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Phillip E. Joseph, OSB No. 882372

pjoseph@balljanik.com 

Kyle A. Sturm, OSB No. 080214 

ksturm@balljanik.com 

BALL JANIK LLP 

101 SW Main Street, Suite 1100 

Portland, Oregon 97204-3219 

503-228-2525 

Fax 503-295-1058 

Attorneys for RUSSELLVILLE II, LLC 

UNITED STATES DISTRICT COURT 

DISTRICT OF OREGON 

PORTLAND DIVISION

RUSSELLVILLE II, LLC, an Oregon limited 

liability company, 

Plaintiff, 

v. 

CLARENDON NATIONAL INSURANCE 

COMPANY, an Illinois company, and 

AMERICAN HALLMARK INSURANCE 

COMPANY OF TEXAS, a Texas company, 

Defendant. 

Case No. 

COMPLAINT (Breach of Contract; 

Breach of Implied Covenant of Good 

Faith and Fair Dealing) 

Prayer Amount: $2,243,270.50 

DEMAND FOR JURY TRIAL ON ALL 

ISSUES TRIABLE BY JURY 

COMES NOW plaintiff Russellville II, LLC (“Russellville II” or “Plaintiff”), and for its 

complaint against defendants Clarendon National Insurance Company (“Clarendon”) and 

American Hallmark Insurance Company of Texas (“Hallmark”) (collectively “Defendants”), 

alleges as follows: 

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1. Russellville II is an Oregon limited liability company. 

2. Clarendon is an insurance company that issued general liability policies to Raul 

Pantoja (“Pantoja”) as an insured. Clarendon is an Illinois insurance company that, at all relevant 

times, was authorized to issue insurance policies in Oregon. 

3. Hallmark is an insurance company that issued general liability policies to 

Pantoja’s Plastering, Inc. d/b/a Raul Pantoja (“Pantoja”) as an insured. Hallmark is a Texas 

insurance company that, at all relevant times, was authorized to issue insurance policies in 

Oregon. 

4. This Court has jurisdiction over the subject matter of this action pursuant to 28 

U.S.C. §1332(a), because there is complete diversity of citizenship between the parties. The 

amount in controversy exceeds the sum of $75,000. Venue lies with this Court pursuant to 28 

U.S.C. §1391(a), because the events which give rise to this dispute occurred in the District of 

Oregon. 

5. Russellville II is a mixed-use complex located at 20 SE 103rd Ave, Portland, 

Multnomah County, Oregon 97216 (the “Project”), comprised of two buildings that are part of 

one campus (which caters to senior citizens), are subject to common ownership and management 

and a common loan. The Project contains commercial and residential space, and assisted living 

facilities. Residents share amenities at the Project, move freely between the buildings at the 

Project. 

6. Russellville II initiated a lawsuit against Pantoja (and others) for certain property 

damage resulting from defective construction of the Project (Multnomah County Case No. 

14CV06627, the “Lawsuit”). In the Lawsuit, Russellville II alleged it was a mixed-use project 

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and that Pantoja’s negligence caused water intrusion and resulting property damage at the 

Project. 

7. Defendants had notice of the Lawsuit and were provided copies of operative 

pleadings. 

8. Defendants failed to defend Pantoja in the Lawsuit. 

9. Pantoja failed to appear in the Lawsuit. 

10. Defendants received notification that Russellville II would move forward with a 

motion for default against Pantoja, their mutual insured. 

11. Defendants received a copy of the Motion for Order of Default that Russellville II 

filed with court, and failed to contest the Motion or otherwise defend Pantoja. 

12. Following a prima facie hearing, the court granted Russellville II’s Motion for 

Oregon of Default and entered a Default Judgment and Money Award against Pantoja and in 

favor of Russellville II in the principal sum of $2,243,270.50, plus pre-judgment interest and 

post-judgment interest at 9% per annum. 

13. Defendants were provided copies of the Default Judgment and Money Award, and 

refused to satisfy the Judgment, contending that there was no possibility of coverage. 

14. The judgment against Pantoja is unsatisfied. Pursuant to ORS 742.031, which is 

incorporated into the policies issued by Defendants to Pantoja, and by the express terms of the 

applicable general liability policies, Russellville II, standing in the shoes of Pantoja, brings this 

action against Defendants to recover the full amount of the Default Judgment and Money Award 

and statutory attorney fees pursuant to ORS 742.061. 

/// 

/// 

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FIRST CLAIM FOR RELIEF 

(Breach of Contract)

 15. Clarendon issued general liability policies to Pantoja (policy numbers 50-MG429029-00/000 and 50-MG-429029-01/000) effective from November 6, 2003 to November 6, 

2005. Hallmark issued general liability policies to Pantoja (policy numbers 44-MG-429029-

02/000; 44-MG-429029-03/000; 44-MG-429029-04/000; 44-MG-429029-05/000; and 44-MG429029-06/000) effective from November 6, 2005 to November 6, 2010). (The policies 

referenced in this paragraph are collectively referred to as the “Policies.”) 

 16. The Policies provided insurance coverage to Pantoja, and by which Defendants 

agreed, among other things, to defend Pantoja against any claim alleging property damage 

covered by the Policies, and to pay those sums that Pantoja became legally obligated to pay 

because of property damage. 

 17. Defendants breached the terms of the Policies by failing to honor their defense 

obligations, and by failing to indemnify Pantoja for the sums Pantoja is legally obligated to pay 

Russellville II. 

 18. As a result of Defendants’ breaches, Russellville II, standing in the shoes of 

Pantoja, seeks damages in an amount to be proven at trial, but which are no less than 

$2,243,270.50. 

 19. Pantoja complied with and satisfied all conditions precedent (if any), except any 

that were excused, in the Policies. 

 20. Russellville II seeks attorney fees pursuant to ORS 742.061. 

/// 

/// 

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SECOND CAUSE OF ACTION 

(Breach of the Implied Duty of Good Faith and Fair Dealing) 

 21. Defendants owed an implied duty of good faith and fair dealing to Pantoja, 

requiring Defendants to give at least equal consideration to Pantoja’s interests as they did their 

own interests. 

 22. Defendants breached the implied duty of good faith and fair dealing in the 

following ways (among others): 

a. They unreasonably failed to attempt any meaningful resolution of the 

Default Judgment and Money Award entered in favor of Russellville II 

and against Pantoja; 

b. They unreasonably failed to settle a claim in which liability had become 

reasonably certain; 

c. They failed to adopt and implement reasonable standards for the prompt 

investigation and resolution of claims; and 

d. They failed to pay claims without conducting a reasonable investigation 

based upon all available information. 

23. Defendants’ breaches of the implied duty of good faith and fair dealing caused 

Pantoja damages in an amount to be proven at trial, but not less than $2,243,270.50, which 

Russellville II, standing in the shoes of Pantoja, is entitled to recover. 

24. Russellville II seeks attorney fees pursuant to ORS 742.061. 

PRAYER FOR RELIEF

 WHEREFORE, Russellville II prays for judgment against Defendants as follows: 

 A. Judgment in its favor; 

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 B. Damages in the amount of $2,243,270.50; 

 C. Pre-judgment and post-judgment interest; 

 D. Attorney fees; 

 E. And any other relief the court deems just and/or equitable. 

DATED: April 15, 2015 Respectfully submitted, 

By: /s/ Kyle A. Sturm 

PHILLIP E. JOSEPH, OSB No. 882372 

KYLE A. STURM, OSB No. 080214 

503-228-2525 

Attorneys for RUSSELLVILLE II, LLC 

Trial Attorneys Phillip E. Joseph and Kyle A. 

Sturm 

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