DEWSNUP v. FARMERS Ins. Co. of Or.

• Decision Date: 16 September 2010
• Docket Number: SC S057895,CA A136394,CC 06CV4790CC
• Citation: 239 P.3d 493,349 Or. 33
• Parties: Beth DEWSNUP and Tim Dewsnup, Petitioners on Review, v. FARMERS INSURANCE COMPANY OF OREGON, Respondent on Review.
• Court: Oregon Supreme Court

349 Or. 33

239 P.3d 493

Beth DEWSNUP and Tim Dewsnup, Petitioners on Review v FARMERS INSURANCE COMPANY OF OREGON, Respondent on Review.

(CC 06CV4790CC; CA A136394; SC S057895).

Supreme Court of Oregon,En Banc.

Argued and Submitted June 8, 2010.

Decided Sept. 16, 2010.

On review from the Court of Appeals. ^*

Kathryn H. Clarke, Portland, argued the cause and filed the brief for petitioners on review. With her on the brief was Robert E.L. Bonaparte.

Beth Cupani, Maloney Lauerdorf Reiner PC, Portland, argued the cause and filed the brief for respondent on review. With her on the brief was Francis J. Maloney III.

KISTLER, J.

The primary question in this case is what is a “roof” within the meaning of plaintiffs' homeowners' insurance policy. Plaintiffs Beth and Tim Dewsnup sustained losses due to water damage while their roof was undergoing repair. Although their insurance policy generally excludes coverage for water damage, they contended that an exception to that exclusion applies. The trial court ruled otherwise on defendant's motion for summary judgment, and the Court of Appeals affirmed. Dewsnup v. Farmers Ins. Co., 229 Or.App. 314, 324, 211 P.3d 354 (2009). The Court of Appeals reasoned that the exception to the water damage exclusion did not apply because, at the time of the loss, plaintiffs' roof was not a “roof” within the meaning of the policy. Id. In particular, the court held that a “roof,” by its ordinary definition, is permanent, and because plaintiffs' roof was undergoing repair at the time of the loss, no permanent roof was in place to which the exception could apply. Id. We allowed plaintiffs' petition for review and now reverse the Court of Appeals decision and the trial court's judgment.

Because this case arises on defendant's motion for summary judgment, we state the facts in the light most favorable to plaintiffs. Bergmann v. Hutton, 337 Or. 596, 599, 101 P.3d 353 (2004). Plaintiffs' roof, which consisted of a plywood sublayer and an outer layer of wood shakes, was in need of repair. Plaintiff Tim Dewsnup is a contractor and took it upon himself to perform the repairs. In doing so, he removed the layer of wood shakes in its entirety, replacing it with a layer of six-mil-thick polyethylene plastic that completely covered the plywood sublayer beneath. ¹ The polyethylene sheets ² were secured to the plywood sublayer with one-half-inch long T-50 staples located at the center of each sheet.

The edges of the polyethylene layer were secured with roof tacks driven through plastic washers to prevent tearing. The edges were further secured with wooden bats spaced at 24 to 30 inches on center. According to plaintiffs' expert, the polyethylene sheets were secured in such a way that they “would have been adequate to protect [plaintiffs'] home for one or two years if necessary under normal circumstances.”

On the first night of plaintiffs' roof repair project, a storm moved through the area. Rising winds caused part of the polyethylenesheeting to loosen and eventually blow away. Tim Dewsnup attempted to replace the sheeting but, in doing so, fell off of the house, taking one or more of the plastic sheets with him to the ground. Dewsnup injured himself when he fell. While he was injured and unable to secure the sheets over the now-exposed areas of the plywood sublayer, rain began to enter the home through the joints in the sublayer. The rain caused water damage to plaintiffs' personal property inside the home, for which plaintiffs filed an insurance claim. Defendant denied the claim on the ground that water damage was excluded under plaintiffs' policy.

Plaintiffs brought an action in the trial court for breach of contract. In response, defendant moved for summary judgment, claiming that plaintiffs' insurance policy excluded loss resulting from water damage. Defendant reasoned that water damage is generally excluded except when a windstorm or hail creates an opening in a roof. Defendant contended that, because the polyethylene “tarp” was not a “roof,” the policy did not cover plaintiffs' water damage. Alternatively, defendant argued that, to the extent that the plastic tarp could be considered a “roof,” the loss resulted from “faulty or inadequate workmanship” and was, for that reason, also excluded from coverage under the policy.

The trial court granted defendant's summary judgment motion. Rather than doing so on the grounds set forth by defendant, the court interpreted plaintiffs' insurance policy to cover only the “dwelling” described in the policy declarations; that is, a dwelling of “frame” construction with a “wood shingle or shake” roof. According to the trial court, at the moment plaintiffs removed the wood shakes, the building was no longer the “dwelling” insured under the policy. As aresult, coverage was not merely excluded under the circumstances; coverage simply did not exist. The trial court accordingly entered judgment in defendant's favor.

On appeal, the Court of Appeals rejected the trial court's conclusion that, by removing the wood shakes, the entire structure was no longer insured under the policy. The court reasoned that no plausible interpretation of the insurance policy supported such a conclusion, pointing out that “[i]f, for example, the policy happened to describe the house as having been painted white, the fact that the owners later decided to paint it yellow would not mean that the house would no longer be covered.” Dewsnup, 229 Or.App. at 320, 211 P.3d 354. The Court of Appeals reasoned that the policy declarations should not be construed as “condition[s] of coverage.” Id. (emphasis omitted).

The Court of Appeals nevertheless affirmed the trial court's judgment, holding that “in no reasonable sense would the sheet of plastic constitute [a] roof.” Id. at 322, 211 P.3d 354. Noting that the policy did not define the term “roof,” the court looked to the ordinary meaning of the terms “roof” and “roofing” and determined that, “[a]s defined, ‘roofing’ is the outermost layer of the cover of a building and consists of materials that are suitable for construction and for application to a roof as protection from the weather.” Id. at 321-22, 211 P.3d 354 (emphasis omitted). According to the court, “a temporary, plastic sheet * * * is not, itself, a ‘roof’ or part of the roof,” id. (emphasis added); rather, the sheet was simply a temporary protective covering in place of an actual roof, and therefore, the loss was not covered. Because the court found its definition of “roof” dispositive, it did not address defendant's alternative grounds for affirming the trial court's grant of summary judgment.

We allowed plaintiffs' petition for review to consider what constitutes a “roof” within the meaning of plaintiffs' insurance policy and whether, viewing the facts in the light most favorable to plaintiffs, a reasonable juror could find that plaintiffs' roof came within that definition. We begin with the meaning of the term “roof” in plaintiffs' policy.

The insurance policy at issue here, like other insurance policies, is organized in terms of coverages and exclusions; in this policy, the coverage clauses bring certain property within the protection of the policy, while the exclusionclauses deny protection to property that, but for the circumstances to which the particular exclusion applies, would otherwise be covered. See Cimarron Ins. Co. v. Travelers Ins. Co., 224 Or. 57, 61, 355 P.2d 742 (1960) (distinguishing coverage and exclusion clauses in the context of an automobile insurance policy). The policy also contains exceptions to the exclusions and specifies the particular circumstances in which those exceptions apply. Generally speaking, this case turns on an interpretation of one specific exception to the policy's exclusion of water damage from general coverage. For the sake of clarity, we begin by describing the content of the policy in terms of its organizational structure.

The general coverage clauses in plaintiffs' insurance policy are found in the section entitled “LOSSES INSURED.” These clauses extend coverage to plaintiffs' “[d]welling,” to “[s]eparate structures,” and to certain personal property located within the dwelling or separate structures. Exclusions from that coverage are listed in the section entitled “SECTION I-LOSSES NOT INSURED.” The policy excludes coverage for water damage, but provides exceptions to that exclusion. It states, in part:

“Whenever water damage occurs, the resulting loss is always excluded under this policy, however caused; except we do cover:

“ * * * * *

“2. Loss or damage to the interior of any dwelling or separate structures, or to personal property inside the dwelling or separate structures caused by water damage if the dwelling or separate structures first sustain loss or damage caused by a peril described under SECTION I-LOSSES INSURED-Coverage C-Personal Property.”

The perils described under “SECTION I-LOSSES INSURED-Coverage C-Personal Property” include “[w]indstorm or hail.” ³ Where “loss to property contained in abuilding” is sustained, as is the case here, coverage is limited to situations where “the direct force of wind or hail damages the building causing an opening in a roof or wall and the rain, snow, sleet, sand or dust enters through this opening.” (Emphasis added.)

The practical effect of this string of coverages, exclusions, and exceptions is that, for coverage to extend to water damage, the “direct force of wind or hail” must first damage a building by causing an opening in a roof. Only if rain enters the building through that opening and causes damage to personal property contained in the building will the policy cover that loss. It necessarily follows, and the parties agree, that the building must first have a “roof” in order for the exception to the water damage exclusion to apply. That raises the question: What is a “roof?”-a question that entails two related but separate issues. First, what is the...