No. 83-524 

IN THE SUPREME COURT OF THE STATE OF JIONTATJA 

1984 

TRUCK INSURANCE EXCHANGE, 

a reciprocal or interinsurance 

exchange, 

Plaintiff and Appellant, 

MARIE WOLDSTAD, Individually, 

and as Administratrix of the Fstate 

of RICHARD C. WOLDSTAD, HYDRO-FLAME, 

a Utah corporation, and ACTION SALES, 

INC. , 

Defendants and Respondents. 

APPEAL FROM: District Court of the Eighteenth Judicial District, 

In and for the County of Gallatin, 

The Honorable Joseph B. Gary, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Morrow, Sedivy & Bennett; Lyman 11. Bennett, 111, 

argued and Terry Schaplow argued, Bozeman, 

Montana 

For Respondents: 

Goetz, Madden & Dunn; William Madden argued for 

Woldstad, Bozeman, Montana 

Landoe, Brown, Law Firm; Randy Dix argued for 

Hydro-Flame, Bozeman, Montana 

Leaphart Law Firm; William Leaphart argued for 

Action Sales, Helena, Montana 

Filed: 

- - 

Submitted: June 19, 1984 

Decided: September 12, 1984 

SEP r ,? t984 

Clerk 
Mr. Chief Justice Frank I. Ha-swell delivered the Opinion of 

the Court. 

This is an appeal from a summary judgment of the 

Gallatin County District Court. Truck Insurance Exchange, 

plaintiff in a declaratory judgment action below and appellant here, challenges the District Court's interpretatj-on of 

an insurance contract issued by appellant to Action Sales, 

Inc. The court found coverage effective for post-expiration 

injury where the defective product was sold while the policy 

was still in force. The court ordered payment of judgment 

and attorney fees. We affirm. 

In June 1976 Richard Woldstad. purchased a pickupmounted camper from Action Sales, Inc. (Action) . The camper 

was equipped with a propane furnace designed, manufactured 

and sold by Hydro-Flame Corp. 

On March 3, 1980, Richard Woldstad was using the camper 

in the vicinity of Manhattan, Montana.. The camper exploded 

and Wol-dstad sustained injuries which caused his death on 

March 9, 1980. 

At the time Woldstad purchased the camper from Action, 

Action was insured by Truck Insurance Exchange (Truck) for 

damages arising out of an occurrence such as that which 

caused Woldstad's death. After the purchase but prior to the 

accident, the coverage was canceled. 

Marie Woldstad (Woldstad), individually and as personal 

representative of the estate of Richard C. Woldstad, filed a 

wrongful death suit against Action and Hydro-Flame. Action 

attempted to tender defense of the suit to Truck. Truck 

declined coverage and refused to defend. Action defended the 

suit and later informed Truck of a settlement offer mzde by 

Woldstad. At that time, Action demanded Truck either settle 
within the policy limits or unconditionally assume Action's 

defense. Truck informed Action that Truck would neither 

respond to the settlement offer nor assume Action's defense. 

Later, Action informed Truck that Action intended to enter 

into a consent judgment with Woldstad in the amount of 

$225,000 with a covenant not to execute and asked Truck if it 

had changed its position. Truck did not respond. Action 

then entered into an agreement for entry of consent judgment 

with Woldstad for $225,000. 

Nearly nine months later the District Court ruled on 

Woldstad's and Truck's cross-motions for summary judgment, 

holding the policy issued by Truck to Action covered the 

claims brought against Action by Woldstad. Woldstad then 

moved for summary judgment against Truck to compel payment of 

the consent judgment. Action joined in Woldstad's motion and 

further sought attorney fees and costs. 

On November 10, 1983, the District Court ordered Truck 

to pay the consent judgment. Six days later Truck appealed, 

and this Court remanded the matter to the District Court for 

a hearing on the issue of fees. On December 21, 1.983, the 

District Court ordered Truck to pay Action $2,446.65 in 

attorney fees and costs. Truck now appeals, and the following issues are raised: 

1. Does the policy issued by Truck to Action provide 

coverage for a product sold during the term of coverage when 

the product causes injury after the policy has expired? 

2. If there is coverage, is Truck legally obliqated to 

pay Action's attorney fees and costs with regard to this 

matter? 
The first issue to be addressed is whether the policy 

issued by Truck provided coverage for damages for a yroduct 

sold during the term of the coverage when the product caused 

injury after the policy had expired. Under the circumstances 

of this case, we affirm the ruling of the District Court that 

the policy issued by Truck provided coverage for such damage. 

It is undisputed that at the date of the sale of the 

camper there was coverage in effect which applied to the type 

of claims asserted by Woldstad. Truck maintains, however, 

that the policy clearly limits their liability to d-amages 

which occur during the policy term. Respondents argue that 

there is no clear limiting language and that the terms of the 

policy are at best amhiguous and, therefore, must be construed in their favor. The District Court found the policy 

ambiguous, held for respondents, and we affirm both the 

hol-ding and the reasons for that holding. 

The critical portions of coverage at issue here are 

those relating to completed operations haza.rd and products 

hazard. 

"Completed Operations Hazard" is, in part, defined. as 

follows: 

" (d) 'Completed Operations Hazard' includes bodily injury and property damage 

arising out of operations or reliance 

upon a representation or warranty made at 

any time with respect thereto, but only 

if the bodily injury or property damage 

occurs after such operations have been 

completed or abandoned and occurs away 

from premises owned by or rented to the 

named insured. 'Operations1 include 

materials, parts or equipment furnished 

in connection therewith. 

"Products Hazard" is defined. as: 

"'Products hazard1 includes bodily injury 

and property damage arising out of the 
named insured's products or reliance upon 

a representation or warranty made at any 

time with respect thereto, but only if 

the bodily injury or property damage 

occurs away from premises owned by or 

rented to the named insured and after 

physical possession of such products has 

been relinquished to others." 

"Bodily Injury" is defin-ed in the policy as foll.ows: 

"'Bodily Injury' means bodily injury, 

sickness or disease, includ.ing death at 

anytime resulting therefrom, sustained by 

any person." (Emphasis added.) 

There is no language in the above definitions which 

provides that the damage must occur while the pol-icy is in 

force. 

Truck argues that the section of the policy entitled 

"General. Conditions; Applicable to Enti-re Policy" states that 

the policy applies only to bodily injury or property damage 

occurring during the policy period. We find, however, as did 

the District Court, that this section does not apply to the 

portions of the policy dealing with products haza.rd and 

completed operations hazard coverage because the general 

limiting language states ". . . except as otherwise provided. 

herein." The policy provides otherwise in the sections 

dealing with products hazard and completed operations hazard 

by not specifically limiting the coverage therein. 

Truck also maintains that a clause in the policy limits 

"liability for all damages arising out of the products hazard 

and completed operations hazard during the twelve-month 

period beginning with the effective date of such coverage 

provided the bodily injury or property damage occurs while 

the policy is in force. . . ." This limiting language specifically applies onl-y to coverage "C, D, E" of the policy, and 

neither products hazard nor completed operations hazard are 

contained in parts C, D or E of the policy. 
The hazard clauses specifically provide coverage tor 

future injury arising from product sales. The act giving 

rise to liability occurred when the camper was sold and while 

the policy was admittedly still in force. While ap insurer 

may limit its liability in this area, the limiting language 

must be clear and unambiguous. The provisions of this policy 

with regard to products hazard or completed operations hazard 

coverage and the sections dealing with policy limitations, 

taken as a whole, are ambiguous. It is the rule of construction in Montana that language of limitation or exclusion must 

be clear and unequivocal; otherwise, the policy will be 

strictl-y construed in favor of the insured. Terry v. National Farmers Union Life Insurance Co. (1960), 138 Mont. 333, 

356 P.2d 975; Atcheson v. Safeco Insurance Co. (1974), 165 

Mont. 239, 527 P.2d 549; Fassio v. Montana Physicians' Service (1976), 170 Mont. 320, 553 P.2d 998; Lindell v. Ruthford 

(1979), 183 Mont. 135, 598 P.2d 616; Northwestern Nat. Cas. 

Co. v. Phalen (1979), 182 Mont. 448, 597 P.2d 720. 

I1 

The second issue is whether Truck is obligated to pay 

Action's attorney fees and costs with regard to this matter. 

We have held that an insurer's breach of contract, in this 

case refusal to defend, renders the insurer liable for the 

defense costs resulting from the breach. Home Insurance 

Company v. Pinski Brothers, Inc. (1972), 160 Mont. 219, 500 

P.2d 945. 

In this matter Action made repeated requests of Truck 

to assume the defense and Truck refused or failed to respond. 

Action was forced to retain counsel for the wrongful death 

action as well as the declaratory judgment action. In light 
of Truck's breach, we find Truck liable for Action's attorney 

fees and costs in defense of this matter. 

Affirmed and remanded to the District Court for determination of attorney fees and costs. 

?id! Chief 4 Justice &q 

We concur: 

Justices 
Mr. Justice Fred J. Weber dissents: 

I respectfully dissent from the majority opinion in its 

interpretation of the insurance contract issued by Truck 

Tnsurance Exchange. The majority has failed to give effect 

to a clear and unambiguous provision of the policy which 

limits coverage to bodily injury or damage which occurs 

during the policy period. The majority opinion creates 

coverage where the parties agreed in the insurance contract 

there would be none. 

The general condition limiting liability, which 

expressly applies to the entire policy, states: 

"Except . . . as otherwise provided herein, the 

insurance afforded under section I1 of this policy 

[the coverage involved in this case] applies only 

- to bodily injury or property dama e which occurs 

during the policy period . . . dmphasis added) 

This is a clear and unambiguous provision stating that the 

insurance applies only to bodily injury or damage which 

occurs within the policy period. It is contained in the 

general conditions expressly applicable to the entire policy. 

There is no language in the policy providing otherwise with 

respect to the coverage involved here. 

The majority suggests that because there is no language 

in section I1 which specifically limits coverage und.er that 

section, there is no limit whatsoever in the policy which 

provides that, to be covered, bodily injury or property 

damage must occur while the policy is in force. The majority 

supports this conclusion by referring to the phrase "except 

as otherwise provided herein." The majority finds that the 

complete absence of any mention of a policy period limitation 

in section I1 constitutes an exception "otherwise provided" 

in the policy. Obviously, if there is no exception stated in 

section 11, there is no exception "otherwise provided" and 

the general condition limiting liability clearly applies. 
The only policy provision arguably related to this 

question is the definition of bodily injury: 

"'Bodily Injury' means bodily injury, sickness or 

disease, including death at any time resulting 

therefrom, sustained by any person." 

Because the phrase "including death at any time" is 

underscored in the majority opinion, I assume the majority 

construes this language as creating coverage of bodily injury 

which occurs outside the policy period. However, the 

majority ignores the last two words of the phrase appearing 

in the policy, "resulting therefrom." When the entire phrase 

is read in light of the general condition statement regarding 

the policy period limit, the phrase "including death at any 

time resulting therefrom" is clearly intended to assure 

coverage for a death occurring outside the policy period 

which results from a bodily injury occurring within the 

policy period. Obviously, this phrase was not intended to 

provide coverage of any death at any time which resulted from 

injury occurring outside the policy period. Despite the 

clear intent of this phrase to the contrary, the majority has 

concluded that it extends coverage to death resulting from an 

injury occurring outside the policy period. 

I respectfully disagree with the majority's conclusion 

that the quoted definitions of completed operations hazard, 

products hazard and bodily injury provide coverage for injury 

occurring outside the policy period. Those provisions are 

definition paragraphs which describe the particular types of 

hazard or injury which are covered. Nothing in these 

definitions provides that bodily injury or property damage 

occurring outside the policy period is covered under the 

policy. 

I would agree with the general statement that the policy 

provisions are complex and technical. At first reading the 
provisions may even be confusing. However, the majority's 

confusion is unrelated to the policy period limitation. 

Complexity or difficulty in reading the policy is alone an 

insufficient basis to find ambiguity. The provision of the 

policy which limits coverage to bodily injury or property 

damage occurring within the policy period, or death resulting 

therefrom, is clear and unambiguous. I would reverse the 

Xr. Justice L. C. Gulbrandson: 

I join in the foregoing dissent of Mr. Justice 'deber. 
Mr. Justice Daniel J. Shea, dissenting: 

I join in the dissent of Justice Weber and I would 

reverse the judgment of the District Court. The majority 

opinion creates insurance coverage where there clearly is 

none--by the terms of the pol-icy. 

Insurance policies are a maze, and this appears to be a 

generally-accepted fact of 1-ife, and a fact that courts also 

must live with. However, once the maze is figured out, the 

question should be whether the essential policy provisions 

are ambiguous. If they are, 1 have no problem in construing 

the provisions against the insurer. This is the law and 

properly so. But if the language is clear and it happens to 

benefit the insurer, the insurer is just as clearly entitled 

to the benefit of that language when the courts are called on 

to decide the question. Here the language is clear and the 

language benefits the insurer. 

When read in its entirety, conditioned upon the general 

condition limiting liability, it is clear that the damage or 

an injury leading to death, had to occur during the policy 

period. It did not and therefore there is no coverage.