Court Opinion

ID: 9618223
Source: CourtListenerOpinion
Date Created: 2023-08-22 05:09:05.069578+00
Date Added: 2024-06-11T09:54:37.295069
License: Public Domain

*253WARREN, J.
Cunningham & Walsh, Inc., (C & W) brought this action against its liability insurer, Atlantic Mutual Co. (Atlantic), to recover the cost of defending and settling an action brought by Kline. The trial court granted summary judgment for Atlantic, and C & W appeals. We agree with the trial court’s determination that Atlantic had no duty to defend C & W and affirm.
Atlantic issued to C & W a comprehensive general liability policy, which provides, in part:
“The company will pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of
“A. Bodily injury or
“B. Property damage
“to which this insurance applies, caused by an occurrence, and the company shall have the right and duty to defend any suit against the insured seeking damages on account of such bodily injury or property damage, even if the allegations of the suit are groundless, false or fraudulent.”
The policy defines “occurrence” as “an accident, including continuous or repeated exposure to conditions, which results in bodily injury or property damage neither expected nor intended from the standpoint of the insured.”
 In 1981, Kline sued C & W, alleging misrepresentation and deceit in connection with the sale of a beer distribution franchise. The complaint prayed for damages for “mental anguish and pain” allegedly caused by the misrepresentation. Atlantic refused to defend the claim on the grounds that the harm which was alleged was not “bodily injury” and that C & W’s alleged conduct was not an “occurrence” within the meaning of the policy, because it was intentional, i.e., not an accident. We need not reach the question whether the complaint alleged bodily injury, because we conclude that the conduct alleged necessarily includes the intentional infliction of harm and is not, therefore, an “occurrence” covered by the policy. Additionally, we conclude the conduct could not be insured, because to provide coverage for fraud would violate public policy.
*254C & W mistakenly relies on Nielsen v. St. Paul Companies, 283 Or 277, 583 P2d 545 (1978), to support its contention that Atlantic should be required to defend the claim. The complaint that the insured sought to have defended there alleged that the insured, without legal authority or permission, entered Mrs. Palin’s vehicle and residence and removed and repossessed a grandfather clock and, in so doing, struck Mrs. Palin on her arms and rendered her nervous and upset. The insurer refused to defend the claim on the ground that the complaint was based on intentional conduct beyond the scope of the policy. In affirming the trial court’s holding that the insurer had a duty to defend, the Supreme Court recognized that to provide insurance coverage for the protection of one who intentionally inflicts injury upon another is against public policy. Whether an insurer is relieved from defending an action on the ground that the conduct was intentional depends on the allegations of the complaint. The court stated:
“* * * p. is noi sufficient that the insured’s intentional, albeit unlawful, acts have resulted in unintended harm; the acts must have been committed for the purpose of inflicting the injury and harm before either a policy provision excluding intentional harm applies or the public policy against insurability attaches. Snyder v. Nelson/Leatherby Ins., 278 Or 409, 413-14, 564 P2d 681 (1977); City of Burns v. Northwestern Mutual, 248 Or 364, 369, 434 P2d 465 (1967).
“* * * There are no allegations in the count in question from which it must be concluded that the insured or anyone else at his direction intentionally inflicted physical injury or emotional harm upon Mrs. Palin. There are some intentional acts the nature of which is such that it must necessarily be concluded that there was an intention to injure. However, the facts alleged against the insured were not of this nature. * * *
«* * * There is nothing in the policy which limits coverage to negligent acts. It covers intentional acts as well, so long as such acts were not done for the purpose of injuring another. * * *” 283 Or at 281 (Emphasis in original.)
C & W would read that language to say that if the particular kind of harm for which damages are sought is not alleged to have been intended, the insurer is not excused from defending the claim, even if the complaint alleges intentional conduct, the necessary consequence of which is intended harm of some kind. In other words, if C & W intended to cheat Kline, but did not intend to cause him emotional distress, the *255claim for emotional distress would be covered. That is not a correct reading. The court made no distinction between types of harm alleged and types not alleged. It stated only that, under the complaint before it, there was no allegation from which it had to be concluded that the insured intended any harm. If, as the court reasoned, the only allegation is that the insured acted intentionally (i.e., volitionally), that is not sufficient to bring the alleged conduct beyond the coverage of the policy or to bring the public policy into play; it must also be alleged or necessarily inferred that some harm was intended by the intentional act. If it is alleged or necessarily inferred that some harm was intended, the insured’s conduct would not be an accident or an “occurrence” covered by the policy. In Nielsen, the complaint could be read to mean that, although Nielsen had entered Mrs. Palin’s automobile and home intentionally and in the course of doing so made physical contact with her, no harm to her was necessarily intended. Under those circumstances, there was a duty to defend.1
Here, the underlying complaint alleges that C & W intentionally deceived Kline with an intent to cause him to rely on the misrepresentation and to enter into a franchise agreement. Although no specific type of intentional harm is alleged, we conclude that deceit, by its nature, is an act from which an intention to cause harm must necessarily be inferred, see Nielsen v. St. Paul Companies, supra, 283 at 281, and that, when deceit is intended, it is of no consequence that the specific harm for which relief is sought is not alleged to have been intended. We hold that, when fraud or deceit is committed, its natural and intended consequence is to do harm and, whatever the harm might be, the conduct which brought it about is not an “occurrence” under the policy.
We may not read into an insurance contract that which we would regard as against public policy if it were expressly included in it. We would not enforce a provision of a policy which requires indemnity for mental distress caused by the policyholder’s fraud or deceit. If it is against public policy to insure the intended conduct, it is against public policy to insure for the harm which it causes, whether the particular harm which is intended or not.
*256Affirmed.

 In fact, the evidence in Nielsen v. St. Paul Companies, 283 Or 277, 583 P2d 545 (1978), was that the physical contact with Mrs. Palin was unintentional.