Essex Ins. Co. v. Moose's Saloon, Inc.

• Decision Date: 15 August 2007
• Docket Number: No. 05-054.,05-054.
• Citation: 166 P.3d 451,338 Mont. 423,2007 MT 202
• Parties: ESSEX INSURANCE COMPANY, a Virginia Corporation, Plaintiff and Appellant, v. MOOSE'S SALOON, INC., a Montana Corporation, Clark Vogt, and John Doe, Defendants and Respondents.
• Court: Montana Supreme Court

166 P.3d 451

2007 MT 202

338 Mont. 423

ESSEX INSURANCE COMPANY, a Virginia Corporation, Plaintiff and Appellant, v. MOOSE'S SALOON, INC., a Montana Corporation, Clark Vogt, and John Doe, Defendants and Respondents.

No. 05-054.

Supreme Court of Montana.

Submitted on Briefs August 17, 2005.

Decided August 15, 2007.

For Appellant: Steven R. Milch, Crowley, Haughey, Toole & Dietrich, PLLP, Billings, Montana.

For Respondent: Stephen C. Berg, Johnson, Berg, McEvoy & Bostock, PLLP, Kalispell, Montana.

Justice JAMES C. NELSON delivered the Opinion of the Court.

¶ 1 This is an appeal by Essex Insurance Company ("Essex") from two orders and the final judgment of the District Court for the Eleventh Judicial District, Flathead County. We reverse.

¶ 2 The dispositive issue on appeal is whether the District Court abused its discretion in granting the M.R. Civ. P. 60(b)(6) motion filed by Moose's Saloon ("Moose's") and Clark Vogt ("Vogt"). We therefore do not address the other two issues raised by Essex, which pertain to rulings by the District Court after it granted the Rule 60(b)(6) motion.

FACTUAL AND PROCEDURAL BACKGROUND

¶ 3 On June 17, 1994, an altercation occurred between Mark Yarde ("Yarde"), Vogt, and Dana Severy ("Severy") at Moose's. According to Yarde's version of the events, Vogt (an employee of Moose's) was removing him from the bar on the night in question. On their way out, Vogt grabbed Yarde around the neck, shoved Yarde against the wall, and then both men fell onto the ground. Vogt stood up and then proceeded to break Yarde's leg by stomping on it. According to Vogt, however, as he escorted Yarde out of the bar, Yarde got into a fight with Severy (a bar patron of Moose's), who was standing nearby. When Vogt separated the two, Yarde grabbed for Vogt's throat, at which point Vogt pushed Yarde down onto the ground.

¶ 4 On April 11, 1995, Yarde filed a personal injury lawsuit against Moose's, Vogt, and Severy. In his complaint, Yarde alleged that Severy and Vogt, while in the scope and course of his employment with Moose's, "negligently injured" Yarde in the bar fight. He also alleged that Moose's was negligent in its hiring and supervision of Vogt. Pursuant to Moose's insurance policy, Essex agreed to investigate and provide Moose's and Vogt with a defense in Yarde's suit; however, Essex reserved its right to deny coverage if any exclusions in the policy applied. During the course of its investigation, Essex learned that Yarde had given a witness statement to the Kalispell Police Department stating that Vogt had committed assault and battery on him.

¶ 5 On May 21, 1996, Essex filed a complaint for a declaratory judgment in the District Court, naming Moose's, Vogt, and John Doe (who was later identified as Severy) as defendants. Essex sought a declaration that, pursuant to the insurance policy, Essex had neither a duty to defend nor a duty to indemnify Moose's and Vogt with regard to the claims asserted by Yarde in the personal injury lawsuit. The basis for Essex's complaint was that the insurance policy contained a number of applicable exclusions. First, according to Essex, the incident involving Yarde, Vogt, and Severy was not an "accident" or "occurrence" as those terms were defined in the policy. Second, the policy contained an express exclusion of coverage for damages resulting from an assault and battery or for any act or omission in connection with the prevention or suppression of an assault and battery, whether instigated or caused by Moose's, an employee of Moose's, or a patron. Lastly, the policy contained an express exclusion for coverage of any claims arising out of charges or allegations of negligent hiring, placement, training, or supervision.

¶ 6 Essex moved for summary judgment on September 10, 1996, on the grounds that "there is no coverage, no duty to defend and no indemnity obligation because of the occurrence language of the policy, because of the assault and battery exclusion of the policy and because of the hiring/supervision exclusion of the policy." Although Yarde had alleged negligence in the personal injury lawsuit, Essex maintained that Yarde was "factually claiming assault and battery." Additionally, Essex maintained that, for the purposes of its motion for summary judgment it did not matter whose version of the incident (Yarde's or Vogt's) was true. According to Essex, "[i]n either version of the facts, there was an assault."

¶ 7 Moose's argued in response that the depositions of Yarde and Vogt created material issues of fact regarding the altercation between the two of them. Moose's maintained that it was unclear whether there was an "intentional act" by Vogt or simply an accidental fall during the course of the altercation between Yarde and Severy. Therefore, according to Moose's, summary judgment was not appropriate.

¶ 8 The District Court disagreed and, on April 23, 1997, granted Essex's motion. The court determined that there were no issues of material fact as to the acts in question, noting that "either Vogt assaulted Yarde, Yarde assaulted Vogt, or Severy and Yarde assaulted each other and Vogt tried to suppress it, or some combination of all three events occurred." The court further determined that the assault and battery exclusion "excludes the types of acts at issue in the underlying matter of Yarde v. Moose's Saloon, Inc., et al." Finally, the court concluded that the "accident" and "occurrence" exclusion and the negligent hiring and supervision exclusion also applied. Thus, the court declared that "Essex Insurance Company has neither a duty to defend nor a duty to indemnify Moose's Saloon, Inc., or any of its employees, including Vogt, or any unnamed John Doe, with regard to any of the claims asserted by Mark Yarde." Significantly, Moose's, Vogt, and Severy did not appeal from the District Court's order granting summary judgment in favor of Essex.

¶ 9 Yarde's personal injury lawsuit ultimately went to trial and, on February 12, 1999, the jury returned a verdict against Moose's, Vogt, and Severy. On the special verdict form, the jury determined that Moose's, Vogt, and Severy were all negligent and that they were each a cause of Yarde's injury. The jury also determined that Vogt had assaulted or battered Yarde and that Vogt had acted with malice. The District Court thereafter entered judgment in favor of Yarde in the sum of $159,500.

¶ 10 On January 12, 2000—nine months after the District Court had entered judgment in favor of Yarde in the personal injury lawsuit and approaching three years after the District Court had granted Essex's motion for summary judgment in the declaratory judgment action—Moose's and Vogt filed a motion pursuant to M.R. Civ. P. 60(b)(6) for relief from the District Court's judgment in the declaratory judgment action.¹ They noted that in that action, the District Court had "held that Vogt's acts were intentional and that the facts surrounding his altercation with Yarde did not support a theory of negligence"; yet, in the personal injury lawsuit, the District Court had "entered judgment on the verdict finding [Moose's and Vogt] negligent." According to Moose's and Vogt, this created "an inconsistency or irregularity in the proceedings" which "prevented an accurate determination on the merits thereby prejudicing [them]." Specifically, they explained that "despite having been found `negligent' by a 12-person jury, [Moose's and Vogt] are not entitled to indemnification by Essex for Vogt's negligent acts because those same acts were deemed `intentional' in the declaratory judgment action." Therefore, they asked the District Court to reopen the declaratory judgment action and "re-determine the issue of insurance policy coverage."

¶ 11 In response, Essex argued, among other things, that Moose's and Vogt's motion must fail on the merits because Moose's and Vogt had failed to establish that the circumstances of the case were so extraordinary as to warrant relief under Rule 60(b)(6). In this regard, Essex noted that Moose's and Vogt had not appealed the District Court's order granting summary judgment in the declaratory judgment action and that Rule 60(b)(6) is not to be used as a substitute for appeal.

¶ 12 The District Court, however, disagreed and, on February 18, 2000, granted the Rule 60(b)(6) motion. The court opined that "the grounds for appealing the declaratory judgment action did not arise until judgment was rendered in the personal injury action. Thus, it cannot be said that [Moose's and Vogt] had an opportunity to appeal the declaratory judgment action but voluntarily chose to forego an appeal." The District Court also stated that Moose's and Vogt had "demonstrated that an inconsistency or irregularity in the proceedings prevented an accurate determination on the merits thereby prejudicing them." Therefore, the court concluded that it was "only fair and equitable to allow [Moose's and Vogt] to reopen the declaratory judgment action and seek a redetermination of insurance coverage." Essex filed a motion for reconsideration, which the District Court denied.

¶ 13 The parties thereafter filed cross-motions for summary judgment. Moose's and Vogt argued that none of the policy exclusions applied and that Essex, therefore, had a duty to defend and indemnify them "for damages paid and expenses incurred in connection with the personal injury action brought by Yarde." They requested that the District Court order Essex to do so. For its part, Essex argued that "under every conceivable theory upon which the jury could hold Moose's Saloon liable in the underlying action, no coverage exists under the Essex policy." They noted that although the jury had found Moose's, Vogt, and Severy negligent, the jury had also found that Vogt assaulted and battered Yarde.

¶ 14 On March 17, 2004, the District Court granted Moose's and Vogt's motion for summary judgment and denied Essex's motion for summary judgment. The court determined that the...