Unpublished Disposition, 852 F.2d 1289 (9th Cir. 1988)

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US Court of Appeals for the Ninth Circuit - 852 F.2d 1289 (9th Cir. 1988)

Robert W. HAINES, Plaintiff-Appellant,v.CONTINENTAL INSURANCE COMPANY, Defendant-Appellee.

No. 87-3702.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted June 8, 1988.Decided July 21, 1988.

Before HUG, FLETCHER, and NELSON, Circuit Judges.



Robert W. Haines owned a boathouse moored at the Columbian Yacht Club near Portland, Oregon. In December of 1983, a severe winter storm struck the Portland area, causing the vessel to break loose from its mooring and collide with a yacht. The owner of the yacht filed suit against Haines for the damage to the yacht. Haines held an insurance policy issued by the defendant in this action, Continental Insurance Company ("Continental"), and filed a claim for the incident. Continental denied the claim. The action between Haines and the yacht owner was eventually settled, and Haines brought suit against Continental, alleging coverage for damages sustained by the yacht. The district court had diversity jurisdiction and granted summary judgment in favor of Continental. Haines timely appealed. We have jurisdiction pursuant to 28 U.S.C. § 1291.

The sole issue on appeal is whether the magistrate erred in finding that coverage did not exist. Because the resolution of this issue must be based on the language of the policy and applicable principles of insurance law, we review the magistrate's decision de novo. Miller v. Safeco Title Ins. Co., 758 F.2d 364, 367 (9th Cir. 1985). We reverse.


Section II of the policy provides for liability coverage. It states: "If a claim is made or a suit is brought against any insured for damages because of bodily injury or property damage to which this coverage applies, we will ... pay up to our limit of liability for the damages for which the Insured is legally liable...." Continental contends that the damage caused by the houseboat falls under a provision in that section which excludes coverage for "property damage ... arising out of any premises owned or rented to any Insured which is not an insured location." (Emphasis added.)

Haines argues that this exclusion is inapplicable. He states that the houseboat is not described by the term "premises," which normally connotes land or buildings on land. We find Haines's point compelling. Under Oregon law,1  courts are to interpret the terms of the insurance policy in a manner consistent with the understanding of the ordinary purchaser. Botts v. Hartford Accident & Indem. Co., 585 P.2d 657, 659 (Or.1978) (en banc). The term "premises" is not defined in the policy at hand.2  When a term is not defined in an insurance policy, the court must reach a definition taking into consideration the popular and nontechnical understanding of the term. Id. at 661. Black's Law Dictionary defines premises as "lands and tenements; an estate; land and buildings thereon ... [t]he area of land surrounding a house...." Black's Law Dictionary, 1344 (5th ed. 1979). Webster's Third New Int'l Dictionary defines premises as "a specified piece or tract of land with the structures on it." Webster's Third New Int'l Dictionary 1789 (1971).3  The Random House College Dictionary defines premises as "a. a tract of land including its buildings. b. a building together with its grounds or other appurtenances." Random House College Dictionary 1046 (1980). We conclude that, because "premises" is generally defined as land or a structure on land, a boathouse would not be thought of as a "premises," as the term is normally used.

At the very least, the term "premises" gives rise to an ambiguity. Under Oregon law, a contract term is ambiguous if it "has no definite significance or if it is capable of more than one sensible and reasonable interpretation; it is unambiguous if its meaning is so clear as to preclude doubt by a reasonable person." Deerfield Commodities Ltd. v. NERCO, Inc., 696 P.2d 1096, 1104-05 (Or.Ct.App.1985). Ambiguities in insurance policies are construed against the insurer such that any uncertainty is resolved in favor of coverage. Shadbolt v. Farmers Ins. Exch., 551 P.2d 478, 480 (Or.1976). This rule is even stronger in the case of exclusionary clauses, such as the one in this case. Insurance Co. of N. Am. v. Howard, 679 F.2d 147, 150 (9th Cir. 1982) (applying Oregon law). See also Stanford v. American Guar. Life Ins. Co., 571 P.2d 909, 911 (Or.1977).

Applying these principles, we resolve any ambiguity in favor of Haines. We find that the term "premises" does not describe the boathouse, and that the magistrate erred in finding that coverage for the incident did not exist. We reject defendant's other contentions as well.



This disposition is not appropriate for publication and may not be cited to or by the courts of this circuit except as provided by 9th Cir.R. 36-3


There appears to be no dispute that Oregon law applies to this diversity action


Though "residence premises" is defined in the policy, the definition does little to clarify the term "premises." "Residence premises" is defined as "the one or two family dwelling, other structures, and grounds, or that part of any other building where you reside and which is shown as the 'residence premises' in the Declarations." (Emphasis added.) If anything, this definition implies the association of land with the term "premises."


Although Webster's also gives a secondary definition of premises as "a building, buildings, or part of a building covered by or within the stated terms of [an insurance] policy," Webster's at 1789, that is not the common usage of the term. Furthermore, it simply begs the question in this case because our whole inquiry is the meaning of premises in this insurance policy