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Porch v. Preferred Contractors Insurance Co., RRG

United States District Court, D. Montana, Billings Division

March 11, 2019




         Plaintiffs Kelly D. Porch and Michelle R. Porch filed this action against Defendants Preferred Contractors Insurance Company (“PCIC”), RGG, Golden State Claims Adjusters Inc. (“Golden State”), and Safebuilt Insurance Services, Inc. doing business as SIS Wholesale Insurance Services (“SIS”), arising out of PCIC and Golden States' failure to defend an underlying lawsuit the Porch's brought against Ochoa's Construction, Inc. (“Ochoa's”). (Doc. 29.) Plaintiffs assert claims for declaratory relief, breach of contract, breach of the implied covenant of good faith and fair dealing, violation of Montana's Unfair Trade Practices Act (“UTPA”), common law bad faith, breach of fiduciary duty, negligence, and punitive damages. (Id.)

         Presently before the Court is Plaintiffs' Motion for Partial Summary Judgment. (Doc. 13.) Defendants have filed an opposition, and Plaintiffs have replied. (Docs. 26, 34.) The motion is fully briefed and ripe for the Court's review.

         Having considered the parties' submissions, the Court finds Plaintiffs' Motion for Partial Summary Judgment should be DENIED.


         In May 2014, Roofing & Restoration Services of America, LLC (“RRSA”) and Rambur Construction, Inc. (“Rambur”) entered into a Joint Marketing Agreement, pursuant to which RSSA and Rambur acted together to solicit sales of roofing jobs in the Billings, Montana area following a significant hail storm. (Doc. 29 at ¶ 10.)

         In June 2014, RRSA contracted with Plaintiff Kelly Porch to sell roofing contracts on several residential buildings in Billings. (Docs. 27 at ¶ 4; 29 at ¶ 9.) RRSA chose to treat Mr. Porch as a direct seller as defined by 26 U.S.C. § 3508, and did not elect Workers' Compensation coverage for him. (Doc. 27 at ¶¶ 4-5.)

         RRSA and Rambur hired Ochoa's Construction, Inc. (“Ochoa's”) to tear off and reapply materials to a residential roof in Billings. (Id. at ¶ 3.) On July 10, 2014, Mr. Porch arrived at the Ochoa's job site with a project manager from RSSA. (Doc. 29 at ¶ 12.) While at the job site, Mr. Porch and the project manager went up onto the roof to physically show Ochoa's foreman how they wanted the materials applied. (Id.) Mr. Porch used a ladder provided by Ochoa's to get onto the roof. (Id. at ¶ 13.) While Mr. Porch was on the roof, one of the employees from Ochoa's moved the ladder and placed it against the rain gutter of the house. (Id.; Doc. 27 at ¶ 2.) When Mr. Porch was climbing down the ladder, the rain gutter broke, causing the ladder and Mr. Porch to fall approximately 10-15 feet.[2](Docs. 27 at ¶ 6; 29 at ¶ 13.) Mr. Porch was knocked unconscious and severely injured. (Id.) Mr. Porch alleges he injured his right foot, both kidneys, his lungs, nose, back, right elbow, and right leg. (Doc. 29 at ¶ 11.)

         At the time of Mr. Porch's accident, PCIC insured Ochoa's under a Commercial General Liability Policy, policy number PC95125, effective June 6, 2014 to June 6, 2015 (the “Policy”). (Doc. 27 at ¶ 7.)

         Plaintiffs filed a Complaint and Demand for Jury Trial (“Complaint”) on November 24, 2014, in the Montana Thirteenth Judicial District Court, Yellowstone County against Ochoa's and RRSA (the “underlying Complaint”). (Doc. 27-1.) The underlying Complaint alleged Mr. Kelly sustained damages “from a fall resulting from a negligently placed ladder on the job site.” (Id. at ¶ 4.) Neither PCIC, Golden State, nor SIS were named as defendants.

         On April 23, 2015, PCIC was notified of the underlying Complaint. (Doc. 27 at ¶ 8.) Golden State responded on behalf of PCIC, and informed Ochoa's by letter dated May 21, 2015, that no coverage existed for the allegations in Plaintiffs' Complaint, and that PCIC would be denying coverage for defense and indemnity. (Docs. 16-5 at 11-16; 27 at ¶ 10.)

         On February 24, 2016, Ochoa's entered into a stipulated consent judgment and covenant not to execute, and assigned to Plaintiffs all of its rights against Defendants. (Docs. 16-5 at 1-10; 27 at ¶ 13.) Plaintiffs thereafter dismissed all defendants except Ochoa's. (Doc 27 at ¶ 14, n.2.)

         On March 28, 2017, Judge Ingrid Gustafson of the Montana Thirteenth Judicial District Court held a reasonableness hearing with respect to Plaintiffs and Ochoa's stipulated consent judgment. (Id. at ¶ 14.) Plaintiffs were present at the hearing and presented evidence in support of the reasonableness of the judgment; Ochoa's did not appear. (Docs. 16-6; 27 at ¶ 23.) On March 30, 2017, Judge Gustafson entered judgment in the amount of $4, 700, 000.00 in favor of Plaintiffs and against Ochoa's.[3] (Id.)

         Plaintiffs now move for partial summary judgment. Plaintiffs ask the Court to find Defendants breached their duty to defend Ochoa's, and are therefore liable for the Judgment entered by Judge Gustafson. Plaintiffs argue their claim against Ochoa's fell within the insurance Policy's coverage, and that Defendants cannot unequivocally demonstrate that there was no coverage under the Policy. Defendants counter that Plaintiffs' claims are clearly and explicitly excluded from coverage under the plain terms of the Policy, and thus, they had no duty to defend.


         A. Summary Judgment Standard

         A court will grant summary judgment if the movant can show “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 when the evidence presented is so conclusive that one party must prevail. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986). The moving party has the initial burden to submit evidence demonstrating the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Material facts are those which may affect the outcome of the case. Anderson, 477 U.S. 242, 248 (1986). A dispute as to a material fact is genuine if there is sufficient evidence for a reasonable fact-finder to return a verdict for the nonmoving party. Id. If the movant meets its initial responsibility, the burden shifts to the nonmoving party to establish a genuine issue of material fact exists. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986).

         B. ...

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