## Facts

- Bresee Homes, Inc., an Oregon homebuilder, built a custom home for homeowners.
- The homeowners sued Bresee alleging defective construction (including flashing and exterior stucco) that allowed water intrusion and caused property damage requiring repairs.
- Bresee tendered defense to its commercial general liability insurer, Farmers Insurance Exchange.
- Farmers denied defense and coverage, relying on policy language concerning the “products-completed operations hazard,” arguing damage occurring after completion and transfer was not covered.
- Bresee sued Farmers for breach of contract and declaratory relief seeking determinations that Farmers owed duties to defend and indemnify in the homeowners’ suit.
- The trial court granted summary judgment to Farmers on both defense and indemnity; the Oregon Court of Appeals affirmed.
- The Oregon Supreme Court granted review.

## Issues

1. Whether, under Oregon’s complaint-and-policy (“four corners”) rule, the homeowners’ allegations triggered Farmers’ duty to defend Bresee under the CGL policy.
2. Whether the policy’s “products-completed operations hazard” language conclusively eliminated any potential for coverage where the complaint did not clearly allege when the property damage occurred.
3. Whether the summary-judgment record permitted a determination, as a matter of law, that Farmers owed (or did not owe) a duty to indemnify.

## Decision

- The Oregon Supreme Court reversed and remanded.
- Farmers owed a duty to defend because the complaint alleged “property damage” that could fall within the policy’s insuring agreement and Farmers did not show the claims were entirely outside coverage.
- The “products-completed operations hazard” provision did not operate as a categorical exclusion for all post-completion property damage.
- Neither party was entitled to summary judgment on indemnity because factual issues remained, including when the damage occurred relative to completion of the work.

## Legal Principles

- An insurer’s duty to defend in Oregon is determined by comparing the complaint’s allegations to the policy terms, without extrinsic evidence.
- The duty to defend is broader than the duty to indemnify and arises if the complaint, without amendment, could impose liability covered by the policy.
- If the complaint is silent or ambiguous on facts material to coverage, the potential for coverage is sufficient to trigger the duty to defend.
- The insurer bears the burden to avoid defending by showing the complaint’s allegations could not possibly result in covered liability (i.e., the claim is entirely excluded).
- Policy language defining hazards or coverage components (such as “products-completed operations hazard”) is not treated as a sweeping exclusion absent clear exclusionary wording; policies are read as a whole.
- The duty to indemnify turns on facts ultimately established, and summary judgment is improper where material facts relevant to coverage remain unresolved.

## Conclusion

The court held that Farmers had to defend Bresee because the homeowners’ complaint alleged potentially covered property damage and did not clearly place all damage outside coverage, but indemnity could not be resolved on summary judgment because key facts about the timing and circumstances of the damage remained undeveloped.


Bresee Homes, Inc. v. Farmers Ins. Exch., 353 Or. 112, 293 P.3d 1036 (Or. 2012)