On appeal, Lockner maintained his position that the damages from the methamphetamine residue were caused by vandalism because the tenants had committed vandalism when they smoked methamphetamine in the rental property. Vandalism was not specifically excluded from coverage, therefore it was a covered loss. However, Lockner's policy did not include a definition for vandalism, so the court defined "vandalism" according to Webster's Third New Int'l Dictionary (unabridged ed 2002), which stated that vandalism was the "willful or malicious destruction or defacement of things of beauty or of public or private property." Locker argued that, based on the earlier case Hatley v. Truck Insurance Exchange, 494 P.2d 426 (Or. 1972), the definition of vandalism also included "acts that [were] reasonably certain or likely to result in damage." 

There were a few holes in this line of reasoning. First, as the court pointed out, Farmers had not referenced the vandalism exclusion in their denial. Even if they had done so, it would not be applicable because the building was not vacant at the time it was damaged. Second, the policy at issue in Hatley had included a vandalism coverage endorsement and concerned the application of exclusions to coverage under that endorsement. Lockner's policy was not so specific. Finally, there was no evidence showing that Lockner's tenant had intentionally damaged the rental property when smoking the methamphetamine. Nor did anything show the tenants knew or should have known smoking methamphetamine would damage the property. For these reasons, the damages were not caused by vandalism. 

Contaminants Exclusion

Lockner also cited Largent v. State Farm Fire & Casualty Co., 842 P.2d 445 (Or. App. 1992). In Largent, the Oregon Court of Appeals found that the contaminants exclusion in a policy did not preclude coverage for a landlord whose tenants ran a meth lab from the rented property. Lockner argued that the exclusion at issue in Largent was nearly identical to the one in his Farmers policy, so his claim should be covered.  

The judges were skeptical. The relevant exclusion in Largent had listed "contamination" on a list of excluded causes of loss that occurred over time, such as "wear and tear; marring; [and] deterioration." Given the gradual nature of the other excluded causes on the list, the court ruled that "contamination" also referred to damages occurring over time. The court ruled that "the exclusion did not apply to the methamphetamine operation because the exclusion barred coverage for loss due to damage that occurs over time, and not to sudden damage such as that which occurs from the production of methamphetamine." (emphasis added).

The exclusion in Lockner's policy, on the other hand, specifically excluded coverage for losses "consisting of, or caused directly or indirectly by: the release, discharge or dispersal of contaminants." (emphasis added). Lockner had not claimed this policy language was ambiguous, so there was no issue concerning reasonable interpretations of the exclusion. Furthermore, the parties had not disputed whether the residue from use of methamphetamine was a contaminant. 

Conclusion 

Since the physical damage from methamphetamine smoke did not constitute vandalism, and Lockner's policy unambiguously excluded physical damage from contaminants, the court found the trial judges had made the correct decision. Judgment in favor of Farmers was affirmed. 

Editor's Note: The key to determining whether damage was caused by vandalism is intent. As stated above, vandalism means "willful or malicious destruction or defacement of things of beauty or of public or private property." (emphasis added). In this case, the court said there was insufficient evidence to conclude that Lockner's tenant had willfully or maliciously caused damage by smoking methamphetamine. Neither was there evidence that the tenant knew or should have known that smoking methamphetamine indoors would cause property damage. Since Lockner could not show intent, his claim for damage by vandalism failed.

Read More: 

Vandalism as Cause of Loss 

Vandalism Claim and the Pollution Exclusion

Drugs in the Home