No. 79-1 INTHE SUPREME COURT OF THE STATE OF MONTANA 1980

ANACONDA COMPANY, 

### a Delaware Corp., Plaintiff 

### and Appellant,



### -vsGENERAL ACCIDENT FIRE & LIFE ASSURANCE CORP., -LTD, 

### a British

### corp., and ARTHUR G. McKEE & CO., 

### a Delaware Corp., Defendants

### and Respondents.

Appeal From: DistrictCourt

### of 

### the Second 

### Judicial District, 

### In and 

### for the County

### of Silver Bow, the Honorable James D. 

### Freebourn, Judge presiding.

Counsel of Record: For Appellant: Corette, Smith,&em, Pohlman & Allen, Butte, 

### '. Montana R.D. Coret-te

### argued, Butte, Montana Gregory C. ~m-k 

### argued, Butte, Montana For Respondent: Poore, Roth, Robischon & Robinson, Butte, Montana James Harrington 

### argued, Butte, Montana

Submitted: May 28, 1980 Decided :dG13t(l---& k t&:

Filed:

## SgP 8

# - 1980Mr. Justice Gene B. Daly delivered the Opinion of the Court. Appellants General Accident Fire & LifeAssurance Corporation (GeneralAccident) and Arthur G. McKee & Company (McKee) appeal from the order and judgment of the Silver Bow County DistrictCourt granting respondent Anaconda Company's (Anaconda) motion for summary judgment. Anaconda crossappeals from the DistrictCourt's amended judgment, entered upon motion by McKee and General Accident which deleted recovery of attorney fees of $3,561.89. On May 15, 1971, McKee and Anaconda entered into a contract to expand the capacity and install facilities relating toenvironmental controls atAnaconda's 

### smelter facilities atAnaconda, Montana. Part of the contract dealt with insurance coverage and required McKee or any subcontractors of McKee toname Anaconda asan additional insured under their liabilitypolicies, insuring againstrisks of any kind relating to the construction atthe 

### smelter facilities undertaken by McKee or its subcontractorspursuant to the contract. McKee complied with the contract by naming Anaconda as

an additional insured under policies issued by General Accident. These policies provided coverage for public, contractor's and automobile liability. Some of the subcontracting work on theprojectwas undertaken by Midland Industrial ElectricCompany (hereinreferred toasMidland),

a wholly owned subsidiary of McKee. In accordance with the contract, Midland named Anaconda asan additional insured under a policy issued by General Accident, also providing public, contractor's and automobile liability coverage. James W. Horner, an employee of Midland, was injured on November 18, 1975, while working attheAnaconda Smelter.Atthat 

### time

### ò id land was installingpumps on old slurry tanks ina building atthe Anaconda Smelter, commonly 

### referred to as the "28' tank house.

## " Gerald Kitchen and Ron Marshall, Anaconda employees, 

### were preparing topaint the ceiling of the "28' tank house" atthe 

### timeof the accident. They 

### were rigging a scaffolding near the ceiling by laying 2" 

### x 12" 

### x 18' planking over 4" x 5" 

### x 18' timbers which



### were supported by existing trusses. The Anaconda employees lost control of one of the timbers and it fell some 30 feet to the ground below. Horner, while working inthe course and scope of his employment forMidland, was struck by the falling timber and was injured. On January 19, 1977, Horner filed a suitagainstAnaconda inSilverBow County alleging the negligence of Anaconda employees. By a 

### letter of January 24, 1977, Anaconda made a formal demand of General Accident to insure and defend Anaconda inthe action brought against it by Horner. By a letter of April 8, 1977, General Accident rejected Anaconda's demand on the grounds that the incident did not fallwithin the "description of operations covered" inthe policy. On April 20, 1977, Anaconda again requested that General Accident insure and defend Anaconda inHorner's suit, which General Accident again refused to do. Anaconda then hired counsel todefend against Horner's suit; and subsequently, an out-of-court settlement of $125,000 was reached. Anaconda then filed the instantaction against McKee and General Accident seeking a declaration that General Accident was obligated to insure and defend Anaconda in Horner's lawsuit. Anaconda moved for summary judgment and a hearing was held. The DistrictCourt entered an orderadopting Anaconda's findings of fact and conclusions of 

### law; and judgment was enteredagainstMcKee and General Accident pursuant to the DistrictCourt's granting of Anaconda's motion for summary judgment. Judgment was inthe amount of $125,000, representing the amount paid by Anaconda in settlement with Horner, plus $5,843.23 in attorney fees expended by Anaconda indefense of the settled claim, and $3,561.89 inattorney fees expended by Anaconda inthe instant action. McKee and General Accident fileda motion to amend the findings of fact, conclusions of law and judgment. The DistrictCourt granted themotion to amend, inpart, by deleting the award of attorney fees of $3,561.89, previously awarded inconnection with the litigation of the instant case. This appeal by McKee and General Accident and Anaconda's cross-appeal followed. The issues on appeal are as follows: 1. Whether the DistrictCourt erred ingranting Anaconda's motion for summary judgment, finding that no genuine issue of material factexisted, and entering judgment for Anaconda. 2. Whether the DistrictCourt erred indenying Anaconda attorney fees incurred inthe prosecution of this

case.General Accident and McKee contend that the ~istrict Court erred ingranting Anaconda's motion for summary judgment. They argue that it was improper for the court to grant summary judgment because there remained unresolved questions of fact. They insist that liability of General Accident inthis action ispredicated on the question of whether or not the Anaconda employees were working pursuant toContractNo. 2081 atthe 

### timeof the accident: a disputed issue.Anaconda contends, and the DistrictCourt found, that it does notmatter whether the Anaconda employees 

### were working pursuant to the contract atthe 

### timeof the injury; what matters 

### iswhether the injured employee was working pursuant to the contract. A review of the record indicates it has been admitted thatatthe 

### timeof the accident the injured workman was working within the scope of the work to be performed under ContractNo. 2081. Rule 56(c),M.R.Civ.P., states that summary judgment shallbe rendered only if: 

# ".

. . the pleadings, depositions, answers to interrogatories, and admissions on file



# . .

# . show that there 

### is no genuine issue as to any material factand that themoving party is entitled toa judgment asa matter of law."

The question tobe decided on a motion for summary judgment 

### iswhether there 

### is a genuine issue of material factand not how thatissue should be determined; the hearing on the motion 

### is not a trial. Fulton v. Clark (1975), 167 Mont. 399, 538 P.2d1371; Matteucci's Super Save Drug v. Hustad Corporation (1971), 158Mont. 311, 491 P.2d 705. The party moving for summary judgment has the burden of showing the complete absence of any genuine issues as to all factswhich aredeemed material in lightof those substantiveprincipleswhich entitledhim to a judgment as a matter of law. Harland v. Anderson (1976), 169 Mont. 447, 548 P.2d 613. In Kober 

### v. Stewart (1966), 148Mont. 117, 121, 417 P.2d 476, this Court cited 6 Moore's Federal Practice,



### "'The courts hold themovant to a strictstandard. To satisfyhisburden the movant must make a showing that isquite clearwhat the truth 

### is, and that excludes any 

### real doubt as to the existence of any genuine issue of material fact."'Since it 

### isnot the function of the trial court toadjudicate genuine factual issues at the hearing on themotion for summary judgment, inruling on themotion allinferences of fact from theproofs proffered atthe hearing must be drawn against themovant and infavor of the party opposing the motion. And thepapers supporting movant's position are closely scrutinized, while the opposing papers are indulgently treated, indetermining whether the movant has satisfied his burden.'

11 1

# . .

# . If there 

### is any doubt as to thepropriety of a motion, courts should, without hesitancy, deny the same.'" Kober v. Stewart, 148Mgnt. at 122. The underlying dispute between the parties to this appeal 

### rests on a question of focus. General Accident and McKee insistthat todetermine liability one must focus on the actions of theAnaconda employees who caused the accident. Anaconda, on the other hand, argues that the focus should be on the injured workman. Both parties base their arguments on varying interpretations of two provisions inContract No. 2081: "Article 10. Insurance.



### "(d) Contractor agrees tocause owner tobe made an additional named insured under allof contractor's liabilitypolicies insuring risks of any kind 

### relating tothe construction and toarrange, in 

### terms approved inadvance by owner, that such policies 

### willconstituteprimary coverage inthe event of any claims against owner that areinsurable under any of such policies." "Article 15. Subcontracts.

"(d)Contractor shallbring the insurance requirements of Paragraph 10hereof to the attentionof allpersons invited to submit bids for subcontracts, atthe timeof any such invitation, and to all persons who areprospective subcontractors for subcontracts with respect towhich the submission of bids is not tobe invited, asearly aspracticable inthe negotiations with respect to such subcontracts, and shall assure that such requirements aremetby any successful subcontract bidder."More specifically, both parties focus their arguments on the construction to be given to the language "risks of any kind relating to the construction" which is contained in the above quoted portions of Contract No. 2081. No mention 

### is made by either party of any provision in the insurance policies themselves which would exclude coverage here. Further, a review of these policies did not bring any such exclusions to the surface. It appears, therefore, that the resolution of this appeal 

### is contingent on the construction 

### we give the above quoted language. As stated earlier, both parties approach the problem from different focal points. It appears, however, that the real issue facing us 

### iswhat type of risks did the parties intend tocover under the insurance provisions of Contract No. 2081. As

### we stated inGlacier Campground v. Wild Rivers, Inc. (1978) -Mont. 

## , 597 P.2d 689, 35 St.Rep. 1894, the intention of parties to a contract is to be ascertained, if possible, solely from language used in the instrument, and resort may be had to extrinsic evidence only when the contract, on 

### its face, appears ambiguous or uncertain. See alsoseckions28-3-303; 28-3-306 

### (2), MCA. Being the subject of this appeal, the language "risks of any kind relating to construction" appears ambiguous or uncertain. This Court has previously held that summary judgment 

### is usually inappropriate where the intent of the contracting parties is an important consideration. Fulton v. Clark (1975), 167 Mont. 399, 403, 538 P.2d 1371, 1373; Kober v. Stewart (1966), 148Mont. 117, 122, 123, 417 P.2d 476, 479; 6 Moore's Federal Practice 7156.17[41.-11. General Accident admits that the contractor's liabilityinsurance which named Anaconda 

### as an additional insured 

### was issued toprotect persons from risks created by the negligence of the insured. This type of coverage has been explained ingeneral 

### terms: "A contract of contractor's liability insurance 

### willgenerally require that the harm be work-related orotherwise specify that there be some causal relationship between the nature of the contractor's [insured's] activity and the harm which is sustained." 11 Couch on Insurance, Sec. 44:338 ,(2ded. 1963). There must be some relationship between the risk created by the alleged insured tortfeasors, the Anaconda employees, and the harm sustained. In determining that relationship it 

### isnecessary to look atthe employment contractwhich created the risk and the work tobe done pursuant thereunder. Were



### we to focus merely on the activities of the injured workman and not the activitiesof the named insureds, 

### we would render application of ContractNo. 2081 overly broad and make General Accident the insurer of allAnaconda activities atthe Smelter that resulted ininjuries to anyone working pursuant to the contract, regardless of control and benefit. This Court

### willplace no such burden on anyone. In the record there 

### is controverted evidence as towhether the work being performed by the Anaconda employees at the 

### timeof the accidentwas undertaken pursuant toContract No. 2081. Wehold this isa genuine issue of material fact. The issue of whether the DistrictCourt erred indenying Anaconda attorney fees incurred inthe prosecution of this case 

### is not ripe for review atthis 

### time. Plaintiffshave not

### mettheir burden of establishing the absence of any issue of material fact. The summary judgment isvacated and 

### set aside. The cause isremanded to the DistrictCourt for trial.

### 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. Sillowayv. Jorgenson (1965),146 Mont. 307, 406 P.2d 167. Under a motion for summary judgment, the formal issuespresented by the pleadings are not controlling and the courtmust consider 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 insurancepolicy to Anaconda by

reason of a contractwith 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 prima;y coverage in the event of any claims against Owner that are insurable under any of such policies." (Emphasisadded.) 3. 

### The insurancepolicy 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 againstwhom claim is made or suit 

### -- isbrought, exceptwith respect to the limits of the company's [the insurance company] liability."

(Emphasisadded.) 

### 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, toAnaconda here, we look to the terms of the policy. An insurance policy, like any other contract,must be given that interpretationwhich is reasonable and which is consonantwith 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

## /\,b18 L.Ed. 2d 336. The general rules of contract law apply to an insurancepolicy. 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 "primarycoverage" in the event of a claim againstAnaconda. If 

### this policy had been purchased by Anaconda in its

own right, there is no doubt that the injury to McKee's employeewould be a risk that was insurable forAnaconda under the policy. Itmakes no difference that here the insurance contractwas purchased by McKee and that Anaconda

### is named as an additional insured. By reason of the severability 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 (10thCir. 1971), 443 F.2d 796. See also, Indemnity InsuranceCompany of North America v. Pacific Clay Products Company (1970), 13 

### 3d Cal.App.4304, 91Cal.Rptr. 52; Liberty Mutual Insurance Company v. Truck InsuranceExchange (Ore. 1966), 420 P.2d 66

(contributionallowed). 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 insurableunder any of such policies." The majority opinionmakes 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 statement 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 accordancewith provisions of contract no. 2081 with Arthur G. McKee and Company and dated May 15, 1971."

### McKee's employee was not an interloper onAnaconda's premises at the time of the injury. He was there in furtherance of contract no. 2081. The risk that he might be injured by Anaconda's employees was within the "risksof 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 onemeaning, 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