West Hills Development Co. v. Chartis Claims

The duty of an insurer to defend the insured against claims will be determined by comparing the insurance contract to the complaint under the Four Corners approach to contract interpretation.

Defendant (Oregon Automobile Ins. Company) “Oregon Auto” appealed the judgment of the trial court (affirmed by the Court of Appeals) finding that Defendant-insurer had a duty to defend Plaintiff-insured West Hills Dev. Co. “West Hills”. Defendant argued that under the Four Corners rule incorporated into the contract, and on the face of the complaint made against West Hills, they had no duty to defend West Hills in that proceeding. Using the Four Corners approach, the Court reviewed the language of the contract. The Court ultimately found the question of whether West Hills’ was covered under the contract to be ambiguous. The Court then resolved this ambiguity in favor of West Hills, finding that given the ambiguity of the insurance contract, and given West Hills reasonable expectation that such claims were covered under the contract, Oregon Auto has a duty to defend.