Hawaii’s Supreme Court has decided an insurance-coverage case that nicely complements a recent opinion by the Oregon Court of Appeals that I’d written about last week. In De Zafra v Farmers Ins. Co., the Oregon Court of Appeals interpreted coverage for damages “arising out of the ownership, maintenance or use” of an uninsured vehicle to include a woman’s gunshot wounds caused by an assailant shooting her from another car. Here is a link to my article about that case. Two days after the Oregon decision, the Hawaii Supreme Court interpreted “arising out of the ownership, maintenance or use” similarly broadly, honoring the bedrock rule of policy interpretation that a tie goes to the insured. In C. Brewer & Co. v. Marine Indem. Ins. Co. (March 27, 2015), the insured, C. Brewer & Co., was responsible for maintaining the Kaloko Dam in Kīlauea, Kaua’i, which gave way in March 2006, flooding downstream properties with over three million gallons of water.

Brewer’s Commercial General Liability (or “CGL”) policy with James River Insurance Company included a “designated premises” endorsement limiting coverage to damages “arising out of the ownership, maintenance or use of the premises shown in the above Schedule.” The schedule did not include the dam, so James River denied any duty to defend or indemnify Brewer, interpreting the endorsement to require that that damages occur “on designated premises.”

But the schedule did include the location of Brewer’s “corporate headquarters” where “negligent corporate decisions” were made about the maintenance of the dam. Brewer argued that this decision-making was enough to be the “use” of the property resulting the flooding. This argument won the day. The Brewer court held that this indirect causal nexus was enough to require coverage by James River, especially because Hawaiian law, like Oregon and most other jurisdictions, puts a finger on the scale in favor of insureds. The Brewer court reasoned that the insurer’s narrow interpretation of the endorsement would covertly transform a “general liability” policy into a “premises liability” policy.

Brewer and De Zafra signal a manifest judicial impatience with ambiguities in insurance policies. The path to victory for Brewer in the Hawaii Supreme Court, however, reveals the difficulty in predicting whether a court will see ambiguity or clarity in exactly the same words. In the history of Brewer, the trial court had ruled that the designated-premises endorsement clearly excluded coverage, the intermediate appellate court had held that the intent of the parties was unclear and would have to be decided on remand, and the Supreme Court held that there was coverage, as a matter of law, because the insured’s coverage-friendly interpretation was reasonable. Three sets of eyes; three different answers. Pity the lawyer, if you will, trying to answer the question from every client: “Will we win?