ACCIDENTS OR OCCURRENCES
An "accident" is an "unforeseen, unexpected and unintended event." Albertson's, Inc. v. Great Southwest Fire Ins. Co., 83 Ore. App. 527, 531, 732 P.2d 916, rev. denied, 303 Ore. 332, 736 P.2d 566 (1987). In Allstate Ins. Co. v. Belezos, 774 F.Supp. 992 (D. Ore. 1990), aff'd, No. 90-35633 (9th Cir. December 24, 1991) a federal court ruled that the insured's deliberate efforts to obstruct patients' access to an abortion clinic were not an "occurrence." An insured that drove the wrong way up a freeway exit ramp at 50 miles per hour and rammed an on-coming truck was held to have to have expected or intended the resulting injuries to passengers. Allstate Ins. Co. v. Stone, 857 P.2d 196 (Ore. App. 1993), rev'd, 876 P.2d 313 (Ore. 1994).
The Court of Appeals ruled in Oak Crest Construction Co. v. Austin Mut. Ins. Co., 905 P.2d 848 (Ore. App. 1995), aff’d, 329 Ore. 620 (2000) that the cost of re-painting a home was not the result of an "occurrence" since the paint was intentionally applied. The court ruled that the policy requires that property damage be caused by an accident, not that the property damage itself be accidental. This ruling was affirmed by the Oregon Supreme Court.
costs that a contractor incurred to strip and refinish a paint job that
had not cured properly did not allege an “occurrence” under a general liability
policy issued to the contractor. In contrast to the rule recently
adopted by the California Supreme Court in Vandenberg, the Oregon Supreme
Court ruled in Oak Crest Construction Company v. Austin Mutual Ins.
Co., 93C13423 (Or. February 17, 2000) that claims for breach of contract
are not covered under general liability insurance policies.
In ZRZ Realty Company v. Beneficial Fire and Casualty Insurance Company, MultNomah (Ore. Cir. Ct. October 15, 1999), Judge Keys declared that insurers had the burden of proving that the policyholder expected to cause damage to the Willamette River or groundwater. A subjective standard will be applied and will be based only on the acts of supervisory employees and senior representatives of the insured
Even the intentional destruction of property will be deemed to constitute an "occurrence" if the conduct was undertaken under the mistaken belief that the acts were authorized. Ferguson v. Birmingham Fire Ins. Co., 460 P.2d 342, 344 (Ore. 1969) (trespass claimed deemed covered since insured was mistaken concerning the location of a property line).
An exclusion for intentional acts was held not to apply in a case where the insured was drunk when he assaulted the plaintiff in Hunter v. Farmers Ins. Co., 898 P.2d 201 (Or. App. 1995).
An insured’s criminal conviction will collaterally estop him from claiming insurance coverage. State Farm Fire and Casualty Co. v. Reuter, 700 P.2d 236, 237 (Or.1985). In Reuter, the Oregon Supreme Court further declared that the estoppel effect of the conviction extended to any rights that the victim might pursue as a judgment creditor.
Supreme Court ruled in St. Paul Fire & Marine Ins. Co. v. McCormick
& Baxter Creosoting Co., 324 Ore. 184, 923 P.2d 1200 (1996) that older
"accident" forms are not limited "big bang"-type events.
ALLOCATION AND SCOPE ISSUES
An insurer may not allocate between covered and non-covered claims involving damage to the insured’s own work. Timberline Equipment Co. v. St. Paul Fire & Marine Ins. Co., 576 P.2d 1244, 1247 (Or. 1978).
A state trial
court has ruled that insurers had a “joint and several” obligation to
provide a defense to a pollution suit. The court ruled that allocation
among the carriers was appropriate so long as allocation didn’t impede
the defense of the underlying action. Finally, the insured was not
liable for any share of defense costs except to the extent that “there
is scientific proof of a discrete event causing pollution which is clearly
distinguishable from all other pollution at a site, if that event happened
during a policy period during which [policyholder] did not have insurance
coverage.” ZRZ Realty Co. v. Beneficial Fire & Cas. Co.,
Multnomah No. 9708-06226 (Ore. Cir. Ct. October 15, 1999). On the
other hand, Judge Keys ruled that indemnity should be allocated based on
“time on the risk” including a share to the insured. The insured
was deemed responsible for the assumed limits for the period 1947-1954.
The court reserved judgment with respect to whether the insured should
be responsible for shares allocable to the period after 1985, which contain
absolute pollution exclusions. The court denied the insured’s contention
that an “all sums” allocation approach was appropriate
Oregon has both an intermediate appellate court and a state Supreme Court.
A cause of action in tort against insurers was recognized by the Oregon Supreme Court in Georgetown Realty v. Home Ins. Co., 313 Ore. 297, 832 P.2d 1233 (1992). However, the court ruled that tort claims may not arise solely from the contractual relationship between the parties and must be based upon the insurer's breach of some independent duty of care to its policyholder.
Oregon has refused to recognize the tort of bad faith in the first-party insurance context. Farris v. USF&G, 587 P.2d 1015 (Or. 1978).
A cause of action for reverse or comparative bad faith was rejected by the Oregon Court of Appeals in Stumph v. Continental Casualty Co., 794 P.2d 1228, 1232 1233 (Or. App. 1990).
Under Oregon law, a liability insurer did not commit bad faith by settling without the insured's consent even though nearly half the settlement fell within the insured's policy deductible. Hartford Accident & Indemnity Co. v. U.S. Natural Resources, Inc., 897 F.Supp. 466 (D. Or. 1995).
may be liable for failing to solicit an offer within limits, where warranted,
even if the plaintiff never actually made such an offer. Maine Bonding
& Casualty Co. v. Centennial Ins. Co., 693 P.2d 1296, 1299
ALLOCATION AND SCOPE ISSUES
motion for partial summary judgment in a pollution case was denied in Taylor
Lumber and Treating, Inc. v. Aetna Casualty & Surety Company, Multnomah
No. 9808-06027 (Ore. Cir. Ct. December 9, 1999). Judge Bearden deferred
any resolution of how such costs should be allocated, noting the fact that
there were ongoing settlement discussions with certain insurers.
Held to include
claims for mental distress in Omark Industries v. Safeco Ins. Co.,
590 F.Supp. 114, 117 (D. Ore. 1984).
BREACH OF POLICY CONDITIONS
v. Aetna Cas. & Surety Co., 272 Or. 593 538 P.2d 902 (1975), the Oregon
Supreme Court applied a two-part analysis, holding that an insurer must
first establish that the insured's late notice had prejudiced it.
If so, the court would then examine whether the insured's tardiness could
be justified or was otherwise reasonable under the circumstances.
Id. at 599, 538 P.2d 90. See also Halsey v. Fireman's Fund Ins. Co.,
68 Or. App. 349, 681 P.2d 168 (1984)(14 month delay--insurer did not show
that its involvement in defense would have yielded a better result).
More recently, the Court of Appeals ruled in North Pacific Ins. Co. v.
Product, Inc., 122 Ore. App. 77 (1993) that summary judgment was inappropriate
where the court had presumed prejudice based upon the insured's destruction
of evidence pertaining to the availability of coverage. The court
suggested that prejudice could not always be presumed to exist, even in
situations where the insured settled or tried a case without notice to
the insurer. Similarly, in Terminal Transfer, Inc. v. Truck Ins.
Exchange, 42 F.3d 1402 (9th Cir. 1994) (Unpublished--full text available
at 1995 U.S. App. LEXIS 1940), the 9th Circuit reversed a lower court's
ruling that an insured's multi-year delay had caused prejudice, holding
that the evidence of prejudice was merely speculative, particularly in
light of the insurer's failure to take any steps to investigate the claim
even after receiving notice.
Realty Company v. Beneficial Fire and Casualty Insurance Company, MultNomah
(Ore. Cir. Ct. October 15, 1999), a state trial court ruled that pre-tender
defense costs are not recoverable and that pre-tender indemnity costs may
or may not be recoverable but posed a question of fact, presumably based
on issues of whether prejudice had occurred
BROAD FORM COVERAGES
The Oregon Supreme Court ruled in Groshong v. Mutual of Enumclaw Insurance Company, 329 Ore. 303, 985 P.2d 1284 (1999) that coverage for “wrongful entry or eviction or other invasion of the right of private occupancy” only extends to situations in which the underlying claimant has a possessory interest in the premises. Accordingly, it declared that a suit for housing discrimination by a prospective tenant was outside the scope of coverage since the claimant had never actually occupied the premises in question.
Citizens' claims that the value and use of their property had been impaired by the insured’s discharge of pollutant into a river were held by a federal district court not to allege any trespass or other "invasion" of their land in Unified Sewerage Agency of Washington County v. Northland Cas. Co., No. 91-375 (D. Or.), reversed, 81 F.3d 171 (9th Cir. 1996)(Unpublished--full text available at 1996 U.S. App. LEXIS 8503).
between policy exclusions and the grant of “personal injury” insurance
will not necessarily result in a finding of ambiguity. In Hofsheier
v. Farmers Ins. Exchange, 154 Or. App. 538 (1998),
the Court of Appeals ruled that an umbrella policy that afforded “personal
injury” coverage for racial discrimination that separately excluded “damages
due to discrimination in any way connected with the violation of any state
or federal civil rights law” unambiguously barred coverage for claims that
the insured had violated state and federal Fair Housing laws were within
the scope of the civil rights exclusion. Notwithstanding the insured’s
contention that the policy withdrew with the left hand what it gave with
the right, the court ruled on June 24 that the policy terms were not mutually
contradictory as there could be situations in which discrimination claims
arose out of common law cause of actions, such as an action for intentional
infliction of emotional distress, which would not be excluded.
BURDEN OF PROOF
The burden of proving that a loss is within the insuring agreement is on the insured; the burden with respect to exclusions is on the insurer. Stanford v. American Guarantee Life Ins. Co., 571 P.2d 909 (Ore. 1977).
A state trial
court adopted a “preponderance of the evidence” standard for missing policy
claims in Schnitzer Investment Corp. v. Certain Underwriters at Lloyd’s,
Multnomah No. 99-02-02004 (Or. Cir. March 15, 2001).
CHOICE OF LAWS
Oregon courts have adopted the Restatement (Second) "most significant relationship" test for contract cases. Citizens First Bank v. Intercontinental Express, Inc., 713 P.2d 1097 (Ore. App. 1986).
Assistance Act of 1999 mandates that Oregon law be applied
to any insurance coverage dispute involving a waste site in Oregon
CONFLICTS OF INTEREST
Where a conflict
of interest exists, the insurer may still retain the right to select counsel
to defend its policyholder but has an enhanced duty of good faith as a
result. Further, the insurer may not rely upon the doctrine of collateral
estoppel from the outcome of the suit in any subsequent coverage litigation.
Furguson v. Birmingham Fire Ins. Co., 460 P.2d 342, 348 (Or. 1969).
The Cleanup Assistance Act of 1999 requires that clean up costs incurred pursuant to written agreements are to be treated as sums which the insured was legally obligated to pay as damages. Earlier, the Oregon Court of Appeals had ruled in St. Paul Fire & Marine Ins. Co. v. McCormick & Baxter Creosoting Co., 126 Ore App. 689, 870 P.2d 260 (1994), aff'd on other grounds, 324 Ore. 184, 923 P.2d 1200 (1996) that costs incurred by a wood treatment plant operator in cleaning up pollution on its sites were "damages" because of "property damage." Similarly, clean up costs were held to be "damages" in cases such as North Pacific and City of Corvalis. See also Port of Portland v. Warner Quality Ins. Syndicate, 796 F.2d 1188, 1194 (9th Cir. 1986) (costs of cleaning up oil spill were on account of "property damage" under CGL policy).
Economy Ins. Co. v. Commons, 552 P.2d 612 (Or. App. 1976), the Court of
Appeals ruled that the costs of fighting forest fire on property of insureds
to prevent spread of conflagration to third-party property were covered
“damages” under a CGL policy.
On the other
hand, in Unified Sewerage Agency of Washington County v. Northland Cas.
Co., 81 F.3d 171 (9th Cir. 1996)(Unpublished--full text available at 1996
U.S. App. LEXIS 8503), the Ninth Circuit declared that payments that a
polluter made to endow an environmental study fund and which were made
in order to avoid the imposition of civil penalties for violations of the
Clean Water Act were not "damages." the court refused to find that
the insured's settlement could somehow transform civil penalties into covered
damages inasmuch as the payments were not because of property damage, nor
were they in compensation for any injury to the claimants' property, since
such a claim could only be made by the government.
DECLARATORY JUDGMENT ACTIONS
The Oregon Court of Appeals has ruled that an insurer cannot proceed with a DJ that would require factual findings that may be inconsistent with a pending liability proceeding against the insured. In North Pacific Ins. Co. v. Wilson's Distributing Service, Inc., 138 Or. App. 166, 908 P.2d 827 (1995) the court ruled that the insurer could not place its insured in the conflicted position of defending against the underlying claims of liability on the one hand while establishing the factual basis for such liability as a means of compelling coverage by showing that such releases from its gasoline service station had been "sudden and accidental." See also Employers Reinsurance Corp. v. Karussos, 65 F.3d 796 (9th Cir. 1995)(District Court has no discretion to hear case involving issues of state law, even if underlying tort suit has since been settled, if coverage issues were in any way factually dependent on findings in state tort case).
An insured that prevails in a coverage dispute may recover its attorney's fees. Fees may be recovered from an insurer pursuant to Or. Rev. Stat 742.061 (1995). Such a claim may also be pursued by an insurer where it is suing another and equitable subrogation theory. State Fire & Casualty Co. v. Underwriters at Lloyd's, 1998 WL 97381 (9th Cir. March 9, 1998). However, an excess insurer has no right to attorneys' fees simply because of a good faith dispute with a primary insurer. Portland General Electric Co. v. Pacific Indemnity Co., 579 F.2d 514, 516 (9th Cir. 1978).
The Oregon Supreme Court has ruled that an insurer’s obligation to reimburse an insured for “reasonable” fees incurred in successful pursuing a coverage appeal are not limited to the hourly rate that the insurer’s own counsel charged. In Dockins v. State Farm Ins. Co., 985 P.2d 796 (Ore. 2000), the court ruled that the commercial factors that might persuade the insurer’s law firm to accept a lower hourly rate did not apply to the insured’s personal counsel, who probably did not have an on-going relationship with that client. Further, the court was not impressed by the fact that the insurer’s attorneys had only billed one-fourth as many hours in defending the appeal as the insured’s lawyer had in pursuing the appeal. The court noted that “lawyers in a position like that of [insurer’s] lawyer often have long-term relationships with the insurance companies that they represent–a fact that tends to drive down their billing rates in comparison to lawyers for insureds, who commonly represent a client in a single matter. Given the broad range of rates that lawyers charge and the broad range of reasons that can affect the rate that a particular lawyer charges a particular client, the billing rate of a lawyer who shares little more with petitioner’s lawyer than a similar area of practice does not assist us materially in setting a reasonable rate for the work of petitioner’s lawyers on this matter.”
A state trial
court ruled in Taylor Lumber and Treating, Inc. v. Aetna Casualty &
Surety Company, Multnomah No. 9808-06027 (Ore. Cir. Ct. December 9, 1999)
that a wood treatment plant operator’s liability insurers had a duty to
defend a U.S. EPA RCRA action but deferred ruling what portion of the claimed
costs were for investigation (defense) or indemnity.
DUTY TO DEFEND
Under Oregon law, an insurer's duty to defend is generally measured by comparing the underlying complaint with the terms of the policies. Ferguson v. Birmingham Fire Ins. Co., 254 Or. 496, 507, 460 P.2d 342 (1969). In general, therefore, "a party's knowledge of facts not alleged in the complaint that would either impose or relieve the insurer's duty to defend is irrelevant in determining the existence of the duty to defend." Id. at 346, cited in Allstate Ins. Co. v. Belezos, No. 90-35633 (9th Cir. December 24, 1991).
Court of Oregon has held that this general rule is inapplicable where there
is "compelling evidence of no coverage." Casey v. Northwest Security
Ins. Co., 260 Or. 485, 489, 491 P.2d 208 (1971) or where the lack of coverage
has incontrovertibly been established in a separate judicial proceeding.
Id. at 490. Oregon courts have also held that an insurer may not
generally rely on extrinsic facts to deny a defense where the pleadings
themselves allege a cause of action within the scope of its coverage.
Oakridge Commonwealth Ambulance v. USF&G, 278 Or. 21, 24, 563 P.2d
164 (1977) and Casey v. Northwest Security Ins. Co., supra.
An insurer is not estopped from disputing the extent of its claimed indemnity obligation by having previously refused to provide a defense to the claim. Timberline Equipment Co., Inc. v. St. Paul Fire & Marine Ins. Co., 576 P.2d 1244 (Or. 1978)
Court of Appeals has ruled that claim letters received by an insured from
state environmental authorities are a "suit." St. Paul Fire &
Marine Ins. Co. v. McCormick & Baxter Creosoting Co., 126 Ore App.
689, 870 P.2d 260 (1994), aff'd on other grounds 324 Ore. 184, 923
P.2d 1200 (1996). Since then the Oregon legislature has enacted
the Cleanup Assistance Act of 1999 which mandates that clean up orders
and agreements are to be treated as a “suit.”
ESTOPPEL AND WAIVER
Coverage cannot be create by estoppel, whether the insured's claim is based upon the conduct of the insurer and its agent before or after the loss giving rise to the insured's liability. Dejonge v. Mutual of Enumclaw, SC37708 (Ore. December 31, 1992).
An insurer ‘s failure to raise other coverage defenses in its original denial letter will only estop the insurer from raising those subsequent defenses later on if its delay resulted in prejudice to the policyholder. ABCD Vision v. Firemans Fund Ins. Co., 734 P.2d 1376 (Or. App. 1987), reversed on other grounds, 744 P.2d 998 (Or. 1987).
An insurer is not estopped from disputing the extent of its claimed indemnity obligation by having previously refused to provide a defense to the claim. Timberline Equipment Co., Inc. v. St. Paul Fire & Marine Ins. Co., 576 P.2d 1244 (Or. 1978).
initial ruling in Northwest Pump and Equipment Co. v. American States Ins.
Co., 141 Ore. App. 210, 917 P.2d 1025 (1996) suggested that an insurer
that wrongly refused to provide a defense to a covered suit would be estopped
to dispute its duty to indemnify the insured for any subsequent settlement
of the claims, the court held on reconsideration (917 P.2d 29) that the
issue of indemnity exists independently of whether the insurer had a duty
to defend and that the insurer should be free to dispute the extent to
which the insured's settlement of the underlying claim, in fact, fell within
the scope of its indemnity obligation. Three dissenting judges disputed
this position, arguing that an insurer might be liable for any ensuing
settlement or damages that were the consequential result of its earlier
failure to provide a defense.
An umbrella carrier whose coverage was written excess of the "amount recoverable" from the primary insurer was held by the Oregon Supreme Court to have no obligation to drop down over the insolvent primary layer in Hoffman Construction Co. v. Fred S. James & Co., 313 Or. 464, 836 P.2d 703 (1992).
If an excess insurer's policy covers a claim that the primary insurer refuses to defend, the excess insurer may be obligated to assume the defense, whether or not the primary policy actually applies or not. School Dist. No. 1 v. Mission Ins. Co., 650 P.2d 929, 944 (Or. App. 1982).
A state trial
court ruled in Schnitzer Investment Corp. v. Certain Underwriters at Lloyd’s,
Multnomah No. 99-02-02004 (Or. Cir. March 15, 2001) that an insured must
first exhaust all underlying primary insurance suing excess carriers.
Recognized in City of Corvallis v. The Hartford Accident & Indemnity Co., Civil No. 89-294-JU (D. Ore. May 31, 1991), wherein a federal Magistrate ruled that the insured was not entitled to coverage under policies that went on the risk after the insured received preliminary notice of a problem with chromium contamination since any ensuing pollution was a "loss in progress" and a "known risk."
cases. Ninth Circuit ruled in Interstate Fire & Cas. Co.
v. Portland Archdiocese, 35 F.3d 1325 (9th Cir. 1994) that negligent supervision
claims arising out of a priest's sexual molestation of a child over a four
year period constituted a separate "occurrence" in each year that the molestation
had occurred. The court reversed a ruling in the District Court that
the claims involved a single "occurrence" since the event giving rise to
the Archdiocese's liability was its continuous negligence in retaining
and supervising the priest. On remand, the U.S. District Court ruled
that the insured was responsible for an individual retention in each of
the four triggered policy years. Interstate Fire & Cas. Co. v.
Portland Archdiocese, 889 F.Supp. 498 (D. Ore. 1995). However,
in National Chiropractic Mut. Ins. Co. v. Morgan, 840 P.2d 732 (Or. App.
1992), the Oregon Court of Appeals ruled that a claim arising out of a
series of treatments by the insured's chiropractor involved multiple "occurrences."
The Oregon Supreme Court ruled that the pollution exclusion was ambiguous in St. Paul Fire & Marine Ins. Co. v. McCormick & Baxter Creosoting Co., 324 Ore. 184, 923 P.2d 1200 (1996).
The Court of Appeals had upheld the "accidental" aspect of the exclusion in several earlier cases. See Transamerica Ins. Co. v. Sunnes, 77 Ore. App. 136, 711 P.2d 212 (1985) and Mays v. Transamerica Ins. Co., 103 Ore. App. 578, 799 P.2d 653 (1990) (deliberate waste discharges are not "accidental" even if the insured had no intention of causing any pollution).
An early decision of the Oregon Court of Appeals concluded that "sudden" was ambiguous and that the exclusion should not bar coverage for the gradual seepage of oil out of a tank absent a showing of intent to injure. A-1 Sandblasting & Steamcleaning v. Baiden, 53 Or. App. 890 632 P.2d 1377 (1981), aff'd on other grounds, 293. Or. 17, 643 P.2d 1260 (1982).
In ZRZ Realty Company v. Beneficial Fire and Casualty Insurance Company, MultNomah (Ore. Cir. Ct. October 15, 1999), Judge Keys ruled that although “sudden” has been declared to be ambiguous, the “accidental” aspect of the pollution exclusion is still good law in Oregon and that if pollutants are discharged intentionally, they are excluded whether or not any secondary migration is expected or intended;
Even before McCormick & Baxter, the Court of Appeals found a duty to defend where the underlying allegations suggested the possibility of a "sudden and accidental" discharge. In North Pacific Ins. Co. v. United Chrome Products, Inc., 122 Ore. App. 77, 857 P.2d 158 (1993), the Court of Appeals reversed a 1991 trial court ruling for insurers in a case involving a metalplater on the basis of the insured's contention that there were factual issues as to whether the pollution had in fact resulted from three discrete "sudden and accidental" events. Cf. City of Corvallis v. The Hartford Accident & Indemnity Co., Civil No. 89-294-JU (D. Ore. May 30, 1991)(gradual pollution is not "sudden").
Similarly, in Northwest Pump and Equipment Co. v. American States Ins. Co., 141 Ore. App. 210, 917 P.2d 1025 (1996), as modified, 925 P.2d 1241 (Ore. App. 1996) the Court of Appeals held that a liability insurer had a duty to defend pollution claims by a gas station operator against a tank installer, holding that a duty to defend should arise where the underlying allegations did not specifically preclude the possibility that such discharges had taken place.
In Unified Sewerage Agency of Washington County v. Wausau Underwriters Ins. Co., No 91-375 (D. Ore. November 10, 1994), Judge Jones ruled that the principal meaning of "sudden" was of unexpected and unintended and only had a temporal quality insofar as it concerned the commencement of the discharge, not the duration of polluting events.
Clean up claims involving the insured's wood treatment plant were held subject to the "absolute" pollution exclusion by the Oregon Supreme Court in McCormick & Baxter, supra. Earlier, the exclusion was upheld by the Ninth Circuit in Great Northern Ins. Co. v. Benjamin Franklin Savings & Loan, 793 F.Supp. 259 (D. Ore. 1990), aff'd, 953 F.2d 1387 (9th Cir. 1992)(asbestos-containing materials are a "pollutant") and Larsen Oil Co. v. Federated Service Ins. Co., 859 F.Supp. 434 (D. Ore. 1994), aff'd, 70 F.3d 1279 (9th Cir. 1995)(LUST claims).
In Martin v. State Farm Fire & Cas., 932 P.2d 1207 (Or. App. 1997), the Oregon Court of Appeals ruled that the absolute pollution exclusions precluded coverage for a law suit that was filed against the insured by the current owner of property that allegedly became polluted as a result of discharges from underground storage tanks before and during the period that the property was owned by the insured. The insured had argued that the pollution exclusion did not apply because much of the contamination had occurred before he inherited the property. The court rejected this argument, stating: "Because of the unavoidable linkage between Martin's ownership and his liability, State Farm had no duty to defend under the Farm policy."
“Hostile fire” arguments were rejected in Indiana Lumbermens Mutual Insurance Company v. West Oregon Productions, Inc., No. 99-1013 (D. Ore. March 1, 2000). Judge Redden ruled that the underlying claims were in the nature of an action for a continuing nuisance and that even though the underlying plaintiffs had amended their complaint at some point to include allegations that they had suffered damage due to discharges of “gases, smoke, fires and other pollutants,” any claim that they had suffered injury because of “uncontrolled and unintended fires over a period of many years is simply fanciful.”
Supreme Court ruled in Fleming v. USAA, 329 Or. 449, 988 P.2d 378
(1999), however, that a pollution exclusion language in the “perils insured
against” portion of a property policy could not be given effect owing to
the fact that it was not clearly labeled as an “exclusion” in keeping with
ORS 742.246(2) which requires that any provision “restricting or abridging
the rights of the insured” must be preceded by a sufficiently explanatory
title printed in eight-point type capital letters. On rehearing,
the court further ruled that this statute was not limited to standard “fire”
policies. A federal district court has since ruled in Indiana
Lumbermens Mutual Insurance Company v. West Oregon Productions, Inc., No.
99-1013 (D. Ore. March 1, 2000) that Fleming has no application to claims
under an absolute pollution exclusion in a general liability policy, as
the exclusion was properly labeled and therefore not subject to the statutory
defect that the Oregon Supreme Court had identified in that earlier case.
PROFESSIONAL LIABILITY ISSUES
that an insured physician traded Xanax for sex have been held to potentially
give rise to coverage under his homeowners policy notwithstanding a policy
exclusion for “professional services.” In Hedmann v. Liberty Mutual
Fire Ins. Co., CA A100556 (Ore. App. February 17, 1999), the Oregon Court
of Appeals held that even though prescribing medication is a service provided
by the medical profession, the insured was not acting as a doctor or otherwise
providing medical treatment to the plaintiff.
Claims for economic loss are not covered. Wyoming Sawmills, Inc. v. Transportation Ins. Co., 578 P.2d 1253, 1256 (Or. 1978). In Allstate Ins. Co. v. Belezos, 774 F.Supp. 992 (D. Ore. 1990), aff'd, No. 90-35633 (9th Cir. December 24, 1991), the cost of hiring additional security to prevent protesters from entering an abortion clinic were held not to constitute damages because of "property damage."
v. State Farm Fire & Cas., 932 P.2d 1207 (Or. App. 1997), the Court
of Appeals ruled that there was no coverage for the plaintiffs' claims
for negligent misrepresentation. Those claims, noted the court, sought
recovery only for economic damages and were not "property damage" as required
by the policy. "Nothing in the allegations [for negligent misrepresentation]
caused any physical damage to tangible property."
disfavors coverage for intentional acts. Allstate Ins. Co.
v. Belezos, 774 F.Supp. 992 (D. Ore. 1990), aff'd, No. 90-35633 (9th Cir.,
December 24, 1991); Isenhart v. General Cas. Co., 23 Or. 49, 53, 377 P.2d
26 (1962). See also Cunningham and Walsh, Inc. v. Atlantic Mutual
Ins. Co., 744 P.2d 1317, 1319 (Or. 1987)(fraud).
so long as award of damages is based on reckless and not intentional conduct.
See Harrell v. Travelers Indemnity Co., 279 Or. 199, 567 P.2d 1013 (1977).
STANDARDS FOR POLICY INTERPRETATION
Oregon courts will look principally to the intention of the parties in attempting to ascertain the meaning of insurance contracts. Hoffman Construction Co. v. Fred S. James & Co., 313 Or. 464, 836 P.2d 703 (1992). Thus, an examination of the meaning of an insurance contract begins with the terms and conditions of the policy itself. If those terms are not defined, the court will look to their plain meaning. Id. at 474. If there is more than one plausible interpretation of the term's plain meaning, "each interpretation must be scrutinized in the light of the specific context in which the term is used in the policy and also in the broad context of the policy as a whole. Id. at 475. Only if, after this scrutiny, both preferred interpretations remained reasonable, will the court invoke the rule of contra proferentum and adopt the construction most favorable to the drafter of the policy term.
An insurance policy is to be reasonably interpreted “so that no part of it is ignored and effect can be given to every word and phrase.” New Zealand Ins. Co. v. Griffith Rubber Mills, 526 P.2d 567 (Or. 1974).
Under Oregon law, courts have ruled that extrinsic evidence is only admissible to explain an ambiguity in a policy. See, e.g., Yogman v. Parrott, 325 Or. 358 (1997). Absent an ambiguity in the policy, extrinsic evidence is inadmissible. Webb v. National Union Fire Insurance Company of Pittsburgh, 2000 WL 300834 (9th Cir. March 24, 2000)(extrinsic evidence may not be relied on to introduce a finding of ambiguity.)
The Oregon Supreme Court has ruled that exclusionary language in a policy will only be given effect if expressly described as such. In Fleming v. USAA, 329 Or. 449, 988 P.2d 378 (1999), the court refused to give effect to an absolute pollution exclusion contained in a first party policy’s insuring language on the basis that the language did not comply with ORS 742.246(2) which requires that any provision “restricting or abridging the rights of the insured” must be preceded by a sufficiently explanatory title printed in eight-point type capital letters.
In Senn v. Merrell Dow Pharmaceuticals, 305 Or. 256, 751 P.2d, 215 (1988), the Oregon Supreme Court rejected theory of alternate liability to shift causation burden of proof in pharmaceutical case.
TRIGGER OF COVERAGE
The Oregon Supreme Court adopted an "injury in fact" trigger for pollution claims and rejected a "manifestation" trigger in St. Paul Fire & Marine Ins. Co. v. McCormick & Baxter Creosoting Co., 324 Ore. 184, 923 P.2d 1200 (1996), holding that coverage was triggered when "actual damage" resulted without regard to when the pollution became "manifest." In State of Oregon v. Northwestern Pacific Indem. Co., 69 Ore. App. 456, 685 P.2d 1026 (1984), the Oregon Court of Appeals ruled that an insurer had no duty to defend farmers' suits against producer of contaminated wheat seed where sale of defective product occurred during its policy period but germination of seeds and harvesting of crops, for which farmers claim damages did not.
A "continuous trigger" was adopted for DES claims in Safeco Ins. Co. of America v. Great American Ins. Co., CV-87-664-JU (D. Or. June 25, 1992).
In ZRZ Realty Company v. Beneficial Fire and Casualty Insurance Company, MultNomah (Ore. Cir. Ct. October 15, 1999), a state trial court declared that injury had occurred throughout a period of 52 years. Once the insured is able to show that an occurrence took place during each policy period, it will not be required to show how much damage there was in each policy year or how much is attributable to each year or policy. Rather, the damages will be allocated equally to each triggered year. If there is damage during the policy period, that policy is triggered even if the damage also occurred outside the policy period
A U.S. District Court has also ruled that property damage occurring prior to an insured's involvement at a hazardous waste site would not trigger coverage despite the fact that the insured may be jointly and severally liable for all of the pollution. Dant & Russell, Inc. v. United Pacific Ins. Co., CV No. 89-915-PA (D. Ore. May 13, 1990).
A federal district court acknowledged the reasonableness of a “loss in progress” argument in a case where complaints involving discharges from the insured’s wood treatment plant began before the insurer’s policy. Indiana Lumbermens Mutual Insurance Company v. West Oregon Productions, Inc., No. 99-1013 (D. Ore. March 1, 2000).