Scottsdale Insurance Company v. Ortiz & Associates, Inc. et al, No. 3:2013cv01791 - Document 39 (D. Or. 2014)
Court Description: OPINION AND ORDER: Granting Inland's Motion to Stay 27 until the underlying lawsuit is resolved. Inland's request for attorney fees is denied.; Scottsdale's Motion for Summary Judgment 18 is denied as moot with leave to renew once the stay is lifted. Signed on 5/9/14 by Chief Judge Ann L. Aiken. (ljb)
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I ' f ~ ! I I I I I I I i IN THE UNITED STATES DISTRICT COURT I FOR THE DISTRICT OF OREGON l ' i I ! SCOTTSDALE INSURANCE COMPANY, I Case No. 3:13-cv-01791-AA Plaintiff, ] v. ! OPINION AND ORDER ORTIZ & ASSOCIATES, INC., an Oregon Corporation; CPM DEVELOPMENT CORPORATION, a Washington Corporation, d/b/a INLAND ASPHALT COMPANY; STACY BOATMAN, as Personal Representative of the Estate of Brian Allen Lacy, deceased; B.A.L. minor child; and STACY BOATMAN, individually and in her capacity as the parent and legal guardian of B.A.L., Defendants. AIKEN, Chief Judge: This is a declaratory judgment action to obtain a declaration as to plaintiff Scottsdale Insurance judicial Company's ("Scottsdale") coverage obligation, if any, to defendants Ortiz & 1 - OPINION AND ORDER (~Ortiz") Associates, Inc. Asphalt arising (~Inland") Co. and CPM Development Corp. d/b/a Inland out involving a fatal workplace accident moves to dismiss jurisdiction, underlying or this action alternatively, lawsuit pending of an underlying lawsuit") to lack stay of Inland subject (~underlying for matter this action is in Washington lawsuit until resolved. the Inland's motion to stay this action until the underlying lawsuit is resolved is GRANTED. I. BACKGROUND On August 9, B. A. L. 2012, (collectively defendants Stacy Boatman and minor child "Boatman") brought the underlying against Inland in Washington State trial court. lawsuit Boatman alleges several claims, including the wrongful death of Brian Allen Lacy, in connection with a workplace accident where Lacy was allegedly struck and killed by a dump truck owned by Inland while he worked on a highway construction project site in Kennewick, Farnell Decl. Ex. 1 at Defendant Inland ~~ Washington. 2.1, 3.4, 3.6. was the contractor for the construction project with the State of Washington Department of Transportation; Ortiz was Inland's subcontractor on the job site and also Lacy's employer. Hall Decl. Ex. 1. Under the subcontract between Inland and Ortiz, Ortiz was obligated to maintain certain minimum insurance coverage and to obtain additional insured status for 2 - OPINION AND ORDER Inland under its policies. Hall Decl. policy Ex. (the 1 at 15-16. "Catlin Ortiz's primary commercial liability Policy") inclu.des Inland as an additional insured. Lister Decl. Ex. 2 at 73. Additionally, Scottsdale issued a commercial excess insurance policy ("Excess Policy") to Ortiz, providing coverage in excess of injury or damage covered in the Catlin Policy, that was effective at the time of the accident. Lister Decl. Ex. 2 at 94. The underlying lawsuit to determine liability for Lacy's death is still ongoing. Inland has not tendered defense of the underlying lawsuit to Scottsdale. Hall Decl. 33) . However, Inland has err 3; Rosner Decl. at 6-7 placed Scottsdale on notice (doc. that the underlying lawsuit could trigger coverage under the Excess Policy. Inland is also engaged in a separate action related to the underlying lawsuit. Ortiz's primary insurer, Catlin, initially defended Inland in the underlying lawsuit; however, Catlin is not presently doing so and has not agreed to resume defense of Inland in the underlying lawsuit. Hall Decl. 4. As a result, Inland has err commenced coverage litigation in the U.S. Western District obligations. of Hall Washington Decl. err 4. District Court for the to enforce Catlin's This lawsuit is also coverage currently ongoing. On October judgment action 8, 2 013, seeking Scottsdale a initiated this declaration that it has declaratory no duty to defend, indemnify, or provide coverage under the Excess Policy with 3 - OPINION AND ORDER I I l respect to the underlying lawsuit. Scottsdale maintains that the auto liability exclusion in the Excess Policy precludes coverage for the accident 28, Ja~uary in 2014, the underlying Scottsdale lawsuit. moved for Subsequently, summary judgment on to establish that the Excess Policy it issued to Ortiz provides no coverage for the claims and damages alleged in the underlying lawsuit against Inland. ! i ! I Inland now moves to dismiss the declaratory judgment action on i grounds that this Court has no subject matter jurisdiction. In the I I alternative, Inland moves to stay this action until the underlying ! I I I litigation pending in the Washington State court and the Western District of Washington are resolved. II. DISCUSSION ! Scottsdale alleges Inland tendered defense of the underlying I I Compl. I I ! I often addressed before the duty to indemnify because it can be I determined by examining the complaint alone. Ledford v. I ! I 319 Or. I lawsuit to Scottsdale, and that it has no duty to defend Inland. at '!! 35 397, (doc. 400, 1); Pls. Resp. 877 P.2d 80 at 2. The duty to defend is Gutoski, (1994) ("The insurer has a duty to I defend if the complaint provides any basis for which the insurer I provides coverage."). However, the duty to defend is not at issue j I I I i i, in this motion. At this ~ I l ~ 1 no evidence shows that Inland tendered defense to Scottsdale. Hall Decl. '!! 3; Rosner Decl. at 6-7 (doc. 33). I I time, 4 - OPINION AND ORDER Scottsdale also alleges it has no duty to indemnify Inland in the underlying lawsuit. The duty to indemnify is independent of the duty to defend. Ledford, 319 Or. indemnify arises when the insured at 403. "liable for harm or injury lS that is covered by the policy." Leach v. 261 Or. App. 234, P.3d 2014) (quoting Ledford, 2014 319 Or. The insurer's duty to WL Scottsdale Indemn. Co., 662324, at 405)). at *8 (Feb. In other words, 12, if the facts proved at trial establish the liability of the insured, the insurer's duty to indemnify will also be established as long as the insured's conduct is covered by the policy. Charter Oak Fire Ins. Co. v. Interstate Mechanical, Inc., 958 F. Supp. 2d 1188, 1215 (D. Or. 2013) (citing Ledford, 319 Or. at 403)). Thus, determine the existence of a duty to indemnify, in order to the court must examine the facts of the underlying lawsuit. Id. Inland argues that a stay is appropriate because it has not tendered defense of the underlying lawsuit to Scottsdale as an excess insurer, and there is no obligation to indemnify yet because the underlying lawsuit is ongoing. Given that the underlying lawsuit is unresolved, it is unknown whether Boatman will obtain a judgment against Inland, exhaust the Catlin and if so, whether such judgment would Policy and therefore implicate Scottsdale's Excess Policy. Additionally, Inland argues that proceeding with the declaratory judgment action at this time would force Inland into 5 - OPINION AND ORuER the vulnerable position of having to admit liability in underlying lawsuit in order to defend itself in this action. the 1 In response, Scottsdale argues that this Court can decide its duty to indemnify because there is a substantial likeli~ood that a judgment in the underlying lawsuit will exceed the Catlin Policy limit and reach the Excess Policy issued by Additionally, Scottsdale alleges that the Excess excludes type the of underlying lawsuit. not clarified in Further, this settlement of what having to defend accident and harm that Scottsdale. Policy clearly occurred the Scottsdale argues if its rights are action, it could it believes is an uncovered claim, against in future claims be for forced failure to to fund or a risk fund a settlement. Two primary doctrines inform the court's analysis on whether to resolve Scottsdale's duty to indemnify prior to the resolution of the underlying action. First, "Oregon courts recognize that when the underlying tort action is still underway, it is appropriate to stay a simultaneous coverage action determining the duty to indemnify if the coverage action places the insured in 'the conflictive position' required to abandon its denial of liability in the of being underlying linland also argues that this Court lacks subject matter jurisdiction; however, the stay of this action will remedy any jurisdictional defects regarding ripeness. 6 - OPINION AND ORDER liability case in order to demonstrate coverage." Charter Oak Fire Tns. Co., 958 F. Supp. 2d at 1215 (citing N. Pac. Ins. Co. v. Wilson's Distributing Serv., Inc., 138 Or. App. 166, 175, 908 P.2d 8 2 7 ( 19 95) ) . There fore, Oregon district courts typically wait until the underlying litigation is resolved and liability is determined before ruling on an insurer's duty to indemnify. Id. ("Courts typically determine the duty to indemnify only after the underlying liability action has been completed."); see also Country Mut. Ins. Co. v. Larson, No. 08-6154-TC, 2010 WL 1039790, at *5 (D. Or. Feb. 26, 2010); Evraz Or. Steel Mills, 0 8- 4 4 7- JE, 2 0 0 9 WL 7 8 9 6 58 , at Inc. v. Cont'l Ins. Co., No. CV * 11-12 ( D. 0r . Mar . 20, 200 9) ; Travelers Prop. Cas. Co. of Am. v. Martella, No. CV-04-176-ST, 2004 WL 1375283, at *6 (D. Or. June 18, 2004). Second, courts have as both parties address in their briefing, discretion whether to exercise jurisdiction. Charter Oak Fire Ins. Co., declaratory federal relief 958 F. Supp. 2d at 1216. Generally, a federal court may decline jurisdiction if exercising jurisdiction for the purpose of declaratory relief would require needless determination of state law issues, shopping, or create duplicative litigation. Id. Brillhart v. Excess Ins. Co. of Am., encourage forum (citing factors in 316 U.S. 491 (1942)). Here, the underlying lawsuit is unresolved. Discovery is not scheduled to close until October 27, currently set for January 5, 7 - OPINION AND ORDER 2015. 2014 and a Farnell Decl. trial date Ex. 2. is Despite Scottsdale's Policy argument automatically underlying lawsuit, that the precludes this Court auto any is exclusion coverage in their Excess obligation hesitant to make in the such a determination when the facts of the underlying lawsuit have yet to be established. Additionally, this declaratory action puts Inland in a conflictive position while the underlying lawsuit remains pending. North Pac. Ins. Co. v. Wilson's Distrib. Serv., 138 Or. App. 166, 175, 908 P.2d 827 (1995) ("What plaintiff has attempted to do here is to litigate, at least in part, the Wilsons' liability to C-CE in the underlying tort action, putting the Wilsons in t~e conflictive position of being required to abandon their denial of liability in that action in order to come within the exception to the policy An insurer may not put exclusion its insured in that position."). For example, to defend itself in this action, Inland may have to posit that the facts could show that Inland was negligent in providing treatment to Lacy after the accident or in some other manner that falls outside Scottsdale's auto exclusion. Such a position would conflict with a denial of liability in the underlying lawsuit. Further, to determine Scottsdale's duty to indemnify, this Court would have to review the facts in the underlying lawsuit, which essentially creates duplicative litigation and likely would cause this Court to engage in needless determination of state law 8 - OPINION AND ORDER .. issues. Thus, consistent with the decisions of this District, I stay this action until the underlying lawsuit is resolved. III. CONCLUSION In sum, until the issue of liability is resolved in the underlying lawsuit, this Court will not entertain the declaratory judgment determination that Scottsdale seeks. Doing so would place Inla~d in a conflictive position that could undermine its position in the underlying lawsuit and would require fact-finding identical to that which will occur in the underlying lawsuit in Washington State court. Accordingly, lawsuit is Inland's motion resolved (doc. 27) to stay until is GRANTED. the Inland's underlying request for attorney fees is denied. Scottsdale's motion for summary judgment (doc. 18) is DENIED as moot with leave to renew once the stay is lifted. IT IS SO ORDERED. DATED this ~y of ~~14. Ann Aiken United States District Judge 9 - OPINION AND ORDER
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