Bresee Homes, Inc. v. Farmers Insurance Exchange
293 P.3d 1036
| Or. | 2012Background
- Bresee Homes, Inc. sought review of a Court of Appeals decision affirming a trial court ruling in favor of Farmers Insurance Exchange under a Commercial General Liability (CGL) policy.
- Joneses sued Bresee for contract damages and negligence over EIFS siding, alleging defective workmanship and water intrusion; the alleged damages were incurred during Bresee's work on their home.
- Bresee tendered defense and sought indemnification; Farmers denied defense citing the products-completed operations hazard (PCOH) exclusion.
- The policy includes a broad coverage clause, exclusions, and a separate PCOH endorsement; several exclusions are qualified by exceptions related to PCOH and subcontractor work.
- Trial court granted Farmers summary judgment on coverage and Bresee’s defense request; Court of Appeals affirmed. This Court reverses to address the duty to defend and its relationship to the PCOH exclusion.
- The Court remands for determinations on indemnification depending on ultimate facts proven at trial or settlement terms.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether insurer has a duty to defend Bresee | Bresee shows tender and potential covered claims. | PCOH exclusion defeats any duty to defend. | Duty to defend exists despite PCOH exclusion. |
| Whether PCOH exclusion precludes coverage for the Joneses’ damages | Exclusion does not bar coverage given allegations | Exclusion controls coverage limits | PCOH exclusion does not eliminate the duty to defend. |
| Whether indemnification is resolvable on the record | Record sufficient to determine indemnification | Indemnification depends on ultimate facts or settlement terms | Indemnification decision requires further proceedings on underlying facts. |
Key Cases Cited
- Ledford v. Gutoski, 319 Or 397 (1994) (duty to defend resolved in insured’s favor when ambiguity favors insured)
- Marleau v. Truck Insurance Exchange, 333 Or 82 (2001) (duty to defend assessed from complaint and policy text; ambiguity resolved for insured)
- Casey v. N.W. Security Ins. Co., 260 Or 485 (1971) (compelling external evidence may limit coverage, but not to defeat defense absent compulsion)
- Abrams v. General Star Indemnity Co., 335 Or 392 (2003) (insurer must defend if complaint contains covered allegations despite exclusions)
- Hoffman Construction Co. v. Fred S. James & Co., 313 Or 464 (1992) (interpret policy as a whole; endorsements/exclusions interact to affect coverage)