Revisiting The Rules Of Policy Interpretation

In Yahoo Inc. v. National Union Fire Ins. Co. of Pittsburgh, -- Cal. Rptr. 3d --;2022 Cal. LEXIS 6887; 2022 WL 16985647 (Nov. 17, 2022), the California Supreme Court applied established rules of policy interpretation and found that the definition of ‘personal injury’ in Yahoo’s policy was ambiguous.

The Court also determined that the rule of contra proferentem applied to a manuscript endorsement negotiated by two sophisticated parties, because the disputed language was standard insurance language.

While the holding appears to be case specific, future questions may arise regarding the application of the rule of contra proferentem.

Yahoo was sued in a series of class action lawsuits alleging that its unsolicited text messaging violated the Telephone Consumer Protection Act of 1991 (TCPA). Yahoo tendered the claims to its commercial liability insurer arguing that it was entitled to coverage under Endorsement 1 to the policy -- a manuscript endorsement negotiated by the parties.

That endorsement provided coverage for ‘personal injury’ defined to include ‘oral or written publication, in any manner, of material that violates a person’s right of privacy.’ The insurer concluded that there was no coverage under the endorsement and declined to defend or indemnify Yahoo.