No. 92-203 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

STANLEY DUENSING and DAVID DUENSING, 

a general partnership, d/b/a 

THE PARROT CONFECTIONERY, 

Plaintiffs and Appellants, 

THE TRAVELER'S COMPANIES, 

a Connecticut corporation, 

Defendant, Respondent and Cross-Appellant. 

APPEAL FROM: District Court of the First Judicial District, 

In and for the County of Lewis and Clark, 

The Honorable Dorothy McCarter, Judge presiding. 

COUNSEL OF RECORD: 

For Appellants: 

W. ~illiam Leaphart, Leaphart; Leaphart Law Firm, 

Helena, Montana 

For Respondent: 

James R. Walsh, Robert J. Vermillion; Smith, Walsh, 

Clarke & Greqoire, Great - Falls, Montana 

submitted on Briefs: Auaust 13, 1992 * 

oecid&: March 29, 1993 
Justice Karla M. Gray delivered the Opinion of the Court. 

Stanley and David Duensing appeal from an order of the First 

Judicial District Court, Lewis and Clark County, granting summary 

judgment in favor of the Travelers Companies. On cross-appeal, the 

Travelers Companies asserts an alternative basis for the granting 

of summary judgment in its favor. We reverse and remand. 

We state the issues on appeal as follows: 

1) Did the District Court err in granting summary judgment in 

favor of the Travelers Companies based on the contamination 

exclusion contained in the insurance policy? 

2) If the District Court erred in granting summary judgment 

in favor of the Travelers Companies based on the contamination 

exclusion, can this Court nonetheless uphold the grant of summary 

judgment pursuant to the governmental action exclusion? 

3) Are the Duensings entitled to entry of summary judgment in 

their favor? 

The facts in this case are relatively straightforward. On 

August 28, 1990, Stanley and David Duensing (the Duensings) , a 

partnership doing business as the Parrot Confectionery (the 

Parrot), discovered that a worker had been exposed to Hepatitis A. 

The Duensings immediately informed the City-County and State Health 

Departments and their insurance agency, Burrington Insurance Agency 

(Burrington). The next morning, the Duensings, their attorney, 

their accountant, Will Selser and Larry Fenster of the Lewis and 

Clark City-County Health Department (the health department), and an 

agent from Burrington met to discuss the possible problems 

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associated with the hepatitis exposure. Later that same day, the 

Montana Department of Health and Environmental Sciences issued a 

"Notice of Embargo" to the Parrot, which prohibited the movement or 

sale of any of the Parrot's candy without permission. Although the 

Parrot's inventory had not been tested, the Duensings agreed to 

destroy voluntarily all existing inventory. 

On August 31, 1990, the Duensings destroyed the Parrot's 

entire inventory of candy and food. They subsequently submitted a 

claim on their business ownersr property insurance policy with 

Travelers for loss of contents and business interruption as a 

result of the destruction of the inventory. Travelers denied 

coverage, relying on the "contamination exclusionn and the 

"governmental action exclusion" contained in the policy. 

The Duensings then filed a declaratory action against 

Travelers for a determination of rights of the parties under the 

insurance contract, waiver and estoppel. Both parties moved for 

summary judgment based on the contamination and governmental action 

exclusions. After briefing and oral argument, the District Court 

granted summary judgment for Travelers based on the contamination 

exclusion; it did not address the governmental action exclusion. 

Did the District Court err in granting summary judgment in 

favor of Travelers based on the contamination exclusion contained 

in the insurance policy? 

Summary judgment is proper when there are no genuine issues of 

material fact and the moving party is entitled to judgment as a 

matter of law. Rule 56(c), M.R.Civ.P. Faced with cross motions 

for summary judgment on the same legal questions, with both parties 
asserting an absence of factual issues as to those questions, the 

District Court concluded that Travelers was entitled to summary 

judgment based on the contamination exclusion. 

The contamination exclusion relied on by the District Court 

reads : 

2. We will not pay for loss or damage caused by or 

resulting from any of the following: . . . 

d. . . . (7) The following causes of losses to personal 

property: . . . 

(d) Evaporation, loss of weight, contamination, exposure 

to light or change in flavor, color, texture or finish. 

[Emphasis added.] 

The District Court determined that the policy did not require 

scientific findings of contamination and that reasonable belief of 

such contamination destroyed the business value of the inventory 

and was sufficient to fall within the exclusion. The District 

Court also stated that the fact that the contamination was not 

confirmed through testing was not material for purposes of the 

insurance contract. The court concluded that, given the common 

sense, usual meaning of the language, the parties had intended to 

exclude coverage for loss of the Parrot's inventory, which was 

destroyed because of the high probability of contamination. Thus, 

the contamination exclusion of the policy precluded coverage. 

The Duensings contend that the District Court incorrectly 

concluded that the inventory was contaminated within the language 

of the contamination exclusion. They argue that the District Court 

erred by interpreting the contamination exclusion to exclude 

anything other than actual contamination. They further argue that, 
contrarytothe rule of construing exclusions in insurance policies 

strictly against the insurer, the District Court enlarged the 

contamination exclusion to include suspected contamination. 

The interpretation of an insurance contract is a question of 

law. Truck Ins. Exchange v. Waller (l992), 252 Mont. 328, 331, 828 

P.2d 1384, 1386. Therefore, we review whether the District Court 

correctly interpreted the policy in question. Steer, Inc. v. 

Department of Revenue (1990), 245 Mont. 470, 475, 803 P.2d 601, 

603. 

Well-established principles guide our interpretation of 

insurance contracts. The language of the insurance policy governs 

if it is clear and explicit. Waller, 252 Mont. at 331, 838 P.2d at 

1386. Furthermore, exclusions from coverage will be narrowly and 

strictly construed because they are contrary to the fundamental 

protective purpose of an insurance policy. Farmers Union Mut. 

Ins. Co. v. Oakland (1992), 251 Mont. 352, 356, 825 P.2d 554, 556. 

In this case, the contamination exclusion is unambiguous, 

clear and explicit: Travelers will not pay for loss or damage to 

personal property caused by or resulting from contamination. The 

exclusion from coverage requires two elements. First, there must 

be "contamination;" and second, the contamination must cause loss 

to personal property. Only if contamination exists does it become 

necessary to determine whether the contamination caused the loss to 

personal property. 

The District Court concluded that the high probability of 

contamination and the reasonable belief of contamination were 
sufficient to exclude coverage. In essence, these conclusions 

define "contamination'* to include suspected contamination. In 

interpreting insurance contracts, the words of the policy are to be 

understood in their usual meaning; common sense controls. James v. 

Prudential Ins. Co. (1957), 131 Mont. 473, 477, 312 P.2d 125, 127 

(citations omitted). 

In Hi-G, Inc. v. St. Paul Fire and Marine Ins. Co. (1st Cir. 

1968), 391 F.2d 924, 925, the First Circuit Court of Appeals 

defined contamination as the introduction of a foreign substance 

that injures the usefulness of the object. Similarly, the Fifth 

Circuit Court of Appeals defined contamination as a condition of 

impurity resulting from mixture or contact with a foreign 

substance, and stated that this definition is consistent with the 

common understanding of contamination. American Casualty Co. of 

Reading, Pennsylvania v. Myrick (5th Cir. 1962), 304 F.2d 179, 183. 

The Court of Appeals of Texas adopted the definition of 

contamination from Mvrick in Auten v. Employers Nat. Ins. Co. 

(Tex.App. l987), 722 S.W.2d 468, 469. In Auten, an exterminator 

sprayed a toxic pesticide inside of Auten's home, and expert 

testimony established that the toxin was deposited on surfaces 

throughout the home. After touching these surfaces, the members of 

the Auten family absorbed the pesticide through their skin and 

became ill. Auten, 722 S.W.2d at 469. As in Mvrick, the 

contamination involved the presence of a foreign substance, thus 

triggering the contamination exclusion. 

We adopt the rationale expressed in u, Mvrick and Auten, 
and conclude that contamination requires the actual presence of a 

foreign substance. We conclude, therefore, that the plain, 

ordinary meaning and understanding of "contaminationw is actual 

contamination, not suspected contamination. Absent proof of actual 

contamination, the contamination exclusion does not bar coverage 

for the Duensings' losses. 

Accordingly, we examine the record to determine whether it 

contains any proof of actual contamination. In this case, the 

candy was destroyed before it was tested, thereby preventing anyone 

from verifying whether it was actually contaminated by the 

hepatitis virus. Nonetheless, Travelers urges us to conclude that 

the candy was contaminated because the health department made a 

"finding" that the inventory was contaminated. The Duensings 

assert that the parties did not complete the necessary statutory 

steps to allow anyone to conclude that the inventory was actually 

contaminated. The parties base their respective arguments on 5 50- 

31-509, MCA, which reads in pertinent part: 

Detainer of adulterated or misbranded articles. (1) If an 

agent of the department finds or has probable cause to 

believe that any food, drug, device, or cosmetic is 

adulterated or so misbranded as to be dangerous or 

fraudulent within the meaning of this chapter, he shall 

affix to the article a tag or other appropriate marking 

giving notice that the article is or is suspected of 

being adulterated or misbranded and has been detained or 

embargoed and warning all persons not to remove or 

dispose of the article by sale or otherwise until 

permission for removal or disposal is given by the agent 

or the court. . . . The owner of an embargoed article or 

another authorized person and the department may enter 

into a disposal agreement providing for the disposal, 

reconditioning, or other disposition of the embargoed 

article. . . . 

(2) If an article detained or embargoed under 
subsection (1) is found by the agent to be adulterated or 

misbranded and a disposal agreement is not executed as 

provided in subsection (I), the agent shall petition the 

justice of peace, city judge, or district court . . . for 

an order for condemnation of the article. If the agent 

finds that an article so detained or embargoed is not 

adulterated or misbranded, he shall remove the tag or 

other marking. 

(3) If the court finds that a detained or embargoed 

article is adulterated or misbranded, the article shall, 

after entry of the decree, be destroyed . . . . 

Travelers notes that 5 50-31-509(2), MCA, requires the health 

department to make a "findingf1 of contamination before petitioning 

the court. On the basis of Larry Fenster's statement to the 

Duensings that he would petition the court for an order to destroy 

the inventory if they would not agree to destroy it voluntarily, 

Travelers argues that Fenster "found" the inventory to be 

contaminated. We disagree. 

Fensterts affidavit clearly shows that he had made no finding 

of contamination, but only a finding of probable cause. The 

affidavit of Larry Fenster reads: 

In my handwritten notes of August 30, 1990 . . . [I 

stated that] all of this product must be "considered 

contaminated." In making this statement, I was not 

implying that there was any factual or scientific finding 

of contamination. There had been no testing of the 

candy. This statement was merely my finding, on behalf 

of the Department, that, since a candy maker was 

diagnosed with jaundice, we had "probable cause to 

believe" the product was contaminated . . . . 

Similarly, Will Selser, another health department official, 

explained in his affidavit that: 

[a]s of the date of the Aug. 31, 1990, destruction of the 

candy, there had been no laboratory testing of the candy 

and thus there was no factual determination as to whether 

or not the candy was, in fact, contaminated. 
Furthermore, comparing these facts to the statutory procedure 

set forth in 5 50-31-509, MCA, does not support a conclusion that 

the health department had made a finding of contamination. 

Subsection (1) of 5 50-31-509, MCA, requires either a finding of 

adulteration probable cause to believe an article is adulterated 

before the health department can issue an embargo order. Under 

subsection (Z), if no disposal agreement is reached the agent 

finds that the object is adulterated, the agent can petition the 

court for an order of condemnation; subsection (2) also is clear 

that the agent could find at this post-embargo stage of the process 

that the article is not adulterated. Finally, under subsection 

(3), the embargoed object can be ordered to be destroyed only after 

a court finds that it is adulterated. Again, at this third stage 

of the process, the court could find that the object was not 

adulterated. 

Fensterls statement that he would petition the court if the 

parties did not reach a disposal agreement does not require us to 

conclude that the health department "found" that the inventory was 

contaminated. The parties here completed subsection (1) of the 

statutory procedure based on a "probable causeI1 determination and 

reached a disposal agreement. The parties did not need to proceed 

through subsections (2) and (3) of 5 50-31-509, MCA, to a finding 

of adulteration. 

Given the clear language of 5 50-31-509, MCA, and the 

affidavits of the health department officials, we conclude that no 

finding of contamination had been made. No other evidence was 
offered that the inventory actually was contaminated. We hold that 

the District Court erred as a matter of law in interpreting the 

contamination exclusion to preclude coverage in this case. 

If the District Court erred in granting summary judgment in 

favor of Travelers based on the contamination exclusion, can this 

Court nonetheless uphold the grant of summary judgment pursuant to 

the governmental action exclusion? 

On cross-appeal, Travelers asserts that the governmental 

action exclusion provides an alternative basis for summary judgment 

in its favor. We have affirmed the correct conclusion of a trial 

court even though that conclusion may have been arrived at for the 

wrong reason. See Wolfe v. Webb (1992), 251 Mont. 217, 234, 824 

P.2d 240, 250. We cannot do so in this case, however, because we 

conclude that the governmental action exclusion does not preclude 

coverage for the Duensingsl losses. 

The governmental action exclusion in the Duensingsl policy 

with Travelers excludes coverage for "loss or damage caused 

directly or indirectly by . . . [sleizure or destruction of 

property by order of governmental authority." Travelers argues 

that both the seizure and destruction clauses of the governmental 

action exclusion apply to the facts at hand. Specifically, 

Travelers argues that the seizure clause bars coverage because the 

embargo constituted a Mconstructive seizure," thus triggering the 

exclusion. Travelers also asserts, under the destruction clause, 

that the embargo order (as a governmental order) caused the 

destruction of the candy. We address each clause in turn. 

In support of its contention that the seizure clause bars 

coverage under these facts, Travelers argues that "constructive 

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seizure" via the embargo satisfies the exclusion. Webster's ~hird 

New International Dictionary defines seizure as the act of taking 

possession of persons or property by virtue of a warrant or by 

legal authority. 

Here, although the embargo restricted the movement of the 

inventory, the embargo order did not authorize governmental agents 

to take possession of the inventory; nor was possession taken. 

Therefore, no seizure occurred. As discussed above, the rule of 

strict construction of exclusions from insurance coverage prevents 

us from expanding the plain language of this exclusion to include 

constructive seizure. See Oakland, 251 Mont. at 356, 825 P.2d at 

556. We hold that the Duensings' losses are not excluded by the 

seizure clause of the governmental action exclusion. 

Travelers' reliance on the destruction clause of the 

governmental action exclusion also is misplaced. For this clause 

to apply, property must be destroyed by order of governmental 

authority, and such a destruction then must cause, directly or 

indirectly, the loss claimed by the insured. 

The embargo order only restricts the sale or movement of the 

property; it does not order or require the destruction of the 

property, nor could it do so under 5 50-31-509, MCA. An embargo 

pursuant to 5 50-31-509, MCA, merely serves as a means of 

preserving the status quo until further proceedings occur. Indeed, 

under 5 50-31-509(3), a governmental authority can only require the 

destruction of property after a court finds that the object is 

adulterated. Thus, it is clear that the inventory was not 
destroyed by order of governmental authority in this case. 

Travelers additionally notes that Will Selser, in describing 

the embargo order in his first affidavit, stated that the Duensings 

were required to destroy the inventory. According to Travelers, 

this demonstrates that the inventory was destroyed pursuant to 

governmental order. However, Will Selservs second affidavit 

controverts Travelersv argument. He stated: 

In my prior affidavit when I stated that the Duensings 

were "requiredvv to destroy the food, I merely meant that 

they were being told by me and my staff that if they did 

not voluntarily destroy the candy, the Department would 

take the next step and petition the Court for an order to 

destroy the candy. In fact, no such petition had been 

filed with the Court. The only governmental order in 

effect was the Order of Embarqo from the Montana 

Department of Health. The ~epartm'nt had no authority to 

"require" the Duensinqs to do anythinq beyond comply with 

the embarqo. [Emphasis added.] 

Absent a court order under subsection (3) of 5 50-31-509, MCA, 

the health department could not order the destruction of the 

inventory. No court order for the destruction of the Parrot's 

inventory was obtained. We hold, therefore, that the inventory was 

not destroyed by order of governmental authority and the 

destruction clause of the governmental action exclusion does not 

bar coverage in this case. 

Are the Duensings entitled to entry of summary judgment in 

their favor? 

Before the trial court, both parties moved for summary 

judgment as a matter of law on the question of insurance coverage 

under the contamination and governmental action exclusions of the 

Travelers' policy. The parties presented identical legal theories, 

albeit seeking opposite legal conclusions; both asserted that no 
genuine issues of material fact existed as to the legal theories 

propounded. Travelers now argues that factual questions remain 

"regarding the actions of the Health Department." 

The fact that both parties have moved for summary judgment 

does not establish, in and of itself, that no genuine issues of 

material fact exist. A party may assert that there is no remaining 

factual issue if his legal theory is accepted and still maintain 

that there is a genuine dispute as to material facts if his 

opponent's theory is adopted. Faith Lutheran Retirement Home v. 

Veis (1970), 156 Mont. 38, 47, 473 P.2d 503, 507. Conversely, if 

the parties presented identical legal theories to the trial court, 

while arguing that no issues of fact remain, neither party can then 

maintain on appeal that factual questions have surfaced on that 

very same issue. A trial court has no duty to anticipate such 

possible proof. a. 

In this case, Travelers has asserted for the first time on 

appeal that "factual questions remain regarding the actions of the 

Health Department. la We have stated many times that this Court will 

not hear on appeal an issue not presented to the trial court. 

Wyman v. DuBray Land Realty (1988), 231 Mont. 294, 299, 752 P.2d 

196, 200. In any event, Travelers cannot rely on speculative, 

fanciful or conclusory statements to raise a genuine issue of 

material fact, but must specify the precise facts which are 

disputed. Sprunk v. First Bank System (1992), 252 Mont. 463, 466, 

830 P.2d 103, 105. Travelers1 assertion is conclusory and 

speculative and does not identify any genuine factual issue in 
dispute. 

This Court has the power to reverse a district court's grant 

of summary judgment and direct it to enter summary judgment in 

favor of the other party only when it is clear that all of the 

facts bearing on the issues are before the court. Canal Ins. Co. 

v. Bunday (1991), 249 Mont. 100, 108, 813 P.2d 974, 979. Given 

the record before us and our determination that the contamination 

and governmental action exclusions do not preclude coverage for the 

Duensings' losses, we conclude that the Duensings are entitled to 

entry of summary judgment on the issues of coverage under the 

contamination and governmental action exclusions. 

We reverse and remand for entry of summary judgment consistent 

with this opinion.