Atl. Specialty Ins. Co. v. Or. Sch. Bds. Ass'n Prop. & Cas. Coverage for Educ. Tr.

ATLANTIC SPECIALTY INSURANCE COMPANY; STATE FARM FIRE AND CASUALTY COMPANY, Plaintiffs, v. OREGON SCHOOL BOARDS ASSOCIATION PROPERTY AND CASUALTY COVERAGE FOR EDUCATION TRUST, Defendant.

No. 3:21-cv-00059-JR

United States District Court, D. Oregon

June 15, 2022

FINDINGS AND RECOMMENDATION

Jolie A. Russo United States Magistrate Judge

Plaintiff State Farm Fire and Casualty Company (“State Farm”) moves for summary judgment pursuant to Fed.R.Civ.P. 56, and plaintiff Atlantic Specialty Insurance Company (“ASIC”) joins in that motion. Defendant Oregon School Boards Association Property and Casualty Coverage for Education Trust (“PACE”) filed a partial motion for summary judgment as to the applicability of the limitations of liability set forth in the Oregon Tort Claims Act (“OTCA”). PACE also filed a partial cross-motion for summary judgment. For the reasons set forth below, the parties' motions should be granted in part and denied in part.

BACKGROUND^[1]

This case emanates from plaintiffs' efforts to recover a portion of their settlement costs associated with two underlying negligence actions asserted against Quency Fahlgren, who, at all relevant times, worked as a certified volunteer ski coach for Sam Barlow High School (“School”), which is located within the Gresham-Barlow School District (“District”).

I. School Athletics

The School has two types of athletic programs: those that fall under the Oregon School Activities Association's (“OSAA”) umbrella and those that do not. OSAA-sanctioned sports are managed by the School's athletic director. Dalzell Dep. 5 (doc. 52-12). Non-OSAA sports are considered “club sports” and managed by the School's activities director. Id. at 4-5. Some OSAA-sanctioned sports receive money from the School to fund the head coach (such as basketball and football) and certain equipment; others (like swimming and golf) do not. Id. at 6-7, 24-25, 32, 37. Similarly some OSAA-sanctioned sports practice exclusively on-site at the School; others do not. Id. at 30-31.

The OSAA-sanctioned teams that do not receive School funding along with all club sports, must raise their own money. Id. at 7, 10, 32-33. “[L]ess than half” of the coaches for OSAA-sanctioned teams are School employees; the majority are volunteers. Id. at 31. Outside of funding, there is no material difference between how the School treats OSAA-sanctioned and non-OSAA sports. Id. at 41.

II. The Ski Team

The School's ski team is considered a non-OSAA sport. Id. at 5. To that end, the School and Mr. Fahlgren are both members of the Oregon Interscholastic Ski Racing Association (“OISRA”), which operates as the School's agent in relation to mountain events. Id. at 39, 42-43, 45. OISRA was established “to mirror the OSAA.” Sellens Dep. 7 (doc. 52-14).

OISRA's “Membership Application for Member Schools” states: “OISRA provides indemnification to member schools, OISRA coaches, volunteers, and racers.” Dalzell Dep. 54 (doc. 52-12). Consistent therewith, OISRA's policies specify that “OISRA carries a multimillion dollar liability policy that indemnifies” member schools, registered racers, registered coaches, and registered volunteers. Hager Decl. Ex. 1, at 6 (doc. 66-1).

The School and OISRA have dual oversight over Mr. Fahlgren in his capacity as volunteer ski coach. Dalzell Dep. 19, 42-43 (doc. 52-12). Specifically, the School posts for the position of “ski coach” on its website and then interviews and hires the successful candidate. Id. at 13-14, 4041; Fahlgren Dep. 9 (doc. 52-13). That process entails completing a background check, contacting references, and issuing an ID badge and School email address. Dalzell Dep. 41, 52, 54 (doc. 5212); Fahlgren Dep. 9 (doc. 52-13); see also Hager Decl. Ex. 1, at 3 (doc. 66-1) (OISRA's membership policies require a criminal background check by “OISRA or the organization sponsoring the team”). Volunteer coaches are required to attend monthly advisors' meetings at the School, and report any safety incidents along with practice and competition schedules. Dalzell Dep. 20-21 (doc. 52-12). The School posts a weekly schedule of ski team trainings and races, but the particulars of each training are determined by the coach and weather conditions. Id. at 27; Fahlgren Dep. 25 (doc. 52-13); Sellens Dep. 15-16 (doc. 52-14).

The School provides transportation to the ski team via a passenger bus when needed, along with equipment such as gates, timers, and ski bibs (but not uniforms or skis). Dalzell Dep. 11, 1819, 22, 37-38 (doc. 52-12); Fahlgren Dep. 28 (doc. 52-13). Additionally, ski team trainings are held on-site at the School. Id. at 28-29; Fahlgren Dep. 19-20 (doc. 52-13). The amount of dryland training is “weather-dependent” and varies from year-to-year due to mountain conditions; about half of all trainings occur at the School when there is “low snow.” Dalzell Dep. 28-29 (doc. 5212).

OISRA dispenses ski team rules that head coaches must follow, such as developing and enforcing participation and academic requirements for student skiers, along with a code of ethics.^[2]Id. at 10; Fahlgren Dep. 56-58 (doc. 52-13); Sellens Dep. 9-10 (doc. 52-14); Hager Decl. Ex. 1, at 4-5, 24 (doc. 66-1). Amongst other things, those rules require coaches to ski in accordance with Or. Rev. Stat. § 30.985^[3] and file an incident report for any on-hill accident. Sellens Dep. 12, 20 (doc. 52-14); Hager Decl. Ex. 1, at 5, 19 (doc. 66-1). OISRA also requires coaches to comply with all School and District rules and policies; where there is a conflict, OISRA's rules “shall prevail.” Sellens Dep. 11, 36 (doc. 52-14); Hager Decl. Ex. 1, at 3 (doc. 66-1). OISRA sets the hours of races and facilitates coaches' meetings. Fahlgren Dep. 20-21, 23 (doc. 52-13); see, e.g., Hager Decl. Ex. 1, at 10-11 (doc. 66-1).

Both the School and OISRA require coaches to complete general trainings on working with children, safety protocols, and communication guidelines. Dalzell Dep. 14-15 (doc. 52-12); Fahlgren Dep. 18-19 (doc. 52-13); Sellens Dep. 9-10 (doc. 52-14); Hager Decl. Ex. 1, at 3-4 (doc. 66-1).

III. The Accident and Underlying Lawsuits

On February 14, 2017, Mr. Fahlgren collided with DV, a minor, following a practice session at Mt. Hood Ski Bowl. DV's father, Joel Vermillion, witnessed the accident. DV sustained serious injuries. Mr. Fahlgren immediately reported the accident to both OISRA and the School. Dalzell Dep. Ex. 11 (doc. 52-12); Fahlgren Dep. 77 (doc. 52-13).

On June 20, 2017, DV, through his guardian ad litem, filed suit against Mr. Fahlgren, OISRA, and the District, alleging that, at all material times, Mr. Fahlgren “was working and volunteering in the scope and course of his employment with OISRA and Gresham-Barlow School District and was acting as an actual and apparent agent of OISRA and Gresham-Barlow School District.” Walker Decl. Ex. 7, at 2 (doc. 52-7). DV alleged further that Mr. Fahlgren's negligence - i.e., “going too fast for conditions” and skiing with “impaired visibility while carrying the gates” - caused the accident and DV's corresponding injuries, including “a traumatic brain injury, multifocal intra-parenchymal hemorrhages, right subarachnoid hemorrhage, extensive diffuse axonal injury, left femur fracture, left clavicular fracture, left hemiparesis, displaced nasal bone fracture, tooth trauma, [and] impaired cognition.” Id. at 2-3. DV sought $6,000,000 in noneconomic damages and $10,000,000 in economic damages. Id. at 3.

On February 7, 2019, Mr. Vermillion filed a separate lawsuit against Mr. Fahlgren, OISRA, and the District, seeking $1,500,000 in non-economic damages due to the emotional distress he experienced witnessing his son's accident and injury. Walker Decl. Ex. 8, at 3 (doc. 52-8). Mr. Vermillion's lawsuit was also premised on Mr. Fahlgren's negligence while “working and volunteering in the scope and course of his employment with OISRA and Gresham-Barlow School District” and “acting as an actual and apparent agent of OISRA and Gresham-Barlow School District.” Id. at 2.

IV. Insurance and Defense of Mr. Fahlgren

At the time of the accident, State Farm insured Mr. Fahlgren under homeowner's insurance and umbrella policies. See generally Walker Decl. Exs. 1-2 (doc. 52). The homeowner's policy had a $100,000 liability limit, and the umbrella policy had a $1,000,000 liability limit.

ASIC insured OISRA pursuant to commercial general liability and excess policies. See generally Walker Decl. Exs. 3-4 (doc. 52). ASIC's policies had a $1,000,000 primary coverage limit and a $4,000,000 excess coverage limit.

PACE only provides coverage to public education organizations in Oregon and issued liability declarations listing the District as a “Named Participant.” Jensen Decl. ¶¶ 3, 5 (doc. 56); see generally Walker Decl. Ex. 5 (doc. 52-5). PACE's coverage document had a $500,000 peroccurrence “Primary Limit of Liability” and a $9,500,000 “Increased Limit of Liability,” for a “Total Limit of Liability” of $10,000,000.

On July 2, 2017, the District “was served with the initial complaint.” ASIC's Resp. to Interrog. 6 (doc. 66-2). The District provided notice to PACE of DV's lawsuit on July 11, 2017. Def.'s Resp. to Interrog. 3 (doc. 52-11). The District retained counsel and tendered the defense to ASIC, which ASIC accepted. Id. at 5; Jensen Decl. Ex. 1 (doc. 65-1). Based on OISRA's indemnity obligation and ASIC's acceptance, “PACE did not expect that it would need to participate in payment of any settlement or judgment,” but was nonetheless willing “to contribute a reasonable and appropriate amount toward a global settlement.” Jensen Decl. ¶¶ 4-5 (doc. 65).

Plaintiffs defended Mr. Fahlgren against the underlying lawsuits ultimately settling DV and Mr. Vermillion's claims for $5,500,000 in May 2019. McAlister ...