Oregon Court of Appeals Decides ZRZ Realty Co. v. Beneficial Fire, et al.

Posted on October 6, 2008 by Diane Polscer

 

In ZRZ Realty Co. v. Beneficial Fire, et al. (Or. Ct. App., Oct. 1, 2008), the Oregon Court of Appeals ruled on appeals brought by insureds, ZRZ Realty, Zidell Marine, and others (“Zidell”) and Lloyds of London (Lloyds”) regarding trial court rulings reached in 2002 and 2003.  The appeal concerned a wide range of issues including burden of proof, the definition of occurrence, availability of attorney fees, and allocation.  The Court’s primary holding was that since the insured had the burden of proving coverage, the insured had the burden of proving that the property damage was caused by an “unexpected and unintended” event when that language is used in the definition of occurrence. Oregon law had been clear that the burden was on the insured to prove coverage. Prior cases, however, seemed to not distinguish the unexpected and unintended requirement in the definition of occurrence with the exclusion for expected or intended injury.  The Court of Appeals clarified that the insured bears the burden of proving that the event was unexpected and unintended.  Since the trial court has placed the burden of proof on Lloyds, the Court remanded for a new trial.

 

In remanding for a new trial, the Court of Appeals also commented on several other issues, including that the definition of “fixed and moveable things” in a protection and indemnity policy does not include soil and river sediment.  The Court declined, however, to comment on allocation.  On cross-appeal, Zidell argued that the court applied the wrong allocation method based on Oregon statute and the Court’s decision in Cascade Corp. v. American Home Ins. Co., 206 Or. App. 1 (2006). The Court of Appeals declined to address the argument, waiting to see if it returned after remand. The Court of Appeals also reversed the trial court’s decision that led to the award of declaratory judgment attorney fees to Zidell.

 
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No Contribution For Defense Of Additional Insured

Posted on May 22, 2008 by Sara Thorpe

The duty to defend, in the context of a contribution lawsuit between insurers, and the right to pursue appeal after an unfavorable summary adjudication ruling, were the subjects of a decision from California’s Court of Appeal, Second Appellate District (Los Angeles).

In Monticello Insurance Company v. Essex Insurance Company (2008) __ Cal.App.4th __ (2008 WL 1851316), the court of appeal affirmed the trial court’s ruling that Monticello failed to prove on motion for summary adjudication/judgment that Essex had a duty to contribute to the defense of a general contractor (“GC”) in a construction defect case.  Monticello was the direct insurer of the GC and Essex insured the GC as an additional insured under a policy issued to a drywall subcontractor. While the legal principles of equitable contribution may not be new, the case is an example of what evidence was found to be inadequate to substantiate the right to contribution. Both the trial and appellate courts (even though reviewing by different standards) found Monticello failed to show there was a potential that the drywaller’s work caused damage to other property.

(What the court does not address, and perhaps Monticello did not feature, was that Essex must have concluded there was a potential for coverage as it was defending its direct insured, the drywaller.)

 

The case suggests the insurer seeking contribution should consider: (1) continuing to provide additional information to the other insurer, which information may impact a decision on the duty to defend, and (2) filing an earlier declaratory relief action (while the defense is ongoing).

The court also addressed whether the parties had standing to appeal. The appeal followed a ruling on summary judgment/adjudication. There were still issues that could have been litigated further, but it did not make much sense to litigate in light of the court’s ruling. Therefore, the parties stipulated judgment would be entered against Monticello for purposes of concluding the case so Monticello could immediately appeal. The court found this appropriate under the circumstances.
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