DA 15-0429

IN THE SUPREME COURT OF THE STATE OF MONTANA

2016 MT 91

EMPLOYERS MUTUAL CASUALTY COMPANY,

 Plaintiff and Appellee,

FISHER BUILDERS, INC.; JEFFREY S. FISHER; 

ASHLI SLAWTER, d/b/a A. SLAWTER ARCHITECTURE; 

and LAKE COUNTY, a political subdivision of the 

State of Montana, and DOES 1-3, 

 Defendants,

JERRY L. SLACK and KAREN SLACK,

 Defendants and Appellants.

APPEAL FROM: District Court of the Eleventh Judicial District,

In and For the County of Flathead, Cause No. DV 11-1519(D)

Honorable David M. Ortley, Presiding Judge

COUNSEL OF RECORD:

For Appellants:

Bruce A. Fredrickson, Rocky Mountain Law Partners, PLLP; 

Kalispell, Montana

J. Devlan Geddes, Paul S. Burdett, Goetz, Baldwin & Geddes, P.C.; 

Bozeman, Montana

For Appellee:

David C. Berkoff, Berkoff Law Firm, P.C.; Missoula, Montana

Submitted on Briefs: March 2, 2016

 Decided: April 19, 2016

Filed:

__________________________________________

Clerk

April 19 2016

Case Number: DA 15-0429
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Justice Jim Rice delivered the Opinion of the Court. 

¶1 Jerry and Karen Slack (Slacks) appeal from an order entered in this declaratory 

action by the Eleventh Judicial District Court, Flathead County, granting summary 

judgment to Employers Mutual Casualty Company (EMC) and concluding that EMC had 

no duty to defend the insured because no coverage existed under the subject policy. We 

reverse and remand for further proceedings. 

¶2 We address the following two restated issues: 

1. Did the District Court err by concluding that the alleged acts and subsequent 

consequences did not constitute an “occurrence” covered by the policy?

2. Did the District Court err by granting summary judgment in favor of EMC?

PROCEDURAL AND FACTUAL BACKGROUND

¶3 The asserted facts in the underlying tort action that gave rise to the insurance 

coverage dispute herein are as follows: Since 1969, the Slacks have owned land on 

Flathead Lake, in Lake County, on which sat a vacation home of some age. In 2007, the 

Slacks hired contractor Jeffrey Fisher and his company, Fisher Builders, (Fisher) to build 

“a remodeled home located on the site of the small home” to serve as a year-round 

residence. Because the Slacks’ vacation home predated the adoption of Lake County’s 

zoning regulations, the proposed construction modifications were deemed by the County 

to be “grandfathered” in as a pre-regulation structure and, thus, an acceptable 

non-conforming property use. However, in order to maintain that status, the remodeled 
3

home had to incorporate the existing structure.1 Approval of the Slacks’ permit was also 

conditioned on the requirement that “[t]he existing deck shall remain unchanged as a 

result of the proposed project.” 

¶4 Fisher elevated the existing home structure on steel I-beams to pour a new 

foundation. With the existing structure resting on the beams, Fisher began to dismantle 

the walls of the vacation home and, in so doing, discovered an infestation of carpenter 

ants. He cut out the ant-infested planks, apparently intending to salvage what usable 

materials he could from the remaining structure. He subsequently burned the ant-infested 

boards.2 At some point during this work, the deck collapsed. 

¶5 A member of the Lake County Planning Department conducted a site visit and 

issued a cease and desist order, halting all work on the project. The Planning Department 

revoked the Slacks’ construction permit, citing multiple violations of the Lakeshore 

Protection Regulations and noting that the “existing structure on the site had been 

destroyed.” The Slacks appealed the revocation of their construction permit to the 

District Court, eventually reaching a settlement with Lake County that allowed them to 

construct a home, albeit a smaller one than had previously been approved.

 

1 The record before us is unclear about what exactly this requirement entailed. We address this 

matter more specifically in the below discussion of the District Court’s granting of EMC’s 

motion for summary judgment. 

2 To underscore its position that Fisher’s acts were intentional, EMC stresses the misdemeanor 

criminal charges brought against Fisher and his guilty plea to violations of the Lake County 

zoning regulations and Lakeshore Protection laws. However, we do not consider these 

subsequent proceedings to be dispositive under the proper inquiry, as set forth herein. 
4

¶6 The Slacks then initiated a negligence action against Fisher and his construction 

company, Fisher Builders (the underlying action). EMC had issued a commercial general 

liability insurance policy to Fisher. The policy provided: 

1. Insuring Agreement

a. We [EMC] will pay those sums that the insured [Fisher] 

becomes legally obligated to pay as damages because of 

“bodily injury” or “property damage” to which this 

insurance applies. . . . However, we will have no duty to 

defend the insured against any “suit” seeking damages for 

“bodily injury” or “property damage” to which this 

insurance does not apply. . . .

b. This insurance applies to “bodily injury” and “property 

damage” only if:

(1) The “bodily injury” or “property damage” 

is caused by an “occurrence” . . . . 

. . .

2. Exclusions

This insurance does not apply to:

a. Expected or Intended Injury

“Bodily injury” or “property damage” expected or intended from the 

standpoint of the Insured. 

. . .

SECTION V – DEFINITIONS

. . .

13. “Occurrence” means an accident, including continuous or 

repeated exposure to substantially the same general harmful 

conditions. 

¶7 Fisher gave notice of the lawsuit to EMC, who provided a defense in the 

underlying action under a reservation of rights while filing a declaratory action (the 

present case), alleging there was no coverage and it had no duty to defend or indemnify 
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any party in the underlying action. EMC and the Slacks both moved for summary 

judgment, with Fisher joining the Slacks’ motion. Fisher and Fisher Builders ultimately 

settled with the Slacks, consenting to entry of judgment in favor of the Slacks and 

assigning their rights under the EMC insurance policy to the Slacks. The District Court 

granted EMC’s motion for summary judgment, concluding that Fisher’s conduct was 

clearly intentional and did not fit within the meaning of “occurrence” under the policy, 

“regardless of whether Fisher intended the consequences or not.” 

¶8 Slacks appeal. 

STANDARD OF REVIEW

¶9 “The interpretation of an insurance policy presents a question of law, and we will 

review the District Court’s legal conclusion for correctness.” Landa v. Assurance Co., 

2013 MT 217, ¶ 13, 371 Mont. 202, 307 P.3d 284 (citation omitted). 

¶10 “The standard of review in appeals from summary judgment rulings is de novo.” 

Blair v. Mid-Continent Cas. Co., 2007 MT 208, ¶ 14, 339 Mont. 8, 167 P.3d 888 (citing 

Williams v. Union Fid. Life Ins. Co., 2005 MT 273, ¶ 18, 329 Mont. 158, 123 P.3d 213). 

“We apply the same M. R. Civ. P. 56 criteria as the district court, and summary judgment 

may be granted only ‘when the pleadings, depositions, answers to interrogatories, 

affidavits, and admissions on file show no genuine issues of material fact exist and when 

the moving party is entitled to judgment as a matter of law.’” Landa, ¶ 13 (quoting 

Fasch v. M.K. Weeden Constr., Inc., 2011 MT 258, ¶ 14, 362 Mont. 256, 262 P.3d 1117). 
6

DISCUSSION

¶11 1. Did the District Court err by concluding that the alleged acts and subsequent 

consequences did not constitute an “occurrence” covered by the policy?

¶12 The Slacks contend that the District Court erred by holding that, in the context of 

general liability insurance, the term “occurrence,” defined by the policy as “an accident,” 

categorically precludes coverage for any intentional conduct on the part of the insured. 

They argue the District Court erred by concluding that unintended consequences resulting 

from Fisher’s acts did not satisfy the definition of “occurrence.” EMC responds that this 

Court “has clearly, unambiguously, and consistently stated that in the context of 

[commercial general liability] insurance coverage where an insurer’s policy defines 

‘occurrence’ as an accident, damages stemming from the insured’s intentional acts do not 

constitute accidental ‘occurrences’ – even if the resulting consequences and related 

damages are unintended.” 

¶13 Slacks cite extensively to Northwestern Nat’l Cas. Co. v. Phalen, 182 Mont. 448, 

597 P.2d 720 (1979). There, Phalen, the insured, punched another man outside of a bar. 

Phalen’s victim ran away after Phalen’s punch, and Phalen gave chase. Before Phalen 

caught him, a third party tripped the victim. Phalen, 182 Mont. at 451, 597 P.2d at 722. 

The victim fell off the curb and hit the pavement, sustaining serious injuries. Phalen, 182 

Mont. at 452, 597 P.2d at 722. After the victim brought suit against Phalen and the 

intervening third party who tripped him, Phalen’s insurer claimed the incident did not 

constitute an “occurrence” under the policy and was not covered. Phalen, 182 Mont. at 

454, 597 P.2d at 723. The policy excluded from coverage “bodily injury or property 
7

damage, which is either expected or intended from the standpoint of the insured,” as does

the policy here. Phalen, 182 Mont. at 455, 597 P.2d at 724 (emphasis in original). The 

district court entered summary judgment in favor of the insurer, concluding there was no 

coverage. Phalen, 182 Mont. at 454, 597 P.2d at 724. This Court reversed, stating,

“[W]e would interpret the clause to mean that it precludes coverage for bodily injuries or 

damages, though not specifically intended by the insured, if the resulting harm was 

within the expectation or intention of the insured from his standpoint.” Phalen, 182 

Mont. at 459, 597 P.2d at 726 (emphasis added). We also determined that summary 

judgment was improper because a question of material fact remained regarding Phalen’s 

intention and expectation as to his victim’s injuries. Phalen, 182 Mont. at 460, 597 P.2d 

at 727.

¶14 We considered a similar coverage question in Miller Mut. Ins. Co. v. Strainer, 204 

Mont. 162, 663 P.2d 338 (1983). Strainer worked at the ASARCO smelter in East 

Helena, and played a practical joke on a coworker by removing a filter from the

coworker’s respirator and “squirt[ing] a puff of smoke into the respirator’s air chamber.” 

Strainer, 204 Mont. at 164, 663 P.2d at 339. While Strainer claimed he “did not know 

the smoke would cause any injury other than momentary discomfort[,]” the coworker 

“inhaled the smoke and allegedly was seriously injured.” Strainer, 204 Mont. at 164, 663 

P.2d at 339. The coworker brought suit against Strainer, whose insurer brought an action 

to declare there was no coverage under the policy, which excluded coverage for “bodily 

injury or property damage which is either expected or intended from the standpoint of the 

insured,” because Strainer had acted intentionally. Strainer, 204 Mont. at 166, 663 P.2d 
8

at 340. We disagreed with the insurer, citing to Phalen for the principle that “intentional 

acts are not excluded under an insurance policy unless the intentional act results in 

injuries which would be expected or intended. A person may act intentionally without 

intending or expecting the consequences of that act.” Strainer, 204 Mont. at 167, 663 

P.2d at 341 (emphasis added). 

¶15 Phalen and Strainer both involved clearly intentional acts, yet in both cases we 

determined that the acts may nonetheless have constituted an “occurrence”3 under the 

policies at issue because the subsequent consequences may not have been intended or 

expected by the actor. Our analysis, simply framed, was to consider 1) whether the act 

itself was intentional, and 2) if so, whether the consequence or resulting harm stemming 

from the act was intended or expected from the actor’s standpoint. See Phalen, 182 

Mont. at 457, 597 P.2d at 725. 

¶16 EMC relies heavily on Blair, calling it “the seminal case on this very issue.” Blair 

owned eight acres of land in a residential subdivision. He excavated a gravel pit on his 

property and the subdivision’s landowners association brought suit against him, seeking 

an injunction and restoration of the property. Blair, ¶¶ 4-5. Blair tendered defense of the 

action to his insurance company, asserting that, despite his intentional act to excavate 

gravel, “he did not intend to cause harm to neighboring property owners,” and thus his 

actions qualified as an “occurrence” under the policy. Blair, ¶ 17. In the declaratory 

judgment action, the district court granted summary judgment to Blair’s insurer, 

 

3

In the policy at issue in Phalen, “occurrence” was further defined as an “accident.” Phalen, 

182 Mont. at 455, 597 P.2d at 724. The Strainer policy’s definition of “occurrence” was not 

provided by the opinion. 
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concluding that “Blair’s admitted intentional gravel operation did not constitute an 

occurrence . . . .” Blair, ¶ 12. This Court affirmed, reasoning that because “Blair 

deliberately moved gravel on his property, which caused the alleged damages[,]” his 

actions were “no accident.” Blair, ¶ 19. In retrospect, while we reached the correct result 

in Blair, the analysis we employed in that case was incomplete. 

¶17 In Blair, we distinguished the Phalen line of authority on the ground that the 

policy at issue did not contain language requiring consideration of whether the damage 

was “expected or intended from the standpoint of the insured.” Blair, ¶ 20.

4 Therefore, 

we cited a similar definition of “accident” as a happening “that occurs without intention 

or design on the part of the insured.” Blair, ¶ 19 (citing Safeco Ins. Co. of Am. v. Liss, 

2000 MT 380, ¶ 36, 303 Mont. 519, 16 P.3d 399). Yet, we failed to fully analyze under 

this definition whether the damages allegedly caused by Blair were intended or designed, 

and simply acceded to Blair’s subjective assertion that “he did not intend to cause harm” 

to his neighbors by locating a gravel pit next to them. Blair, ¶ 17. We thus decided the 

case on the sheer force of a declaration that “[u]nequivocally, this was no accident.” 

Blair, ¶ 19. 

¶18 Instead of distinguishing the Phalen line of authority, we should have applied it by 

holding that Blair’s subjective assertion that “he did not intend” to cause the resulting 

 

4 EMC offers material outside of that portion of the record that was before us in Blair to 

demonstrate that the policy in Blair indeed contained the same “expected or intended” exclusion

that we stated did not exist, and upon which we distinguished the Phalen line of authority. Of 

course, we cannot consider that material now, but even if that assertion were true, such exclusion 

would have likewise provided the proper basis for determining that no coverage existed in Blair, 

based on the reasoning set forth herein.
10

harm to his neighbors was not dispositive, and that, pursuant to the second prong of our 

construct, Blair’s act of siting a gravel pit in a residential neighborhood had the objective 

intention or design of impacting the adjacent residential properties. Blair, ¶ 17. By so 

doing, we would have reached the same denial of coverage but decided the case 

consistently with the principles of our previous cases: an “accident” may include 

intentional acts, but coverage is excluded when the consequences of those acts are 

objectively intended or expected from the standpoint of the insured, as the consequences 

in Blair surely were. Phalen, 182 Mont. at 459, 597 P.2d at 726; Strainer, 204 Mont. at 

167, 663 P.2d at 341. Likewise, we could have employed this analysis in Landa, where 

we held there was no coverage under the same policy definition of “occurrence” for tort 

claims that were “wholly comprised of [the insured’s] intentional acts” of deceptive

statements and misrepresentation. Landa, ¶ 24. Instead of relying on Blair’s focus on 

whether the act was truly intentional, we would have reached the same denial of coverage 

under the second prong of our construct by holding that the insured’s deceitful statements 

about his business had the objective intention or design of misleading or defrauding the 

prospective buyer of the business. 

¶19 As noted above, the second prong of the analysis (whether the insured intended or 

expected the injury stemming from an intentional act) is an objective inquiry. In Blair,

Strainer, and many other cases, the insured made the subjective claim that he did not 

intend the harm that ensued from his intentional act. It would be a rare case indeed, as 

reflected in the absence of such cases in our precedent, where an insured would 

acknowledge that he intended to injure or cause harm to others. However, courts are well 
11

equipped to determine objectively what injuries could reasonably be expected to result 

from an intentional act. See N. H. Ins. Group v. Strecker, 244 Mont. 478, 798 P.2d 130 

(1990) (father who molested his minor daughter for over 10 years could expect the 

personal injuries that followed, including medical treatment and emotional distress, 

regardless of his protestations to the contrary); Am. States Ins. Co. v. Willoughby, 254 

Mont. 218, 836 P.2d 37 (1992) (spectator who punched, kicked, and bit security guards 

could expect physical injuries that resulted from assault; “[t]hese types of action are per 

se intentional and the intent to seriously injure is evident from the commission and type 

or nature of the act itself.”); Smith v. State Farm Ins. Cos., 264 Mont. 129, 870 P.2d 74 

(1992) (homeowner who punched teenager in the face could expect physical injuries that 

followed, including knocking out a tooth); Landa (business owner who made intentional 

misrepresentations to a prospective buyer could expect injuries from reliance on those 

misrepresentations). 

¶20 The District Court erred by reasoning that “the Montana Supreme Court has 

rejected” the Slacks’ argument that the term accident may “include intentional conduct 

with unintended results.” In fairness to the District Court, this Court has not been 

consistent in the analysis to be applied when considering this coverage issue. 

Nonetheless, holding otherwise could broadly eliminate coverage for many damage 

events that began with an initial act of intention but led to unexpected results. As we said 

many years ago, pointed out by the Slacks: “Strange and wonderful indeed are the 

circumstances in which persons are killed or injured by the intentional pulling of the 

trigger of an ‘unloaded’ gun, and it is clear that in such situations the discharge itself and 
12

the resulting injuries are accidental.” Terry v. Nat’l Farmers Union Life Ins. Co., 138 

Mont. 333, 339, 356 P.2d 975, 978 (1960) (citation omitted). With the clarification 

provided herein that the policy language defining “accidents” may include intentional 

acts if the damages were not objectively intended or expected by the insured, our 

inconsistent statements have been harmonized and the proper standard can be applied on 

remand. 

¶21 2. Did the District Court err when it granted summary judgment in favor of 

EMC? 

¶22 Slacks argue that the District Court erred by resolving issues of material fact when

granting EMC’s motion for summary judgment, and by resolving disputed facts in favor 

of EMC. Specifically, the Slacks claim that the District Court determined that Fisher left 

parts of the home and/or deck unsupported, causing the deck to collapse, that Fisher 

“destroyed” the original structure by dismantling the walls, and that Fisher failed to retain 

a sufficient portion of the original structure in order to maintain the non-conforming use 

status. 

¶23 EMC argues that the Slacks’ claim of error is without merit because “[t]he district 

court’s findings are based upon the substantial evidence and are not clearly erroneous.” 

However, we review a trial court’s grant of summary judgment de novo, applying the 

exact same standards that the district court applied. Landa, ¶ 13. At the summary 

judgment stage, “‘the court does not make findings of fact, weigh the evidence, choose 

one disputed fact over another, or assess the credibility of the witnesses.’” Johnston v. 
13

Centennial Log Homes & Furnishings, Inc., 2013 MT 179, ¶ 24, 370 Mont. 529, 305 

P.3d 781 (emphasis added) (citation omitted). 

¶24 The Slacks offer that “[t]he record establishes that Fisher did not intentionally tear 

down the entire home. He took apart some of the walls . . . .” Fisher testified that he and 

his crew “pulled the tarpaper loose from the house,” and “started taking those boards 

loose” in order to move a wall “a foot closer to the lake than the original house,” as 

contemplated by the building plan. Fisher testified that, after removing the boards, he 

and his crew discovered an infestation of carpenter ants and they sawed away the 

ant-infested boards. “So we cut all the ones that were heavily laden[] with carpenter ants 

into two-foot sections.” Fisher further testified that “the deck fell down because it 

wouldn’t support itself.” EMC asserts that “Fisher unilaterally and purposely tore down 

the Slacks’ entire home . . . ,” and that he admitted as much. However, in support of this 

statement, EMC cites to pages of Fisher’s deposition that are not included with the record 

before this Court (only excerpts were provided). We cannot determine with certainty 

from the record provided whether the District Court’s statement that Fisher “destroy[ed] 

the original structure . . . ” is supported by uncontested facts, but it appears doubtful.

¶25 The Slacks also contend the District Court erred by determining that Fisher’s 

actions violated the construction permit. They point to Fisher’s testimony about his

meeting with the Lake County Planning Department Planner, where Fisher stated: “We 

had the meeting with Sue Shannon when she gave us the permit. After the meeting I said 

. . . ‘How much of this old house would you like me to use in here’ . . . . She said, ‘I 

would like you to use 50 percent.’” They cite Fisher’s testimony expressing his 
14

understanding that the non-conforming use permit allowed him to dismantle the original 

structure and then reuse/reassemble the materials in the remodeled home. “And did we 

have a non-conforming structure? [The Lake County Planner] always said we needed to 

have a non-conforming structure in place. He didn’t say it had to be the old nonconforming structure, he said we had to have a non-conforming structure.” “[T]here is no 

possible way you can move a wall in two feet without taking it apart and reassembling 

it.” In response, EMC again cites to portions of Fisher’s testimony not provided to the 

Court by stating that “[Fisher] admitted at his deposition purposely tearing down the 

entire house even after being informed by Lake County that the original structure was 

required to be in place at all times.” 

¶26 Given this testimony from the record as provided, we conclude that issues of 

material fact precluded summary judgment, and that further proceedings will be 

necessary to resolve factual issues related to application of the coverage provisions of the 

policy.

¶27 Reversed and remanded for further proceedings consistent herewith. 

/S/ JIM RICE

We concur: 

/S/ MIKE McGRATH

/S/ BETH BAKER

/S/ MICHAEL E WHEAT

/S/ PATRICIA COTTER