Opinion ID: 3011726
Heading Depth: 2
Heading Rank: 3

Heading: Public Policy and Commonsense

Text: Of the three briefs submitted in this case, only the amicus attempts a public policy argument: [C]ourts create great uncertainty when they disregard express, unambiguous provisions defining and circumscribing the risks that the insur er agrees to cover. Failure to enforce the insurance contract as written can affect the price and availability of coverage for those who lack the resources to self-insure -- most notably, individuals and small businesses. 16 Amicus brief at 25 (citations omitted) (emphasis added). We completely agree with this statement. In fact, one would be hard-pressed to find anyone to disagree. The problem is that this statement assumes away the central issue in this case - whether the disputed policy language is ambiguous. It is beyond peradventure, as the amicus contends, that [i]nsurance serves an important economic and social function, and courts must enforce unambiguous policy language in order to maintain its viability. The question remains, however, whether the CGL policy is unambiguous, and none of the parties provides any policy ar guments for addressing that particular question. In our opinion, the most important and relevant observation in this case was only casually r eferenced by the District Court. The court noted: Insurance companies have included the clause `wrongful eviction from, wrongful entry into, or invasion of the right of private occupancy' in their policies for at least twenty years, and litigants have repeatedly disputed the meaning of the term `invasion of the right of private occupancy.' . . . After at least two decades of litigation over the meaning of the term `invasion of the right of private occupancy,' courts have not arrived at a uniform definition of the term. Rather than attempt to construe the ter m `invasion of the right of private occupancy' solely based on its plain meaning, courts have concluded that the term is ambiguous, and have resorted to other techniques of contract interpretation. This court, similarly will examine the meaning of the ter m in the broader context of the CGL policy. Insurance companies continue to employ the ter m `invasion of the right of private occupancy' in their policies, despite twenty years of legal decisionsfinding that this term is ambiguous. It is instructive to ask why. We also find it instructive to ask why? -- because we cannot conceive of an answer. The District Court concluded that insurance companies intend the disputed language to be read in context, to take meaning from the specific terms 17 it follows (almost always wrongful eviction and wrongful entry). Perhaps this is true. But even if it is, their intent has been, and continues to be, unclear. A Westlaw search from 1973 to the present reveals 249 cases that include the phrase invasion of the right of private occupancy. Approximately half of those decisions required a direct interpretation of the disputed language. In fact, National Union itself has been forced to litigate the meaning of the phrase on numerous occasions, and has lost at least four times.11 Yet, in spite of this extensive history of litigation, and obvious disagreement amongst courts and parties alike, insurance companies, and National Union in particular, continue to use the phrase without any language defining its scope. Once again, we must ask, why? It is well settled under Delaware law that insurance policies are contracts of adhesion. Ther efore it is the responsibility of the insurer to write clear policies with adequately defined terms: [Insurance contracts] must be interpreted in a common sense manner, giving effect to all pr ovisions so that a reasonable policyholder can understand the scope and limitation of coverage. It is the obligation of the insurer to state clearly the terms of the policy . . .. The policy behind this principle is that the insur er or the issuer, as the case may be, is the entity in control of the process of articulating the terms. The other party, whether it be the ordinary insur ed or the investor, usually has very little say about those terms _________________________________________________________________ 11. See Kitsap County, 964 P.2d at 1184-86; Rozet v. City Ins. Co., 24 F.3d 249 (9th Cir. 1994) (unpublished decision); Great Northern Nekoosa Corp. v. Aetna Cas. & Sur. Co., 921 F .Supp. 401, 416-18 (N.D. Miss. 1996); Gould, 829 F.Supp. at 724, 729. National Union has, on other occasions, prevailed in similar suits. See e.g., City of Oakland v. National Union Fire Ins. Co. of Pittsburgh, Pa , 56 F.3d 70 (9th Cir. 1995) (unpublished opinion); Wackenhut Servs., Inc. v. National Union Fire Ins. Co. of Pittsburgh, Pennsylvania, 15 F .Supp.2d 1314, 1323-24 (S.D. Fla. 1998); Stein-Brief, 65 Cal.App.4th at 368, 373; O'Brien Energy Sys., Inc. v. American Employers' Ins. Co., 629 A.2d 957, 959, 963-63 (Pa.Super. 1993). 18 except to take them or leave them or to select fr om limited options offered by the insur er or issuer. Therefore, it is incumbent upon the dominant party to make terms clear. Convoluted or confusing terms are the problem of the insurer or issuer -- not the insured. Penn Mutual, 695 A.2d at 1149-50. Because of the onesided nature of insurance policies, insurance companies are in the best position to clarify potentially ambiguous terms and avoid future disputes. The persistent litigation surrounding the meaning of invasion of the right of private occupancy strongly suggests that they indeed should do so. A simple definition of the phrase, indicating, for example, that it refers only to offenses requiring a physical invasion (or only to those involving a tenant-landlord dispute, etc.) would be dispositive. At oral argument, we asked counsel why National Union had chosen not to further define the contested phrase. Counsel responded that this phraseology makes the policy marketable. In response to our follow-up question, counsel denied that the phrase was marketable solely because it created confusion; instead, he stated thatthe purpose of this policy language is that it covers fact patter ns and situations and scenarios that don't narrowly fall within the parameters of a `wrongful entry' or `wr ongful eviction.'  Even if this is true, we fail to see how further defining the scope of the language would undercut this purpose. If anything, it would help clarify which fact patter ns, situations, and scenarios are indeed cover ed. We will not speculate as to why National Union has consistently refused to clarify its language, but one thing is clear: The provision at issue in the National Union CGL policy is ambiguous. There is a time and place for reliance upon Latin maxims and principles of statutory construction, but not at the expense of commonsense. See SI Mgmt. L.P . v. Wininger, 707 A.2d 37, 42 (Del. 1998) (holding that insurance contracts must be interpreted in a common sense manner, giving effect to all provisions so that a reasonable policyholder can understand the scope and limitation of coverage. It is the obligation of the insurer to state clearly the terms of the policy.). A single phrase, which insurance 19 companies have consistently refused to define, and that has generated literally hundreds of lawsuits, with widely varying results, cannot, under our application of commonsense, be termed unambiguous. As such, we hold that aninvasion of the right of private occupancy must be construed liberally, and that the CGL policy does cover the County's legal expenses and its liability arising from Acierno's claims. We reverse the District Court's grant of summary judgment in favor of National Union, and remand the cause for further proceedings consistent with this opinion. 20