Nat'l Indem. Co. v. State

• Decision Date: 23 November 2021
• Docket Number: DA 19-0533
• Citation: 2021 MT 300
• Parties: NATIONAL INDEMNITY COMPANY, Plaintiff and Appellant, v. STATE OF MONTANA, Defendant and Appellee, and TERRY JELLESED, et al., Intervenors.
• Court: Montana Supreme Court

2021 MT 300

NATIONAL INDEMNITY COMPANY, Plaintiff and Appellant,
v.
STATE OF MONTANA, Defendant and Appellee,

and TERRY JELLESED, et al., Intervenors.^[1]

No. DA 19-0533

Supreme Court of Montana

November 23, 2021

SYNOPSIS OF THE CASE

The Montana Supreme Court affirmed a District Court's ruling that the State of Montana is covered by an insurance policy it had with National Indemnity Company (National) for claims made against the State for injury and death resulting from asbestos exposure in Libby, Montana. The Court also upheld the District Court's ruling that National breached its duty to defend the State against the injury claims. Although the Court upheld the District Court's rulings that led to entry of a $97, 833, 193.39 judgment against National, the Court reversed the District Court's rulings regarding qualifying "occurrences" under the policy, and regarding coverage for claimants who were exposed to asbestos prior to the period covered by the policy, but suffered injury during that period. The Court remanded for further consideration of these issues.

This insurance coverage case follows nearly two decades of litigation between the State and claimants who alleged they were harmed by the State's failure to warn them of the hazards of asbestos exposure that became evident from the State's inspections over many years of the vermiculite mining and milling operations in Libby. National insured the State against general liability from 1973-1975. Beginning in 2000, claims alleging injuries and death from asbestos exposure that occurred before, during, and after that period were made against the State. The State and National initiated discussions regarding the duties of National to defend the State against the claims and to provide coverage under the policy, but no agreement on these issues was finalized. During this time, the State defended itself and settled claims, including a global settlement of claims in 2009 for payment of $43 million. National participated in that settlement but filed this action in 2012, seeking determinations that it had no obligation to defend the State or to cover the claims.

The Supreme Court held that the State did not initially tender the claims to National for defense, but when it ultimately did so in 2005, National breached its duty to defend by offering to defend the State only on a partial, or pro rata, basis. After eventually agreeing to fully defend the State in 2006, subject to a reservation of rights...