Oregon agreement to procure insurance, anti-indemnity statute, and self-insured retention

In Continental Casualty Ins. Co. v. Zurich American Ins. Co., No. 09-35484 (9th Cir. Oct. 28, 2010), general contractor TCR was sued by an employee of subcontractor Safeway for bodily injuries suffered while working on the project.   In the subcontract, Safeway agreed to procure primary insurance providing coverage for TCR for liability arising out of Safeway’s negligence.   Safeway’s CGL policy included a self-insured retention that had to be satisfied before the insurer had a duty to defend.   TCR filed suit against Safeway alleging that Safeway had breached the contractual agreement to procure insurance.  The federal trial court entered summary judgment for TCR.  On appeal, the U.S. Court of Appeals for the Ninth Circuit, applying Oregon law, affirmed.  The court first rejected Safeway’s argument that the agreement to procure insurance was void as contrary to Oregon’s workers compensation exclusivity statute.  The court next held that, because the agreement to procure insurance was limited to liability arising out of Safeway’s own negligence, it was not void as contrary to Oregon’s anti-indemnity statute.  Finally, the court held that, although the subcontract did not expressly preclude self-insured retentions, because a self-insured retention does not constitute “primary” insurance, it did not satisfy the agreement to procure insurance.