United States District Court, D. Montana, Billings Division
ZIMMERMAN AG & CATTLE COMPANY, LLC, and RANDY NUNN, Plaintiffs,
NAU COUNTRY INSURANCE COMPANY, Defendants.
TIMOTHY J. CAVAN UNITED STATES MAGISTRATE JUDGE
Zimmerman Ag (“Zimmerman”) and Randy Nunn
(“Nunn”) filed this action against Defendant NAU
Country Insurance Company (“NAU”) arising out of
NAU's denial of coverage for crop hail damage. (Doc. 7.)
Plaintiffs assert claims for breach of contract, declaratory
relief, and violation of Montana's Unfair Trade Practices
Act. (Id. at 7-8.)
before the Court is Plaintiffs' Motion for Partial
Summary Judgment. (Doc. 31.) NAU filed a response and
Plaintiffs in turned filed a reply. (Docs. 35 & 39.)
After considering the parties' submissions,
Plaintiffs' motion is DENIED.
and Nunn each purchased crop hail insurance policies from NAU
on July 10, 2017, insuring wheat that Zimmerman farmed on
parcels belonging to Zimmerman and Nunn. NAU issued
individual “Schedules of Insurance” to Zimmerman
and Nunn, reflecting such information as the insured's
name and address, policy effective date, crops covered, and
locations of the crops. Zimmerman's schedule itemized
four separate wheat crops of varying acreages; each
designated the number of acres, the insurance per acre
($400), and a corresponding insurance limit, consisting of
the number of acres multiplied by the insurance per acre.
From each amount a rate was assigned to determine the cost of
the premium for that crop. Nunn's schedule only featured
one itemized wheat crop, which set forth the number of acres,
the insurance per acre ($166) and the corresponding insurance
limit. The Schedules of Insurance also conspicuously directed
the insured to “Access Your Hail Provisions
online” and provided a URL address to do so.
hail insurance policies can generally be bound on two
hours' notice, and before any premium is actually paid.
In this case, for example, premiums were not due on the
Plaintiffs' hail insurance until October 1, 2017. NAU did
not send agents or employees to assess the value of the
Plaintiffs' wheat crop at the time the policy was issued,
nor was the value discussed with NAU at the time of
application for coverage. Zimmerman and Nunn simply provided
NAU's agent with the amount of insurance they desired.
Zimmer explained that he arrived at the value of $400 per
acre because “I just bought max coverage. I bought what
I could for it.”
the policies were issued, Plaintiffs contend that their crops
were damaged by hail, and they submitted a Notice of Loss to
NAU on July 19, 2017. NAU subsequently notified Plaintiffs it
was denying coverage on September 25, 2017. In addition to
reasons for the denial, the notification letter also advised
Zimmerman and Nunn of several adjustments to their policies,
including adjustments to the actual acreage
planted. Paramount to the instant motion, however,
is NAU's downward adjustment of the amount of insurance
payable per acre. NAU explained in its letter that the amount
payable was adjusted to reflect the actual cash value of the
insured crop. This resulted in downward adjustment of the
amount of insurance on Zimmerman's four parcels from $400
per acre to $175, $74, $209, and $175 per acre. The insurance
per acre was also reduced on Nunn's parcel from $166 per
acre to $37 per acre. NAU stated that its determination of the
actual cash value of the damaged crop was based on “our
field appraisals, the local market price at the time of
application, and visual field inspections.” (Doc. 7 at
13, 18.) This adjustment is the underlying issue in the
Standard of Review
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). 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
v. Liberty Lobby, Inc., 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).
Montana Insurance Law
Court's jurisdiction over this action is based on
diversity of citizenship. Therefore, the Court must apply the
substantive law of Montana. In re Cty. of Orange,
784 F.3d 520, 523-24 (9th Cir. 2015). In Montana, the
interpretation of an insurance contract is a question of law.
Scentry Biologicals, Inc. v. Mid-continent Cas. Co.,
319 P.3d 1260, 1264 (Mont. 2014). A court interpreting an
insurance policy is to read the policy as a whole and, to the
extent possible, reconcile the policy's various parts to
give each meaning and effect. O'Connell v. Liberty
Mut. Fire Ins. Co., 43 F.Supp.3d 1093, 1096 (D. Mont.
2014) (citing Newbury v. State Farm Fire & Cas. Ins.
Co. of Bloomington, Ill., 184 P.3d 1021 (Mont. 2008)).
The terms and words used in an insurance policy are to be
given their usual meaning and construed using common sense.
Hardy v. Progressive Specialty Ins. Co., 112, 67
P.3d 892, 896 (Mont. 2003). Any ambiguities in the insurance
contract are construed against the insurer and in favor of
extending coverage. Revelation Indus., Inc. v. St. Paul
Fire & Marine Ins. Co., 206 P.3d 919, 929 (Mont.
2009). “An ambiguity exists when the policy, taken as a
whole, is reasonably susceptible to two different
interpretations.” Heggem v. Capitol Indem.
Corp., 154 P.3d 1189, 1193 (Mont. 2007). But a court
should not “seize upon certain and definite covenants
expressed in plain English with violent hands and distort
them so as to include a risk clearly excluded by the
insurance contract.” Travelers Cas. & Sur. Co.
v. Ribi Immunochem Research, Inc., 108 P.3d 469, 474
(Mont. 2005). Moreover, “a court may not create an
ambiguity where none exists, nor may a court rewrite an
insurance policy by ignoring clear and unambiguous language
to accomplish a ‘good purpose.'”
Heggem, 154 P.3d at 1193.
issue is whether the policies that Zimmerman and Nunn
purchased from NAU are “valued” or “open
policies.” A valued policy is “one in which the
parties agree on the value of the subject matter of
insurance.” Billmayer v. FarmersUnion
Property and Cas. Co,404 P.2d 322, 324 (Mont. 1965)
(citing 44 C.J.S. Insurance § 48). A valued policy must
clearly indicate the insurer's intention to value the
risk and loss, in whatever words expressed. Am. Ins. Co.
v. Gentile ...