This court accepted certification of the following question of law from the United States Court of Appeals for the Ninth Circuit (Ninth Circuit):
“Does an insurer have a duty to defend an insured under an insurance policy with an ‘intentional acts’ exclusion if the complaint against the insured alleges a subjective intent to harm but the claim could be proven through unintentional conduct?”
See ORS 28.200 to 28.255 (describing certified question process); ORAP 12.20 (prescribing procedures for consideration of certified questions). We answer that question in the affirmative, for the reasons that follow.
We begin with the information that the Ninth Circuit provided about the underlying federal civil action. Southern Pacific Railway (Southern Pacific) possessed a number of rail van trailers that it leased to third parties on behalf of the owners of the trailers. An individual who worked for Southern Pacific, but who did not have authority to sell the trailers, sold some rail van trailers to Stuart Abrams and Abrams, Inc. (Abrams), the plaintiffs in this case, and kept the money. Abrams then sold many of the trailers to Beall Transport Equipment Company (Beall).
Once Southern Pacific discovered the theft of the trailers, it seized most of them from Beall. Beall then brought an action in state court against Southern Pacific, alleging conversion. Southern Pacific filed a third-party complaint against Abrams, alleging conversion. Abrams also brought an action in state court against Southern Pacific, alleging conversion, and Southern Pacific counterclaimed in that action for conversion. The two actions were consolidated for trial, and the trial court entered judgment against Abrams. 1
At the time of the alleged conversion, Abrams was insured by General Star Indemnity Company (General Star). According to the Ninth Circuit, the insurance policy required General Star “to defend Abrams in any suit alleging property damage caused by Abrams” and “excluded coverage for any damage that the insured intended to cause.” Abrams had tendered Southern Pacific’s third-party complaint and counterclaim (the complaints) to General Star, but General Star had refused to defend. After General Star rejected Abrams’s tender, Abrams brought an action in state court against General Star for failing to defend and indemnify. General Star removed the action to federal district court, invoking that court’s diversity jurisdiction.
General Star moved for summary judgment, arguing that it did not have a duty to defend Abrams because the complaints alleged that Abrams had acted with the subjective intent to cause harm and, thus, Abrams’s conduct fell under the intentional-acts exclusion of the insurance policy.
See, e.g., Allstate Ins. Co. v. Stone,
In its order certifying the question, the Ninth Circuit stated that Southern Pacific’s complaints against Abrams stated claims for conversion and that conversion was a covered claim under the General Star insurance policy. In addition, the Ninth Circuit noted that the factual allegations of the complaints also included allegations that Abrams had acted with the subjective intent to cause harm. We have reviewed the complaints against Abrams and the relevant provisions of the insurance policy, and agree with the Ninth Circuit’s conclusions. As noted above, under this court’s cases, an insurance policy with an intentional-acts exclusion does not provide coverage for acts done with the subjective intent to cause harm. Abrams argues that, because the complaints state claims for conversion, General Star has a duty
to
Before answering the certified question, we address a threshold issue raised by amici curiae. 2 Amici argue that this court cannot answer the question as phrased because the question is so abstract that any answer that we offer will not be meaningful. The answer to any duty-to-defend question, they point out, depends on the specific wording of the insurance policy at issue. For that reason, they ask this court to rephrase the certified question to refer specifically to the wording of the duty-to-defend provision and to the “intended acts” exclusion of the General Star insurance policy. 3
We agree with
amici
that whether a duty to.defend exists in a particular case first depends on the specific wording of the specific insurance policy involved. As this court explained in
Marleau v. Truck Insurance Exchange,
We begin, as the parties do, with this court’s decision in
Marleau.
In that case, the insurance policy covered “personal injury liability” and imposed on the insurer the duty to defend any action against the insured seeking damages for personal injury. The personal injury coverage included coverage for defamation, libel, and invasion of privacy, but excluded coverage for “personal injury * * * arising out of oral or written publication of material, if done by or at the direction of the insured with knowledge of its falsity.”
On review, the insured made the same argument that Abrams makes in this case, namely, that an insurer has a duty to defend if the allegations in the complaint, without amendment, state facts sufficient to constitute a claim for conduct that the policy covers, even if the complaint does not state those facts separately from facts that constitute a claim for excluded conduct. The insurer accepted that proposition but argued that, if the complaint required
any
amendment,
Despite this court’s explanation in Marleau that an insurer has a duty to defend if the complaint against the insured states a claim for covered conduct, General Star argues that it nevertheless has no duty to defend in this case because the complaint, although stating a claim for conversion, includes allegations that Abrams had converted the property with the intent to cause harm to Southern Pacific. As authority for that argument, General Star relies on the following passage from this court’s opinion in Ledford:
“Because the complaint alleged only that [the insured] subjectively intended to harm or injure [the plaintiff], it is irrelevant whether or not a claim for malicious prosecution could, in theory, be sustained where the [insured] did not have a subjective intent to cause harm * * *. The * * * complaint alleged only conduct that clearly falls outside the coverage of the policy. Therefore, [the insurer] had no duty to defend the malicious prosecution action.”
The insured in
Ledford
had been sued for malicious prosecution. The complaint specifically alleged that the insured “willfully and maliciously” had instituted a prosecution with the intent to “harass, annoy, harm and cause expense to” the plaintiff in that action. The insurer had refused the tender of the defense, citing the insurance policy’s intended-acts exclusion.
That is the context in which this court offered the statement, set out above, on which General Star relies here. Therefore, read in conjunction with this court’s holding in Ferguson, the court’s statement in Ledford that there is no duty to defend if the complaint “alleges only that [the insured] subjectively intended to cause harm” does not mean that the inclusion of such allegations always defeats the duty to defend. Instead, it means that, when the allegations in the complaint state a claim for excluded conduct only, as was true of the complaint for malicious prosecution then before the court, there is no duty to defend. Indeed, Ledford made that distinction clear at a later point in the opinion:
“The subjective intent of the defendant is an element of malicious prosecution. That is not the case with respect to some otherintentional torts * * * as to which this court has concluded that the inference of an intent to cause harm does not apply. Those other intentional torts have lesser included torts,’ such as negligence, under which liability may be imposed for similar conduct without any subjective intent to cause harm.”
Read together, therefore, Ferguson and Ledford suggest the following approach for answering any duty-to-defend question when the complaint contains allegations of conduct that are excluded under the insurance policy. First, the court must determine whether the complaint contains allegations of covered conduct. If it does, as the trespass complaint did in Ferguson, then the insurer has a duty to defend, even if the complaint also includes allegations of excluded conduct. If the complaint does not contain allegations of covered conduct, as was the case with the malicious prosecution complaint before the court in Ledford, then the insurer has no duty to defend. Accordingly, in this case, because the allegations of intentional conversion include allegations of ordinary conversion, a tortious act that is covered under the policy, General Star had a duty to defend.
Although we have answered the certified question, we offer the following additional clarification in response to another argument that
amici
make in this case. They argue that the rule of
Ferguson
is at odds with a long line of authorities from this court. They contend that that line of authority, which includes
Isenhart v. General Casualty Co.,
First, this court specifically rejected that strict interpretation of the “without amendment” standard in
Marleau,
as described above. As this court noted in that case, “neither the failure to identify correctly the claims nor the failure to state them separately defeats the duty to defend.”
Finally, although
amici
correctly note that this court’s holding in
City of Burns
is contrary to the duty-to-defend analysis offered here, this court, in
Ferguson,
explicitly disavowed
City of Burns.
The complaint at issue in
City of Burns
included a punitive damages provision alleging that the insured had acted “willfully, wantonly, and maliciously” when it moved the plaintiffs husband’s body from
“was erroneous because the complaint, although alleging a malicious injury would, without amendment, permit a recovery for an unintended injury since it could be analogized to a ‘lesser included offense.’ Since the unintended injury fell within the policy coverage the insurer on that issue had a duty to defend.”
Ferguson,
Certified question answered.
Notes
The Oregon Court of Appeals affirmed the trial court’s judgment on appeal.
Beall Transport Equipment Co. v. Southern Pacific,
The amici curiae, who joined in one brief, are Mutual of Enumclaw Insurance Company, Farmers Insurance Company, Safeco Insurance Company, and Liberty Northwest Insurance Company.
Amici
are correct to point out that this court has the discretion to rephrase a question certified to it.
See Western Helicopter Services v. Rogerson Aircraft,
In
Marleau,
however, this court concluded that the insurer did not have a duty to defend because the complaint did not state a claim for any covered claim.
It is not clear that this court today would reach the conclusion that it did in Isenhart that the complaint at issue there did not state a claim for unintentional conduct.
The complaint at issue in that case was one for assault and battery, and that intentional tort often includes the “lesser,” unintentional offense of battery.
See, e.g., Snyder v. Nelson/Leatherby
Ins.,