No. 90-544 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1992 

TRUCK INSURANCE EXCHANGE, a reciprocal 

inter-insurance exchange, 

Plaintiff and Respondent, 

-vsTHOMAS G. WALLER and LINDA L. WALLER, 

Defendants and Appellants, , 

t; 

DONALD ENGELKE, CHARLES ENGELKE, and 

CHARLES AND DONALD ENGELKE, d/b/a CHARLES &&[ x.*zifL 

AND DONALD ENGELKE, a partnership, ,t:i$E(K OF Sef;5RT?$E COURT ' 

STATE OF UOATANA 

Defendants, 

and 

THOMAS G. WALLER and LINDA L. WALLER, 

Counterclaimants and Appellants, 

-vsTRUCK INSURANCE EXCHANGE, a reciprocal 

Inter-insurance Exchange, 

Counterclaim Defendant and Respondent. 

APPEAL FROM: District Court of the Fifteenth Judicial District, 

In and for the County of Roosevelt, 

The Honorable M. James Sorte, Judge presiding. 

COUNSEL OF RECORD: 

For Appellants: 

David L. Irving, Attorney at Law, Glasgow, Montana 

David S. Evinger; Robins, Kaplan, Miller & Ciresi, 

Minneapolis, Minnesota 

For Respondent: 

George C. Dalthorp and Peter F. Habein; Crowley, 

Haughey, Hanson, Toole & Dietrich, Billings, Montana 

Filed: 

Submitted on Briefs: January 30, 1992 

Decided: April 10, 1992 
Justice Karla M. Gray delivered the opinion of the Court. 

The appellants, Thomas and Linda Waller, appeal from an order 

of the District Court of the Fifteenth Judicial District, Roosevelt 

County, which granted summary judgment in favor of the respondent, 

Truck Insurance Exchange (Truck Insurance). We affirm. 

The issues on appeal are: 

1. Did the District Court err in concluding that the language 

of the Engelkest insurance policies excluded coverage for Mr. 

Waller s injuries arising from the airplane accident and, thus, 

that Truck Insurance was entitled to summary judgment? 

2. Did the District Court err in granting summary judgment to 

Truck Insurance on the Wallerst misrepresentation counterclaim? 

3. Did the District Court err in dismissing the Wallers1 bad 

faith counterclaim? 

Truck Insurance brought this action in 1985 seeking a 

declaration that the insurance policies it issued to Donald and 

Charles Engelke did not provide coverage for the injuries suffered 

by Mr. Waller while he was a passenger in an airplane which crashed 

while piloted by Donald Engelke. Prior to the accident, the 

Engelkes had insured their farm through Truck Insurance with a Farm 

Sentinel policy and a commercial umbrella policy. When this 

declaratory judgment action originated, the Engelkes were 

defendants in a personal injury action filed by the Wallers. 

Judgment in that action was entered in 1989 against Donald Engelke. 

The Engelkes answered Truck Insurance's declaratory judgment 

complaint by admitting that the insurance policies provided no 

2 
coverage for the airplane accident; they are no longer involved in 

this suit. The Wallers answered by alleging that there was 

coverage for the airplane accident. They also counterclaimed for 

misrepresentation against Truck Insurance asserting that after the 

Engelkes purchased their insurance, Truck Insurance's agent 

misrepresented to Donald Engelke that Engelke could not obtain 

insurance coverage for his aircraft because he did not have a 

pilot's license. The Wallers sought reformation of the insurance 

policies to provide coverage or estoppel on the part of Truck 

Insurance to deny coverage. 

Truck Insurance filed a motion for summary judgment on all 

issues, including the Wallers' misrepresentation counterclaim, on 

February 14, 1989. The District Court allowed further discovery by 

the Wallers and the motion for summary judgment was set for hearing 

on May 30, 1990. 

Prior to the hearing, the Wallers filed a cross-motion for 

summary judgment on May 9, 1990, as to coverage under the policies. 

In addition, the Wallers were granted leave on May 24, 1990, to 

amend their answer to add a second counterclaim for bad faith. On 

May 30, 1990, the day of the hearing on the cross-motions for 

summary judgment, Truck Insurance filed a motion for 

reconsideration of the court's order granting the Wallers leave to 

amend their answer; it subsequently filed its answer to the second 

counterclaim on June 5, 1990. The court never ruled on Truck 

Insurance's motion for reconsideration. 

The District Court granted summary judgment to Truck Insurance 
on August 10, 1990. It ruled that the policy language did not 

provide coverage for the accident in which Mr. Waller was injured 

and that the counterclaim for misrepresentation or "coverage by 

estoppelff was without merit. The court also dismissed the Wallersf 

counterclaim for bad faith. The Wallers appealed. 

Did the District Court err in concluding that the language of 

the Engelkesf insurance policies excluded coverage for Mr. Wallerfs 

injuries arising from the airplane accident and, thus, that Truck 

Insurance was entitled to summary judgment? 

Summary judgment is proper when there is no genuine issue as 

to any material fact and the moving party is entitled to judgment 

as a matter of law. Rule 56 (c) , M.R.Civ.P. The interpretation of 

an insurance contract is a question of law. Truck Insurance 

Exchange v. Nelson (1987), 228 Mont. 233, 236, 743 P.2d 572, 574. 

The language of the insurance policy governs its interpretation if 

it is clear and explicit. Section 28-3-401, MCA. 

Coverage f1E2ff of the Farm Sentinel policy states that the 

insurer agrees to pay various medical expenses incurred as a result 

of bodily injury caused by an accident while on the premises with 

the permission of the insured, or elsewhere if such injury is 

caused by the activities of an insured. The policy also contains 

the following exclusion: 

THIS POLICY DOES NOT APPLY UNDER: 

(b) Coverages . . . E2 to the ownership, maintenance, 

operation, use, loading or unloading of . . . (iv) 
aircraft; but, with respect to bodily injury to a 

residence employee or a farm employee, arising out of and 

in the course of employment by the insured of such 

residence or farm employee, parts (i), (ii) and (iii) of 

this exclusion do not apply, and part (iv) applies only 

while such employee is engaged in the operation or 

maintenance of aircraft[.] 

The commercial umbrella policy states that coverage under that 

policy is subject to the insuring provisions in the underlying 

(Farm Sentinel) policy. 

The District Court concluded that the Farm Sentinel policy 

does not provide coverage for the accident in which Mr. Waller was 

injured. The Wallers claim error. They assert that the aircraft 

exclusion applies only to injuries sustained by farm or residence 

employees and that, because Mr. Waller was not an employee of the 

Engelkes, the exclusion does not apply to the accident in which he 

was injured. We disagree. 

The meaning of the aircraft exclusion is clear and explicit. 

The language plainly excludes coverage for bodily injury arising 

from the ownership, maintenance, operation, use, loading or 

unloading of aircraft; however, in the case of bodily injury to a 

residence or farm employee, the policy excludes coverage only where 

such employee is engaged in the operation or maintenance of 

aircraft. It is undisputed that the injuries to Mr. Waller arose 

out of the operation and use of an aircraft and that he was not a 

residence or farm employee at the time of his injuries. Thus, the 

airplane accident in question is excluded from coverage. 

Accordingly, we hold that the District Court did not err in 

granting summary judgment to Truck Insurance on the question of 
coverage under the insurance policies. 

11. 

Did the District Court err in granting summary judgment to 

Truck Insurance on the Wallers1 misrepresentation counterclaim? 

The Wallers contend that the misrepresentation counterclaim 

was not involved in the cross-motions for summary judgment. Citing 

Hereford v. Hereford (1979), 183 Mont. 104, 598 P.2d 600, they 

argue that it is reversible error to grant summary judgment on a 

claim not before the court without affording them notice and 

reasonable opportunity to respond. 

We find no error on the part of the District Court. Truck 

Insurancels February 14, 1989 motion for summary judgment 

specifically included the misrepresentation counterclaim. Thus, 

the Wallers cannot reasonably argue that they had no notice or 

opportunity to respond. 

In analyzing the merits of the counterclaim for 

misrepresentation, the District Court, having already found that 

the language of the policies excluded coverage, addressed whether 

Truck Insurance was nonetheless estopped from denying coverage 

because of statements made to Donald Engelke by Truck Insurancels 

agent, LeRoy Tvedt. The court found that no issue of material fact 

existed with respect to the conversation between Engelke and Tvedt. 

It then applied the elements of estoppel to the Wallers1 claim and, 

finding some of the elements of estoppel to be lacking, concluded 

that Truck Insurance was entitled to summary judgment as a matter 

of law. 
The Wallers maintain that the District Court erroneously 

characterized the counterclaim as one of estoppel, arguing that 

misrepresentation is a cause of action independent of the 

declaratory judgment action. We find the Wallers1 attempt to 

distinguish estoppel from misrepresentation unpersuasive under the 

circumstances of this case. The Wallers did not seek money damages 

for the alleged misrepresentation; they sought reformation of the 

policies to provide coverage or estoppel on the part of Truck 

Insurance to deny coverage. The remedies sought make it clear that 

the counterclaim was tied to, and not independent of, the 

declaratory judgment action. 

In addition, an element of both estoppel and misrepresentation 

is detrimental reliance. The Wallers were not parties to the 

conversation and in no way relied on Mr. Tvedtls statements. 

Therefore, they cannot establish this element. 

The Wallers assert that, as judgment creditors of Donald 

Engelke, "they have the right to stand in the same position as 

Donald Engelke with respect to his insurer, Truck Ins~rance.~' 

Assuming arsuendo that the Wallers correctly assert that they have 

the right to bring a misrepresentation action against Truck 

Insurance on behalf of Donald Engelke, their claim still fails. 

Donald Engelke did not change his position for the worse in 

reliance on Mr. Tvedtls statements. He did not have or seek 

insurance coverage for the airplane before the conversation with 

Mr. Tvedt and did not pursue obtaining coverage after that 

conversation. Under these facts, it is clear that the Wallers 
cannot establish the element of detrimental reliance. Thus, their 

misrepresentation counterclaim fails as a matter of law. We hold 

that the District Court did not err in granting summary judgment to 

Truck Insurance on the Wallers' misrepresentation counterclaim. 

111. 

Did the District Court err in dismissing the Wallersl bad 

faith counterclaim? 

Having determined that there was no coverage pursuant to the 

language of the insurance policies or by estoppel, the court 

concluded that it was proper to address the Wallers' bad faith 

counterclaim. It dismissed the counterclaim concluding that "[iln 

light of the court's ruling that there is no coverage under the 

insurance policies, the counterclaim is without merit and totally 

inapplicable to this case." 

The Wallers argue that the bad faith counterclaim was not 

before the court at the time of the May 30, 1990 summary judgment 

hearing and, thus, the District Court erred in addressing and 

dismissing it. They also argue that a determination that the 

insurance policies do not provide coverage for the airplane 

accident does not mandate dismissal of the bad faith counterclaim 

because "[tlhe claim stands alone as a separate and independent 

cause of action from the declaratory judgment action. 'I We conclude 

that under the circumstances of this case the District Court did 

not err in dismissing the bad faith counterclaim. 

The Wallers' bad faith counterclaim alleges that: 

Since the filing of the declaratory action herein, 

and especially since judgment was granted against the 
insured in the underlying personal injury action, Cause 

Number 10105 in this Court, upon information and belief 

the counterclaim defendants have violatedtheir fiduciary 

duty and the contractual rights of the Wallers, as third 

party claimants, concerning good faith and fair dealing 

in the investigation, discovery, prosecution and 

settlement of the declaratory action. Upon information 

and belief, said violations amount to a breach of the 

implied covenant of good faith and fair dealing, as well 

as the statutory protections of the Montana Unfair Trade 

Practices Act. 

(Emphasis added.) It is clear that the Wallerst claims of bad 

faith on the part of Truck Insurance were all premised upon the 

existence of a contract between Truck Insurance and the Engelkes, 

that is, that the Engelkest insurance policies provided coverage 

for the airplane accident in which Mr. Waller was injured. Because 

the policies excluded coverage, the Wallerst claims of bad faith on 

the part of Truck Insurance fail as a matter of law. While we 

agree with the Wallers that the counterclaim for bad faith was not 

within the scope of the partiest respective motions for summary 

judgment, the law does not require the performance of idle acts. 

Section 1-3-223, MCA. To compel the District Court, under the 

circumstances of this case, to dispose of the bad faith 

counterclaim in a separate, independent proceeding would be to 

compel inefficient and idle acts. 

Affirmed . 
We concur: