{"id":891048,"date":"2016-09-30T09:36:58","date_gmt":"2016-09-30T15:36:58","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=891048"},"modified":"2016-09-30T09:36:58","modified_gmt":"2016-09-30T15:36:58","slug":"oregon-supreme-court-forecloses-insurers-taking-second-bite-apple","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/oregon-supreme-court-forecloses-insurers-taking-second-bite-apple\/","title":{"rendered":"Oregon Supreme Court Forecloses Insurers from Taking a Second Bite at the Apple"},"content":{"rendered":"

Nick Thede | The Policyholder Report<\/a> | September 22, 2016<\/p>\n

Today, the Oregon Supreme Court unanimously rejected a liability insurer\u2019s attempt to avoid paying on a judgment entered against its insured in Fountain Court Homeowners\u2019 Ass\u2019n v. FountainCourt Dev., LLC<\/em>. The Court held\u00a0that an insurer cannot re-litigate an underlying lawsuit as part of an insurance-coverage lawsuit, and that a claimant must\u00a0show\u00a0only that some<\/em> property damage occurred during the insurer\u2019s policy period. In so holding, the Court eliminated a series of arguments frequently raised by Oregon liability insurers.<\/p>\n

The case arose from an insurance-coverage action in which a homeowners association was seeking to collect on a judgment it obtained against a siding company following a construction-defect lawsuit. The jury in the construction-defect lawsuit found that the siding company\u2019s negligent construction resulted in continuous and progressive water damage that caused property damage to the association\u2019s buildings. When the association attempted to collect on the judgment, the sider\u2019s insurer argued that it was entitled to re-litigate the merits of the construction-defect lawsuit and that the association was not entitled to coverage because it could not establish the specific amount of damages that occurred during its coverage period.<\/p>\n

The Court rejected both positions.<\/p>\n

The Court first concluded that an insurer is not entitled to a wholesale re-litigation of the construction-defect lawsuit in the insurance coverage action. The insurer argued that it was entitled to a new trial on the merits of the case against the sider because it was \u201cnot bound by the facts of the underlying lawsuit\u201d and \u201cnot bound by the factual findings assumed within the judgment.\u201d The Court rejected that\u00a0argument, acknowledging that the question in the insurance-coverage lawsuit is whether the facts adduced in the underlying construction-defect case fall within the coverage provided by the policy. In other words, \u201cthe insurer is not, as [it] contends, entitled to second-guess or\u00a0retry \u2018thenature<\/em> of [the sider]\u2019s liability.\u2019\u201d The Court did, however, acknowledge that the insurer is entitled to litigate issues in the coverage action \u201csuch as whether an exclusion applies or whether the damages awarded are otherwise covered by the policy.\u201d Importantly, this portion of the opinion eliminates the potential for inconsistent or contradictory decisions regarding the insured\u2019s liability or damages.<\/p>\n

Next, the Court rejected the insurer\u2019s \u201cinjury-in-fact\u201d argument, which relied on the position that the association could not establish that the property damage was caused by an \u201coccurrence\u201d because it could not establish the specific amount of damage during any one policy period. The Court concluded that a claimant must show\u00a0only that some<\/em> property damage occurred during the relevant policy period to trigger coverage, not the precise amount of damage that occurred during any one policy period. The Court refused to adopt the insurer\u2019s strict trigger-of-coverage argument, citing the nature of continuous and progressive property damage that\u00a0cannot be broken into discrete parts.<\/p>\n

Finally, the Court addressed the issue of allocation of damages, but ultimately determined the issue was not properly preserved. In a telling portion of the opinion, however, the Court tacitly approved the trial court\u2019s imposition of the \u201call sums\u201d rule, citing prior decisions. The Court seemingly reserved application of the \u201cpro rata\u201d rule, which simply allocates damages based on an insurer\u2019s time on risk, for contribution actions between insurers. While the Court did not go so far as to expressly adopt the \u201call sums\u201d approach, it undoubtedly held\u00a0that Oregon courts may utilize it under the appropriate circumstances.<\/p>\n","protected":false},"excerpt":{"rendered":"

Nick Thede | The Policyholder Report | September 22, 2016 Today, the Oregon Supreme Court unanimously rejected a liability insurer\u2019s attempt to avoid paying on a judgment entered against its insured in Fountain Court Homeowners\u2019 Ass\u2019n v. FountainCourt Dev., LLC. The Court held\u00a0that an insurer cannot re-litigate an underlying lawsuit as part of an insurance-coverage… Continue reading Oregon Supreme Court Forecloses Insurers from Taking a Second Bite at the Apple<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[4,3],"tags":[19,3],"class_list":["post-891048","post","type-post","status-publish","format-standard","hentry","category-construction-defects","category-insurance-claims","tag-construction-defects-2","tag-insurance-claims","entry"],"jetpack_publicize_connections":[],"yoast_head":"\nOregon Supreme Court Forecloses Insurers from Taking a Second Bite at the Apple - 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