Portland Sch. Dist. v. Great American Ins.
241 Or. App. 161
Or. Ct. App.2011Background
- Portland School District, as assignee of its insured, sued Great American for breach of an excess insurance contract.
- Underlying CNA policy issued to contractor had an anti-assignment clause prohibiting transfer of rights without CNA's consent except upon death.
- Excess policy with Great American states it follows the underlying policy's coverage but is ambiguous about terms, conditions, definitions, and exclusions.
- Contractor settled with CNA and the district, consent to file suit against the contractor, and a staged payment agreement to preserve claims.
- Assignment of Claims and Covenant Not to Execute transferred the contractor's rights against Great American to the district after a stipulated judgment, per ORS 31.825.
- Parties disputed whether the excess policy incorporated the underlying anti-assignment clause and whether ORS 31.825 preserved the contractor’s claims against Great American.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the excess policy incorporates the underlying anti-assignment clause. | District contends excess policy does not incorporate anti-assignment terms. | Great American argues follows-form includes underlying terms including anti-assignment. | Ambiguous; construed against drafter to not incorporate anti-assignment. |
| Whether ORS 31.825 permits assignment of claims against insurer from contractor to district. | Statute preserves and allows assignment, not extinguishing contractor's rights. | Stubblefield controls; assignment invalid if extinguished by settlement. | ORS 31.825 permits such assignment and preserves claims; not extinguished. |
| Whether Stubblefield applies given ORS 31.825. | Stubblefield inapplicable; statute preserved assignment rights. | Stubblefield should govern if no statute overrides. | Stubblefield distinguished; statute controls, assignment valid. |
Key Cases Cited
- Holloway v. Republic Indemnity Co. of America, 341 Or. 642 (2006) (anti-assignment concerns inform interpretation of follows-form)
- Stubblefield v. St. Paul Fire & Marine, 267 Or. 397 (1973) (settlement extinguishes rights to the extent not assigned)
- ORS 31.825, - (-) (allows assignment of insurer claims arising from a judgment, unless otherwise provided)
- Dewsnup v. Farmers Ins. Co., 349 Or. 33 (2010) (principle that ambiguous terms are construed in insured's favor)
- Hoffman Construction Co. v. Fred S. James & Co., 313 Or. 464 (1992) (primary rule to ascertain intention of the parties; ambiguity favored to insured)
- Groshong v. Mutual of Enumclaw Ins. Co., 329 Or. 303 (1999) (method for interpreting ambiguous policy terms)