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Huckins v. United Services Automobile Association

Supreme Court of Montana

June 13, 2017

JESSICA HUCKINS, Plaintiff and Appellant,
v.
UNITED SERVICES AUTOMOBILE ASSOCIATION, Defendant and Appellee.

          Submitted on Briefs: April 19, 2017

         APPEAL FROM District Court of the Twenty-First Judicial District, In and For the County of Ravalli, Cause No. DV 15-331 Honorable James A. Haynes, Presiding Judge

          For Appellant: Jesse C. Kodadek, Worden Thane, P.C., Missoula, Montana

          For Appellee: David M. McLean, Ryan C. Willmore, McLean & Associates, PLLC, Missoula, Montana

          OPINION

          JIM RICE JUSTICE.

         ¶1 Appellant Jessica Huckins (Huckins) appeals the order of the Twenty-First Judicial District Court, Ravalli County, granting summary judgment in favor of Appellee United Services Automobile Association (USAA), and holding that USAA did not breach its duty to defend under policies held by the insured. We reverse and address the following issue:

Did the District Court err by holding that USAA did not breach its duty to defend under the homeowner's policies or the renter's policy?

         FACTUAL AND PROCEDURAL BACKGROUND

         ¶2 Barry Van Sickle (Van Sickle) purchased a home in Stevensville, Montana, in 2001. In 2010, Van Sickle placed the home for sale and, in the process, completed a Seller's Property Disclosure Statement Montana Association of Realtors® Standard Form (Disclosure). The Disclosure requested the seller to "Please describe any Adverse Material Facts concerning the items listed or other components, fixtures or matters, " followed by a request for information about the "BASEMENT: (Leakage, Flooding, Moisture or evidence of Water, and Fuel Tanks)." In the blank next to this request, Van Sickle wrote "N\A."

         ¶3 On January 28, 2014, Huckins conveyed an offer on Van Sickle's home. Van Sickle accepted the offer on January 29, 2014, and, "[s]oon thereafter, " the Disclosure completed by Van Sickle was provided to Huckins. Prior to closing, Huckins paid for a home inspection and inquired into home insurance costs. The inspection revealed that there was an "unconventional" sump pump in the basement, and the home insurance quotes indicated that a claim for flooding in the home had been made in 2011. Huckins closed on the transaction in March 2014, but upon entering the home after the closing, she found the basement flooded.

         ¶4 Huckins filed a complaint against Van Sickle and his real estate agent[1] (Underlying Complaint). The Underlying Complaint stated that the Disclosure's question about the basement was "left blank by Van Sickle" and provided a screenshot of that question with a blank answer. Huckins alleged that Van Sickle should have disclosed the previous basement flooding problems and set forth claims of negligent misrepresentation, negligence, fraud and fraudulent misrepresentation, constructive fraud, violations of the Montana Consumer Protection Act, deceit, breach of the covenant of good faith and fair dealing, and for punitive damages.

         ¶5 At times related to the events stated by the Underlying Complaint, Van Sickle held three insurance policies through USAA. From 2001 to January 3, 2014, Van Sickle was covered by an annually renewing homeowner's policy, with identical terms each year (Pre-2014 Policy). When the policy renewed for the January 4, 2014 to January 4, 2015 term, USAA added additional exclusions, including one that excluded coverage for damages "arising out of your failure, intentionally or unintentionally, to disclose information regarding the sale or transfer of real or personal property." (2014 Policy) (collectively "Homeowner's Policies"). The Homeowner's Policies both included personal liability protection that provided both indemnity and a defense "[i]f a claim is made or a suit is brought against an 'insured' for damages because of 'bodily injury' or 'property damage' caused by an 'occurrence' to which this coverage applies." In addition to the Homeowner's Policies, Van Sickle, who at the time had moved to and rented a home in California, had a renter's policy that ran from March 15, 2014, to March 15, 2015 (Renter's Policy).

         ¶6 Van Sickle tendered the Underlying Complaint to USAA, who conducted a telephone interview with Van Sickle and his wife, Michelle Van Sickle (Michelle). Following the interview, USAA sent a letter to Van Sickle denying coverage for the claims stated in the Underlying Complaint, stating "[t]he allegations are concerning alleged misrepresentation and concealment of material facts concerning the sale of property, " and that the policy required an "occurrence as defined" to provide coverage, noting that "[m]isrepresentation and concealment is not an accident and does not give rise to an occurrence." USAA's letter also cited the exclusion for "property damage to property owned by an insured."

         ¶7 Van Sickle then settled the underlying litigation with Huckins by way of a consent judgment of $300, 000 and Van Sickle's assignment of all claims under his insurance policies to Huckins in exchange for a covenant not to execute. The District Court entered the consent judgment on June 25, 2015, concluding it was "reasonable in light of the facts and circumstances of this case, and the risks and costs of litigation." Huckins then brought the instant case against USAA, stating claims for breach of duty to defend Van Sickle, breach of contract, violations of the Montana Unfair Trade Practices Act, breach of the covenant of good faith and fair dealing, and punitive damages. Huckins and USAA moved for summary judgment on the primary issue of whether USAA had breached its duty to defend Van Sickle. The District Court reasoned that the claim did ...


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