Opinion ID: 888211
Heading Depth: 1
Heading Rank: 4

Heading: Count One Breach of Contract

Text: ¶ 14 The Town alleges that AK's claim for breach of contract does not turn on the terms of the contract, but instead is a claim for negligence. The Town contends that AK's Complaint alleges that the Mayor knew or should have known that the Town was not going to pay for the work performed and that the Mayor should have disclosed this fact to AK in advance. Thus, the Town argues that the Mayor's alleged failure to act when she had a duty to act constitutes negligence and negligence is a claim which MMIA is obligated to defend under the terms of the policy. ¶ 15 MMIA argues on the other hand that there is no reference in Count One to any duty, only references to a contract being created and breached. Nevertheless, as MMIA points out in its brief on appeal, breach of contract claims are pled as breaches of duties, i.e., the duties created by each parties' obligations under the contract. A contract is a promise or a set of promises for the breach of which the law gives a remedy, or the performance of which the law in some way recognizes as a duty. Restatement (Second) of Contracts § 1 (1981). ¶ 16 In Count One of its Complaint, AK set forth the facts leading up to its claim for breach of contract and specifically stated in ¶ 24 that the Town has breached its Agreement with AK. Nowhere in Count One does AK refer to a breach of duty by the Mayor or any other claim that could be considered other than a breach of contract. Section IX.22. of Form A specifically excludes from coverage [a]ny liability arising out of failure to perform, or breach of, a contractual obligation. ¶ 17 We have held that exclusions from coverage will be narrowly and strictly construed because they are contrary to the fundamental protective purpose of an insurance policy. Swank Enterprises v. All Purpose Services, 2007 MT 57, ¶ 27, 336 Mont. 197, ¶ 27, 154 P.3d 52, ¶ 27 (citing Deonier & Assoc. v. Paul Revere Life Ins. Co., 2000 MT 238, ¶ 45, 301 Mont. 347, ¶ 45, 9 P.3d 622, ¶ 45). ¶ 18 Here, contrary to being excluded from coverage, the Town argues that this claim falls under the personal injury coverage of the policy. Personal injury is defined in Section V.O. of Form A as follows: Personal Injury  means injury, other than Bodily Injury, including but not limited to one or more of the following: 1. False arrest, detention, imprisonment, or malicious prosecution; 2. Wrongful entry or eviction or other invasion of private occupancy; 3. The publication or utterance of a libel or slander, including disparaging statements concerning the condition, value, quality or use of real or personal property; or a publication or utterance in violation of the rights of privacy; 4. Unlawful discrimination or violation of civil rights; 5. Shock, fright, mental anguish or mental injury; 6. Assault and battery, committed by, at the discretion of, or with the consent of a COVERED PARTY, for the purpose of protecting persons from injury, death, or property from damage. [Emphasis added.] ¶ 19 The Town claims that coverage here falls under subsection 3 of the personal injury provision of the policy regarding the publication or utterance of a libel or slander. The Town maintains that in ¶ 20 of its Complaint, AK contends the Mayor disparaged the quality of AK's personal property used in the project. Contrary to the Town's assertions, ¶ 20 does no such thing; there is no mention in ¶ 20 of the Complaint of any actions on the part of the Mayor. Instead, ¶ 20 refers to actions taken by Delta, the project engineer, in setting out items that had yet to be completed by AK under the contract, and items that did not comply with the terms of the contract. Furthermore, nowhere in the Complaint does AK contend that the Mayor disparaged AK's personal property. ¶ 20 Consequently, we hold that defense of this claim is excluded under the breach of contract provision of the Town's policy with MMIA.