Hous. Cas. Co. v. Strata Corp.

• Decision Date: 08 February 2019
• Docket Number: No. 17-3404, No. 17-3405,17-3404
• Citation: 915 F.3d 549
• Parties: HOUSTON CASUALTY COMPANY, Plaintiff - Appellee v. STRATA CORPORATION, Defendant - Appellant Houston Casualty Company, Plaintiff - Appellant v. Strata Corporation, Defendant - Appellee
• Court: U.S. Court of Appeals — Eighth Circuit

915 F.3d 549

HOUSTON CASUALTY COMPANY, Plaintiff - Appellee

v.STRATA CORPORATION, Defendant - Appellant

Houston Casualty Company, Plaintiff - Appellant

v.Strata Corporation, Defendant - Appellee

No. 17-3404

No. 17-3405

United States Court of Appeals, Eighth Circuit.

Submitted: October 17, 2018

Filed: February 8, 2019

Counsel who presented argument on behalf of the appellant/cross-appellee was Jason A. Lien, of Minneapolis, MN. The following attorney(s) appeared on the appellant/cross-appellee’s brief; Jason A. Lien, of Minneapolis, MN., Jesse Mondry, of Minneapolis, MN.

Counsel who presented argument on behalf of the appellee/cross-appellant was Jon T. Dyre, of Billings, MT. The following attorney(s) appeared on the appellee/cross-appellant’s brief; Jon T. Dyre, of Billings, MT.

Before SMITH, Chief Judge, LOKEN and GRUENDER, Circuit Judges.

GRUENDER, Circuit Judge.

Strata Corporation appeals the district court’s¹ order granting summary judgment to its excess insurer Houston Casualty Company and denying its cross-motion for summary judgment. We affirm.

In July 2012, Strata employee Peter Faust fell to his death at a Montana mine. While Montana’s Workers’ Compensation Act generally provides the exclusive remedy for workplace injuries, Mont. Code Ann. § 39-71-411, Faust’s estate brought suit alleging that Strata’s intentional failure to maintain a safe workplace triggered an exception and gave it a cause of action against Strata, see id. § 39-71-413.

Strata had a Workers Compensation and Employers Liability Insurance Policy from Liberty Mutual Insurance Company that included a coverage limit of $500,000 for each accident. The policy excluded coverage for certain acts, including "[b]odily injury intentionally caused or aggravated" by Strata. The policy also included a Montana Intentional Injury Exclusion Endorsement excluding coverage for "[b]odily injury caused by [Strata’s] intentional, malicious or deliberate act, whether or not the act was intended to cause injury to the employee injured, or whether or not [Strata] had actual knowledge that an injury was certain to occur." Strata also had a Commercial Excess Liability Policy from Houston Casualty Company that provided up to $5 million in excess coverage over and above the underlying Liberty Mutual policy limits. This excess policy "followed form" with the underlying Liberty Mutual policy. In particular, the Houston Casualty excess policy provided that "[u]nder no circumstances will this coverage be broader than" the Liberty Mutual policy, and it stated that it was "subject to the same terms, conditions, agreements, exclusions and definitions" as the Liberty Mutual policy.

As the primary insurer, Liberty Mutual defended Strata against the Faust estate’s lawsuit, subject to a reservation of rights. Strata eventually settled the lawsuit with Faust’s estate, and Liberty Mutual contributed a portion of the settlement in exchange for a release from Strata. Houston Casualty refused to contribute anything toward the settlement, forcing Strata to pay the remaining balance from its own funds.

Houston Casualty brought suit seeking a declaratory judgment that it had no duty to defend or indemnify Strata and that it did not breach its duty of good faith. Strata counterclaimed. On cross-motions for summary judgment, the district court concluded that North Dakota law applied, granted summary judgment to Houston Casualty, and denied summary judgment for Strata. Strata appealed the district court’s order, and Houston Casualty cross-appealed, maintaining that the district court erred in finding that the settlement exhausted the underlying policy limits.

We review a district court’s grant of summary judgment de novo and may affirm on any ground supported by the record. Moyle v. Anderson , 571 F.3d 814, 817 (8th Cir. 2009). Summary judgment is proper if "the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). Applying this standard, we conclude that the district court properly granted summary judgment to Houston Casualty because the excess insurance policy did not cover the Faust estate’s claims against Strata in the underlying lawsuit. Thus, Houston Casualty had no duty to indemnify Strata, and it did not breach its duty of good faith.

On appeal, Strata points out that Houston Casualty’s excess policy does not expressly state that it is subject to endorsements to Liberty Mutual’s underlying...