Bighorn Logging Corp. v. Truck Ins. Exch.

Decision Date30 January 2019
Docket NumberA163054
Parties BIGHORN LOGGING CORPORATION, an Oregon Corporation, Plaintiff-Respondent, v. TRUCK INSURANCE EXCHANGE, a Reciprocal Inter-Insurance Exchange, Defendant-Appellant, and Farmers Insurance Exchange, a Reciprocal Inter-Insurance Exchange, Defendant.
CourtOregon Court of Appeals

295 Or.App. 819
437 P.3d 287

BIGHORN LOGGING CORPORATION, an Oregon Corporation, Plaintiff-Respondent,
v.
TRUCK INSURANCE EXCHANGE, a Reciprocal Inter-Insurance Exchange, Defendant-Appellant,
and
Farmers Insurance Exchange, a Reciprocal Inter-Insurance Exchange, Defendant.

A163054

Court of Appeals of Oregon.

Argued and submitted April 13, 2018.
January 30, 2019


Lindsey H. Hughes, Portland, argued the cause for appellant. Also on the briefs were Hillary A. Taylor and Keating Jones Hughes, P.C.

Seth H. Row, Portland, argued the cause for respondent. Also on the brief were Iván Resendiz Gutierrez, Miller Nash Graham & Dunn LLP, Rima L. Ghandour, and Ghandour Law, LLC.

Before Armstrong, Presiding Judge, and Tookey, Judge, and Shorr, Judge.

SHORR, J.

437 P.3d 290
295 Or.App. 821

This appeal arises from an action for defense costs and indemnity brought by Bighorn Logging Corporation (Bighorn) against Truck Insurance Exchange (Truck). Bighorn was the defendant in a timber trespass lawsuit filed by Paul Ater. In April 2012, Bighorn had approached Ater requesting a limited license to use up to three Douglas fir trees on Ater's property (the Ater property) as "tail hold trees" that would be used to secure "yarder lines" in connection with a logging operation on an adjacent property owned by Dr. Edney (the Edney property).1 Bighorn explained to Ater that it would use only two or three trees and take specific precautions to ensure that there was no or minimal damage to Ater's trees. Under those proposed conditions, Ater granted Bighorn a limited license to use the indicated trees.

In his complaint, Ater alleged that, contrary to its representations, Bighorn failed to effectively employ methods designed to minimize damage to Ater's trees. Instead, Bighorn used a chainsaw to "girdle" the trees and create wedge-shaped cuts to keep the steel yarder lines in place. In total, Bighorn cut down or severely damaged 18 Douglas fir and alder trees as well as numerous shrubs and small trees on Ater's property. The Ater lawsuit went to trial, and Bighorn was found liable by a jury for "intentionally or recklessly" damaging Ater's trees.

Bighorn tendered defense of Ater's claim to Truck pursuant to a commercial general liability (CGL) insurance policy that Bighorn had purchased from Truck. Truck concluded that it was not obligated to defend or indemnify Bighorn because, in its view, Ater's complaint alleged conduct for which the policy did not provide coverage and, in the event that there was coverage, Bighorn's alleged conduct was subject to exclusions in the insurance policy.

After Truck refused to defend or indemnify Bighorn, Bighorn brought a breach of contract action against Truck. The trial court entered summary judgment for Bighorn and denied Truck's cross-motion for summary judgment. On

295 Or.App. 822

appeal, Truck assigns error to those rulings and reprises its arguments that it was not obligated under the insurance policy to defend Bighorn against Ater's timber trespass claim or to indemnify Bighorn against the liability that resulted from that claim. For the reasons explained below, we affirm.

I. BACKGROUND

Before discussing Truck's duty to defend and indemnify Bighorn in the Ater case, we turn to a more detailed explanation of the factual and procedural background leading to this appeal. The following material facts are undisputed.

A. Insurance Policy Provisions

The insurance policy that Truck sold to Bighorn provided that Truck would defend and indemnify Bighorn in certain lawsuits. Regarding those duties, the policy provided, in relevant part, that

"[Truck] 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. [Truck] will have the right and duty to defend the insured against any ‘suit’ seeking those damages."

The policy applies to "property damage" only if the damage was "caused by an ‘occurrence’ that takes place in the ‘coverage territory’ " and "during the ‘policy period.’ "

The policy contains several exclusions, three of which are relevant to this appeal. Exclusion 2(a) excludes coverage for property damage "expected or intended" by the insured. Exclusion 2(j)(5) excludes coverage for "property damage" to "that particular part of real property on which you *** are performing operations, if the ‘property damage’ arises out of those operations." Exclusion 2(j)(6) excludes coverage for "property damage" to "that particular part of any property that must be restored, repaired or replaced because ‘your work’ was incorrectly performed on it."

437 P.3d 291

The policy also defines several terms. The term "occurrence" as used to describe the kind of property damage covered by the policy means "an accident, including continuous or repeated exposure to substantially the same

295 Or.App. 823

general harmful conditions"; the policy does not further define the term "accident." "Property damage" means "physical injury to tangible property, including all resulting loss of use of that property." "Your work" as used in exclusion 2(j)(6) means "work or operations performed by [Bighorn]." The policy does not further define the term "operations" as used in exclusion 2(j)(5) and the definitional language in exclusion 2(j)(6) or what it means for property damage to be "expected or intended" as used in exclusion 2(a).

B. Ater's Complaint Against Bighorn

In 2013, Ater filed a timber trespass action against Bighorn. In the original complaint, Ater alleged that Bighorn had "willfully" and "intentionally" trespassed on Ater's property, resulting in timber damage. In the first amended complaint, Ater specifically alleged both "intentional" and "negligent" timber trespass, ORS 105.810 ; ORS 105.815. Ater relied on the same factual allegations to support both claims, namely, Ater alleged that Bighorn had exceeded the limited license granted by Ater when it used a chainsaw to cut and girdle numerous trees on Ater's property in lieu of using the promised methods designed to minimize tree damage. With respect to the intentional trespass claim, Ater alleged that Bighorn had "blatantly violated the limited license granted by plaintiff and willfully, intentionally and without plaintiff's consent trespassed on plaintiff's property." With respect to the negligent trespass claim, Ater alleged only that Bighorn had "negligently" damaged the trees.

Timber trespass includes cutting down, girdling, or otherwise injuring any "tree, timber, or shrub on the land of another person." ORS 105.810(1). Under ORS 105.815(1), "judgment shall be given for double damages" for timber trespass if, among other things, it "appears that the trespass was casual or involuntary." Proof of "casual or involuntary" trespass does not require a showing of negligence, as "that disjunctive statutory language encompasses non-negligent, non-volitional trespass." Wyatt v. Sweitz , 146 Or. App. 723, 728, 934 P.2d 544 (1997). By contrast, damages are trebled if the acts listed in ORS 105.810(1) were committed "willfully, intentionally and without plaintiff's consent."

295 Or.App. 824

ORS 105.810(1). Under ORS 105.810(1), "upon plaintiff's proof of ownership of the premises and the commission by the defendant of any of the acts mentioned in this section[, including cutting down and girdling trees], it is prima facie evidence that the acts were committed by the defendant willfully, intentionally, and without plaintiff's consent." Put differently, a plaintiff need not prove that the defendant maliciously or purposely damaged the plaintiff's trees to prevail on an intentional timber trespass claim. Evidence that the plaintiff owns the premises and that the "defendants' conduct was such that they knew the tree would be injured as a result of their acts"—regardless of whether the defendant acted with "such a narrow focus"—is sufficient. Brown v. Johnston , 258 Or. 284, 289, 482 P.2d 712 (1971).

C. Bighorn Tenders Defense and Indemnity to Truck

After Ater served Bighorn with his complaint, Bighorn invoked Truck's duty to defend and indemnify Bighorn in the Ater case. Truck refused. It explained to Bighorn that, based on the allegations in Ater's complaint, the damage to Ater's property was the result of Bighorn's intentional conduct, not an "occurrence" (i.e. , an "accident") as required by the insurance policy to trigger Truck's duty to defend or indemnify. Truck also informed Bighorn that the underlying factual allegations—that Bighorn had used a chainsaw to cut and girdle Ater's trees rather than using methods designed to avoid damage to the trees as it promised to do to secure a limited license from Ater—fell within exclusion 2(a) for "expected or intended" property damage, exclusion 2(j)(5) for property damage to the "particular part" of the property on which Bighorn was performing "operations," and exclusion 2(j)(6) for property damage caused by Bighorn "incorrectly" performing its "work."

437 P.3d 292...

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