Brownstone Homes Condominium Ass'n v. Brownstone Forest Heights, LLC
255 Or. App. 390
Or. Ct. App.2013Background
- Insurance dispute arising from construction defect litigation involving A&T Siding and its insurer Capitol Specialty.
- Plaintiff Brownstone Homes Condominium Association, as assignee of A&T, seeks to garnish Capitol for unpaid portion of a stipulated judgment.
- Settlement agreement (March 14, 2008) required A&T to stipulate to a judgment; Zurich would pay part; plaintiff could pursue unexecuted portion against Capitol.
- A&T assigned to plaintiff any claims against Capitol under the policy; covenant not to execute against A&T or its assets was included.
- Stubblefield v. St. Paul Fire & Marine established that a nonexecution covenant can extinguish insurer liability; Reuter and related cases clarify garnishor status and insurer obligations; the trial court granted summary judgment for Capitol.
- The court applies ORS 18.352 and ORS 31.825, addresses timing and sequencing of assignment against judgment, and distinguishes Lancaster and Terrain Tamers.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Stubblefield controls garnishment here | Stubblefield inapposite in garnishment | Stubblefield applies; garnishor rights limited | Stubblefield applied; rights not enforceable against Capitol |
| Whether ORS 31.825 abrogates Stubblefield | 31.825 preserves assignment despite pre-judgment timing | 31.825 requires judgment entered before assignment | ORS 31.825 does not apply to pre-judgment assignment; timing controls |
| Whether the nonexecution covenant was unambiguous and unconditional | Covenant may be conditional upon cooperation | Covenant unambiguously not to execute | Covenant unconditional; extinguished plaintiff's rights under Stubblefield |
Key Cases Cited
- Stubblefield v. St. Paul Fire & Marine, 267 Or 397 (1973) (set forth nonexecution covenant effect on insurer liability)
- Reuter v. State Farm Fire & Cas. Co., 299 Or 155 (1985) (garnishment yields no greater rights than debtor; shoes of subrogor)
- Lancaster v. Royal Ins. Co. of America, 302 Or 62 (1986) (ambiguity of nonexecution clause; issues of fact possible)
- Portland School Dist. v. Great American Ins. Co., 241 Or App 161 (2011) (timing of assignment consistent with ORS 31.825; sequence matters)
- Terrain Tamers v. Insurance Marketing Corp., 210 Or App 534 (2007) (covenant not to execute possibly conditional; distinguished here)