Opinion
CV 00-1512-BR
June 18, 2001.
Attorneys for Plaintiffs :
ROBERT E.L. BONAPARTE, Bonaparte Bonaparte, Portland, OR
Attorneys for Defendant :
JOHN A. BENNETT, ANDREW C. LAUERSDORF, Bullivant Houser Bailey, Portland, OR
OPINION and ORDER
This matter comes before the Court on Defendant Safeco Insurance Company's (Safeco) Motion for Summary Judgment (#25) and Plaintiffs' Renewed Motion to Compel Discovery (and Supplemental Memorandum) on Claim for Negligent Misrepresentation (#24).
Plaintiffs bring this diversity action for breach of an insurance contract and negligent misrepresentation. This Court has jurisdiction pursuant to 28 U.S.C. § 1332. For the reasons set forth herein, the Court GRANTS Safeco's Motion and DENIES Plaintiffs' Motion as moot.
FACTUAL BACKGROUND
The following facts are undisputed unless otherwise noted.
Plaintiffs are the owners of a home in Portland, Oregon, for which they purchased homeowner's insurance from Safeco. Plaintiffs' home, which is situated on a steep hillside, was severely damaged in February, 1996, when it partially collapsed during heavy rains. Safeco's policy was in force at the time of the claimed loss.
Plaintiffs reported a claim under the policy on February 6, 1996. Safeco hired Kevin Foster, a geotechnical engineer, and Wayne Brown, a structural engineer, to observe Plaintiffs' home and surrounding grounds and to determine the cause of the damage. Both concluded the damage was caused in part by earth movement. Both Brown and Foster visited Plaintiffs' home within a few days after Plaintiffs reported the loss.
By letter dated March 5, 1996, Safeco denied Plaintiffs' claim based upon the earth movement and weather exclusions in the insurance policy. This letter included the following statement:
[T]he insurance company continues to reserve any and all rights and defenses which may now exist or which may arise in the future. No waiver or estoppel of any kind is intended, nor should be inferred.
On May 24, 2000, Safeco sent Plaintiffs a letter that Plaintiffs characterize as an invitation to resubmit their claim.
Safeco asserts it sent this letter to all of its policyholders. This assertion is supported by the affidavit of a Safeco claims specialist. Plaintiff disputes this assertion, but offers no evidence controverting it.
Although Plaintiffs only rely on selective parts of this letter, the Court sets forth its contents in full:
Dear SAFECO Policyholder:
We are always seeking ways to make our products and services the best available. A recent Oregon Supreme Court decision (Fleming v. USAA) interpreted an old Oregon statute in a way insurance regulators and companies could not have anticipated.
Although SAFECO's policies have been approved by the Oregon Department of Insurance and followed established industry standards, the Fleming decision requires us to put titles in capital letters, meet certain size requirements, and ensure that sections containing restrictions in coverage state this plainly in the section title.
The Fleming decision allows coverage for certain events that we never intended to provide. Thus, if you recently had all or part of a claim denied, or did not file a claim because you felt you weren't covered, we invite you to call (888) 723-3265 or email us at flmclm@safeco.com. You may be eligible for payment under the Fleming decision. Please crefer to this letter when you call. Please note the Fleming decision has no effect on liability coverages or on the following subsections of the property section of your policy: DEFINITIONS, EXCLUSIONS, CONDITIONS, and DEDUCTIBLE.
Thank you for entrusting us with your insurance needs. We appreciate having you as a customer!
Plaintiffs retained counsel to respond to the May 24, 2000, letter. Plaintiffs' counsel sent a letter to Safeco's counsel on June 9, 2000, asking Safeco to pay Plaintiffs' 1996 property damage claim. By letter dated July 20, 2000, Safeco affirmed its conclusion that "the loss [Plaintiffs] suffered is not covered by the contract of insurance." Safeco also stated it
. . . . must respectfully reserve any and all rights and defense [sic] which may now exist or which may arise in the future, specifically including, but not limited to, any contractual period of limitation. No waiver or estoppel of any kind is intended nor may be inferred.
Plaintiffs filed this action for breach of the insurance contract and negligent misrepresentation on October 11, 2000, more than four years after Safeco's denial of their claim.
I. Summary Judgment Standard
Under Fed.R.Civ.P. 56:
Summary judgment should be granted if "there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law." If the moving party shows that there are no genuine issues of material fact, the non-moving party must go beyond the pleadings and designate facts showing an issue for trial. A scintilla of evidence or evidence that is merely colorable or not significantly probative does not present a genuine issue of material fact. The underlying substantive law governing the claims determines whether or not it is material. Reasonable doubts as to the existence of material factual issue[s] are resolved against the moving parties and inferences are drawn in the light most favorable to the non-moving party. There must be enough doubt for a "reasonable trier of fact" to find for plaintiffs in order to defeat the summary judgment motion.
Addisu v. Fred Meyer, Inc., 198 F.3d 1130, 1134 (9th Cir. 2000) (citations omitted).
II. Plaintiffs' Breach of Contract Claim is Time Barred
The Safeco policy contains the following suit limitation provision:
SECTION I — CONDITIONS
* * * *
6. Suit Against Us. No action shall be brought unless there has been compliance with the policy provisions and the action is started within two years after the loss or damage.
This provision is mandated by Oregon statute, which requires:
Suit on policy. A fire insurance policy shall contain a provision as follows:
"No suit or action on this policy for the recovery of any claim shall be sustainable in any court of law or equity unless all the requirements of this policy shall have been complied with, and unless commenced within 24 months next after inception of the loss."
Or. Rev. Stat. § 742.240. The statute applies to the Safeco homeowner's policy. See Herman v. Valley Insurance Company, 145 Or. App. 124, 126 n. 1, 928 P.2d 985 (1996), review denied, 325 Or. 438 (1997).
Plaintiffs argue that the suit limitation provision is invalid because it does not comply with Or. Rev. Stat. § 742.246(2), which requires "[a]ny provision restricting or abridging the rights of the insured under the policy must be preceded by a sufficiently explanatory title printed or written in type not smaller than eight-point capital letters."
Plaintiffs' argument is based on a strained interpretation of the statute. First, Plaintiffs contend the statute requires the title to be printed in capital letters. Plaintiffs do not assert the title, "Suits Against Us," is printed in type smaller than eight-point capital letters; they complain only that the type is not in all capital letters. As support for their argument that the statute requires titles to be in all capital letters, Plaintiffs rely on dicta from Fleming v. United Services Automobile Ass'n, 329 Or. 449, 988 P.2d 378 (1999). The Fleming opinion, however, was modified on reconsideration. The modified opinion correctly reflects the statutory language requiring type "not smaller than eight-point capital letters." Fleming v. United Services Automobile Ass'n, 330 Or. 62, 69, 996 P.2d 501 (1999).
This Court finds the policy provision does not violate Or. Rev. Stat. § 742.246(2) simply because the title contains both upper and lower case letters, none of which are smaller than eight-point capital letters. See Salvador v. Allstate Insurance Company, CV 00-1491 (Jelderks, J.) (Opinion and Order dated Apr. 1, 2001).
Plaintiffs also assert the title of the provision, "Suits Against Us," is not sufficiently explanatory to satisfy the requirement of Or. Rev. Stat. § 742.246(2). Plaintiffs contend the title must "explain clearly that the insured has only two years to sue." Plaintiffs' interpretation of the statute, however, would require the entire policy provision to be set forth in the "explanatory title." Plaintiffs cite no authority for this novel interpretation, and this Court declines to adopt it. The title of the provision adequately explains that the provision following it pertains to suits against the insurance company.
In any event, even if the typeface or title did not comply with Or. Rev. Stat. § 742.246(2), Oregon law requires this Court to construe the policy to include the suit limitation provision because it is mandated by Or. Rev. Stat. § 742.240. Olson v. National Indemnity Company, 112 Or. App. 359, 361, 829 P.2d 716 (1992). Plaintiffs' action is subject to the two-year period of lmitation set forth in Or. Rev. Stat. § 742.240 and was filed more than four years after their loss. Unless Plaintiffs can establish that Safeco is estopped from asserting the limitation provision as a defense, their action is barred as untimely.
III. Safeco Is Not Estopped from Asserting the Suit Limitation Provision
"Under proper circumstances, an insurer may be estopped from asserting a suit limitation provision as a defense to liability on an insurance policy. . . ." Herman, 145 Or. App. at 133. To prevail on their claim that Safeco should be estopped from asserting the limitation provision as a defense, Plaintiffs must establish (1) Safeco made a false representation, (2) with knowledge of the facts, (3) Plaintiffs were ignorant of the truth, (4) Safeco made the representation with the intention that it be acted upon by Plaintiffs, and (5) Plaintiffs were induced to act upon it. Herman, 145 Or. App. at 133-34 (citing Lyden v. Goldberg, 260 Or. 301, 304, 490 P.2d 181 (1971)).
To avoid summary judgment, Plaintiffs must show facts from which a jury could conclude Safeco made a false representation with the intent that Plaintiffs rely on it, and Plaintiffs did rely on it by foregoing their right to file suit within the limitation period. Plaintiffs offer the affidavit of Stanley Prosser to raise a fact question on the issue of estoppel.
Prosser testifies "Defendant's agents, during the course of numerous discussions over 12 years, had left me with the impression that my policy covered earthquake and earth movement. Notwithstanding, defendant denied coverage." Prosser also states he was not aware of the two-year suit limitation provision in his homeowner's policy.
Plaintiffs have not produced any evidence, however, to show their failure to file suit within two years of Safeco's March 6, 1996, denial was in reliance on any representation by Safeco. "`To invoke the doctrine of estoppel, the . . . insurance company must have done something that amounted to an affirmative inducement that would cause plaintiff to delay bringing his action.'" Herman, 145 Or. App. at 134 (quoting Lyden v. Goldberg, 260 Or. 301, 304, 490 P.2d 181 (1971)). Safeco's denial letter included a warning that Safeco did not intend any waiver or estoppel. Viewed in the light most favorable to Plaintiffs, the record does not show Safeco made any false representations or affirmatively induced Plaintiffs to delay bringing their action. Safeco was not obligated to remind Plaintiffs of the suit limitation provision in their policy. See Herman, 145 Or. App. at 134. See also DeJonge v. Mut. of Enumclaw, 315 Or. 237, 843 P.2d 914 (1993).
There are no issues of material fact in this record on summary judgment, and there is no legal basis on which an objectively reasonable juror could find that Safeco should be estopped from raising the suit limitation provision as an affirmative defense. Plaintiffs' breach of contract action was not timely filed and is barred by the two-year suit limitation provision of the Safeco policy and by Oregon statute.
Because the Court finds Plaintiffs' breach of contract claim is time-barred, it is not necessary to reach Plaintiffs' contentions regarding applicability of the exclusions relied upon by Safeco.
IV. Plaintiffs Have Not Raised a Genuine Issue of Material Fact as to Their Negligent Misrepresentation Claim
To defeat Safeco's summary judgment motion on their negligent misrepresentation claim, Plaintiffs must present evidence from which a jury could reasonably find 1) Safeco was acting in the course of a special relationship with Plaintiffs, 2) Safeco failed to use reasonable care to protect Plaintiffs from economic loss by negligently supplying false material information or making a false representation of a material matter to Plaintiffs during the course of that relationship, 3) Plaintiffs reasonably relied on Safeco's negligent misrepresentation or false information, and 4) Plaintiffs sustained economic loss as a result. See Conway v. Pacific University, 324 Or. 231, 924 P.2d 818 (1996).
Safeco contends Plaintiffs' negligent misrepresentation claim is time barred, and Plaintiffs cannot establish the existence of the special relationship that is required to sustain a negligent misrepresentation claim.
A. Plaintiffs' Negligent Misrepresentation Claim is Time Barred to the Extent It Is Based on Representations That Occurred in 1996
Plaintiffs do not clearly set forth in either their Complaint or their opposition to Safeco's Motion the representations they contend form the basis of this claim. It appears they rely on representations made in 1996 as well as representations made in connection with Safeco's May 24, 2000, letter.
In their Complaint, Plaintiffs allege "[i]n the course of advertising and promoting its policy, and during its claims handling, defendant supplied material false information for the guidance of plaintiff." Plaintiffs set forth a February 5, 1996, letter in which Plaintiffs allege Safeco "promised `to better protect you . . . should you suffer a major loss.'"
The February 5, 1996, letter is a policy-renewal letter sent to Plaintiffs together with an invoice for renewal of their policy. Plaintiffs' selective quotation come from the following paragraph:
This renewal reflects adjustments in coverages based on careful assessment of your home's replacement value. Changes have been made to better protect you against changing costs of building materials and labor, should you suffer a major loss.
Plaintiffs' isolation of this language as a promise by Safeco to protect Plaintiffs if they suffered a major loss is unreasonable. Plaintiffs offer no evidence that this statement when read in its entirety, or any other statement in the February 5, 1996, letter, is false.
Plaintiffs also contend Safeco's "agents" gave Plaintiffs "the impression" that their policy covered earthquake and earth movement prior to the 1996 loss. Plaintiffs admit Safeco denied their claim on March 5, 1996, based on the earth-movement exclusion.
A claim for negligent misrepresentation must be commenced within two years of the date Plaintiffs knew or should have known their reliance on Safeco's representations caused them an economic loss. Onita Pacific Corp. v. Trustees of Bronson, 315 Or. 149, 158, 843 P.2d 890 (1992), (citing Duyck v. Tualatin Valley Irrigation Dist., 304 Or. 151, 160-64, 742 P.2d 1176 (1987)). See also Or. Rev. Stat. § 12.110(1). Assuming Safeco made the statements Plaintiffs attribute to an unidentified agent, Plaintiffs knew when they received Safeco's claim-denial letter in 1996 that Safeco did not agree with Plaintiffs' impression regarding coverage for losses due to earth movement. To the extent Plaintiffs' negligent misrepresentation claim is based on alleged representations that occurred in 1996, therefore, the claim is time barred.
B. Plaintiffs Have Failed to Present Sufficient Evidence of the Special Relationship Required to Bring a Negligent Misrepresentation Claim
"For the duty to avoid making negligent misrepresentations to arise, the parties must be in a `special relationship,' in which the party sought to be held liable had some obligation to pursue the interests of the other party." Conway v. Pacific University, 324 Or. 231, 237, 924 P.2d 818 (1996). To determine the existence of a special relationship,
[t]he focus is not on the subject matter of the relationship, such as one party's financial future; nor is it on whether one party, in fact, relinquished control to the other. The focus instead is on whether the nature of the parties' relationship itself allowed one party to exercise control in the first party's best interests. In other words, the law does not imply a tort duty simply because one party to a business relationship begins to dominate and to control the other party's financial future. Rather, the law implies a tort duty only when that relationship is of the type that, by its nature, allows one party to exercise judgment on the other party's behalf.
Bennett v. Farmers Insurance Company, 332 Or. 138, 2001 WL 587572, *13 (June 1, 2001) (emphasis in original).
Plaintiffs assert a special relationship of trust existed between them and Safeco. Plaintiffs, however, do not point to any admissible evidence that shows their relationship with Safeco by its nature allowed Safeco to exercise judgment on Plaintiffs' behalf. Plaintiffs rely solely on the affidavit of Stanley Prosser to describe their relationship with Safeco.
Prosser testified regarding conversations he had with unidentified individuals he describes as "defendant's agents." Prosser averred he relied on Safeco to assist him "in selecting appropriate coverage for [his] home and in handling claims," and he told "defendant's agents" he relied on them to protect him "from harm arising from damage to [his] home." Plaintiffs present no evidence, however, that shows they authorized Safeco to exercise independent judgment on their behalf or that Plaintiffs had a right to rely upon any representations made by Safeco. Prosser's alleged belief that he "had a relationship of trust with" Safeco does not transform the relationship between Plaintiffs and Safeco into a special relationship. See Conway, 342 Or. at 242 n. 5 (citing Uptown Heights Associates v. Seafirst Corp., 320 Or. 638, 648-50, 891 P.2d 639 (1995)). In fact, Plaintiffs offer no facts from which a jury could determine whether the unidentified individuals with whom Stanley Prosser spoke were agents of Safeco. Prosser's conclusory testimony is not sufficiently specific to be admissible and, in any event, does not provide admissible facts from which a jury could find the parties' relationship was "of the type that, by its nature, allows one party to exercise judgment on the other party's behalf." Bennett, 2001 WL 587572, *13.
Viewed in the light most favorable to Plaintiffs, the admissible evidence demonstrates the parties enjoyed no more than a typical relationship between insured and insurer. Safeco is, therefore, entitled to summary judgment as to Plaintiffs' negligent misrepresentation claim.
V. Plaintiffs' Motion to Compel is Moot.
Plaintiffs have filed a Renewed Motion to Compel Discovery (and Supplemental Memorandum) on Claim for Negligent Misrepresentation (#24). Plaintiffs' renewed Motion does not specify which discovery requests they intend to renew. Plaintiffs simply ask the Court to allow discovery on Plaintiffs' claim for negligent misrepresentation.
At oral argument on Plaintiffs' original Motion to Compel, the Court denied Plaintiffs' Requests for Production Nos. 17 and 19 pending an analysis of Plaintiffs' negligent misrepresentation claim. These discovery requests now are moot in light of the Court's ruling granting summary judgment to Safeco. Plaintiffs' Renewed Motion to Compel Discovery (and Supplemental Memorandum) on Claim for Negligent Misrepresentation (#24) is, therefore, denied as moot.
CONCLUSION
Based on the foregoing, the Court GRANTS Safeco's Motion for Summary Judgment (#25) and DENIES as MOOT Plaintiffs' Renewed Motion to Compel Discovery (and Supplemental Memorandum) on Claim for Negligent Misrepresentation (#24).
IT IS SO ORDERED.