp
239 P.3d 503 (Court of Appeals of Oregon, 2010)

Cite This Page — Counsel Stack

Bluebook (online)
237 P.3d 861, 236 Or. App. 326, Counsel Stack Legal Research, https://law.counselstack.com/opinion/dept-of-forestry-v-pacificorp-orctapp-2010.