No. 02-677

IN THE SUPREME COURT OF THE STATE OF MONTANA

2003 MT 79

FARMERS UNION MUTUAL INSURANCE COMPANY, 

Plaintiff and Respondent, 

v.

HOWARD HORTON, d/b/a Howard’s Apartments; and

LAUREL TRADER, individually and as Personal 

Representative of the Estate of Gary A. Trader; 

and GARDNER ASPHALT CORPORATION, 

Defendants and Appellants.

APPEAL FROM: District Court of the Fourth Judicial District, 

In and For the County of Missoula, Cause No. DV 2000-470,

Honorable Douglas G. Harkin, Presiding Judge

COUNSEL OF RECORD:

For Appellants:

David R. Paoli and Heather M. Latino, Paoli & Shea, P.C., 

Missoula, Montana 

For Respondent:

William J. Gregoire and Stephanie A. Hollar, Smith, Walsh, Clarke

and Gregoire, Great Falls, Montana 

 Submitted on Briefs: January 30, 2003

 Decided: April 10, 2003 

Filed:

__________________________________________

Clerk
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Justice W. William Leaphart delivered the Opinion of the Court.

¶1 Laurel Trader appeals from the July 17, 2002, Order and Memorandum of the Fourth

Judicial District Court, Missoula County, granting partial summary judgment to Farmers

Union Mutual Insurance. We affirm.

¶2 The following issue is raised on appeal:

¶3 (1) Whether the District Court erred when it concluded that the employerís liability

exclusion contained in Hortonís insurance policy precluded coverage for injuries to Hortonís

employee, Gary Trader, and the resulting claims brought by Traderís wife.

FACTUAL AND PROCEDURAL BACKGROUND

 ¶4 Gary Trader, an employee of Howard Horton and Gardner Asphalt, was killed in an

on-the-job accident. Gary was applying Trubond fibered aluminum liquid roof coating to

the roof of an apartment building owned by Horton when he slipped on the coating and fell

approximately forty feet onto a metal railing before hitting the ground. Garyís wife, Laurel,

sued Horton alleging the following: premises liability, wrongful death, negligence and/or

intentional malicious acts, negligent infliction of emotional distress, and intentional infliction

of emotional distress. According to Trader, Horton had failed to provide Gary with a safe

place to work or with proper safety equipment and training. Trader sought punitive damages

and damages for loss of consortium. 

¶5 Horton is insured by Farmers Union Mutual Insurance Company under a Comprehensive General Liability (CGL) policy. Horton requested that Farmers Union defend him in
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the action brought by Trader and indemnify him from Traderís claims pursuant to the CGL

policy. Farmers Union refused to indemnify Horton but agreed to finance his defense. 

¶6 In addition, Farmers Union brought its own action for declaratory judgment, seeking

a determination that Traderís claims were not covered by the CGL policy. Farmers Union,

Horton, and Trader filed cross motions for summary judgment. While the motions were

pending, this Court decided Maney v. Louisiana Pacific Corp., 2000 MT 366, ¶ 25, 303

Mont. 398, ¶ 25, 15 P.3d 962, ¶ 25, and held that claims for infliction of emotional distress

brought by an employeeís family were prohibited pursuant to the exclusive remedy

provisions of the workersí compensation laws. Farmers Union supplemented its briefs to

account for the Maney decision and argued that Traderís infliction of emotional distress

claims were barred pursuant to our holding. In response, Horton and Trader conceded that

there was no coverage for claims precluded by the exclusive remedy doctrine. Horton and

Trader further conceded that the ìintentional actî exclusion provision contained in the policy

precluded coverage for allegations of intentional misconduct and that punitive damages were

statutorily excluded from coverage. 

¶7 In light of these concessions, the issue to be resolved by the District Court was

whether coverage for Traderís remaining claims was precluded by the employerís liability

exclusion provision. According to Farmers Union, this provision, which excludes liability

for bodily injury to employees of the insured, operated to bar coverage for claims arising out

of Gary Traderís death. The exclusion provision states as follows:

This insurance does not apply to: 
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e. Employerís Liability. 

ìBodily injuryî to: 

(1) An ìemployeeî of the insured arising out of and in the course of: 

(a) Employment by the insured; or 

(b) Performing duties related to the conduct of the insuredís business; or

(2) The spouse, child, parent, brother or sister of that ìemployeeî as a

consequence of paragraph (1) above.

This exclusion applies:

(1) Whether the insured may be liable as an employer or in any other

capacity; and

(2) To any obligation to share damages with or repay someone else who must

pay damages because of the injury.

The policy defines the term ìemployeeî as including leased workers but not temporary

workers. A leased worker is defined by the policy as ìa person leased to [the employer] by

a labor leasing firm under an agreement between [the employer] and the labor leasing firm,

to perform duties related to the conduct of [the employerís] business.î

¶8 Trader argued that, pursuant to the ìemployeeî definition, the exclusion provision

operated to exclude from coverage only those injuries sustained by leased workers, and that

Gary was not a leased worker. Horton added that Traderís claims were covered by the CGL

policy because he reasonably expected that under the terms of the policy, Farmers Union

would provide indemnification for any employment related claims not precluded by the

exclusive remedy rule of the workersí compensation laws. 

¶9 The District Court granted Farmers Unionís motion in part and denied it in part,

concluding that because of the employerís liability exclusion provision of the CGL policy,

there was no coverage for Gary Traderís injuries. The court also concluded that Hortonís

reasonable expectations were contrary to the exclusion provision and could not be relied
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upon to avoid the effect of the provision. In addition, the court determined that material

issues of fact precluded summary judgment on the question of whether an intentional act

exclusion provision contained in the policy barred coverage.

STANDARD OF REVIEW

¶10 The standard of review of an appeal from summary judgment is de novo. This Court

will apply the same evaluation as the trial court under Rule 56, M.R.Civ.P. The moving

party must establish both the absence of a genuine issue of material fact and entitlement to

judgment as a matter of law. Gonzales v. Walchuk, 2002 MT 262, ¶ 9, 312 Mont. 240, ¶ 9,

59 P.3d 377, ¶ 9. Once the moving party has met its burden, the opposing party must, in

order to raise a genuine issue of material fact, present substantial evidence essential to one

or more elements of its case rather than mere conclusory or speculative statements.

Gonzales, ¶ 9. In addition, our standard of review of a question of law is whether the trial

courtís legal conclusions are correct. Gonzales, ¶ 9. 

DISCUSSION

¶11 Traderís appeal consists of a series of arguments designed to persuade this Court that

her claims are covered by the CGL policy notwithstanding the limiting effect of the policyís

exclusionary language. She makes the following assertions: (1) that the clear language of

the employerís liability exclusion provision operates to exclude from coverage only those

injuries sustained by a leased worker, and that since Gary was not a leased worker, the

exclusion does not bar coverage; (2) that Horton reasonably expected that Farmers Union

would defend him for employment related claims not precluded by the workersí compensa-
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tion exclusivity rule; and (3) that Hortonís conduct, which contributed to Garyís injury, does

not satisfy the definition of an intentional act for purposes of the intentional act exclusion

provision contained in the policy, and that the exclusion is, therefore, inapplicable.

¶12 Taking each of these arguments into account, we note that the pivotal issue is whether

the employerís liability exclusion of the CGL policy is clear and unambiguous, and whether

it operates to bar coverage for Traderís claims against Horton. For the reasons set forth

below, we conclude that the employerís liability exclusion precludes Traderís claims. We

further conclude that the resolution of this issue is dispositive and, therefore, decline to

address Traderís remaining arguments regarding the intentional act exclusion provision and

Hortonís reasonable expectations for coverage. 

¶13 The employerís liability exclusion, which Trader argues is inapplicable, excludes

from coverage bodily injury to employees. The policy provides that ì[t]his insurance does

not apply to: ëBodily Injuryí to . . . [a]n ëemployeeí of the insured . . . rising out of . . .

[e]mploy-ment by the insured . . . .î The policyís definition of an employee provides simply

that an ìëEmployeeí includes a ëleased workerí [but not] a ëtemporary workerí.î 

¶14 Trader interprets this language as meaning that the term ìemployeeî refers only to

leased workers. She cites general rules of construction for insurance policies and contends

that these rules, taken together, necessitate this strict interpretation. For example, she

observes that exclusions from coverage are generally construed narrowly because they are

contrary to the fundamental protective purpose of insurance policies. National Farmers

Union Property v. George, 1998 MT 205, ¶ 12, 290 Mont. 386, ¶ 12, 963 P.2d 1259, ¶ 12.
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She also notes that ì[i]f the language of a policy is clear and explicit, the policy must be

enforced as written.î George, ¶ 12. Applying these rules, and pursuant to the maxim,

expressio unius est exclusio alterius, Trader contends that by enumerating one class of

personsñleased workersñto be included within the definition of an employee, the CGL policy

necessarily excludes all other classes of persons usually included within that definition.

Trader concludes that Gary cannot be classified as an employee because he was not a leased

worker, and that the employerís liability exclusion provision does not apply. 

¶15 On this point, the District Court concluded that Traderís proposed interpretation of

the term ìemployeeî is too restrictive. The court, instead, adopted a ìusual and common

senseî definition of an employee as one employed by another or, more specifically, ìone

engaged in services for wages or salary by another.î According to the court, the reference

to leased workers in the CGL policyís ìemployeeî definition indicates only that leased

workers are included within the broader definition. Relying on Websterís Dictionary, Tenth

Edition, the court further noted that the usual and common sense meaning of the term

ìincludeî is to ìtake in or comprise as part of a whole.î Thus, according to the court, the

CGL policy identifies employees as those who are employed by another, including leased

workers. 

¶16 We agree with the District Court in its interpretation of the exclusion provision and,

specifically, the use and meaning of the term ìemployee.î In Wendell v. State Farm Mut.

Auto. Ins. Co., 1999 MT 17, ¶ 14, 293 Mont. 140, ¶ 14, 974 P.2d 623, ¶ 14, we stated that

ì[t]his Court is bound to interpret the terms of an insurance contract according to their usual,
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common-sense meaning as viewed from the perspective of a reasonable consumer of

insurance products.î Wendell was based, in part, on our holding in Stutzman v. Safeco Ins.

(1997), 284 Mont. 372, 376, 945 P.2d 32, 34. In that case, we discussed whether, for

purposes of enforcing an automobile insurance policy, the term ìrelativeî could have been

construed to include spouses even though spouses were not mentioned in the policyís

definition section. The policy defined relatives as ìa relative of the named insured who is

a resident of the same household.î Stutzman, 284 Mont. at 379, 945 P.2d at 36. Stuztman

argued that because the policy did not expressly provide that spouses are relatives, there

existed an ambiguity which should have been construed in her favor and against the insurer.

Stutzman, 284 Mont. at 379, 945 P.2d at 36. We disagreed, stating that ìthe term ërelative,í

construed in its ordinary sense and from the perspective of the average consumer of

insurance, clearly and unambiguously includes oneís spouse.î Stutzman, 284 Mont. at 380,

945 P.2d at 36. 

¶17 Stutzman and Wendell require a similar result in the present case with respect to the

issue of whether the term ìemployee,î as used in the employerís liability exclusion,

encompasses all those engaged in services for wages or salary by another, including leased

workers, or whether ìemployee,î as defined, is restricted to leased workers only. As the

District Court noted, upon reading the CGL policy, a reasonable insurance consumer of

average intelligence, but not trained in the law or insurance business, would understand that

the primary purpose of the policy is to insure for damages for bodily injury or property

damage. The same consumer would also understand the policy as excluding coverage for
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employer liability for bodily injuries sustained by employees while in the course of

employment. 

¶18 Thus, in accordance with our case law, and applying a common sense interpretation

of the term ìemployee,î we conclude that the average consumer of insurance, when reading

the employerís liability exclusion, would understand this term to refer to all those engaged

in the services for wages and salary by another. The fact that the policyís ìemployeeî

definition refers to leased workers suggests only that leased workers have been added to the

broader definition of the term. 

CONCLUSION

¶19 In summary, we hold that, for purposes of enforcing the Farmers Union policy, the

definition of an ìemployee,î if construed in its ordinary sense, clearly and unambiguously

includes those who engage in services for wages or salary by another, including leased

workers. We further conclude that because Gary Trader was an employee of Horton, the

employerís liability exclusion provision contained in the CGL policy bars coverage for

Garyís injuries. Laurel Trader has not presented substantial evidence that the employerís

liability exclusion does not apply and, thus, she has not satisfied her burden in opposing

summary judgment. Affirmed. 

/S/ W. WILLIAM LEAPHART

We concur:

/S/ JIM REGNIER
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/S/ PATRICIA COTTER

/S/ JIM RICE
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Chief Justice Karla Gray, specially concurring.

¶20 I join in the Court's opinion which effectively holds that, because coverage is

precluded via the clear and unambiguous "employee" exclusion, no other exclusion in the

policy need be addressed and the case is at an end. The Court is entirely correct.

¶21 I write separately only to clarify that this case, which addresses what appears to be

only a partial summary judgment, does not create an exception to our longstanding case law

concluding that a grant of partial summary judgment is interlocutory and not appealable.

See, e.g., Matter of Litigation Relating to Riot (1997), 283 Mont. 277, 280, 939 P.2d 1013,

1015-16; Kirchner v. Western Montana Mental Hlth. (1995), 272 Mont. 110, 113, 899 P.2d

1102, 1104. The usual result in a case which comes to this Court prematurely, such as a

partial summary judgment, is dismissal of the appeal for lack of jurisdiction, a matter which

we may raise sua sponte. See, e.g., Litigation Relating to Riot, 283 Mont. at 281, 939 P.2d

at 1016; In re Marriage of Grounds, 2000 MT 128, ¶ 10, 300 Mont. 1, ¶ 10, 2 P.3d 822, ¶

10. If this were in reality a partial summary judgment, I would--and I believe the Court

would--dismiss it for lack of jurisdiction.

¶22 Appearances notwithstanding, this case is not a partial summary judgment and,

therefore, is properly accepted on appeal. The District Court having concluded that coverage

is precluded under the "employee" exception in the policy and this Court having properly

affirmed on that basis, other disputed policy exceptions--in particular, one with regard to
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which the District Court determined genuine issues of fact remained which precluded

summary judgment--need not be addressed. 

/S/ KARLA M. GRAY