LEONARD LANDA and LANDA-HARBAUGH & ASSOCIATES, LLC, a Montana Limited Liability Corporation, Plaintiffs and Appellants,
ASSURANCE COMPANY OF AMERICA, Defendant and Appellee.
Submitted on Briefs: April 17, 2013
APPEAL FROM: District Court of the Fourth Judicial District, In and For the County of Missoula, Cause No. DV 09-508 Honorable Karen Townsend, Presiding Judge
Elizabeth A. O'Halloran; Milodragovich, Dale & Steinbrenner, P.C.; Missoula, Montana
Steve Reida;, Patrick C. Riley; Landoe, Brown, Planalp & Reida, P.C., Bozeman, Montana
Michael E Wheat, Justice
¶1 Plaintiffs and appellants Leonard Landa and Landa-Harbaugh & Associates, LLC (collectively "Landa") appeal the grant of defendant and appellee Assurance Company of America's (Assurance) motion for summary judgment by the Fourth Judicial District Court of Montana, Missoula County. We affirm.
¶2 We restate the issues on appeal as follows:
¶3 1. Did the District Court err by determining that Assurance had no duty to defend Landa because Alsup's claim did not involve an "occurrence" as defined by the insurance policy?
¶4 2. Did the District Court err by determining that Assurance had no duty to defend Landa because Alsup's claim did not involve a "bodily injury" as defined by the insurance policy?
¶5 3. Did the District Court err by determining that Assurance did not have a duty to conduct an independent investigation of Landa's claim?
FACTUAL AND PROCEDURAL BACKGROUND
¶6 Leonard Landa was the sole managing member of Landa-Harbaugh & Associates, LLC, a Montana limited liability corporation licensed to sell securities and insurance in this state. Landa carried commercial general liability insurance through Assurance, a New York entity licensed to do business in Montana. This appeal arises out of Assurance's refusal to defend Landa against claims made by Olan L. "Bubba" Alsup (Alsup), a former employee of Landa's.
¶7 Alsup had previously worked as a salesman at Bretz RV & Marine in Missoula, Montana. Landa approached Alsup and encouraged him to quit his job at Bretz and come to work at Landa selling insurance. Alsup claimed that Landa promised to train him to run the insurance business with an eye towards soon retiring and selling Alsup the business for a "reasonable price." Alsup claimed that he quit his job at Bretz based on these representations and he began to work for Landa in January of 2002. However, Alsup claimed that Landa spent much of his time out of the office on vacation instead of training him or transferring him clients. Alsup eventually came to believe that Landa had no intention of either retiring or selling him the insurance business. When Alsup did approach Landa about buying the business, Landa repeatedly quoted prices that Alsup considered to be unreasonable and unrealistic given his valuation of the business. Alsup quit working at Landa in 2006 due to his belief that Landa's promises had been a ruse.
¶8 Alsup thereafter filed a complaint and demand for a jury trial on April 1, 2008, alleging that Landa had engaged in "fraud and constructive fraud, " "misrepresentation and deceit, " "deception in the character of employment, " "negligence, " "breach of contract, " and "tortious breach of the implied covenant of good faith and fair dealing" by inducing Alsup to come work for him under allegedly false pretenses. Landa tendered defense of Alsup's claim to Assurance, through Zurich North America, on April 18, 2008. Landa included a copy of Alsup's complaint with this request.
¶9 Assurance declined to defend Landa, asserting that the allegations set forth in Alsup's complaint were not covered under Landa's policy. The policy sets out the following relevant coverages under "Section I – Coverages":
COVERAGE A. BODILY INJURY AND PROPERTY DAMAGE LIABILITY
1. Insuring Agreement
a. We will pay those sums that the insured becomes legally obligated to pay as damages because of 'bodily injury' or 'property damage' to which the insurance applies. We will have the right and duty to defend the insured against any 'suit' seeking those damages. However, we will have no duty to defend the insured against any 'suit' seeking damages ...