Farmers Union Mut. Ins. Co. v. Oakland, 91-213
| Docket Nº | No. 91-213 |
| Citation | 251 Mont. 352, 825 P.2d 554 |
| Case Date | January 28, 1992 |
| Court | United States State Supreme Court of Montana |
Page 554
v.
Gary OAKLAND, individually and as Personal Representative of
the Estate of Loretta Oakland, d/b/a Oakland
Holding Company, Defendants and
Counterclaimants/Appellants.
Decided Jan. 28, 1992.
[251 Mont. 353] James A. Poore, III, Douglas A. Buxbaum, and Patrick M. Sullivan, Poore, Roth and Robinson, P.C., Butte, for defendants and counterclaimants/appellants.
James L. Jones, Dorsey and Whitney, Billings, Robert F. James, James, Gray & McCafferty, Great Falls, for plaintiff and respondent.
TRIEWEILER, Justice.
On July 20, 1988, Farmers Union Mutual Insurance Company filed a declaratory judgment action against Gary and Loretta Oakland in the Thirteenth Judicial District Court in Yellowstone County. The District Court held that the insurance policy issued to the Oaklands by Farmers Union did not require Farmers Union to pay for additional costs related to the removal of materials containing asbestos during reconstruction of the insureds' property. Gary Oakland appeals. We reverse.
The issue on appeal is whether the District Court erred in holding that a "code exclusion" clause in the insurance policy relieved Farmers Union of any obligation to pay additional costs for the removal of debris from the insured's fire-damaged building, when the cost of removal was increased because of regulations related to the removal of materials that contain asbestos.
Page 555
The Oaklands purchased the Broadwater Center, a commercial property in Billings, on November 1, 1979. The Broadwater Center was an older building, and it contained asbestos pipe insulation and floor tile. On October 1, 1986, the Oaklands purchased a fire and casualty insurance policy for the Broadwater Center from Farmers Union. On January 4, 1988, a fire damaged the insured property.
Gary Oakland immediately notified Farmers Union of the loss. Farmers Union retained an independent adjuster to handle the claim. Oakland then hired his own adjuster. The adjusters disagreed on how to obtain reconstruction bids from contractors. In addition, they [251 Mont. 354] disagreed about whether the "code exclusion" clause in the insurance policy relieved Farmers Union of the obligation to pay the higher costs associated with removal and disposal of debris that contained asbestos.
Consequently, in mid-February of 1988 Farmers Union decided to submit the matter to an appraiser selected by each party and an umpire selected by the appraisers. On May 15, 1988, the umpire determined that the total loss was worth $773,020. The umpire's award attributed $70,540 to the cost of asbestos removal.
Almost immediately a dispute arose on the question of whether the appraisers had subtracted a deduction for depreciation on certain items as required by the insurance policy. Farmers Union therefore sought a declaratory judgment regarding the asbestos and depreciation issues. The Oaklands filed a counterclaim asserting that Farmers Union had acted in bad faith by unnecessarily prolonging the adjustment process.
Both parties moved for summary judgment on the asbestos, depreciation, and bad faith issues. On January 18, 1990, the District Court entered an order disposing of several pending motions. This order denied the pending summary judgment motions on the asbestos and depreciation issues. However, the court appended a memorandum to the order in which it stated:
In connection with the asbestos issue, a question has been raised as to whether the Seventy Thousand Five Hundred Forty and No/100ths Dollars ($70,540.00) figure is the amount determined to be the costs of removing the asbestos material or is the amount in excess of what it would have cost to remove the material had it not contained asbestos. The Court has concluded [Farmers Union] is not required to pay any increased cost of repair or reconstruction by reason of the statutes and ordinances regulating asbestos...
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