Sunset Presbyterian Church v. Andersen Construction Co.

341 P.3d 192, 268 Or. App. 309, 2014 Ore. App. LEXIS 1841
CourtCourt of Appeals of Oregon
DecidedDecember 31, 2014
DocketC106643CV; A153158
StatusPublished
Cited by4 cases

This text of 341 P.3d 192 (Sunset Presbyterian Church v. Andersen Construction Co.) 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
Sunset Presbyterian Church v. Andersen Construction Co., 341 P.3d 192, 268 Or. App. 309, 2014 Ore. App. LEXIS 1841 (Or. Ct. App. 2014).

Opinion

HADLOCK, J.

This construction-defect case began when Sunset Presbyterian Church (Sunset) filed an action against its general contractor, Andersen Construction Company (Andersen). Andersen, in turn, filed a third-party complaint against its subcontractors, including B&B Tile and Masonry Corporation (B&B). Sunset and Andersen settled, and Andersen assigned its third-party claims against the subcontractors to Sunset. The subcontractors other than B&B settled, leaving Sunset (as Andersen’s assignee) and B&B as the only litigants. Sunset dismissed all the claims against B&B except one, based on Andersen’s subcontract with B&B, for breach of duty to defend Andersen against Sunset’s action.

The trial court concluded that B&B had a contractual duty to defend Andersen against Sunset’s allegations that might implicate B&B’s negligence, but that ORS 30.1401 voided the subcontract to the extent that it required B&B to defend Andersen against allegations of Andersen’s or other subcontractors’ negligence. Because Sunset did not prove what portion of Andersen’s litigation costs Andersen incurred in defending against only those allegations that might implicate B&B’s negligence, the court awarded Sunset zero dollars as damages. The court also declined to award Sunset the attorney fees that it had incurred in prosecuting the duty-to-defend claim. It entered a general judgment that identified Sunset as the prevailing party but that awarded Sunset no damages. Both parties appeal. On Sunset’s appeal, we affirm; on B&B’s cross-appeal, we reverse and [312]*312remand for entry of a judgment identifying B&B as the prevailing party.

The relevant underlying facts are few and undisputed. Sunset contracted with Andersen for phase-two construction of a church building. Andersen, in turn, entered into a subcontract with B&B under which B&B was to perform masonry. Article 12 of the subcontract, entitled “INDEMNIFICATION,” provides, in part, as follows:

“12.1 SUBCONTRACTOR’S PERFORMANCE. To the fullest extent permitted by law, the Subcontractor shall indemnify and hold harmless the Owner, the Architect, the Contractor (including its affiliates, parents and subsidiaries) and other contractors and subcontractors and all of their agents and employees from and against all claims, damages, loss and expenses, including but not limited to attorney’s fees, arising out of or resulting from the performance of the Subcontractor’s Work provided that (a) any such claim, damage, loss, or expense is attributable to bodily injury, sickness, disease, or death, or to injury to or destruction of tangible property (other than the Subcontractor’s Work itself) including the loss of use resulting therefrom, to the extent caused or alleged to be caused in whole or in any part by any negligent act or omission of the Subcontractor or anyone for whose acts the Subcontractor may be liable regardless of whether it is caused in part by a party indemnified hereunder, (b) such obligation shall not be construed to negate, or abridge, or otherwise reduce any other right or obligation of indemnity which would otherwise exist as to any party or person described in this Article 12.”

After the work was complete, Sunset brought this action, alleging that Andersen constructed the project and that it hired subcontractors to help with the project. Sunset alleged that it “has discovered new and recurring deficiencies in the work performed by Andersen, which deficiencies have caused and are causing water intrusion and resulting property damage.” The specific allegations of deficient work included an allegation that “[a]rchitectural stone has been terminated at the level of the finish grade along the base-of-wall at hard surfaces, contrary to Owens Corning manufacturer installation instructions.” Installation of the architectural stone was part of B&B’s scope of work under the subcontract.

[313]*313Andersen tendered the defense of Sunset’s action to B&B and other subcontractors, all of whose subcontracts contained the same indemnity provision set out above. B&B and the other subcontractors declined Andersen’s tender of defense, and Andersen then filed third-party claims against B&B and the other subcontractors.2 Among other things, the third-party complaint alleged that each of the subcontractors had breached its subcontractual duty to defend.

Before trial, Andersen settled with Sunset and assigned Sunset its claims against the subcontractors. Sunset then moved for partial summary judgment on the duty and breach elements of the duty-to-defend claims, noting that it was “not seeking summary judgment on the amounts for which the [subcontractors *** are liable.” While the trial court had the motion for summary judgment under advisement, Sunset and the subcontractors settled all of Andersen’s claims against the subcontractors except the duty-to-defend claim against B&B.

The trial court concluded:

“By contract, B&B has a duty to defend Andersen against any claims based on its work on the project. The duty to defend arose once a claim(s) had been made against Andersen and the claim(s) allege substandard work or damages *** which B&B may have been part of.”

(Emphasis in original.) Accordingly, the court granted Sunset’s motion for partial summary judgment on duty and breach.

At that point, the remaining question was the amount of damages caused by B&B’s breach of its duty to defend Andersen. The parties chose to litigate that question through the procedure set out in ORCP 68 for determining costs and attorney fees. (The damages that Sunset sought were the attorney fees and costs that Andersen had incurred in litigating this action.) Sunset contended that B&B’s defense obligation was to provide Andersen with a full [314]*314defense against Sunset’s action; accordingly, it requested all of the attorney fees and costs that Andersen had incurred during the litigation. Although the trial court indicated, both before and at the ORCP 68 hearing, that Sunset would need to prove which attorney fees and costs Andersen had incurred “as a result of defending the sort of things that B&B * * * is alleged to have done,” Sunset declined to divide the fees and costs between allegations or claims involving B&B’s work, other subcontractors’ work, and Andersen’s own work. B&B argued that, for a variety of reasons, Sunset was not entitled to recover any of Andersen’s fees and costs.

The trial court ruled that, in light of ORS 30.140, the subcontract lawfully could require B&B to defend Andersen only to the extent that Sunset’s allegations implicated B&B’s work and, accordingly, B&B’s possible negligence. Because Sunset’s fee petition — the only proof of Andersen’s damages that Sunset presented — did not divide Andersen’s attorney fees and costs between allegations or claims, the court declined to award any fees or costs. Accordingly, the court entered a general judgment against B&B identifying Sunset as the prevailing party, but awarding Sunset zero dollars for the principal amount of the judgment, zero dollars for costs, and zero dollars for attorney fees.

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Bluebook (online)
341 P.3d 192, 268 Or. App. 309, 2014 Ore. App. LEXIS 1841, Counsel Stack Legal Research, https://law.counselstack.com/opinion/sunset-presbyterian-church-v-andersen-construction-co-orctapp-2014.