437 P.3d 287
Or. Ct. App.2019Background
- Bighorn Logging obtained a limited license to use up to three Douglas firs on Ater's land as tail-hold trees while logging on adjacent Edney property; Bighorn instead cut/girdled numerous trees and damaged shrubs.
- Ater sued for timber trespass alleging both negligent and intentional trespass; jury found Bighorn "intentionally or recklessly" damaged trees and awarded damages; trial court entered judgment for intentional timber trespass under ORS 105.810.
- Bighorn tendered defense and indemnity to its CGL insurer, Truck Insurance Exchange; Truck denied coverage citing lack of an "occurrence" (accident) and policy exclusions for expected/intended damage and for damage to the particular part of property where the insured performed operations or where insured's work was incorrectly performed (exclusions 2(a), 2(j)(5), 2(j)(6)).
- Bighorn sued Truck for breach of contract (duty to defend and duty to indemnify); at summary judgment the trial court ruled for Bighorn, concluding ambiguities in exclusions and that the underlying judgment did not establish subjective intent to harm.
- Truck appealed, arguing exclusions unambiguously preclude defense and indemnity and that intentional trespass judgment negates the required accidental "occurrence."
Issues
| Issue | Plaintiff's Argument (Bighorn) | Defendant's Argument (Truck) | Held |
|---|---|---|---|
| Duty to defend — whether policy exclusions (2(j)(5), 2(j)(6)) bar defense | Ater's complaint alleged negligent trespass and ambiguous claims; exclusions are ambiguous and construed for insured | Exclusions unambiguously exclude coverage for property damaged in the course of insured's operations (including ancillary work on third‑party property) | Exclusions ambiguous as to scope; ambiguities construed for insured — duty to defend exists |
| Duty to indemnify — whether judgment for intentional trespass precludes coverage because policy covers only an "occurrence" (accident) | Jury found intentional or reckless conduct; judgment does not establish subjective intent to cause harm, so indemnity may still be triggered | Judgment for intentional trespass means nonaccidental damage and exclusion 2(a) (expected/intended) applies | Judgment under ORS 105.810 does not establish subjective intent to cause the injury; insurer failed to prove intentional‑harm exclusion — indemnity not precluded as matter of law |
| Application of exclusions 2(j)(5) & 2(j)(6) to ancillary/unauthorized work on third‑party property | Exclusions should be read narrowly to apply only to the insured’s contracted/authorized work on the specific property portion | Exclusions apply broadly to any property part where insured performed operations related to the project, including ancillary work | Language is susceptible to multiple plausible readings; insurer failed to show exclusions unambiguously apply |
| Standard for construing policy language and resolving coverage ambiguities | Ambiguities must be resolved for the insured; jury’s finding of "reckless" conduct supports coverage | Insurer urges a narrower rule excluding coverage once judgment labels trespass "intentional" | Court applied Oregon insurance interpretation rules: ambiguous terms construed for insured; subjective intent governs application of intentional‑act exclusion |
Key Cases Cited
- Ledford v. Gutoski, 319 Or. 397 (insurer's duty to defend determined from complaint vs policy; duty to indemnify distinct)
- FountainCourt Homeowners v. FountainCourt Development, 360 Or. 341 (distinguishing duty to defend and to indemnify; indemnity determined by contract and underlying judgment/record)
- Bresee Homes, Inc. v. Farmers Ins. Exchange, 353 Or. 112 (ambiguities in complaint/policy resolved in favor of insured for duty to defend)
- West Hills Development Co. v. Chartis Claims, 360 Or. 650 (four‑corners rule for duty to defend)
- Allstate Ins. Co. v. Stone, 319 Or. 275 (intentional‑act exclusion depends on insured's subjective intent)
- Brown v. Johnston, 258 Or. 284 (under ORS 105.810, intentional timber trespass may be established without proof of purpose to damage property)
- Hunters Ridge Condo. Assn. v. Sherwood Crossing, 285 Or. App. 416 (policy terms interpreted from perspective of ordinary purchaser; resolve ambiguities for insured)