No. 83-524 IN THE SUPREME COURT OF THE STATE OF JIONTATJA 1984

TRUCK INSURANCEEXCHANGE, a reciprocal or interinsurance exchange, Plaintiffand Appellant,

MARIE WOLDSTAD, Individually, and asAdministratrix of the Fstate of RICHARD C. WOLDSTAD,HYDRO-FLAME, a Utah corporation,andACTION SALES, INC.

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APPEAL FROM: DistrictCourtof the EighteenthJudicial District, In and for the County of Gallatin, The Honorable Joseph B. Gary,Judgepresiding.

COUNSELOF RECORD:

ForAppellant: 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 

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ClerkMr. Chief Justice Frank I. Ha-swelldelivered 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-onof

an insurance contract issued by appellant to Action Sales, Inc. The court found coverage effective forpost-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)

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was equipped with a propane furnace designed, manufactured and sold by Hydro-FlameCorp. On March 3, 1980,RichardWoldstad 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 fromAction, Action was insured by Truck Insurance Exchange (Truck) for damages arising out of an occurrence such as that which causedWoldstad's death. After thepurchasebutprior to the accident, the coveragewas canceled. Marie Woldstad (Woldstad), individually and aspersonal 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 settlewithin the policy limits or unconditionally assume Action's defense. Truck informed Action that Truck would neither respond to the settlement offer nor assumeAction'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 covenantnot 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 withWoldstad 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 inWoldstad's motion and further soughtattorney feesand 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 coveragewhen the product causes injury after thepolicy 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 thepolicy issuedby Truck provided coverage for suchdamage. 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-dingand the reasons for thatholding. The critical portions of coverage at issue here are those relating to completed operations haza.rdand 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 representationorwarrantymade 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: "'Productshazard1includesbodily injury and property damage arising out of thenamed insured'sproducts 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-edin the policy as foll.ows: "'Bodily Injury' means bodily injury, sickness or disease, includ.ingdeath at anytime resulting therefrom, sustained

### by anyperson." (Emphasisadded.) There is no language in the above definitions which provides that the damage must occur while the pol-icyis in force.Truck argues that the section of the policy entitled "General.Conditions; Applicable to Enti-rePolicy" states that the policy applies only to bodily injury or property damage occurring during thepolicy 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

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# . 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 thepolicy 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. 

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# .."This limiting language specifically applies onl-yto coverage "C,D,E" of the policy, and neither products hazard nor completed operations hazard are contained inparts C,D or E of thepolicy.The hazard clauses specifically provide coverage tor future injury arising from product sales. The act giving rise to liability occurred when the camperwas sold and while the policy was admittedly still in force. While ap insurer may limit its liability in this area, the limiting language mustbe clearand unambiguous. Theprovisions of thispolicy with regard toproductshazard or completed operationshazard coverage and the sections dealing with policy limitations, taken as a whole, are ambiguous. It is the rule of construction inMontana that language of limitation or exclusionmust be clear and unequivocal; otherwise, the policy will be strictl-yconstrued 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),170Mont. 320, 553 P.2d 998;Lindellv. Ruthford

(1979), 183 Mont. 135, 598 P.2d 616;Northwestern Nat. Cas. Co. v. Phalen (1979),182Mont. 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 thismatter. 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 lightof Truck's breach, we find Truck liable forAction's attorney fees and costs in defense of thismatter. Affirmed and remanded to the District Court for determination of attorney fees and costs. 

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We concur:

JusticesMr. 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 entirepolicy, states: "Except 

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# . . 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 

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# ..dmphasisadded) 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 conditionsexpressly applicable to the entirepolicy. There is no language in the policy providing otherwise with respect to the coverage involvedhere. The majority suggests that because there is no language in section I1 which specifically limits coverage und.erthat section, there is no limit whatsoever in the policy which provides that, to be covered, bodily injury or property damage must occur while thepolicy is in force. Themajority supports this conclusion by referring to the phrase "except

as otherwise provided herein." The majority finds that the completeabsence of anymention of apolicy period limitation in section I1 constitutes an exception "otherwise provided" in thepolicy. 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 ofbodily injury: "'Bodily Injury' means bodily injury, sickness or disease, including death at any time resulting therefrom, sustainedby anyperson." Because the phrase "including death at any time" is underscored in the majority opinion, I assume the majority construes this language as creating coverage ofbodily injury which occurs outside the policy period. However, the majority ignores the last two words of the phrase appearing in thepolicy, "resultingtherefrom." When the entire phrase is read in light of the general condition statement regarding the policy period limit, the phrase "includingdeath 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 coverageof any death at any timewhich resulted from injury occurring outside the policy period. Despite the clear intentof 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 injuryprovide coverage for injury occurring outside the policy period. Those provisions are definitionparagraphs 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. Iwould agree with the general statement that thepolicy provisions are complex and technical. At first reading theprovisions 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 occurringwithin thepolicy period, ordeath resulting therefrom, is clear and unambiguous. I would reverse the

Xr. Justice L. C. Gulbrandson: I join in the foregoing dissent ofMr. Justice 'deber.Mr. JusticeDanielJ. 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 thepol-icy. Insurancepolicies 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 thebenefit of that languagewhen 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. Itdid not and therefore there isno coverage.