Case Title: Fleming v. United Services Automobile Assn.

Citation: 

Docket Number: 

State: oregon

Court: Oregon Supreme Court

Date: 2000-03-03T00:00:00Z

Document:
Filed: March 3, 2000
IN THE SUPREME COURT OF THE STATE OF OREGON

TERRY FLEMING,
		Respondent on Reconsideration,
	v.
UNITED SERVICES AUTOMOBILE ASSOCIATION,a foreign corporation,
	Petitioner on Reconsideration.
(CC 9312-08128; CA A86826; SC S44805)

	En Banc
	On petition for reconsideration filed December 23, 1999.* 
	Lisa E. Lear and S. Joel Wilson, of Bullivant Houser Bailey,
Portland, filed the petition for petitioner on reconsideration.
	No appearance contra.
	James E. Horne, of Peery, Hiscock, Pierson, Kingman &
Peabody, PS, Seattle, Washington, filed a brief for amicus curiae
Insurance Environmental Litigation Association. 
	John H. Holmes and William D. Okrent, of Holmes & Rickles,
Portland, filed a brief for amici curiae National Association of
Independent Insurers, Alliance of American Insurers, and American
Insurance Association. 
	Philip Schradle, Christine A. Chute, and Kathleen Dahlin,
Assistant Attorneys General, Salem, filed a brief for amicus
curiae Department of Consumer and Business Services.  With them
on the brief were Hardy Myers, Attorney General, and Michael D.
Reynolds, Solicitor General.
	Natalie L. Hocken, of Heller Ehrman White & McAuliffe, LLP,
Portland, filed a brief for amicus curiae State Farm Fire and
Casualty Insurance Company.
	Thomas M. Christ, of Mitchell, Lang & Smith, and Thomas W.
Brown, of Cosgrave, Vergeer & Kester LLP, Portland, filed a brief
for amici curiae Mutual of Enumclaw Insurance Company, Grange
Mutual Insurance Company, Oregon Mutual Insurance Company, North
Pacific Insurance Company, and Oregon Automobile Insurance
Company. 
	Mark L. Zipse, of Cavanagh & Zipse, and Priscilla F. Slocum,
of Early, Maslach, Price & Baukol, Portland, filed a brief for
amici curiae Farmers Insurance Company of Oregon, Farmers
Insurance Exchange, Truck Insurance Exchange, and Mid-Century
Insurance Exchange. 
	LEESON, J.
	The petition for reconsideration is allowed.  The earlier
decision is modified.  The case is remanded to the Court of
Appeals for further proceedings.
	*Appeal from Multnomah County Circuit Court.
	144 Or App 1, 925 P2d 140 (1996), 329 Or 449, 988 P2d 378 (1999).
	LEESON, J.
	Petitioner United Services Automobile Association
(USAA), supported by several amici curiae, petitions for
reconsideration of this court's decision in Fleming v. United
Services Automobile Assn., 329 Or 449, 988 P2d 378 (1999).  We
allow the petition for reconsideration, modify our earlier
decision, and remand the case to the Court of Appeals for further
proceedings.
The issue in this case was whether plaintiff was
entitled to insurance coverage for loss to his rental property
that was caused by the clandestine operation of an illegal
methamphetamine laboratory.  Fleming, 329 Or at 452.  This court
held that, because the title "PERILS INSURED AGAINST" in USAA's
policy violated ORS 742.246(2), plaintiff was entitled to
coverage for his loss.  Id. at 459. (1)
	 USAA contends that this court erred by failing to
remand the case to the Court of Appeals for that court to address
assignments of error numbers six, seven, eight, and fourteen in
USAA's brief to that court.  In its brief on the merits to this
court, USAA did not request that relief.  The better practice is
for a party to identify any issue that might require remand
following this court's review.  See Kentner v. Gulf Ins. Co., 298
Or 69, 74, 689 P2d 955 (1984) (discussing policy of promoting
finality of appellate court decisions and conserving judicial
time).  Nonetheless, USAA is correct that our earlier decision
did not dispose of those four assignments of error and that we
should remand this case to the Court of Appeals for further
proceedings.  See Relational Systems International v. Cable, 303
Or 71, 72, 733 P2d 1379 (1987) (describing when this court should
remand to consider remaining assignments of error).  
	USAA and amici raise a number of other arguments, most
of which they make for the first time in their petitions for
reconsideration.  We decline to address the arguments that are
made for the first time on reconsideration.  See Kentner, 298 Or
at 73-74 (stating general rule that contention not raised in
original hearing will not be considered on reconsideration). 
However, several of the arguments that  USAA and amici raise on
reconsideration relate to this court's construction of ORS
742.246(2).  We address those arguments.  See Stull v. Hoke, 326
Or 72, 77, 948 P2d 722 (1997) ("In construing a statute, this
court is responsible for identifying the correct interpretation,
whether or not asserted by the parties.") 
	USAA and amici argue that, in construing and applying
ORS 742.246(2), this court erroneously disregarded the fact that
the Director of the Department of Consumer and Business Services
(Director) had approved USAA's policy form as complying with the
Insurance Code.  See ORS 742.003 (requiring approval of insurance
forms by Director of Department of Consumer and Business
Services).  They contend that, in light of the Director's
statutory authority to approve or disapprove policy forms, courts
no longer look to the statutes to determine whether a policy
complies with the Insurance Code.  This court previously has
rejected that argument, and we continue to do so.  See Utah Home
Fire Ins. Co. v. Colonial Ins. Co., 300 Or 564, 573 n 6, 715 P2d
1112 (1986) ("Approval by the Insurance Commissioner under ORS
743.006 [renumbered 742.003 in 1989] is no assurance that the
approved language is consistent with the statutes.").     
	USAA and amici also argue that the explanatory title
requirements in ORS 742.246(2) apply only to "standard" fire
insurance policy forms, not to multi-peril insurance policy forms
such as the one that USAA issued to plaintiff.  They contend
that, in holding to the contrary, this court misapplied the
statutory construction methodology summarized in PGE v. Bureau of
Labor and Industries, 317 Or 606, 610-12, 859 P2d 1143 (1993). 
Specifically, they argue that the court failed to consider ORS
742.246(1), which is the immediate statutory context of ORS
742.246(2).  They also rely on ORS 742.202 and ORS 742.204,
which, they contend, provide additional relevant context for
construing the requirements in ORS 742.246(2).  In their view,
those statutes collectively compel the conclusion that the
explanatory title requirements in ORS 742.246(2) do not apply to
multi-peril insurance policy forms.  
	To facilitate our analysis of those arguments, we set
out the relevant statutes.  
	ORS 742.202 provides:
"Except as provided in ORS 742.204, no fire
insurer, its officers or agents, shall use any fire
insurance policy or renew any fire insurance policy on
property in this state unless it contains the
provisions set forth in ORS 742.206 to [ORS] 742.242,
which shall form a portion of the contract between the
insurer and the insured."
(Emphasis added.)  
	ORS 742.204, provides:
"Any insurance policy that includes, either on an
unspecified basis as to coverage or for a single
premium, coverage against the peril of fire and
substantial coverage against other perils need not
comply with the provisions of ORS 742.202, if such
policy:
		"(1)  Affords coverage with respect to the peril
of fire, not less than the substantial equivalent of
the coverage afforded by the provisions of the standard
fire insurance policy as required by ORS 742.202;
		"(2)  Contains, without change, the provisions
relating to mortgagee interests and obligations as
required for the standard fire insurance policy by ORS
742.202; and
		"(3)  Is complete as to all its terms without
reference to the standard fire insurance policy or any
other policy."
(Emphasis added.)  
	ORS 742.246 provides:
"(1)  A fire insurer may add, to the provisions
required by ORS 742.202, other conditions, provisions,
and agreements not in conflict with law or contrary to
public policy.
		"(2)  Any provision restricting or abridging the
rights of the insured under the policy must be preceded
by a sufficiently explanatory title printed or written
in type not smaller than eight-point capital letters."
	USAA and amici argue that ORS 742.246(1) makes clear
that ORS 742.246(2) applies only to standard fire insurance
policy forms.  They contend that the reference to "the policy" in
ORS 742.246(2) is to the standard fire insurance policy that is
issued by "[a] fire insurer" in ORS 742.246(1).  USAA and amici
then point out that the policy at issue in this case is not a
standard fire insurance policy, but is, instead, a multi-peril
policy.  Because it is not a standard fire insurance policy, they
contend, the policy form is exempt from the requirements in ORS
742.246(2).  
	USAA and amici are correct that ORS 742.246(1) permits
a fire insurer to add to the provisions that are required by ORS
742.202 "other conditions, provisions, and agreements * * *" that
are not in conflict with law or that are not contrary to public
policy.  However, they apparently draw from that statutory
authorization the conclusion that, if an insurer offers a policy
that provides coverage for loss from fire and also contains
provisions that provide for coverage for loss from other perils,
then that insurer no longer is a fire insurer and, therefore, no
longer is subject to the requirements in ORS 742.246(2).  We
disagree.  ORS 742.246(1) permits a fire insurer to add
provisions to its policy.  ORS 742.246(2) requires "[a]ny
provision" in the policy to comply with the title requirements
specified in that subsection.  Nothing in ORS 742.246(1) suggests
that a fire insurer may avoid the explanatory title requirements
in ORS 742.246(2) simply by including provisions in addition to
those that are required to be in a standard fire insurance
policy. 
	In this case, USAA's policy provides that "any * * *
loss to property described in Coverages A and B not excluded or
excepted in this policy is covered."  Loss from fire is not
excluded or excepted.  That USAA insures losses to property from
sources other than fire does not mean that it is not also a fire
insurer.  We reject the argument that ORS 742.246(1) establishes
that a multi-peril insurance policy that provides coverage for
losses from sources in addition to loss from fire is exempt from
the explanatory title requirements in ORS 742.246(2).    
	USAA and amici also contend that an examination of ORS
742.202 and ORS 742.204 demonstrates that ORS 742.246(2) does not
apply to multi-peril insurance policies like the one that USAA
issued to plaintiff.  They argue that, because a multi-peril
policy is not subject to the requirements in ORS 742.204, neither
is it subject to the requirements in ORS 742.246(2).   
	USAA and amici are correct that, under ORS 742.204, a
policy of insurance that provides coverage for the peril of fire
and substantial coverage against other perils does not need to
comply with the requirements in ORS 742.202 if the policy
satisfies the three requirements listed in ORS 742.204.  One of
those requirements is that the multi-peril policy must provide
coverage with respect to the peril of fire that is not less than
the substantial equivalent of the coverage afforded by the
standard fire insurance policy.  ORS 742.204(1).  USAA and amici
concede that the standard fire insurance policy form must comply
with the title requirements in ORS 742.246(2).  
	As noted, the exemption in ORS 742.204 for multi-peril
insurance policies is from the requirements in ORS 742.202.  ORS
742.202, in turn, requires insurance policies that are issued by
fire insurers to contain the provisions set forth in ORS 742.206
to ORS 742.242.  Accordingly, the exemption in ORS 742.204 is an
exemption only from the requirements in ORS 742.206 to ORS
742.242.  ORS 742.204 does not exempt multi-peril policies from
the requirements in ORS 742.246(2).  To agree with USAA and amici
that multi-peril policy forms are exempt from the requirements in
ORS 742.246(2), this court would have to insert into ORS 742.204
an exemption that it does not contain, namely, an exemption for
multi-peril policy forms from the requirements in ORS 742.246(2). 
Courts are not free to insert into a statute provisions that it
does not contain.  ORS 174.010. 
	ORS 731.008 also supports the conclusion that the
legislature did not intend to limit the explanatory title
requirements in ORS 742.246(2) only to standard fire insurance
policy forms.  ORS 731.008 provides that the purpose of the code
"is for the protection of the insurance-buying public." 
	As noted, ORS 742.246(2) requires that provisions that 
restrict or abridge the rights of the insured under the policy 
be preceded by a sufficiently explanatory title that is printed
or written in type not smaller than eight-point capital letters. 
The evident purpose of that statutory requirement is to have
insurance policies contain explanatory titles that will assist
the insurance-buying public in understanding those policies. 
USAA and amici ask this court to construe the Insurance Code in a
manner that would subject standard fire insurance policy forms 
to the requirements in ORS 742.246(2), but would exempt complex,
multi-peril policy forms from those requirements.  The effect of
such a holding would be that the explanatory titles that the
legislature intended to assist the insurance-buying public would
not be required in circumstances where they would be of greatest
assistance to the insurance-buying public, namely, in
understanding complicated, multi-peril insurance policies.  We
find no evidence in the Insurance Code that the legislature
intended such a result.  We adhere to our earlier decision
regarding the interpretation and application of the explanatory
title requirements in ORS 742.246(2).
	The petition for reconsideration is allowed.  The
earlier decision is modified.  The case is remanded to the Court
of Appeals for further proceedings.

1. 	Because this court held that USAA's policy violated ORS
742.246(2) and, accordingly, that plaintiff was entitled to
coverage for his loss, this court did not address plaintiff's
alternative argument that the pollution exclusion clause, which
appeared under the title "PERILS INSURED AGAINST," was ambiguous.