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Employers Mutual Casualty Co. v. The Estate of Buckles

Supreme Court of Montana

June 11, 2019

EMPLOYERS MUTUAL CASUALTY COMPANY, Plaintiff and Appellant,
v.
THE ESTATE OF ZACHARY S. BUCKLES; BH FLOW TESTING INC.; CONTINENTAL RESOURCES, INC.; JANSEN PALMER d/b/a BLACK GOLD TESTING; and DOES 1-10, Defendants and Appellees, CONTINENTAL RESOURCES, INC., Counterclaim Plaintiff and Appellee,
v.
EMPLOYERS MUTUAL CASUALTY COMPANY, Counterclaim Defendant and Appellant.

          Submitted on Briefs: April 3, 2019

          APPEAL FROM: District Court of the Seventeenth Judicial District, In and For the County of Valley, Cause No. DV-2015-37 Honorable Yvonne Laird, Presiding Judge

          For Appellant Employers Mutual Casualty Company: David C. Berkoff, Berkoff Law Firm, P.C., Missoula, Montana Gary M. Zadick, Ugrin Alexander Zadick, P.C., Great Falls, Montana

          For Appellee Continental Resources, Inc.: Kyle A. Gray, W. Scott Mitchell, Holland & Hart, LLP, Billings, Montana

          For Appellee BH Flow Testing, Inc.: Christopher C. Stoneback, Monique P. Voigt, Crowley Fleck PLLP, Billings, Montana

          OPINION

          Beth Baker, Justice.

         ¶1 Employers Mutual Casualty Company ("Employers Mutual") filed a declaratory judgment action in the Seventeenth Judicial District Court, Valley County, to determine its obligations to defend and to indemnify Continental Resources, Inc. ("Continental") under a commercial general liability ("CGL") insurance policy it issued to Black Rock Testing, Inc. ("Black Rock"). Employers Mutual appeals the order of the District Court denying its motion for summary judgment, granting Continental's motion for summary judgment, and dismissing Employers Mutual's first amended complaint. The District Court held in part that Continental was entitled to a defense as an additional insured under the Employers Mutual insurance policy. We restate the issues on appeal as follows:

1. Did the District Court err as a matter of law when it determined that Employers Mutual must defend Continental as an additional insured under the CGL insurance policy issued to Black Rock? and
2.Did the District Court err as a matter of law when it determined that the pollution exclusion in the CGL insurance policy did not apply to exclude coverage? We reverse on Issue 1 and therefore do not reach Issue 2.

         PROCEDURAL AND FACTUAL BACKGROUND

         ¶2 This is an appeal from a declaratory judgment action initiated by Employers Mutual to determine its duties to defend and to indemnify Continental and other defendants in an underlying wrongful death lawsuit (the "Underlying Suit") filed by the Estate of Zachary Buckles. The Underlying Suit arose from Buckles's death on April 28, 2014, at a well site near Alexander, North Dakota. Buckles was working as a flow tester at the site. Continental owns or leases the well site. At the time of Buckles's death, Continental had a master service contract with BH Flow Testing to perform flow testing at the site. BH Flow Testing subcontracted the work to Black Rock, which subcontracted the work to Jansen Palmer, doing business as Black Gold Testing, with which Buckles was working at the time.

         ¶3 Black Rock had a CGL insurance policy (the "Policy") through Employers Mutual. After the Estate of Buckles brought suit, Continental made a tender to Employers Mutual to provide it with a defense, alleging that Continental was an additional insured under the Policy. Employers Mutual denied the tender.

         ¶4 In July 2015, Employers Mutual filed this declaratory judgment action. Among other issues, Employers Mutual sought a determination that Continental is not an additional insured under the Policy and that Employers Mutual does not have duties to defend or to indemnify Continental in the Underlying Suit. Continental answered Employers Mutual's complaint and filed counterclaims seeking a declaratory judgment of its rights under the Policy and alleging breach of the insurance contract, bad faith, and violations of the Unfair Trade Practices Act. Employers Mutual filed its first amended complaint on May 31, 2016. Before Continental filed its answer, Employers Mutual moved for summary judgment against Continental. Continental responded with its own motion to dismiss the first amended complaint or, alternatively, for summary judgment on Employers Mutual's duty to defend. Much of the briefing on the cross-motions focused on whether Employers Mutual had provided necessary evidence to make an unequivocal demonstration that Continental was not an additional insured and whether Continental proffered any evidence to raise a genuine issue of material fact in response to Employers Mutual's statement of undisputed facts.

         ¶5 After both motions were fully briefed, the District Court entered an order denying Employers Mutual's motion and granting Continental's motion.[1] The District Court explained that it could not grant summary judgment to Employers Mutual because there was a genuine issue of material fact regarding the status of an "additional interested party" under the policy. But it granted Continental's motion for summary judgment, explaining that Employers Mutual failed to make an unequivocal demonstration that Continental is not an additional insured under the Policy. On motion from Employers Mutual, the District Court certified its ...


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