United States District Court, D. Montana, Missoula Division
WESTERN HERITAGE INSURANCE COMPANY, an Arizona corporation, Plaintiff,
SLOPESIDE CONDOMINIUM ASSOCIATION, INC., a Montana corporation, MATTHEW FOLKMAN, individually and d/b/a JARAS CONSTRUCTION, Defendants.
L. CHRISTENSEN, CHIEF DISTRICT JUDGE.
parties to this insurance coverage dispute have filed
cross-motions for summary judgment. (Docs. 28 & 36.)
Defendant Slopeside Condominium Association, Inc.
(“Slopeside”) attained a judgment against
Defendant Matthew Folkman, doing business as Jaras
Construction, in the underlying state court action, and it
hopes to satisfy that judgment. Plaintiffs Western Heritage
Insurance Company and Scottsdale Insurance Company
(collectively, “Western Heritage”) seek a
declaration that Western Heritage has no duty to indemnify
Folkman, its insured. Folkman has chosen to represent himself
in this matter, and he has not responded to Western
Heritage's motion. (See Docs. 43 & 49.) Slopeside
seeks partial summary judgment, arguing that the relevant
insurance policy provides coverage if Slopeside can prove
is a homeowners association responsible for the operation and
maintenance of a group of condos in Whitefish, Montana. (Doc.
13-4 at 1.) In September 2011, Folkman and Slopeside entered
into a construction agreement. (Doc. 38 at 8.) Folkman agreed
to install thermal “T-panel” systems on the roofs
of Slopeside buildings to melt snow and ice. (Doc. 38 at 8.)
However, the T-panel systems were not effective-not only did
they fail to serve their intended purpose, but they created
ice buildups and caused additional damages-and Slopeside sued
Folkman in state court on November 16, 2016. (Docs. 13-4
initially retained counsel without notifying Western Heritage
of the lawsuit, but his counsel withdrew on March 23, 2017.
From that point forward, Folkman did not respond to
Slopeside's discovery requests or otherwise defend
against the action. (Doc. 38 at 8-9.) Slopeside filed a
motion for summary judgment on June 27, 2017, to which
Folkman did not respond, as well as a proposed order granting
summary judgment to Slopeside. (Doc. 38 at 9.) On July 21,
2017, Slopeside's attorney in the underlying action
informed Western Heritage of the underlying action, attaching
a copy of the proposed order granting summary judgment. (Doc.
38 at 10-11.)
31, 2017, the state court adopted Slopeside's proposed
order, awarding Slopeside $441, 770.83, comprising $436,
040.37 in damages and $5, 730.46 in attorneys' fees.
(Docs. 13-8; 13-9; 28 at 11.) In awarding damages, the court
adopted in full the statement of actual and anticipated
expenses submitted by Slopeside's representative. (Docs.
13-6 & 13-8.) Excluding attorneys' fees, the damages
awarded included: (1) $68, 040.37 in actual expenses as of
the date of the state court judgment; and (2) an additional
$368, 000 in anticipated expenses. (Doc. 13-6 at 6.) The
anticipated expenses were calculated by multiplying 23-the
number of condo units-by $16, 000-the actual expenses
incurred in repairing the T-panel system in one of the
Slopeside units, rounded down to the nearest $1, 000. (Doc.
13-6 at 6.)
was served with a notice of entry of judgment on August 4,
2017. (Doc. 20 at 3.) On September 19, 2017, Western Heritage
sent a letter to Folkman, informing him that Western Heritage
would defend Folkman under a reservation of rights if
Slopeside would agree to set aside the state court judgment.
(Doc. 13-10 at 2.) Because Slopeside refused, Western
Heritage declined coverage based on the failure of Folkman to
provide timely notice. Western Heritage initiated this
lawsuit, seeking a declaration that it had no duty to
indemnify Folkman in the underlying action.
the relevant time, Folkman was insured under three commercial
general liability (“CGL”) policies. The relevant
provisions of the policies are identical. (Doc. 38 at 2-8.)
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, 250-51 (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.” Adickes v.
S.H. Kress & Co., 398 U.S. 144, 157 (1970).
“[T]he evidence of the non-movant is to be believed,
and all justifiable inferences are to be drawn in his
favor.” Anderson, 477 U.S. at 255.
federal jurisdiction is grounded in diversity, the Court
looks to Montana law for the “rules of decision.”
28 U.S.C. § 1652. “The interpretation of an
insurance contract is a question of law.” Babcock
v. Farmers Ins. Exch., 999 P.2d 347, 348 (Mont. 2000).
“If the language of a policy is clear and explicit, the
policy must be enforced as written.” Nat'l
Farmers Union Prop. & Cas. Co. v. George, 963 P.2d
1259, 1261 (Mont. 1998). “Ambiguities are construed
against the insurer and exclusions from coverage are
construed narrowly because they are contrary to the
fundamental protective purpose of insurance policies.”
Id. Further, “because exclusions are contrary
to the fundamental purpose of the policy, such exclusions are
frequently subject to challenge for ambiguity or
inconsistency.” Newman v. Scottsdale Ins. Co.,
1 P.3d 348');">301 P.3d 348, 355 (Mont. 2013).
Heritage argues that there was no “occurrence”
triggering coverage ...