Case Title: Twite Family Partnership v Unitrin

Citation: 2008 MT 310

Docket Number: ec0cf3ba-7020-4256-831e-a346f5c0422c

State: montana

Court: Montana Supreme Court

Date: 2008-09-09T00:00:00Z

Document:
FILED
‘Septombar 9 2008,
DA 07-0612
IN THE SUPREME COURT OF THE STATE OF MONTANA,
2008 MT 310

 

LLOYD A. TWITE FAMILY PARTNERSHIP, LLOYD
A. TWITE, individually, SCOTT TWITE, dbva SCOTT

‘TWITE CONSTRUCTION, and C. & L, TRUST, EF IL ED

Petitioners and! Appellants,

v. SEP 9 2008
UNITRIN MULTI LINE INSURANCE, and Ed Smith
‘SECURITY NATIONAL INSURANCE CO,, cuancoy THe spnene count

Defendants and Appellees.

 

APPEAL FROM: District Court of the Fourth Judicial District,
In and For the County of Missoula, Cause No. DV 03-62,
Honorable Edward P. McLean, Presiding Judge
COUNSEL OF RECORD:
For Appellants:
James A. Manley; Manley Law Firm; Polson, Montana

Quentin M. Rhoades; Sullivan, Tabsracei & Rhoades, P.C.
Missoula, Montana

For Appellees:

Gary L. Graham, Randall J. Colbert; Garlington, Lohn & Robinson:
Missoula, Montana

 

Submitted on Briefs: July 2, 2008
Decided: September 9, 2008,
Filed:
Justice W, William Leaphart delivered the Opi

 

mn of the Court,
{1 The Lloyd A. Twite Family Partnership, Lloyd A. Twite, Scott Twite, dbya Scott
‘Twite Construction, and C. & L. Trust (collectively, “the Twites”), appeal the order from
the Fourth Judicial District Court granting summary judgment in favor of Unitrin
Multiline Insurance and Security National Insurance (“Security National”). We affirm.
BACKGROUND
{2 The Twites operate a construction company which builds housing complexes. The
‘Twites held a commercial package insurance policy with Security National that included
the Commercial General Liability (*CGL”) policy at issue here. Under the CGL policy,
Security National had a duty to defend the Twites against lawsuits alleging “bodily
injury” that resulted from a covered “occurrence.” Both terms are specifically defined in
the policy and discussed in more detail below.
{8 Montana Fair Housing, Inc. (*MFH”) and its Executive Direction Robert Liston
(“Liston”) filed a complaint in federal court against the Twites, alleging several counts of
negligence, as well as violations of the federal Fair Housing Act (“FHA”) and the
Montana Human Rights Act (*MHRA"). ‘The complaint was brought on behalf of MFH

1nd Liston, and on behalf of MFH’s staff, members, and constituents who are disabled or

 

anti

  

have family members with disabilities (collectively, "), The Plaintiffs alleged

that the design and construction of several housing complexes designed and built by the

 

‘Twites failed to comply with state and federal requirements, and thus denied equal use

and access to persons with disabilities. The complaint charged the Twites with

 

intentionally violating Plaintiffs’ fair housing rights and engaging in a pattern of
discrimination against those with disabilities in the design, construction, operation, and
‘management of these housing complexes.

$4 The Twites tendered the claim to Security National for defense. Security Nati

 

refused to defend or indemnify, explaining that it did not believe the Plaintiffs’ complaint

alleged any property damage, bodily injury, or occurrence covered by the policy. During

 

discovery, the Twites sought a more specific description of the Plaintiffs" injuries. Liston
responded that he was seeking damages for “compensable emotional harm based on the

‘emotional impact to him as a result of the denial of his rights to access the subject

 

property and the violation of his fundamental rights. ...” Liston also refused to admit

that he did not suffer “personal injury.” The Twites forwarded this information to

 

Security National, arguing that Liston’s claim for emotional damages fell within the
definition of “bodily injury” under Montana law. Again, Security National refused to
defend or indemnity.

YS The Twites subsequently filed this suit against Security National, alleging
statutory and common law breach of contract and breach of statutory duties. Security
National moved for summary judgment, arguing that as a matter of law, no duty to
defend existed because no bodily injury or property damage was alleged on the face of
the complaint. In response, the Twites filed a motion for partial summary judgment on
the breach of contract issue, which the District Court denied. The District Court granted
Security National’s summary judgment motion, and found that none of the allegations
made in the Plaintiffs’ complaint were covered under the policy and thus, Security

National had no duty to defend. The Twites appeal this order.
STANDARD OF REVIEW
16 We review de novo a district court’s decision to grant summary judgment, using

the crit

 

a set forth in M. R. Civ. P. $6. Hogenson Const. of North Dakota v. Montana
‘State Fund, 2007 MT 267, § 11, 339 Mont. 389, § 11, 170 P.34 471, 4) 11. We review a

dis

 

jet court’s conclusions of law to determine whether they are correct. Hogenson,
qn.

DISCUSSION
{7 An insurer has a duty to defend its insured against complaints that allege “facts
Which represent a risk covered by the terms of [the] insurance policy.” Blair v. Mid-
Continent Cas. Co., 2007 MT 208, 4 15, 339 Mont. 8, 4 15, 167 P.3d 888, 4 15, To

determine whether Security N:

 

al had a duty to defend the Twites, we look first to the
coverage afforded by the policy, and next, to the facts alleged by MFH"s complaint, to
determine whether the alleged facts fall within the policy's coverage.
‘A. Coverage Under the Policy
{8 The scope of an insurer's duty to defend its insured is determined by the language
of the insurance policy. Grimsrud v. Hagel, 2005 MT 194, §| 34, 328 Mont. 142, $34,
119 P34 47, § 34 (citation omitted). If the facts alleged in the complaint do not come
Within the policy’s terms, then there is no duty to defend. Grimsrud, 434. The Twites’
CGL policy provides:
We {Security National] will pay those sums that the insured becomes
legally obligated to pay as damages because of “bodily injury” or “property

damage” to which this insurance applies. We will have the right and duty
to defend the insured against any “suit” seeking those damages.
  

‘The policy defines “bodily injury” as “bodily injury, sickness or disease sustained by a
person, including death resulting from any of these at any time,”

‘This policy only covers bodily injury that: 1) occurs during the policy period, and
2) “is caused by an ‘occurrence’ that takes place in the ‘coverage territory.”" An
“occurrence” is “an accident, including continuous ot repeated exposure to substantially

the same general harmful conditions.” In sum, under this CGL policy, Security National

 

 

has a duty to defend the Twites against complaints that allege bodi

 

njury arising from

 

an accident which occurred during the policy period and within the coverage tetitory
B, Facts Alleged in MFH’s Complaint

19 The Plaintiffs alleged the following injuries in their federal complaint:

 

[Plaintis] have been d
Missoula)

an increase in the accessible housing stock [in

 

PlaintffS have suffered injury to their ability to carry out the purpose of
Montana Fair Housing to find and to make available decent, affordable and
accessible rental housing for persons regardless of disability. ..

   

Plaintiff Bob Liston has suffered injury to his ability to perform his job. ...

Plaintiff MFH has} suffer{ed] economic losses in staff pay, in the inability
to undertake other efforts to end unlawful housing practices, in lost
‘opportunities to pursue funding, and in other diversion of resources...

 

‘The complaint sought declaratory and injunctive relief, as well as damages, t0
compensate for these alleged harms.

{10 The duty to defend is triggered when a complaint alleges facts that, if proven,
would result in coverage. Farmers Union Mut, Ins. Co. v. Staples, 2004 MT 108, 4 21,
321 Mont, 99, 4 21, 90 P.3d 381, 421, None of the injuries alleged by MFH on the face

‘of the complaint come within the policy definition of “bodily injury.” Each injury
 

alleged by MFH stems from the Twites’ design and construction of the housing

complexes, The Twites’ alleged failure to comply with the requirements of the FHA and

 

the MHRA is not an accident that meets the definition of “occurrence” under the CGL_

policy. Even if we assume that every allegation in MFH’s complaint were true, no fact,

 

alleged on the face of this complaint would bring it within the coverage of the CGL.
policy, In short, no duty to defend is triggered by the allegations on the face of this
complaint

{11 The Twites, however, argue that Security National should have looked beyond the
four comers of the complaint in assessing whether or not it had a duty to defend. The
‘Twites claim that during discovery, information was revealed which triggered Security

National's duty to defend. In response to the Twites’ requests for admission, the

Plaintiffs refused to admit that they had not suffered personal injury:

   

Please admit Plaintiffs did not suffer
al distress, because of these Defendants

 

Request for Admission No.
personal injury, including em
[sic] actions, errors or omissions.

 

MBH Answer: Admit to the extent the organization cannot sustain stich
‘personal injury but deny to the extent Montana Fair Housing [sic] sustained
diversion of resources and frustration of its organizational goals and

purposes.
Liston Answer: Deny.

 

 

‘Additionally, in response to the Twites’ interrogatories, Liston stated he was seeking,
damages for the “compensable emotional harm” he suffered, “based on the emotional

impact to him as a result ofthe denial of his rights to access the subject property and the
‘Violation of his fundamental rights in that regard.” Emotional injury, the Twit

 

1 form of bodily injury under Montana law in some circumstances.
12 We do not reach the question of whether Security National had a duty to look
beyond the four comers of the complaint in assessing its duty to defend, Even assuming
that a duty to defend could arise from facts uncovered during discovery, the facts alleged
above still do not come with the policy’s coverage.

413 Even if we assume that Liston did suffer “compensable emotional harm” and that

 

emotional harm could qualify as “bodily injury” under the policy's definition, the alleged
emotional harm did not arise from a covered “occurrence.” As discussed above, the
‘scope of the insurer's duty to defend is defined by the language of the policy. Grimsrud,

4134. The Twites’ policy only covers bodily injuries that arise from “an accident,

 

including continuous or repeated exposure to substantially the same general harmful

conditions.” The Plaintiffs allege that their injuries occurred as a result ofthe design and

 

construction of the housing units—not as a result of an accident. Liston’s alleged injury,

regardless of whether it constitutes “bodily injury” did not result from a covered

 

occurrence. Therefore, Liston’s claim fell outside the policy’s coverage.
{4 The Twites rely heavily on Staples for the proposition that the insurer has a duty to
defend the claim unless it has been “unequivocally demonstrated” that the claim falls
outside of the policy's coverage. In Staples, we held
Unless there exists an unequivocal demonstration that the claim against the
insured does not fall within the policy coverage, the insurer has a duty to

defend, In other words, if there is any dispute as to the facts relevant to
‘coverage, those factual disputes must be resolved in favor of coverage,
Staples, ¥ 24 (internal citation omitted). There is a crucial difference between Staples and
the instant case: in Staples, the facts allegedly giving rise to coverage were disputed.
Here, there is no factual dispute.
{15 Courts must liberally construe the allegations of a complaint in favor of finding an
obligation to defend. Staples, 22. Where a claim falls unequivocally outside the
policy's coverage, however, there is nothing for the court to construe, and no reason to
impose a duty to defend. See e.g. Hogenson, § 20 (the insured failed to file his claim
within the mandatory six month period, thus no coverage existed); Farmers Union Mut
Ins. Co. v. Rumph, 2007 MT 249, § 25, 339 Mont. 251, § 25, 170 P.3d 934, § 25 (facts
alleged in the complaint did not fall within the insured’s GCL policy; facts not alleged in
the complaint were disregarded); New Hampshire Ins. Group v. Strecker, 244 Mont. 478,
481, 798 P.2d 130, 131 (1990) (molestation was not a covered “occurrence”; Graber v.
State Farm, 244 Mont. 265, 270, 797 P.2d 215-17 (1990) (complaint alleging trademark
and copyright violations did not meet policy's definition of “occurrence”.
{16 In the instant case, the facts alleged in the complaint and during discovery were
unequivocally outside the policy’s coverage. MFH did not present any facts on the face
‘of the complaint or in discovery, which, if true, would result in coverage. Thus, the
District Court did not err in concluding that the allegations made in MFH's complaint
‘unequivocally fell outside the policy’s coverage.

CONCLUSION

17 The Twites have failed to demonstrate that a genuine issue of material fact existed

 

‘with respect to whether Security National had a duty to defend the Twites against the
MPH suit, Neither the facts alleged on the face of the complaint nor the facts disclosed
during discovery constitute a covered occurrence within the terms of the policy. The
District Court did not err in concluding that the complaint was unequivocally outside the
policy's coverage, and thus, as a matter of law, Security National had no duty to defend.

We affirm the District Court's grant of summary judgment in favor of Security National,

Lhe

Justice

 

Tustices