Case Title: Westfield Ins. Group v. J.P's Wharf, LTD

Citation: 

Docket Number: 26, 2004

State: delaware

Court: Delaware Supreme Court

Date: 2004-09-17T00:00:00Z

Document:
IN THE SUPREME COURT OF THE STATE OF DELAWARE
WESTFIELD INSURANCE GROUP,
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No. 26, 2004
Plaintiff Below,
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Appellant,
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v.
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Court Below:  
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Superior Court of the
J.P.’S WHARF, LTD and PETER RUSSO, §
State of Delaware in and
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for New Castle County
Defendants Below,
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C.A. No. 02C-08-161
Appellees.
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Submitted: July 14, 2004
Decided: September 17, 2004
Before STEELE, Chief Justice, HOLLAND and BERGER, Justices.
Upon appeal from the Superior Court.  REVERSED.
Brian E. Lutness, Esquire, of Silverman, McDonald & Friedman, Wilmington,
Delaware, for Appellant.
Bradley S. Eaby, Esquire, of Barros, McNamara, Malkiewicz & Taylor, P.A.,
Dover, Delaware, for Appellees.
BERGER, Justice:
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In this appeal, we consider whether a commercial insurance policy covers
amounts paid by a restaurant for racial discrimination.  The policy defines “personal
injury” to include “wrongful eviction,” among other intentional torts, and the trial
court held that the wrongful eviction clause clearly and unambiguously affords
coverage for discriminatory acts.  We agree with the conclusion that the policy
language is clear and unambiguous.  But we hold that the wrongful eviction clause
only applies to the eviction of claimants having a possessory interest in the premises.
Since the patrons who were refused service at the restaurant had no possessory interest
in the premises, the restaurant’s expenses in resolving the patrons’ claims are not
covered under the insurance policy.
Factual and Procedural Background
In 2001, the State Human Relations Commission found that J.P.’s Wharf
Restaurant, and its owner, Peter Russo (collectively “Wharf”), engaged in racial
discrimination when Wharf refused to serve certain patrons and ordered them to leave.
The Commission ordered Wharf, among other things, to pay damages totaling $6,000
to the complaining patrons, and to pay a $5,000 civil penalty.  At all relevant times
Wharf was insured by Westfield Insurance Group, under a commercial policy that
provides coverage for “personal injury,” defined as: injury, other than “bodily injury,”
arising out of one or more of the following offenses:
E.I. du Pont de Nemours & Co. v. Allstate Ins. Co., 686 A.2d 152 (Del. 1996).
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Phillips Home Builders, Inc. v. Travelers Insurance Company, 700 A.2d 127, 129 (Del.
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1997).
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a.  False arrest, detention or imprisonment;
b.  Malicious prosecution;
c.  The wrongful eviction from, wrongful entry into, or invasion of the
right of private occupancy of a room, dwelling or premises that a person
occupies by or on behalf of its owner, landlord or lessor;
d. Oral or written publication of material that slanders or libels a
person...; or
e.  Oral or written publication of material that violates a person’s right
of privacy.
After Wharf filed an insurance claim for expenses related to the discrimination
complaint, Westfield sought a declaratory judgment that its policy does not cover
those expenses.  The Superior Court held that the “wrongful eviction” clause provides
coverage for Wharf’s discriminatory conduct.  This appeal followed.
Discussion
The sole issue is the scope of the coverage provided under the Westfield
insurance policy.  We consider this question of law de novo.   Under settled principles,
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“if the relevant contract language is clear and unambiguous, courts must give the
language its plain meaning.”   If the provision is ambiguous, it will be “read in a way
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Continental Insurance Company v. Burr, 706 A.2d 499, 501 (Del. 1998).
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Rhone-Poulenc  Basic Chems. Co. v. American Motorists Ins. Co., 616 A.2d 1192, 1196
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(Del. 1996).
819 S.W.2d 296 (Ark. Ct. App. 1991).
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14 P.3d 638 (Ore. Ct. App. 2000).
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that satisfies the reasonable expectations of the average consumer.”   The language is
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deemed “ambiguous” if it is “reasonably ... susceptible of different interpretations.”4
Several other jurisdictions have considered similar policy language, reaching
different conclusions.  In Insurance Company of North America v. Forrest City
Country Club,  for example, the policy language defined “personal injury” to include
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“wrongful entry into, or eviction of a person from a room, dwelling or premises that
the person occupies....”  The Arkansas appellate court found the language ambiguous,
as “eviction” could mean interference with a possessory property interest or, if used
in its popular sense, simply the process of being forcefully removed or ejected from
a particular location.  Giving the insured the benefit of a liberal construction, the
Arkansas court held that the insurer had a duty to defend a claim of racial
discrimination brought by a woman who was barred from playing tennis at the
insured’s country club.
In STK Enterprises, Inc. v. Crusader Insurance Company,  the insured sought
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coverage for the costs of defending and settling three racial discrimination claims
66 Cal. Rptr.2d 356 (Cal. Ct. App. 1997).
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We note that the Superior Court relied on Z.R.L. Corporation v. Great Central Insurance
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Company, 510 N.E.2d 102 (Ill. App. Ct. 1987), in support of its conclusion that racial discrimination
claims are covered by Westfield’s “wrongful eviction” clause. The Z.R.L. clause, however, did not
mirror Westfield’s.  Moreover, in Z.R.L., the insurer conceded that its policy would cover a claim
by a patron removed from the premises because of rowdiness.
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brought by patrons who were refused entry into the insured’s restaurant and bar.  An
Oregon appellate court held that the same “wrongful eviction” clause as that
considered in Forrest City covers only claims arising from a possessory interest in the
property.  Similarly, in Zelda v. Northland Insurance Company,  a California appellate
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court concluded that the same “wrongful eviction” language covers tort claims
involving interference with an interest in real property, not claims made by business
patrons.8
We are satisfied that Westfield’s “wrongful eviction” clause plainly requires
that the claim involve a possessory interest in property, and adopt the reasoning of the
Zelda court:
[A]n insurance policy, like any other contract, must be construed in its
entirety, with each clause lending meaning to the other.  The proposal
that the policy definition covers any wrongful “eviction,” understood in
the popular sense, fails to give the phrase “from, a room, dwelling or
premises that the person occupies” a function in the definition.  Because
an eviction, popularly understood, is necessarily from somewhere the
phrase in question is redundant unless it means something other than
merely “from somewhere.”  In this regard, we observe that the term “to
occupy,” in one of its popular senses, means “to reside in as an owner or
tenant.” Thus, the only reasonable explanation for the additional phrase
66 Cal. Rptr.2d at 364 (Emphasis in original. Citations omitted.)
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is to clarify that the wrongfulness of the ejection must consist in, or
attach to, an invasion of the right of occupation.9
Since the patrons who filed their racial discrimination complaints against Wharf had
no possessory interest in the restaurant premises, the “wrongful eviction” provision
in Wharf’s insurance policy does not cover expenses it incurred in resolving those
complaints.
Conclusion
Based on the foregoing, the judgment of the Superior Court is reversed.