Courthouse Square Affiliated FM Insurance Company Lawsuit
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Michael E. Farnell, OSB # 922996 [email protected] Seth H. Row, OSB # 021845 [email protected] PARSONS FARNELL & GREIN, LLP 1030 SW Morrison Street Portland, Oregon 97205 Telephone: (503) 222-1812 Facsimile: (503) 274-7979
Attomeys for Plaintiffs Courthouse Square Condominium Association and Marion County, Oregon
UNITED STATES DISTRICT COURT DISTRICT OF OREGON PORTLAND DIVISION
COURTHOUSE SQUARE CONDOMINIUM ASSOCIATION, an Oregon nonprofit corporation; and MARlON COUNTY, OREGON, an Oregon public entity, Plaintiffs, v.
CVc4~~:Q 26
8- AC
COMPLAINT
(Breach of Contract; Declaratory Judgment) [28 U.S.C. § 1332; 28 U.S.C. § 2201]
AFFILIATED FM INSURANCE COMPANY, a Rhode Island corporation, Defendant.
DEMAND FOR JURY TRIAL
PRELIMINARY STATEMENT
1.
This is an action for breach of insurance contracts, declaratory judgment, and damages with respect to property insurance policies issued to Plaintiffs by Affiliated FM Insurance Company ("Affiliated FM") and covering Marion County Courthouse Square ("Courthouse Page 1 - COMPLAINT
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Square"). Courthouse Square has sustained direct physical losses and/or damage, is damaged, structurally and otherwise, so structurally impaired as to be unfit for its intended purpose, and dangerous, to such an extent that the property must be substantially repaired if not replaced. In addition to repair or replacement costs and damages, one or both Plaintiffs have incurred other losses and damages, including but not limited to investigation costs, loss of business income, extra expenses, and other costs, liabilities and expenses. 2. The direct physical losses and/or damage to Courthouse Square and other covered losses and damage were sustained during periods covered by the property insurance policies issued by Affiliated FM, and were caused by or resulted from a peril or perils covered by those policies. Affiliated FM has wrongfully refused to acknowledge coverage under these policies for the damage, losses, costs, fees, liabilities and expenses incurred or to be incurred by Plaintiffs in connection with Courthouse Square. 3. Accordingly, Plaintiffs seek awards of damages for breach of contract against Affiliated FM. Plaintiffs also seek declaratory judgment against Affiliated FM regarding the rights, duties, and liabilities of the parties under the property insurance policies issued by Affiliated FM to Plaintiffs.
JURISDICTION AND VENUE
4. This action is a civil action over which this Court has jurisdiction pursuant to 28 U.S.c. § 1332 and 28 U.S.C. § 2201. This is a civil action between citizens of different states and the amount in controversy exceeds $75,000, exclusive of interest, costs, and attorney fees.
5.
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occurred in that District and Division, and because the defendant is subject to personal jurisdiction in that District.
PARTIES
6.
Plaintiff Courthouse Square Condominium Association ("the Association") is an Oregon nonprofit corporation organized and existing under the laws of the State of Oregon, having its principal place of business in Salem, Oregon.
7.
Plaintiff Marion County, Oregon ("the County"), is an Oregon public entity, having its principal place of business in Salem, Oregon. 8. Defendant Affiliated FM is an insurance company incorporated and organized under the laws of the State of Rhode Island, having its principal place of business at 1301 Atwood Ave., Johnston, Rhode Island, 02919. At all relevant times, Affiliated FM was authorized to issue insurance policies in and conducted business in the state of Oregon.
ALLEGA TIONS COMMON TO ALL CLAIMS
Courthouse Square
9. Courthouse Square is located at 555 Court Street NE, Salem, Oregon. It was constructed in 1999-2000. It was intended to serve as both the County's central office and a transit center hub for buses and other transportation services offered by the Salem Area Mass Transit District ("Transit").
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10.
Courthouse Square consists of a 163,000 square foot, five-floor office building, a two direction "bus mall" at street-level, a street-level undeveloped area known by various names including the Future Development Unit, and an underground parking garage that extends under all of the above-ground areas.
11.
Courthouse Square is owned by the County and Transit. Both the County and Transit are members of the Association and are the only members of the Association. The Association exercises control over certain aspects of Courthouse Square and takes other acts under the authority of recorded documents pursuant to the Oregon Condominium Act. The Association has an insurable interest in the entirety of Courthouse Square. 12. When the condominium was created, the County and Transit deeded certain units in the condominium to the County, and certain units to Transit. In addition, the County has an insurable interest in all of the common elements of the condominium. 13. Courthouse Square was constructed using concrete columns and post-tensioned concrete slabs. 14. The County consolidated and moved operations and offices from various other locations to the office building at Courthouse Square shortly after the building was completed. In connection with moving operations to the office building, the County purchased and installed servers and other equipment into the office building that were not intended to be removable.
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15. The County received revenue from renting out parking spaces at Courthouse Square to employees, and from providing maintenance and other services to the Association. 16. In June 2010, consultants retained by Plaintiffs conducted comprehensive tests and analysis of the bus mall structure. The consultants determined that the bus mall was damaged, structurally and otherwise, and so structurally impaired as to be unfit for its intended purpose and dangerous. Plaintiffs thereafter closed and vacated the bus mall. 17. In July 2010, the consultants conducted similar comprehensive tests and analysis on the Courthouse Square office building. The consultants determined that the office building was damaged, structurally and otherwise, and so structurally impaired as to be unfit for its intended purpose and dangerous. 18. On July 30, 2010, the City of Salem declared the entirety of Courthouse Square to be dangerous and issued a Notice and Order to Abate a Dangerous Building, requiring that Courthouse Square be fully vacated within 60 days. The Notice and Order stated that: Unstable structural conditions or defects exist in the buildings and
structures to the extent that the buildings and structures are unsafe and the
life, health, property, or safety ofthe public or its occupants are
endangered.
The Notice and Order mandated that the structural failures in Courthouse Square be repaired and remedied, or the entire complex be demolished. Plaintiffs thereafter closed and vacated the office building and all other portions of Courthouse Square.
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The Affiliated FM Insurance Policies 19. In consideration for the payment of premiums, Affiliated FM issued to the Association Policy No. PB 175, date of issue September 30, 2008, with policy period October 1, 2008 to October 1,2009 ("the 2008 Association All-Risk Policy") and Policy No. PB326, date of issue October 1, 2009, with policy period October 1, 2009 to October 1, 2010 ("the 2009 Association All-Risk Policy"). Affiliated FM endorsed the location 555 Court Street NE Salem Oregon 97301 at the inception of both the 2008 Association All-Risk Policy and the 2009 Association All-Risk Policy. The 2008 Association All-Risk Policy has an aggregate limit of $27,735,500. The 2009 Association All-Risk Policy has an aggregate limit of $29,022,275. The 2008 Association All-Risk Policy and the 2009 Association All-Risk Policy are referred to collectively hereinafter as the "Association All-Risk Policies." 20. In consideration for the payment of premiums, Affiliated FM issued to the County Policy No. PB232, date of issue February 27,2009, with policy period March 1,2009 to March 1,2010 ("the 2009 County All-Risk Policy"), and Policy No. PB393, date of issue February 25,2010, with policy period March 1,2010 to March 1,2011 ("the 2010 County All-Risk Policy"). Affiliated FM endorsed the location 555 Court Street NE Salem Oregon 97301 at the inception of both the 2009 County All-Risk Policy and the 2010 County All-Risk Policy. The 2009 County All-Risk Policy has an aggregate limit of$115,108,740. The 2010 County All-Risk Policy has an aggregate limit of$120,260,453. The 2009 County All-Risk Policy and the 2010 County All-Risk Policy are referred to collectively hereinafter as the "County All-Risk Policies." The Association All-Risk Policies and County All-Risk Policies are referred to collectively hereinafter as the "All-Risk Policies."
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21.
The Association All-Risk Policies provide insurance for losses suffered by the Association for damage to real property (Courthouse Square), loss of business income, and certain expenses incurred due to property loss.
22.
The County All-Risk Policies provide insurance for losses suffered by the County for damage to real property (including but not limited to Courthouse Square), loss of business income, and certain expenses incurred due to property loss. 23. Each of the All-Risk Policies states that it provides "insur[ance] against all risks of direct physical loss or damage to insured property except as excluded under this policy."
Covered Losses and/or Damage - Physical Loss During Policy Period(s)
24. Courthouse Square has sustained direct physical losses and/or damage, including ensuing and/or resulting losses and/or damage, during the policy periods of one or more of the County All-Risk Policies and one or more of the Association All-Risk Policies and caused by a peril or perils covered by the All-Risk Policies. Courthouse Square has suffered physical losses and/or damage, and ensuing and/or resulting losses and/or damage, including but not limited to the following: a) Damage to the office building. In particular, the slabs of the office building are
deflecting downward in long spans of the transverse direction, while overbalancing in the longitudinal direction causing crowning mid-grid rather than deflection. The slabs have deformed, descended involuntarily, have fallen, and have otherwise moved involuntarily in a manner that has damaged the slab and building. In addition, the office building has experienced slab movement, structural impaim1ent at slab perimeters, movement and damage at tops of columns, and structural impairment and damage (including movement or separation from Page 7 - COMPLAINT
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intended locations) in concrete walls. As a result, the metal studs that comprise the primary structural system of the building's brick veneer have twisted. Those studs have fallen away from the building and/or otherwise been deformed, separated or moved from their intended position and have been damaged thereby, causing additional damage to the brick veneer and masonry system itself. The damage described above to the office building has in tum caused damage to finishes and other components of the office building, including causing certain building elements to deform, fall or separate from their intended locations. The office building is damaged, structurally and otherwise, and is so structurally impaired as to be unfit for its intended purpose and dangerous. b) Damage to the slab at the bus mall and the columns supporting it in the parking
area. In particular, the bus mall is overstressed by up to 300% in punching shear, and nearly all columns supporting that slab, located in the parking area, are overstressed. Two rows of columns are leaning inward, having deformed, fallen or separated from their intended position as part of the structural support, and several other columns have significant and pronounced structural impairment due (on information and belief) to damage to the elevated slab. The bus mall is damaged, structurally and otherwise, and is so structurally impaired as to be unfit for its intended purpose and dangerous . c) Damage to the Future Development Unit. In particular, the slab is experiencing
punching shear stresses and other effects from high pre-compression stress and other causes, and is cracking, resulting in water intrusion and other damage. The slab is damaged, structurally and otherwise, and is so structurally impaired as to be unfit for its intended purpose and dangerous. d) Damage to and around numerous windows and the ceiling at the fifth floor of the
office building and associated damage to window sealant. e) Damage to interior wall assemblies and finishes due to damage to the floor slabs
in the office building.
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The damage to Courthouse Square, including but not limited to the damage noted above, has resulted in destruction of the function of the property, the property being unusable, the property being unsafe for occupancy, and the property having to be taken out of service. 25. The consultants retained by Plaintiffs have forecast the cost to repair the losses and damage detailed above at up to the following amounts: Office Building Bus Mall Future Development Unit
Total
$46,336,530.00 $10,375,284.00 $3,421,730.00
$60,133,544.00
Business Income & Extra Expense Losses
26. The direct physical losses and/or damage detailed above and the resulting closure of Courthouse Square have also caused or will cause the Association to sustain losses and incur extra expense as defined in the Association All-Risk Policies, including the following: a) The Association retained professionals to assess the nature and severity of the
damage to Courthouse Square, the cost of which was in excess of policy limits; b) The Association projects that the repair or replacement of Courthouse Square will
involve costs to replace damaged pavements and roadways in excess of policy limits; c) The Association projects that the repair or replacement of Courthouse Square will
involve costs covered as Demolition and Increased Cost of Construction as those terms are defined in the Association All-Risk Policies in excess of policy limits;
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d)
The Association projects that the repair or replacement of Courthouse Square will
involve costs covered as Soft Costs as that term is defined in the Association All-Risk Policies. 27. The direct physical losses and/or damage detailed above and the resulting closure of Courthouse Square have also caused, are causing and will cause the County loss of business income and have caused, are causing, and will cause the County to suffer additional losses and to incur extra expenses as defined in the County All-Risk Policies, including the following: a) When it was required to vacate the office building due to the damage described
above, the County experienced losses of business personal property which could not be salvaged, principally to information technology equipment that had been installed at Courthouse Square; b) The County was required to retain professionals to assess the nature and severity
of the damage to Courthouse Square, the cost of which was in excess of policy limits; c) The County projects that the repair or replacement of Courthouse Square will
involve costs to replace damaged pavements and roadways in excess of policy limits; d) The County projects that the repair or replacement of Courthouse Square will
involve costs covered as Demolition and Increased Cost of Construction as those terms are defined in the County All-Risk Policies in excess of policy limits; e) the loss; The County expended funds on locks and keys to secure Courthouse Square after
f)
The County projects that the restoration or repair of Courthouse Square will
involve costs covered as Soft Costs as that term is defined in the County All-Risk Policies; g) Due to the office building and parking garage being damaged, structurally and
otherwise, and so structurally impaired as to be unfit for their intended purpose and dangerous, and taken out of service, the County suffered losses covered as Business Interruption in two areas: lost revenue from parking spaces that the County leased to employees; and lost revenue under a service agreement between the County and the Association. With regard to parking Page 10 - COMPLAINT
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revenue, the County has been able to mitigate its losses but only in part. Those losses are continuing; h) The County incurred significant relocation costs as a result of the office building
being damaged, structurally and otherwise, and so structurally impaired as to be unfit for its intended purpose and dangerous, and taken out of service. The County moved its offices from the office building to several other locations, most of which are leased from others. Therefore, the County has also incurred significant extra expense in the form of leases for temporary replacement offices. Those losses are in excess of policy limits. Those losses are continuing.
Notice to Affiliated FM
28. Beginning in or about June 2010, Plaintiffs provided notice to Affiliated FM that Courthouse Square was damaged, structurally and otherwise, and so structurally impaired as to be unfit for its intended purpose and dangerous, and that the City of Salem had ordered Courthouse Square to be vacated. 29. Subsequently, Plaintiffs have provided all information and notices reasonably required or requested by Affiliated FM regarding the damage and losses described above. 30. Affiliated FM has failed to acknowledge coverage under any ofthe All-Risk Policies and/or to pay any ofthe losses described above.
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FIRST CLAIM FOR RELIEF (Breach of Contract - Association)
31. The Association realleges and incorporates paragraphs 1 through 30 above as if fully set forth herein. 32. The Association has complied with all terms and conditions precedent of the Association All-Risk Policies except any that were excused and/or waived. 33. The date ofloss is July 30, 2010. Accordingly, Affiliated FM's failure to acknowledge coverage and/or to pay amounts owed to the Association constitutes a breach of the 2009 Association All-Risk Policy. 34. In the alternative, Affiliated FM's failure to acknowledge coverage and/or to pay amounts owed to the Association constitutes a breach ofthe 2008 Association All-Risk Policy. 35. As a direct and proximate result of Affiliated FM's breach of contract, the Association has suffered damages in an amount to be proven at trial but in excess of $75,000. 36. Because of the breach of contract alleged above, the Association has been required to incur attorney fees to protect its interests. Pursuant to ORS 742.061 , the Association is entitled to recover its attorney fees incurred to protect its interests and pursue recovery under the Association All-Risk Policies.
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SECOND CLAIM FOR RELIEF (Breach of Contract- County) 37. The County realleges and incorporates paragraphs 1 through 30 above as if fully set forth herein.
38 .
The County has complied with all tenns and conditions precedent of the County All-Risk Policies except any that were excused and/or waived. 39. The date ofloss is July 30,2010. Accordingly, Affiliated FM's failure to acknowledge coverage and/or to pay amounts owed to the County constitutes a breach of the 2010 County All Risk Policy. 40. Alternatively, Affiliated FM's failure to acknowledge coverage and/or to pay amounts owed to the County constitutes a breach ofthe 2009 County All-Risk Policy.
41.
As a direct and proximate result of Affiliated FM's breach of contract, the County has suffered damages in an amount to be proven at trial but in excess of $75,000. 42. Because of the breach of contract by Affiliated FM alleged above, the County has been required to incur attorney fees to protect its interests. Pursuant to ORS 742.061, the County is entitled to recover its attorneys fees incurred to protect its interests and seek recovery under the County All-Risk Policies.
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THIRD CLAIM FOR RELIEF (Declaratory Judgment)
(28 U.S.C. § 2201) 43. Plaintiffs reallege and incorporate paragraphs 1 through 30 above as if fully set forth herein. 44. The Association and County have given timely notification to Affiliated FM of the losses alleged above and made timely demands in writing that Affiliated FM acknowledge coverage for the losses alleged above. 45.
Certain of Plaintiffs' losses are continuing in nature.
46. Plaintiffs have complied with all terms and conditions precedent to coverage except any that were excused and/or waived. 47. Affiliated FM has failed to acknowledge that it is obligated to indemnify Plaintiffs for the losses alleged above. 48.
An actual controversy exists between Plaintiffs and Affiliated FM concerning Affiliated
FM's duty to indemnify the Association and County for the losses alleged above. 49. Under the circumstances, it is necessary and appropriate for the Court to declare Affiliated FM's duties under the All-Risk Policies. Pursuant to 28 U.S.C. § 2201, Plaintiffs request declaratory judgment construing the rights and duties of Affiliated FM under the All-Risk
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Policies. Plaintiffs request declaratory judgment that Affiliated FM is obligated to indemnify Plaintiffs for the losses described above. 50. Plaintiffs have been required to incur attorney fees to protect their interests in connection with the above-sought declaratory relief. Pursuant to ORS 742.061, Plaintiffs are entitled to recover their attorneys fees incurred in protecting their interests and seeking a declaration of rights under the All-Risk Policies.
PRAYER FOR RELIEF
WHEREFORE, Plaintiffs pray for judgment as follows:
1.
On the First Claim for Relief (Breach of Contract - Association): a. Compensatory damages in an amount to be proven at trial but more than $75,000;
2.
On the Second Claim for Relief (Breach of Contract - County): a. Compensatory damages in an amount to be proven at trial but more than $75,000;
3.
On their Third Claim for Relief (Declaratory Judgment): a. Declaratory judgment in favor of the Association and County and against
Affiliated FM, ordering and decreeing that the losses suffered, including amounts expended as extra expenses and loss of business income, constitute losses covered by the All-Risk Policies; 4. On All Claims for Relief: a. b. c. d. Plaintiffs' costs and disbursements incurred herein; Plaintiffs' attorney fees pursuant to ORS 742.061; Prejudgment interest at 9% per annum; Interest at the maximum legal allowable rate from the date of judgment; and
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e.
Any other relief the Court deems just and equitable.
DATED this 14th day of February, 2012. PARSONS FARNELL & GREIN, LLP
By: Michael E. Farnell, OSB # 922996 Seth H. Row, OSB # 021845 Telephone: (503) 222-1812 Attorneys for Plaintiffs Courthouse Square Condominium Association and Marion County, Oregon
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Michael E. Farnell, OSB # 922996 [email protected] Seth H. Row, OSB # 021845 [email protected] PARSONS FARNELL & GREIN, LLP 1030 SW Morrison Street Portland, Oregon 97205 Telephone: (503) 222-1812 Facsimile: (503) 274-7979
Attomeys for Plaintiffs Courthouse Square Condominium Association and Marion County, Oregon
UNITED STATES DISTRICT COURT DISTRICT OF OREGON PORTLAND DIVISION
COURTHOUSE SQUARE CONDOMINIUM ASSOCIATION, an Oregon nonprofit corporation; and MARlON COUNTY, OREGON, an Oregon public entity, Plaintiffs, v.
CVc4~~:Q 26
8- AC
COMPLAINT
(Breach of Contract; Declaratory Judgment) [28 U.S.C. § 1332; 28 U.S.C. § 2201]
AFFILIATED FM INSURANCE COMPANY, a Rhode Island corporation, Defendant.
DEMAND FOR JURY TRIAL
PRELIMINARY STATEMENT
1.
This is an action for breach of insurance contracts, declaratory judgment, and damages with respect to property insurance policies issued to Plaintiffs by Affiliated FM Insurance Company ("Affiliated FM") and covering Marion County Courthouse Square ("Courthouse Page 1 - COMPLAINT
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Square"). Courthouse Square has sustained direct physical losses and/or damage, is damaged, structurally and otherwise, so structurally impaired as to be unfit for its intended purpose, and dangerous, to such an extent that the property must be substantially repaired if not replaced. In addition to repair or replacement costs and damages, one or both Plaintiffs have incurred other losses and damages, including but not limited to investigation costs, loss of business income, extra expenses, and other costs, liabilities and expenses. 2. The direct physical losses and/or damage to Courthouse Square and other covered losses and damage were sustained during periods covered by the property insurance policies issued by Affiliated FM, and were caused by or resulted from a peril or perils covered by those policies. Affiliated FM has wrongfully refused to acknowledge coverage under these policies for the damage, losses, costs, fees, liabilities and expenses incurred or to be incurred by Plaintiffs in connection with Courthouse Square. 3. Accordingly, Plaintiffs seek awards of damages for breach of contract against Affiliated FM. Plaintiffs also seek declaratory judgment against Affiliated FM regarding the rights, duties, and liabilities of the parties under the property insurance policies issued by Affiliated FM to Plaintiffs.
JURISDICTION AND VENUE
4. This action is a civil action over which this Court has jurisdiction pursuant to 28 U.S.c. § 1332 and 28 U.S.C. § 2201. This is a civil action between citizens of different states and the amount in controversy exceeds $75,000, exclusive of interest, costs, and attorney fees.
5.
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occurred in that District and Division, and because the defendant is subject to personal jurisdiction in that District.
PARTIES
6.
Plaintiff Courthouse Square Condominium Association ("the Association") is an Oregon nonprofit corporation organized and existing under the laws of the State of Oregon, having its principal place of business in Salem, Oregon.
7.
Plaintiff Marion County, Oregon ("the County"), is an Oregon public entity, having its principal place of business in Salem, Oregon. 8. Defendant Affiliated FM is an insurance company incorporated and organized under the laws of the State of Rhode Island, having its principal place of business at 1301 Atwood Ave., Johnston, Rhode Island, 02919. At all relevant times, Affiliated FM was authorized to issue insurance policies in and conducted business in the state of Oregon.
ALLEGA TIONS COMMON TO ALL CLAIMS
Courthouse Square
9. Courthouse Square is located at 555 Court Street NE, Salem, Oregon. It was constructed in 1999-2000. It was intended to serve as both the County's central office and a transit center hub for buses and other transportation services offered by the Salem Area Mass Transit District ("Transit").
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10.
Courthouse Square consists of a 163,000 square foot, five-floor office building, a two direction "bus mall" at street-level, a street-level undeveloped area known by various names including the Future Development Unit, and an underground parking garage that extends under all of the above-ground areas.
11.
Courthouse Square is owned by the County and Transit. Both the County and Transit are members of the Association and are the only members of the Association. The Association exercises control over certain aspects of Courthouse Square and takes other acts under the authority of recorded documents pursuant to the Oregon Condominium Act. The Association has an insurable interest in the entirety of Courthouse Square. 12. When the condominium was created, the County and Transit deeded certain units in the condominium to the County, and certain units to Transit. In addition, the County has an insurable interest in all of the common elements of the condominium. 13. Courthouse Square was constructed using concrete columns and post-tensioned concrete slabs. 14. The County consolidated and moved operations and offices from various other locations to the office building at Courthouse Square shortly after the building was completed. In connection with moving operations to the office building, the County purchased and installed servers and other equipment into the office building that were not intended to be removable.
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15. The County received revenue from renting out parking spaces at Courthouse Square to employees, and from providing maintenance and other services to the Association. 16. In June 2010, consultants retained by Plaintiffs conducted comprehensive tests and analysis of the bus mall structure. The consultants determined that the bus mall was damaged, structurally and otherwise, and so structurally impaired as to be unfit for its intended purpose and dangerous. Plaintiffs thereafter closed and vacated the bus mall. 17. In July 2010, the consultants conducted similar comprehensive tests and analysis on the Courthouse Square office building. The consultants determined that the office building was damaged, structurally and otherwise, and so structurally impaired as to be unfit for its intended purpose and dangerous. 18. On July 30, 2010, the City of Salem declared the entirety of Courthouse Square to be dangerous and issued a Notice and Order to Abate a Dangerous Building, requiring that Courthouse Square be fully vacated within 60 days. The Notice and Order stated that: Unstable structural conditions or defects exist in the buildings and
structures to the extent that the buildings and structures are unsafe and the
life, health, property, or safety ofthe public or its occupants are
endangered.
The Notice and Order mandated that the structural failures in Courthouse Square be repaired and remedied, or the entire complex be demolished. Plaintiffs thereafter closed and vacated the office building and all other portions of Courthouse Square.
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The Affiliated FM Insurance Policies 19. In consideration for the payment of premiums, Affiliated FM issued to the Association Policy No. PB 175, date of issue September 30, 2008, with policy period October 1, 2008 to October 1,2009 ("the 2008 Association All-Risk Policy") and Policy No. PB326, date of issue October 1, 2009, with policy period October 1, 2009 to October 1, 2010 ("the 2009 Association All-Risk Policy"). Affiliated FM endorsed the location 555 Court Street NE Salem Oregon 97301 at the inception of both the 2008 Association All-Risk Policy and the 2009 Association All-Risk Policy. The 2008 Association All-Risk Policy has an aggregate limit of $27,735,500. The 2009 Association All-Risk Policy has an aggregate limit of $29,022,275. The 2008 Association All-Risk Policy and the 2009 Association All-Risk Policy are referred to collectively hereinafter as the "Association All-Risk Policies." 20. In consideration for the payment of premiums, Affiliated FM issued to the County Policy No. PB232, date of issue February 27,2009, with policy period March 1,2009 to March 1,2010 ("the 2009 County All-Risk Policy"), and Policy No. PB393, date of issue February 25,2010, with policy period March 1,2010 to March 1,2011 ("the 2010 County All-Risk Policy"). Affiliated FM endorsed the location 555 Court Street NE Salem Oregon 97301 at the inception of both the 2009 County All-Risk Policy and the 2010 County All-Risk Policy. The 2009 County All-Risk Policy has an aggregate limit of$115,108,740. The 2010 County All-Risk Policy has an aggregate limit of$120,260,453. The 2009 County All-Risk Policy and the 2010 County All-Risk Policy are referred to collectively hereinafter as the "County All-Risk Policies." The Association All-Risk Policies and County All-Risk Policies are referred to collectively hereinafter as the "All-Risk Policies."
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21.
The Association All-Risk Policies provide insurance for losses suffered by the Association for damage to real property (Courthouse Square), loss of business income, and certain expenses incurred due to property loss.
22.
The County All-Risk Policies provide insurance for losses suffered by the County for damage to real property (including but not limited to Courthouse Square), loss of business income, and certain expenses incurred due to property loss. 23. Each of the All-Risk Policies states that it provides "insur[ance] against all risks of direct physical loss or damage to insured property except as excluded under this policy."
Covered Losses and/or Damage - Physical Loss During Policy Period(s)
24. Courthouse Square has sustained direct physical losses and/or damage, including ensuing and/or resulting losses and/or damage, during the policy periods of one or more of the County All-Risk Policies and one or more of the Association All-Risk Policies and caused by a peril or perils covered by the All-Risk Policies. Courthouse Square has suffered physical losses and/or damage, and ensuing and/or resulting losses and/or damage, including but not limited to the following: a) Damage to the office building. In particular, the slabs of the office building are
deflecting downward in long spans of the transverse direction, while overbalancing in the longitudinal direction causing crowning mid-grid rather than deflection. The slabs have deformed, descended involuntarily, have fallen, and have otherwise moved involuntarily in a manner that has damaged the slab and building. In addition, the office building has experienced slab movement, structural impaim1ent at slab perimeters, movement and damage at tops of columns, and structural impairment and damage (including movement or separation from Page 7 - COMPLAINT
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intended locations) in concrete walls. As a result, the metal studs that comprise the primary structural system of the building's brick veneer have twisted. Those studs have fallen away from the building and/or otherwise been deformed, separated or moved from their intended position and have been damaged thereby, causing additional damage to the brick veneer and masonry system itself. The damage described above to the office building has in tum caused damage to finishes and other components of the office building, including causing certain building elements to deform, fall or separate from their intended locations. The office building is damaged, structurally and otherwise, and is so structurally impaired as to be unfit for its intended purpose and dangerous. b) Damage to the slab at the bus mall and the columns supporting it in the parking
area. In particular, the bus mall is overstressed by up to 300% in punching shear, and nearly all columns supporting that slab, located in the parking area, are overstressed. Two rows of columns are leaning inward, having deformed, fallen or separated from their intended position as part of the structural support, and several other columns have significant and pronounced structural impairment due (on information and belief) to damage to the elevated slab. The bus mall is damaged, structurally and otherwise, and is so structurally impaired as to be unfit for its intended purpose and dangerous . c) Damage to the Future Development Unit. In particular, the slab is experiencing
punching shear stresses and other effects from high pre-compression stress and other causes, and is cracking, resulting in water intrusion and other damage. The slab is damaged, structurally and otherwise, and is so structurally impaired as to be unfit for its intended purpose and dangerous. d) Damage to and around numerous windows and the ceiling at the fifth floor of the
office building and associated damage to window sealant. e) Damage to interior wall assemblies and finishes due to damage to the floor slabs
in the office building.
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The damage to Courthouse Square, including but not limited to the damage noted above, has resulted in destruction of the function of the property, the property being unusable, the property being unsafe for occupancy, and the property having to be taken out of service. 25. The consultants retained by Plaintiffs have forecast the cost to repair the losses and damage detailed above at up to the following amounts: Office Building Bus Mall Future Development Unit
Total
$46,336,530.00 $10,375,284.00 $3,421,730.00
$60,133,544.00
Business Income & Extra Expense Losses
26. The direct physical losses and/or damage detailed above and the resulting closure of Courthouse Square have also caused or will cause the Association to sustain losses and incur extra expense as defined in the Association All-Risk Policies, including the following: a) The Association retained professionals to assess the nature and severity of the
damage to Courthouse Square, the cost of which was in excess of policy limits; b) The Association projects that the repair or replacement of Courthouse Square will
involve costs to replace damaged pavements and roadways in excess of policy limits; c) The Association projects that the repair or replacement of Courthouse Square will
involve costs covered as Demolition and Increased Cost of Construction as those terms are defined in the Association All-Risk Policies in excess of policy limits;
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d)
The Association projects that the repair or replacement of Courthouse Square will
involve costs covered as Soft Costs as that term is defined in the Association All-Risk Policies. 27. The direct physical losses and/or damage detailed above and the resulting closure of Courthouse Square have also caused, are causing and will cause the County loss of business income and have caused, are causing, and will cause the County to suffer additional losses and to incur extra expenses as defined in the County All-Risk Policies, including the following: a) When it was required to vacate the office building due to the damage described
above, the County experienced losses of business personal property which could not be salvaged, principally to information technology equipment that had been installed at Courthouse Square; b) The County was required to retain professionals to assess the nature and severity
of the damage to Courthouse Square, the cost of which was in excess of policy limits; c) The County projects that the repair or replacement of Courthouse Square will
involve costs to replace damaged pavements and roadways in excess of policy limits; d) The County projects that the repair or replacement of Courthouse Square will
involve costs covered as Demolition and Increased Cost of Construction as those terms are defined in the County All-Risk Policies in excess of policy limits; e) the loss; The County expended funds on locks and keys to secure Courthouse Square after
f)
The County projects that the restoration or repair of Courthouse Square will
involve costs covered as Soft Costs as that term is defined in the County All-Risk Policies; g) Due to the office building and parking garage being damaged, structurally and
otherwise, and so structurally impaired as to be unfit for their intended purpose and dangerous, and taken out of service, the County suffered losses covered as Business Interruption in two areas: lost revenue from parking spaces that the County leased to employees; and lost revenue under a service agreement between the County and the Association. With regard to parking Page 10 - COMPLAINT
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revenue, the County has been able to mitigate its losses but only in part. Those losses are continuing; h) The County incurred significant relocation costs as a result of the office building
being damaged, structurally and otherwise, and so structurally impaired as to be unfit for its intended purpose and dangerous, and taken out of service. The County moved its offices from the office building to several other locations, most of which are leased from others. Therefore, the County has also incurred significant extra expense in the form of leases for temporary replacement offices. Those losses are in excess of policy limits. Those losses are continuing.
Notice to Affiliated FM
28. Beginning in or about June 2010, Plaintiffs provided notice to Affiliated FM that Courthouse Square was damaged, structurally and otherwise, and so structurally impaired as to be unfit for its intended purpose and dangerous, and that the City of Salem had ordered Courthouse Square to be vacated. 29. Subsequently, Plaintiffs have provided all information and notices reasonably required or requested by Affiliated FM regarding the damage and losses described above. 30. Affiliated FM has failed to acknowledge coverage under any ofthe All-Risk Policies and/or to pay any ofthe losses described above.
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FIRST CLAIM FOR RELIEF (Breach of Contract - Association)
31. The Association realleges and incorporates paragraphs 1 through 30 above as if fully set forth herein. 32. The Association has complied with all terms and conditions precedent of the Association All-Risk Policies except any that were excused and/or waived. 33. The date ofloss is July 30, 2010. Accordingly, Affiliated FM's failure to acknowledge coverage and/or to pay amounts owed to the Association constitutes a breach of the 2009 Association All-Risk Policy. 34. In the alternative, Affiliated FM's failure to acknowledge coverage and/or to pay amounts owed to the Association constitutes a breach ofthe 2008 Association All-Risk Policy. 35. As a direct and proximate result of Affiliated FM's breach of contract, the Association has suffered damages in an amount to be proven at trial but in excess of $75,000. 36. Because of the breach of contract alleged above, the Association has been required to incur attorney fees to protect its interests. Pursuant to ORS 742.061 , the Association is entitled to recover its attorney fees incurred to protect its interests and pursue recovery under the Association All-Risk Policies.
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SECOND CLAIM FOR RELIEF (Breach of Contract- County) 37. The County realleges and incorporates paragraphs 1 through 30 above as if fully set forth herein.
38 .
The County has complied with all tenns and conditions precedent of the County All-Risk Policies except any that were excused and/or waived. 39. The date ofloss is July 30,2010. Accordingly, Affiliated FM's failure to acknowledge coverage and/or to pay amounts owed to the County constitutes a breach of the 2010 County All Risk Policy. 40. Alternatively, Affiliated FM's failure to acknowledge coverage and/or to pay amounts owed to the County constitutes a breach ofthe 2009 County All-Risk Policy.
41.
As a direct and proximate result of Affiliated FM's breach of contract, the County has suffered damages in an amount to be proven at trial but in excess of $75,000. 42. Because of the breach of contract by Affiliated FM alleged above, the County has been required to incur attorney fees to protect its interests. Pursuant to ORS 742.061, the County is entitled to recover its attorneys fees incurred to protect its interests and seek recovery under the County All-Risk Policies.
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THIRD CLAIM FOR RELIEF (Declaratory Judgment)
(28 U.S.C. § 2201) 43. Plaintiffs reallege and incorporate paragraphs 1 through 30 above as if fully set forth herein. 44. The Association and County have given timely notification to Affiliated FM of the losses alleged above and made timely demands in writing that Affiliated FM acknowledge coverage for the losses alleged above. 45.
Certain of Plaintiffs' losses are continuing in nature.
46. Plaintiffs have complied with all terms and conditions precedent to coverage except any that were excused and/or waived. 47. Affiliated FM has failed to acknowledge that it is obligated to indemnify Plaintiffs for the losses alleged above. 48.
An actual controversy exists between Plaintiffs and Affiliated FM concerning Affiliated
FM's duty to indemnify the Association and County for the losses alleged above. 49. Under the circumstances, it is necessary and appropriate for the Court to declare Affiliated FM's duties under the All-Risk Policies. Pursuant to 28 U.S.C. § 2201, Plaintiffs request declaratory judgment construing the rights and duties of Affiliated FM under the All-Risk
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Policies. Plaintiffs request declaratory judgment that Affiliated FM is obligated to indemnify Plaintiffs for the losses described above. 50. Plaintiffs have been required to incur attorney fees to protect their interests in connection with the above-sought declaratory relief. Pursuant to ORS 742.061, Plaintiffs are entitled to recover their attorneys fees incurred in protecting their interests and seeking a declaration of rights under the All-Risk Policies.
PRAYER FOR RELIEF
WHEREFORE, Plaintiffs pray for judgment as follows:
1.
On the First Claim for Relief (Breach of Contract - Association): a. Compensatory damages in an amount to be proven at trial but more than $75,000;
2.
On the Second Claim for Relief (Breach of Contract - County): a. Compensatory damages in an amount to be proven at trial but more than $75,000;
3.
On their Third Claim for Relief (Declaratory Judgment): a. Declaratory judgment in favor of the Association and County and against
Affiliated FM, ordering and decreeing that the losses suffered, including amounts expended as extra expenses and loss of business income, constitute losses covered by the All-Risk Policies; 4. On All Claims for Relief: a. b. c. d. Plaintiffs' costs and disbursements incurred herein; Plaintiffs' attorney fees pursuant to ORS 742.061; Prejudgment interest at 9% per annum; Interest at the maximum legal allowable rate from the date of judgment; and
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e.
Any other relief the Court deems just and equitable.
DATED this 14th day of February, 2012. PARSONS FARNELL & GREIN, LLP
By: Michael E. Farnell, OSB # 922996 Seth H. Row, OSB # 021845 Telephone: (503) 222-1812 Attorneys for Plaintiffs Courthouse Square Condominium Association and Marion County, Oregon
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