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Chartwell Law partners David Rossmiller, Elissa Boyd and Sean Carney recently won a major victory for client Contractors Bonding and Insurance Company (“CBIC”). On January 9, 2023, in CBIC v. Radian Construction Corporation, Michael Martyn, Martyn Properties, LLC, and Pacific Rim Martial Arts Academy, LLC, the District Court granted CBIC’s motion for summary judgment, adopting in full the November 29, 2022 Findings and Recommendation of the U.S. Magistrate Judge. According to those Findings, coverage could not exist for Radian Construction, the policy’s named insured, regarding any damages arising out of work on a project where Radian failed to satisfy CBIC’s Special Condition Endorsement regarding all subcontractors on that project.
The decision’s significance in the District of Oregon is manifold. First, it is a positive result for an insurer in a state where it is markedly difficult for insurers to obtain positive results in court because Oregon courts have become more accepting of policyholder arguments in recent years. Second, it bolsters the limited case law enforcing conditions of coverage in construction contractor insurance policies that require, for coverage to exist, that insured contractors obtain certificates of insurance, additional insured coverage, and written indemnity agreements from each subcontractor working on a project before any work on the project by that subcontractor commences. Finally, it clarifies that the terms of the Endorsement were conditions of coverage, not conditions of forfeiture. The distinction between conditions of coverage and conditions of forfeiture is important because conditions of coverage require an insured to prove that it met all conditions before any coverage can exist and before the insurer has any potential obligation under the policy, whereas conditions of forfeiture pertain to actions by an insured after coverage under the policy exists and which lead to forfeiture of the existing coverage. Conditions of forfeiture, unlike conditions of coverage, are enforceable only if an insurer can show that the insurer was prejudiced by the insured’s failure to comply with the condition of forfeiture.
Congratulations, David, Elissa, and Sean!
