Merlin B. Smith, Inc. (named insured) was a professional consulting forestry corporation hired by Harrell Plantation, Inc. (Harrell) to select and mark for harvest the merchantable timber on the owner's property. A forestry technician employed by the named insured mistakenly marked timber on property owned by Plum Creek Marketing, Inc. (Plum Creek) that was adjacent to Harrell's property. As a result, Anthony Timberlands, the company who had purchased the marked timber began harvesting timber on Plum Creek's property. The named insured reimbursed Plum Creek for the damage and also paid Anthony Timberlands an amount equal to the value of the difference of the timber that it thought it was purchasing and the amount it had actually purchased. Plum Creek and Anthony Timberlands assigned and subrogated to the named insured all of their rights in reference to this loss.

Although notice was timely, the insurer denied coverage, stating that the negligence occurred as a result of the rendering of professional services, which was excluded from the CGL policy. The insurer also denied coverage, stating that there had been no occurrence, as that term was defined in the policy. While the CGL policy excluded professional services and listed consulting forester as a professional service, it did not define this latter term. The court case did not cite the terms of the professional services exclusion, but did say that such services meant those performed by one in the ordinary course of the practice of his profession on behalf of another pursuant to some agreement, express or implied and for which one could reasonably expect some compensation. The court also explained that professional services are those that require the specialized training, judgment and the use of specialized tools or instruments.

The named insured's position, in arguing that coverage applied despite the professional services exclusion, was that the employee who marked the trees did not require identification of boundary lines and, therefore, was not a professional service. To the contrary, however, the named insured (Merlin Smith) testified in his deposition that the job of a consulting forester was to identify merchantable timber, mark it for harvest and then market it and sell it. Additionally, he admitted that identifying boundary lines was an essential part of the services his corporation offered to his customers, and that skill, training and judgment were required in identifying property lines. The employee who actually did the marking also was deposed and stated that a forestry technician trains for six months to a year before going into the field alone and that map-reading was taught during the training process. He also testified that it was necessary to use topographical maps and a compass and the fact that he had “spent a lifetime in the woods, . . . [he knew] a boundary . . . [when he found] one.”

In the final analysis, the Louisiana court of appeal affirmed the trial court's decision against coverage. In doing so, the court stated that locating boundary lines was a professional service of a consulting forester.

Instead of arguing for coverage based on an occurrence and absence of any applicable exclusion, the issue in the case of United States Fidelity & Guaranty Co., et al., v. Goodwin, et al., 950 F. Supp. 24 (1996) was over personal injury liability coverage. The defendant, Goodwin, allegedly cut trees belonging to Henderson who filed suit alleging that Goodwin had trespassed on Henderson's land and removed timber without permission in violation of a specified statute. Goodwin's commercial liability policy would pay damages because of personal injury, defined as: [t]he wrongful eviction from, wrongful entry into, or invasion of the right of private occupancy of a room, dwelling or premises that a person occupies by or on behalf of its owner, landlord or lessor. The defendants (Goodwin and Henderson Logging) contended that Goodwin's trespass on Henderson's land constituted “wrongful entry into . . . a room, dwelling or premises that a person occupies by or on behalf of its owner, landlord or lessor” and, therefore, was covered under the policies. The insurers argued, on the other hand, that pursuant to the plain language of the policies, the wrongful entry must have been committed by the owner, landlord or lessor of the property that had been entered wrongfully. The insurers noted that Goodwin was not the owner of the property on which he trespassed; therefore, they argued, Goodwin was not covered under the personal injury provision of the respective policies.

In response, the defendants argued that the phrase “by or on behalf of its owner, landlord or lessor” modified the word “occupies”. In other words, the defendants contended that the personal injury provision merely required that the person who occupied the room, dwelling, or premises, that was entered wrongfully, did so by or on behalf of the property's owner, landlord, or lessor. According to the defendants, since Henderson owned the property upon which Goodwin trespassed, Henderson occupied the property by or on behalf of the property's owner, landlord or lessor. The defendants argued, furthermore, that the provision did not require that the person who wrongfully entered the property be the owner, landlord, or lessor of the property; therefore, it was irrelevant that Goodwin did not own the property that he wrongfully entered. Alternatively, the defendants stated that the “by or on behalf of its owner, landlord, or lessor” provision was ambiguous and to be construed to provide Goodwin with coverage.

The U.S. District Court, in this matter, stated that, while at least one other court had found that the modification “by or on behalf of its owner, landlord, or lessor” was ambiguous (see Blackhawk-Central City Sanitation Dist. V. American Guarantee and Liability Ins. Co., 856 F. Supp. 584 [1994]), this court was persuaded that the modification clearly referred to the person committing the wrongful entry and not the person who occupied the room, dwelling, or premises. The court also stated that the key to determining the meaning of “wrongful entry into . . . a room, dwelling or premises that a person occupies by or on behalf of its owner, landlord, or lessor” lied in the word “its”. This court went on to explain that the word “its” modified the words “room, dwelling, or premises”. Thus, the word “its” did not modify the word “person”. Unlike a room, dwelling, or premises, the court went on to explain, a person obviously cannot have an owner. Accordingly, the provision unambiguously required that the wrongful entry be committed by the owner, landlord, or lessor of the room, dwelling, or premises. Since Henderson, the court said, was the owner of the land upon which Goodwin trespassed, Goodwin could not be indemnified for damages under his personal injury coverage.

Disputes Involving Personal Insurance

Court rulings have also favored coverage for individuals based on personal insurance. One such case where a homeowner was able to obtain coverage is Allstate Property and Casualty Company v. Gregory Strand, Case No. C11-1334 JLR (2012), decided by the U. S District Court, District of Washington. An individual (Hathaway) entered on the property of Strand without its approval and removed three Douglas fir trees and one Western Red Cedar tree. During the removal, at least one tree struck the Strand home causing significant damage. The removal of the trees also resulted in soil exposure increases, increased erosion, and other disruptive and/or destabilizing activities with no remedial measures on Hathaway's part. Prior to this tree cutting, Allstate (insurer) issued a homeowners policy to the Hathaways, along with a personal umbrella liability policy. Under the homeowners policy, the insurer agreed to pay damages which an insured person became legally obligated to pay because of bodily injury or property damage arising from an occurrence to which the policy applied, and was covered by this part of the policy.

The homeowners policy defined occurrence as: an accident, including continuous or repeated exposure to substantially the same general harmful conditions during the policy period, resulting in bodily injury or property damage. Under the personal umbrella policy (PUP), the term “occurrence” was defined as: an accident or a continuous exposure to conditions. An occurrence includes personal injury and property damage caused by an insured while trying to protect persons or property from injury or damage.

The exclusions section of the homeowners policy stated: We do not cover . . . property damage intended by, or which may reasonably be expected to result from the intentional . . . acts or omissions of, any insured person. This exclusion applies even if . . . (b) such. . . property damage is of a different kind or degree than intended or reasonably expected; or (c) such . . . property damage is sustained by a different person than intended or reasonably expected. The general exclusions section of the PUP section stated: This policy will not apply . . . to any intentionally harmful act or omission of an insured, even if . . . the personal injury or property damage resulting from the act or omission occurs to a person or property other than the person or property to whom the act or omission was intended or is of a different nature or magnitude than was intended. (Through an endorsement, this above exclusion was modified as follows: This policy will not apply . . . to any intentionally harmful act or omission of an insured, even if . . . the personal injury, property damage or bodily injury resulting from the act or omission occurs to a person or property other than the person or property to whom the act or omission was intended or is of a different nature or magnitude than was intended.)

When the Strands filed a lawsuit against the Hathaways who, in turn, sought defense and indemnity, their insurer asserted that it was not obligated, because the incidents did not qualify as occurrences and because of the policy's exclusion or intentional conduct. The Strands argued, however, that damage occasioned by Hathaway's conduct constituted an occurrence, because his conduct resulted in unintended losses and consequences that were included within the meaning of accident. In denying the insurer's motion for summary judgment against coverage, the district court first examined, in considerable depth, whether the incidents constituted an occurrence under the policies and then the exclusion for intentions acts.

In examining the meaning of occurrence, the court visited (1) a number of court decisions, (2) considered the subjective and objective state of the insured's mind, and (3) explored the evolution of the term “occurrence”. In doing so, the court concluded that the term “accident”, which was included within the term “occurrence”, encompassed some intentional acts that resulted in some unintended losses as a consequence. As it turned out, the evidence was determined to have been insufficient to demonstrate that Hathaway was aware of the implications of his acts.

Turning to the exclusion for intentional acts, the insurer relied on the insured's admission that he cut down the trees. The court stated, however, that the policy's exclusion for intentional action nonetheless covered intentional action under certain circumstances. To show that coverage was excluded, the court explained, the insurer would have had to demonstrate that the damage could not “reasonably be expected to result from the [insured's] intentional. . . acts.” However, the court added, the evidence relied on by the insurer did not demonstrate that there was no question of fact whether the damage to the Strand home or to the hillside could have been foreseen or expected. Viewing the evidence in light most favorable to the nonmoving party, the court stated that the insurer did not demonstrate that Hathaway expected, “with a high degree of certainty or probability” that the trees would damage the Strand home or the cutting of the trees would result in damage to the hillside.

The same conclusion, the court added, applied with respect to Hathaway's personal umbrella policy.

Another tree-cutting case involving a coverage issue under a homeowner's policy is Brodhead v. Scott, 497 So. 2d 497 (1986). This was a suit for damages resulting from the loss of trees along a 50 foot access road some 1,460 feet in length owned by Brodhead. Scott owned the land on either side of the tree-line strip. The dispute arose when Scott caused the uprooting and clearing of all trees from the 50 foot strip, as well as from the adjoining properties. As a result, Brodhead filed a suit against Scott and also named an insurer that had issued a homeowner's policy to Scott's mother with whom Scott had lived. The case was tried before a jury and verdict was rendered in favor of Brodhead. It was also found that the insurer had an obligation to provide coverage.

The insurer, however, argued on appeal before the Louisiana Court of Appeals that its policy excluded coverage for the following three reasons.

First, the homeowner's policy did not apply to business pursuits. The reason for this exclusion apparently was because Scott was renting the property prior to the clearing operation, and was clearing additional property to lease. While Scott was said to be clearing the land for a monetary return, the court was not of the opinion that Scott was engaged in the business of farming or of clearing. Scott was said not to have lived on the property and was not a farmer by occupation. The business pursuit exclusion therefore did not apply.

Second, the homeowner's policy did not apply to bodily injury or property damage arising out of any premises other than the “insured premises”, owned, rented or controlled by any insured. Since the property on which the property damage occurred was not an additional residence or business, the court was of the opinion that this exclusion did not apply.

Finally, the homeowner's policy did not apply to bodily injury or property damage which was either expected or intended from the viewpoint of the insured. It was true that Scott intended to destroy the trees, said the court. However, Scott stated that at the time he had the trees destroyed, he was under the impression that they belonged to him. The jury, in determining the value of the trees, found that there was no wanton or willful destruction and Brodhead was denied damages for mental anguish. The court stated, therefore, that it could not conclude, based on the evidence, that Scott committed an intentional tort sufficient to activate the exclusion in question. Insofar as the insurer was concerned, it was held obligated to pay the full amount of the damages and all costs.

Conclusion

It would appear that if insurers were to conduct investigations to learn the facts of why their insureds damaged or destroyed trees and other property belonging to others and found the facts to reflect pure accidents, it might be better to pay the damages than to litigate them. The reason is that the odds of insurers winning their arguments are not good, even when the trees are destroyed though intentional acts of others. It also stands to reason that the damage to work exclusion that is commonly relied on by insurers will not withstand the test because the trees cut by others are not in the cutter's possession or control and certainly not their work for which they have been hired.

As mentioned, a great deal will hinge on the facts. This means that some insurers may find themselves on the winning side of denying coverage for intentional cutting of trees belonging to others, but insurers would appear to be underdogs in most disputes.