Old Republic Surety Company V Ross Island Sand Gravel Co

Key Facts

Transaction Type

Issues

• The court first determines whether it has jurisdiction over this case and the Defendants. It finds that subject-matter jurisdiction is established based on diversity of citizenship between Plaintiff Old Republic Surety Company (Wisconsin) and the Defendants (Oregon/Delaware/Washington). Personal jurisdiction is proper as all Defendants reside or are incorporated in Oregon. Venue is proper in the District of Oregon as all Defendants reside there.
• Plaintiff seeks damages for breach of the Indemnity Agreement, including $600,000 in settlement costs from the California action, attorney's fees and costs for both the California action and this litigation. The court awards $629,135.27 total, comprising the settlement amount, $12,425.25 in California action fees, $15,735.04 in this action's fees, and $974.98 in costs.
• The court assesses whether default judgment is warranted by considering seven Eitel factors: prejudice to plaintiff, merits of the claim, sufficiency of complaint, sum of money at stake, possibility of factual dispute, excusable neglect, and policy preference for merits decisions. All factors support entering default judgment in Plaintiff's favor.

Holdings

Remedies

Monetary Damages

Legal Principles

• To establish a breach of contract claim, the plaintiff must allege the existence of a contract, its relevant terms, and a breach by defendant that resulted in damage to plaintiff. The breach must be material, meaning it goes to the very substance of the contract and defeats the object of the parties in entering into the contract.
• The court applied the Eitel factors to determine whether default judgment was warranted: (1) prejudice to plaintiff, (2) merits of substantive claim, (3) sufficiency of complaint, (4) sum at stake, (5) possibility of factual dispute, (6) excusable neglect, and (7) policy preference for merits decisions. When defendants fail to participate, deciding on merits becomes impracticable.
• The Indemnity Agreement between Plaintiff and Defendants expressly authorized the plaintiff to recover attorney's fees and costs as a consequence of executing the bond or the failure of Defendants to perform under the agreement. The court found the terms of the contract authorized the fee award.
• Under Oregon law, the prevailing party on a breach-of-contract claim can recover attorney's fees if the contract terms authorize the award. The court considered O.R.S. 20.075 factors including conduct of parties, reasonableness of claims, and reasonableness of fees.
• When reviewing a motion for default judgment, the court takes well-pleaded factual allegations in the complaint as true. The court need not accept facts that are not well-pleaded, conclusions of law, or the amount of claimed damages.

Precedent Name

• DIRECTV, Inc. v. Hoa Huynh
• Mindful Insights, LLC v. VerifyValid, LLC
• PepsiCo, Inc. v. Cal. Sec. Cans
• Eitel v. McCool
• Swiss Re Corp. Sols. Am. Ins. Corp. v. Jeff Carter Constr., Inc.
• In re Tuli
• Daimler AG v. Bauman
• TeleVideo Sys., Inc. v. Heidenthal
• Liberty Mut. Ins. Co. v. RB Pamplin Corp.
• Stavrum v. NW Precision Constr. LLC
• Geddes v. United Fin. Grp.
• Huskey v. Oregon Dep't of Corr.

Key Disputed Contract Clauses

• The Indemnity Agreement expressly authorized Defendants to indemnify Plaintiff for 'every cost... including but not limited to attorney's fees' incurred as a consequence of executing the bond or Defendants' failure to perform. The court found this clause authorized the award of attorney's fees and costs totaling $17,483.38 in this action and $12,425.25 in the California action.
• The Indemnity Agreement required Defendants to 'continually indemnify and save [Plaintiff] harmless from and against every claim, demand, loss, cost, charge, suit, judgment and expense, including but not limited to attorney's fees, investigative costs, etc.' which Plaintiff may pay in consequence of executing bonds or Defendants' failure to perform. Defendants breached this obligation by refusing to indemnify Plaintiff for the $600,000 California settlement.

Cited Statute

• 28 U.S.C. § 1391(b)(1)
• 28 U.S.C. § 1332
• O.R.S. 20.083
• Federal Rules of Civil Procedure
• O.R.S. 20.075
• O.R.S. 20.077(2)

Judge Name

Passage Text

• Plaintiff's Motion for Default Judgment, ECF 10, is GRANTED. IT IS ADJUDGED that judgment is entered in favor of Plaintiff Old Republic Surety Company against Defendants Ross Island Sand & Gravel Co., R.B. Pamplin Corporation, Pacific Northwest Aggregates, Columbia Empire Farms, Inc., and Robert B. Pamplin in the amount of $629,135.27. IT IS SO ORDERED.
• IT IS ADJUDGED that judgment is entered in favor of Plaintiff Old Republic Surety Company against Defendants Ross Island Sand & Gravel Co., R.B. Pamplin Corporation, Pacific Northwest Aggregates, Columbia Empire Farms, Inc., and Robert B. Pamplin in the amount of $629,135.27.
• After the Clerk of Court enters default against a defendant, the court may enter default judgment against that defendant. Fed. R. Civ. P. 55(b)(2). When reviewing a motion for default judgment, the court takes the well-pleaded factual allegations in the complaint as true.

Damages / Relief Type