OPINION & ORDER
MOSMAN, Chief United States District Judge.
On July 1, 2019, Magistrate Judge John V. Acosta issued his Findings and Recommendation ("F&R") [30], recommending that Defendant's Motion for Summary Judgment [19] be granted. Plaintiffs Dr. Herbert Semler and Shirley Semler, husband and wife, filed objections [36] to which Defendant AIG Property Casualty Company ("AIGPCC")1 responded [39].
For reasons I will explain below, I decline to adopt the F&R and DENY Defendant's Motion for Summary Judgment. In short, I reach this conclusion because I find that 1) the Semlers' interpretation of the "Legal Action Against Us" clause is reasonable and thus controlling pursuant to Hoffman Construction Co. of Alaska v. Fred S. James & Co. of Oregon, 313 Or. 464, 836 P.2d 703 (1992); and 2) under the Semlers' interpretation of the LAAU clause, there remains a genuine dispute of material fact as to whether the Semlers' suit is time-barred.
BACKGROUND
For the complete factual background to the present case, I incorporate Judge Acosta's comprehensive summary contained in his F&R. See F&R [ECF 30] at 2-11. In brief, the dispute between the Semlers and AIGPCC revolves around an insurance policy issued by AIGPCC covering a beach house owned by the Semlers. In June 2012, the beach house suffered damage after a water supply line to an upstairs bathroom leaked. Deck of Dr. Herbert Semler [ECF 23] at ¶ 3. The ultimate dispute between the parties is the amount owed under the insurance policy for the loss resulting from that incident. At issue in AIGPCC's Motion for Summary Judgment is whether the Semlers' suit is time-barred by a valid suit limitation provision contained in the insurance policy. See Pls.' Obj. to F&R [ECF 36] at 1.
The suit limitation provision is known as the "Legal Action Against Us" clause ("LAAU clause"). Deck of Kathleen Spinella [ECF 20] Ex. 1 at 18. It states:
No action shall be brought against us unless the insured person has complied with this policy's provisions.... You also agree to bring any action against us within one year after a loss occurs, but not until thirty (30) days after proof of loss has been filed and the amount of loss has been determined.
Id. (emphasis added).
As described more fully below, the parties have differing interpretations for what it means for a loss to be "determined" under the LAAU clause, and thus they disagree as to when the one-year clock began ticking for the Semlers to file their suit. AIGPCC contends the loss was "determined" when it sent an email to the Semlers on November 3, 2014 ("November 2014 Email"). Def.'s Resp. to Pls.' Obj. to F&R [ECF 39] at 3-4; see also F&R [30] at 7-8 (describing the context of the November 2014 Email). The Semlers contest that the loss was not "determined" until August 24, 2017, when AIGPCC sent the Semlers a letter ("August 2017 Letter") specifically closing the claim and citing the limitation period of the LAAU clause. Pls.' Obj. [36] at 5; see also F&R [30] at 10 (describing the context of the August 2017 Letter). The Semlers filed this suit on April 13, 2018. Compl. [1].
LEGAL STANDARDS
I. Review of Findings and Recommendation
The magistrate judge makes only recommendations to the court, to which any party may file written objections. The court is not bound by the recommendations of the magistrate judge but retains responsibility for making the final determination. The court is generally required to make a de novo determination regarding those portions of the report or specified findings or recommendation as to which an objection is made. 28 U.S.C. § 636(b)(1)(C). However, the court is not required to review, de novo or under any other standard, the factual or legal conclusions of the magistrate judge as to those portions of the F&R to which no objections are addressed. See Thomas v. Arn, 474 U.S. 140, 149, 106 S.Ct. 466, 88 L.Ed.2d 435 (1985); United States v. Reyna-Tapia, 328 F.3d 1114, 1121 (9th Cir. 2003). While the level of scrutiny under which I am required to review the F&R depends on whether or not objections have been filed, in either case, I am free to accept, reject, or modify any part of the F&R. 28 U.S.C. § 636(b)(1)(C).
II. Summary Judgment
Summary judgment is appropriate when "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). A party seeking summary judgment bears the burden of establishing the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). If the moving party demonstrates no issue of material fact exists, the nonmoving party must go beyond the pleadings and identify facts which show a genuine issue for trial. Id. at 324, 106 S.Ct. 2548. A party cannot defeat a summary judgment motion by relying on the allegations set forth in the complaint, unsupported conjecture, or conclusory statements. Hernandez v. Spacelabs Med., Inc., 343 F.3d 1107, 1112 (9th Cir. 2003). Summary judgment thus should be entered against "a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex, 477 U.S. at 322, 106 S.Ct. 2548.
To determine whether summary judgment is proper, the court must view the evidence in the light most favorable to the nonmoving party. Bell v. Cameron Meadows Land Co., 669 F.2d 1278, 1281-82 (9th Cir. 1982).
DISCUSSION
There are two issues to resolve in AIGPCC's Motion for Summary Judgment. First, I must decide what it means for a loss to be "determined" under the LAAU clause. Second, in accordance with that interpretation, I must determine whether a genuine dispute of material fact remains as to when the LAAU clause was triggered, and thus whether the Semlers' suit is time-barred. Because I ultimately conclude that the Semlers' suit is not time-barred under the LAAU clause, I do not reach the issue of equitable estoppel.
I. Interpreting the LAAU Clause
It is undisputed that the insurance policy issued by AIGPCC covering the Semlers' beach house is a contract executed in Oregon, subject to the laws of Oregon. In Oregon, the proper construction of an insurance policy is evaluated using the interpretive framework set forth by the Oregon Supreme Court in Hoffman Construction Co. of Alaska v. Fred S. James & Co. of Oregon, 313 Or. 464, 836 P.2d 703 (1992).
In Hoffman, the Court held that if an insurance policy does not define a term at issue, a court must "resort to various aids of interpretation to discern the parties' intended meaning." Groshong v. Mutual of Enumclaw Ins. Co., 329 Or. 303, 985 P.2d 1284, 1287 (1999) (citing Hoffman, 836 P.2d at 706). The Court then laid out a three-step analysis. "The first aid to interpretation is determining whether the term at issue has a plain meaning.... The meaning of a term is "plain"— that is, unambiguous—if the term is susceptible to only one plausible interpretation." Id. (citations omitted). If there is more than one plausible interpretation of a contested term or phrase, then the second step is to analyze the term or phrase "in light of, among other things, the particular context in which [it] is used in the policy and the broader context of the policy as a whole." Hoffman, 836 P.2d at 706. Third and finally, if the competing interpretations continue to be reasonable after this examination, then the term or phrase will be deemed ambiguous and it will be construed against the insurer, who drafted the policy. Id.
The Semlers and AIGPCC each offer their own interpretation of when a loss is "determined" under the LAAU clause. The Semlers argue that a loss is "determined" when "all investigations and negotiations related to the claim have ceased and the insurer unambiguously and conclusively communicates a final decision to the insured." Pls.' Obj. [36] at 15. AIGPCC contests that the word "determined" is not imbued with the ultimate finality that the Semlers' interpretation requires; rather, AIGPCC argues that a loss is "determined" for purposes of the LAAU clause "when the insurer denies the claim or makes an offer to settle the claim." See Def.'s Resp. [39] at 7 (quoting F&R [30] at 23).
To illustrate how these interpretations operate differently, consider the hypothetical scenario where an insurer offers to settle a claim for $10,000 but communicates the possibility that the loss amount could be adjusted after further negotiation and investigation. Under AIGPCC's interpretation, a loss has been "determined" at the time of the $10,000 offer. Under the Semlers' interpretation, a loss has not been "determined" at the time of the $10,000 offer because the insurer communicated a decision that was not "final"— i.e., the claim was still subject to adjustment after additional negotiation or investigation.
Under the first step of Hoffman, I think each interpretation is plausible on its face. Looking solely at the text of the disputed phrase ("until ... the amount of loss has been determined"), it is at least plausible —a low bar—that "determined" could mean an initial determination or a final determination. I thus proceed to step two of Hoffman, to analyze whether the Semlers' interpretation is reasonable when read in context.
Looking within the four corners of the insurance policy itself, the particular context in which the disputed phrase is situated does not resolve the ambiguity. That is, there is nothing about the surrounding language in the rest of the LAAU clause or in the rest of the policy that indicates how we should read the disputed phrase, or that otherwise suggests the Semlers' interpretation is unreasonable. I thus turn to the broader context of the operation of the insurance policy as a whole. If the Semlers' interpretation of the LAAU clause would render the insurance policy unworkable as a practical matter, then it would be an unreasonable interpretation.
Judge Acosta agrees with AIGPCC that the Semlers' interpretation is unreasonable because it would render the LAAU clause unworkable by giving the insured "unilateral control" over when the limitation period begins to run. See F&R [30] at 19; Def.'s Resp. [39] at 5-6. The insured would even have the ability to "reset the limitation period at will." F&R [30] at 19. As I understand it, the logic behind this conclusion is as follows: 1) the Semlers' interpretation requires that all negotiation and investigation of a claim have ceased for a "determination" to have been made (thus triggering the beginning of the limitation period); 2) if an insured requests a claim be reopened, and the insurer entertains that request by investigating even just the legitimacy of that request, then all investigation has not ceased; 3) therefore, an insured can reset the limitation period by simply inducing an insurer to investigate a request to reopen a claim. See id. at 19-20. Judge Acosta and AIGPCC reason that "[n]o reasonable insurer" would draft an insurance policy that "would leave it perpetually exposed to the threat of litigation." Id. at 22.
I agree that an interpretation of the LAAU clause that would give the insured unilateral control over the limitation period would not be a reasonable interpretation. But I do not agree that the Semlers' interpretation of the LAAU clause has that effect. Under the Semlers' interpretation, an insurer maintains control of the limitation period. An insurer can start the limitation clock by the nature of their communication; that is, they can send a communication that unambiguously communicates that a final determination has been made. For example, a hypothetical insurer could say: "After completing our investigation, we have determined that the loss amounts to $10,000. This is our final determination, and we note that the limitation period as described by the LAAU clause has begun." The only reasonable reading of that hypothetical communication is that a determination has been made, even under the Semlers' interpretation of the LAAU clause.
But what if, two weeks later, our hypothetical insurer agrees to investigate a new piece of evidence submitted by the insured? No matter—a "determination" was still made two weeks ago. This is because we evaluate whether a particular communication between insurer and insured constitutes a "determination" by evaluating the communication at the time the communication is made. Earlier events might provide context to that communication, but subsequent events do not.2 Importantly, because subsequent events do not "undo" a determination, insurers can still engage with insureds while the twelve-month limitation period runs. If an insurer agrees to reopen a claim during this period in order to forestall litigation or maintain goodwill, such a decision's effect on the limitation period would be governed by the rules of waiver.3 The same would be true even after the twelve-month period runs. Notably, there is no difference between the Semlers' interpretation and AIGPCC's interpretation in this respect.
The Semlers' interpretation of the LAAU clause is workable, and there is no other contextual evidence that suggests it is an unreasonable interpretation. Under Hoffman, reasonable is enough. Thus, because the Semlers' interpretation is reasonable, the disputed phrase is at least ambiguous and I must construe the LAAU clause against the insurer, pursuant to the third step of Hoffman. Therefore, the Semlers' interpretation of the LAAU clause applies here.
II. Applying the Semlers' Interpretation of the LAAU Clause
Because the Semlers' interpretation4 of the LAAU clause governs, I must now determine if there remains a genuine dispute of material fact as to when the limitation period contained in the LAAU clause was triggered, and thus whether the Semlers' suit is time-barred.
AIGPCC argues that the loss amount for damage to the Semlers' beach house was "determined" (under its own, less stringent interpretation of the LAAU clause) on November 3, 2014, when AIGPCC sent the November 2014 Email to Dr. Semler rejecting the Semlers' request for the reimbursement of architectural fees. Def.'s Resp. [39] at 3-4. The email reads, in relevant part:
We have paid what we owe for the structure repairs. The [amount paid] would be enough to complete the work to the home to put it back to the condition it was prior to the loss happening. The insured's contractor has written an estimate that was to remodel the kitchen and bathroom, not repair it. We only owe to put the dwelling back to its original condition when the loss occurred on June 5, 2012.
Your Architect was not willing to assist in providing what was need [sic] to determine what her billing was for. Please see her responses.
...
The way the invoice reads, it was only rendering remodeling plans, not repair plans. Based on the damages incurred, there would not need to be an architect involved to complete the repairs to the home to place it back to its original condition. If anything can be presented to the contrary we will gladly review it.
As of now our settlement stands. Thank you.
Spinella Decl. [20] Ex. 8 at 1 (emphasis added).
Under the Semler's interpretation of the LAAU clause and viewing the facts in the light most favorable to the Semlers as the nonmoving party, a reasonable juror could conclude that the November 2014 Email did not constitute a "determination" because the email did not unambiguously communicate that a final decision had been made and that negotiation had ceased. Principally, AIGPCC concludes the letter by stating that "[i]f anything can be presented to the contrary we will gladly review it" and "as of now our settlement stands." A reasonable juror might interpret those statements as inviting further negotiation on the ultimate loss amount.
Moreover, viewing the November 2014 Email in context supports the view that the email does not constitute a final determination. More than once, AIGPCC adjusted its total loss award as the result of further negotiation with the Semlers. See F&R [30] 3-7. To cite one example, on October 9, 2014, AIGPCC issued a "final supplement check" to the Semlers in the amount of $6,008.69. Spinella Decl. [20] Ex. 6 at 1. But roughly two weeks later, after further negotiation, AIGPCC adjusted that amount upward to $10,362.86. Spinella Decl. [20] ¶ 12. Based on the history of negotiation between the Semlers and AIGPCC, a reasonable juror might read the November 2014 Email as even less final-sounding.
After the November 2014 Email, there was no further communication between the Semlers and AIGPCC for three years, until July 2017. Spinella Decl. [20] ¶ 13. Eventually, after some further back-and-forth, AIGPCC sent the August 2017 Letter, which explained that AIGPCC was "closing the claim." Spinella Decl. [20] Ex. 11 at 1. Excerpts of the insurance policy, including the LAAU clause, were also included. Id. The Semlers argue that this letter constituted the moment when the loss was "determined" for purposes of triggering the limitation period. Pls.' Obj. [36] at 5.
In viewing the evidence in the light most favorable to the Semlers, reasonable jurors could disagree as to whether AIGPCC triggered the limitation period contained in the LAAU clause prior to sending the August 2017 Letter. Because the Semlers filed this suit on April 13, 2018, which is within one year and thirty days of the August 2017 Letter, there remains a genuine dispute of material fact as to whether their suit is time-barred by the LAAU clause.
CONCLUSION
For the foregoing reasons, I decline to adopt Judge Acosta's F&R [30] and DENY Defendant's Motion for Summary Judgement [19].
IT IS SO ORDERED.
