Court Opinion

ID: 219302
Source: CourtListenerOpinion
Date Created: 2011-06-22 00:01:54+00
Date Added: 2024-06-11T17:28:40.051290
License: Public Domain

FILED
                           NOT FOR PUBLICATION                              JUN 21 2011

                                                                        MOLLY C. DWYER, CLERK
                    UNITED STATES COURT OF APPEALS                       U .S. C O U R T OF APPE ALS

                            FOR THE NINTH CIRCUIT

ERNEST DESROSIERS,                               No. 10-35773

              Plaintiff-counter-defendant -      D.C. No. 3:09-cv-01201-PK
Appellant,

  v.                                             MEMORANDUM *

HUDSON SPECIALTY INSURANCE
COMPANY,

              Defendant-third-party-
plaintiff-cross-claimant - Appellee.

                    Appeal from the United States District Court
                              for the District of Oregon
                     Paul J. Papak, Magistrate Judge, Presiding

                        Argued and Submitted June 6, 2011
                                Portland, Oregon

Before: FISHER, GOULD, and PAEZ, Circuit Judges.

       Ernest Desrosiers sued Hudson Specialty Insurance Company (“Hudson”) to

recover on a judgment previously obtained against Hudson’s insured, Mary’s Fine

Food, Inc. (“Mary’s Club”), corporate owner of the Portland bar Mary’s Club.

        *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
That previous action was for injuries that Desrosiers sustained outside Mary’s Club

allegedly inflicted by bar patron Paul Whisenhunt after he had been served alcohol

in excessive quantity. Hudson refused to defend Mary’s Club because it

determined that Desrosiers’ claims fell within the scope of the insurance policy’s

exclusion for injuries arising from assaults or batteries. The personal injury suit

settled, and Mary’s Club assigned to Desrosiers its rights against Hudson for

indemnity and breach of the duty to defend. In Desrosiers’ present action seeking

to enforce those rights against Hudson, the district court granted summary

judgment to Hudson, concluding that Hudson had neither a duty to defend nor a

duty to indemnify Mary’s Club under the policy. Desrosiers v. Hudson Specialty

Ins. Co., No. 09-1201, 2010 WL 3218584, *4–6 (D. Or. Aug. 13, 2010).1

Desrosiers appealed. Our jurisdiction is pursuant to 28 U.S.C. § 1291, and we

reverse.

      Hudson had a duty to defend Mary’s Club. Oregon law provides that “[a]n

insurer has a duty to defend an action against its insured if the claim against the

insured stated in the complaint could, without amendment, impose liability for

      1
        Hudson removed the case from state court, and the district court had
diversity jurisdiction because this post-judgment collection effort is not a “direct
action” within the meaning of 28 U.S.C. § 1332(c)(1). See Beckham v. Safeco
Insurance Co. of America, 691 F.2d 898, 900–02 (9th Cir. 1982).

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conduct covered by the policy.” Ledford v. Gutoski, 877 P.2d 80, 82 (Or. 1994).

“The insurer has a duty to defend if the complaint provides any basis for which the

insurer provides coverage. . . . Any ambiguity in the complaint with respect to

whether the allegations could be covered is resolved in favor of the insured.” Id. at

83 (emphasis in original). Here, the complaint pled alternative theories: first, that

Desrosiers’s injuries were caused by the negligence of both Whisenhunt and

Mary’s Club; and, second, that Whisenhunt intentionally attacked Desrosiers.

See Or. R. Civ. P. 16(c) (permitting the pleading of inconsistent theories). The

negligence allegations triggered Hudson’s duty to defend because the policy

exception covers assault and battery, which are intentional torts, see Cook v.

Kinzua Pine Mills Co., 293 P.2d 717, 723 (Or. 1956), so the allegation that

Desrosiers’s injuries were caused by Whisenhunt’s negligence falls outside the

scope of the policy’s exclusion.

      We reject Hudson’s argument that the complaint’s factual allegations are

inconsistent with the possibility that Whisenhunt negligently struck Desrosiers. A

rational jury could have found that an intoxicated Whisenhunt was incapable of

forming the requisite intent to commit assault or battery. See Hunter v. Farmers

Ins. Co., 898 P.2d 201, 207 (Or. Ct. App. 1995) (affirming that a drunk bar patron

was reasonably found not to have intended injury from punching someone in the

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face). That the complaint describes the incident as an “assault” does not preclude

coverage because that term appears only within the second claim for relief, which

states the alternative theory of an intentional attack. See Ledford, 877 P.2d at 83

(“Even if the complaint alleges some conduct outside the coverage of the policy,

the insurer may still have a duty to defend.”).

      Hudson concedes that if it breached its duty to defend then it must

indemnify. We agree that an insurer that breaches its duty to defend may not later

argue that it has no duty to indemnify. See Nw. Pump & Equip. Co. v. Am. States

Ins. Co., 917 P.2d 1025, 1029 (Or. Ct. App. 1996) (“When an insurer wrongfully

refuses to defend its insured on a claim that could impose liability covered by the

policy and the insured, acting in its own defense, reasonably settles the claim, the

insurer is liable for the amount of the settlement.”). We therefore direct the district

court, on remand, to calculate Desrosiers’ damages and to enter judgment for him.

      REVERSED and REMANDED.

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