Esurance Ins. Co. v. Hamm, Civ. No. 1:18-cv-01715-MC

387 F.Supp.3d 1134

ESURANCE INSURANCE COMPANY, Plaintiff,

v.Seth HAMM; Michelle Hamm; Emilio Pina, Defendants.

Civ. No. 1:18-cv-01715-MC

United States District Court, D. Oregon, Medford Division.

Signed April 30, 2019

Sean D. Lanz, Barger Law Group PC, Lake Oswego, OR, for Plaintiff.

Seth Hamm, North Bend, OR, pro se.

Adam C. Springer, Adam C. Springer LLC, Newport, OR, for Defendants.

OPINION & ORDER

MICHAEL McSHANE, United States District Judge This matter comes before the Court on Defendant Emilio Pina's Motion for Judgment on the Pleadings, ECF No. 15, and Plaintiff Esurance Insurance Company ("Esurance")'s Motion for Entry of Default, ECF No. 12, and Esurance's Motion for Summary Judgment, ECF No. 16.

BACKGROUND

Esurance is an insurance company with its principal place of business in California. Esurance issued a homeowner's insurance policy to Seth and Michelle Hamm, covering their residence in Coos County, Oregon. The policy was in effect during the relevant period and contained an exclusion for conduct which constitutes a criminal act.

On March 18, 2018, Seth Hamm and Emilio Pina got into an altercation, during which Seth Hamm shot Pina with a firearm. On May 7, 2018, Seth Hamm pleaded guilty to Assault in the Third Degree with a firearm and was sentenced to thirty-six months in prison. Compl. Ex. C.

On July 3, 2018, Pina sued Seth Hamm for his injuries stemming from the gunshot wound, seeking $1.6 million. Compl. Ex. D. Seth and Michelle Hamm have made a claim for Esurance to defend and indemnify Seth Hamm in that action. Esurance undertook to defend Seth Hamm under a reservation of rights. Pina subsequently dismissed his lawsuit with the intent to refile. As of yet, Pina has not refiled his suit against Seth Hamm.

In September 2018, Esurance filed this this action for declaratory relief. Esurance seeks a judgment declaring that the applicable policy provides no coverage for Seth and Michelle Hamm for claims made by Pina in the underlying lawsuit and that Esurance has no obligation to defend or indemnify Seth and Michelle Hamm for any injuries stemming from the criminal acts of Seth Hamm on March 18, 2018.

LEGAL STANDARDS

Summary judgment is appropriate if the record shows that "there is no genuine dispute as to any materials fact and the [moving party] is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). Substantive law on an issue determines the materiality of a fact. T.W. Elec. Serv., Inc. v. Pac. Elect. Contractors Ass'n , 809 F.2d 626, 630 (9th Cir. 1987). Whether the evidence is such that a reasonable jury could return a verdict for the nonmoving party determines the authenticity of the dispute. Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

The moving party has the burden of establishing the absence of a genuine issue of material fact. Celotex Corp. v. Catrett , 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). If the moving party shows the absence of a genuine issue of material fact, the nonmoving party must go beyond the pleadings and identify facts which show a genuine issue for trial. Id. at 324, 106 S.Ct. 2548.

Special rules of construction apply when evaluating a summary judgment motion: (1) all reasonable doubts as to the existence of genuine issues of material fact should be resolved against the moving party; and (2) all inferences drawn from the underlying facts must be viewed in the light most favorable to the nonmoving party. T.W. Elec. , 809 F.2d at 630-31.

DISCUSSION

I. Motion for Default

Esurance has filed a Motion for Entry of Default against Pina and Michelle Hamm.

ECF No. 12. Pursuant to Federal Rule of Civil Procedure 55, when a party "against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend, and that failure is shown by affidavit or otherwise, the clerk must enter the party's default." Fed. R. Civ. P. 55(a).

In the present case, Pina filed an Answer on the same day Esurance filed its Motion for Default. ECF Nos. 12, 13. Esurance's Motion is therefore DENIED as to Pina.

In the case of Michelle Hamm, Esurance has submitted an Affidavit of Service showing that Michelle Hamm was personally served on November 20, 2018. ECF No. 12-1. A Return of Service Executed as to Michelle Hamm was entered on December 6, 2018, and her answer was due on December 11, 2018. ECF No. 11. Michelle Hamm has not appeared or otherwise defended in this action and so the Court GRANTS Esurance's Motion for Entry of Default as to Michelle Hamm.

II. Motion for Judgment on the Pleadings

Defendant Emilio Pina has moved for judgment on the pleadings on the basis that this case was filed in the Medford Division, which is the wrong venue. Pursuant to Local Rule 3-2(b), the filing party must identify the division within the District of Oregon where "divisional venue" lies. For purposes of the Local Rules, "divisional venue" means "the division of the Court in which a substantial part of the events or omissions giving rise to the claim occurred, or a substantial part of the property that is the subject of the action is situated." LR 3-2(b). The events that form the basis for this case occurred in Coos County, Oregon. Coos County is part of the District's Eugene Division. LR 3-2(a)(3). As such, the parties agree that the case should have been filed in the Eugene Division.

In cases where the complaint has been filed in the wrong division or district, the court "shall dismiss, or if it be in the interest of justice, transfer such case to any district or division in which it could have been brought." 28 U.S.C. § 1406(a).

Pina urges the Court to dismiss the case without prejudice and permit Esurance to refile in the Eugene Division. Such a remedy is, while permissible, not an efficient use of the parties' time or the Court's resources. The Court therefore finds that the interests of justice are served by transferring this case to the Eugene Division. This Court presides over cases filed in both the Eugene Division and the Medford Division and so shall continue to preside over this case.

III. Motion for Summary Judgment

Esurance seeks a declaratory judgment to the effect that it has no duty to indemnify the Hamms for claims stemming from the altercation between Seth Hamm and Pina on March 18, 2018. Esurance also seeks a declaration that it has no duty to defend the Hamms if and when Pina re-files his state court civil claim against Seth Hamm.

"State law determines the court's interpretation of insurance policy and an insurer's duty to defend and indemnify." Allstate Ins. Co. v. Morgan , 123 F. Supp.3d 1266, 1272-73 (D. Or. 2015) (citing Larson Const. Co. v. Or. Auto. Ins. Co. , 450 F.2d 1193, 1195 (9th Cir. 1971) ). Under Oregon law, the duty to defend is "distinct from, and is broader than, the duty to indemnify under the terms of an insurance policy." Id. at 1273 (citing Ledford v. Gutoski , 319 Or. 397, 403, 877 P.2d 80 (1994) ). Although the duty to defend and the duty to indemnify turn on the terms of the policy, they are independent of one another.

W. Hills Dev. Co. v. Chartis Claims, Inc. , 360 Or. 650, 652, 385 P.3d 1053 (2016). An insurer might be obliged to defend a case that results in a verdict that is not covered by the insured's policy, or an insurer might not be obliged to defend the insured but the case results in a judgment that is covered by the policy, which requires indemnification. Id. at 652-53, 385 P.3d 1053.

An insurer's duty to defend is determined by comparing the complaint to the insurance policy, under what is known as the "four-corners" rule. W. Hills Dev. Co. , 360 Or. at 653, 385 P.3d 1053. "If the allegations in the complaint assert a claim that is covered by the policy, then the insurer has a duty to defend." Id. Conversely, if the allegations of the complaint do not assert a claim covered by the policy, then there is no duty to defend. Id. This analysis generally precludes any consideration of extrinsic evidence. Id. "Although an insurer's duty to defend depends on the pleading, the insurer has a duty to defend the insured only ‘if the claim made against the insured is one covered by the insurer.’ " Morgan , 123 F. Supp.3d at 1273 (quoting Casey v. Nw. Sec. Ins. , 260 Or. 485, 489, 491 P.2d 208 (1971) ). "While a duty to defend is triggered by the allegations in a pleading, the duty to indemnify is proven by facts that establish a right to coverage." Id.

The insured bears the burden of proving coverage, while the insurer has the burden of proving exclusion from coverage. ZRZ Realty Co. v. Beneficial Fire & Cas. Ins. Co. , 349 Or. 117, 127, 241 P.3d 710 (2010). "Thus, if the insurer can establish that the insured is precluded from coverage, it has neither the duty to defend, nor the duty to indemnify the insured." Morgan , 123 F. Supp.3d at 1273.

Esurance alleges that, under the terms of the Hamms' policy, it is not obliged to either defend or indemnify because the injury alleged by Pina in the underlying case was the result of a criminal act by Seth Hamm. As relevant to this issue, the Hamms' policy provides:

"We" [Esurance] do not cover any "bodily injury" or "property damage" intended by, or which may reasonably be expected to result from the intentional or criminal acts or omissions of, any "insured person". This exclusion applies even if:

a) such "insured person" lacks the mental capacity to govern his or her conduct;

b) such "bodily injury" or "property damage" is of a difference kind or degree than intended or reasonably expected; or

c) such "bodily injury" or "property damage" is sustained by a different person than intended or reasonably expected.

This exclusion applies regardless of whether such "insured person" is actually charged with, or convicted of, a crime.

Lanz Decl. Ex. C, at 30. ECF No. 16-1.

A. Duty to Defend and Indemnify Seth Hamm

In the present case, Pina has dismissed the underlying lawsuit against Seth Hamm. Esurance seeks a declaration that it has no duty to defend if and when Pina...