Groshong v. Mutual of Enumclaw Ins. Co.

• Decision Date: 12 August 1999
• Parties: Joel C. GROSHONG, JoAnn Huth and Gary Huth, Petitioners on Review, v. MUTUAL OF ENUMCLAW INSURANCE COMPANY, a Washington corporation, Respondent on Review.
• Court: Oregon Supreme Court

985 P.2d 1284

329 Or. 303

329 Ore. 303

Joel C. GROSHONG, JoAnn Huth and Gary Huth, Petitioners on Review, v. MUTUAL OF ENUMCLAW INSURANCE COMPANY, a Washington corporation, Respondent on Review.

(CC 9407-04901; CA A89325; SC S43912)

Supreme Court of Oregon.

Argued and Submitted November 3, 1997.

Decided August 12, 1999.

Michael A. Lehner, of Lehner, Mitchell, Rodrigues & Sears, Portland, argued the cause and filed the brief for petitioners on review. Edward L. Sears, of Lehner, Mitchell, Rodrigues & Sears, Portland, filed the petition for review.

Thomas M. Christ, of Mitchell, Lang & Smith, Portland, argued the cause and filed the briefs for respondent on review.

Before CARSON, Chief Justice, and GILLETTE, VAN HOOMISSEN, DURHAM, and KULONGOSKI, Justices.¹

CARSON, C.J.

In this case, we are asked to decide whether an insurance policy that defendant issued provides coverage for a claim of housing discrimination made by a prospective tenant against the insured plaintiffs. After a trial on stipulated facts, the trial court entered judgment for defendant, concluding that the terms of the policy did not cover the prospective tenant's claim. The Court of Appeals affirmed the trial court's judgment. Groshong v. Mutual of Enumclaw Ins. Co., 143 Or.App. 450, 923 P.2d 1280 (1996). That court, however, did not base its decision upon the wording of the policy. Instead, the court concluded that, because the prospective tenant's claim alleged intentional housing discrimination, the public policy consideration that prohibits insuring against injuries that intentionally are inflicted precluded defendant from defending or indemnifying against that claim. Id. at 456-61, 923 P.2d 1280.

We allowed review and now conclude, as did the trial court, that the terms of the insurance policy did not provide coverage for the housing discrimination claim. Accordingly, we do not address the public policy argument upon which the Court of Appeals relied. We affirm the decision of the Court of Appeals and the judgment of the circuit court.

We take the following facts from the parties' stipulation. Plaintiff Groshong owns a two-story apartment complex in Portland. He employed plaintiffs JoAnn and Gary Huth to manage the apartments.

Defendant was Groshong's insurer and issued to him a "special businessowner's" policy of insurance. That policy provided, in part:

"The Company will pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of bodily injury, property damage or personal injury caused by an occurrence to which this insurance applies."

The policy further provided:

"[O]ccurrence means an accident, including continuous or repeated exposure to conditions, which results in bodily injury or property damage neither expected nor intended from the standpoint of the insured and with respect to personal injury, the commission of an offense, or a series of similar or related offenses;

"[P]ersonal injury means injury which arises out of one or more of the following offenses committed in the conduct of the named insured's business:

"* * * * *

"(c) wrongful entry or eviction, or other invasion of the right of private occupancy[.]"

(Boldface type in original.)

In November 1992, a prospective tenant, the mother of a small child, responded to a newspaper advertisement for the rental of an apartment on the second floor of the complex. While showing the apartment to the prospective tenant, JoAnn Huth stated that the complex did not allow small children to live on the second floor due to safety concerns. At that time, there were no ground-floor apartments available.

Several months later, Groshong received a letter and draft complaint from a lawyer representing the prospective tenant. The draft complaint alleged claims of familial status discrimination under federal housing laws. Groshong tendered the claim to defendant for defense under the policy, and defendant rejected the tender.

The prospective tenant's discrimination claim ultimately proceeded to litigation, naming both Groshong and the Huths as defendants. At various stages during the proceedings, Groshong again tendered the claim to defendant. Each time defendant rejected the tender. Plaintiffs later settled the prospective tenant's claim. Defendant stipulated that the settlement was reasonable and that plaintiffs had performed all conditions required of them under the policy.

Plaintiffs then brought this action against defendant for breach of contract.² Defendant responded by arguing, among other things, that the underlying claim—housing discrimination under federal law—did not allege "personal injury" within the meaning of the insurance policy, because the claim was not one for an "other invasion of the right of private occupancy." Defendant further argued that public policy prohibited insuring against a claim of intentional housing discrimination. The trial court agreed with defendant's first argument and entered judgment accordingly. As noted, the Court of Appeals affirmed, but did so based upon defendant's public policy argument. Groshong, 143 Or.App. at 456-61, 923 P.2d 1280. That court did not address whether the policy covered the prospective tenant's claim. Id. at 455, 923 P.2d 1280.

On review, the parties have briefed both the public policy question and the question whether the prospective tenant's claim constituted a "personal injury" under the terms of the policy. We begin our inquiry with the question presented under the terms of the policy and will address the public policy argument only if we conclude that the policy covers the claim. See A-1 Sandblasting v. Baiden, 293 Or. 17, 19-20, 643 P.2d 1260 (1982)

(examining wording of policy before addressing public policy considerations). As noted, we conclude that the policy does not provide coverage.

The analytical framework for construing the terms of an insurance policy is set out in Hoffman Construction Co. v. Fred S. James & Co., 313 Or. 464, 469-71, 474-75, 836 P.2d 703 (1992). The question of policy interpretation is one of law, id. at 469, 836 P.2d 703, and our task is to determine the intent of the parties, Totten v. New York Life Ins. Co., 298 Or. 765, 770, 696 P.2d 1082 (1985). We determine the parties' intent from the terms and conditions of the policy. Interstate Fire v. Archdiocese of Portland, 318 Or. 110, 117, 864 P.2d 346 (1993).

Plaintiffs argue that the prospective tenant alleged a claim for personal injury based upon an "other invasion of the right of private occupancy." Therefore, we must ascertain the meaning of that quoted phrase as it is used in the policy. The policy, however, offers no definition. Accordingly, we resort to various aids of interpretation to discern the parties' intended meaning. See Hoffman, 313 Or. at 469,

836 P.2d 703 (turning to such aids when policy did not define term at issue).

The first aid to interpretation is determining whether the term at issue has a plain meaning. See ibid. (so demonstrating). The meaning of a term is "plain"—that is, unambiguous—if the term is susceptible to only one plausible interpretation. See id. at 469-70, 836 P.2d 703 (so demonstrating). If so, the parties' intent conclusively is established, and our interpretive inquiry is at an end. However, as the court noted in Hoffman, establishing the plain meaning of a term at this level of analysis—that is, showing that the term is not susceptible to competing plausible interpretations—may be difficult:

"[G]iven the breadth and flexibility of the English language, the task of suggesting plausible alternative meanings is no challenge to capable counsel."

Id. at 470, 836 P.2d 703. We turn, then, to the question whether the phrase "other invasion of the right of private occupancy" has a plain meaning.

Plaintiffs argue:

"[T]he language is not limited to claims arising out of possessory interest in property. In the context of this case, plaintiffs argue that the insurance policy encompasses claims made by prospective tenants who have been denied the right to occupy an apartment because of rental policies that have a discriminatory impact. * * * "

Plaintiffs continue that:

"Defendant's interpretation should be rejected because it renders part of the definition of personal injury meaningless. If coverage is limited to rights of occupancy associated with entry into a tenant's premises, or eviction of a tenant, the phrase `other invasion of the right of private occupancy' would add nothing to the policy and would be meaningless. * * * "

Defendant, in turn, argues that the plain meaning of the phrase does not encompass housing discrimination claims:

"As a would-be tenant, not an actual tenant, [the prospective tenant] had no right of occupancy that could be invaded. * * * [S]he left the [apartment complex] without even applying for the vacant apartment, let alone obtaining it, after Ms. Huth informed her of the no-kids-upstairs policy. Thus, she was neither occupying the apartment nor entitled to occupy it at the time of the alleged discrimination."

Stated differently, defendant argues that "other invasion of the right of private occupancy" can refer only to claims affecting either an actual possessory interest in property or an entitlement to such an interest. Neither of those circumstances, defendant asserts, were at issue in the prospective tenant's action.

Defendant also argues that construing the phrase "other invasion of the right of private occupancy" to include only claims involving a possessory interest in property would not render that phrase redundant of, or superfluous to, claims for "wrongful entry or eviction." Defendant lists several examples of claims for which the phrase at issue exclusively would apply. They include claims for interrupting services to a tenant's dwelling (water, heat, electricity, etc.) and claims for allowing disruption of a tenant's right to quiet enjoyment.

Defendant further argues that plaintiffs' proffered...