Koch v. Spann

*620 ARMSTRONG, J.,

dissenting.

I disagree first with the majority’s interpretation of the rental agreement. In my view, the agreement shows that the parties intended that plaintiff would bear the risk of loss for damage to the premises due to fire. Despite provisions assigning responsibility to defendant for damage caused by negligence, which the majority finds conclusive, other provisions of the agreement permit an inference that the parties intended that defendant would be responsible for damage to his own personal property only and not for damage to the premises. For example, the agreement provides that plaintiff is not responsible for defendant’s personal property, and advises defendant to purchase renter insurance to protect himself “in the event of loss.” Paragraph 13 of the agreement provides that plaintiff “will not be responsible in any way for loss/damage to articles or property belonging to the tenant/s” and in capital letters, provides that defendant “should maintain fire and theft insurance for his / her property. ” (Emphasis added.) Thus, the agreement emphasizes defendant’s responsibility to obtain insurance for his own property and twice disclaims plaintiffs responsibility for defendant’s personal property.

The agreement’s only reference to fire insurance is in a paragraph about defendant’s responsibility for his own belongings. The agreement nowhere suggests or imposes an obligation on defendant to obtain fire insurance for the premises. In light of the explicit provisions assigning to defendant responsibility for damage to his own property due to fire loss, I conclude that had the parties intended in this month-to-month tenancy for defendant also to bear responsibility for fire loss to the premises, the agreement would have listed that responsibility among the many explicit obligations placed on defendant and the disclaimers made by plaintiff.

Thus, viewing the agreement as a whole, I conclude that, although it places general responsibility on defendant for damages caused by his negligence, the specific provisions relating to fire loss place the risk of fire loss to the premises on plaintiff. Because the rental agreement contemplates that *621 plaintiff will be responsible for fire loss to the premises, I conclude that plaintiff has waived any claim against defendant for damages due to fire loss.

If the provisions of the agreement on which I rely do not unambiguously require the conclusion that the parties intended the risk of loss of the premise due to fire to fall on plaintiff, they at least give rise to an ambiguity as to the parties’ intentions. Ordinarily, an ambiguity in an agreement would preclude summary judgment. However, because there is no extrinsic evidence bearing on the parties’ intentions, no factual dispute exists. Accordingly, the meaning of the agreement remains a legal question of the court. See Zygar v. Johnson, 169 Or App 638, 643 , 10 P3d 326 (2000), rev den, 331 Or 584 (2001). Construing the agreement against plaintiff, as the drafter, I would reach the same conclusion that plaintiff has waived any claim against defendant for damages due to fire loss. North Pacific Ins. Co. v. Hamilton, 332 Or 20 , 22 P3d 739 (2000).

My conclusion is driven in part by what I believe is the fundamentally correct social policy underlying the decisions of those courts applying the holding of Sutton v. Jondahl, 532 P2d 478 (Okla Ct App 1975), or deciding independently of Sutton that, absent an express provision to the contrary, insurers who provide fire insurance to landlords should bear the risk of loss of fire due to the negligence of the tenant.

“This principle is derived from a recognition of a relational reality, namely, that both landlord and tenant have an insurable interest in the rented premises. * * * To suggest the fire insurance does not extend to the insurable interest of an occupying tenant is to ignore the realities of urban apartment and single-family dwelling renting. Prospective tenants ordinarily rely upon the owner of the dwelling to provide fire protection for the realty (as distinguished from personal property) absent an express agreement otherwise. Certainly it would not likely occur to a reasonably prudent tenant that the premises were without fire insurance protection or that if there was such protection it did not inure to his benefit and that he would need to take out another fire policy to protect himself from a loss during his occupancy. * * * Basic equity and fundamental justice upon *622 which the equitable doctrine of subrogation is established requires that when fire insurance is provided for a dwelling it protects the insurable interests of all joint owners including the possessory interests of a tenant absent an express agreement by the latter to the contrary. The company affording such coverage should not be allowed to shift a fire loss to an occupying tenant even if the latter negligently caused it.”

Sutton, 532 P2d at 482 . As the Utah Court of Appeals said in GNS Partnership v. Fullmer, 873 P2d 1157, 1162 (Utah Ct App 1994):

“The insurer knows the risk that it is undertaking when insuring a rental property. It insures the building for the use for which it is intended. While it may not have control over who the individual tenants are, it can increase its premiums to reflect increased risks presented by changing tenant use. Likewise, it can require the landlord to undertake any number of safety and structural precautions. We believe the landlord is the party in the best position to assume such responsibilities [.]”

In my view, the policy discussed in the cited cases is the correct one and requires the conclusion that, unless an agreement provides expressly that the tenant is to provide fire insurance for the premises, the risk of loss for fire damage to the premises should remain with the landlord and its property insurer, which accepted premiums to take on the risk of fire damage to the premises due to negligence. In this case, that policy requires an affirmance of the trial court’s ruling. Accordingly, I dissent.