Title: ANACONDA CO v GENERAL ACCIDENT FI

State: montana

Issuer: Montana Supreme Court

Document:

No. 7 9 - 1 I N THE SUPREME COURT OF THE STATE OF MONTANA 1 9 8 0 ANACONDA COMPANY, a D e l a w a r e C o r p . , P l a i n t i f f and A p p e l l a n t , -vs- GENERAL ACCIDENT F I R E & L I F E ASSURANCE CORP., -LTD, a B r i t i s h corp., and ARTHUR G. McKEE & CO., a D e l a w a r e C o r p . , D e f e n d a n t s and R e s p o n d e n t s . A p p e a l F r o m : D i s t r i c t C o u r t of the Second Judicial D i s t r i c t , In and for t h e C o u n t y of Silver Bow, t h e H o n o r a b l e J a m e s D. Freebourn, Judge presiding. C o u n s e l of R e c o r d : For A p p e l l a n t : C o r e t t e , S m i t h , & e m , P o h l m a n & A l l e n , B u t t e , '. Montana R.D. C o r e t - t e argued, B u t t e , M o n t a n a G r e g o r y C. ~ m - k argued, B u t t e , M o n t a n a For R e s p o n d e n t : P o o r e , R o t h , R o b i s c h o n & R o b i n s o n , B u t t e , M o n t a n a J a m e s H a r r i n g t o n argued, B u t t e , M o n t a n a S u b m i t t e d : May 28, 1 9 8 0 D e c i d e d : d G 1 3 t ( l ---& k t & : F i l e d : S g P 8 - 1980 M r . J u s t i c e Gene B. Daly d e l i v e r e d t h e Opinion of t h e Court. Appellants General Accident F i r e & L i f e Assurance Corporation (General Accident) and Arthur G. M c K e e & Company (McKee) appeal from t h e o r d e r and judgment of t h e S i l v e r Bow County D i s t r i c t Court g r a n t i n g respondent Anaconda Company's (Anaconda) motion f o r summary judgment. Anaconda cross- appeals from t h e D i s t r i c t C o u r t ' s amended judgment, e n t e r e d upon motion by McKee and General Accident which d e l e t e d recovery of a t t o r n e y f e e s of $3,561.89. On May 15, 1971, McKee and Anaconda e n t e r e d i n t o a c o n t r a c t t o expand t h e c a p a c i t y and i n s t a l l f a c i l i t i e s r e l a t i n g t o environmental c o n t r o l s a t Anaconda's smelter f a c i l i t i e s a t Anaconda, Montana. P a r t of t h e c o n t r a c t d e a l t w i t h insurance coverage and r e q u i r e d M c K e e o r any subcon- t r a c t o r s of M c K e e t o name Anaconda a s an a d d i t i o n a l i n s u r e d under t h e i r l i a b i l i t y p o l i c i e s , i n s u r i n g a g a i n s t r i s k s of any kind r e l a t i n g t o t h e c o n s t r u c t i o n a t t h e smelter f a c i - l i t i e s undertaken by M c K e e o r i t s s u b c o n t r a c t o r s pursuant t o t h e c o n t r a c t . M c K e e complied w i t h t h e c o n t r a c t by naming Anaconda a s a n a d d i t i o n a l insured under p o l i c i e s i s s u e d by General Accident. These p o l i c i e s provided coverage f o r p u b l i c , c o n t r a c t o r ' s and automobile l i a b i l i t y . Some of t h e sub- c o n t r a c t i n g work on t h e p r o j e c t was undertaken by Midland I n d u s t r i a l E l e c t r i c Company ( h e r e i n r e f e r r e d t o a s Midland), a wholly owned s u b s i d i a r y of M c K e e . I n accordance with t h e c o n t r a c t , Midland named Anaconda a s an a d d i t i o n a l i n s u r e d under a p o l i c y i s s u e d by General Accident, a l s o providing p u b l i c , c o n t r a c t o r ' s and automobile l i a b i l i t y coverage. James W. Horner, an employee of Midland, was i n j u r e d on November 18, 1975, while working a t t h e Anaconda Smelter. A t t h a t t i m e ò id land was i n s t a l l i n g pumps on o l d s l u r r y tanks i n a b u i l d i n g a t t h e Anaconda Smelter, commonly re- f e r r e d t o a s t h e "28' tank house. " Gerald Kitchen and Ron Marshall, Anaconda employees, were preparing t o p a i n t t h e c e i l i n g of t h e "28' tank house" a t t h e t i m e of t h e a c c i d e n t . They w e r e r i g g i n g a s c a f f o l d i n g near t h e c e i l i n g by l a y i n g 2" x 12" x 1 8 ' planking over 4" x 5" x 18' timbers which w e r e supported by e x i s t i n g t r u s s e s . The Anaconda employees l o s t c o n t r o l of one of t h e timbers and it f e l l some 30 f e e t t o t h e ground below. Horner, while working i n t h e course and scope of h i s employment f o r Midland, was s t r u c k by t h e f a l l i n g timber and was i n j u r e d . On January 19, 1977, Horner f i l e d a s u i t a g a i n s t Ana- conda i n S i l v e r Bow County a l l e g i n g t h e negligence of Ana- conda employees. By a letter of January 24, 1977, Anaconda made a formal demand of General Accident t o i n s u r e and defend Anaconda i n t h e a c t i o n brought a g a i n s t it by Horner. By a letter of A p r i l 8, 1977, General Accident r e j e c t e d Anaconda's demand on t h e grounds t h a t t h e i n c i d e n t d i d n o t f a l l w i t h i n t h e " d e s c r i p t i o n of o p e r a t i o n s covered" i n t h e p o l i c y . On A p r i l 20, 1977, Anaconda a g a i n requested t h a t General Accident i n s u r e and defend Anaconda i n Horner's s u i t , which General Accident again r e f u s e d t o do. Anaconda then h i r e d counsel t o defend a g a i n s t Horner's s u i t ; and subsequently, a n out-of-court s e t t l e m e n t of $125,000 was reached. Anaconda then f i l e d t h e i n s t a n t a c t i o n a g a i n s t M c K e e and General Accident seeking a d e c l a r a t i o n t h a t General Accident was o b l i g a t e d t o i n s u r e and defend Anaconda i n Horner's lawsuit. Anaconda moved f o r summary judgment and a hearing was held. The D i s t r i c t Court e n t e r e d an o r d e r adopting Anaconda's f i n d i n g s of f a c t and conclusions of l a w ; and judgment was enteredagainstMcKee and General Accident pursuant t o the D i s t r i c t C o u r t ' s granting of Anaconda's motion f o r summary judgment. Judgment was i n t h e amount of $125,000, representing t h e amount paid by Anaconda i n settlement with Horner, p l u s $5,843.23 i n a t t o r n e y f e e s expended by Anaconda i n defense of t h e s e t t l e d claim, and $3,561.89 i n a t t o r n e y f e e s ex- pended by Anaconda i n t h e i n s t a n t a c t i o n . McKee and General Accident f i l e d a motion t o amend t h e f i n d i n g s of f a c t , conclusions of law and judgment. The D i s t r i c t Court granted t h e motion t o amend, i n p a r t , by d e l e t i n g t h e award of a t t o r n e y f e e s of $3,561.89, previously awarded i n connection with t h e l i t i g a t i o n of t h e i n s t a n t case. This appeal by McKee and General Accident and Anaconda's cross-appeal followed. The i s s u e s on appeal a r e a s follows: 1. Whether t h e D i s t r i c t Court e r r e d i n granting Ana- conda's motion f o r summary judgment, f i n d i n g t h a t no genuine i s s u e of m a t e r i a l f a c t e x i s t e d , and e n t e r i n g judgment f o r Anaconda. 2. Whether t h e D i s t r i c t Court e r r e d i n denying Ana- conda a t t o r n e y f e e s incurred i n t h e prosecution of t h i s case. General Accident and McKee contend t h a t the ~ i s t r i c t Court e r r e d i n granting Anaconda's motion f o r summary judg- ment. They argue t h a t it was improper f o r t h e c o u r t t o g r a n t summary judgment because t h e r e remained unresolved questions of f a c t . They i n s i s t t h a t l i a b i l i t y of General Accident i n t h i s a c t i o n i s predicated on t h e question of whether o r n o t t h e Anaconda employees were working pursuant t o Contract No. 2081 a t t h e t i m e of t h e accident: a d i s - puted i s s u e . Anaconda contends, and t h e D i s t r i c t Court found, t h a t it does n o t m a t t e r whether t h e Anaconda employees w e r e working pursuant t o t h e c o n t r a c t a t t h e t i m e of t h e i n j u r y ; what m a t t e r s i s whether t h e i n j u r e d employee was working pursuant t o t h e c o n t r a c t . A review of t h e record i n d i c a t e s it has been admitted t h a t a t t h e t i m e of t h e a c c i d e n t t h e i n j u r e d workman was working w i t h i n t h e scope of t h e work t o be performed under C o n t r a c t N o . 2081. Rule 5 6 ( c ) , M.R.Civ.P., s t a t e s t h a t summary judgment s h a l l be rendered only i f : ". . . t h e pleadings, d e p o s i t i o n s , answers t o i n t e r r o g a t o r i e s , and admissions on f i l e . . . show t h a t t h e r e i s no genuine i s s u e a s t o any m a t e r i a l f a c t and t h a t t h e moving p a r t y i s e n t i t l e d t o a judgment a s a m a t t e r of law." The q u e s t i o n t o be decided on a motion f o r summary judgment i s whether t h e r e i s a genuine i s s u e of m a t e r i a l f a c t and n o t how t h a t i s s u e should be determined; t h e hear- i n g on t h e motion i s n o t a t r i a l . Fulton v. Clark (1975), 167 Mont. 399, 538 P.2d1371; M a t t e u c c i ' s Super Save Drug v . Hustad Corporation (1971), 158 Mont. 311, 491 P.2d 705. The p a r t y moving f o r summary judgment has t h e burden of showing t h e complete absence of any genuine i s s u e s a s t o a l l f a c t s which a r e deemed m a t e r i a l i n l i g h t of those substan- t i v e p r i n c i p l e s which e n t i t l e d him t o a judgment a s a m a t t e r of law. Harland v. Anderson (1976), 169 Mont. 447, 548 P.2d 613. I n Kober v. Stewart (1966), 148 Mont. 117, 121, 417 P.2d 476, t h i s Court c i t e d 6 Moore's Federal P r a c t i c e , " 'The c o u r t s hold t h e movant t o a s t r i c t stan- dard. To s a t i s f y h i s burden t h e movant must make a showing t h a t i s q u i t e c l e a r what t h e t r u t h is, and t h a t excludes any real doubt a s t o t h e e x i s t e n c e of any genuine i s s u e of ma- t e r i a l f a c t . " ' S i n c e it i s n o t t h e f u n c t i o n of t h e t r i a l c o u r t t o a d j u d i c a t e genuine f a c t u a l i s s u e s a t t h e hearing on t h e motion f o r summary judgment, i n r u l i n g on t h e motion a l l i n f e r e n c e s of f a c t from t h e proofs p r o f f e r e d a t t h e h e a r i n g must be drawn a g a i n s t t h e movant and i n f a v o r of t h e p a r t y opposing t h e motion. And t h e papers supporting movant's p o s i t i o n a r e c l o s e l y s c r u t i n i z e d , while t h e opposing papers a r e i n d u l g e n t l y t r e a t e d , i n determining whether t h e movant has s a t i s f i e d h i s burden.' 11 1 . . . I f t h e r e i s any doubt a s t o t h e pro- p r i e t y of a motion, c o u r t s should, without hesitancy, deny t h e same.'" Kober v. Stewart, 148 Mgnt. a t 122. The underlying d i s p u t e between t h e p a r t i e s t o t h i s appeal rests on a q u e s t i o n of focus. General Accident and M c K e e i n s i s t t h a t t o determine l i a b i l i t y one must focus on t h e a c t i o n s of t h e Anaconda employees who caused t h e a c c i - dent. Anaconda, on t h e o t h e r hand, argues t h a t t h e focus should be on t h e i n j u r e d workman. Both p a r t i e s base t h e i r arguments on varying i n t e r p r e - t a t i o n s of two p r o v i s i o n s i n Contract No. 2081: " A r t i c l e 10. Insurance. " ( d ) Contractor a g r e e s t o cause owner t o be made an a d d i t i o n a l named i n s u r e d under a l l of c o n t r a c t o r ' s l i a b i l i t y p o l i c i e s i n s u r i n g r i s k s of any kind re- l a t i n g t o t h e c o n s t r u c t i o n and t o a r r a n g e , i n terms approved i n advance by owner, t h a t such po- licies w i l l c o n s t i t u t e primary coverage i n t h e e v e n t of any claims a g a i n s t owner t h a t a r e i n - s u r a b l e under any of such p o l i c i e s . " " A r t i c l e 15. Subcontracts. " ( d ) Contractor s h a l l b r i n g t h e insurance r e q u i r e - ments of Paragraph 10 hereof t o t h e a t t e n t i o n of a l l persons i n v i t e d t o submit b i d s f o r s u b c o n t r a c t s , a t t h e t i m e of any such i n v i t a t i o n , and t o a l l persons who a r e p r o s p e c t i v e s u b c o n t r a c t o r s f o r sub- c o n t r a c t s w i t h r e s p e c t t o which t h e submission of b i d s i s n o t t o be i n v i t e d , a s e a r l y a s p r a c t i c a b l e i n t h e n e g o t i a t i o n s w i t h r e s p e c t t o such subcon- t r a c t s , and s h a l l a s s u r e t h a t such requirements a r e m e t by any s u c c e s s f u l s u b c o n t r a c t bidder." More s p e c i f i c a l l y , both p a r t i e s focus t h e i r arguments on the construction t o be given t o the language " r i s k s of any kind r e l a t i n g t o the construction" which i s contained i n the above quoted p o r t i o n s of Contract No. 2081. N o mention i s made by e i t h e r p a r t y of any provision i n t h e insurance p o l i c i e s themselves which would exclude coverage here. Further, a review of these p o l i c i e s d i d n o t bring any such exclusions t o t h e surface. I t appears, t h e r e f o r e , t h a t t h e r e s o l u t i o n of t h i s appeal i s contingent on t h e construction w e give t h e above quoted language. A s s t a t e d e a r l i e r , both p a r t i e s approach t h e problem from d i f f e r e n t f o c a l points. It appears, how- ever, t h a t the r e a l i s s u e facing us i s what type of r i s k s d i d the p a r t i e s intend t o cover under t h e insurance provi- s i o n s of Contract No. 2081. A s w e s t a t e d i n Glacier Campground v. Wild Rivers, Inc. (1978) - Mont. , 597 P.2d 689, 35 St.Rep. 1894, t h e i n t e n t i o n of p a r t i e s t o a c o n t r a c t i s t o be a s c e r t a i n e d , i f p o s s i b l e , s o l e l y from language used i n t h e instrument, and r e s o r t may be had t o e x t r i n s i c evidence only when t h e con- t r a c t , on i t s face, appears ambiguous o r uncertain. See a l s o seckions 28-3-303; 28-3-306 ( 2 ) , MCA. Being t h e s u b j e c t of t h i s appeal, t h e language " r i s k s of any kind r e l a t i n g t o construction" appears ambiguous o r uncertain. This Court has previously held t h a t summary judgment i s u s u a l l y inappropriate where t h e i n t e n t of t h e contracting p a r t i e s i s an important consideration. Fulton v. Clark (1975), 167 Mont. 399, 403, 538 P.2d 1371, 1373; Kober v. Stewart (1966), 148 Mont. 117, 122, 123, 417 P.2d 476, 479; 6 Moore's Federal P r a c t i c e 7156.17[41.-11. General Accident admits t h a t t h e c o n t r a c t o r ' s l i a b i l i t y insurance which named Anaconda as an a d d i t i o n a l insured w a s i s s u e d t o p r o t e c t persons from r i s k s c r e a t e d by t h e n e g l i - gence of t h e insured. This type of coverage has been ex- plained i n g e n e r a l t e r m s : "A c o n t r a c t of c o n t r a c t o r ' s l i a b i l i t y i n s u r - ance w i l l g e n e r a l l y r e q u i r e t h a t t h e harm be work-related o r otherwise s p e c i f y t h a t t h e r e be some c a u s a l r e l a t i o n s h i p between t h e n a t u r e of t h e c o n t r a c t o r ' s [ i n s u r e d ' s ] a c t i v i t y and t h e harm which i s s u s t a i n e d . " 1 1 Couch on Insurance, Sec. 44:338 ,(2d ed. 1963). There must be some r e l a t i o n s h i p between t h e r i s k c r e a t e d by t h e a l l e g e d insured t o r t f e a s o r s , t h e Anaconda employees, and t h e harm sustained. I n determining t h a t r e l a t i o n s h i p it i s necessary t o look a t t h e employment c o n t r a c t which c r e a t e d t h e r i s k and t h e work t o be done pursuant thereunder. Were w e t o focus merely on t h e a c t i v i t i e s of t h e i n j u r e d workman and n o t t h e a c t i v i t i e s of t h e named i n s u r e d s , w e would render a p p l i c a t i o n of Contract No. 2081 o v e r l y broad and make General Accident t h e i n s u r e r of a l l Anaconda a c t i v i t i e s a t t h e Smelter t h a t r e s u l t e d i n i n j u r i e s t o anyone working pursuant t o t h e c o n t r a c t , r e g a r d l e s s of c o n t r o l and b e n e f i t . This Court w i l l p l a c e no such burden on anyone. I n t h e record t h e r e i s controverted evidence a s t o whe- t h e r t h e work being performed by t h e Anaconda employees a t t h e t i m e of t h e a c c i d e n t was undertaken pursuant t o Contract No. 2081. W e hold t h i s i s a genuine i s s u e of m a t e r i a l f a c t . The i s s u e of whether t h e D i s t r i c t Court e r r e d i n deny- i n g Anaconda a t t o r n e y f e e s incurred i n t h e prosecution of t h i s case i s n o t r i p e f o r review a t t h i s t i m e . P l a i n t i f f s have n o t m e t t h e i r burden of e s t a b l i s h i n g t h e absence of any i s s u e of m a t e r i a l f a c t . The summary judgment i s vacated and set a s i d e . The cause i s remanded t o t h e D i s t r i c t Court f o r t r i a l . We concur: Mr. Justice John C. Sheehy, joined by Mr. Chief Justice Frank I . Haswell, dissent: The purpose of a motion for summary judgment under Rule 56, is to eliminate unnecessary trial, delay, and expense. Silloway v. Jorgenson (1965), 146 Mont. 307, 406 P.2d 167. Under a motion for summary judgment, the formal issues presented by the pleadings are not controlling and the court must con- sider the depositions, answers to interrogatories, admissions on file, oral te,stimony, and exhibits presented to determine who should prevail on the motion. Hager v . Tandy (1965), 146 Mont. 531, 410 P.2d 447. When the facts established under the motion for summary judgment are undisputed, and under those undisputed facts the plaintiff is not entitled to prevail on any legal theory, this Court on review should affirm the grant of summary judgment to the plaintiff. The salient undisputed facts that should decide this appeal are these: 1. General Accident and Fire & Life Assurance Corporation Ltd., issued its liability policy, including comprehensive general liability, in which policy Arthur G. McKee & Company is the named insured, and the Anaconda Company by endorsement is an additional insured. 2. McKee provided the insurance policy to Anaconda by reason of a contract with Anaconda that recited: "Contractor [McKee] agrees to cause Owner [Anaconda] to be made an additional named insured under all of - - Contractor's liability policies insuring risks -- of any kind relating -- to the construction and to arrange, in terms approved in advance by Owner, that such policies wiil constitute p r i m a ; y coverage in the event of any claims against Owner that are insurable under any of such policies." (Emphasis added.) 3. The insurance policy defines an "insured" as any person or organization qualifying as an insured under the policy, and further provides as to several insureds under the same policy: ". . . The insurance afforded applies separately to each insured against whom claim is made or suit -- is brought, except with respect to the limits of the company's [the insurance company] liability." (Emphasis added. ) 4. At the time of his injury, McKee's employee was on the Anaconda premises pursuant to work in progress under contract no. 2081, the contract between McKee as contractor and Anaconda as owner. 5. Anaconda's employees were negligent in dropping the planking that caused the injury to McKee's employee. In determining the liability of General Accident, if any, to Anaconda here, we look to the terms of the policy. An insurance policy, like any other contract, must be given that interpretation which is reasonable and which is consonant with the manifest object and intent of the parties. National Farmers Union Property and Casualty Company v. Colbrese (9th Cir. 1966), 368 F.2d 405; cert.den. 386 U.S. 991, 87 S.Ct. G /\,b 18 L.Ed. 2d 336. The general rules of contract law apply to an insurance policy. Hildebrandt v. Washington National Insurance Company (1979) , - Mont. - , 593 P.2d 37, 36 St.Rep. 628, (life insurance); Universal Underwriters Insurance Company v . State Farm Mutual Auto Insurance Company (1975), 166 Mont. 128, 531 P.2d 668, (garage liability policy). Under McKee's agreement with Anaconda, McKee agreed to make Anaconda an additional named insured in McKee's policies "insuring risks of any kind relating to the construction" which would constitute "primary coverage" in the event of a claim against Anaconda. If this policy had been purchased by Anaconda in its own right, there is no doubt that the injury to McKee's employee would be a risk that was insurable for Anaconda under the policy. It makes no difference that here the insurance contract was purchased by McKee and that Anaconda is named as an additional insured. By reason of the sev- erability of the interests clause which we have quoted above, in fact, here Anaconda and McKee are two separate insureds under the same policy, the only limitation being the limits of liability of General Accident under its policy. Each of the two entities, McKee and Anaconda, are separately insured under all the terms of the policy. As an example of the effect of the severability clause, see Caribou Four Corners, Inc. v . Truck Insurance Exchange (10th Cir. 1971), 443 F.2d 796. See also, Indemnity Insurance Company of North America v. Pacific Clay Products Company (1970), 13 3d Cal.App.4304, 91 Cal.Rptr. 52; Liberty Mutual Insurance Company v. Truck Insurance Exchange (Ore. 1966), 420 P.2d 66 (contribution allowed). Thus, the policy issued by General Accident comes within the provisions of contract no. 2081 between McKee and Anaconda that the policy provided by McKee will constitute "primary coverage in the event of any claims against [Anaconda] that are insurable under any of such policies." The majority opinion makes it "overly broad" that General Accident should be the insurer of all Anaconda activities at the Smelter that result in an injury to anyone working pursuant to the contract, regardless of control and benefit. That state- ment overlooks the clause of contract no. 2081 that Anaconda would be an additional named insured with respect to "risks of any kind relating to the construction". The endorsement which makes Anaconda an additional insured under the general liability policy is as follows: ". . . that the Anaconda Company, Anaconda, Montana, is an additional insured under this policy in accordance with provisions of contract no. 2081 with Arthur G. McKee and Company and dated May 15, 1971." McKee's employee was not an interloper on Anaconda's premises at the time of the injury. He was there in further- ance of contract no. 2081. The risk that he might be injured by Anaconda's employees was within the "risks of any kind relating to the construction" for which McKee agreed to provide insurance to Anaconda. There is no reason to return this case to the District Court under the guise of seeking the "intent" of the parties with respect to the insurance here provided. Where the language of the insurance policy admits of only one meaning, there is no basis for the interpretation of policy coverage under the guise of ambiguity. Universal Underwriters Insurance Company v. State Farm Mutual Auto Insurance Company (1975), 166 Mont. 128, 531 P.2d 668. Since the injury to McKee's employee is plainly within the coverage extended to Anaconda by General Accident under this policy of insurance, the District Court was correct in awarding judgment to Anaconda for the amount required to settle the claim of McKee's employee, plus the cost of defense that Anaconda incurred in handling the claim against it by McKee's employee. The District Court in this case should be affirmed. I concur with the foregoing dissent. Chief Justice