Oregon Case Law Update: Subsequent Purchaser of Real Property can Sue for Preexisting Property Damage

Oregon Case Law Update: Subsequent Purchaser of Real Property can Sue for Preexisting Property Damage

From the Desk of Smith Freed Eberhard: While Oregon courts have not specifically addressed the so-called “owner-claimant” rule, which would require that a claimant own the damaged property at the time the property damage occurred in order for the liability to be covered under a general liability policy, other jurisdictions have roundly rejected the rule where the damage is continuous and progressive (such as, for example, a long-term water leak).  In this case, an Oregon federal district court analyzed case law from other jurisdictions and concluded that the Oregon Supreme Court would likely also reject the rule, thus allowing a subsequent purchaser of real property to sue for preexisting property damage.

Claims Pointer:  In this case arising out of long-term water damage to real property, the court rejected the “owner-claimant rule” and determined that a subsequent purchaser of real property could sue for preexisting property damage where the applicable insurance policy covered damaged that occurred during the period of coverage.  Moreover, the court noted that under FountainCourt, a prior Oregon Court of Appeals case, more than one insurer could be liable for the same continuous and progressive damage.

American States Ins. Co. v. PIH Beaverton LLC, 2016 WL 3473349 (D Or May 3, 2016)

PIH Beaverton, LLC, (PIH) purchased the Phoenix Inn Suites hotel in Beaverton, Oregon, in 2006.  Shortly after completing the purchase, PIH discovered that the hotel had a number of significant construction defects, including defects stemming from subcontract work performed in 1997 by Portland Plastering while they were covered under a commercial general liability (CGL) policy issued by American States Insurance Company (American States).  PIH sued several contractors, including Portland Plastering, for negligent construction, alleging that Portland Plastering...

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