The Invasion of the Right of Private Occupancy As a Covered Offense

Courts in the 1980s found this provision, and particularly its reference to invasion of the right of private occupancy, to offer very broad coverage. For instance, courts found that many offenses not originally contemplated by ISO or insurers fit the terms of the policy, including claims involving racial discrimination (see Gardner v. Romano, 688 F.Supp. 489 (E.D. Wis. 1988) (finding insurer had a duty to defend its insured apartment building owner against claims of racial discrimination where the phrase “other invasion of the right of private occupancy” was vague)); breach of the implied warranty of habitability (see Beltway Management Co v. Lexington-Landmark Ins. Co., 746 F.Supp. 1145 (D.D.C. 1990) (concluding that a claim for an implied breach of habitability was an “invasion of the right of private occupancy”)); and pollution claims (Edgerton v. General Casualty, 172 Wis.2d 518, 493 N.W.2d 768 (holding that pollution is “an invasion of the right of private occupancy”)).

In order to simplify CGL policies and expand the scope of coverage, in or about 1985, ISO introduced a new CGL form that, for the first time, incorporated “personal injury” and “advertising injury” coverages into a single coverage called Coverage B. Thus, insureds no longer needed to purchase separate broad-form endorsements. Under this new Coverage B form, however, insurers no longer included “other invasion of the right of private occupancy” in the definition of “personal injury.”

The deletion of this phrase was consequential, as reflected in the Minnesota Supreme Court case of Garvis v. Employers Mut. Cas. Co., 497 N.W.2d 254 (Minn. 1993). In Garvis, the court analyzed whether or not a telephone call could be considered “wrongful entry into a room that a person occupies” for the purposes of personal injury coverage. The court held that the answer to that question was “no.” In this case, which involved the 1985 policy form, the court noted the difference between “wrongful entry” and “invasion of the right of private occupancy,” highlighting that the policy language was intended to cover only invasions of real property.

Personal Injury Coverage for Invasion of the Right of Private Occupancy Today

The change in the form eliminating the phrase “or other invasion of the right of private occupancy” was short lived. In 1988, it made a comeback, although this time (and until the present) it is restricted to a “room, dwelling or premises that a person occupies by or on behalf of its owner, landlord or lessor.” In other words, although broadening the coverage available under the 1985 form, the new language reflected that insurers intended to cover only physical dispossessions, theoretically extinguishing exposure in claims for racial discrimination, pollution and breach of a covenant of habitability. The risk of coverage for pollution claims was finally eliminated in 1996, when ISO CGL policy forms were modified to include pollution exclusions from the “personal injury” coverage. This view has been adopted by most courts across the country. See, e.g., Freedman v. U.S. Liab. Ins. Co., 972 N.E.2d 1059, 1061-62 (Mass. App. 2012) (finding no coverage in the absence of an unjustified physical intrusion in or impediment to use property); Sterling Bldrs., Inc. v. United Nat'l Ins. Co., 79 Cal. App. 4th 105 (Cal. App. 2000) (coverage extends only to interference with property rights that includes physical occupation or trespass); STK Enterprises, Inc. v. Crusader Ins. Co., 171 Ore. App. 9 (2000) (offense must affect a possessory interest in property); see also City of Glendale v. Nat'l Union Fire Ins. Co., 2013 U.S. Dist. LEXIS 45468, *12-35 (D. Ariz. Mar. 28, 2013) (collecting cases nationwide and, despite finding language ambiguous, holding that ordinary meaning of offense requires allegations of encroachment or infringement of the right to use a property).

Nautilus: The Outlier

Although the vast majority of courts across the country have required a physical intrusion to trigger the “invasion of the right of private occupancy” offense, in the federal court case of Nautilus Ins. Co. v. BSA Ltd. P'ship, 602 F. Supp. 2d 641 (D. Md. 2009), the United States District Court of Maryland, acknowledging there was no Maryland state court decisional authority on point, concluded that Coverage B's use of the phrase “invasion of the right of private occupancy” was ambiguous as applied to the specific allegations of the underlying complaint filed in the matter of Feemster v. BSA Limited Partnership. Nautilus appears to be an outlier decision nationally in terms of its broad interpretation of the phrase “invasion of the right of private occupancy.” Indeed, Nautilus stretches the interpretation of the offense to include personal property. See Nautilus, 602 F. Supp. 2d 654, n. 6. Moreover, Nautilus' interpretation of the offense has never been cited approvingly for this proposition by any other court in the country.

Nautilus, therefore, failed to follow Maryland law, which holds that “wrongful eviction” requires actual physical ouster, interference and/or deprivation of a tenant's possession or occupation of the premises. BTR Hampstead, LLC v. Source Interlink Distrib., LLC, 194 Md. App. 538, 555-556, 5 A.3d 142, 152-153 (2010) (explaining that wrongful eviction “occurs when the person recovering the property had no right to dispossess the other party from the property.”)

But the underlying facts in Nautilus are so unique that they render the decision practically inapplicable absent identical circumstances. In Nautilus , the claims were premised on alleged violations of federal Section 8 housing regulations that sought to dispossess plaintiff tenants of their places of residence. The underlying complaint in the Nautilus case ' which is not cited in the opinion ' was characterized by the plaintiffs as follows:

This is an action seeking declaratory and injunctive relief, and damages to prevent the Plaintiffs ['] from losing their homes; enjoin the Defendant's interference with the Plaintiffs' right to remain in their units under terms substantially similar to those regulating their tenancies prior to October 1, 2004; enjoin the Defendant from refusing to accept the Plaintiffs' rental vouchers; and compensate the Plaintiffs for violations of their rights.

The complaint in the underlying action that gave rise to Nautilus turned entirely on intended dispossession. Indeed, the underlying plaintiffs in Nautilus alleged in their complaint that their landlord was refusing to accept enhanced payment vouchers, thus placing the plaintiffs in imminent danger of losing their residences. Their first and second counts for relief sought redress for violation of their federal statutory rights to remain in subsidized housing. Ultimately, the Nautilus court found that there was a potential for coverage because the claims against BSA, the landlord, sought relief for BSA's actions interfering directly with the underlying tenant/plaintiffs' ability to retain their possessory interest in their homes.

Thus, notwithstanding the Nautilus opinion's broad view of what constitutes an allegation of “invasion of the right of private occupancy,” the court still remained faithful to the notion that Coverage B requires an affirmative claim for relief relating to the plaintiffs' right to occupy the premises. In finding that the landlord's insurer had a duty to defend, the Nautilus court found that the underlying action “involve[d] a financial harm interfering with the tenants' right to remain on their property” and interfered with the tenants “ability to retain their established possessory interest in their homes.” In other words, even under Nautilus , there must be an actual attempt to affect a possessory interest ' occupancy ' to trigger the “wrongful eviction” offense in Coverage B of the policy.

Ilan Rosenberg is a Partner at Gordon & Rees, resident in the Philadelphia office. He focuses his practice on complex coverage, commercial litigation and international disputes involving Latin America. Mr. Rosenberg is also a court-recognized expert in the field of Mexican law.