Plаintiff Robert Leach appeals from a final judgment dismissing with prejudice his claims against his insurance company, defendant Scottsdale Indemnity Company (Scottsdale). Leach alleged that Scottsdale breached its duties to defend and indemnify him in connection with Thomas Warberg’s personal injury action for injuries sustained as a result of a collision that occurred during a practice session at the motocross track operated by Leach. The trial court granted summary judgment in favor of Scottsdale on both alleged breaches on the ground that the policy did not provide coverage for bodily injuries sustained by motorcycle ridеrs on Leach’s track. In addition, the court ruled that Scottsdale was entitled to summary judgment on the alleged breach of the duty to indemnify on the ground that, under the rule of law announced in Stubblefield v. St. Paul Fire & Marine,
I. BACKGROUND
Leach leased, designed, and operated a motocross course at the Fair and Expo Center in Salem, Oregon,
“will pay those sums that the insured becomes legally obligated to pay as damages because of ‘bodily injury’ or ‘property damage’ to which this insurance applies. We will have the right and duty to defend the insured against any ‘suit’ seeking those damages.”
However, the policy also contained an endorsement exclusion— titled the “Athletic or Sports Participants” exclusion (“Athletic Participant” exclusion) — that limited the scope of its coverage. The exclusion provided that “this insurance does not apply to ‘bodily injury’ to any person while practicing for or
Leach routinely held both motocross practice sessions and motocross races at the track. Generally, Leach would hold races on Friday and Saturday nights, or occasionally on Saturday and Sunday, and he would have practice sessions on Wednesday evenings and on those Sundays where no races were held. During one practice session, a rider lost control of the motorcycle that he was riding, and entered Warberg’s lane and collided with him. Warberg was seriously injured.
Warberg sued Leach, the rider who caused the collision, and others in Warberg v. Fleck, et al. (Warberg I). Warberg sought eсonomic damages for medical expenses in an amount not less than $100,000; economic damages for lost wages or salary in an amount not less than $1,000,000; and noneconomic damages in the amount of $5,000,000. Leach tendered the complaint to Scottsdale. Scottsdale denied coverage and refused to defend or indemnify Leach in connection with the suit on the ground that “Scottsdale does not owe a duty to defend or indemnify its insured, Bob Leach Enterprises, because the Athletic Or Sports Participant’ Exclusion is applicable to bar coverage.”
After Leach unsuccessfully moved for summary judgment, Warberg settled with Leach. In аccordance with the settlement, the trial court entered a stipulated judgment against Leach in the amount of $1,500,000. After judgment was entered, Leach and Warberg entered into an “Assignment and Covenant Not to Execute” agreement. Under the agreement,
“pursuant to ORS 31.825, Leach *** assigned] all his rights of recovery, choses in action, and enforcement of obligations between himself and Leach’s Insurance Policy holder, Scottsdale Indemnity Company, and against any and all other persons having any responsibility or liability for the Judgment entered in favor of Warberg by Leach * * * »
(Emphasis omitted.) In turn, Warberg “agree [d] not to enforce the Judgment against Leаch by execution or any other manner against Leach in exchange for the Assignment.”
The trial court ruled on the motion in a letter opinion. The letter opinion concluded that issues of fact existed as to whether Warberg’s injuries fell within the “Athletic Participant” exclusion, but concluded that the anti-assignment clause barred Warberg’s action against Scottsdale. The trial court then entered an order stating that Scottsdale was entitled to summary judgment because the anti-assignment clause barred Warberg’s action.
Leach then filed the present action, reiterating the claims alleged in Warberg II: that Scottsdale breached its duties under the policy when it refused to defend or indemnify Leach in connection with Warberg I. Scottsdale moved for summary judgment, again asserting that it had no duty to defend or indemnify Leach because Warberg’s injuries fell within the “Athletic Participant” exclusion. Scottsdale also asserted that Warberg’s covenant not to execute against Leach eliminated any duty of Scottsdale to indemnify Leach under the rule of law announced in Stubblefield. The trial court granted the motion and entered a general judgment dismissing all of Leach’s claims with prejudice.
Leach timely appealed. On appeal, Leach assigns error to the trial court’s grant of summary judgment to Scottsdale. Leach contends that (1) in the light of the Warberg II court’s conclusion in its letter opinion that there were factual disputes as to whether the “Athletic Participant” exclusion bars coverage for liability for Warberg’s injuries, issue preclusion barred the grant of summary judgment in Scottsdale’s
II. STANDARD OF REVIEW
On review of a trial court’s grant of summary judgment, “we view the evidеnce and all reasonable inferences that may be drawn from the evidence in the light most favorable to *** the party opposing the motion.” Jones v. General Motors Corp.,
III. ANALYSIS
A. Issue preclusion does not bar Scottsdale from asserting that the “Athletic Participant” exclusion bars coverage for liability for Warberg’s injuries.
The first question presented by this aрpeal is whether the letter opinion in Warberg II bars the grant of summary judgment in favor of Scottsdale under principles of issue preclusion. Leach argues that the trial court in this case was required to give preclusive effect to the Warberg II court’s conclusion in its letter opinion that there are issues of material fact as to whether Warberg’s injuries are excluded from coverage under the “Athletic Participant” exclusion. We disagree.
For a prior court decision to be afforded issuepreclusive effect, among other things, the pertinent issue must have been “actually litigated” and “essential to a final decision on the merits in the priоr proceeding.” Nelson v. Emerald People’s Utility Dist.,
Here, the Warberg II court’s order granting summary judgment to Scottsdale did not state on its face that the court resolved any issue regarding the application of the “Athletic Participant” exclusion. Moreover, the court’s determination that factual disputes рrecluded summary judgment in favor of Scottsdale based on the exclusion was not essential to the court’s decision to grant summary judgment in favor of Scottsdale on the ground that the policy’s anti-assignment clause barred Warberg’s action. The scope of the “Athletic Participant” exclusion has no bearing on whether or not Leach was permitted to assign his claims against Scottsdale to Warberg. Accordingly, we reject Leach’s argument that issue preclusion barred the trial court from granting summary judgment in favor of Scottsdale in this case.
B. The “Athletic Participant” exclusion did not entitle Scottsdale to summary judgment on the alleged breach of either the duty to defend or the duty to indemnify.
The next question presented by this appeal is whether the trial court erred when it concluded that the summary judgment record demonstrates that Warberg’s injuries are, as a matter of law, excluded from coverage under the policy’s “Athletic Participant” exclusion. We conclude that it did.
1. The scope of the “Athletic Participant” exclusion
As noted, the policy’s “Athletic Participant” exclusion states that “this insurance does not apply to ‘bodily injury’ to any person while practicing for or participating in any sports or athletic contest or exhibition that you sponsor.” We interpret that provision in accordance with the framework outlined in Hoffman Construction Co. v. Fred S. James
Here, the parties’ disagreement centers on whether Warberg was “practicing for * * * any sports or athletic contest or exhibition” sponsored by Leach by riding during the practice session. (Emphasis added.) The parties do not dispute that Warberg was not “participating in” any contest or exhibition at the time of his injury;
We agree with Leach that the applicability of the provision depends on the purpose for which the injured party is practicing. Leach’s proposed interpretation gives effect to the entirety of the “Athletic Participant” exclusion. The use of the word “for” after “practicing” indicates that the exclusion applies when the “practicing” that leads to injury has the purpose or objective of preparing for a contest or exhibition. See Webster’s Third New Int’l Dictionary 886 (unabridged ed 2002) (defining “for,” as relevant here, as “a preparation toward,” “in order to bring about or further,” or “with the purpose or object of’).
Scottsdale’s interpretation, on the other hand, would omit text from the policy. “To qualify as a ‘reasonable’ construction, a proposed reading of the policy must, at the least, be consistent with the wording])]” Cain Petroleum Inc. v. Zurich American Ins. Co.,
Nor does anything else in the policy support Scottsdale’s proffered interpretation. In fact, the wording of a second exclusion — the “Athletic Activities” exclusion
We further observe that, although case law from other states is not binding upon us, the interpretation of the provision offered by Leach is consistent with that of other courts. See Fred Shearer & Sons, Inc. v. Gemini Ins. Co.,
“(1) that the event in which the person was injured was a contest or exhibition; (2) that the contest or exhibition was of an athletic or sports nature; (3) that the contest or exhibition was sponsored by the named insured; and (4) that the injured person was practicing for or participating in the contest or exhibition at the time of the injury.”
Jefferson Ins. Co. of New York, 586 So 2d at 98 (quoting Garcia v. St. Bernard Parish School Bd., 576 So 2d 975, 976-77 (La 1991)); see also Sciolla v. West Bend Mut. Ins. Co., No 11-5604,
Notwithstanding the wording of the “Athletic Particiрant” exclusion, Scottsdale argues that this interpretation is unreasonable because it “would depend on the unspoken intent of the rider, potential claimant, rather than the purpose of the insured in sponsoring the activity.” We reject that argument. In concluding that the “Athletic Participant” exclusion bars coverage for injuries sustained by persons “practicing for” a contest or exhibition, we do not hold that the injured party’s subjective intent is determinative of whether that person was hurt “while practicing for * * * a contest or exhibition” sponsored by the named insured. Rather, the determination whether a party was “practicing for” a рarticular contest or exhibition sponsored by the named insured will involve an objective inquiry into the nature of the injured party’s activity at the time of injury, the insured’s objective in allowing that activity to occur, and other surrounding circumstances — just as the determination whether the injured
Finally, Scottsdale also contends that we must construe the “Athletiс Participant” exclusion to eliminate coverage for Warberg’s injuries in the light of Leach’s deposition testimony that he thought the policy covered spectators only. However, “the interpretation of an insurance policy is a question of law that is confined to the four corners of the policy without regard to extrinsic evidence.” Rhiner,
2. Duty to defend
Having construed the “Athletic Participant” exclusion to require that a person’s injuries be sustained while
Whether an insurer has a duty to defend its insured depends on the face of two documents: the complaint and the insurance policy. Ledford v. Gutoski,
Here, the complaint is ambiguous “with respect to whether the allegations could be covered.” Id. That is because the complaint does not allege facts permitting the conclusion that the purpose of Warberg’s practice activity was to prepare for a contest or exhibition sponsored by Leach. Instead, the allegations in the complaint state simply that Warberg was “engaging in a practice motocross run at the motocross course,” without identifying any facts or circumstances regarding the purpose of the practice session. Resolving the ambiguity in the сomplaint regarding the purpose of the practice session in favor of the insured, as we must, we conclude that the allegations gave rise to a duty to defend. The trial court therefore erred when it granted summary judgment in favor of Scottsdale on Leach’s claim that Scottsdale breached its duty to defend.
We next address whether the trial court erred in granting summary judgment to Scottsdale on Leach’s claim that Scottsdale breached its duty to indemnify on the ground that the “Athletic Participant” exclusion barred coverage as a matter of law.
Specifically, if all factual disputes are resolved in favor of Leach, the evidence in the summary judgment record would permit a reasonable factfinder to find that Warberg was not “practicing for” a contest or exhibition sponsored by Leach at the time of his injury. It is undisputed that Warberg was injured in a practice session, and it is undisputed that no races were held on the day of that practice session. In addition, Warberg testified that, “[a]t the time of my injuries, I was not practicing for a race, competition, contest, or exhibition.” Finally, when asked to compare the number of laps run on practice days versus race days, Leach explained:
“I would almost guess that maybe there’s more on practice days. You know, you’ve got — you’ve got a lot of people in the sрort that they don’t like to race. They just want to ride so, you know, you might get a few more of those guys that show up on a practice day than you do on a race day.”
C. The covenant not to execute did not entitlе Scottsdale to summary judgment on the alleged breach of the duty to indemnify.
The final question presented by this appeal is whether the evidence that Warberg entered into a covenant not to execute on the stipulated judgment against Leach entitled Scottsdale to summary judgment under Stubblefield on the claim for breach of the duty to indemnify. We conclude that it did not.
Under Stubblefield, “when an insured is released from liability to the assignee, the insured is not legally obligated to his assignee, and the insurance company in turn is not obligated to its insured.” Lancaster v. Royal Ins. Co. of America,
The summary judgment record in this case does not permit us to conclude, as a matter of law, that the agreement between Leach and Warberg extinguished Leach’s
“The extеnt to which a contract is divisible and whether one promise may be severed from another depends on the intention of the parties,” to be determined by examining the wording of the contract and other pertinent circumstances. Care Medical Equipment, Inc. v. Baldwin,
For the foregoing reasons, the trial court erred by granting summary judgment in favor of Scottsdale. Accordingly, we reverse and remand for further proceedings consistent with this opinion.
Reversed and remanded.
Notes
The Fair and Expo Center is owned by the State of Oregon, hut Leach leased the premises and designed the motocross course located on site.
Scottsdale at one pоint took the position that the “Athletic Participant” exclusion barred coverage because the motocross event in which Warberg was injured was an athletic “contest or exhibition” sponsored by Leach. On appeal, Scottsdale now appears to concede that Warberg’s injuries were sustained during a “practice motocross run” — rather than during a contest or exhibition — and does not appear to dispute that Warberg was not practicing for the purpose of preparing for a contest or exhibition at the time of his injury. Instead of challenging that characterization, Scottsdale’s argument on aрpeal is that the “Athletic Participant” exclusion bars coverage both for injuries sustained during contests or exhibitions and injuries sustained during any practice session, regardless of the purpose for that practice.
Leach argues in his reply brief that the trial court did not decide whether the “Athletic Participant” exclusion established that Scottsdale had no duty to indemnify Leach, although his opening brief appears to treat the trial court’s decision as having resolved that issue. Although the trial court’s ruling is unclear, we read the ruling to have reached the issue of both the duty to defend and the duty to indemnify.
The fact that the assignment given in exchange fоr the covenant not to execute has been partially invalidated distinguishes this case from Brownstone Homes Condo. Assn. v. Brownstone Forest Hts.,
As a general rule, when a contract is ambiguous, “ascertaining its meaning is a question of fact” that is not susceрtible to resolution on summary judgment. Madson v. Oregon Conf. of Seventh-Day Adventists,
Leach also argues that ORS 31.825 preserves his cause of action against Scottsdale, regardless of the Stubblefield rule. That statute, which abrogates the Stubblefield rule, provides:
“A defendant in a tort action against whom a judgment has been rendered may assign any cause of action that defendant has against the defendant’s insurer as a result of the judgment to the plaintiff in whose favor the judgment has been entered. That assignment and any release or covenant given for the assignment shall not extinguish the cause of action against the insurer unless the assignment specifically so provides.”
ORS 31.825. In view of our determination that the summary judgment record does not permit the conclusion, as a matter of law, that the Stubblefield rule applies on the facts of this case, we do not address whether ORS 31.825 would operate to preserve Leach’s cause of action against Scottsdale under the circumstances present here. We note, however, that the “Assignment and Covenant Not to Execute” between Leach and Warberg specifically invoked that statute (“pursuant to ORS 31.825, Leach * * * assigned] all his rights of recovery * * *”), thereby manifesting an intent to avoid the Stubblefield rule. That lends further support to our conclusion that there is, at the very least, a question of fact as to whether Leach and Warberg would have intended their agreement to extinguish Leach’s liability in the event that the assignment was unenforceable.