Title: Marleau v. Truck Insurance Exchange

State: oregon

Issuer: Oregon Supreme Court

Document:

Filed: December 13, 2001
IN THE SUPREME COURT OF THE STATE OF OREGON

LAWRENCE MARLEAU,
 MIKELEEN REED,
 

and OREGON TRAIL CUSTOM LOG HOMES,
	Petitioners on Review,
	v.
TRUCK INSURANCE EXCHANGE 
and 

DAVID FLIPPEN,
	Respondents on Review.
(CC CCV 95 08 506; CA A93629; SC S46406)

	On review from the Court of Appeals.*
	Argued and submitted September 7, 2000; reassigned June 20,
2001; resubmitted July 3, 2001.
	Christopher A. Rycewicz, of Rycewicz & Chenoweth, P.C.,
Portland, argued the cause for petitioners on review.  With him
on the briefs was Michael J. Knapp, of Meyers & Knapp, Portland.
	William G. Earle, of Abbott Davis Rothwell Mullin & Earle,
PC, Portland, argued the cause and filed the briefs for
respondents on review. With him on the briefs was Alan Gladstone.
	J. Michael Alexander, of Burt, Swanson, Lathen, Alexander &
McCann, Salem, filed a brief on behalf of amicus curiae Oregon
Trial Lawyers Association.
	Before Carson, Chief Justice, and Gillette, Durham, and De Muniz, Justices.**
	DE MUNIZ, J.
	The decision of the Court of Appeals and the judgment of the
circuit court are affirmed.
	*On appeal from Clackamas County Circuit Court, Robert J. Morgan, Judge.  155 Or App 147, 963 P2d 715 (1998).
	**Van Hoomissen, J. retired December 31, 2000, and did not
participate the decision of this case.  Kulongoski, J., resigned
June 14, 2001, and did not participate in the decision of this
case.  Leeson, Riggs, and Balmer, JJ., did not participate in the
consideration or decision of this case.
		DE MUNIZ, J.
		In this insurance case, we must determine whether Truck
Insurance Exchange (defendant) (1) had a duty to defend its insured,
Marleau, and Marleau's business partner, Reed (plaintiffs), in a
tort action alleging intentional infliction of emotional
distress.  The trial court entered summary judgment in favor of
defendant.  The Court of Appeals affirmed, holding that, although
the insurance policy covered the conduct alleged, public policy
against insurance coverage for intentionally inflicting injury
upon another precluded coverage.  Marleau v. Truck Insurance
Exchange, 155 Or App 147, 154-55, 963 P2d 715 (1998).  We allowed
review and now conclude that the insurance policy at issue does
not cover the conduct alleged in the claim for intentional
infliction of emotional distress.  Accordingly, we do not address
the public policy argument upon which the Court of Appeals
relied.  We affirm the decision of the Court of Appeals and the
judgment of the circuit court.
		The material facts are not in dispute.  Plaintiffs
Marleau and Reed operated "Oregon Trail Custom Log Homes" (Oregon
Trail), a log home construction business.  Defendant issued a
commercial general liability policy naming Marleau, doing
business as Oregon Trail, as the insured.  In addition to bodily
injury and property damage, the policy covered "personal injury
liability" of the insured:
	"COVERAGE B.  PERSONAL * * * INJURY LIABILITY
	"1.  Insuring Agreement.
	"a.  [Truck Insurance Exchange] will pay those sums
that the insured becomes legally obligated to pay as
damages because of 'personal injury' * * * to which
this insurance applies.  * * * "
A separate section of the policy defined "personal injury":
	"'Personal injury' means injury, other than 'bodily
injury,' arising out of one or more of the following
offenses:
		"a.  False arrest, * * *;
		"b.  Malicious prosecution;
		"c.  Wrongful * * * eviction * * *;
		"d.  Oral or written publication of material that
slanders or libels a person * * * or disparages a
person's * * * goods, products, or services; or
  		"e.  Oral or written publication of material that
violates a person's right to privacy."
The policy excluded "personal injury * * * arising out of oral or
written publication of material, if done by or at the direction
of the insured with knowledge of its falsity."  Under the policy,
defendant had the duty to defend any action seeking damages for
"personal injury."
		The Parletts were customers of Oregon Trail.  After
Oregon Trail built the Parletts' log home, a dispute arose
between plaintiffs and the Parletts.  The Parletts brought an
action against plaintiffs and against Oregon Trail, alleging
breach of contract, breach of warranty, negligence, negligence
per se, conversion, fraud, and intentional infliction of
emotional distress.  
		As noted above, only the claim for intentional
infliction of emotional distress remains at issue in this action. 
In that claim, the Parletts alleged that:
	"Reed and Marleau conspired with each other to harass,
annoy, disgrace, humiliate, discredit and cause severe
emotional distress to [the Parletts] * * * with the
intention of causing [the Parletts] so much emotional
distress that [the Parletts] would sell their log home
and move from the Rhododendron community and abandon
all claims against Reed and Marleau.
		"In intentionally committing their outrageous acts
against [the Parletts], * * * Reed and Marleau did so
with the knowledge that * * * Jean Parlett suffered
from a nervous disorder that was aggravated by stress.  

	* * * Reed and Marleau strategically timed the
commission of their outrageous acts when * * * Charles
Parlett was out of town and when Jean Parlett was home
by herself and without her husband's emotional and
physical support."
The following "intentional acts" gave rise to the claim:  
	   	"a.  Telling Jean Parlett that her bank loan had
been canceled when it was not;
		"b.  Informing representatives of [the Parletts']
lender that [the Parletts] were not paying their debts
when such information was false;
		"c.	Telling members of the Rhododendron community 	* * * that Jean Parlett was committing adultery;
		"d.  Telling a local attorney that [the Parletts] were 	getting a divorce because Jean Parlett was in love with
Defendant Marleau;
		"e.  Telling members of the local community * * * that 	[the Parletts] were divorced and that Jean Parlett had
been forced to move to a campground;
		"f.  Telling local public safety officials that
Jean Parlett was insane and had hired someone to shoot
at Marleau's and Reed's home from a car, and also that
[the Parletts had threatened to] burn down Marleau's
and Reed's home;
		"g.  Telling members of the Rhododendron community that
	Jean Parlett was 'in love' with Defendant Marleau;  
		"h.  Telling members of the Rhododendron community
that Jean Parlett had recently been released from a
mental institution; 
		"i.  Telling * * * Charles Parlett over the
telephone when he was out of town that his wife was
sleeping with * * * Marleau's employees, in love with
Marleau and that she was abusing drugs[.]"  		
Finally, the claim alleged:
		"The foregoing acts were vicious, defamatory,
intentional and constituted extraordinary
transgressions of the bounds of socially tolerable
conduct.  As a direct and substantial result, [the
Parletts] were humiliated, disgraced and suffered
severe emotional distress, all to their general damage
of $75,000."
		Approximately one year after the Parletts had filed
their complaint, defendant accepted the tendered defense of
plaintiff Marleau under a reservation of the right to deny
coverage. (2)  Defendant refused the tender as to plaintiff Reed,
arguing that she was not an insured.  
		After settling the Parletts' action, plaintiffs brought
this action to recover the costs of defending plaintiffs Reed and 
Marleau during the first year of the pendency of the Parletts'
action.  Plaintiffs ultimately moved for partial summary
judgment, arguing that they were entitled to a defense because
the claim for intentional infliction of emotional distress
alleged that they had invaded the Parletts' privacy and had
defamed the Parletts, and those offenses were covered under the
"personal injury" coverage of plaintiffs' policy.  They also
argued that, if defendant had a duty to defend plaintiff Marleau,
then it also had a duty to defend plaintiff Reed, even if she was
not a named insured, because of Marleau's potential vicarious
liability for Reed's actions.  Plaintiffs' theory was that,
because they were partners, Marleau could be held vicariously
liable for Reed's actions and, thus, the defense of Marleau had
to include a defense of Reed.  
		Defendant also moved for summary judgment, arguing that
it had no duty to defend because the policy did not cover the
Parletts' claim for intentional infliction of emotional
distress. (3)  The trial court concluded that both the terms of the
policy and public policy precluded coverage of the Parletts'
claim, and entered summary judgment in defendant's favor. 
Plaintiffs appealed.  As noted above, the Court of Appeals
affirmed, concluding that the insurance policy covered the
allegations in the Parletts' intentional infliction of emotional
distress claim, but that such coverage was against public policy. 
Marleau, 155 Or App at 154-55.  We allowed plaintiffs' petition
for review.		
		"We review the record on summary judgment in the light
most favorable to the party opposing the motion."  Miller v.
Water Wonderland, 326 Or 306, 309, 951 P2d 720 (1998).  In this
case, such review presents several questions of law.  The
ultimate question is whether defendant had a duty to defend its
insured against the Parletts' claim for intentional infliction of
emotional distress.  The answer to that question depends on
whether the policy covered the Parletts' claim and, if so, 
whether public policy nevertheless precluded such coverage.  See
Groshong v. Mutual of Enumclaw Ins. Co., 329 Or 303, 307, 985 P2d
1284 (1999) (insurance policy addressed prior to public policy). 
Accordingly, we turn first to the question whether the insurance
policy covered the Parletts' claim. 
		To answer that question, we must examine two documents: 
the insurance policy and Parletts' complaint.  Ledford v.
Gutoski, 319 Or 397, 399, 877 P2d 80 (1994).  In regard to the
insurance policy, we must determine from its terms and conditions
what the parties intended the policy to cover.  Hoffman
Construction Co. v. Fred S. James & Co., 313 Or 464, 469, 836 P2d
703 (1992).  We then examine the Parletts' complaint to determine
if it, "without amendment, may impose liability for conduct
covered by the policy[.]"  Ferguson v. Birmingham Fire Insurance
Co., 254 Or 496, 507, 460 P2d 342 (1969). 
		According to the terms and conditions of the personal
injury provision of the insurance policy (set out ante), the
parties to the insurance contract intended the policy to cover
personal injury arising out of any of the five enumerated
"offenses."  Those five "offenses" are essentially five different
torts:  false arrest, malicious prosecution, wrongful eviction,
defamation, and invasion of privacy.  In this case, the issue is
whether, according to the allegations of the complaint, the
Parletts' injury arose out of any one of those "offenses" or
torts. (4)  That question can be answered only by examining the
Parletts' complaint.    
		Because the parties agree that no other claim in the
Parlett complaint alleges conduct covered by the policy, our
examination of the complaint in this case is limited to the claim
identified as a claim for intentional infliction of emotional
distress.  The parties agree that, as identified in the
complaint, that claim alleges that the Parletts' injury arose out
of the "offense" of intentional infliction of emotional distress. 
They also agree that that offense is not covered by the policy. 
However, they disagree about whether that claim for intentional
infliction of emotional distress, without amendment, also may
have imposed liability for either invasion of privacy or
defamation, offenses that the policy covered.   
		The parties first disagree about how to determine,
under Ferguson, 254 Or at 507, whether a particular claim,
"without amendment, may impose liability" for both an excluded
and a covered offense.  Plaintiff argues that, if the allegations
in the claim, without amendment, state facts sufficient to
constitute a claim for conduct that the policy covers, then the
insurer has a duty to defend, even if those facts are not stated
separately from facts that constitute a claim for excluded
conduct.  Defendant argues that, if the claims require any
amendment, even an amendment as to form such as one that would be
required if the complaint failed to state the claims separately
as required under ORCP 16 B, (5) then the complaint does not,
"without amendment" (emphasis added) impose liability for a
covered offense, and the insurer does not have a duty to defend. 
As discussed below, the rationale for the Ferguson "without
amendment" standard supports plaintiffs' interpretation.  	
		In Ferguson, this court explained that the reason for
the "without amendment" standard is to ensure that an insurer
will not owe a duty to defend unless the complaint provides the
insurer with sufficient notice of the insured's potential
liability for conduct that is covered under the policy.  254 Or
at 507.  Thus, the insurer has a duty to defend so long as the
complaint contains one claim that the policy covers.  Id. at 506. 
This court consistently emphasizes the "notice" rationale when
asked to determine whether an insurer has a duty to defend.  See,
e.g., Ledford, 319 Or at 400 (insurer should be able to determine
from face of complaint whether to accept tender of defense of
action).
  		Moreover, this court has recognized that a complaint
need not plead a claim in perfect form to provide notice to the
insurer.  Indeed, if the complaint is unclear, but "may be
reasonably interpreted to include an incident within the coverage
of the policy, [then] there is a duty to defend."  Blohm et al v.
Glens Falls Ins. Co., 231 Or 410, 416, 373 P2d 412 (1962).  It is
the substance of the complaint, not its form, that is at the
heart of the inquiry.  See Ledford, 319 Or at 402 (court should
focus on conduct alleged in complaint in analyzing duty to
defend). 
		From those principles, it follows that the insured also
has a duty to defend if allegations in a complaint, identified 
as a single claim for relief, in fact state more than one claim
for relief, at least one of which is for conduct covered by the
policy.  In other words, neither the failure to identify
correctly the claims nor the failure to state them separately
defeats the duty to defend.  As this court previously has stated,
"in the absence of any compelling evidence of no coverage, the
insurer owes a duty to defend if the injured claimant can recover
under the allegations of the complaint upon any basis for which
the insurer affords coverage."  Casey v. N.W. Security Ins. Co.,
260 Or 485, 489, 491 P2d 208 (1971) (emphasis added).  Today, we
so hold:  An insurer has a duty to defend if the factual
allegations of the complaint, without amendment, state a claim
for any offense covered by the policy.  We now turn to apply that
standard to the complaint in this case.
		Plaintiffs contend that the factual allegations of the
Parletts' claim for intentional infliction of emotional distress
also state claims for invasion of privacy and for defamation,
both of which are covered offenses under the "personal injury"
provision of the insurance policy.  The Court of Appeals agreed
that the Parletts' claim stated a claim for defamation, but it
did not explain that aspect of its holding.  Marleau, 155 Or App
at 154.  For the reasons discussed below, we conclude that the
Parletts' intentional infliction of emotional distress claim did
not state a claim for invasion of privacy or defamation.  We
begin by addressing plaintiffs' argument concerning whether the
Parletts' allegations constitute a claim for invasion of privacy. 
Plaintiffs assert, without elaborating, that the factual
allegations of the Parletts' complaint state two different
invasion of privacy claims:  a "false light" claim and a claim
for public disclosure of private facts.  First, we address the
law concerning invasion of privacy by placing another in a "false
light."
		This court has referred to the definition of the tort
of invasion of privacy by "false light" offered by the
Restatement (Second) of Torts:
		"One who gives publicity to a matter concerning
another that places the other before the public in a
false light is subject to liability to the other for
invasion of his privacy, if
		"(a) the false light in which the other was placed
would be highly offensive to a reasonable person, and
		"(b) the actor had knowledge of or acted in
reckless disregard as to the falsity of the publicized
matter and the false light in which the other would be
placed."
Restatement (Second) of Torts § 625E (1977).  See Reesman v.
Highfill, 327 Or 597, 607, 965 P2d 1030 (1998) (discussing
elements of "false light" claim pursuant to Restatement (Second)
of Torts). 
		It requires little analysis to conclude that the 

Parletts' claim fails to state a claim for invasion of privacy by
"false light," under the elements listed above. (6)  Invasion of
privacy by "false light" requires that the matter be both false
(or that it create a false impression) and publicized.  The only
disclosure in the Parletts' claim that complies with the former
requirement, "informing * * * [the Parletts'] lender that [the
Parletts] were not paying their debts when such information was
false" (allegation "b," ante), does not comply with the latter. 
Disclosure to the individual lender does not constitute "giving
publicity."  See Tollefson v. Price, 247 Or 398, 402, 430 P2d 990
(1967) ("publicity" element requires communication either to
public generally or to large number of persons).
		Plaintiffs' argument that the Parletts' claim states a
claim for public disclosure of private facts also fails.  As the
name implies, that tort requires the tortfeasor publicly disclose
private facts about another.  Id.  In contrast to a "false light"
claim, the facts disclosed may be true.  However, not every
disclosure of a private fact will give rise to a claim in tort. 
The tortfeasor's conduct must be "wrongful" in some respect apart
from inflicting emotional distress on the plaintiff.  As this
court held in Anderson v. Fisher Broadcasting Co., 300 Or 452,
469, 712 P2d 803 (1986):
	"[I]n Oregon the truthful representation of facts
concerning a person, even facts that a reasonable
person would wish to keep private and that are not
'newsworthy,' does not give rise to common-law tort
liability for damages for mental or emotional distress,
unless the manner or purpose of defendant's conduct is
wrongful in some respect apart from causing the
plaintiff's hurt feelings."
		The Parletts included four allegations of disclosures
that arguably were "public":  the disclosures made to "members of
the Rhododendron community" (allegations "c," "e," "g," and "h,"
ante).  Assuming, arguendo, that those disclosures constituted
disclosures of "private facts," the Parletts' claim does not give
rise to tort liability for public disclosure of those facts
because the Parletts did not allege facts demonstrating that
plaintiffs' conduct in making those disclosures was wrongful. 
For example, the Parletts did not allege that plaintiffs obtained
the information in some wrongful way, see Anderson, 300 Or at
469, citing McLain v. Boise Cascade Corp., 271 Or 549, 533 P2d
343 (1975) (unobtrusive filming surveillance during daylight
hours of the plaintiff's activities that could have been observed
by passers-by not invasion of privacy), or that plaintiffs
violated some obligation of secrecy in disclosing the information
about the Parletts, see id. at 469, citing Humphers v. First
Interstate Bank, 298 Or 706, 716-17, 696 P2d 527 (1985) (person
who knows facts without obligation of secrecy does not commit
tort by disclosing them to another).  Thus, the Parletts'
allegations fail to state a claim for invasion of privacy by
public disclosure of private facts.        
      	Finally, we turn to plaintiffs' argument that the
factual allegations in the Parletts' complaint constitute a claim
for defamation.  When we review the allegations with the elements
of the tort of defamation in mind, we conclude that they fail to
state a claim for that covered offense.  Again, we begin by
reviewing the elements of the tort at issue.   
	 	To state a claim for defamation, the complaint must
state facts sufficient to establish that the defendant published
to a third person a defamatory statement about plaintiff. 
Wallulis v. Dymowski, 323 Or 337, 343, 918 P2d 755 (1996).  A
defamatory statement is one that would subject another to "* * *
hatred, contempt or ridicule * * * [or] tend to diminish the
esteem, respect, goodwill or confidence in which [the other] is
held or to excite adverse, derogatory or unpleasant feelings or
opinions against [the other]."  Reesman, 327 Or at 603 (internal
quotations and citations omitted).  Unless a statement
constitutes defamation per se, a plaintiff must allege that the
statement was false.  See Fowler v. Donnelly, 225 Or 287, 293,
358 P2d 485 (1960) (discussing the necessity of alleging the
falsity of words complained of in libel and slander claims).  
		The Parletts's complaint does not allege that
plaintiffs made the disparaging statements in writing. 
Therefore, the only possible type of defamation at issue in this
case is defamation by spoken words, i.e., slander.  An additional
pleading requirement applies to cases of slander:  Unless the
statement constitutes slander per se, the plaintiff must allege
special damages.  That rule historically applied to all
defamation, see Peck v. Coos Bay Times Pub. Co. et al, 122 Or
408, 417, 259 P 307 (1927) (so stating), but, in Hinkle v.
Alexander, 244 Or 267, 279, 417 P2d 586 (1966), this court
abandoned that rule in cases of libel.   
		 When we review the Parletts' complaint with those
requirements in mind, we note that the Parletts did not allege
special damages as a result of plaintiffs' conduct.  Therefore,
the complaint does not state a claim for slander unless it states
a claim for slander per se. 
		Plaintiffs argue that allegation "c" of the Parletts'
claim -- the allegation that plaintiffs told others that Jean
Parlett was committing adultery -- constitutes slander per se. 
In support of that argument, plaintiffs rely on Cook v. Safeway
Stores, Inc., 266 Or 77, 82, 511 P2d 375 (1973), which this court
referred (in dicta) to an assertion of "unchastity in a woman" as
an example of words that were actionable per se. (7)  However,
although that is the rule in many other jurisdictions, it is not
the common-law rule and, as explained below, it is not the rule
in Oregon.  
		Spoken words are actionable per se in Oregon only if
they are words tending to injure the plaintiff in his or her
profession or business, or if they impute to plaintiff the
commission of a crime involving moral turpitude.  Davis v.
Sladden, 17 Or 259, 261, 21 P 140 (1889).   At common law, an
accusation of unchastity was regarded as a "spiritual" matter and 
"actionable only with proof of 'temporal' damage, such as the
loss of a marriage."  Prosser and Keeton on the Law of Torts, §
112, 792-93 (5th ed 1984).  That rule was changed in regard to
women in England in 1891, under the "Slander of Women Act."  Id.;
see also Barnett v. Phelps, 97 Or 242, 248, 191 P 502 (1920)
(discussing how "Slander of Women Act" changed common law in
England).  However, Oregon continued to follow the common law. 
Davis, 17 Or at 261; see also Barnett, 97 Or at 249 (criticizing 
Davis, yet noting change in common law should be made by
legislature, not court).  
		In this jurisdiction at the time of the decision in
Davis, asserting that a woman had committed adultery did
constitute slander per se, but only because adultery was
prosecutable as a crime.  Davis, 17 Or at 263.  However, adultery
no longer is a crime under Oregon law.  See Brown v. Vogt, 272 Or
482, 484, 538 P2d 362 (1975) (noting that legislature
decriminalized adultery in 1971).  Thus, asserting that a woman
has committed adultery no longer imputes criminal conduct to her. 
Accordingly, the allegations of paragraph "c" of the Parletts'
claim do not state a claim for slander per se.
		Plaintiffs do not argue that any other allegation in
the Parlett complaint constitutes slander per se.  Accordingly,
the factual allegations of the Parletts' claim do not state a
claim for defamation.         
		In sum, the factual allegations of the Parletts' claim
do not state a claim for invasion of privacy by "false light,"
for public disclosure of public facts, or for defamation.
Therefore, they do not state a claim for any "offense" covered
under the "personal injury" provision of the insurance policy. 
Accordingly, we hold that the insurer did not have a duty to
defend.   
		The decision of the Court of Appeals and the judgment
of the circuit court are affirmed. 




1. 	Defendant Flippen was dismissed from the case and was
not a party to the appeal.  Marleau v. Truck Insurance Exchange,
155 Or App 147, 149 n 1, 963 P2d 715 (1998).  Accordingly, we
refer to "Truck Insurance Exchange" as the only defendant
throughout this opinion.

2. 	The parties disagree concerning when plaintiffs first
tendered defense of the Parletts' action to defendant.  Because
we hold that the insurer did not have a duty to defend, infra, we
need not resolve that disagreement. 


3. 	Defendant does not dispute that, if it had a duty to
defend its insured against one claim in the complaint, then it
had a duty to defend against the entire complaint.  See Ferguson
v. Birmingham Fire Insurance Co., 254 Or 496, 506, 460 P2d 342
(1969) (when complaint contains two counts, one falling outside
policy coverage and the other within, insurer has duty to
defend).


4. 	Although "offense" is not always synonymous with
"tort," for purposes of this opinion, the difference in meaning
between the two words is not significant.  We will use the word
"offense" in this opinion, because the policy used that word.


5. 	ORCP 16 B provides, in part:
	"Each separate claim or defense shall be 	separately stated.  Within each claim alternative
theories of recovery shall be identified as separate
counts."
If a claim is not separately stated, then a party may move to
strike under ORCP 21 E:  
	"[T]he court may order stricken * * * any pleading
containing more than one claim * * * not separately
stated. * * *"


6. 	Although we need not resolve the question here, we note
that we are not certain of the accuracy, by way of dictum, in
Reesman that "[t]his court previously has not recognized the tort
of invasion of privacy by false light."  327 Or at 607.  
		In Tollefson v. Price, 247 Or 398, 430 P2d 990 (1967),
a decision that pre-dates the Restatement (Second) of Torts by
ten years, this court sustained a pleading that alleged invasion
of privacy by publication of false facts.  This court identified
the claim at issue as a claim of invasion of privacy by public
disclosure of private facts.  Id. at 401.  However, if we apply
the Restatement (Second) definition quoted above to the claim at
issue in Tollefson, it is clear that the pleading at issue also
stated a claim for invasion of privacy by "false light."  In that
regard, this court has "recognized" a "false light" claim,
although it had not specifically so stated before Reesman.


7. 	Cook is not the only opinion in which this court has
referred to an assertion of "unchastity in a woman" as slander
per se.  See, e.g., Hinkle, 244 Or at 273 (so referring).