223 F. Supp. 3d 1133
D. Or.2016Background
- Factory Mutual (insurer) paid $1,681,888.90 under Intel’s OCIP Builder’s Risk policy for concrete damage on an Intel construction project and sued PERI (a formwork supplier) in subrogation for negligence. PERI impleaded McClone (a subcontractor) seeking contractual indemnity and contribution.
- Intel sponsored an Owner Controlled Insurance Program (OCIP) administered by Marsh; approved contractors (including McClone) received Certificates of Insurance and McClone enrolled in the OCIP; PERI did not enroll.
- The Builder’s Risk policy’s declarations list Intel as the named insured, but other policy provisions state that the policy “also insures the interest of contractors and subcontractors that are enrolled in the OCIP.”
- Factory Mutual paid McClone and Turner directly at Intel’s direction; Factory Mutual characterized its suit as a subrogation action standing in the insureds’ shoes.
- McClone moved for summary judgment arguing it is an insured under the Builder’s Risk policy and thus the anti-subrogation rule bars PERI’s third-party claims; McClone also argued PERI’s contractual duty to defend/indemnify has not been triggered.
- The district court concluded McClone was an insured under the Builder’s Risk policy, applied the anti-subrogation rule, and granted summary judgment dismissing PERI’s third-party claims against McClone.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether McClone is an “insured” under the Builder’s Risk policy | Factory Mutual/Peri: (PERI argued) policy language lists only Intel as the insured; contractors not insured except to extent of Intel’s liability | McClone: OCIP language, the Declarations and Certificate show enrolled contractors are automatically added as insureds; Manual and premium-sharing support coverage | Court: McClone is an insured (policy construed to include OCIP-enrolled contractors) |
| Whether anti-subrogation rule bars PERI’s contribution/indemnity claims against McClone | PERI: if McClone is not an insured, anti-subrogation doesn't apply | McClone: if an insured, insurer cannot subrogate against its insured — that bars PERI’s attempt to shift insurer-paid loss back to McClone | Court: anti-subrogation applies; PERI’s contribution claim barred |
| Whether McClone has a contractual duty to defend/indemnify PERI now | PERI: complaint could give rise to liability and thus duty to defend may be triggered under Oregon law | McClone: Complaint does not and cannot allege McClone’s negligence because anti-subrogation precludes insurer suing its insured; no duty triggered | Court: No present duty to defend or indemnify; indemnity/duty not triggered now |
| Whether extrinsic evidence may be considered in construing who is an insured | PERI: policy unambiguous on its face—no extrinsic evidence needed; limited insureds = Intel | McClone/insurer: extrinsic OCIP Manual, Certificate, and insurer conduct confirm contractors are insured | Court: considered policy context and extrinsic evidence; reached same conclusion that McClone is an insured |
Key Cases Cited
- Celotex Corp. v. Catrett, 477 U.S. 317 (summary judgment burden rules)
- Anderson v. Liberty Lobby, 477 U.S. 242 (summary judgment standard re: scintilla of evidence)
- Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574 (summary judgment—no genuine issue if record cannot lead rational trier of fact)
- Hoffman Constr. Co. v. Fred S. James & Co., 313 Or. 464 (Oregon 1992) (three-step insurance-policy interpretation framework)
- N. Pac. Ins. Co. v. Hamilton, 332 Or. 20 (Oregon Supreme Ct.) (construe ambiguities in insurance contract in favor of coverage)
- Groshong v. Mut. of Enumclaw Ins. Co., 329 Or. 303 (plain meaning / ambiguity analysis for policy terms)
- Fred Shearer & Sons, Inc. v. Gemini Ins. Co., 237 Or. App. 468 (use of extrinsic evidence when issue is whether plaintiff is an insured under the policy)