Opinion
3:23-cv-00830-JR
03-21-2024
LAURA TOMAS, Plaintiff, v. ALLSTATE INDEMNITY COMPANY, an Illinois insurance company, Defendant.
FINDINGS AND RECOMMENDATION
Jolie A. Russo United States Magistrate Judge
Defendant Allstate Indemnity Company (“AIC”) moves for summary judgment as to plaintiff Laura Tomas's claims pursuant to Fed.R.Civ.P. 56. AIC also moves to withdraw or amend its responses to plaintiff's Requests for Admission under Fed.R.Civ.P. 36(b). For the reasons set forth below, AIC's summary judgment motion should be granted, and this case should be dismissed.
The Court generally cites to AIC's evidence except when referring to the non-duplicative information produced by plaintiff.
Plaintiff owned a personal residence located at 1575 N.E. Jarrett St. in Portland, Oregon (“Property”) that was insured under a homeowner's insurance policy issued by Allstate Vehicle and Property Company (“AVPC”).
On June 11, 2021, plaintiff sold the Property to Joel and Christina Stenberg but remained therein for an additional thirty-day period pursuant to a separate rental agreement. To comply with the terms of that agreement, plaintiff obtained renter's insurance through AIC (“Renters Policy”).
Plaintiff's claims in this lawsuit are raised exclusively under the Renters Policy. However, the Court notes that plaintiff's homeowner's policy with AVPC contained analogous grants of coverage and exclusions. See generally Foley Decl. Ex. A (doc. 5-1). The remaining contracts identified by the parties - namely, the sale and rental agreements - have not been produced.
This policy contained a “Family Liability Protection - Coverage X” provision, pursuant to which AIC agreed to “pay damages which as insured person becomes legally obligated to pay because of bodily injury or property damage arising from an occurrence to which its policy applies.” Foley Decl. Ex. B, at 18 (doc. 5-2). “Occurrence” is defined as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions, during the policy period, resulting in bodily injury and property damage.” Id. at 10. “Property damage,” in turn, is defined as “physical injury to or destruction of tangible property, including loss of its use resulting from such physical injury or destruction.” Id.
A number of exclusions applied to the “Family Liability Protection” provision. In relevant part, the Renters Policy expressly did “not cover”: (1) “property damage consisting of or caused by vapors, fumes, acids, toxic chemicals, toxic gasses, toxic liquids, toxic solids, waste materials or other irritants, contaminants or pollutants” (“Exclusion 9”); (2) “property damage to property rented to, occupied by, or in the care of, an insured person [unless] the property damages is caused by fire, explosion or smoke” (“Exclusion 14”); or (3) “any liability an insured person assumes arising out of any contract or agreement” (“Exclusion 15”). Id. at 19.
On November 30, 2021, the Stenbergs instituted the following arbitration claim:
Re: Breach of Contract - Residential Real Estate Agreement to Occupy After Closing
To Whom It May Concern:
My office represents Joel and Christine Stenberg, (“Buyers”), regarding breach of contract from the sale of a home following the discovery of extensive pet urine damage . . .
Laura Tomas (“Seller”) sold a home with extensive carpet and subflooring damaged caused by pet urine . . . Upon taking possession Buyers began to note an overwhelming odor of urine emanating from the carpets throughout the home. This led the Buyers to remove portions of carpet, discovering significant areas were highly saturated with pet urine. Certain trim boards were also swollen with apparent urine saturation. Contractors who entered the home found the odor of urine overwhelming and indicated the subflooring needed replacement and/or treatment to address the urine that had saturated the wood.
Immediately after taking possession of the Home, Buyers notified their Agent, Meg Dorick, who contacted Seller's Agent to inform them of the disrepair. Buyers invited Seller to the home to observe the damage to the carpet and flooring and to look at the carpet as well. Seller rejected any offer to inspect the home and carpet and denied notice of the damage.
Meanwhile, Seller sent numerous texts to her realtor. A sampling of these texts includes: “Let them know we have coucil (sp) on retainer;” and “Can grind them down;” and “They can go F * * * themselves.”
Seller has not provided the name of the carpet cleaning company used prior to listing and has not provided the invoice and notations from the date of service.
Buyers were not able to occupy the upstairs due to the condition of the carpet and subflooring. They have three young children and the condition of any area with carpeting was uninhabitable. Buyers moved quickly to remediate the damage and avoid prolonging loss of use of the home in order to mitigate damages. Seller made it clear she did not want to look at the home and refused to acknowledge the issue. Photographs of the damage are included, below.
LIABILITY
The damage to the carpets and flooring from pet urine is obvious. A Safeco agent inspected the home and wrote the following: “The damage to the home consisted of extensive damage to carpet, carpet pad, subfloor, drywall and trim work from domestic animal urine.”
Contractor Portland Floor noted “'strong pet urine smell throughout carpeted areas, including mill work in multiple areas.”
PacWest Home Inspections inspected the Home on May 12, 2021. At the time no odors were noted. Grant Waller, the owner of Pac West, wrote that pet urine odors can be masked temporarily by thorough carpet cleaning. However, the odor relief does not last. Mr. Waller also noted the Seller lived at the home for several weeks (30 days) after closure of the sale and the presence of Seller and her dog could have had something to do with newly encountered odors.
No invoice for the carpet cleaning or notes have been provided by Seller.
The Sale Agreement contains Seller's representation that Seller knows of no material defect in or about the property. Paragraph 14. (3).
Seller posits she had no knowledge of any issue with pet urine prior to the sale. Seller's text messages suggest otherwise: “Let them know we have coucil (sp) on retainer;” and “Can grind them down;” and “They can go F * * * themselves.” Given the amount of urine and the extent of the damage this contention lacks credibility. The odor and condition of the floor was so poor that the home was made uninhabitable. In other words this was a material defect.
Seller also occupied the home for 30 days after which the odor of the pet urine was apparent. Seller's responsibility to pay for the repairs necessitated by pet damage during the rental period is absolute: Section 6. 1 of The Agreement to Occupy After Closing provides it is “Seller's Responsibility [to] . . . (b) Perform any repairs to the Property necessitated by the negligent, reckless or willful misconduct of Seller, or Seller's guests, invitees or pets.” Further, Section 8 states “Seller is responsible for damage caused by Seller's pets” . . .
DAMAGES
The below repair and remediation costs were incurred by Buyers[:]
Portland Floor: $9,879.83
Pure Environmental: $3,294.95
Bin Confirmed: $505.25
Paint Bid: $650.00
Mortgage/Taxes: $2,800.00
Total: $17,130.03 . . .
Pursuant to the Sale Agreement section 39.2, “[t]he prevailing party in arbitration is entitled to its reasonable attorney fees, filing fees, costs, disbursements, and mediator and arbitrator fees.”
Foley Decl. Ex. E, at 1-2, 7-9 (doc. 5-3).
On April 22, 2022, plaintiff initiated a lawsuit in Multnomah County Circuit Court against AVPC and AIC (“First Lawsuit”). In particular, she alleged that AVPC and AIC had wrongfully taken a “position of no coverage” in regard to the Stenbergs' arbitration claim. Foley Decl. Ex. C, at 2 (doc. 5-3). Plaintiff sought a declaration that the underlying homeowner's and rental policies “provide[d] liability protection from [the Stenbergs'] claims,” such that they “obligate” AVPC and AIC to furnish a defense during the upcoming arbitration hearing. Id. at 3-4.
AVPC and AIC, in turn, asserted a counterclaim for declaratory relief alleging: “The Arbitration claim asserts a claim for economic loss and loss of benefit of a bargain regarding damages with respect to the performance of a real estate contract, and not defined property damage. The Policies Allstate issued do not provide indemnity [for] economic loss [or] for loss of benefit of a bargain . . . The Policies [do] not provide indemnity for contracts or agreements or alleged breaches of such contracts or agreements.” Foley Decl. Ex. D, at 17-19 (doc. 5-4) (emphasis in original). AVPC and AIC also cited to a number of exclusions (including Exclusions 9, 14, and 15) that purportedly foreclosed coverage. Id.
On September 15, 2022, an arbitration was held and thereafter the arbitrator issued a decision in favor of the Stenbergs and awarding damages in the amount of $17,130.03, explaining:
I find that it is more probable than not that the damages depicted in the photos of the Jarrett house were caused by dog urine.
I find that it is more probable than not that the dog urine came from [plaintiff's] dog.
I find that it is more probable than not that there is sufficient evidence to conclude at least some, if not most, of the damage caused by the dog urine occurred during the 30-day occupancy.
[The Stenbergs are] invited to submit a petition of recoverable costs and attorneys' fees.
Norman Decl. Ex. F, at 1 (doc. 9).
On October 22, 2022, an Arbitration Award was entered and $64,046.05 in damages was assessed against plaintiff (inclusive of attorney fees and costs) in regard the Stenbergs claims “ar[ising] out of a certain Residential Real Estate Agreement between the parties.” Norman Decl. Ex. D, at 6 (doc. 9). Multnomah County Circuit Court then entered a General Judgment and Money Award commemorating the arbitration decision. Norman Decl. Ex. G, at 1 (doc. 9).
On October 28, 2022, Multnomah County Circuit Court issued a decision in the First Lawsuit as to AVPC and AIC's motion “for summary judgment as a matter of law on all of Plaintiff's claims on the basis of lack of coverage or duty to defend,” as well as plaintiff's motion “for partial summary judgment on the issue of [AVPC and AIC's] duty to defend.” Foley Decl. Ex. F, at 6 (doc. 5-6). Specifically, Circuit Court Judge S. Michael Rose held that Exclusions 9, 14, and 15 unambiguously “provide no avenue for coverage.” Id. at 7-9. Circuit Judge Rose also found that the precedent cited to plaintiff “for the proposition that breach of contract can be an occurrence” - i.e., Oak Crest Constr. Co. v. Austin Mut. Inc., 320 Or. 620, 998 P.2d 1254 (2000) - actually supported AVPC and AIC's denial of coverage, explaining:
[Similar to Oak Crest] the breach of contract claim in the [Stenbergs' arbitration] Demand is not due to a tortious “accident” but rather was the alleged failure to perform a seller's obligation under a real estate contract: the disclosure of known material defects of the property. Indeed, the Agreement even specified that Plaintiff “is responsible for damage caused by the [Plaintiff's] pets.” While there are scenarios that could result in a tortious breach, the record lacks any evidence of such an event causing the pet damage at issue in this case.
Id. at 9 (internal citation omitted). Accordingly, Circuit Judge Rose granted AVPC and AIC's summary judgment motion.
In April 2023, Multnomah County Circuit Court entered a General Judgment and Money Award relating to the First Lawsuit “in favor of [AVPC and AIC] and against plaintiff on all claims and in favor of [AVPC and AIC] on counterclaim for declaratory relief.” Id. at 1. In May 2023, plaintiff appealed Circuit Judge Rose's decision to the Oregon Court of Appeals. Foley Decl. Ex. I, at 1-2 (doc. 5-9).
That same month, plaintiff commenced a second lawsuit in Multnomah County Circuit Court alleging claims for declaratory relief, breach of contract, and negligence per se based on AIC's refusal to “accept its contractual obligation to indemnify Plaintiff from the [the Stenbergs' Arbitration] Award” under the Renters Policy. Compl. ¶ 12 (doc. 1). Plaintiff served her Requests for Admission coterminous to her complaint. Norman Decl. ¶ 2 (doc. 16).
In its Answer, AIC did not explicitly admit or deny any of plaintiff's allegations, but rather stated:
with respect to all allegations set forth therein, Defendant alleges that the subject matter of Plaintiff's Second Complaint has been fully resolved and addressed by the Court in Laura Tomas v. Allstate Indemnity Company, et al, Cause No. 22CV14237 in the Circuit Court for Multnomah County, state of Oregon (hereinafter “the first lawsuit”). The first lawsuit fully resolved all claims involving coverage for, or the duty to defend, with respect to all issues involving insurance coverage alleged in Plaintiff's second lawsuit, as confirmed in the Judgment granted on Summary Judgment filed with the Court in the first lawsuit on April 21, 2023, Exhibit “A” hereto. There is no lawful basis for the second lawsuit. The second lawsuit is plainly barred by the doctrines of Res Judicata and Collateral Estoppel . . . No claim of any merit has been advanced in the present lawsuit and it should be dismissed with prejudice, and with appropriate sanctions to be awarded by the Court involving all costs, fees and expenses engendered in the defense of the present action.
Answer ¶¶ 1-3, 8 (doc. 1).
AIC subsequently timely removed plaintiff's claims to this Court. Between June 20 and July 13, 2023, AIC filed the present motions. Briefing was completed in regard to those motions on July 27, 2023.
STANDARD OF REVIEW
Summary judgment is appropriate if the pleadings, depositions, answers to interrogatories, affidavits, and admissions on file, if any, show “that there is no genuine dispute as to any material fact and the [moving party] is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). Substantive law on an issue determines the materiality of a fact. T.W. Elec. Servs., Inc. v. Pac.Elec. Contractors Ass'n, 809 F.2d 626, 630 (9th Cir. 1987). Whether the evidence is such that a reasonable jury could return a verdict for the nonmoving party determines the authenticity of the dispute. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
The moving party has the burden of establishing the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). If the moving party shows the absence of a genuine issue of material fact, the nonmoving party must go beyond the pleadings and identify facts which show a genuine issue for trial. Id. at 324.
Special rules of construction apply when evaluating a summary judgment motion: (1) all reasonable doubts as to the existence of genuine issues of material fact should be resolved against the moving party; and (2) all inferences to be drawn from the underlying facts must be viewed in the light most favorable to the nonmoving party. T.W. Elec., 809 F.2d at 630.
DISCUSSION
AIC argues summary judgment is warranted because “[a]ll of Plaintiff's claims involving any defense obligation or coverage were decided in the first lawsuit and are barred by res judicata (claim preclusion) and collateral estoppel (issue preclusion).” Def.'s Mot. Summ. J. 2 (doc. 4). Alternatively, AIC contends “[t]he Renters Policy does not provide coverage” for the loss at issue and “Plaintiff does not have a cognizable claim for negligence per se under Oregon law because there is no physical impact.” Id. at 7, 10.
In contrast, plaintiff asserts that the First Lawsuit concerned only the duty to defend, whereas “[t]he Current Lawsuit does not request a defense or reimbursement of fees from AIC [or] contain any claim arising out of allegations in the Arbitration Claim . . . The Current Lawsuit entirely springs out of liability established against Plaintiff, and that question is resolved through an analysis different from the eight corner rules.” Pl.'s Resp. to Mot. Summ. J. 8 (doc. 8). Additionally, plaintiff maintains that liability is established because AIC's “Answer fails to admit or deny the allegations made in paragraphs 1- 35 of Plaintiff's Complaint” and “AIC has not provided written responses to the Requests for Admission.” Id. at 5.
Because it is axiomatic that AIC's evidentiary admissions cannot change a governing state court ruling, summary judgment initially hinges on whether there is sufficient parity between the issues raised and resolved in the First Lawsuit and this case. The Court will nonetheless briefly address AIC's Rule 36(b) motion.
I. Rule 36
Rule 36(a) specifies that a matter is deemed admitted “unless, within 30 days after service of the request . . . the party to whom the request is directed serves upon the party requesting the admission a written answer or objection addressed to the matter, signed by the party or by the party's attorney.” Fed.R.Civ.P. 36(a); see also Conlon v. United States, 474 F.3d 616, 621 (9th Cir. 2007) (“[u]nanswered requests for admissions may be relied on as the basis for granting summary judgment”).
Once admitted, the matter “is conclusively established unless the court on motion permits withdrawal or amendment of the admission” pursuant to Rule 36(b). Fed.R.Civ.P. 36(b). This rule provides, in pertinent part:
the court may permit withdrawal or amendment when the presentation of the merits of the action will be subserved thereby and the party who obtained the admission fails to satisfy the court that withdrawal or amendment will prejudice that party in maintaining the action or defense on the merits.Id.
As such, “Rule 36(b) is permissive, not mandatory, with respect to the withdrawal of admissions.” Conlon, 474 F.3d at 621. Further, “the rule seeks to serve two important goals: truthseeking in litigation and efficiency in dispensing justice” such that it “is not to be used in an effort to ‘harass the other side' or in the hope that a party's adversary will simply concede essential elements.” Id. at 621-22 (citations and internal quotations omitted).
As a preliminary matter, it is impossible to read AIC's Answer as anything other than a general denial of plaintiff's allegations (except for those previously and specifically admitted in regard to the First Lawsuit). Given the particular circumstances of this case, it would be anathema to logic, and frustrate longstanding principles favoring merits-based resolutions, to deny AIC's summary judgment motion in light of its Answer. SeeFoman v. Davis, 371 U.S. 178, 181-82 (1962) (“[t]he Federal Rules reject the approach that pleading is a game of skill in which one misstep by counsel may be decisive to the outcome and accept the principle that the purpose of pleading is to facilitate a proper decision on the merits”) (citation and internal quotations omitted).
Moreover, while no party addresses this matter, the Court notes that plaintiff's Requests for Admission do not address salient aspects on this lawsuit and additionally call for legal conclusions.In other words, even if deemed admitted, they would not completely resolve the issues currently before the Court since they are silent as to the First Lawsuit, as well as Exclusions 9 and 15. Cf. Perez-Denison v. Kaiser Found. Health Plan of the Nw., 868 F.Supp.2d 1065, 108889 (D. Or. 2012) (denying an evidentiary objection as moot where “the evidence moved against does not change the [court's] recommendation” regarding summary judgment); see also ZRZ Realty Co. v. Beneficial Fire & Cas. Ins. Co., 349 Or. 117, 127, 241 P.3d 710, 716 (2010) (as modified) (insured generally bears the initial burden of proving that the underlying claim is within the insuring clause of the policy, whereas the insurer bears the burden of proving the existence of any applicable exclusion, restriction, or limitation once coverage is demonstrated).
That is, plaintiff propounded the following Requests for Admissions: (1) “Admit that Allstate received notice of the Decision on September 19, 2023”; (2) “Admit that Allstate's duty to defend Plaintiff from the claim underlying the Award is not determinative of Allstate's duty to indemnify Plaintiff from the Award”; (3) “Admit Allstate has not conducted a reasonable investigation based on all available information with respect to the Award”; (4) “Admit Allstate has not provided Plaintiff with an explanation concerning Allstate's obligations with respect to the Award”; (5) “Admit Allstate received the communication attached as Exhibit C on December 9, 2022”; (6) “Admit Allstate did not respond to Exhibit ‘C' despite its obligation to provide an explanation under ORS 746.230”; (7) “Admit Allstate sent the e-mail attached as Exhibit ‘D' asserting ‘fee exposure on your side in regard to an appeal'”; (8) “Admit the assertion in Request No. 7 was and is false”; (9) “Admit the assertion in Request No. 7 was a misrepresentation intended to discourage Plaintiff from seeking insurance benefits”; (10) “Admit that the Award falls within the coverage grant of Policy Section II, Family Liability Protection - Coverage X providing Allstate will ‘pay damages which an insured person becomes legally obligated to pay because of bodily injury or property damage arising from an occurrence to which this policy applies'”; (11) “Admit that ‘Renter's Policy Exclusion 14 - rented property exclusion' does not apply to the premises located at 1575 NE Jarrett Street, Portland, Multnomah County, Oregon”; (12) “Admit that Allstate's assertion that Exclusion 14 applied to the Premises was a misrepresentation of a policy provision”; (13) “Admit that Allstate knew Plaintiff had one pet at the time it issued Plaintiff the Renter's Policy”; and (14) “Admit that Allstate has monitored efforts to collect the Award against Plaintiff.” Normal Decl. Ex. D, 1-4 (doc. 9).
For these reasons, the Court denies AIC's Rule 36(b) as moot. Nevertheless, it is difficult to discern how the presentation of the merits of this case would not be subserved by granting AIC's Rule 36(b) motion since plaintiff seeks an admission of coverage under the “Family Liability Protection” provision. Normal Decl. Ex. D, 1-4 (doc. 9). It is equally difficult to discern how plaintiff would be prejudiced by allowing AIC the opportunity to respond, especially given that the delay in this case is relatively minor, no trial date has been set, and discovery is still underway. See Sonoda v. Cabrera, 255 F.3d 1035, 1039-40 (9th Cir. 2001) (district court did not abuse its discretion by granting the defendant's Rule 36(b) motion where it was made before trial).
II. Issue Preclusion
“Under the doctrine of issue preclusion, a party is bound by the determination of a particular issue in an earlier proceeding.” Dauven v. U.S. Bancorp, 390 F.Supp.3d 1262, 1280 (D. Or. 2019) (citations and internal quotations omitted). “The purpose of the doctrine is to prevent parties from being harassed by successive, duplicative proceedings and to promote the efficient use of judicial resources.” Id. (citations and internal quotations omitted).
Accordingly, issue preclusion applies when the: (1) “issue in the two proceedings is identical”; (2) “issue was actually litigated and was essential to a final decision on the merits in the prior proceeding”; (3) “party sought to be precluded has had a full and fair opportunity to be heard on that issue”; (4) “party sought to be precluded was a party or was in privity with a party to the prior proceeding”; and (5) “prior proceeding was the type of proceeding to which this court will give preclusive effect.” Id. (citation omitted). Even when all requirements are met, “the court must also consider the fairness under all the circumstances of precluding a party.” Minihan v. Stiglich, 258 Or.App. 839, 855, 311 P.3d 922 (2013) (citation and internal quotations omitted).
Plaintiff concedes “there was a prior lawsuit . . . involving common parties [and] AIC prevailed.” Pl.'s Resp. to Mot. Summ. J. 7 (doc. 8). Plaintiff's brief is silent as to the second, third, and fifth elements. See generally id.; see also Justice v. Rockwell Collins. Inc., 117 F.Supp.3d 1119, 1134 (D. Or. 2015), aff'd, 720 Fed.Appx. 365 (9th Cir. 2017) (“if a party fails to counter an argument that the opposing party makes . . . the court may treat that argument as conceded”) (citation and internal quotations and brackets omitted). Rather, plaintiff's main contention is that the “[First] Lawsuit and the Current Lawsuit do not share the same factual transaction [because] Plaintiff did not have an indemnity claim at the time she filed the First Lawsuit [and she] contested liability for the Arbitration Claim up through the hearing which occurred about the time [AVPC and AIC] filed its summary judgment motion.” Pl.'s Resp. to Mot. Summ. J. 10 (doc. 8).
The propriety of issue preclusion thus turns on the first and second elements. When the First Lawsuit's filings are read in their entirety, there is no disputing that the issue at bar - i.e., AlC's duty to indemnify plaintiff against liability arising from the Stenbergs' arbitration claim -is identical to the coverage issue actually litigated and addressed by Circuit Judge Rose. See Dauven, 390 F.Supp.3d at 1281 (“when an issue is properly raised, by the pleadings or otherwise, and is submitted for determination, and is determined, the issue is actually litigated”) (citation and internal quotations, brackets, and emphasis omitted).
As discussed herein, it is clear that the First Lawsuit did not, as plaintiff maintains, solely concern the duty to defend. To the extent plaintiff separately implies that the term “coverage” as used in the Renters Policy is ambiguous, the Court imbues that term with its well-established and plain meaning (which is also the same meaning that plaintiff employs throughout her briefing). Cf.Pac.Coast Bldg. Prods., Inc. v. AIU Ins. Co., 300 Fed.Appx. 546, 548 (9th Cir. 2008) (“the noun ‘coverage' means inclusion within the scope of an insurance policy . . . Coverage has nothing to do with ‘collectability,' or the ability to take in payment”) (citations and internal quotations, emphasis, and brackets omitted); Collins v. Farmers Ins. Co. of Or., 312 Or. 337, 341, 822 P.2d 1146 (1991) (statute specifying “‘coverage in excess of or in addition to the required coverage'- means that liability insurers can write [policies] with higher limits and coverage than that required by [Oregon law]”).
That is, AVPC and AIC denied the existence of any coverage in their Answer. Foley Decl. Ex. D, at 3-4 (doc. 5-4). Via their counterclaim, AVPC and AIC explicitly asserted that the Renters Policy did “not provide indemnity for contracts or agreements or alleged breaches of such contracts or agreements [or] economic loss [or] for loss of benefit of a bargain.” Id. at 17-19. To that end, AVPC and AIC relied on the “Family Liability Protection” provision and Exclusions 9 and 15, amongst others. Id.; Foley Decl. Ex. B, at 18-19 (doc. 5-2).
In subsequently moving for summary judgment in the First Lawsuit, AVPC and AIC expressly sought a determination concerning both coverage “as a matter of law” and the duty to defend. Foley Decl. Ex. F, at 6 (doc. 5-6). Circuit Judge Rose resolved, based on the operative arbitration demand, that the Stenbergs' claim sounded in contract. Id. at 8. And, based on the plain language of the Renters Policy, coupled with the parties' concession “that there are no substantial questions of material fact in this matter which preclude judgment as a matter of law,” Circuit Judge Rose concluded that “[p]et urine damage is excluded as property damage caused by waste or other types of pollution” and, in any event, “[b]reach of contract claims are excluded.” Id. at 7-9. He then reiterated that the Stenbergs' arbitration claim emanated from plaintiff's breach of the parties' rental agreement, such that the pet urine damage did not qualify as an “occurrence” under both the Renters Policy and Oregon Supreme Court precedent. Id. at 9.
The Oregon Court of Appeals recently reaffirmed in Twigg v. Admiral Ins. Co., 324 Or.App. 259, 525 P.3d 478 (2023), that arbitration awards emanating from the breach of an underlying agreement do not qualify as an “occurrence” under identical policy language. Even presuming no preclusive effect attached to the First Lawsuit, Twigg would seemingly foreclose plaintiff's claim of coverage in this case.
Thus, the first and second elements are met. As AIC correctly observes, both of plaintiff's lawsuits surround the same factual nexus - i.e., “Plaintiff's obligations to the buyers of her home in regard to her pet damage to the property that they purchased and which she rented back for 30 days” - and the same underlying insurance agreement. Def.'s Reply to Mot. Summ. J. 6 (doc. 14). Indeed, the arbitrator's findings and the corresponding award - which plaintiff identifies as the distinguishing fact between the First Lawsuit and the present case - confirmed that the Stenbergs' claims were contractual in nature, and that plaintiff's liability emanated from “the dog urine came from [plaintiff's] dog.” Norman Decl. Ex. D, at 6 (doc. 9); Norman Decl. Ex. F, at 1 (doc. 9); see also Def.'s Reply to Mot. Summ. J. 7 (doc. 14) (“[t]he fact that there is an Award or Judgment for the same damage does not, somehow, make the damage covered, or present a new issue”).
Finally, plaintiff's contentions regarding legal differences between the obligations underlying the duty to defend and indemnify are flawed in two respects. First, plaintiff ignores the fact that the inquiry surrounding each duty is guided by the terms of the contract. See Twigg, 324 Or.App. at 271 (“the subsequent proceeding requires the court to evaluate - as a matter of contract law - what, precisely, the insured has become legally obligated to pay as damages in the prior proceeding, in order to determine whether the policy covers those damages”) (citation and internal quotations and brackets omitted). Indeed, the cases on which plaintiff relies do not stand for a different proposition. Here, however, the First Lawsuit has already construed those terms under well-established Oregon insurance law and concluded no coverage is afforded to claims against the insured arising out of the breach of a separate agreement or damage caused by “waste material.”
Second, and relatedly, plaintiff does not provide any meaningful argument concerning how her present claims fall either within the “Family Liability Protection” provision or outside of the exclusions invoked by AIC, or otherwise identify how the proven facts diverge from the alleged facts in any material respect. See Celotex, 477 U.S. at 322 (summary judgment should be entered against “a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden on proof at trial”); see alsoAnderson, 477 U.S. at 252 (in order to defeat a motion for summary judgment “there must be evidence on which the jury could reasonably find for the [non-moving party]”).
While not raised in her opposition, plaintiff's documentary evidence points to the following “distinctions” between the alleged and proven facts: (1) “[e]vidence was presented for loss of use of the home due to smell”; (2) “[e]vidence was presented that plaintiff's dog was less than ten pounds”; and (3) “[a] final award and judgment were entered against Ms. Tomas.” Norman Decl. Ex. B, at 3 (doc. 9). The remaining “distinctions” identified by plaintiff's counsel - i.e., that “[t]he Stenbergs changed their story to drop all allegations that damage occurred during the 30-day postclosing rental period” and “[t]he claim does not relate to the purchase or sale agreement” - are not borne out by the record. Concerning the former, both plaintiff's complaint and the arbitrator's findings are confined to the rent-back period. Regarding the latter, the Stenbergs' arbitration claim was presented as a claim for breach of contract and, significantly, both Circuit Judge Rose and the arbitrator understood it to be a claim for breach of contract.
In other words, the Stenbergs alleged that dog urine from plaintiff's dog damaged the Property during the rent-back period in violation of the parties' written agreements, and the arbitration proceedings found that dog urine from plaintiff's dog damaged the Property during the rent-back period in violation of the parties' written agreements. Compare Foley Decl. Ex. E, at 12, 7-9 (doc. 5-5), with Norman Decl. Ex. F, at 1 (doc. 9), and Norman Decl. Ex. D, at 6 (doc. 9). While plaintiff is correct that the duty to defend and the duty to indemnify are not inherently coextensive, in the present case they are. See RTR Builders Inc. v. Savard, 631 Fed.Appx. 452, 453 (9th Cir. 2015) (no duty to indemnify where the plaintiff failed to allege facts or put forth evidence establishing the existence of covered damage under the plain language of the policy); see also Twigg, 324 Or.App. at 270 (“an insurer's duty to indemnify for an insured's liability . . . is based on the nature of the insured's liability in the underlying [arbitration]”).
In sum, since the question of coverage under the Renters Policy was fully decided in the First Lawsuit, and there are no issues surrounding fairness to the precluding party in light of the record as a whole, AIC's duty to indemnify plaintiff against the damages assessed in relation to the Stenbergs' arbitration claim cannot be litigated a second time. AIC's motion should be granted as to plaintiff's declaratory judgment and breach of contract claims.
III. Claim Preclusion
“The doctrine of claim preclusion, formerly known as res judicata, generally prohibits a party from relitigating the same claim or splitting a claim into multiple actions against the same opponent.” Bloomfield v. Weakland, 339 Or. 504, 510, 123 P.3d 275 (2005). This “rule forecloses a party that has litigated a claim against another from further litigation on that same claim on any ground or theory of relief that the party could have litigated in the first instance.” Id. at 511. Thus, unlike issue preclusion, “[c]laim preclusion does not require actual litigation of an issue of fact or law . . . Nor does it require that the determination of the issue be essential to the final or end result reached in the action, claim, or proceeding.” Drew v. EBI Cos., 310 Or. 134, 140, 795 P.2d 531 (1990). Rather, in order for claim preclusion to attach, only finality and the “opportunity to litigate the question” are required, and “courts employ a broad definition” in regard to the latter. Id. at 140-1.
Here, the preliminary requirements for application of claim preclusion are met. There is a final judgment binding on the parties in the First Lawsuit by virtue of the summary judgment granted in favor of AVDP and AIC on all counts. And plaintiff does not dispute that her negligence per se claim could have been brought in the First Lawsuit. See Pl.'s Resp. to Mot. Summ. J. (doc. 8) (arguing only that she “has stated a claim for negligence per se” because AIC's “indemnity obligation has not been determined” and “the prevailing law . . . requires evidence of a physical injury and [her allegations of] stress” meet this standard).
Given the procedural posture of this case, allowing plaintiff to proceed with her negligence per se claim would essentially require this Court to conclude that AIC's denial of coverage was wrongful. Yet plaintiff has not cited to any authority that allows a federal court to sit in direct review of a state court judgment under the present circumstances. Cf. Reusser v. Wachovia Bank,N.A., 525 F.3d 855, 859 (9th Cir. 2008) (Rooker-Feldman doctrine precludes recourse in federal court for an allegedly erroneous state court decision). The Court therefore declines to define the precise parameters of negligence per se given the apparent split in unpublished District precedent interpreting Moody v. Or. Cmty. Credit Union, 317 Or.App. 233, 505 P.3d 1047, rev. allowed, 369 Or. 855, 512 P.3d 446 (2022), and the physical impact rule. AIC's motion should be granted as to plaintiff's negligence per se claim.
RECOMMENDATION
For the reasons stated herein, AIC's Motion for Summary Judgment (doc. 4) should be granted, AIC's Motion to Allow Responses to Request for Admissions (doc. 11) is denied as moot, and judgment should be prepared dismissing this case. AIC's requests for oral argument are denied as unnecessary. This recommendation is not an order that is immediately appealable to the Ninth Circuit Court of Appeals. Any notice of appeal pursuant to Rule 4(a)(1), Federal Rules of Appellate Procedure, should not be filed until entry of the district court's judgment or appealable order. The parties shall have fourteen (14) days from the date of service of a copy of this recommendation within which to file specific written objections with the court. Thereafter, the parties shall have fourteen (14) days within which to file a response to the objections. Failure to timely file objections to any factual determination of the Magistrate Judge will be considered as a waiver of a party's right to de novo consideration of the factual issues and will constitute a waiver of a party's right to appellate review of the findings of fact in an order or judgment entered pursuant to this recommendation.