Opinion ID: 888906
Heading Depth: 2
Heading Rank: 3

Heading: Additional Insured Endorsement

Text: ¶ 26 St. Paul asserts that Swank was an additional insured on a primary non-contributing basis under the terms of the United National policy and United National cannot now pick and choose language that supports its view of limiting coverage ... [t]he policy must be looked at in its entirety. United National counters stating that we must look to the intent of the contract language and that the contract language did not intend to cover Swank for Swank's own negligence. ¶ 27 We have held that [a]n insurance policy, like any other contract, must be given that interpretation which is reasonable and which is consonant with the manifest object and intent of the parties. Anaconda Co. v. General Acc. Fire & Life Assur. Corp., Ltd., 189 Mont. 447, 455, 616 P.2d 363, 367 (1980). The subcontract agreement specified that Advanced Fireproofing must obtain a policy covering Swank. More specifically, Article 9, § 9.2.1 of the subcontract agreement states: [b]efore commencing the Subcontractor's Work, and as a condition of payment, the Subcontractor [Advanced Fireproofing] shall purchase and maintain insurance that will protect it from the claims arising out of its operations under this Agreement, whether the operations are by the Subcontractor, or any of its consultants or subcontractors or anyone directly or indirectly employed by any of them, or by anyone for whose acts any of them may be liable. Exhibit B to the subcontract agreement states that Swank Enterprises must be listed as additional insured, and a copy of the additional insured endorsement must be attached to the certificate. ¶ 28 Endorsement # 5 to United National's policy covering Advanced Fireproofing states the policy affords insurance coverage to additional insureds, pursuant to the following language: [s]ubject to all its terms, conditions and endorsements, such insurance as is afforded by the policy shall also apply to the following entity(ies) as an additional insured, but only as respects liability arising from (1) premises owned by or occupied by the Named Insured, or (2) the contract entered into by the Named Insured. The policy names additional insured entities as [a]ll entities for which a Certificate of Insurance has been issued naming them as an Additional Insured with a copy of the Certificate of Insurance on file with the Company, and required by a written contract. United National then issued a Certificate of Liability Insurance stating that Swank Enterprises and all other related entities, the owner, and all other parties as required by contract, are named as Additional Insured on a Primary Non-Contributing Basis. Furthermore, the Primary Insurance Endorsement of the policy states: Subject to the terms and conditions of this policy, it is understood and agreed that with respect to claims arising out of work performed by the Named Insured, the coverage afforded herein shall be primary in relation to any policies carried by any person or organization to whom or to which the Named Insured is obligated by virtue of a written contract, and then only as required by said written contract. (Emphasis added.) ¶ 29 Montana law is well-settled that an insurer's duty to defend its insured arises when an insured sets forth facts that represent a risk covered by the terms of an insurance policy. Farmers Union Mut. Ins. Co. v. Staples, 2004 MT 108, ¶ 20, 321 Mont. 99, 90 P.3d 381. And the duty to defend is independent from and broader than the duty to indemnify created by the same insurance contract. Staples, ¶ 21. Unless there exists an unequivocal demonstration that the claim against the insured does not fall within the policy coverage, the insurer has a duty to defend. Insured Titles, Inc. v. McDonald, 275 Mont. 111, 115-16, 911 P.2d 209, 211-12 (1996). And any doubt as to the existence of a duty to defend must be resolved in the insured's favor. Allan D. Windt, Insurance Claims and Disputes, § 4:2 (4th ed., West 2001). ¶ 30 It is clear from the plain language of the policy that United National intended to cover Swank for the type of incident that occurred here. The policy covers Swank as an additional insured on a primary non-contributing basis. The policy plainly states that it affords additional coverage to additional insured for liability arising from (1) premises owned by or occupied by the Named Insured, or, (2) the contract entered into by the Named Insured. United National's suggested interpretation of its policy would render the policy meaningless. United National argues that even if United National's policy covering Advanced Fireproofing extended coverage to Swank, that coverage would be excess coverage, secondary to St. Paul's coverage. In interpreting insurance contracts, we accord the usual meaning to the terms and the words ... and we construe them using common sense. Modroo v. Nationwide Mut. Fire Ins. Co., 2008 MT 275, ¶ 23, 345 Mont. 262, 191 P.3d 389. The language in the Certificate of Liability Insurance issued to Swank under the United National policy plainly states that Swank is named as Additional Insured on a Primary Non-contributing basis. It is clear from the plain language of the insurance contract that the United National policy was intended to be primary. ¶ 31 Thus, the District Court was correct in determining that United National had a duty to defend Swank and that United National's policy is primary, pursuant to the language in the additional insured endorsement in United National's policy. The District Court did not err in granting St. Paul's motion for summary judgment and denying United National's motion for summary judgment and holding United National breached its duty to defend Swank. ¶ 32 Did the District Court err in awarding St. Paul attorney fees for defense of the initial personal injury action and for the declaratory judgment action? ¶ 33 In its October 2007 order and judgment, the District Court awarded St. Paul $24,695.54 in attorney fees for the underlying personal injury case Booth v. Swank Enterprises, et al. and $7,095.66 in attorney fees for the declaratory judgment action. United National argues the attorney fees were neither necessarily nor properly awarded under the Uniform Declaratory Judgment Act or... Trustees of Indiana University v. Buxbaum, 2003 MT 97, 315 Mont. 210, 69 P.3d 663 ... [and] consequently, the District Court's determination that fees ... were attributable to United National was in error. United National further argues St. Paul should have sought the monetary relief it sought through a properly asserted subrogation claim ... without the invocation of the UDJA. St. Paul's decision to seek summary judgment in the declaratory judgment context was a tactical decision and the proper claim was for subrogation of St. Paul's insured's contractual rights. ¶ 34 St. Paul argues it is entitled to attorney fees and indemnity amounts paid on behalf of Swank Enterprises due to United National's failure to fulfill its duty to defend and indemnify Swank. St. Paul further argues [t]his is not a subrogation action, as characterized by United National ... [i]t is rather a direct action against United National by St. Paul as the assignor of the rights of [Swank] for a determination that United National had an obligation to provide a defense and indemnify [Swank] under the terms of its insurance contract. ¶ 35 The Uniform Declaratory Judgment Act allows for claims to be brought by [a]ny person interested under a deed, will, written contract, or other writings constituting a contract or whose rights, status, or other legal relations are affected by a statute, municipal ordinance, contract, or franchise may have determined any question of construction or validity arising under the instrument, statute, ordinance, contract, or franchise and obtain a declaration of rights, status or other legal relations thereunder. Section 27-8-202, MCA. The stated purpose of the Act is to settle and to afford relief from uncertainty and insecurity with respect to rights, status, and other legal relations; and it is to be liberally construed and administered. Section 27-8-102, MCA; Tarlton v. Kaufman, 2008 MT 462, ¶ 33, 348 Mont. 178, 199 P.3d 263. Furthermore, this Court has stated that [a] declaratory proceeding is primarily intended to determine the meaning of a law or a contract and to adjudicate the rights of the parties therein.... Tarlton, ¶ 33 (citing Raynes v. City of Great Falls, 215 Mont. 114, 120-21, 696 P.2d 423, 427 (1985)). ¶ 36 United National argues St. Paul improperly brought its action under the UDJA. However, Swank's claim was not simply a subrogation action, but rather an action to determine the scope of coverage under United National's insurance policy covering Swank. Such an action squarely fits within the intent of the UDJA's liberally constructed purpose to settle and to afford relief from uncertainty and insecurity with respect to rights, status, and other legal relations.... Thus, Swank properly brought the claim under the UDJA, and we now turn to the question of whether the District Court abused its discretion to award attorney fees under § 27-8-313, MCA. ¶ 37 Montana follows the general American Rule that a party in a civil action is not entitled to attorney fees absent a specific contractual or statutory provision. Martin v. SAIF Corp., 2007 MT 234, ¶ 22, 339 Mont. 167, 167 P.3d 916 (citing Trustees of Indiana University v. Buxbaum, 2003 MT 97, ¶ 19, 315 Mont. 210, 69 P.3d 663). Because the contracts at issue do not contain language regarding attorney fees, we must turn to the statutory exception. Section 27-8-313, MCA does not contain a specific attorney fee provision; however, it gives a court the ability to grant supplemental relief when the court deems such relief is necessary and proper. Section 27-8-313, MCA. This Court held in Buxbaum that § 27-8-313, MCA provides a statutory basis for awarding supplemental relief in the form of attorney fees in declaratory judgment actions if the award is necessary and proper. Buxbaum, ¶ 42. The Court in Buxbaum did not define what constitutes necessary and proper. However, this Court has adopted the tangible parameters test to determine whether attorney fees granted under § 27-8-313 are necessary and proper. Martin, ¶ 23 (citing Renville, ¶ 27). The tangible parameters test provides that fees are necessary and proper when (1) an insurance company possesses what the plaintiffs sought in the declaratory relief action; (2) it is necessary to seek a declaration showing that the plaintiffs are entitled to the relief sought; and (3) the declaratory relief sought was necessary in order to change the status quo. Martin, ¶ 23. And this Court has recognized a party's tactical decision to file a declaratory judgment action does not automatically presume attorney fees are necessary or proper. Buxbaum, ¶ 45. ¶ 38 While § 27-8-313, MCA gives district courts the discretion to award further relief in the form of attorney fees if a court determines such an award is necessary and proper, implicit in that determination is a threshold question of whether the equities support a grant of attorney fees. In the only case since Buxbaum where we have upheld a district court's discretionary grant of attorney fees under § 27-8-313, the fees were granted in order to prevent an anomalous result where one party would have been better off had it never brought the claim in the first place. ( See Renville, ¶ 28, affirming the district court's grant of attorney fees to an injured party seeking declaratory judgment as to payment of medical costs owed by an insurance company). In Renville, we determined fees were necessary and proper in order to afford meaningful relief to the injured party. Thus, while a district court has the discretion to award attorney fees under § 27-8-313, MCA, such fees are only appropriate if equitable considerations support the award. This determination must be made before a court applies the criteria of the tangible parameters test. ¶ 39 In applying the equitable consideration described above to the facts before us, we find the equities do not support an award of attorney fees. The instant case is distinct from the facts of Renville where an injured party expended more on the cost of litigation than it received as a result of the litigation, thus potentially rendering the declaratory relief meaningless. Rather, here we have two similarly situated parties disputing the interpretation of a contract. Under these circumstances, the equities do not support an award of attorney fees to St. Paul. Because this threshold requirement is not met, we do not even reach an analysis of the tangible parameters test. Therefore, the District Court abused its discretion by acting arbitrarily in its award of attorney fees to St. Paul. ¶ 40 We reverse the award of attorney fees. We concur: JOHN WARNER, BRIAN MORRIS and JIM RICE, JJ.