Farmers Union Mut. Ins. Co. v. Horton, 02-677.

• Decision Date: 10 April 2003
• Docket Number: No. 02-677.,02-677.
• Citation: 67 P.3d 285,2003 MT 79,315 Mont. 43
• Parties: FARMERS UNION MUTUAL INSURANCE COMPANY, Plaintiff and Respondent, v. Howard HORTON, d/b/a Howard's Apartments; and Laurel Trader, individually and as Personal Representative of the Estate of Gary A. Trader; and Gardner Asphalt Corporation, Defendants and Appellants.
• Court: Montana Supreme Court

67 P.3d 285

2003 MT 79

315 Mont. 43

FARMERS UNION MUTUAL INSURANCE COMPANY, Plaintiff and Respondent, v. Howard HORTON, d/b/a Howard's Apartments; and Laurel Trader, individually and as Personal Representative of the Estate of Gary A. Trader; and Gardner Asphalt Corporation, Defendants and Appellants.

No. 02-677.

Supreme Court of Montana.

Submitted on Briefs January 30, 2003.

Decided April 10, 2003.

David R. Paoli and Heather M. Latino, Paoli & Shea, P.C., Missoula, Montana, for Appellants.

William J. Gregoire and Stephanie A. Hollar, Smith, Walsh, Clarke and Gregoire, Great Falls, Montana, for Respondent.

Justice W. WILLIAM LEAPHART delivered the Opinion of the Court.

¶ 1 Laurel Trader appeals from the July 17, 2002, Order and Memorandum of the Fourth Judicial District Court, Missoula County, granting partial summary judgment to Farmers Union Mutual Insurance. We affirm.

¶ 2 The following issue is raised on appeal:

¶ 3 (1) Whether the District Court erred when it concluded that the employer's liability exclusion contained in Horton's insurance policy precluded coverage for injuries to Horton's employee, Gary Trader, and the resulting claims brought by Trader's wife.

FACTUAL AND PROCEDURAL BACKGROUND

¶ 4 Gary Trader, an employee of Howard Horton and Gardner Asphalt, was killed in an on-the-job accident. Gary was applying Trubond fibered aluminum liquid roof coating to the roof of an apartment building owned by Horton when he slipped on the coating and fell approximately forty feet onto a metal railing before hitting the ground. Gary's wife, Laurel, sued Horton alleging the following: premises liability, wrongful death, negligence and/or intentional malicious acts, negligent infliction of emotional distress, and intentional infliction of emotional distress. According to Trader, Horton had failed to provide Gary with a safe place to work or with proper safety equipment and training. Trader sought punitive damages and damages for loss of consortium.

¶ 5 Horton is insured by Farmers Union Mutual Insurance Company under a Comprehensive General Liability (CGL) policy. Horton requested that Farmers Union defend him in the action brought by Trader and indemnify him from Trader's claims pursuant to the CGL policy. Farmers Union refused to indemnify Horton but agreed to finance his defense.

¶ 6 In addition, Farmers Union brought its own action for declaratory judgment, seeking a determination that Trader's claims were not covered by the CGL policy. Farmers Union, Horton, and Trader filed cross motions for summary judgment. While the motions were pending, this Court decided Maney v. Louisiana Pacific Corp., 2000 MT 366, ¶ 25, 303 Mont. 398, ¶ 25, 15 P.3d 962, ¶ 25, and held that claims for infliction of emotional distress brought by an employee's family were prohibited pursuant to the exclusive remedy provisions of the workers' compensation laws. Farmers Union supplemented its briefs to account for the Maney decision and argued that Trader's infliction of emotional distress claims were barred pursuant to our holding. In response, Horton and Trader conceded that there was no coverage for claims precluded by the exclusive remedy doctrine. Horton and Trader further conceded that the "intentional act" exclusion provision contained in the policy precluded coverage for allegations of intentional misconduct and that punitive damages were statutorily excluded from coverage.

¶ 7 In light of these concessions, the issue to be resolved by the District Court was whether coverage for Trader's remaining claims was precluded by the employer's liability exclusion provision. According to Farmers Union, this provision, which excludes liability for bodily injury to employees of the insured, operated to bar coverage for claims arising out of Gary Trader's death. The exclusion provision states as follows:

This insurance does not apply to:

e. Employer's Liability.

"Bodily injury" to:

(1) An "employee" of the insured arising out of and in the course of:

(a) Employment by the insured; or

(b) Performing duties related to the conduct of the insured's business; or

(2) The spouse, child, parent, brother or sister of that "employee" as a consequence of paragraph (1) above.

This exclusion applies:

(1) Whether the insured may be liable as an employer or in any other capacity; and

(2) To any obligation to share damages with or repay someone else who must pay damages because of the injury.

The policy defines the term "employee" as including leased workers but not temporary workers. A leased worker is defined by the policy as "a person leased to [the employer] by a labor leasing firm under an agreement between [the employer] and the labor leasing firm, to perform duties related to the conduct of [the employer's] business."

¶ 8 Trader argued that, pursuant to the "employee" definition, the exclusion provision operated to exclude from coverage only those injuries sustained by leased workers, and that Gary was not a leased worker. Horton added that Trader's claims were covered by the CGL policy because he reasonably expected that under the terms of the policy, Farmers Union would provide indemnification for any employment related claims not precluded by the exclusive remedy rule of the workers' compensation laws.

¶ 9 The District Court granted Farmers Union's motion in part and denied it in part, concluding that because of the employer's liability exclusion provision of the CGL policy, there was no coverage for Gary Trader's injuries. The court also concluded that Horton's reasonable expectations were contrary to the exclusion provision and could not be relied upon to avoid the effect of the provision. In addition, the court determined that material issues of fact precluded summary judgment on the question of whether an intentional act exclusion provision contained in the policy barred coverage.

STANDARD OF REVIEW

¶ 10 The standard of review of an appeal from summary judgment is de novo. This Court will apply the same evaluation as the trial court under Rule 56, M.R.Civ.P. The moving party must establish both the absence of a genuine issue of material fact and entitlement to judgment as a matter of law. Gonzales v. Walchuk, 2002 MT 262, ¶ 9, 312 Mont. 240, ¶ 9, 59 P.3d 377, ¶ 9. Once the moving party has met its burden, the opposing party must, in order to raise a genuine issue of material fact, present substantial evidence essential to one or more elements of its case rather than mere conclusory or speculative statements. Gonzales, ¶ 9. In addition, our standard of review of a question of law is whether the trial court's legal conclusions are correct. Gonzales, ¶ 9.

DISCUSSION

¶ 11 Trader's appeal consists of a series of arguments designed to persuade this Court that her claims are covered by the CGL policy notwithstanding the limiting effect of the policy's exclusionary language. She makes the following assertions: (1) that the clear language of the employer's liability exclusion provision operates to exclude from coverage only those injuries sustained by a leased worker, and that since Gary was not a leased worker, the exclusion does not bar coverage; (2) that Horton reasonably expected that Farmers Union would defend him for employment related claims not precluded by the workers' compensation exclusivity rule; and (3) that Horton's conduct, which contributed to Gary's injury, does not satisfy the definition of an intentional act for purposes of the intentional act exclusion provision contained in the policy, and that the exclusion is, therefore, inapplicable.

¶ 12 Taking each of these arguments into account, we note that the pivotal issue is whether the employer's liability exclusion of the CGL policy is clear and unambiguous, and whether it operates to bar coverage for Trader's claims against Horton. For the reasons set forth below, we conclude that the employer's liability exclusion precludes Trader's claims. We further conclude that the resolution of this issue is dispositive and, therefore, decline to address Trader's remaining arguments regarding the intentional act exclusion provision and Horton's reasonable expectations for coverage.

¶ 13 The employer's liability exclusion, which Trader argues is inapplicable, excludes from coverage bodily injury to employees. The policy provides that "[t]his insurance does not apply to: `Bodily Injury' to... [a]n `employee' of the insured ... rising out of ... [e]mployment by the insured...." The policy's definition of an employee provides simply that an "`Employee' includes a `leased worker' [but not] a `temporary worker'."

¶ 14 Trader interprets this language as meaning that the term "employee" refers only to leased workers. She cites general rules of construction for insurance policies and contends that these rules, taken together, necessitate this strict interpretation. For example, she observes that exclusions from coverage are generally construed narrowly because they are contrary to the fundamental protective purpose of insurance policies. National Farmers Union Property v. George, 1998 MT 205, ¶ 12, 290 Mont. 386, ¶ 12, 963 P.2d 1259, ¶ 12. She also notes that "[i]f the language of a policy is clear and explicit, the policy must be enforced as written." George, ¶ 12. Applying these rules, and pursuant to the maxim, expressio unius est exclusio alterius, Trader contends that by enumerating one class of persons leased workers to be included within the definition of an employee, the CGL policy necessarily excludes all other classes of persons usually included within that definition. Trader concludes that Gary cannot be classified as an employee because he was not a leased worker, and that the employer's liability exclusion provision does not apply.

¶ 15 On this point, the District Court concluded that Trader's proposed interpretation of the term "employee" is too restrictive....