MW BUILDERS, INC., a Missouri corporation v. Safeco Insurance Company of America, a Washington corporation

This disposition is not appropriate for publication and is not precedent*
except as provided by 9th Cir. R. 36-3.
NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
MW BUILDERS, INC., a Missouri
corporation; GREAT AMERICAN
ALLIANCE INSURANCE COMPANY,
an Ohio corporation,
Plaintiffs - Appellees,
v.
SAFECO INSURANCE COMPANY OF
AMERICA, a Washington corporation;
SAFECO INSURANCE COMPANY OF
OREGON, an Oregon corporation;
AMERICAN STATES INSURANCE
COMPANY, an Indiana corporation,
Defendants - Appellants,
And
ELLIOTT, POWELL, BADEN &
BAKER, INC., an Oregon corporation;
REX & COMPANY, an Oregon
corporation; LAWRENCE REX ESTATE,
by and through its personal representative;
LAWRENCE REX TRUST, by and
through its Trustee, L.V. Rex,
No. 09-35538
D.C. No. 3:02-cv-01578-AC
MEMORANDUM*
FILED
JUL 08 2010
MOLLY C. DWYER, CLERK
U .S. C OU R T OF APPE ALS

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Defendants.
Appeal from the United States District Court
for the District of Oregon
Ancer L. Haggerty, Senior District Judge, Presiding
Argued and Submitted June 10, 2010
Portland, Oregon
Before: THOMPSON, McKEOWN and PAEZ, Circuit Judges.
Defendants Safeco Insurance Company of America and its affiliates
(collectively “Safeco”) appeal the district court’s judgment, following our remand,
in favor of MW Builders, Inc., and its subrogated insurer (collectively “MW
Builders”). We have jurisdiction under 28 U.S.C. § 1291, and we reverse and
remand.
In the prior appeal, we concluded that Safeco was obligated to cover certain
repair costs but not others, and remanded to the district court to partition the
$620,000 arbitration award between covered and uncovered costs. On remand, the
district court referred the matter to the magistrate judge who ordered the parties to
conduct discovery and file cross motions for summary judgement. The magistrate
judge concluded that sixty percent of the $620,000 arbitration award represented
covered costs and recommended that MW Builders be awarded $372,000. The

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Because we conclude that the arbitration award included uncovered costs1
that must be partitioned, we need not resolve Safeco’s other contentions regarding
the law of the case doctrine and which party bears the burden of proof to establish
an allocation between covered and uncovered claims under Oregon law.
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district court, however, overruled the magistrate judge’s recommendation and
granted MW Builders the entire $620,000 arbitration award. “We review de novo
the district court’s rulings on cross-motions for summary judgment.” Caliber One
Indem. Co. v. Wade Cook Fin. Corp., 491 F.3d 1079, 1082 (9th Cir. 2007).
The district court erred in granting MW Builders the entire arbitration award
because that award included uncovered repair costs, which we previously
instructed the court to partition from the covered repair costs. We know that the1
arbitration award included uncovered repair costs because it was calculated as a
percentage of MW Builders’ $2 million settlement that was based, in part, on
$629,960 in uncovered repair costs. The magistrate judge reasonably partitioned
these uncovered costs from the covered costs and recommended that MW Builders
be awarded sixty percent of the arbitration award pursuant to this court’s prior
order.
The district court’s decision to award MW Builders the entire arbitration
award notwithstanding the fact that the award included some uncovered costs was
improper. That the actual repair costs, excluding uncovered repairs, ended up

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exceeding the $620,000 arbitration award does not justify awarding MW Builders
the entire award. MW Builders was never entitled to recover all the repair costs
from Safeco. It was only entitled to recover a portion of the damage to the hotel
caused by Safeco’s insured.
We therefore reverse the district court’s decision to award MW Builders the
entire $620,000 arbitration award, and remand for the district court to modify the
judgment to reflect an award of $372,000 in favor of MW Builders, the amount of
covered costs recommended by the magistrate judge.
REVERSED AND REMANDED.

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