Mortgage Bancorporation v. New Hampshire Insurance , 67 Or. App. 261 ( 1984 )

WARREN, J.

Defendant appeals a trial court ruling granting plaintiffs motion for summary judgment and denying defendant’s cross-motion in a declaratory judgment action. The trial court held that plaintiff is entitled to recover for vandalism damage under a policy of insurance issued by defendant to plaintiff. We reverse.

The facts are not in dispute. Gary and Shireen Weddel borrowed money from plaintiff, secured by a trust deed, to complete and remodel a home in Cottage Grove in 1978. In March, 1981, plaintiff obtained a decree foreclosing the trust deed, and in April, plaintiff and the Weddels obtained the policy of insurance here at issue, which named plaintiff as the loss payee. On July 14, pursuant to a writ of execution on the foreclosure, the Weddels’ interest in the property was sold at public auction to plaintiff.

After July 14, neither the Weddels nor plaintiff did any remodeling work on the dwelling. Forty-one days after the remodeling work ceased, the building was vandalized. Plaintiff made a claim under the policy for the damage, which defendant denied under the following provision of its policy:

“We insure for all risks of physical loss to the property * * * except:

* * * *

“vandalism and malicious mischief, theft or attempted theft or breakage of glass and safety glazing materials if the dwelling has been vacant for more than 30 consecutive days immediately before the loss. A dwelling being constructed is ' not considered vacant; * *

The issue in this case, as posed in the trial court by defendant, is “* * * whether at the time the insured premises were vandalized said premises were ‘being constructed’ where all remodeling work had ceased more than 30 days prior to the loss.”

The trial court in its memorandum decision stated that, because “being constructed” could be interpreted to apply to the facts, it would resolve the issue in favor of extending coverage. The rule of law applied by the trial court to interpret the contract most favorably to the insured so as to extend coverage applies only when the contract is subject to more than one reasonable interpretation, thus creating ambiguity as to the intent of the parties. Western Fire Insurance Co. v. Wallis, 289 Or 303, 308, 613 P2d 36 (1980). When words of common understanding are used and the meaning is clear and subject to only a single reasonable meaning, no interpretation is necessary, and the words are to be taken in their plain, ordinary and popular sense. It is not permissible to apply a strained meaning to unambiguous language to create an ambiguity where none exists so that interpretation may be indulged to extend coverage. Western Fire Insurance Co. v. Wallis, supra; see also Temco v. St. Paul Fire & Marine, 273 Or 716, 719, 543 P2d 1 (1975).

The existence of an ambiguity is a question of law, and we find none in this case. The phrase “is being constructed” describes action that is still in progress. To adopt the interpretation urged by plaintiff would be to say that a building on which construction was commenced but abandoned was, for an unlimited period of time, a building “being constructed.” That clearly was not intended by the insurer and was not within the reasonable expectation of the party insured.

The only case cited to us, and we have found no other, directly dealing with the issue before us is Crescent Co., Inc. v. Insurance Co. of N. A., 225 SE2d 656, 657 (SC 1976). The policy in that case provided:

“This company (INA) shall not be liable for loss if the described building(s) had been vacant or unoccupied beyond a period of thirty (30) consecutive days immediately preceding the loss, whether or not such period commenced prior to the inception date of this coverage; but a building in process of construction shall not be deemed vacant or unoccupied * * *.”

We do not think that the language difference between “being constructed” and “in the process of construction” is a material difference. The facts were similar to those now under consideration, except that the construction had ceased due to the unavailability of federal financing two years before the vandalism occurred. The South Carolina Supreme Court ruled as a matter of law that the houses were not “in process of construction.” In doing so, the court rejected an argument identical to that made in the present case that the contract was ambiguous, because it did not define the term “in process of construction” and must therefore liberally be construed in favor of the insured. The South Carolina Supreme Court reasoned:

“We do not think it can be fairly said that the vandalism coverage for a house ‘in process of construction’ was to run in perpetuity from the time of ground breaking regardless of the insured’s actions postponing completion of the houses. The reason for charging an extra premium for vandalism and for restricting it to houses in process of construction is obvious: excessive vandalism occurs when houses or buildings are vacant. Under other policy provisions, a house vacant for more than thirty consecutive days was not covered for vandalism. The ‘in process of construction’ clause was obviously designed to extend coverage for houses during normal periods of construction. Without it, coverage generally would have been unavailable due to the thirty day non-occupancy provision. * * *” 225 SE2d at 658.

The difference in the length of time between cessation of construction and the occurrence of the loss for which coverage is sought is immaterial to the determination of the question on appeal. The normal course of construction having been terminated, the 30-day vacancy exclusion operates to avoid coverage.

The trial court erred in granting plaintiffs motion for summary judgment and in denying defendant’s. Because defendant was entitled to prevail as a matter of law, it is appropriate for us to order entry of summary judgment for defendant. Cochran v. Connell, 53 Or App 933, 939, 632 P2d 1385, rev den 292 Or 109 (1981).

Reversed and remanded with instructions to enter judgment for defendant.