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Selman Breitman Pacific Northwest Update: Legal Update from our Seattle and Portland Offices

For those who have cases in Washington and Oregon, our lawyers want to bring you up to date on some of the important decisions recently decided. 

OREGON:

  • Siltronic Corp. v. Employers Ins. Co. of Wausau, (D. Or. Mar. 31, 2016) ---F.Supp.3d ---, 2016 WL 1270999, continues Oregon's aggressive attitude towards insurance policies when environmental issues are involved.  The court held the costs of the insured's Funding and Participating Agreement with the NRD Trustees to investigate damage to natural resources were defense costs rather than indemnity payments and did not reduce limits.  The court was unmoved by the fact any payments pursuant to the agreement would be credited against the insured's ultimate liability for natural resource damages.  The court also ruled that an insured's right to “independent counsel” in environmental matters under ORS 465.483 may require the insurer to pay separate counsel retained by the insured in addition to counsel retained by the insurer.
  • Ash Grove Cement v. Liberty Mut. Ins. Co., (9th Cir. May 11, 2016) ---Fed.Appx ---, 2016 WL 2731656, held that an EPA Section 104(e) information request was a "suit" which triggered a duty to defend. 
  • Northwest Pipe Co. v. RLI Ins. Co, (9th Circuit, May 13, 2016) (unpublished), 2016 WL 2810505, continued the trend involving environmental claims by holding a PRP letter was a “suit” triggering a duty to defend.  The Ninth Circuit also held that an umbrella insurer without a pollution exclusion must “drop down” and defend when the claim constitutes an “occurrence” not covered by scheduled underlying insurance.  The fact that the primary insurers in other years were defending did not negate the umbrella insurer's duty to defend.
  • Oregon Shakespeare Festival v. Great American, (D. Or. June 7, 2016) --- F.Supp.3d ----, 2016 WL 3267247 held that the presence of wildfire smoke was “direct physical loss of or damage to property” that triggered business income coverage for lost ticket revenue.  According to the District Court, "while air may often be invisible to the naked eye, surely the fact that air has physical properties cannot reasonably be disputed."  Thus, changes to the air constituted "physical" damage. 
  • Allstate Ins. Co. v. Cepeda, (D. Or. May 6, 2016) --- F.Supp.3d ----, 2016 WL 2611214.  On the plus side, the court found there was no duty to defend or indemnify a housing discrimination claim even though claim was couched as "negligence" because claimants were, according to the court, asserting a claim for intentional discrimination.  The court also held that public policy precluded a duty to defend intentional housing discrimination claims.
  • And finally, Bjugan v. State Farm Fire & Cas. Ins. Co., (9th Cir. Mar. 18, 2016) --- Fed.Appx. ---- , 2016 WL 1072207 upheld the "domestic animals" exclusion in a homeowner's policy finding it was not ambiguous, notwithstanding the insured's contention that it could be read as either excluding all damage caused by insured’s cats or only damage as was predictable and preventable such as ordinary wear and tear.  The Ninth Circuit reasoned the insured's proposed reading would render the exclusion superfluous, as another provision of the policy already excluded coverage for wear and tear. 

WASHINGTON:

  • In a surprising turn for what is described by some as a pro-policyholder court, the Washington Supreme Court issued a unanimous opinion in favor of an insurer in Lui v. Essex Insurance Company, 2016 WL 3320769, --- P.3d --- (June 9, 2016).  It rejected the argument a “Vacancy or Unoccupancy” endorsement was ambiguous, instead finding that under the endorsement when a building becomes vacant, coverage is limited to loss resulting from the specified causes of loss set forth in the endorsement and, after a 60 day vacancy, there is no coverage.
  • In Arden v. Forsberg & Umlauf, 193 Wn.App. 731 (May 13, 2016) the Washington Court of Appeals (Division II) found a law firm doing work for an insurer may also defend that insurer's policyholders without creating a conflict.  The court further found no duty to disclose that the firm represented the insurer in coverage disputes.

Please contact Peter Mintzer (pmintzer@selmanlaw.com) at 206.805.0206 for any further details on these cases or any other aspect of Washington or Oregon law and how it may impact matters you are handling.