Ledford v. Gutoski

• Decision Date: 29 July 1994
• Citation: 319 Or. 397,877 P.2d 80
• Parties: Bill R. LEDFORD, Plaintiff, v. Peter C. GUTOSKI and Raymond A. Kuhl, Defendants. Raymond A. KUHL, Petitioner on Review, v. NORTHWEST FARM BUREAU INSURANCE COMPANY, Respondent on Review. CC 16-90-07552; CA A73578; SC S40708.
• Court: Oregon Supreme Court

Page 80

877 P.2d 80

319 Or. 397

Bill R. LEDFORD, Plaintiff, v. Peter C. GUTOSKI and Raymond A. Kuhl, Defendants.

Raymond A. KUHL, Petitioner on Review, v. NORTHWEST FARM BUREAU INSURANCE COMPANY, Respondent on Review.

CC 16-90-07552; CA A73578; SC S40708.

Supreme Court of Oregon,

In Banc.

Argued and Submitted May 9, 1994.

Decided July 29, 1994.

P. Scott McCleery, of Doyle, Gartland, Nelson & McCleery, P.C., Eugene, argued the cause and filed the petition on behalf of petitioner on review.

Larry Dawson, Portland, argued the cause on behalf of respondent on review.

UNIS, Justice.

This is an action for defense costs and indemnity brought by Raymond Kuhl as third-party plaintiff against his insurer, Northwest Farm Bureau Insurance Company (Northwest), as third-party defendant. Kuhl was a defendant in an action for malicious prosecution filed by Bill Ledford, in which the complaint (the Ledford complaint) alleged that Kuhl had willfully and maliciously instituted a prosecution of plaintiff because Kuhl "intended to harass, annoy, harm and cause expense to" Ledford and that Kuhl acted "for the purpose of injuring" Ledford.

Kuhl tendered defense of Ledford's claim to Northwest. Kuhl's homeowner's policy provided in part that Northwest would pay "on behalf of an insured for damages resulting from bodily injury or property damage caused by an occurrence, if the insured is legally obligated." The policy defined "occurrence" as "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." Northwest refused to defend the malicious prosecution claim because, in its view, the Ledford complaint alleged intentional conduct that was outside the policy's coverage.

The malicious prosecution action settled, and Kuhl then filed a third-party complaint against Northwest seeking indemnity and defense costs. The trial court entered summary judgment for Northwest. The Court of Appeals affirmed, holding that Northwest had no duty to defend the claim or to indemnify Kuhl. Ledford v. Gutoski, 121 Or.App. 226, 855 P.2d 196 (1993). We allowed Kuhl's petition for review. We affirm the decision of the Court of Appeals on different grounds and affirm the judgment of the trial court.

DUTY TO DEFEND

Whether an insurer has a duty to defend an action against its insured depends on two documents: the complaint and the insurance policy. Oakridge Comm. Ambulance v. U.S. Fidelity, 278 Or. 21, 24, 563 P.2d 164 (1977). An insurer has a duty to defend an action against its insured if the claim against the insured stated in the complaint could, without amendment, impose liability for conduct covered by the policy. Nielsen v. St. Paul Companies, 283 Or. 277, 280, 583 P.2d 545 (1978); Oakridge Comm. Ambulance v. U.S. Fidelity, supra, 278 Or. at 24, 563 P.2d 164; Ferguson v. Birmingham Fire Ins., 254 Or. 496, 507, 460 P.2d 342 (1969).

In evaluating whether an insurer has a duty to defend, the court looks only at the facts alleged in the complaint to determine whether they provide a basis for recovery that could be covered by the policy:

"If the facts alleged in the complaint against the insured do not fall within the coverage of the policy, the insurer should not have the obligation to defend. If a contrary rule were adopted, requiring the insurer to take note of facts other than those alleged, the insurer frequently would be required to speculate upon whether the facts alleged could be proved. We do not think this is a reasonable interpretation of the bargain to defend. It is more reasonable to assume that the parties bargained for the insurer's participation in the lawsuit only if the action brought by the third party, if successful, would impose liability upon the insurer to indemnify the insured." Isenhart v. General Casualty Co., 233 Or. 49, 54, 377 P.2d 26 (1962).

An insurer should be able to determine from the face of the complaint whether to accept or reject the tender of the defense of the action. Ferguson v. Birmingham Fire Ins., supra, 254 Or. at 505-06, 460 P.2d 342.

The insurer has a duty to defend if the complaint provides any basis for which the insurer provides coverage. Nielsen v. St. Paul Companies, supra, 283 Or. at 280, 583 P.2d 545. Even if the complaint alleges some conduct outside the coverage of the policy, the insurer may still have a duty to defend if certain allegations of the complaint, without amendment, could impose liability for conduct covered by the policy. Ferguson v. Birmingham Fire Ins., supra, 254 Or. at 506-07, 460 P.2d 342. Any ambiguity in the complaint with respect to whether the allegations could be covered is resolved in favor of the insured. Blohm et al v. Glens Falls Ins. Co., 231 Or. 410, 416, 373 P.2d 412 (1962). We must determine whether the facts alleged in the Ledford complaint may reasonably be interpreted to include conduct within the coverage of Northwest's policy.

The Ledford complaint alleged that Kuhl signed a criminal complaint against Ledford accusing Ledford of committing numerous crimes. The Ledford complaint further alleged that all of the charges against Ledford either were dismissed or resulted in acquittal. The Ledford complaint also alleged that Kuhl acted without probable cause in initiating the criminal prosecution against Ledford because Ledford did not commit the crimes alleged in the criminal complaint and that Kuhl knew that the charges were false. The Ledford complaint also alleged:

"[Kuhl] acted maliciously and wilfully in instituting the prosecution of [Ledford] in that [he] intended to harass, annoy, harm and cause expense to [Ledford.]"

Northwest contends that it had no duty to defend because the policy provides coverage only for accidents "which result[ ] in bodily injury or property damage neither expected nor intended from the standpoint of the insured," and that the conduct alleged in the complaint falls outside the coverage in that policy because the damage suffered was either intended or expected by Kuhl.

Despite variations in the language of the policies, this court has interpreted various policy provisions excluding insurance coverage for intentionally-caused injuries similarly. See, e.g., Allstate Ins. Co. v. Stone, 319 Or. 275, 278, 876 P.2d 313 (1994) (policy excluding "bodily injury or property damage caused intentionally by, or at the direction of, an insured person"); Snyder v. Nelson, Leatherby Ins., 278 Or. 409, 413, 564 P.2d 681 (1977) (policy covering injuries "caused by accident"); Nielsen v. St. Paul Companies, supra, 283 Or. at 279, 583 P.2d 545 (policy covering "bodily injury or property damage neither expected nor intended from the standpoint of the Insured"). Cf. Isenhart v. General Casualty Co., supra, 233 Or. at 53, 377 P.2d 26 (applying same analysis to policy without provision excluding coverage for intentionally-inflicted injuries because coverage of such injuries would be against public policy). Injuries resulting from intentional acts are excluded from insurance coverage when the insured intended to cause the particular injury or harm, as opposed to merely intending the act. E.g., Allstate Ins. Co. v. Stone, supra, 319 Or. at 278, 876 P.2d 313. For an exclusion from insurance coverage for intentional conduct to apply, "[i]t is not sufficient that the insured's intentional, albeit unlawful, acts have resulted in unintended harm; the acts must have been committed for the purpose of inflicting the injury and harm before either a policy provision excluding intentional harm applies or the public policy against insurability attaches." Nielsen v. St. Paul Companies, supra, 283 Or. at 281, 583 P.2d 545 (emphasis added).

The Ledford complaint specifically alleged that Kuhl "intended to harass, annoy, harm and cause expense" to Ledford. Those are allegations that Kuhl committed acts outside the coverage of the policy, namely acts committed for the purpose of causing the harm or injury.

Kuhl argues that there are instances in which liability on a malicious prosecution claim can be established even though the defendant did not have a subjective intent to cause harm or injury to the plaintiff. The Court of Appeals rejected Kuhl's argument, inferring a purpose to injure or harm from the general nature of the tort of malicious prosecution. The Court of Appeals stated:

"We believe that instituting a criminal proceeding against another for a purpose Kuhl's argument and the response by the Court of Appeals miss the point in evaluating the duty to defend. In analyzing the duty to defend, a court's focus should be on the conduct alleged in the complaint. Unless the complaint alleges conduct that could be covered by the policy, the duty to defend does not arise. In this case, the Ledford complaint alleged that Kuhl did subjectively intend to cause injury or harm to Ledford. The Ledford complaint did not allege, and without amendment would not permit proof, that Kuhl instituted the criminal action against Ledford for some "malicious" purpose other than to "harass, annoy, harm and cause expense to" Ledford. Because the complaint alleged only that Kuhl subjectively intended to harm or injure Ledford, it is irrelevant whether or not a claim for malicious prosecution could, in theory, be sustained where the defendant did not...