American States Ins. Co. v. Willoughby

• Decision Date: 27 August 1992
• Docket Number: No. 92-022,92-022
• Citation: 836 P.2d 37,254 Mont. 218
• Parties: AMERICAN STATES INSURANCE COMPANY, Plaintiff and Respondent, v. Susan WILLOUGHBY, Mark T. Nielsen and John Geering, Defendants and Appellants.
• Court: Montana Supreme Court

Page 37

836 P.2d 37

254 Mont. 218

AMERICAN STATES INSURANCE COMPANY, Plaintiff and Respondent, v.Susan WILLOUGHBY, Mark T. Nielsen and John GeeringDefendants and Appellants.

No. 92-022.

Supreme Court of Montana.

Submitted on Briefs June 11, 1992.

Decided Aug. 13, 1992.

As Corrected on Petition for Rehearing Aug. 27, 1992.

James P. Healow, Sweeney & Healow, Billings, for defendants and appellants.

Guy W. Rogers, Anderson, Brown, Gerbase, Cebull, Fulton, Harman & Ross, Billings, for plaintiff and respondent.

McDONOUGH, Justice.

Defendants appeal from the decision of the Thirteenth Judicial District, Yellowstone County, granting Plaintiff's motion for summary judgment and denying Defendant's motion for summary judgment.Plaintiff, American States, had requested a declaratory judgment stating that it did not have to indemnify or defend Defendant, Mark Neilsen, in two civil actions because the acts committed by Neilsen were not covered under his American States insurance policy.We affirm the District Court.

There are two issues on appeal:

I.Did the District Court err in granting summary judgment to Plaintiff because it ruled that Neilsen's actions were not covered under his American States policy?

II.Did the District Court err in concluding that Neilsen had the burden of proving the reasonableness of the settlements with Willoughby and Geering?

Mark Neilsen attended the automobile races at Yellowstone Belaro Speedway with his wife and friends.Sometime during the evening, security guards received a complaint about Neilsen's behavior.Shortly thereafter, two security guards, Susan Willoughby and John Geering, entered the area where Mark Neilsen and his party were sitting.Susan and John observed Mark Neilsen being disruptive and approached him to request that he quiet down but he refused to change his behavior.

A physical altercation followed between Neilsen and Willoughby when Neilsen pushed or fell on Willoughby and they both fell to the ground.John Geering approached the two on the ground and attempted to assist Susan.Eventually, Mark Neilsen's wife, Joe Gonzales, the security guard supervisor, and a friend of Mark's joined the melee.Ultimately, Mark was restrained and taken under the grandstand where he created another disturbance, tussling with Deputy Sheriff Ellis and damaging a police vehicle before he was subdued and placed inside the vehicle.

Susan Willoughby and John Geering sustained injuries during the altercation and both went to the hospital following the incident.Willoughby complained of a sore back, sore leg, and swelling and a cut on her leg while John Geering was treated for three bites from Neilsen sustained during the scuffle.Neither party required hospitalization although Ms. Willoughby obtained a prescription.

Criminal charges against Mark Neilsen followed the incident.Mr. Neilsen was charged with three counts of misdemeanor assault against Susan Willoughby, John Geering and Deputy Sheriff Ellis.Mr. Neilsen pled guilty to these charges as well as to one count of criminal mischief for damage to the police vehicle.

Susan Willoughby and John Geering filed actions against Mark Neilsen for damages incurred during the incident at the Speedway and Neilsen sought indemnification from his insurance company.Neilsen's insurance policy with American States provided that it would:

pay up to our limit of liability for the damages ... and provide a defense at our expense ... if ... a suit is brought against an insured for damages because of personal injury ... caused by an occurrence to which this coverage applies....

The exclusion provision of the policy states that coverage does not apply to bodily injury ... which is expected or intended by the insured.In addition, this provision states that the exclusion "does not apply to an act committed by or at the direction of the insured not intended to cause serious bodily injury ....(Emphasis original.)

The word "occurrence" in the policy means an accident, including exposure to conditions, which results, during the policy period, in ... personal injury."[P]ersonal injury" means bodily injury....

A procedural history of two underlying cases will clarify the present case.On May 9, 1989, DefendantSusan Willoughby filed an action against Mark Neilsen for personal damages for assault and battery.The complaint was later amended to include a count of negligence.Neilsen tendered the defense of this action to American States requesting that it provide a defense and indemnification of any damages awarded in the Willoughby action.American States offered to provide a defense for Mr. Neilsen under a reservation of rights.

Subsequent to this arrangement, Neilsen entered into a settlement with Susan Willoughby for $25,500 with the knowledge of American States, but without its consent.Neilsen assigned his rights under the policy to Susan Willoughby in satisfaction of the settlement agreement.

John Geering filed his action against Mark Neilsen on May 29, 1991.Virtually the same sequence of events followed in this action and ultimately, Neilsen entered into a similar settlement agreement with Geering, assigning his rights under his insurance policy without American State's knowledge or consent.

American States filed the present action for a declaratory judgment that it did not have to indemnify or defend Neilsen in either of these actions.The District Court granted summary judgment to American States.

Summary judgment is only proper under Rule 56(c), M.R.Civ.P., where the record discloses that no genuine issue of material fact exists and the moving party is entitled to judgment as a matter of law.New Hampshire Ins. Group v. Strecker, (1990), 244 Mont. 478, 480, 798 P.2d 130, 131.

I.

Did the District Court err in granting summary judgment to Plaintiff because it ruled that Neilsen's actions were not covered under his American States policy?

American States contended that Neilsen's actions were intentional acts and thus excluded from coverage under his insurance policy.If the company was liable for his actions, then American States argued that the settlement agreements were unreasonably high and that Neilsen had the burden to prove they were reasonable.

However, the Defendants contended that Neilsen's actions resulted in unintended injuries and were therefore accidental.They argued that accidental injuries fell within the coverage of the insurance policy and the exclusion provision in the policy was not applicable.

The District Court concluded in its...