Court Opinion

ID: 9571895
Source: CourtListenerOpinion
Date Created: 2023-08-21 20:36:07.27014+00
Date Added: 2024-06-11T12:31:09.140466
License: Public Domain

ROSSMAN, J.,
dissenting.
I dissent, because in my opinion the majority has completely overlooked abundant and clearly dispositive Oregon case law. Considering the facts of this case, I am also concerned that it has reached an unjust result.
The majority relies almost exclusively on Crescent Co., Inc. v. Insurance Co. of N. A., 225 SE2d 656 (SC 1976), in which the Supreme Court of South Carolina concluded that an *266insurance contract covering vandalism to “a building in process of construction” did not cover unoccupied houses which were 96 percent complete and on which no work had been done for over two years. In so holding, the court rejected an argument that the phrase “in process of construction” was ambiguous. The majority here reasons that the phrases “in process of construction” and “a dwelling being constructed” are materially identical and that the circumstances in the Crescent case are closely analogous to those at issue here. It, therefore, concludes that our holding should mirror the one reached by the South Carolina court.
Given the abundance and clarity of relevant Oregon case law, I am extremely puzzled by the majority’s long trip to South Carolina in search of authority.1 I, instead, favor the approach taken by the trial judge, who held that plaintiffs loss was covered by the insurance policy. He applied the well-established rule that insurance contracts are to be construed liberally in favor of the insureds.
*267“ ‘The language used in a contract of insurance is entitled to a construction as favorable to the insured as in good conscience will be permitted, and every reasonable intendment will be allowed to support a view that will protect the insured and prevent forfeiture. [Citations omitted.]’ Schweigert v. Beneficial Life Ins. Co., 204 Or 294, 301, 282 P2d 621 (1955).” O’Neill v. Standard Insurance, 276 Or 357, 361, 554 P2d 997 (1976).
In other words, if a term is susceptible to more than one meaning, every reasonable doubt will be resolved in favor of extending coverage. Western Fire Insurance Co. v. Wallis, 289 Or 303, 308, 613 P2d 36 (1980); Allen v. Continental Casualty Co., 280 Or 631, 633, 572 P2d 617 (1977). The rule is especially applicable in cases involving exclusionary clauses, such as this one. Stanford v. American Guaranty Life Ins. Co., 280 Or 525, 527, 571 P2d 909 (1977); United Pac. Ins. v. Truck Ins. Exch., 273 Or 283, 293, 541 P2d 448 (1975).
The majority apparently concedes that, if a particular phrase like “a dwelling being constructed” is susceptible to two or more reasonable constructions, the phrase is to be construed in favor of the insured and against the insurer. However, it conveniently concludes that the only reasonable interpretation of “dwelling being constructed” is the one which avoids coverage. In this regard, the majority states:
“The existence of an ambiguity is a question of law, and we find none in this case. The phrase ‘is being constructed’ describes action that is still in progress. * * *” 67 Or App at 264.
I agree that the existence of an ambiguity is a question of law.
“* * * [Wjords or terms may be ambiguous, in the legal sense, when they can reasonably be given a broader or a narrower meaning, depending upon the intention of the parties in the context in which such words are used by them. * * *” Allen v. Continental Casualty Co., supra, 280 Or at 633-34.
However, I believe that the phrase “dwelling being constructed” is ambiguous. As I read the briefs in this case and listened to the attorneys during oral argument, it became increasingly apparent that the phrase is easily susceptible to at least two reasonable constructions.
*268The construction advanced by the majority is a narrow one, allowing insurance companies to deny coverage under this clause unless there is active construction in progress. Such a construction raises several questions: What if severe winter weather, material shortages, or a carpenters’ strike interrupt construction for over 30 days? In the absence of active construction, would insurance coverage lapse on the 31st day? The majority opinion leaves these questions unanswered.
Perhaps I could agree that the majority’s construction is the only reasonable one if the insurance contract extended coverage for damage caused by vandals occurring during periods of “on-going construction activity.” Instead, the contract provides that no house left vacant for over 30 days is covered unless it is a “dwelling being constructed.” Plaintiffs house was “being constructed.” Save for a relatively short delay caused by a foreclosure action and the resulting change of possession, the construction would have been more active. Therefore, given the wording of this provision, it was reasonable for plaintiff to believe that the house was insured for damage caused by vandals.
The construction advanced by plaintiff becomes even more reasonable when examined in the light of the circumstances under which the policy at issue was obtained. Following a previous episode of vandalism, the Weddels called defendant’s agent to report the damage. After being informed that the policy they then owned did not have vandalism coverage, Mr. Weddel said, “Well, I have to have it. This can’t happen again.” Thereafter, the policy in dispute was issued, naming plaintiff as a loss payee. Clearly, the Weddels expected the insurance policy to cover losses caused by vandalism. That expectation was certainly reasonable, considering the wording of the vandalism clause and the nature of the circumstances surrounding the policy’s purchase. However, even assuming that defendant honestly misunderstood the type of coverage desired by Weddel and actually believed that there would be no coverage for a loss of this type, we are still faced with a situation in which the two parties to the insurance transaction each attributed a different, but reasonable, meaning to the insurance contract. That is a legal ambiguity.
The trial judge apparently found that there was a legal ambiguity. He ruled that the construction advanced by *269plaintiff was a reasonable one. Accordingly, under the clearly-established line of Oregon authority, he construed the contract in favor of coverage and against defendant insurer. In my opinion, his resolution of this case was proper. I would therefore affirm.

 My puzzlement becomes even greater when I consider that the factual distinctions between Crescent Co., Inc. v. Insurance Co. of N.A., 225 SE2d 656 (SC 1976) and the one at bar are significant enough to render the majority’s reliance suspect. Crescent involved a project to construct 235 houses for low income families, to be sold under federally financed programs. When the houses were about 96 percent completed, the federal financing was discontinued, making the homes unmarketable. It was undisputed that any additional investment would have been imprudent. Accordingly, all construction stopped and was not resumed. Over two years later, the homes were vandalized and coverage was denied. In the instant case, construction was suspended for 41 days — not two years. Moreover, the house was not abandoned and sitting idle when the vandalism occurred. It was simply in a transitional period following its acquisition by plaintiff at a public auction. No circumstances rendered the house unmarketable or made further investments of time and money imprudent. The original owner had simply run out of money to complete his remodeling effort and had ceased work, necessitating a foreclosure by plaintiff.
It is apparent that the facts in Crescent represent an extreme situation where it was easy for the court to conclude that the houses were not in process of construction. The South Carolina court recognized that:
“Under certain circumstances, the term ‘in process of construction,’ without further definition, may be ambiguous. In the instant appeal, the testimony of the insured’s officers revealed that the work on the houses had been interrupted and that for two years the houses were left dormant. The reasons assigned for the insured’s failure to complete the houses were unrelated to considerations relative to construction. Rather, they involved the unmarketability of the houses resulting from cancellation of a government sponsored financing program.” 225 SE2d at 658.
The facts of our case are not nearly so clear-cut. Therefore, even if the majority’s search for non-Oregon case law is justifiable, the Crescent holding is not dispositive.