Daily Development for Wednesday, October 12, 2005
by: Patrick A. Randolph, Jr.
Elmer F. Pierson Professor of Law
UMKC School of Law
Of Counsel: Blackwell Sanders Peper Martin
Kansas City, Missouri
dirt@umkc.edu
INSURANCE; DEFINITIONS; “PERSON:” In insurance policy providing coverage for wrongful eviction, a “person” wrongfully evicted must be a human being, and not a business.
Mirpad v. California Insurance Guarantee Assoc., 34 Cal. Rptr. 3d 136 (Cal. App. 9/19/05)
Mirpad was the owner of commercial property, and paid for a liability policy related to that ownership issued by a predecessor of CIGA.
Mirpad’s managing agent evicted an existing tenant on the premises and the tenant and one of its principles sued Mirpad for wrongful termination and eviction. Mirpad tendered defense of the lawsuit to its insurer, which denied coverage. Mirpad then defended the suit at a cost of in excess of $500,000 and sued the successor insurer for damages.
There was no question in the case that if the
policy covered the alleged injury, there was a duty to defend.
The case law clearly established such a duty except where the existence
of a duty depends upon an issue of law. The question here, of
course, was a legal one - whether the policy covers the claim at all.
The liability policy contained a provision for “personal Injury and Advertising Injury Liability.” Pursuant to that coverage, the insurer promised to “pay those sums to which this insurance applies, that the insured becomes legally obligated to pay as damages because of personal injury.” “Personal injury” was defined elsewhere in the policy to include “. . . injury other than bodily injury arising out of one or more of the following offenses: (1) false arrest, detention or imprisonment; (1) malicious prosecution; (3) wrongful eviction from, wrongful entry into, or invasion of the right of private occupancy of: (a) a room; (b) a dwelling; or ( c) premises; that a person occupies by or on behalf of its owner, landlord or lessor. . . “
The insurer took the position that coverage under the above language was available only when the alleged wrongful eviction was of a human being, and not a business entity. As the alleged wrongful eviction in this case was of a corporate entity, the insurer maintained, there was no coverage as a matter of law, and therefore no duty to defend.
The trial court, relying on the Webster’s Dictionary definition of “person,” disagreed, and found coverage based upon the notion that the word “person” as used in the policy included either a natural person or a corporate entity. The court of appeals here reversed, finding that the term “person,” in the policy, as a matter of law, meant only a natural person, and not a business entity..
The court stated that it “must read the quoted term [“person”] not in isolation, but in the context of the entire policy.” At another point it stated that its approach was consistent with the “principle that a court, in determining the plain meaning of a policy language must not only interpret that language in its ‘ordinary and popular sense,’ but also in the context of its usage in the policy itself.” It noted that the policy consistently used the term to refer only to natural persons, while corporate and other business entities were referred to as “organizations.” It commented that if it were to view “person” as to include “organizations,” then the policy’s use twenty times of the phrase “person or organization” would be superfluous and the single reference to “organization” in twelve other places might be ambiguous.
The court further noted that the “wrongful eviction” language in the policy referred to places where people live. The policy used the terms “room,” “dwelling,” or “premises.” It stated that the word “premises” “is the more general of thee three terms, but, as noted, settled rules of contruction compel us to conclude that it is of the same class as the other two.”
Comment 1: The case is most likely correct, although one certainly can quibble with elements of the analysis. Is it really true, for instance, that an “organization” cannot occupy a “room?” Does the term “room” exclusively connote a dwelling place? If it does not, then the phrase “room, dwelling or premises” may have a different meaning than suggested. Perhaps the use of the three terms was to identify that a single room in a multi-tenant building could be the subject of a wrongful eviction action, as could either a dwelling or some other premises other than a dwelling. But the frequent use throughout the policy of “person or organization” also was convincing to the editor as it was to the court. When the drafters of the policy provided coverage for the wrongful eviction of a person they probably had in mind a natural person, not a business entity.
Comment 2: Of course, the ordinary rules of construction don’t govern insurance policies - the classic contracts of adhesion. What the drafters intended in their back room at the home office is not necessarily controlling. Nevertheless, these policy language must have some standard meaning. This case just means that clients have to pay their lawyers to read policy language carefully to be sure they’re getting the coverage they expect. For lawyers, then, “it’s a good thing.”
Items reported here and in the ABA publications
are for general information purposes only and
should not be relied upon in the course of
representation or in the forming of decisions in
legal matters. The same is true of all
commentary provided by contributors to the DIRT
list. Accuracy of data and opinions expressed
are the sole responsibility of the DIRT editor
and are in no sense the publication of the ABA.
Parties posting messages to DIRT are posting to a
source that is readily accessible by members of
the general public, and should take that fact
into account in evaluating confidentiality
issues.
ABOUT DIRT:
DIRT is an internet discussion group for serious
real estate professionals. Message volume varies,
but commonly runs 5 15 messages per work day.
Daily Developments are posted every work day. To
subscribe, send the message
subscribe Dirt [your name]
to
listserv@listserv.umkc.edu
To cancel your subscription, send the message
signoff DIRT to the address:
listserv@listserv.umkc.edu
for information on other commands, send the message
Help to the listserv address.
DIRT has an alternate, more extensive coverage that includes not only
commercial and general real estate matters but also focuses specifically upon
residential real estate matters. Because real estate brokers generally find
this service more valuable, it is named “BrokerDIRT.” But residential
specialist attorneys, title insurers, lenders and others interested in the
residential market will want to subscribe to this alternative list. If you
subscribe to BrokerDIRT, it is not necessary also to subscribe to DIRT, as
BrokerDIRT carries all DIRT traffic in addition to the residential discussions.
To subscribe to BrokerDIRT, send the message
subscribe BrokerDIRT [your name]
to
listserv@listserv.umkc.edu
To cancel your subscription to BrokerDIRT, send the message
signoff BrokerDIRT to the address:
listserv@listserv.umkc.edu
DIRT is a service of the American Bar Association
Section on Real Property, Probate & Trust Law and
the University of Missouri, Kansas City, School
of Law. Daily Developments are copyrighted by
Patrick A. Randolph, Jr., Professor of Law, UMKC
School of Law, but Professor Randolph grants
permission for copying or distribution of Daily
Developments for educational purposes, including
professional continuing education, provided that
no charge is imposed for such distribution and
that appropriate credit is given to Professor
Randolph, DIRT, and its sponsors.
DIRT has a WebPage at:
http://cctr.umkc.edu/dept/dirt/
*************************************
Your e-mail address will only be used within the ABA and its entities. We do not sell or rent e-mail addresses to anyone outside the ABA.
To change your e-mail address or remove your name from any future general distribution e-mails you can call us at 1-800-285-2221, or write to: American Bar Association, Service Center, 321 N Clark Street, Floor 16, Chicago, IL 60610
If you are an ABA member, log in to the ABA Web site at http://www.abanet.org/abanet/common/MyABA/home.cfm to edit your member profile. Otherwise, complete the form located at https://www.abanet.org/members/join/coa2.html
To review our privacy statement, go to http://www.abanet.org/privacy_statement.html.
If you have any problems, please contact the list owner at
dirt-dd-request@mail.abanet.org.