Safeco Ins. Co. of Or. v. Masood

• Decision Date: 02 July 2014
• Docket Number: A147177.,CV09040785
• Citation: 330 P.3d 61,264 Or.App. 173
• Parties: SAFECO INSURANCE COMPANY OF OREGON, Plaintiff–Respondent, v. Sohail MASOOD, Defendant–Appellant.
• Court: Oregon Court of Appeals

264 Or.App. 173

330 P.3d 61

SAFECO INSURANCE COMPANY OF OREGON, Plaintiff–Respondent,

v.Sohail MASOOD, Defendant–Appellant.

CV09040785; A147177.

Court of Appeals of Oregon.

Argued and submitted Feb. 05, 2013.

Decided July 2, 2014.

David Axelrod argued the cause for appellant. With him on the opening brief were Manasi Kumar, Sara Kobak, and Schwabe Williamson & Wyatt, P.C. With him on the reply brief were Abra T. Cooper, Sara Kobak, and Schwabe, Williamson & Wyatt, P.C.

Stephen F. Deatherage argued the cause for respondent. On the briefs were John A. Bennett, Emilie K. Edling, and Bullivant Houser Bailey PC.

Before ARMSTRONG, Presiding Judge, and EGAN, Judge, and DE MUNIZ, Senior Judge.^*

DE MUNIZ, S.J.

The issue in this case is whether an insured, after filing a claim of loss, may condition compliance with an insurer's information requests by requiring the insurer to execute a confidentiality agreement that imposes limitations on the insurer's use of the insured's personal information. Plaintiff, Safeco Insurance Company of Oregon (Safeco), refused to enter into such an agreement with the insured, Masood, and filed a declaratory judgment action. The trial court entered summary judgment for Safeco, concluding that the terms of the policy required Masood to cooperate with Safeco's claim investigation and that Masood could not condition his cooperation on the negotiation of additional contractual terms. For the reasons that follow, we affirm.

We take the facts from the summary judgment record and view those facts and all reasonable inferences that may be drawn from them in the light most favorable to Masood, the nonmoving party. Oregon Steel Mills, Inc. v. Coopers & Lybrand, LLP, 336 Or. 329, 332, 83 P.3d 322 (2004).

Masood had a homeowner insurance contract with Safeco when a fire destroyed his residence. Masood and his family were displaced from the residence while firefighters and clean-up crews worked on the site. Safeco provided security for the property during the cleanup. After returning to the residence, Masood reported a theft from the site of approximately $3.5 million of personal property. Masood alleged that the theft occurred after the fire while Safeco had control of the site. Following receipt of Masood's claim of loss for the stolen property, Safeco initiated an investigation of the claim. As part of its investigation, Safeco requested that Masood furnish information such as financial statements, records of Masood's children's college fees, all health insurance costs for Masood and his family, and the monthly expenses associated with Masood's pet care. Safeco also demanded that Masood consent to the disclosure of his Social Security information to vendors from which Masood had purchased tangible goods.

The portion of the parties' insurance contract that bears on Safeco's information requests provides:

“3. An Insured's Duties After Loss. In case of a loss to which this insurance may apply, you must perform the following duties:

“* * * * *

“e. prepare an inventory of the loss to the building and damaged personal property showing in detail the quantity, description, replacement cost and age. Attach all bills, receipts and related documents that justify the figures in the inventory;

“f. as often as we reasonably require:

“(1) exhibit the damaged and undamaged property;

“(2) provide us with records and documents we request and permit us to make copies; and

“(3) submit to examinations under oath and subscribe the same. We may examine you separately and apart from your spouse or any other insured. You shall not interfere with us examining any other insured.”

(Emphasis omitted.)

In response to Safeco's information demands, Masood drafted a proposed confidentiality agreement that placed restrictions on Safeco's use of Masood's personal information and contact with third parties in relation to Safeco's investigation of the claim. Masood invited Safeco to negotiate the terms of the confidentiality agreement and stated that he would provide all requested information if “his privacy and other rights [were] respected and protected.” Safeco rejected the proffered confidentiality agreement and filed a declaratory action seeking a declaration that Safeco was entitled to the requested information. The trial court entered summary judgment in favor of Safeco, and Masood appealed.

Masood agrees that Safeco has a contractual right to investigate his claim of loss and that he is contractually bound to cooperate with Safeco's investigation of the claim. Although, in the trial court and in his brief in this court, Masood has described some of the information requested by Safeco as “wholly unrelated to the cause of the loss or the loss claim,” that is not his argument. Rather, Masood argues that, because his financial information is “sensitive,” and because every insurance contract in Oregon includes the implied duty of good faith and fair dealing, and because the contract must be construed in a manner consistent with the understanding of an “ordinary” insured, he had a contractual right to require Safeco to enter into a confidentiality agreement before furnishing the requested financial information.

Before addressing Masood's contractual arguments, we explain what is not at issue in this dispute between the insurer and the insured. As noted in the trial court's ruling, Masood has “the benefit of any existing legal protections as to personal information.” The record does not demonstrate that, absent the confidentiality agreement at issue here, Masood would be without legal recourse if Safeco used the information provided by him in an unreasonable or malicious way that caused Masood damage. Nor does Masood claim that Safeco intends to use the information in such a way.¹ And, as noted above, Masood does not argue in this court that the information requested by Safeco is unrelated to the loss investigation. Accordingly, we do not address whether an insured may refuse an insurer's information request that is unreasonable or unrelated to the claim of loss.

The interpretation of an insurance contract presents a legal question, and the court's task is “ ‘to ascertain the intention of the parties.’ ” Hoffman Construction Co. v. Fred S. James & Co., 313 Or. 464, 469, 836 P.2d 703 (1992) (quoting Totten v. New York Life Ins. Co., 298 Or. 765, 770, 696 P.2d 1082 (1985)). When the language of the contract is not ambiguous, the policy is interpreted in accordance with its unambiguous terms. Id. at 469–70, 836 P.2d 703. Unless a term is defined in the contract, the court presumes that the words used within it have their plain, ordinary meanings. Patton v. Mutual of Enumclaw Ins. Co. 238 Or.App. 101, 119–20, 242 P.3d 624 (2010), rev. den.,349 Or. 654, 249 P.3d 542 (2011). Moreover, “the interpretation of an insurance policy is not to be resolved by reference to evidence extrinsic to the policy itself,” id. at 120, 242 P.3d 624, such as the parties' conduct subsequent to making the contract.

The Oregon Supreme Court has never adopted a standard of insurance contract interpretation that emphasizes the understanding of the insured over the understanding of the insurer when the contract terms are unambiguous.² Rather, the court has advised that, in “interpreting the meaning of an insurance policy, ‘[t]he primary and governing rule * * * is to ascertain the intention of the parties.’ ” Dewsnup v. Farmers Ins. Co., 349 Or. 33, 39–40, 239 P.3d 493 (2010) (quoting Hoffman, 313 Or. at 469, 836 P.2d 703) (alteration in original) (emphasis added). “Issues of contractual intent are determined by the objective manifestations of the parties based on the terms that they use and not on what they subjectively believe that the terms mean.” Employers Insurance of Wausau v. Tektronix, Inc., 211 Or.App. 485, 503, 156 P.3d 105, rev. den.,343 Or. 363, 169 P.3d 1268 (2007). The intention of the parties is determined by considering the objective terms and conditions set forth in the policy. Hoffman, 313 Or. at 469, 836 P.2d 703. Only if a contractual ambiguity exists does the court construe the policy in a...