PIH Beaverton LLC v. Red Shield Ins. Co.

412 P.3d 234, 289 Or. App. 788
Court of Appeals of Oregon·Decided January 10, 2018·No. A159503·Published·Cited by 4 cases

Opinion

DEHOOG, P. J.

*790This is an action between insurance companies concerning the duty to defend against claims arising out of construction defects. Defendant American States Insurance Company was the insurer of Gary Thompson dba Portland Plastering (Thompson), a subcontractor hired by general contractor Super One, Inc. (Super One) to do construction work on hotels in Portland and Beaverton. The parties' dispute arose when the eventual owners of the two hotels sued Super One, alleging that negligent work by Super One and others had resulted in water intrusion and related damage. Super One tendered the defense of both actions to its insurers and, relying on its status as an "additional insured" on Thompson's insurance policy, also to defendant. After defendant declined to defend Super One, several of Super One's insurers (plaintiffs) brought this separate action seeking, in part, declaratory relief and contribution from defendant to the costs of defending Super One.1 Following a hearing on the parties' cross-motions for partial summary judgment, the trial court entered a limited judgment declaring that defendant owed a duty to defend Super One in the construction defect cases. Defendant appeals that judgment, assigning error to the trial court's grant of plaintiffs' motion and the denial of its own motion. We conclude that the trial court did not err in concluding that defendant owed Super One a duty to defend. Accordingly, we affirm.

In an appeal involving cross-motions for partial summary judgment where "the losing party assigns error both to the grant of summary judgment to the other party and to the denial of its own motion for summary judgment, we review to determine 'whether there are any disputed issues of material fact and whether either party was entitled to judgment as a matter of law.' " Hynix Semiconductor Mfg. America v. EWEB , 276 Or.App. 228, 230-31, 367 P.3d 927 (2016) (quoting *791Vision Realty, Inc. v. Kohler , 214 Or.App. 220, 222, 164 P.3d 330 (2007) ). Here, there are no disputed material facts; the only question is one of law.

To provide context for the underlying facts, we begin with the legal principles governing an insurer's duty to defend.

"An insurer's duty to defend, according to the widely accepted 'four-corners' rule, is determined by comparing the complaint to *236the insurance policy. The rule refers to the four corners of the complaint; it also sometimes is referred to as the eight-corners rule (for the four corners of the complaint plus the four corners of the policy). However denominated, under that rule, one compares the allegations in the complaint to the insurance policy's terms. If the allegations in the complaint assert a claim covered by the policy, then the insurer has a duty to defend. If the allegations do not assert a claim covered by the policy, then the insurer has no duty to defend. By limiting the analysis to the complaint and the insurance policy, the four-corners rule generally prevents consideration of extrinsic evidence."

West Hills Development Co. v. Chartis Claims , 360 Or. 650, 653, 385 P.3d 1053 (2016) ( West Hills ) (citations omitted).

In West Hills , the Supreme Court acknowledged that applying the four-corners rule to real world complaints can be challenging. Id. at 660, 385 P.3d 1053. Ambiguities are resolved in favor of defending the insured:

" 'Where the complaint does not state facts sufficient to bring the case clearly within or without the coverage, the general rule is that the insurer is obligated to defend if there is, potentially, a case under the complaint within the coverage of the policy. In other words, in case of doubt as to whether or not the allegations of a complaint against the insured state a cause of action within the coverage of a liability policy sufficient to compel the insurer to defend the action, such doubt will be resolved in the insured's favor.' "

Id. at 662, 385 P.3d 1053 (quoting Blohm et al v. Glens Falls Ins. Co. , 231 Or. 410, 415-16, 373 P.2d 412 (1962) (internal quotation marks and citation omitted)); see also Bresee Homes, Inc. v. Farmers Ins. Exchange , 353 Or. 112, 117, 293 P.3d 1036 (2012) ("Any ambiguity concerning potential coverage is resolved in favor of the insured."). Additionally, it does not matter if there are *792also claims in the complaint that are outside of the insurance coverage; "[a]s long as the complaint contains allegations that, without amendment, state a basis for a claim covered by the policy, the duty to defend arises."2 Bresee Homes, Inc.

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PIH Beaverton LLC v. Red Shield Ins. Co., 412 P.3d 234, 289 Or. App. 788 (Or. Ct. App. 2018).

412 P.3d 234 (PIH Beaverton LLC v. Red Shield Ins. Co.) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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