The Ninth Circuit agreed with a jury that the insurer breached the farm insurance policy and the duty of good faith and fair dealing in denying a claim for, among other things, theft of cattle. Chatelain v. Country Mut. Ins. Co., 2019 U.S. App. LEXIS 34530 (9th Cir. Nov. 20, 2019).
The Chatelain's sought coverage from Country Mutual for property damage, stolen cattle and missing equipment after evicting the Brauns from their farm. The district court held that the policy's conversion exclusion was ambiguous. Under Oregon law, conversion could include anything from the outright, blatant kind of theft to the most innocent conversion. Therefore, if Country Mutual intended to limit coverage based on differences between conversion and the statutory definition for theft, it could have drafted an exclusion so stating. But the policy left "conversion" entirely undefined.
The district court also denied Country Mutual's motion for judgment as a matter of law after finding that the Chatelains were entitled to damages for lost milk production based on the poilcy's coverage of "loss caused by . . . theft." Under Oregon law, where a peril specifically insured against set other causes in motion which, in an unbroken sequence and connection between the act and final loss, produced the result for which recovery was sought, the insured peril was the proximate cause of the entire loss.
Nor was Country Mutual entitled to a new trial on the vandalism claim because the Chatelains presented sufficient evidence that the Brauns willfully or maliciously damages the Chatelains' property through extensive damage to the main farm house and other structures.
