PIH Beaverton LLC v. Red Shield Insurance Co.

If there is doubt as to whether “allegations of a complaint against the insured state a cause of action that is defined within the coverage of a liability policy sufficient to compel the insurer to defend the action,” the court will resolve the doubt in the insured’s favor. West Hills Development Co. v. Chartis Claims, 360 Or 650, 653 (2016); Blohm et al v. Glens Falls Ins. Co., 231 Or 410, 415-16 (1962).

Defendant insurance company appealed a judgment declaring that Defendant owed a duty to defend general contractor and its subcontractors against building construction defect litigation. Defendant assigned error to trial court’s decision requiring the duty to defend based upon three arguments. On appeal, Defendant argued that the general contractor was not liable for the subcontractor’s operations, that liability did not exist for any “ongoing” operations per the insurance policy endorsements, and the damage did not occur within the insurance policy coverage period. In response, Plaintiff argued that the general contractor can be liable for the subcontractor’s negligence, the damage happened during the subcontractor’s operations, and that damage occurred within the insurance policy period. If there is doubt as to whether “allegations of a complaint against the insured state a cause of action that is defined within the coverage of a liability policy sufficient to compel the insurer to defend the action,” the court will resolve the doubt in the insured’s favor. West Hills Development Co. v. Chartis Claims, 360 Or 650, 653 (2016); Blohm et al v. Glens Falls Ins. Co., 231 Or 410, 415-16 (1962). The Court of Appeals held that the duty to defend was required because the general contractor was liable not just for its own acts of negligence but also the work performed by its subcontractors, and the “ongoing operations” of the subcontractor, the damage resulting from those operations, and the time when the work was performed were not in factual dispute between the parties. Affirmed.