Preview:

FILED: September 29, 2010 IN THE COURT OF APPEALS OF THE STATE OF OREGON
FRED SHEARER & SONS, INC., an Oregon corporation, Plaintiff-Respondent,
v.
GEMINI INSURANCE COMPANY,
a Delaware corporation,
Defendant-Appellant.
GEMINI INSURANCE COMPANY,

a Delaware corporation, Counterclaim Plaintiff,
v.
FRED SHEARER & SONS, INC., an Oregon corporation, Counterclaim Defendant.
Multnomah County Circuit Court
0507-07126
A136818 (Control)
A140007

Steven K. Bushong, Judge.  (General Judgment)
Ronald E. Cinniger, Senior Judge. (Limited Judgment)
Argued and submitted on February 03, 2010.

Todd S. Baran argued the cause and filed the briefs for appellant.
John L. Langslet argued the cause for respondent.  With him on the brief were Joan L. Volpert and Martin,
Bischoff, Templeton, Langslet & Hoffman LLP.

Before Landau, Presiding Judge, and Schuman, Judge, and Ortega, Judge.
SCHUMAN, J.
Affirmed.
SCHUMAN, J.
Defendant Gemini Insurance Company insured TransMineral USA, a distributor of a stucco product.

Plaintiff Fred Shearer & Sons, Inc. (Shearer) installed that product on the exterior of a residence. The product allegedly failed, and the property owners sued their general contractor who, in turn, sued Shearer and TransMineral.  Shearer then tendered the defense of that underlying action to Gemini, on the theory that the policy issued by Gemini to TransMineral contained an endorsement that also required Gemini to cover "vendors" of TransMineral products, and that Shearer was such an entity.  Gemini rejected the tender, and Shearer brought this action seeking, among other relief, a declaration that Gemini owed Shearer a duty of defense.  The trial court granted Shearer's motion for partial summary judgment to that effect, and, after a trial on stipulated facts, entered a limited judgment against Gemini, which it now
appeals.  We affirm.(1)
Although the facts themselves are undisputed, there is a question in this case as to which of those facts properly may be considered when determining the duty to defend.  We discuss that issue below and resolve it in favor of the more inclusive position.  ___ Or App at ___ (slip op at 6-10).  The following recitation reflects that determination.
In May 2000, Walsh Construction Co. entered into a contract with the Evenstads to perform various repairs to their residence.  Walsh then subcontracted with Shearer to apply stucco to the exterior of the residence, which Shearer did.  Sometime after the repairs were completed, the Evenstads discovered cracking in the stucco, and they eventually filed an action against various defendants, including their general contractor, Walsh.  The factual allegations in that complaint included the following:
"After the repairs were completed, the [Evenstads] began to notice cracking of the stucco and were told by * * * Walsh and Shearer that such cracking was normal and to be expected. Plaintiffs became more concerned as the cracking continued and they began to notice leaking and mold[.] * * *.
"* * * * *
"While the plaintiffs have not yet obtained bids for performing the repairs that will be necessary, their preliminary estimate is that the total costs of the design and repair work will be approximately $1.5 million.  The [Evenstads] will amend this Complaint to allege the specific items and amounts of the damages when they become known."
(Paragraph numbering omitted.)
The Evenstads further alleged that Walsh had breached its construction contract in a number of specifics, including:
"(a)  Failing to mix and apply the stucco products and cladding system in a professional and workmanlike manner;
"(b)  Failing to mix and apply the stucco products and cladding system in accordance with industry standards;
"(c)  Failing to mix and apply the stucco products and cladding system according to the stucco manufacturer's instructions and recommendations;
"(d)  Failing to properly mix the lime plaster compounds to meet the appropriate density for the stucco;
"(e)  Failing to supply plaintiffs with a stucco product and cladding system that was free of defects and that met industry standards;
"(f)  Applying the cement plaster, lime plaster and/or limestone mortar that make up the stucco cladding during periods when the ambient temperature was greater than 77

Download A136818.pdf

Oregon Law