City of Tualatin v. City-County Ins. Services Trust

• Decision Date: 25 May 1995
• Docket Number: CITY-COUNTY
• Citation: 894 P.2d 1158,321 Or. 164
• Parties: CITY OF TUALATIN, Petitioner on Review, v.INSURANCE SERVICES TRUST, Ted Lopuszynski, Trustee, Kent Taylor, Trustee, Daniel J. Ahern, Trustee, Laura Pryor, Trustee, Nels Hanson, Trustee, Larry Lehman, Trustee, Respondents on Review. DC 91D301739; CA A79184; SC S41660.
• Court: Oregon Supreme Court

Page 1158

894 P.2d 1158

321 Or. 164

CITY OF TUALATIN, Petitioner on Review, v. CITY-COUNTY INSURANCE SERVICES TRUST, Ted Lopuszynski Trustee, Kent Taylor, Trustee, Daniel J. Ahern, Trustee Laura Pryor, Trustee, Nels Hanson, Trustee, Larry Lehman Trustee, Respondents on Review.

DC 91D301739; CA A79184; SC S41660.

Supreme Court of Oregon In Banc.

Argued and Submitted March 9, 1995.

Decided May 25, 1995.

Ridgway K. Foley, Jr. of Foley and Duncan, P.C., Portland, argued the cause for petitioner on review. With him on the petition were M. Elizabeth Duncan of Foley and Duncan, P.C., and Mark E. Pilliod, City Atty., City of Tualatin.

James E. Mountain, Jr. of Harrang Long Gary Rudnick P.C., Salem, argued the cause and filed the response for respondent on review.

FADELEY, Justice.

The question in this case is whether an insurer is obligated to defend a local government officer named in a complaint filed with the Oregon Government Ethics Commission, ¹ alleging that the officer violated an ethics statute. Disposition of that issue depends on the proper interpretation of the first sentence of ORS 30.287(1), which we quote later in this opinion.

City-County Insurance Services Trust and its trustees (Defendants, hereafter defendant or defendant insurer) provided comprehensive liability insurance to plaintiff City of Tualatin. The parties dispute whether their insurance contract covers defense of the ethics complaint. The insurance contract promised:

"[T]he Company will pay on behalf of the Insured all sums which the Insured shall be legally obligated to pay as 'damages' because of:

"Coverage A: Liability arising under Oregon Revised Statutes 30.260 to 30.300[.]"

The statute sections cited comprise the Oregon Tort Claims Act (OTCA).

The trial court determined that a complaint alleging an ethics violation was not a "tort claim or demand" under ORS 30.260(8) and granted defendant insurer's motion for summary judgment. The Court of Appeals affirmed on that basis. City of Tualatin v. City-County Ins. Services Trust, 129 Or.App. 198, 878 P.2d 1139 (1994). Because we conclude that defense of a complaint for an ethics violation does not fall within the parameters of the OTCA, we also affirm.

The relevant facts in this case are undisputed. In April 1990, the Oregon Government Ethics Commission (commission) received a complaint against Mayor Stolze of Tualatin. The complaint alleged that the mayor had violated ORS 244.040 when he voted on a particular land use matter that was under consideration by the Tualatin City Council. The complaint alleged that, when the mayor voted, he had a financial interest, ² because he was a general business competitor of complainant. The mayor tendered the defense of that complaint to the City of Tualatin (plaintiff). Subsequently, plaintiff tendered the defense to its insurer, City-County Insurance Services Trust, which declined to defend the mayor. Defendant insurer justified its refusal to provide coverage to plaintiff for the mayor's defense of the ethics complaint by arguing that the ethics complaint was not a "tort claim or demand" arising under the OTCA, ORS 30.260 to 30.300, and that no other coverage applied. The mayor obtained a defense elsewhere. The ethics complaint was dismissed without hearing. The mayor submitted the bill for his lawyer's fees to plaintiff city, and it requested reimbursement of those defense costs from defendant insurer. Defendant again refused.

Plaintiff filed an action for the cost of defense against defendant insurer. The trial court granted defendant's motion for summary judgment. On appeal, the Court of Appeals held that an ethics complaint did not come within the OTCA, because it did not constitute a claim of "tort" as defined in ORS 30.260(8). That court held that, to qualify as a tort claim, the claim must assert a "civil right of action for damages or a protective remedy for specific persons claiming injury due to a violation of [law]," and that state ethics statutes do not provide such a right of action. 129 Or.App. at 202, 878 P.2d 1139.

On review, plaintiff first contends that the Court of Appeals erred in holding that ORS 30.287(1) only covers the defense of tort actions. Plaintiff relies on the words of ORS 30.287(1), which provide:

"If any civil action, suit or proceeding is brought against any officer, employee or agent of a local public body other than the state which on its face falls within the provisions of ORS 30.285(1), or which the officer, employee or agent asserts to be based in fact upon an alleged act or omission in the performance of duty, the officer, employee or agent may file a written request for counsel with the governing body of the public body. The governing body shall thereupon engage counsel to appear and defend the officer, employee or agent unless after investigation it is determined that the claim or demand does not arise out of an alleged act or omission occurring in the performance of duty, or that the act or omission complained of amounted to malfeasance in office or willful or wanton neglect of duty, in which case the governing body shall reject defense of the claim." (Emphasis added.)

Plaintiff argues that the legislature employed the word "or," emphasized in the above-quoted first sentence of ORS 30.287(1), for the specific purpose of signaling a separate class of claims for which public bodies must provide a defense. Plaintiff contends that ORS 30.287(1) applies either to a "tort claim or demand * * * arising out of an alleged act or omission occurring in the performance of duty" as provided in ORS 30.285(1) or, although no tort claim or demand has been made, to any other kind of complaint against a public officer, ³ whenever the officer asserts that such complaint is "based * * * on an alleged act or omission in the performance of duty."

In response, defendant argues that, in context, both the words "claim or demand," which appear in ORS 30.287(1) by reason of an internal reference therein to ORS 30.285(1), and the words "civil action, suit or proceeding," which are found in ORS 30.287(1), and in ORS 30.285(3) alike, refer only to tort claims. Therefore, defendant argues, the reference in ORS 30.287(1) to "an act or omission in the performance of duty," found within the same sentence that refers to "tort claim or demand," also refers only to acts or omissions that give rise to tort claims.

"In interpreting a statute, the court's task is to discern the intent of the legislature. ORS 174.020." PGE v. Bureau of Labor and Industries, 317 Or. 606, 610, 859 P.2d 1143 (1993). In attempting to discern the intent of the legislature, the first level of analysis is to examine the text and context of the statute. The context of a statute includes other provisions of the same statute and other related statutes. If the legislature's intent is clear from the text and context, further inquiry is inappropriate. Id. at 611, 859 P.2d 1143.

Thus, we first turn to the text and context of the provision to be construed, ORS 30.287(1). We initially focus on the text of the dispositive first sentence of ORS 30.287(1). The subject of the sentence appears in the last clause. That clause provides that the public "officer * * * may file a written request for [defense] counsel" with the local public body. The remaining clauses of that sentence describe the conditions that must be present before the officer "may" file the request for defense.

The first of those clauses--"[i]f any civil action, suit or proceeding is brought against any officer"--requires an action or proceeding and that it be brought against an officer of the government. The next clause specifies that the action or proceeding must either show on its face that it falls within the provisions of ORS 30.285(1) by being, in the words of that referenced subsection, "any tort claim or demand * * * arising out of an alleged act or omission occurring in the performance of duty" or must be an action or proceeding which the public "officer * * * asserts to be based in fact upon an alleged act or omission in the performance of [governmental] duty." The first alternative condition under which a claim for defense may be filed is that the claim shows on its face that it allegedly arose from performance of duty; the second alternative is that the officer asserts that the claim arose from performance of duty. The two alternatives are each introduced by the word "which." In this instance, that word is used as a parallel construction device. The parallel clauses have a common referent. They refer to the "civil action, suit or proceeding" with which the sentence begins.

Under context, we begin with the statute directly announcing the disputed duty to defend. ORS 30.285(1) provides:

"The governing body of any public body shall defend, save harmless and indemnify any of its officers, employees and agents, whether elective or appointive, against any tort claim or demand, whether groundless or otherwise, arising out of an alleged act or omission occurring in the performance of duty." (Emphasis added.)

Before its amendment by Oregon Laws of 1975, chapter 609, section 16, ORS 30.285(1) provided that any public body "may" defend and indemnify an officer. After those amendments, that subsection mandated that any public body "shall" defend and indemnify against any tort claim or demand arising out of performance of duty as an officer. Section 16 of the 1975 act further amended ORS 30.285 by adding a completely new subsection (3) which spells out the procedure and the conditions under which a state officer may claim entitlement to the new mandatory right to a defense and indemnity. That subsection provides in part:

"If any civil action, suit or proceeding is brought against any state officer, employee or agent which on its face falls within the provisions of subsection (1) of this section, or which the state officer, employee or agent asserts to be based in fact upon an...