United States District Court, D. Montana, Missoula Division
L. CHRISTENSEN, CHIEF JUDGE UNITED STATES DISTRICT COURT
the Court is Plaintiff American Reliable Insurance
Company's ("American Reliable") motion for
summary judgment. For the reasons explained below, the Court
denies the motion.
and Procedural History
Lockard ("Lockard") was employed by the United
States Fish and Wildlife Service ("USFWS") as a
Regional Field Dive Officer. Karen Jane Nelson
("Nelson") also worked for the USFWS. On September
8, 2015, Nelson accompanied Lockard into Quartz Lake in
Glacier National Park to collect information regarding lake
trout. The trip entailed an overnight stay in a remote USFWS
cabin, and Lockard and Nelson slept in the same room in
separate but adjacent beds. Nelson alleged that Lockard knew
she had taken sleep medication, waited for her to fall
asleep, and then sexually assaulted her. Nelson claims that
the assault caused her damages, including anxiety,
embarrassment, humiliation, insomnia, nightmares, and
September 9, 2015, Nelson filed a civil Complaint (hereafter
"Underlying Complaint") against Lockard alleging
that he negligently proceeded with a sexual advance without
her permission. Lockard tendered the Underlying Complaint to
American Reliable and requested a defense and
indemnification. During the relevant period of his employment
with USFWS, Lockard was insured by American Reliable, policy
No. LOG000313-7 (the "Policy"). The Policy is a
standard "occurrence" based homeowner's policy
which provides coverage for bodily injury and property
damage. American Reliable filed this declaratory action and
now seeks summary judgment arguing that the policy precludes
coverage because the conduct alleged does not qualify as an
"occurrence" under the Policy, and that five Policy
exclusions further preclude coverage:
1. "Expected or Intended Injury Exclusion";
2. "Business Exclusion" which excludes coverage for
3. "Sexual Molestation, Corporal Punishment or Mental
4. "Assault and Battery Exclusion"; and
5. "Punitive Damages Exclusion."
bench trial in this matter is currently set for May 21, 2018.
is entitled to summary judgment if it can demonstrate that
"there is no genuine dispute as to any material fact and
the movant is entitled to judgment as a matter of law."
Fed.R.Civ.P. 56(a). Summary judgment is warranted where the
documentary evidence produced by the parties permits only one
conclusion. Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 251 (1986). Only disputes over facts that might
affect the outcome of the lawsuit will preclude entry of
summary judgment; factual disputes that are irrelevant or
unnecessary to the outcome are not considered. Id.
at 248. In ruling on a motion for summary judgment, a court
must view the evidence "in the light most favorable to
the opposing party." Tolan v. Cotton, 134 S.Ct.
1861, 1866 (2014) (quoting Adickes v. S.H. Kress &
Co., 398 U.S. 144, 157 (1970)). "[T]he evidence of
the nonmovant is to be believed, and all justifiable
inferences are to be drawn in his favor." Id.
at 1863 (quoting Anderson, 477 U.S. at 255).
"[A]t the summary judgment stage the judge's
function is not himself to weigh the evidence and determine
the truth of the matter but to determine whether there is a
genuine issue for trial." Anderson, 477 U.S. at
interpretation of an insurance contract is a question of law
for the Court. Babcockv. Farmers Ins. Exchange, 999
P.2d 347, 348 (Mont. 2000). The Court will construe terms
according to their usual, commonsense meaning. Natl.
Farmers Union Property & Casualty Co. v. George, 963
P.2d 1259, 1261 (Mont. 1998). The interpretation should honor
the objectively reasonable expectations of the insured.
Hanson v. Employers Mut. Cas. Co., 336 F.Supp.2d
1070, 1075 (D. Mont. 2004). Any ambiguities regarding
coverage are construed against the insurer. Hanson,
336 F.Supp.2d at 1073. "An ambiguity exists when a
contract taken as a whole is reasonably subject to two
different interpretations." Id. (citation
omitted); see also Modroo v. Nationwide Mut. Fire Ins.
Co., 191 P.3d 389, 395 (Mont. 2008). However, a policy
provision is not ambiguous just because the parties disagree
as to its interpretation, and "courts will not distort
contractual language to create an ambiguity where none
exists." Giacomelli v. Scottsdale Ins. Co., 221
P.3d 666, 672 (Mont. 2009).
An "Occurrence" under the policy
Reliable initially contends that there is no coverage under
the Policy because the Underlying Complaint does not allege
an "occurrence" which would trigger a duty to
defend and indemnify. American Reliable relies on
New Hampshire Ins. Group v. Strecker, 798
P.2d 130 (Mont. 1990), for the proposition that all acts of
sexual assault and molestation are "not
accidental." Nelson claims that because the Underlying
Complaint alleges negligence, it is covered under the Policy.
Further, Lockard contends that under the Montana Supreme
Court's recent holding in Emplrs. Mut. Cas. Co. v.
Fisher Building, Inc., 371 P.3d 375 (Mont. 2016), an
"accident" may include intentional acts so long as
the consequences of those acts are not objectively intended
or expected from the standpoint of the insured.
According to the policy, an "Occurrence" is defined
... an accident, including continuous or repeated exposure to
substantially the same harmful conditions, which results,