Farmers Ins. Exch. v. Wessel

• Decision Date: 22 December 2020
• Docket Number: DA 19-0727
• Citation: 402 Mont. 348,477 P.3d 1101,2020 MT 319
• Parties: FARMERS INSURANCE EXCHANGE, Petitioner, Appellee, and Cross-Appellant, v. Kate WESSEL, John Mehan, Respondents, Appellants, and Cross-Appellees, Marc Flora, Gloria Flora and Connie Crites, as Personal Representative of the Estate of John Michael Crites, Respondents.
• Court: Montana Supreme Court

402 Mont. 348

477 P.3d 1101

2020 MT 319

FARMERS INSURANCE EXCHANGE, Petitioner, Appellee, and Cross-Appellant,

v. Kate WESSEL, John Mehan, Respondents, Appellants, and Cross-Appellees,Marc Flora, Gloria Flora and Connie Crites, as Personal Representative of the Estate of John Michael Crites, Respondents.

DA 19-0727

Supreme Court of Montana.

Submitted on Briefs: September 30, 2020

Decided: December 22, 2020

For Appellants: David L. Vicevich, Lawrence E. Henke, Vicevich Law, Butte, Montana

For Appellee: Nicholas J. Pagnotta, Alexander Tsomaya, Williams Law Firm, P.C., Missoula, Montana

Justice Laurie McKinnon delivered the Opinion of the Court.

¶1 This case has its origins in two lawsuits involving neighboring landowners in a rural part of Lewis and Clark County. One claim was filed by Marc and Gloria Flora (the Floras) and the other by the Estate of John Michael Crites (the Estate). Defendants in these underlying lawsuits, Katy Wessel and John Mehan (together, the Insureds), tendered the claims to Farmers Insurance Exchange (Farmers), with whom they have a homeowners insurance policy (Policy). Farmers concluded coverage was not available because the claims asserted intentional conduct by the Insureds. Farmers continued with its defense of the Insureds and filed the instant declaratory judgment action to confirm it did not have a duty to defend or indemnify the Insureds. The First Judicial District Court, Lewis and Clark County, granted summary judgment to Farmers, concluding there was no coverage under the Policy and Farmers, therefore, did not have a duty to defend the Insureds. However, the District Court determined the issue of indemnification was not justiciable and, on that basis, denied Farmers’ motion to dismiss. Also, citing M. R. Civ. P. 56(f), the District Court denied the Insureds’ request to conduct further discovery, concluding no affidavit had been filed showing "specific reasons" why the Insureds could not present essential facts in opposition to Farmers’ summary judgment motion. Both parties appeal.

¶2 The Insureds present the following issues for review:

1. Whether Farmers had a duty to defend when the claim against the Insureds alleges intentional conduct?

2. Whether the District Court abused its discretion when it denied the Insureds’ discovery requests?

Farmers presents the following issue on cross-appeal:

3. Whether there can be a duty to indemnify in the absence of a duty to defend?

We affirm the District Court's denial of the Insureds’ discovery requests. We affirm the District Court's holding that Farmers had no duty to defend the Insureds. However, when there is no duty to defend there cannot be a duty to indemnify. Consequently, we reverse the District Court's holding that the duty to indemnify was not justiciable.

FACTUAL AND PROCEDURAL BACKGROUND

¶3 In 2008, the Insureds purchased property in Lewis and Clark County which is accessed by Turk Road. At the time, neighboring landowners, the Floras and Michael Crites, used Turk Road to access their homes located further north. Turk Road, which traverses the Insureds’ property, was the only means of access to the Floras’ and Michael Crites’ properties. Both the Floras and the Estate maintain they have a right to use Turk Road as it traverses the Insureds’ property and that Turk Road has historically provided the only means of access to their properties.

¶4 In 2008, the Insureds asked for permission to snowmobile, and otherwise recreate, on the Floras’ property. The Floras were unable to grant them permission because the property is in a conservation easement which prohibits motorized use. The Insureds became upset and retaliated by not allowing the Floras and Michael Crites to use Turk Road. The Floras and the Estate allege that the Insureds began a concerted campaign to intimidate and harass them and others who needed to use Turk Road to access their properties. As a result, the Floras purchased, from another landowner, an easement on property adjoining the Insureds’ property and constructed a new driveway which did not traverse the Insureds’ property, and which could also be used by Michael Crites.

¶5 This did not resolve the ongoing dispute. John Mehan allegedly told Mrs. Flora that "if the Floras continued to use their new driveway, Marc Flora's blood would run down it."¹ Threats were also allegedly made by the Insureds that if Crites bypassed the Insureds’ parcel by using the new driveway, it would "be the end of him, too." The Floras allege that, in retaliation for not allowing the Insureds to recreate on their property, the Insureds constructed snow berms and gates, felled trees, and created other obstacles to prevent them and others from using the new driveway to access their properties. Additionally, the Floras allege the Insureds physically threatened them; interfered with the enjoyment of their property and home; and intimidated them, including discharging firearms at them. The Floras allege they were compelled to leave their home, upon advice of law enforcement, and because they feared for their lives. The Floras have been unable to find anyone to live in their home, even for free; and their home continues to sit vacant, to decay, and cannot be sold.

¶6 In the summer of 2011, Michael Crites disappeared. His dismembered remains were found several months later near McDonald Pass. Michael Crites’ skull was subsequently discovered in a different location from the rest of his body, on the other side of the Continental Divide. Mehan was charged with felony assault with a weapon for pointing a gun at Crites, and for felony evidence tampering for removing cameras that were being used by law enforcement to investigate Crites’ murder. Law enforcement has searched the Insureds’ home on several occasions.

¶7 The Floras filed a lawsuit against the Insureds seeking declaratory and injunctive relief alleging that they have an express and/or prescriptive easement to use Turk Road; and sought relief for assault, trespass, and civil conspiracy. They allege the Insureds acted intentionally, purposefully, and with malice. The second claim against the Insureds was brought by the Estate and, like the Flora case, alleged that Crites had a right to use Turk Road and that the Insureds had threatened Crites in retaliation for the Insureds’ inability to recreate on the Floras’ property. The Estate brought claims against the Insureds for assault, trespass, intentional infliction of emotional distress, and civil conspiracy. The Estate claims these acts were intentional and purposeful.

¶8 Farmers argues that the claims, made by the Estate and the Floras against the Insureds, do not constitute an "occurrence" which would trigger coverage under the terms of the Policy. Farmers maintains there was nothing "accidental" about the Insureds’ conduct which could be construed as an "occurrence" under the Policy. Contrarily, the Insureds maintain that there are disputes of fact over whether they committed any wrongful or intentional acts which would exclude them from coverage under the Policy. The Insureds argue that a factual issue exists over whether an "occurrence" is involved in this dispute, thus triggering coverage. Finally, the Insureds argue more discovery is needed to know the basis of Farmers’ decision to deny coverage.

¶9 Relevant portions of the Policy provide that "Farmers will defend an insured against any suit seeking damages covered under Coverage E (Personal Liability)." Coverage E provides that Farmers will pay "those damages which an insured becomes legally obligated to pay because of: 1. Bodily injury resulting from an occurrence; or 2. Property damage resulting from an occurrence." Under the Policy, "occurrence" is clearly defined: "occurrence ... means an accident [.]" (Emphasis added.) The Policy further provides for a number of exclusions for intentional torts:²

12. Intentional acts.

We do not cover bodily injury, property damage or personal injury which is caused by, arises out of or is the result of an intentional act by or at the direction of any insured. By way of example this includes but is not limited to any intentional act or intentional failure to act by any insured, whether a criminal act or otherwise, where resulting injury or damage would be objectively expected to a high degree of likelihood, even if not subjectively intended or expected. This exclusion applies even if:

a. any insured mistakenly believes he or she has the right to engage in certain conduct;

b. the injury or damage is sustained by persons or property not intended or expected by any insured;

c. the injury or damage is different or greater or of a different quality than that intended or expected;

d. any insured did not understand that injury or damage may result; or

e. any insured knew the intentional act or failure to act was a violation of any penal law, whether or not an insured is actually charged with or convicted of a crime.

For purposes of application of this exclusion, a plea of guilty, no contest, or true in a criminal proceeding, which involves the same acts or activities which are the basis of a claim for damages against any insured, shall conclusively bar any bodily injury, property damage or personal injury arising or resulting from or caused by such acts or activities from.

¶10 Farmers moved for summary judgment in September 2019 after receiving answers from the Floras and the Estate admitting that their allegations against the Insureds were for "strictly intentional conduct." The District Court granted Farmers’ motion for summary judgment on the duty to defend; however, it concluded Farmers’ duty to indemnify was not yet justiciable.

STANDARDS OF REVIEW

¶11 This Court will review an order granting summary judgment de novo. M. R. Civ. P. 56(c)(3), provides: "the judgment sought should be rendered if the pleadings, the discovery and disclosure materials on file, and any affidavits shows that there is no genuine issue as to any material fact and that the movant is entitled...