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Porch v. Preferred Contractors Insurance Co.

United States District Court, D. Montana, Billings Division

August 26, 2019



          TIMOTHY J. CAVAN United States Magistrate Judge.

         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 State's 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 are Defendants' Motion for Summary Judgment (Doc. 62); SIS's Motion to Dismiss (Doc. 35); and PCIC and Golden State's Motion to Dismiss (Doc. 38). The motions are fully briefed and ripe for the Court's review.

         Having considered the parties' submissions, the Court finds Defendants' Motion for Summary Judgment should be GRANTED, and SIS, PCIC and Golden State's Motions to Dismiss should be DENIED as moot.


         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.

         In June 2014, RRSA contracted with Plaintiff Kelly Porch to sell roofing contracts on several residential buildings in Billings. 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.

         RRSA and Rambur hired Ochoa's Construction, Inc. (“Ochoa's”) to tear off and reapply materials to a residential roof in Billings. On July 10, 2014, Mr. Porch arrived at the Ochoa's job site with a project manager from RSSA. 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. Mr. Porch used a ladder provided by Ochoa's to get onto the roof. 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. When Mr. Porch was climbing down the ladder, the rain gutter broke, causing the ladder and Mr. Porch to fall approximately 10-15 feet. Mr. Porch was knocked unconscious and severely injured. Mr. Porch alleges he injured his right foot, both kidneys, his lungs, nose, back, right elbow, and right leg.

         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”).

         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”). The underlying Complaint alleged Mr. Porch sustained damages “from a fall resulting from a negligently placed ladder on the job site.” Neither PCIC, Golden State, nor SIS were named as defendants.

         On April 23, 2015, PCIC was notified of the underlying Complaint. 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.

         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. Plaintiffs thereafter dismissed all defendants except Ochoa's.

         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. Plaintiffs were present at the hearing and presented evidence in support of the reasonableness of the judgment; Ochoa's did not appear. On March 30, 2017, Judge Gustafson entered judgment in the amount of $4, 700, 000.00 in favor of Plaintiffs and against Ochoa's.

         Subsequently, Plaintiffs were granted leave to file a Second Amended Complaint, which added PCIC and Golden State as defendants, and asserted various claims against them based on their coverage decisions with respect to Ochoa's. Defendants then removed the case to this Court, and sought dismissal on grounds that Judge Gustafson erred in permitting Plaintiffs to amend their complaint after judgment had been entered in the state court. (Porch v. Ochoa's Const. Inc., et al., No. CV-17-93-BLG-SPW-TJC, Docket No. 80 (D. ...

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