Prosper Portland has sued its own insurance carrier, alleging the company largely refused to cover costs tied to a multimillion-dollar settlement the agency reached with Black families displaced from Portland's Albina neighborhood decades ago. The agency is seeking more than $3.6 million in damages from Westchester Fire Insurance Co., an entity of Chubb Ltd. of New York, over what it says was a breach of its insurance contract.
According to a report from Bloomberg Government, Prosper Portland's complaint, filed Friday in the U.S. District Court for the District of Oregon, alleges the carrier breached its contract by largely refusing to cover defense costs and settlement payments. Prosper Portland, formerly known as the Portland Development Commission, held a Westchester insurance policy with a $2 million liability limit meant to cover damages, claims and expenses on the agency's behalf, according to KGW. Shawn Uhlman, an agency spokesperson, told the station that Prosper Portland does not comment on pending litigation.
A Settlement Years in the Making
The dispute traces back to a lawsuit brought by 26 Black Portlanders and family members displaced from Albina, who became collectively known as the Emanuel Displaced Persons Association 2, or EDPA2, per KGW's reporting. Those residents and their families were displaced by urban renewal building projects in the 1960s, including construction of Interstate 5, the Memorial Coliseum, and a planned expansion by Legacy Emanuel Hospital that ultimately left much of the property taken from the neighborhood undeveloped, the station reported. EDPA2 sought damages caused by those urban renewal projects, naming Prosper Portland, the City of Portland and Legacy Emanuel Medical Center in a federal lawsuit filed in late 2022, according to OPB.
The settlement that eventually emerged grew substantially before it was finalized. OPB reported that the original financial settlement proposed to the city council was $2 million, but after testimony from a dozen community members, including descendants, all 12 councilors voted to increase the amount by another $6.5 million, bringing the total to $8.5 million. OregonLive reported that the revised deal also included a city acknowledgment that its zoning code, urban renewal policies and lending practices had led to systemic discrimination and segregation that hurt Black communities.
What the Final Agreement Spelled Out
A Prosper Portland resolution formalizing the deal lays out how that $8.5 million would be divided: $7.5 million from the City of Portland and $1 million from Prosper Portland, paid directly to the plaintiffs. Per KGW, the settlement also included a separate $2 million payout to EDPA2 members from Prosper Portland and the city, along with the chance for EDPA2 to acquire up to two undeveloped lots from the agency at no cost. The resolution identifies those parcels as 240 NE MLK and 3620 NE MLK, and specifically notes that a third property, at 4500 N. Albina, was not part of the approved settlement.
The resolution is careful to note that the deal settles disputed claims without resolving who, if anyone, was at fault. Municipal Defendants expressly deny liability, while Plaintiffs maintain the validity of their claims, the document states. As part of the arrangement, plaintiffs agreed to release claims against the municipal defendants, including their insurers, in exchange for the defendants' commitments under the settlement.
Why the Insurer Fight Matters Now
The unreimbursed costs at the center of Prosper Portland's new lawsuit stem directly from that settlement between the agency, the city and residents displaced by the Albina urban renewal projects, the Portland Business Journal reported. Now Prosper Portland wants Westchester to pay its share, arguing the insurer was contractually obligated to help cover the defense and settlement expenses tied to the underlying civil rights case.
The scale of displacement that led to the original lawsuit was significant. A Portland.gov historical overview states that an agreement once promised 180 to 300 replacement housing units for homes demolished during urban renewal, but says those homes were never built; the same overview states that Albina's Eliot neighborhood alone lost roughly 3,000 residents to involuntary displacement between 1960 and 1970. It remains unclear how the court will ultimately rule on Prosper Portland's coverage claims against Westchester, and the insurer has not been reported as commenting on the lawsuit.
