Certain Underwriters At Lloyd's London & Excess Ins. Co. v. Mass. Bonding & Ins. Co.

287 Or.App. 279

401 P.3d 1212

CERTAIN UNDERWRITERS AT LLOYD'S LONDON and Excess Insurance Company, Limited, Plaintiffs-Appellants,

v. MASSACHUSETTS BONDING AND INSURANCE COMPANY, succeeded in interest by Hanover Insurance Company, et al., Defendants,andBeneficial Fire and Casualty Insurance Company, succeeded in interest by JC Penney Life Insurance Company, then succeeded in interest by Stonebridge Life Insurance Company, a Vermont corporation; Industrial Indemnity Company, succeeded in interest by United States Fire Insurance Company, a New York corporation; Glens Falls Insurance Company, a Delaware corporation, dba CNA Insurance Companies; and Continental Insurance Company, a New Hampshire corporation, dba CNA Insurance Companies, Defendants-Respondents.

A156649.

Court of Appeals of Oregon.

Argued and submitted December 17, 2015.

August 16, 2017

Michael B. King, Washington, argued the cause for appellants. With him on the opening brief were Linda B. Clapham, Jeffrey D. Laveson, and Carney Badley Spellman, PS. With him on the reply brief were Linda B. Clapham and Carney Badley Spellman, PS.

Christopher T. Carson, Portland, argued the cause for respondent Beneficial Fire and Casualty Insurance Company. With him on the brief were Kilmer, Voorhees & Laurick, P.C.; Eliot R. Hudson, California, and DLA Piper LLP.

Thomas M. Christ, Portland, argued the cause for respondent Industrial Indemnity Company. With him on the brief were Cosgrave Vergeer Kester LLP; Richard A. Lee and Bodyfelt Mount.

Andrew S. Moses, Diane L. Polscer, and Gordon & Polscer, L.L.C., filed the brief for respondents Glens Falls Insurance Company and Continental Insurance Company.

Before DeVore, Presiding Judge, and DeHoog, Judge, and Sercombe, Senior Judge.^*

SERCOMBE, S.J.

This is the second time this case, an action for contribution between insurance companies, has been before us. See Certain Underwriters v. Mass. Bonding and Ins. Co. , 235 Or.App. 99, 230 P.3d 103, rev. den., 349 Or. 173, 243 P.3d 468 (2010), adh'd to as modified on recons . , 245 Or.App. 101, 260 P.3d 830 (2011). The issue presented in this case is whether plaintiffs Certain Underwriters at Lloyd's London and Excess Insurance Company, Limited (collectively, London) can maintain their contribution action against defendants in light of the 2013 amendments to the Oregon Environmental Cleanup Assistance Act (OECAA), ORS 465.475 to 465.484. SeeOr. Laws 2013, ch. 350, §§ 4, 8.¹ Under the OECAA, the contribution action is precluded unless the underlying environmental claim or claims² for which London sought contribution had, "before the effective date of th[e] 2013 Act" become subject to a "final judgment, after exhaustion of all appeals." Or. Laws 2013, ch. 350, § 8(2). The trial court concluded that no such judgment had been entered before the effective date of the 2013 amendments and, accordingly, London's contribution rights against defendants were extinguished. London appeals the resulting judgment dismissing this action, contending that the trial court erred. We affirm.

London and defendants are companies that issued insurance policies to a common insured, Zidell.³ After Zidell, which operated a scrap metal business along the Willamette River, became the subject of a Department of Environmental Quality (DEQ) environmental cleanup action, it sought coverage from its insurers, including London and defendants and, in 1997, filed claims against them "seeking a declaration of coverage relating to the cleanup action, as well as reimbursement for defense and indemnity costs already incurred." Certain Underwriters, 235 Or.App. at 102, 230 P.3d 103. We refer to that underlying coverage action as the "Moody Avenue" action. Between 1997 and April 2003, when the trial court entered its judgment, defendants settled with Zidell and were dismissed from the case. As we explained in Certain Underwriters :

"Defendants Beneficial Fire, National Union, and Industrial Indemnity Company (U.S. Fire) were among those who settled first, which left defendants Glen Falls and Continental Insurance Company (collectively CNA), defendant Century Indemnity Company (CIGNA), and [London] as the only remaining insurers in the coverage case.

"In October 1999, the Moody Avenuecourt ruled on a series of summary judgment motions filed by Zidell and the remaining insurers. The court ruled that 'the duty to defend is a joint and several obligation, which will be allocated among the Defendant Insurers. Allocation should not be any hindrance to the duty to defend.' The court further ordered that 'the Defendant Insurers'—at that time, CNA, CIGNA, and [London]—were to 'make payment of past defense costs submitted by [Zidell] to date' and that, 'with respect to ongoing defense costs,' the parties were to put in place a 'reasonable system for submission, review and payment of these costs.'

"The remaining insurers paid Zidell's accrued defense costs—approximately $771,000—as ordered. Of that amount, [London] paid approximately $578,000, and CNA and CIGNA paid the rest. The payments were made by [London] with the understanding that they were 'subject to a full reservation of each insurer's rights.'

"After the start of trial in the Moody Avenueaction, CNA settled out. The settlement then left [London] and CIGNA as the only insurers subject to the court's order to pay Zidell's remaining defense costs. Together, [London] and CIGNA paid another $619,982 in defense costs, with [London] again paying the lion's share—approximately $566,000. Then, after trial but while the court was still preparing its findings of fact and conclusions of law, CIGNA settled with Zidell."

235 Or.App. at 103-04, 230 P.3d 103. It is undisputed that all settlements were made in good faith.

London, however, did not settle and, instead, proceeded to trial. After a bench trial, in April 2003, the trial court entered a judgment against London and in favor of Zidell. With respect to defense costs, the judgment provided, in part, that London was liable to pay Zidell's costs of defense in connection with the environmental cleanup action. The judgment also stated that London,

"together with dismissed defendants CNA and CIGNA (who shared the joint and several obligation to pay Zidell's defense costs prior to their dismissal from this case), have satisfied their obligation for defense costs of $1,390,658.65 incurred by Zidell through August 31, 2001, with respect to the DEQ Action and the prejudgment interest of $37,768.35 thereon."

Thus, according to the judgment, London was "now responsible only for defense costs submitted by Zidell subsequent to August 31, 2001." With respect to London's "indemnity obligations (i.e., the costs of remediation as a result of the [the environmental cleanup] claims rather than defending against them or investigating them), the Moody Avenuejudgment incorporated the trial court's earlier findings of fact and conclusions of law, which allocated indemnity costs to particular policies." Certain Underwriters, 235 Or.App. at 104, 230 P.3d 103. The court also awarded Zidell its attorney fees.

The parties appealed the trial court's judgment. See ZRZ Realty v. Beneficial Fire and Casualty Ins. , 222 Or.App. 453, 194 P.3d 167 (2008) ( ZRZ I ), adh'd to as modified on recons . , 225 Or.App. 257, 201 P.3d 912 (2009) ( ZRZ II ), aff'd in part and rev'd in part , 349 Or. 117, 241 P.3d 710 (2010) ( ZRZ III ), adh'd to as modified on recons . , 349 Or. 657, 249 P.3d 111 (2011) ( ZRZ IV ). On appeal, we reversed and remanded for a new trial, concluding, in part, that the trial court had incorrectly allocated the burden of proof to London on certain issues. ZRZ I, 222 Or.App. at 476-77, 194 P.3d 167. On reconsideration, we modified our opinion and adhered to it as modified; we did not change the disposition of the case. ZRZ II, 225 Or.App. at 265, 201 P.3d 912. Thereafter, the Supreme Court granted review and, on review, it affirmed in part and reversed in part our decision and remanded the case to us for resolution of issues we had deemed it unnecessary to address in ZRZ I. ZRZ III, 349 Or. at 149-51, 241 P.3d 710. Then, on reconsideration, the Supreme Court clarified what proceedings the trial court might use on remand, stating that the court could take live testimony if, in its discretion, the court determined such testimony was appropriate. ZRZ IV, 349 Or. at 662, 249 P.3d 111.

In 2013, on remand from the Supreme Court, we issued another opinion in the Moody Avenueaction, deciding the assignments of error that we had not previously reached and, ultimately, reversing in part the trial court's judgment on appeal and cross-appeal, and remanding for further proceedings. ZRZ Realty v. Beneficial Fire and Casualty Ins. , 255 Or.App. 524, 300 P.3d 1224 ( ZRZ V ), adh'd to as clarified on recons . , 257 Or.App. 180, 306 P.3d 661 ( ZRZ VI ), rev. den., 354 Or. 491, 317 P.3d 256 (2013). On reconsideration, we clarified our opinion in ZRZ V, and adhered to the disposition of the case. ZRZ VI, 257 Or.App. 180, 306 P.3d 661. In November 2013, the Supreme Court denied review, and, finally, in February 2014, the appellate judgment was issued remanding the case to the trial court.

Meanwhile, in 2003, after the trial court had entered its judgment in the Moody Avenueaction, London filed this contribution action against defendants. London alleged that the duty to defend Zidell from an environmental cleanup action was an obligation owed by London and defendants jointly. London alleged that it had paid a disproportionate share of that common obligation and was entitled to pro rata contributions from defendants, the settling insurers. Certain Underwriters, 235 Or.App. at 102, 230 P.3d 103. London also asserted that it "had been held liable for attorney fees * * * as well as prejudgment interest on the unpaid defense costs, for which defendants would have been liable had they not settled with Zidell before the Moody Avenuejudgment was entered." Id.at 105, 230 P.3d 103...