Opinion ID: 2210731
Heading Depth: 1
Heading Rank: 1

Heading: United had a duty to defend.

Text: The scope of insurance policy coverage is determined from the contractual intent and objectives of the parties as expressed by the policy language. See Black Hills Kennel Club, Inc. v. Fireman's Fund Indem. Co., 77 S.D. 503, 94 N.W.2d 90 (1959). An insurance contract's language is to be construed according to its plain and ordinary meaning. Grandpre v. Northwestern Nat'l Life Ins. Co., 261 N.W.2d 804 (S.D.1977). The City's policy from United covers any claim made against the Insured ... caused by any ... error ... of the Insured, and United is obligated to defend any suit against the Insured alleging such... error ... and seeking damages on account thereof[.] The plain and ordinary meaning of error is: A mistaken judgment or incorrect belief as to the existence or effect of matters of fact, or a false or mistaken conception or application of the law. Black's Law Dictionary 487 (5th ed. 1979). Accordingly, the policy covers any claims against the City that are the result of the City's mistaken judgment as to a matter of fact. An insurer must defend its insured in an action brought against the insured if the pleadings in the action allege facts that, if true, fall within the policy's coverage. Bayer v. Employers Reinsurance Corp., 383 N.W.2d 858 (S.D.1986). The insurer bears the burden of showing that it has no duty to defend the action because it clearly falls outside the policy coverage. Hawkeye-Security Ins. Co. v. Clifford, 366 N.W.2d 489 (S.D.1985). Therefore, United has a duty to defend any claim against the City that alleges facts that are the result of the City's mistaken judgment as to a matter of fact. The United States action against the City alleged the City discharged fill into a protected wetland without a permit. If those facts were true, the claim by the United States against the City would be caused by the City's mistaken judgment as to a matter of fact, i.e., the slough's status as a protected wetland. The mistaken judgment would have been the City's belief that the slough was not a protected wetland, making a permit unnecessary. Indeed, in its brief, United acknowledged that the City proceeded without a permit because the City felt that the United States government's classification of the slough as a `wetland' was incorrect. Consequently, contrary to the majority's conclusion, the federal lawsuit fell within the policy's general coverage, or, at a minimum, does not clearly fall outside the policy coverage.