Industrial Finishes & Systems, Inc. v. American Universal Insurance

BUTTLER, P. J.

Defendant Wagner-Spray Tech Corporation (Wagner) petitions for reconsideration of our decision in Ind. Finishes & Systems v. Amer. Univ. Ins., 79 Or App 614, 720 P2d 382 (1986). We grant the petition only to explain more fully why plaintiffs indemnity claim against Wagner must be reinstated.

Plaintiff brought this action to recover expenses incurred in defending and settling a lawsuit brought against it and Wagner by an employe of Willamette Industries. The trial court granted plaintiffs motion for summary judgment against defendant American Universal Insurance Company (American), holding that American was liable for the entire amount expended on the basis of insurance coverage afforded plaintiff under an insurance policy that it had issued to Wagner. It then dismissed plaintiffs indemnity claims against Wagner as moot.

We held that the extent of American’s liability arising out of the coverage that Wagner’s policy afforded plaintiff was limited by the Lamb-Weston doctrine to one-half of plaintiffs loss, because plaintiff was also insured against the same loss under an insurance policy issued to it by Transamerica Insurance Co. Accordingly, we reversed and remanded with instructions to reinstate plaintiffs indemnity claim against Wagner without discussing those claims.

Wagner now contends that our instructing the trial court to reinstate plaintiffs indemnity action against it is contrary to United Pac. Ins. v. Truck Ins. Exch., 273 Or 283, 541 P2d 448 (1975). There, the court held that the Lamb-Weston doctrine applied in a common-law indemnity action brought by United Pacific Insurance Co. against Truck Insurance Exchange, which was subrogated to the rights of the individual ultimately responsible for the underlying liability. Contrary to Wagner’s contention, the court did not reject United Pacific’s claim of a right to bring a common-law indemnity action. It held, rather, that United Pacific’s recovery was limited by application of the Lamb-Weston doctrine, because the individual from whom United Pacific, in effect, sought indemnity was insured by it as well as by Truck Insurance Exchange. Here, plaintiff seeks indemnification from Wagner, which does not allege or now claim that it is an insured under the policy issued to plaintiff by Transamerica. United Pac. Ins. is therefore inapposite. See Fireman’s Fd. Am. Ins. Cos. v. Turner, 260 Or 30, 488 P2d 429 (1971).

As a practical matter, we recognize that, if plaintiff prevails on its claim against Wagner, American ultimately may be liable for the entire amount that was expended in settling the underlying lawsuit. However, neither Lamb-Weston nor United Pac. Ins. precludes that result when the person who is ultimately responsible for the damage is not an insured under the plaintiffs policy.¹

Petition for reconsideration allowed; former opinion, as amplified, adhered to.

1 Wagner suggests that Transamerica, rather than plaintiff, is the real party in interest. See generally Northern Ins. Co. v. Conn Organ, 40 Or App 785, 596 P2d 605, rev den 287 Or 507 (1979). However, that issue was not raised on appeal, and we do not consider it.