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Kaady v. Mid-Continent Casualty Co.

United States Court of Appeals, Ninth Circuit

June 25, 2015

RANDY KAADY, Plaintiff-Appellant,
v.
MID-CONTINENT CASUALTY COMPANY, an Ohio corporation, Defendant-Appellee

Argued and Submitted, Portland, Oregon October 7, 2014.

Appeal from the United States District Court for the District of Oregon. D.C. No. 3:11-cv-00706-MO. Michael W. Mosman, District Judge, Presiding.

SUMMARY[*]

Insurance Law

The panel reversed the district court's summary judgment in favor of insurer Mid-Continent Casualty Company because there was a triable issue whether the insured's claim for property damage under Mid-Continent's commercial general liability insurance policy was barred by the policy's known-loss provision, and remanded.

The insured, as part of a subcontract, affixed manufactured stone to buildings in a multi-unit residential project, and cracks developed in the manufactured stone. In an underlying action, the insured settled a claim against him; Mid-Continent denied the claim and the insured brought this diversity action. The district court held that there was relevant property damage prior to the insured obtaining the policy, and that this damage was known to the insured.

First, the panel rejected Mid-Continent's argument that so long as the insured knew about any damage to the structure, the known-loss provision barred coverage of any other damage to the same structure. The panel held under Oregon law that the insured's knowledge of damage to his own work did not automatically constitute knowledge of damage to the components of the structure furnished by others; but rather the correct inquiry was whether the claimed damage to the structural components was a " continuation, change or resumption" of the cracks.

Second, the panel held that Mid-Continent did not establish its contention that the damage for which the insured sought coverage was in fact a " continuation, change or resumption" of earlier cracks. The panel held that summary judgment was inappropriate where there was no record evidence connecting the cracks in the masonry that the insured observed before the policy to the damage to the wooden components for which the insured claimed coverage.

Robert C. Muth and Peter J. Viteznik (argued), Kilmer, Voorhees & Laurick, P.C., Portland, Oregon for Plaintiff-Appellant.

Douglas G. Houser, Matthew E. Hedberg (argued) and Janis C. Puracal, Bullivant Houser Bailey, P.C., Portland, Oregon, for Defendant-Appellee.

Before: Alex Kozinski, Ferdinand F. Fernandez and Raymond C. Fisher, Circuit Judges.

OPINION

Page 996

KOZINSKI, Circuit Judge:

We explore the meaning of a " known-loss" provision in a commercial general liability ...


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