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Town of Cumberland v. Rhode Island Interlocal Risk Management Trust11/24/2004
The motion justice found that the use of a semicolon separating the definitions of liability for personal injuries and that of property damages created two independent clauses and that the term "arising out of any occurrence" was limited to property damage. Consequently, he determined that the appearance of the term "occurrence" after the semicolon meant that it modified property damage, but not personal injuries.
Setting aside the grammatical analysis, the motion justice further found that the policy could not be read to cover only personal injuries arising from "occurrences" because the policy's definition of personal injuries explicitly includes several intentional torts. Under the policy, personal injuries include "False Arrest, False Imprisonment, Wrongful Eviction, Detention, Malicious Prosecution, Discrimination, Humiliation, Invasion of Rights of Privacy, Libel, Slander or Defamation of Character; also * * * Violation of Civil Rights, Assault and Battery, and Disparagment of Property." (Emphasis added.) The motion justice found that, at best, the general liability clause is ambiguous and should be construed in favor of the town.
This Court interprets the terms of an insurance policy according to the same rules of construction governing contracts. Pawtucket Mutual Insurance Co. v. Gay, 786 A.2d 383, 386 (R.I. 2001) (citing Textron, Inc. v. Aetna Casualty & Surety Co., 638 A.2d 537, 539 (R.I. 1994)). We look at the four corners of a policy, viewing it "in its entirety, affording its terms their 'plain, ordinary and usual meaning.'" Casco Indemnity Co. v. Gonsalves, 839 A.2d 546, 548 (R.I. 2004) (quoting American Commerce Insurance Co. v. Porto, 811 A.2d 1185, 1192 (R.I. 2002)). "The test to be applied is not what the insurer intended by his words, but what the ordinary reader and purchaser would have understood them to mean." Pressman v. Aetna Casualty and Surety Co., 574 A.2d 757, 760 (R.I. 1990) (quoting Elliott Leases Cars, Inc. v. Quigley, 118 R.I. 321, 326, 373 A.2d 810, 812 (1977)).
We will not deviate from the literal policy language unless we deem the policy to be ambiguous. Pawtucket Mutual Insurance Co., 786 A.2d at 386 (citing Sjogren v. Metropolitan Property & Casualty Insurance Co., 703 A.2d 608, 610 (R.I. 1997)). We will not indulge in "'mental gymnastics * * * to read ambiguity into a policy where none is present.' * * * If, however, a policy's terms are ambiguous or capable of more than one reasonable meaning, the policy will be strictly construed in favor of the insured and against the insurer." Id. (quoting Sjogren, 703 A.2d at 610).
The defendants argue that when construing the insurance contract, the motion justice placed undue importance on the use of the semicolon and failed to interpret the clause in light of the entire insurance contract. They assert that the use of the phrase "Ultimate Net Loss" in the general liability section of the policy provides additional evidence of the requirement that personal injuries arise out of an occurrence because "Ultimate Net Loss" is defined as "the total sum which [town] becomes obligated to pay by reason of personal injury or property damage claims * * * which are paid as a consequence of any occurrence covered hereunder." (Emphases added.) Furthermore, defendants argue, the term "personal injuries" is incorporated into the definition of "occurrence:"
"OCCURRENCE - The term 'occurrence' wherever used herein shall mean an accident or a happening or event or a continuous or repeated exposure to conditions which unexpectedly and unintentionally results in personal injury, or damage to property during the policy period. All such exposure to substantially the same general conditions
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