Farmers Ins. v. Minemyer ( 2023 )

07/18/2023
DA 22-0482
Case Number: DA 22-0482
IN THE SUPREME COURT OF THE STATE OF MONTANA
2023 MT 138FARMERS INSURANCE EXCHANGE
and TRUCK INSURANCE EXCHANGE,
Petitioners and Appellees,
v.
DENNIS MINEMYER,
Respondent and Appellant,
BRAD J. DAVEY, and DALE YATSKO,
Respondents.
APPEAL FROM: District Court of the Fourth Judicial District,
In and For the County of Missoula, Cause No. DV-20-1463
Honorable Shane A. Vannatta, Presiding Judge
COUNSEL OF RECORD:
For Appellant:
Robert J. Phillips, Emma L. Mediak, Garlington, Lohn & Robinson, PLLP,
Missoula, Montana (for Dennis Minemyer)
For Appellees:
James David Johnson, Nicholas J. Pagnotta, Williams Law Firm, P.C.,
Missoula, Montana
Submitted on Briefs: April 12, 2023
Decided: July 18, 2023
Filed:
Vrr-6A--.-#f
__________________________________________
Clerk
Justice Ingrid Gustafson delivered the Opinion of the Court.
¶1 Respondent and Appellant Dennis Minemyer (Minemyer) appeals from the July 20,
2022 Opinion and Order (Petitioners’ Motion for Summary Judgment & Respondent
Minemyer’s Cross-Motion) and the accompanying July 25, 2022 Final Judgment issued by
the Fourth Judicial District Court, Missoula County. The District Court’s order granted
the summary judgment motion of Petitioners and Appellees Farmers Insurance Exchange
(Farmers) and Truck Insurance Exchange (Truck) (collectively “Insurers”) and denied
Minemyer’s cross-motion for summary judgment, determining the Insurers had no duty to
defend, and therefore no duty to indemnify, Minemyer against claims made against him in
a separate lawsuit.
¶2 We address the following restated issue on appeal:
Did the District Court err by finding Insurers had no duty to defend Minemyer under
the terms of the insurance policies?
¶3 We affirm.
FACTUAL AND PROCEDURAL BACKGROUND
¶4 In 2018, Brad J. Davey (Davey) and Dale Yatsko (Yatsko) filed a lawsuit in Cascade
County (Underlying Lawsuit), suing several named and unnamed defendants. The basic
allegation of the Underlying Lawsuit was that the defendants in that case filed a baseless
and unsupported lawsuit against Davey and Yatsko in 2012 (2012 Lawsuit) regarding the
financing and proposed development of a golf course. Davey and Yatsko alleged the
plaintiffs in the 2012 Lawsuit were then able to place a constructive trust and equitable lien
against their property due to the false allegations of that lawsuit. The 2012 Lawsuit was
2
ultimately dismissed in 2017, following Davey and Yatsko’s motion for summary
judgment. The complaint in the Underlying Lawsuit was amended in 2019, adding
Minemyer as a defendant. Minemyer, a certified public accountant, was not a named
plaintiff in the 2012 Lawsuit, but Davey and Yatsko assert he assisted the 2012 Lawsuit
plaintiffs to advance the lawsuit by providing false information and making defamatory
statements about them.
¶5 After the Underlying Lawsuit was amended to add Minemyer as a defendant,
Minemyer tendered the underlying complaint to Farmers, seeking defense and indemnity
under a series of homeowners insurance policies providing coverage from 2010-2020
(Homeowner’s Policy) and a series of commercial general liability (CGL) policies
providing coverage from 2014-2017 (Farmers CGL Policy), and to Truck, seeking defense
and indemnity under a series of CGL policies providing coverage from 2018-2021 (Truck
CGL Policy). The Insurers, while continuing to defend Minemyer in the Underlying
Lawsuit under a reservation of rights, filed a declaratory judgment action against
Minemyer, Davey, and Yatsko in the District Court, seeking a judicial determination that
they were not obligated to defend and indemnify Minemyer against claims made against
him in the Underlying Lawsuit. Meanwhile, in the Underlying Lawsuit, Davey and Yatsko
dismissed all defendants other than Minemyer and one other individual.
¶6 On April 26, 2021, the Insurers filed a motion for summary judgment. Along with
their motion, the Insurers filed an appendix providing copies of the relevant Homeowner’s,
3
Farmers CGL, and Truck CGL Policies. The relevant portions of the Homeowner’s Policy
provided:1
4. Bodily injury – under Section II – Liability Coverage, means physical
harm to the body, including physical sickness or disease, to a person other
than an insured. This includes required care, loss of services and death that
results.
Bodily injury does not include:
a. psychological injury or effect, including by way of example but not limited
to fear, depression, humiliation, anxiety, anguish, shock or distress, unless it
arises from actual physical harm to the body of a person;
b. any sexually transmitted disease;
c. Acquired Immune Deficiency Syndrome (AIDS), AIDS related Complex,
Human Immunodeficiency Virus (HIV);
d. any auto-immune disease;
e. any viral, bacterial, fungal or parasitic infection; or
f. any symptom, injury, condition, effect, illness or disease related to
subsection a. through e. above, or resulting from a noxious substance. A
symptom, injury, condition, effect, illness or disease includes by way of
example but not limited to fatigue, insomnia, stomachaches, headaches or
ulcers.
. . .
21. Occurrence – under Section II – Liability Coverage, means an accident,
including exposure to conditions, which occurs during the policy period, and
which results in bodily injury, property damage, or personal injury during
the policy period. Repeated or continuous exposure to the same general
conditions is deemed to be one occurrence.
. . .
25. Property damage – under Section II – Liability Coverage means direct
distinct and demonstrable, actual physical injury to or destruction of tangible
property, including loss of use resulting from the distinct and demonstrable,
actual physical injury to or destruction of the property.
Property damage does not mean:
1
Throughout our following quotations from the Homeowner’s, Farmers GCL, and Truck GCL
Policies, all language, including emphasis, is as provided in the original document.
4
a. actual, threatened, feared, constructive or alleged diminution of value or
equity;
b. functional impairment or loss of use of property unless the property has
sustained distinct and demonstrable, actual physical injury or destruction; or
c. non-economic damages.
. . .
Coverage E (Personal Liability)
We will pay those damages which an insured becomes legally obligated to
pay because of:
1. bodily injury resulting from an occurrence; or
2. property damage resulting from an occurrence.
At our expense and with attorneys of our choice, we will defend an insured
against any suit seeking damages covered under Coverage E (Personal
Liability). Our obligation to defend a suit seeking damages ends once we
have paid our applicable stated limit. We may investigate and settle any
claim or suit seeking damages that we consider appropriate.
We do not have any duty to defend or settle any suit involving actual, alleged,
threatened or declared bodily injury or property damage not covered under
this liability insurance. This applies whether or not the suit is groundless,
false or fraudulent.
Relevant portions of both the Farmers CGL Policy and the Truck CGL Policy provided:
3. “Bodily injury” means bodily injury, sickness or disease sustained by a
person, including death resulting from any of these at any time.
. . .
12. “Occurrence” means an accident, including continuous or repeated
exposure to substantially the same general conditions.
. . .
15. “Property damage” means:
a. Physical injury to tangible property, including all resulting loss of
use of that property. All such loss of use shall be deemed to occur at the time
of the physical injury that caused it; or
b. Loss of use of tangible property that is not physically injured. All
such loss of use shall be deemed to occur at the time of the “occurrence” that
caused it.
5
. . .
A. Coverages
1. Business Liability
a. We will pay those sums that the insured becomes legally
obligated to pay as damages because of “bodily injury”, “property
damage” or “personal and advertising injury” to which this insurance
applies. We will have the right and duty to defend the insured against
any “suit” seeking those damages. However, we will have no duty to
defend the insured against any “suit” seeking damages for “bodily
injury”, “property damage” or “personal and advertising injury” to
which this insurance does not apply. We may at our discretion,
investigate any “occurrence” and settle any claim or “suit” that may
result. []
. . .
b. This insurance applies:
(1) To “bodily injury” and “property damage” only if:
(a) The “bodily injury” or “property damage” is
caused by an “occurrence” that takes place in the “coverage territory”; and
(b) The “bodily injury” or “property damage”
occurs during the policy period.
(2) To “personal and advertising injury” caused by an
offense arising out of your business, but only if the offense was committed
in the “coverage territory” during the policy period.
As it relates to “personal and advertising injury” coverage, the Farmers CGL and Truck
CGL Policies contained amendatory endorsements with minor differences in language.
The Farmers CGL Policy provided, in relevant part:
A. Coverages
1. Item 1. Business Liability is amended as follows:
a. The words “personal injury” or “advertising injury” in item
1.a. are changed to read “personal and advertising injury”.
b. Items 1.b. (2)(a) and (b) are deleted and replaced with the
following:
(2) This insurance applies to “personal and advertising
injury” caused by an offense arising out of your business, but
6
only if the offense was committed in the “coverage territory”
during the policy period.
. . .
13. “Personal and advertising injury” means injury, including consequential
“bodily injury” arising out of one or more of the following offenses:
a. False arrest, detention or imprisonment;
b. Malicious prosecution;
c. The wrongful eviction from, wrongful entry into, or invasion of the
right of private occupancy of a room, dwelling or premises that a person
occupies, committed by or on behalf of its owner, landlord or lessor;
d. Oral or written publication of material that slanders or libels a
person or organization or disparages a person’s or organization’s goods,
product [or] services;
e. Oral or written publication of material that violates a person’s right
of privacy;
f. The use of another’s advertising idea in your “advertisement” or
g. Infringing upon another’s copyright, trade dress or slogan in your
“advertisement”.
While the Truck GCL Policy provided, in relevant part:
A. Paragraph 1. Business Liability is amended as follows:
a. Subparagraph 1.a. is deleted and replaced with the
following:
a. We will pay those sums that the insured becomes legally
obligated to pay as damages because of “bodily injury”, “property
damage” or “personal and advertising injury” to which this insurance
applies. We will have the right and duty to defend the insured against
any “suit” seeking those damages. However, we will have no duty to
defend the insured against any “suit” seeking damages for “bodily
injury”, “property damage” or “personal and advertising injury” to
which this insurance does not apply. We may, at our discretion,
investigate any “occurrence” or any offense and settle any claim or
“suit” that may result. But:
b. Subparagraphs 1.b. (2)(a) and (b) are deleted and replaced with the
following:
(2) To “personal and advertising injury” caused by an offense
arising out of your business, but only if the offense was committed in
the “coverage territory” during the policy period.
. . .
7
F. Definitions 1. “Advertising Injury”, 13. “Personal Injury” and 16. “Suit”
in Section F. Liability and Medical Expenses Definitions is amended as
follows:
. . .
2. Subparagraph 13. is deleted and replaced with:
13. “Personal and advertising injury” means injury, including
consequential “bodily injury”, arising out of one or more of the following
offenses:
a. False arrest, detention or imprisonment;
b. Malicious prosecution;
c. The wrongful eviction from, wrongful entry into, or invasion
of the right of private occupancy of a room, dwelling or premises that
a person occupies, committed by or on behalf of its owner, landlord
or lessor;
d. Oral or written publication, in any manner, of material that
slanders or libels a person or organization or disparages a person’s or
organization’s goods, products or services;
e. Oral or written publication, in any manner, of material that
violates a person’s right of privacy;
f. The use of another’s advertising idea in your
“advertisement”; or
g. Infringing upon another’s copyright, trade dress or slogan in
your “advertisement”.
Damages because of “personal and advertising injury” do not include
disgorgement, restitution or any other similar monetary amount based, in
whole or in part, on an insured’s unlawful gain or profit, alleged or otherwise.
The Homeowner’s, Farmers CGL, and Truck CGL Policies also provided numerous
exclusions from coverage.
¶7 On May 13, 2021, Davey and Yatsko filed a brief in opposition to the Insurers’
motion for summary judgment. In addition, they also filed the Affidavit of Brad Davey
and the Affidavit of Dale Yatsko. In Davey’s affidavit, he stated, in relevant part:
In the underlying action, and as a result of acts and omissions committed by
Dennis Mineymer [sic] and other individuals. I suffered so much physical
8
and emotional stress that I had to be admitted to the hospital for significantly
elevated blood pressure. That is part of the basis of the word “injury” that I
used in my lawsuit. I did indeed suffer personal injury in this case as a result
of the acts and omissions committed by Mr. Minemyer and others.
In Yatsko’s affidavit, he stated, in relevant part:
In the underlying action, and as a result of acts and omissions committed by
Dennis Mineymer [sic] and other individuals, I suffered such stress that I had
to go to the hospital for a procedure done on my heart. I know that this is
part of the stress that I was under as a result of the acts and omissions of
Defendant Minemyer and others. These acts and omissions are described in
my complaint and this is a part of the “injury” that [sic] suffered.
¶8 On May 26, 2021, Minemyer filed a Cross-Motion for Summary Judgment,
asserting summary judgment should be granted in his favor because “there are no genuine
issues of material fact and Mr. Minemyer is entitled to judgment as a matter of law.” In
his combined brief in response to the Insurers’ motion and in support of his cross-motion
for summary judgment, Minemyer asserted the Truck CGL Policy was not implicated by
the facts asserted in the Underlying Lawsuit, but coverage was provided under both the
Homeowner’s and Farmers CGL Policies. The Insurers filed a reply brief to Davey and
Yatsko’s response on May 27, 2021, and a combined brief in reply to Minemyer’s response
and response to Minemyer’s cross-motion for summary judgment on June 23, 2021.
Minemyer did not file a reply brief and no party requested oral argument on the competing
motions.
¶9 On January 21, 2022, the Insurers filed the Petitioners’ Notice to the Court,
informing the District Court that Davey and Yatsko had filed a Second Amended
Complaint in the Underlying Lawsuit on December 17, 2021. The Insurers asserted the
Second Amended Complaint did not change the coverage issues before the court, but were
9
willing to submit additional briefing at the court’s request. Minemyer filed a response
asserting the Second Amended Complaint added new claims of oral defamation and the
filing of a lis pendens2 on Davey and Yatsko’s property, which would have “significant
implications on the defenses to coverage” raised by the Insurers and requested the District
Court reopen briefing on the cross-motions for summary judgment. The Insurers filed a
reply brief on February 8, 2022.
¶10 On February 9, 2022, the District Court issued its Order (Request for Supplemental
Summary Judgment Briefing). The court ordered the parties to file supplemental briefing
regarding the Second Amended Complaint in the Underlying Lawsuit. Davey and Yatsko
filed their supplemental brief on February 17, 2022, while both Minemyer and the Insurers
filed their supplemental briefs on February 25, 2022. Though Minemyer had previously
asserted the Truck CGL Policy was not implicated, Minemyer now asserted the Insurers
had a duty to defend him “against the Second Amended Complaint under both CGL
Policies” and that the Insurers had a “duty to defend under all three policies.” Minemeyer
and the Insurers thereafter each filed a supplemental response brief on March 11, 2022. No
party requested oral argument on the cross-motions after the supplemental briefing.
¶11 On July 20, 2022, the District Court issued its Opinion and Order (Petitioners’
Motion for Summary Judgment & Respondent Minemyer’s Cross-Motion). The District
2
A lis pendens, as alleged here, is a “notice, recorded in the chain of title to real property, required
or permitted in some jurisdictions to warn all persons that certain property is the subject matter of
litigation, and that any interests acquired during the pendency of the suit are subject to its
outcome.” Lis pendens, Black’s Law Dictionary (11th ed. 2019).
10
Court found the Insurers had no duty to defend Minemyer under the Homeowner’s,
Farmers CGL, or Truck CGL Policies.3 The court found Minemyer failed to meet his initial
burden to demonstrate the claims fell under the coverage grant and did not address any
exclusions to the Policies. The District Court’s order found the claims, as alleged in the
Underlying Lawsuit, did not constitute “bodily injury” or “property damage” under the
language of any of the Policies, failed to show the offense of malicious prosecution was
committed within the Farmers CGL policy period, and failed to show the offense of slander
was committed within the CGL policy periods.
¶12 Minemyer appeals. Additional facts will be discussed as necessary below.
STANDARD OF REVIEW
¶13 We review a district court’s grant or denial of summary judgment de novo, applying
the same criteria as M. R. Civ. P. 56. Fire Ins. Exch. v. Weitzel, 2016 MT 113, ¶ 10, 383
Mont. 364, 371 P.3d 457. Summary judgment is only appropriate if there is no genuine
dispute as to any material fact and the moving party is entitled to judgment as a matter of
law. Lorang v. Fortis Ins. Co., 2008 MT 252, ¶ 37, 345 Mont. 12, 192 P.3d 186.
3
Relying on Minemyer’s previous assertion from his cross-motion for summary judgment that the
Truck CGL Policy was not implicated in the Underlying Lawsuit, the District Court did not
specifically address coverage under the Truck CGL Policy other than in relation to the slander
claim. In his supplemental briefing, Minemyer appeared to walk this back by asserting the Insurers
had a duty to defend him “under both CGL Policies” and “under all three policies.” Regardless,
under the coverage analysis done by the District Court in this case, the result—finding no duty to
defend under the Truck CGL Policy—would be the same.
11
¶14 The interpretation of an insurance policy presents a question of law, which we
review for correctness. Town of Geraldine v. Montana Mun. Ins. Auth., 2008 MT 411, ¶ 8,
347 Mont. 267, 198 P.3d 796 (citations omitted).
DISCUSSION
¶15 Did the District Court err by finding Insurers had no duty to defend Minemyer under
the terms of the insurance policies?
¶16 This matter comes to us following cross-motions for summary judgment where the
parties each asserted there are no material facts in dispute. On appeal, we are simply tasked
with interpreting the insurance policies at issue and determining whether the Insurers had
a duty to defend Minemyer based on the language of the policies and the factual allegations
of the Underlying Lawsuit.
¶17 “An insurer has a duty to defend when a complaint against an insured alleges facts
which, if proved, would result in coverage.” Farmers Ins. Exch. v. Wessel, 2020 MT 319,
¶ 14, 402 Mont. 348, 477 P.3d 1101 (citing Weitzel, ¶ 12). “The insured bears the initial
burden to establish that the claim falls within the basic scope of coverage.” Weitzel, ¶ 13
(citing Travelers Cas. & Sur. Co. v. Ribi Immunochem Research, 2005 MT 50, ¶ 29, 326
Mont. 174, 108 P.3d 469). “If there is no coverage under the terms of the policy based on
the facts contained in the complaint, there is no duty to defend.” Wessel, ¶ 14 (citing
Weitzel, ¶ 12). If the insured meets the initial burden of showing that the claim falls within
the basic scope of coverage, then the burden shifts to the insurer to show that the claim is
unequivocally excluded under an exception within the coverage. Wessel, ¶ 14 (citing
Weitzel, ¶ 13).
12
¶18 When a court compares allegations of liability advanced in a complaint with policy
language to determine whether the insurer’s obligation to defend was triggered, the court
must liberally construe allegations in a complaint in favor of finding that the obligation to
defend was activated unless there is an unequivocal demonstration that the claim against
an insured does not fall within the insurance policy’s coverage. Christian v. United Fire
& Cas. Co., 2023 MT 100, ¶ 14, 412 Mont. 340, 530 P.3d 456 (citing Farmers Union Mut.
Ins. Co. v. Staples, 2004 MT 108, ¶ 22, 321 Mont. 99, 90 P.3d 381). “Factual disputes
between the parties relevant to coverage ‘must be resolved in favor of coverage.’” Weitzel,
¶ 12 (quoting Staples, ¶ 24).
¶19 Minemyer asserts the District Court erred because the Insurers owed him a duty to
defend on four separate claims in the Underlying Lawsuit: slander, malicious prosecution,
loss of tangible property, and bodily injury. It is Minemyer’s burden as the insured to
establish the claims of this case fall “within the basic scope of coverage” before the duty
to defend would be triggered. Weitzel, ¶ 13. “If a complaint states multiple claims, some
of which are covered by the insurance policy and some of which are not, it is a mixed
action. In these cases, Montana follows what is known as the mixed-action rule, which
requires an insurer to defend all counts in a complaint so long as one count triggers
coverage, even if the remaining counts do not trigger coverage.” Weitzel, ¶ 14 (citing State
Farm Fire & Cas. Co. v. Schwan, 2013 MT 216, ¶ 16, 371 Mont. 192, 308 P.3d 48).
Accordingly, if the District Court did err on any of these four claims, the Insurers would
be required to defend Minemyer against all claims. We address each in turn.
13
a. Slander
¶20 Minemyer asserts the Insurers owe a duty to defend him under the terms of the
Farmers and Truck CGL Policies because the Second Amended Complaint in the
Underlying Lawsuit contains an undated allegation of slander, therefore creating a factual
dispute that must be resolved in favor of coverage. The District Court rejected this
argument because the parties agreed the Underlying Complaint did not specify when the
alleged defamatory statements were made or what the statements were and inserting the
allegation the statements were made during the policy periods to the undated claim of the
Underlying Complaint would be “based entirely on speculation.” The Insurers contend
Minemyer is asking this Court to “insert facts into the pleadings to support his argument
that the claim falls within coverage.”
¶21 “An insurer’s duty to defend its insured arises when an insured sets forth facts that
present a risk that possibly would be covered by the terms of an insurance policy.” Horace
Mann Ins. Co. v. Hanke, 2013 MT 320, ¶ 24, 372 Mont. 350, 312 P.3d 429 (citing Staples,
¶ 22). We liberally construe allegations in a complaint in favor of finding that a duty to
defend exists. Staples, ¶ 22. The insured bears the initial burden of establishing that the
claim falls within the basic scope of coverage, however. Weitzel, ¶ 13. In addition,
“[s]ummary judgment cannot be defeated by unsupported speculation.” Knucklehead Land
Co. v. Accutitle, Inc., 2007 MT 301, ¶ 26, 340 Mont. 62, 172 P.3d 116.
¶22 Together, the Farmers CGL and Truck CGL Policies at issue provided Minemyer
coverage from 2014-2021. Each policy provides that Minemyer is entitled to a defense
against a claim for personal or advertising injury, which, as defined in the Policies, includes
14
the oral or written publication of material that slanders or libels a person. The Second
Amended Complaint in the Underlying Lawsuit contained the following allegations
relevant to the offense of slander:
[The 2012 Lawsuit plaintiffs]4 accused [Davey and Yatsko] of having
committed fraud, published those statements to others and these allegations
were likewise false and constitutes defamation per se. . . . The assertions
against [Davey and Yatsko] by [the 2012 Lawsuit plaintiffs] had a natural
tendency to injure [Davey and Yatsko] and [Davey and Yatsko] were indeed
injured by the defamatory written and oral allegations and statements
advanced by the Defendants against them.
. . .
The allegations leveled against [Davey and Yatsko] by [the 2012 Lawsuit
plaintiffs] were also grossly negligently advanced as there was really no basis
for making the statements against [Davey and Yatsko] which were made.
. . .
Dennis Minemyer, a CPA, negligently and recklessly provided much of the
factual information which was false and erroneous and then used the same to
develop the complaint allegations against [Davey and Yatsko]. . . .
Minemyer knew or should have known that [his] input into the lawsuit lacked
sufficient due diligence such that the allegations themselves were erroneous
and should not have been made.
. . .
When the [2012 Lawsuit plaintiffs] orchestrated the filing of the [2012
Lawsuit] Complaint against [Davey and Yatsko], made defamatory
statements about [Davey and Yatsko] and wrongfully filing a lis pendens
against [Davey and Yatsko’s] property, without even telling them, the [2012
Lawsuit plaintiffs] tortiously damaged [Davey and Yatsko].
4
While Minemyer was not a named plaintiff in the 2012 Lawsuit, the allegations of Davey and
Yatsko’s Underlying Lawsuit, with some exceptions not relevant here, tend to refer to both the
actual plaintiffs and Minemyer interchangeably. When used in this Opinion, the term “2012
Lawsuit plaintiffs” is inclusive of both the actual plaintiffs and Minemyer.
15
Reviewing these allegations, the District Court found Minemyer’s claim the alleged slander
was committed during the policy periods was “based entirely on speculation,” because
Davey and Yatsko did not allege any time periods to correspond with allegations of any
new oral defamatory statements other than the filing of the 2012 Lawsuit and the
defamatory written allegations.
¶23 We agree with the District Court. Even liberally construing the allegations in favor
of Minemyer, Christian, ¶ 14, does not lead to a determination he has met his burden of
demonstrating coverage. Liberal construction of a complaint in favor of the insured does
not require a court to insert facts that have not been alleged in order to find coverage. See
generally Weitzel, ¶¶ 21-24. The undated allegation of slander makes no claim the slander
was made during either the Farmers or the Truck CGL Policy periods. Minemyer admits
as much, noting that the “reality is that the Underlying Complaint is silent as to what
Minemyer allegedly said and when he allegedly said it,” but then asks this Court to make
the assumption the slander did occur during the policy periods. We decline to do so. The
allegations of the Second Amended Complaint in the Underlying Lawsuit, if proven, do
not allege that the slander was committed during the policy periods. As such, Minemyer’s
“argument is based entirely on speculation without a basis in the facts actually pled in the
complaint.” Weitzel, ¶ 24. While Minemyer complains that the District Court somehow
shifted the burden to him to demonstrate the slander did occur during the policy period, we
are not convinced by this argument because the initial burden to establish the claim falls
within the basic scope of coverage lies with him. Weitzel, ¶ 13. The undated slander claim
here, added to the Underlying Lawsuit by Davey and Yatsko after the parties had already
16
moved for summary judgment in the present case, does not present a claim which falls
within the basic scope of coverage because it is not alleged in the Underlying Complaint
to have happened during the CGL policy periods. The District Court therefore correctly
determined the Insurers did not have a duty to defend Minemyer from the slander claim
under either the Farmers CGL or the Truck CGL Policies.
b. Malicious Prosecution
¶24 Minemyer next claims he is entitled to a defense from Davey and Yatsko’s
malicious prosecution claim under the Farmers CGL Policy, correctly noting he was not a
named plaintiff in the 2012 Lawsuit. The Insurers assert the offense of malicious
prosecution occurred on the date of the filing of the 2012 Lawsuit. Minemyer, meanwhile,
argues the malicious prosecution offense occurred later, because Davey and Yatsko were
not actually served and did not voluntarily answer that complaint under November 2015.
The District Court concluded Davey and Yatsko’s alleged damages arose from the filing
of the 2012 Lawsuit in 2012, which did not occur during the Farmers CGL Policy period,
which did not begin until 2014.
¶25 A claim for malicious prosecution is established upon a showing of six elements:
(1) a judicial proceeding was commenced and prosecuted against the
plaintiff;
(2) the defendant was responsible for instigating, prosecuting or continuing
such proceeding;
(3) there was a lack of probable cause for the defendant’s acts;
(4) the defendant was actuated by malice;
(5) the judicial proceeding terminated favorably for plaintiff; and
17
(6) the plaintiff suffered damage.
McAtee v. Morrison & Frampton, PLLP, 2021 MT 227, ¶ 17, 405 Mont. 269, 512 P.3d 235(quoting Plouffe v. Mont. Dep’t of Pub. Health & Human Servs., 2002 MT 64, ¶ 16, 309
Mont. 184, 45 P.3d 10).
¶26 The Farmers CGL Policy provided Minemyer with “personal and advertising
injury” coverage caused by an “offense” committed during the policy period. This question
has not been squarely addressed in Montana. To determine when the offense of malicious
prosecution occurred, the District Court relied on out-of-state cases for the proposition that
the tort of malicious prosecution occurs upon the filing of the complaint. The California
Court of Appeal, in addressing an insurance dispute where the policy required the offense
of malicious prosecution to be committed within the policy period noted that in California,
like Montana, the “favorable termination of the offending action is a prerequisite to the
filing of the malicious prosecution action[.]” Zurich Ins. Co. v. Peterson, 188 Cal. App.
3d 438, 444 (Cal. Ct. App. 1986). Nevertheless, after surveying the issue across the
decisions of several states, the California court held that “for purposes of an insurance
policy which measures coverage by the period within which the ‘offense is committed,’
the tort of malicious prosecution occurs upon the filing of the complaint.” Zurich Ins. Co.,
188 Cal. App. 3d at 448. This continues to be the majority position across the nation, as
the “majority of jurisdictions that have considered the issue have concluded that the
‘occurrence’ causing personal injury under an insurance policy is the filing of the
18
underlying malicious suit[.]” Billings v. Commerce Ins. Co., 936 N.E.2d 408, 412 (Mass.
2010) (collecting cases).
¶27 The tort of malicious prosecution includes not just the commencement of a judicial
proceeding, but the prosecution of the proceeding as well. It also requires that “the
defendant was responsible for instigating, prosecuting or continuing such proceeding[.]”
McAtee, ¶ 17. So while the ongoing tort of malicious prosecution may span months or
even years, for purposes of determining whether or not it falls within a particular insurance
coverage period, clarity requires that we determine a specific date constituting the
occurrence of the offense. Consistent with the reasoning of the majority of jurisdictions
that have considered this issue, we hold that solely “for purposes of an insurance policy
which measures coverage by the period within which the ‘offense is committed,’” the tort
of malicious prosecution occurs upon the commencement of the judicial proceeding on
which the malicious prosecution claim is based. To hold otherwise would allow a party
who did not have an insurance policy covering malicious prosecution when the underlying
lawsuit was filed to later purchase coverage and force the insurer to defend and indemnify
against a claim of malicious prosecution arising out of the previously filed suit. Such a
result has been consistently rejected by the majority of the states who have addressed the
issue, see Zurich Ins. Co., 188 Cal. App. 3d at 448 and Billings, 936 N.E.2d at 413, and we
join them in rejecting such a theory. Because the Farmers CGL Policy did not exist until
2014, and the judicial proceeding on which the malicious prosecution claim is based was
commenced prior to the effective policy period, the District Court correctly held that the
Insurers had no duty to defend against this claim.
19
c. Loss of Tangible Property
¶28 Minemyer next asserts Farmers owed him a duty to defend against Davey and
Yatsko’s claim of property damage under the Farmers CGL Policy. The Underlying
Complaint alleged Davey and Yatsko had a lis pendens filed against their property, had
their property “tied up for a significant period of time,” and were “unable to sell or use the
property” due to the 2012 Lawsuit. Minemyer argues the loss of use allegations of Davey
and Yatsko’s complaint, when liberally construed in his favor, sufficiently allege “property
damage” so as to be covered under the Farmers CGL Policy. The Insurers contend Davey
and Yatsko alleged only pecuniary damages and the District Court correctly concluded
none of the claims in the Underlying Lawsuit qualified as “property damage.”
¶29 Under the relevant portion of the Farmers CGL Policy, “property damage” is
defined as the “[l]oss of use of tangible property that is not physically injured.” The
Farmers CGL Policy does not define “loss of use of tangible property[.]” “Tangible
property is property that is capable of being handled, touched[,] or physically possessed.”
Graber v. State Farm Fire & Cas. Co., 244 Mont. 265, 269, 797 P.2d 214, 216 (1990)
(collecting cases). The Underlying Complaint alleged Davey and Yatsko suffered damages
because “their property was tied up for a significant period of time,” and “were unable to
sell or use the property in the interim.” As recognized by the District Court, the allegations
of the Underlying Complaint did not allege Davey and Yatsko were somehow “prohibited
from physically accessing, physically interacting with, or otherwise physically using the
property,” but were in fact an allegation of economic loss because they were unable to sell
the land or otherwise use it for business opportunities.
20
¶30 Minemyer contends the allegations of the Underlying Complaint, when liberally
construed in his favor, do allege the loss of use of tangible property because Davey and
Yatsko alleged they “were unable to . . . use” the property. Such a reading is divorced from
the actual context of the Underlying Complaint, where all allegations of damage to Davey
and Yatsko’s property were economic in nature, such as the lis pendens and not being able
to sell the property. Such claims do “not constitute property damage, or loss of use of
tangible property.” Graber, 244 Mont. at 269, 797 P.2d at 217. The District Court
correctly read the entire paragraph, and the complete sentence, at issue here and came away
with the interpretation Davey and Yatsko made no allegation they were somehow
physically prevented from accessing or using the property at issue in the 2012 Lawsuit. A
conveniently placed ellipsis to remove context does not change this basic fact. “Montana
courts have consistently held that in order for economic loss to be covered by insurance a
direct physical injury to tangible property must occur.” Graber, 244 Mont. at 269, 797
P.2d at 216 (collecting cases). No physical injury to Davey and Yatsko’s property occurred
and their alleged economic loss does not qualify as “property damage” under the Farmers
CGL Policy.
d. Bodily Injury
¶31 Finally, Minemyer asserts the Insurers owed him a duty to defend under terms of all
three policies because Davey and Yatsko filed affidavits asserting they suffered “bodily
injury” in response to the Insurers’ summary judgment motion. The Insurers contend
Davey and Yatsko’s self-serving affidavits fail to cure the deficiency that the Underlying
Complaint contains no allegation of bodily injury. The District Court found Davey and
21
Yatsko did not allege bodily injury in the Underlying Complaint and that their affidavits
were “not sufficient documented evidence to support the allegations of physical
manifestations of injury to trigger coverage.” Again, we agree with the District Court.
¶32 “Bodily injury” is defined in all three policies at issue here. Under the
Homeowner’s Policy, bodily injury “means physical harm to the body, including physical
sickness or disease,” to a person other than an insured. The Homeowner’s Policy further
provides that bodily injury does not include “psychological injury or effect, including by
way of example but not limited to fear, depression, humiliation, anxiety, anguish, shock or
distress, unless it arises from actual physical harm to the body of a person.” Under the
CGL Policies, bodily injury “means bodily injury, sickness or disease sustained by a
person, including death resulting from any of these at any time.”
¶33 Nowhere in the Second Amended Complaint filed in the Underlying Lawsuit is
there any specific reference to bodily injury suffered by either Davey or Yatsko. Davey’s
affidavit, filed in response to the Insurers’ motion for summary judgment, asserted he “had
to be admitted to the hospital for significantly elevated blood pressure” due to stress.
Yatsko’s affidavit, meanwhile, asserted he “had to go to the hospital for a procedure done
on my heart” due to stress.
¶34 “Each case must necessarily be judged by its own facts to determine whether the
alleged injuries are sufficiently akin to physical injuries to fall within coverage for ‘bodily
injury.’ Such conditions include those which are susceptible to medical diagnosis and
treatment in a manner which distinguishes them from mental injuries.” Allstate v.
Wagner-Ellsworth, 2008 MT 240, ¶ 42, 344 Mont. 445, 188 P.3d 1042. Judging this case
22
by its own facts, the District Court found Davey and Yatsko did not allege bodily injury in
the Underlying Lawsuit and their self-serving affidavits filed in response to the Insurers’
motion for summary judgment were “not sufficient evidence to support the allegations of
physical manifestations of injury to trigger coverage.” See State Farm Fire & Cas. Co. v.
Basham, 520 N.W.2d 713, 715 (Mich. Ct. App. 1994) (“At a minimum, there must be
allegations of physical manifestations supported by sufficient documented evidence in
order for insurance coverage to be triggered.”).
¶35 We agree with the District Court that the Underlying Complaint failed to set forth a
claim of bodily injury which would be covered by any of the Policies. The initial complaint
in the Underlying Lawsuit was filed in March of 2018. It was not until over three years
later, in May of 2021, where Davey and Yatsko first made any allegation which could even
possibly be construed as “bodily injury” through their self-serving affidavits alleging each
had to go to the hospital due to “stress.” The District Court properly took these self-serving
affidavits for what they were, merely weak evidence to be received with caution and not
conclusive of the facts stated therein. Neither Davey nor Yatsko provided any evidence,
beyond their affidavits filed in response to the summary judgment motion, let alone
“sufficient documented evidence,” to support their newly-discovered claim—over three
years into litigation—of a physical manifestation of injury. There was certainly no
allegation of hospital visits in the Underlying Complaint. Because there was no sufficient
documented evidence to support Davey and Yatsko’s newfound allegations of physical
manifestations of injury, Minemyer’s insurance coverage was not triggered in this case.
See Wagner-Ellsworth, ¶ 42 (citing Basham, 520 N.W.2d at 715).
23
¶36 Because Minemyer failed to meet his burden of demonstrating the claims fell within
the scope of coverage of any of the policies at issue, it is unnecessary to address whether
the claims would also be excluded by any exceptions to the coverage under the terms of
the policies. As such, the District Court correctly granted the Insurers’ motion for summary
judgment and denied Minemyer’s cross-motion for summary judgment.
CONCLUSION
¶37 The District Court correctly granted the Insurers’ motion for summary judgment
and found the Insurers had no duty to defend Minemyer for claims of slander, malicious
prosecution, loss of tangible property, and bodily injury under the terms of the policies at
issue and the facts of this case.
¶38 Affirmed.
/S/ INGRID GUSTAFSON
We concur:
/S/ JAMES JEREMIAH SHEA
/S/ BETH BAKER
/S/ LAURIE McKINNON
/S/ DIRK M. SANDEFUR
24