Tred R. Eyerly – March 20, 2013
Unable to discern the meaning of a provision stating that payment of damages would be made “through a trial but not any appeal”, the court found an ambiguity. Parker v. Am. Family Ins. Co., 2013 U.S. Dist. LEXIS 9085 (D. Ore. Jan. 23, 2013).
The homeowners sued the general contractor for defective construction of their home. In November 2008, the homeowners reached a settlement through mediation with the general contractor. The general contractor’s claims under its policies with American Family and Mid-Continent were assigned to the homeowners.
The homeowners then sued both insurers for breach of insurance contract and/or equitable contribution. American Family moved for summary judgment, claiming the homeowners did not prove their damages claim against the general contractor “through a trial but not any appeal.” The court found the phrase ambiguous because it alternatively could mean (1) the homeowners must resolve all claims against subcontractors by means of a trial, as opposed to settlement or (2) the homeowners were required only to resolve all claims against subcontractors at the trial court level before suing the insurers. Both meanings were plausible, and the ambiguity was construed against American Family.
American Family also argued that the “owned-property” exclusion barred coverage because the general contractor had the right to possession of the property and home until the homeowners purchased the property on July 25, 2005. American Family argued the owned-property exclusion that was in effect until June 1, 2005, excluded property damage coverage that occurred on or before that date. The court agreed. The issue was whether the general contractor was protected under the policy for losses it caused to its own property while construction the house it built. Under this reasoning, the owned-property exclusion barred coverage. American Family was granted summary judgment on this issue.
Finally, Mid-Continent also moved for summary judgment based upon the anti-assignment provision in its policy. The court agreed that the assignment of claims against insurers was invalid under Oregon law.
via Insurance Law Hawaii: Limitation on Coverage for Payment of Damages Creates Ambiguity.