In ZRZ Realty Co. v. Beneficial Fire, et al. (Or. Ct. App., Oct. 1, 2008), the Oregon Court of Appeals ruled on appeals brought by insureds, ZRZ Realty, Zidell Marine, and others (“Zidell”) and Lloyds of London (Lloyds”) regarding trial court rulings reached in 2002 and 2003.  The appeal concerned a wide range of issues including burden of proof, the definition of occurrence, availability of attorney fees, and allocation.  The Court’s primary holding was that since the insured had the burden of proving coverage, the insured had the burden of proving that the property damage was caused by an “unexpected and unintended” event when that language is used in the definition of occurrence. Oregon law had been clear that the burden was on the insured to prove coverage. Prior cases, however, seemed to not distinguish the unexpected and unintended requirement in the definition of occurrence with the exclusion for expected or intended injury.  The Court of Appeals clarified that the insured bears the burden of proving that the event was unexpected and unintended.  Since the trial court has placed the burden of proof on Lloyds, the Court remanded for a new trial.


In remanding for a new trial, the Court of Appeals also commented on several other issues, including that the definition of “fixed and moveable things” in a protection and indemnity policy does not include soil and river sediment.  The Court declined, however, to comment on allocation.  On cross-appeal, Zidell argued that the court applied the wrong allocation method based on Oregon statute and the Court’s decision in Cascade Corp. v. American Home Ins. Co., 206 Or. App. 1 (2006). The Court of Appeals declined to address the argument, waiting to see if it returned after remand. The Court of Appeals also reversed the trial court’s decision that led to the award of declaratory judgment attorney fees to Zidell.