Filed: Sep. 16, 2016
Latest Update: Mar. 03, 2020
Summary: NOT FOR PUBLICATION UNITED STATES COURT OF APPEALS FILED FOR THE NINTH CIRCUIT SEP 16 2016 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS JUDITH NEWMAN, as Personal No. 14-35103 Representative of the Estate of Karlye Newman, D.C. No. 9:13-cv-00047-DLC Plaintiff-Appellee, MEMORANDUM* v. UNITED FIRE & CASUALTY COMPANY, Defendant-Appellant. Appeal from the United States District Court for the District of Montana Dana L. Christensen, Chief Judge, Presiding Submitted July 8, 2016** Seattle, Washington B
Summary: NOT FOR PUBLICATION UNITED STATES COURT OF APPEALS FILED FOR THE NINTH CIRCUIT SEP 16 2016 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS JUDITH NEWMAN, as Personal No. 14-35103 Representative of the Estate of Karlye Newman, D.C. No. 9:13-cv-00047-DLC Plaintiff-Appellee, MEMORANDUM* v. UNITED FIRE & CASUALTY COMPANY, Defendant-Appellant. Appeal from the United States District Court for the District of Montana Dana L. Christensen, Chief Judge, Presiding Submitted July 8, 2016** Seattle, Washington Be..
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NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FILED
FOR THE NINTH CIRCUIT
SEP 16 2016
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
JUDITH NEWMAN, as Personal No. 14-35103
Representative of the Estate of Karlye
Newman, D.C. No. 9:13-cv-00047-DLC
Plaintiff-Appellee,
MEMORANDUM*
v.
UNITED FIRE & CASUALTY
COMPANY,
Defendant-Appellant.
Appeal from the United States District Court
for the District of Montana
Dana L. Christensen, Chief Judge, Presiding
Submitted July 8, 2016**
Seattle, Washington
Before: TASHIMA and M. SMITH, Circuit Judges, and KOBAYASHI,*** District
Judge.
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
**
The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
***
The Honorable Leslie E. Kobayashi, United States District Judge for
the District of Hawaii, sitting by designation.
Defendant-Appellant United Fire & Casualty Co. (“United Fire”) appeals the
award of summary judgment in favor of Plaintiff-Appellee Judith Newman, as
Personal Representative of the Estate of Karlye Newman (“Newman”), in an
insurance-coverage action. First, we hold that Montana law applies pursuant to
Mitchell v. State Farm Insurance Co., 68 P.3d 703 (Mont. 2003), and Mont. Code
Ann. § 28-3-102.
Second, we recognize that the endorsement in the commercial general
liability policy titled “LIMITATION OF COVERAGE TO DESIGNATED
PREMISES OR PROJECT” and the similar endorsement in the umbrella policy
(collectively, “the Premises Endorsements” and “the Policies”) could be interpreted
as limiting coverage to occurrences tied to National Contract Services’ (“National
Contract”) St. George, Utah, premises. Such an interpretation, however, would be
inconsistent with the Policies’ definitions of the “coverage territory,” which
include, inter alia, all of the United States. Reading the Premises Endorsements in
light of the Policies as a whole, we hold that the endorsements are reasonably
susceptible to two different interpretations, and therefore are ambiguous. See
Westchester Surplus Lines Ins. Co. v. Keller Transp., Inc., 365 P.3d 465, 470
(Mont. 2016). Montana law construes ambiguous provisions “against the insurer
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and in favor of extending coverage.” Id. We therefore reject United Fire’s
argument that the Premises Endorsements limit coverage to incidents that occurred
on the St. George premises. Because the Premises Endorsements purport to cover
claims “arising out of . . . the use of” the St. George premises, they are sufficiently
capacious to include coverage for bodily injury in Montana that flows from or
grows out of the use of the St. George premises. See State Farm Mut. Auto. Ins.
Co. v. Ferrin,
54 P.3d 21, 23 (Mont. 2002) (holding that “the phrase ‘arising out of
the use’ is ambiguous,” and interpreting it as “originat[ing] from, or grow[ing] out
of, or flow[ing] from”). Thus, United Fire had a duty to defend National Contract
in the underlying action.
Third, because United Fire unjustifiably refused to defend National Contract,
we hold that it is liable for the full amount of Newman’s judgment against National
Contract, including amounts in excess of the Policies’ limits. See Tidyman’s
Mgmt. Servs., Inc. v. Davis, 330 P.3d 1139, 1149 (Mont. 2014). Finally, we hold
that the district court awarded the correct rate of post-judgment interest provided in
Mont. Code Ann. § 25-9-205(1). AFFIRMED.
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FILED
Newman v. United Fire & Casualty Co., No. 14-35103
SEP 16 2016
TASHIMA, Circuit Judge, dissenting: MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
Although I agree with the majority’s conclusion that Montana law applies, I
disagree that United Fire had a duty to defend its insured, National Contract
Services. In arriving at its duty-to-defend conclusion, the majority reasons that the
Premises Endorsement may be construed in favor of coverage. The Premises
Endorsement, which modifies the Policies, limits coverage to a specified physical
location: National Contract’s 12,000 square foot office in St. George, Utah. Given
this limitation, the majority’s interpretation of the Premises Endorsement relies on
a number faulty premises and conclusions. I therefore dissent.
1. The underlying complaint does not mention St. George, Utah. See
Tidyman’s Mgmt. Servs. Inc. v. Davis, 330 P.3d 1139, 1149 (Mont. 2014) (“The
duty to defend arises when a complaint against an insured alleges facts which, if
proved, would result in coverage.”). It alleges that National Contract is a citizen of
Nevada and Montana. It also alleges that National Contract negligently provided
program materials and services, leading to the bodily injury in Sanders County,
Montana. But nowhere does the complaint allege that National Contract
committed these negligent acts – or otherwise conducted any business connected
with the underlying incident – in St. George, or even Utah.
2. The majority concludes that the Policies cannot be read as limiting
coverage to occurrences tied to the St. George premises, because that would “be
inconsistent with the Policies’ definition of the ‘coverage territory,’ which
includes, inter alia, all of the United States.” But this reasoning overlooks that the
Premises Endorsement specifically provides that [t]his endorsement modifies the
insurance provided under” the Policies, by narrowing the originally broad grant of
coverage. Thus, by its plain and unambiguous terms, the Premises Endorsement is
designed to override and narrow the geographic coverage provided by the Policies.
3. Finally, interpreting the Policies to require coverage under the
allegations of the underlying complaint renders the Premises Endorsement
superfluous. An insurance policy must be read “as a whole . . . to give each [part]
meaning and effect.” Newbury v. State Farm Fire & Cas. Ins. Co. of Bloomington,
Ill., 184 P.3d 1021, 1025 (Mont. 2008). The district court reasoned that the
underlying complaint concerning events in Montana triggered coverage because
the Premises Endorsement covers “operations necessary or incidental to [the]
premises,” i.e., National Contract’s office in St. George. However, because the
Endorsement is a modification to the general form Policies, it must, in some way,
differ from the initial grant of coverage provided for by the Policies; otherwise, it
serves no function – it is completely meaningless surplusage. By conflating the
term “premises” with “business,” the district court read the Premises Endorsement
2
as covering any damages arising from National Contract’s business. This reading
is effectively coextensive with the initial, limitless grant of coverage before that
coverage was limited by the Premises Endorsement: damages caused by an
occurrence anywhere in the United States, for which National Contract is
responsible.
• ! •
Because the underlying complaint cannot be read to trigger coverage under
the Policies, as modified by the Premises Endorsement, I respectfully dissent.
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