OR Case Update: The Silent Complaint: Does Subcontractor’s Insurer have Duty to Defend Where Complaint Fails to Allege Subcontractor’s Negligence?

From the Desk of Ryan J. McLellan: Oregon law provides that a subcontractor’s insurer may have a duty to defend a general contractor and owner against damages arising out of the subcontractor’s own negligence. Because it is common for an injured employee to receive workers’ compensation benefits and therefore omit his own employer from a complaint, it is not always clear from the complaint whether damages were caused by the subcontractor’s negligence. So when does the duty to defend trigger in such a circumstance? Read on to see how Oregon courts handle this issue.

Claims Pointer: Pursuant to Oregon’s anti-indemnity statute for construction contracts, an insurer is obligated to provide a defense to its additional insureds only when the additional insureds’ involvement in the case arose out of the negligence of the named insured. In this coverage case involving a construction site injury, a federal Oregon District Court held that an insurer’s duty to defend its additional insureds can be triggered even though the complaint contains no allegations of negligence against the named insured. The court reasoned that when the complaint merely “implies the negligence” of the named insured, the insurer will have a duty to defend its additional insured. When deciding whether to accept the defense of additional insured in construction site cases (or when deciding to press for a defense as an additional insured), make sure to review the allegations of the complaint broadly and with the understanding that the complaint need only to imply the negligence of the named insured for the duty to defend to arise.

Homeland Insurance Co. of New York v. AAM, Inc., et al., 2016 WL 2841944 (D Or May 13, 2016)

Del Monte Foods, Inc. (“Del Monte”), hired CentiMark Corporation (“CentiMark”) to perform repairs to Del Monte’s warehouse. CentiMark subcontracted part of the project to AAM, Inc. (“AAM”), and the subcontract required AAM to add CentiMark and Del...

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