Would A Homeowners Insurance Policy Provide A Defense To This Lawsuit?

I loved this story about the lottery winners in Oregon who said they were going to use the money to help people fight drug addiction.  Instead, according to the story, they allegedly "held four months of parties with public sex, fights and signs of drug dealing," prompting the city of Portland to file a complaint charging them with being a public nuisance. Here is another story on the matter, from the local newspaper.  (Warning — you may encounter a registration process that is short and painless but nonetheless annoying). I notice that the lede of this version of the story does not say they were going to use the money to fight drug addiction, but rather that they "talked of helping young people with addictions to drugs and alcohol." Hmmmm. There are at least three ways of reading that phrase, only one of which means to help folks get rid of addictions.

This story intrigued me because it made me wonder what would happen if the residents of the house tender the lawsuit to their homeowners insurer.  I don’t know if the lawsuit seeks more than injunctive relief, I’m guessing probably not, because a municipality is the plaintiff.  I also don’t know if only the residents were sued or also the property, but I doubt that makes any difference in the analysis. Usually, and this has come up a lot in lawsuits against gun companies and gun stores, a suit that seeks only injunctive relief does not give rise to an insurer’s duty to defend because injunctive relief is not "damages" as defined by the policy.  The duty to defend arises whenever any allegation in the complaint, whether true or not, could under any scenario be covered under the policy.  At the very beginning of a liability policy, it says the insurer is obligated to pay for covered damages.  However, "damages" in the legal sense almost always means money, and does not include other relief like injunctions.

I would also add that most liability policies predicate coverage not only on the existence of damages, but state that the damages must be on account of bodily injury or property damage, the latter of which is usually defined to mean physical injury to tangible property. Again, because of who the plaintiff is and the type of claim, I doubt either one is alleged.  So, with no damages, no bodily injury and no property damage, there’s a pretty good possibility the insurer would give the skunk eye to a tender of defense. However, if anything is left of those lottery winnings — and that may be a big if considering all the alleged goings-on in that house — they should be able to afford their own lawyer to defend them and wage a coverage fight with the insurance company. 

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