United States District Court, D. Montana, Great Falls Division
THE PHOENIX INSURANCE COMPANY, a Connecticut Corporation, Plaintiff,
ED BOLAND CONSTRUCTION, INC., Defendant.
MORRIS, UNITED STATES DISTRICT COURT JUDGE
The Phoenix Insurance Company (Phoenix) brought this
declaratory judgment action for a determination of its rights
and obligations under a Commercial General Liability (CGL)
policy issued to Defendant Ed Boland Construction, Inc.
(EBC). Phoenix seeks a ruling that it has no duty to defend
EBC in the federal lawsuit entitled Northbank Civil &
Marine, LLC v. Ed Boland Construction, Inc., CV
15-38-GF-BMM. Presently before the Court are the
parties's cross-motions for summary judgment on whether
Phoenix possesses a duty to defend EBC.
States Magistrate Judge John Johnston entered Findings and
Recommendations in this matter on September 15, 2016. (Doc.
43). Judge Johnston concluded that Phoenix had no duty to
defend or indemnify EBC with respect to the claims asserted
by Northbank in Cause CV-15-38-GF-BMM. Judge Johnston
recommended that Phoenix's Motion for Summary Judgment be
granted, and that EBC's Motion for Summary Judgment be
denied. (Doc. 43 at 22-23). EBC filed objections to Judge
Johnston's Findings and Recommendations on September 29,
2016. (Doc. 44). Phoenix filed a response to EBC's
objections on October 11, 2016. (Doc. 45).
Court reviews de novo findings and recommendations to which
objections are made. 28 U.S.C. § 636(b)(1). No review is
required of proposed findings and recommendations to which no
objection is made. Thomas v. Arn, 474 U.S. 140,
was the general contractor on a construction project with the
Federal Highway Administration (FHA) in 2014. Northbank had
contracted with the FHA to repair and reconstruct the
Swiftcurrent Creek Spillway Bridge in Glacier National Park.
EBC was a subcontractor on the project. EBC had contracted
with Northbank to perform drilling and pile installation
services. The subcontract imposed a requirement on EBC to
perform its work under the general direction of Northbank and
in accordance with the primary contract between Northbank and
began its work on or about September 30, 2014. Difficulties
with the drilling and pile installation arose shortly after
work began. EBC informed Northbank on October 2, 2014, that
it had encountered unforeseen conditions at the work site
that hindered its performance. The unforeseen site conditions
included oversized rip-rap, concrete, and timbers. The FHA
informed Northbank on the same date that it had concerns over
EBC's ability to complete the pile installation according
to contract specifications. The FHA alleged that EBC had
brought equipment for use on the project that differed from
the equipment that it had represented that it would be using
in its installation submittal to the FHA.
issued EBC a three day notice to cure on October 7, 2014. The
notice informed EBC that it had three days to gather the
equipment that the FHA had requested be brought to the site
or be declared in default under the terms of the subcontract.
determined on about October 14, 2014, that EBC was unable to
complete its subcontract according to project specifications.
Northbank terminated EBC from the project. Northbank sought
replacement contractors to complete EBC's drilling and
pile installation work. The project was delayed while
Northbank was hiring the replacement contractors. Some
construction equipment incurred downtime during the
construction delay period.
filed the underlying action, Northbank Civil &
Marine, LLC v. Ed Boland Construction, Inc., CV
15-38-GF-BMM, on May 6, 2015. Northbank asserted claims
against EBC for breach of contract, negligence, and negligent
misrepresentation. Northbank sought to recover from EBC: (1)
the additional sums that it had paid the replacement
contractors over and above the original amount it expected to
pay EBC for the drilling and pile installation work (Doc.
23-3 at 5); and (2) certain expenses that Northbank had
incurred during the construction delay period that were
allegedly caused by EBC's failed performance. (Doc. 23-3
at 6-7); Doc. 12-7 at 2-3).
additional sums Northbank paid to replacement contractors
included $8, 000 paid to subcontractor Bay Materials LLC (Bay
Materials) to reimburse Bay Materials for an insurance
deductible Bay Materials paid for the repair of a damaged
excavator. (Doc. 12-7 at 4). The expenses Northbank incurred
during the construction delay period included: rental of a
hydraulic crane that sat idle during the construction delay
period ($6, 500); rental of “earthwork/roadway”
equipment that sat idle during the construction delay period
($10, 200); the use of two work trucks that sat idle during
the construction delay period ($3, 780); and the rental of
ground thawing equipment ($7, 788). (Doc. 12-7 at 2-3).
insured unde Commercial General Liability Policy Number
DT-CO-3595N220-PHX-14, issued by Phoenix, with a policy
period of April 1, 2014 to April 1, 2015. EBC tendered
Northbank's Complaint to Phoenix. Phoenix agreed to
defend EBC under a reservation of rights. Phoenix filed the
present declaratory judgment action on August 27, 2015. The
underlying lawsuit (Cause CV 15-38-GF-BMM) has been resolved.
The Court dismissed Cause CV 15-38-GF-BMM with prejudice on
December 20, 2016, pursuant to a stipulation of the parties.
interpretation of insurance contracts generally presents a
question of law for the Court. Modroo v. Nationwide Mut.
Fire Ins. Co., 191 P.3d 389, ¶ 23 (Mont. 2008). The
Court must examine the insurance contract as a whole.
Id. Insurance contracts should be interpreted
according to their usual, common sense meaning as viewed from
the perspective of a reasonable consumer of insurance
products. Park Place Apartments, L.L.C. v. Farmers Union
Mut. Ins. Co., 247 P.3d 236, 239 (Mont. 2010). The Court
must enforce clear and explicit terms as they are written.
Allstate Ins. Co. v. Wagner-Ellsworth, 188 P.3d
1042, ¶ 16 (Mont. 2008). The burden rests on the insured
to establish coverage under the general coverage provision.
Travelers Cas. & Sur. Co. v. Ribi Immunochem
Research, Inc., 108 P.3d 469, ¶ 29 (Mont.
2005). The burden rests on the insurer to establish the
applicability of a coverage exclusion. Id. The
insured has the burden to prove an exception to an exclusion.
Id. at ¶ 30.
Duty to Defend
insurer's duty to defend its insured arises when a
complaint against the insured alleges facts which, if proven,
would result in coverage under the policy at issue.
Tidyman's Mgmt. Servs. v. Davis, 330 P.3d 1139
¶ 22 (Mont. 2014). There is no duty to defend “if
there is no coverage under the terms of the policy based on
the facts contained in the complaint.” Steadele v.
Colony Ins. Co., 260 P.3d 145, ¶ 25 (Mont. 2011).
The insurer has no obligation to search for information
outside of the complaint to determine whether coverage
exists. Newman v. Scottsdale Ins. Co., 301 P.3d 348,
¶ 56 (Mont. 2013). An insurer may not ignore, however,
information that it actually obtains. Id. When ...