Associated Dermatology & Skin Cancer Clinic of Helena, P.C. v. Mountain West Farm Bureau Mutual Insurance Co.

02/21/2017
DA 16-0098
Case Number: DA 16-0098
IN THE SUPREME COURT OF THE STATE OF MONTANA
2017 MT 30
ASSOCIATED DERMATOLOGY AND
SKIN CANCER CLINIC OF HELENA, P.C.
PROFIT SHARING PLAN AND TRUST FOR
THE BENEFIT OF STEPHEN D. BEHLMER, M.D.,
Plaintiff and Appellant,
v.
MOUNTAIN WEST FARM BUREAU
MUTUAL INSURANCE COMPANY,
Defendant, Appellee,
and Cross-Appellant.
APPEAL FROM: District Court of the First Judicial District,
In and For the County of Lewis and Clark, Cause No. ADV 13-690
Honorable Mike Menahan, Presiding Judge
COUNSEL OF RECORD:
For Appellant:
Erik B. Thueson, Thueson Law Ofice, Helena, Montana
Scott Peterson, Morrison, Sherwood, Wilson and Deola, PLLP,
Helena, Montana
For Appellee:
Randall G. Nelson, Nelson & Dahle, P.C., Billings, Montana
Martha Sheehy, Sheehy Law Firm, Billings, Montana
Submitted on Briefs: December 21, 2016
Decided: February 21, 2017
Filed:
__________________________________________
Clerk
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Justice Jim Rice delivered the Opinion of the Court.
¶1 Appellant Associated Dermatology and Skin Cancer Clinic of Helena, P.C. Profit
Sharing Plan and Trust for the Benefit of Stephen D. Behlmer, M.D. (Behlmer), appeals
from the order of the First Judicial District Court, Lewis and Clark County, partially
granting summary judgment to Appellee Mountain West Farm Bureau Mutual Insurance
Company (Mountain West), holding that certain insurance proceeds must be deposited
into the District Court, denying Behlmer’s motion for attorneys’ fees and costs, and not
ruling on the availability of post-judgment interest. Mountain West cross-appeals the
District Court’s summary judgment ruling that determined the subject insurance policy
provided coverage for Behlmer’s claim. We address only the cross-appeal and reverse
the District Court’s coverage determination. We do not reach Behlmer’s appellate issues.
¶2 We restate the issue as follows:
Did the District Court err by holding there was coverage for the Corral Fire
damage under Mountain West’s commercial automobile policy?
FACTUAL AND PROCEDURAL BACKGROUND
¶3 Robert S. Fitte (Fitte) is a property owner in the Scratchgravel Hills in Lewis and
Clark County, who runs a construction business out of his home. Fitte’s property
contained pine trees that had been killed by beetles. In June 2012, Fitte, concerned about
potential damage that could occur if a tree fell, decided to cut down two beetle-killed pine
trees on his property. Fitte was concerned that the trees might fall on his work vehicles,
ladders, and scaffolding. He testified in his deposition:
The tops of the trees had already blown over and damaged the fence in two
spots. I was worried because that’s where I park my work vehicles if the
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tree itself blew over it would take out my work vehicles, and I keep ladders
and scaffolds there from time to time when they’re not on the job site.
¶4 On June 21, 2012, Fitte cut down the second tree, after felling the first tree earlier.
Fitte trimmed the branches off the trees and cut the trunks into eight-foot logs, stacking
them on his property with the intention of either selling or giving them away. Pursuant to
a burn permit, Fitte started a fire to burn the branches from the trees so that the branches
would not take up space on his property. He agreed in his deposition that, once he had
felled both trees, there “was no longer a risk of those trees falling on [my] business
vehicles or [my] scaffold or [my] ladders.”
¶5 Two days later, a fire rose from the ashes of Fitte’s burn and erupted into a
wildfire that became known as the Corral Fire, as we have previously noted. See
Associated Dermatology & Skin Cancer Clinic of Helena, P.C. Profit Sharing Plan and
Trust for the Benefit of Stephen D. Behlmer, M.D. v. Fitte, 2016 MT 349, ¶ 3, 386 Mont.
150, ___ P.3d ___ [hereinafter Associated Dermatology I]. The Corral Fire burned over
1,800 acres owned by approximately 35 landowners, including Behlmer’s 224-acre
parcel, and consumed four dwellings, timber, and other personal property.
¶6 At the time of the fire, Fitte carried two insurance policies issued by Mountain
West that provided three coverages: a $300,000 homeowners policy; and a commercial
policy that provided $1,000,000 in coverage for commercial general liability (CGL) and
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$500,000 in coverage for commercial automobiles. Only the commercial automobile
coverage is at issue in this appeal.1
¶7 Fitte conceded negligence and, following arbitration on damages, stipulated to
entry of a judgment in favor of Behlmer in the amount of $500,000, which was entered
by the District Court on September 13, 2013. Fitte and Behlmer subsequently entered
into an agreement in which Fitte assigned his rights in the Mountain West policies to
Behlmer in exchange for an agreement that Behlmer would not execute against Fitte
personally. Behlmer filed this action seeking, inter alia, a declaration that the automobile
policy provided coverage for the Corral Fire damages and enforcement of its judgment
against Fitte. Mountain West counterclaimed for a declaration that the automobile policy
did not provide coverage. Both parties moved for summary judgment on the coverage
issue and the District Court held in favor of Behlmer, reasoning that:
By removing and disposing trees to prevent damage to his vehicles, Fitte
caused the Corral Fire. Thus, [Behlmer’s] property damage flowed from,
grew out of, or originated from Fitte maintaining his insured vehicle.
(Internal quotations omitted).
¶8 Mountain West appeals.
STANDARD OF REVIEW
¶9 This Court reviews a district court’s order on a motion for summary judgment by
applying the same criteria as the district court under M. R. Civ. P. 56. Parker v. Safeco
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Mountain West conceded coverage under the homeowners policy. Coverage under the CGL
policy was declared by the United States District Court for the District of Montana. Order
Granting Summary Judgment in Favor of Defendant and Intervenor Defendant, Mountain W.
Mut. Farm Bureau Mut. Ins. Co. v. Fitte (D. Mont. 2013) (No. CV-13-20-RKS); Associated
Dermatology I, ¶ 7.
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Ins. Co. of Am., 2016 MT 173, ¶ 15, 384 Mont. 125, 376 P.3d 114 (citing Thornton v.
Flathead Cnty., 2009 MT 367, ¶ 13, 353 Mont. 252, 220 P.3d 395).
¶10 The interpretation of an insurance policy presents a question of law, which we
review for correctness. Parker, ¶ 14 (citing Wendell v. State Farm Mut. Auto. Ins. Co.,
1999 MT 17, ¶ 10, 293 Mont. 140, 974 P.2d 623); State Farm Mut. Auto. Ins. Co. v.
Ferrin, 2002 MT 196, ¶ 11, 311 Mont. 155, 54 P.3d 21 (citing Pablo v. Moore, 2000 MT
48, ¶ 12, 298 Mont. 393, 995 P.2d 460).
DISCUSSION
¶11 “It is well established that in construing and analyzing the terms of an insurance
policy we look first to the policy’s plain language.” Monroe v. Cogswell Agency, 2010
MT 134, ¶ 15, 356 Mont. 417, 234 P.3d 79; accord Lincoln Cnty. Port Auth. v. Allianz
Global Risks US Ins. Co., 2013 MT 365, ¶ 15, 373 Mont. 60, 315 P.3d 934. When
interpreting the contract, we “give the terms and words used in an insurance contract their
usual meaning and construe them using common sense.” Travelers Cas. & Sur. Co. v.
Ribi Immunochem Research, 2005 MT 50, ¶ 17, 326 Mont. 174, 108 P.3d 469; accord
Modroo v. Nationwide Mut. Fire Ins. Co., 2008 MT 275, ¶ 23, 345 Mont. 262, 191 P.3d
389; Mitchell v. State Farm Ins. Co., 2003 MT 102, ¶ 26, 315 Mont. 281, 68 P.3d 703;
Stutzman v. Safeco Ins. Co. of Am., 284 Mont. 372, 376, 945 P.2d 32, 34 (1997).
¶12 Mountain West’s commercial automobile policy provides, in pertinent part:
We [Mountain West] will pay all sums an “insured” legally must pay as
damages because of “bodily injury” or “property damage” to which this
insurance applies, caused by an “accident” and resulting from the
ownership, maintenance or use of a covered “auto.”
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There is no dispute that the incident in question was an “accident” that caused “property
damage” that the insured, Fitte, was legally required to pay. The coverage question here
is whether the property damage “result[ed] from the ownership, maintenance or use of”
Fitte’s covered vehicles.
¶13 Mountain West’s initial argument is that merely “preventing harm” to a vehicle by
cutting down trees is not “maintenance” of a vehicle, but, rather, “maintenance” consists
of “repairing or working on an intrinsic part” of a vehicle. Alternatively, Mountain West
argues that, even assuming that maintenance could encompass the prevention of harm to
a vehicle, Fitte’s subsequent burning of the branches did not prevent any harm, but
instead “dispos[ed] of rubbish which at a previous time may have posed a risk,” adding
that “any potential threat to the vehicles from the falling tree limbs ended when the trees
were on the ground.” (Emphasis in original.) As such, Mountain West argues that “Fitte
did not burn the branches to eliminate a risk to his vehicles,” and that the Corral Fire
damages resulted from Fitte’s decision about the method of disposing of the tree
branches.
¶14 Behlmer responds that the policy provides coverage “because the Corral Fire and
the damage it caused resulted from Fitte maintaining his insured vehicles.” Behlmer
argues that the District Court correctly reasoned that Fitte was engaging in “maintenance”
because his actions were done “to preserve or keep [his insured vehicles] in an existing
state or condition.” Thus, Behlmer argues that “a causal relationship existed here
between the fire and the vehicle’s maintenance,” because, quoting the District Court,
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“[t]he obvious and necessary result of cutting down trees is the requirement to dispose of
them.”
¶15 We have once addressed the meaning of the word “maintenance,” albeit in a
non-insurance context. In Link v. State, 180 Mont. 469, 591 P.2d 214 (1979), cited by
Behlmer, the Montana State Park Commission (Park Commission) entered into a contract
in 1946 with the Link Bros. partnership that granted the partnership the right to operate
the concession service at the Lewis and Clark Caverns State Park, and required that the
partnership construct certain improvements that would become the property of the Park
Commission, including a railroad or tramway to carry visitors from the concession area to
the caverns. Link, 180 Mont. at 471, 591 P.2d at 216. Link Bros. operated the tramway
for three years before entering into a supplemental agreement with the Park Commission
in which the Park Commission agreed to “‘take over the operation and maintenance of
the said mountain railroad’, and to ‘operate and maintain same at its own expense.’”
Link, 180 Mont. at 472, 591 P.2d at 216 (quoting the agreement). The Park Commission
agreed to pay Link Bros. a portion of the fares in recognition of their investment in the
improvements. Link, 180 Mont. at 472, 591 P.2d at 216. In 1973, a gear in the tramway
hoist broke and the Park Commission did not repair it, but instead removed the tramway
and replaced it with a walking path in its place. Link, 180 Mont. at 472–73, 591 P.2d at
217. Addressing Link Bros.’ breach of contract claim, we quoted the Texas Supreme
Court, stating:
“To ‘maintain’ means to preserve or keep in an existing state or condition
and embraces acts of repair and other acts to prevent a decline, lapse, or
cessation from that state of condition . . .” and “. . . includes the idea of
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keeping in repair, but has much broader meaning involving the concept of
supporting, sustaining, carrying on and continuing.”
Link, 180 Mont. at 477, 591 P.2d at 219 (quoting State Farm Mut. Auto. Ins. Co. v. Pan
Am. Ins. Co., 437 S.W.2d 542, 545 (Tex. 1969)). We held that the Park Commission’s
“failure to maintain and refusal to operate the system” was a breach of the contractual
requirement to “operate and maintain” the tramway. Link, 180 Mont. at 478, 591 P.2d at
219.
¶16 Intrinsic within the definition of “maintenance” we cited in Link was that the acts
of “preservation” or “repair” or “support” or “sustaining” or “continuing” would occur on
the item being maintained. “Maintenance” as constituting work on the actual object is a
meaning commonly understood by other courts. “Maintenance” includes “the act of
repairing the covered automobile.” 8A Steven Plitt et al., Couch on Insurance § 119:36
(3d ed. 2014) (citing Louisiana, Pennsylvania, Texas, Wisconsin, and New York
decisions). In an automobile insurance contract, New York defined “maintenance” as
“performance of work on an intrinsic part of the mechanism of the car and its overall
function.” Guishard v. Gen. Sec. Ins. Co., 875 N.E.2d 881, 882 (N.Y. 2007) (internal
quotations omitted). Similarly, Oklahoma defined “maintenance” in an automobile
insurance contract as “all acts which come within its ordinary scope and meaning,
including acts of commission or omission relative to the external and mechanical
condition of a vehicle.” Ply v. Nat’l Union Fire Ins. Co., 81 P.3d 643, 649 n.13 (Okla.
2003). “Maintenance” is defined as the “care and work put into property to keep it
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operating and productive; general repair and upkeep.” Black’s Law Dictionary 1097
(Bryan A. Garner ed., 10th ed. 2014).
¶17 Even if we were to assume, for sake of argument, that cutting down trees
constituted maintenance of a vehicle, the policy would not extend coverage for the
damages here. Placing the word “maintenance” back within the provision at issue
requires that the damage “result from” the maintenance of the covered vehicles. Fitte’s
decision to dispose of the branches by burning them and his action of starting the fire
occurred after the trees had been cut down. As Fitte admitted in his deposition, the
perceived risk to his vehicles was eliminated when he felled the trees. Fitte could have
disposed of the trees in any number of ways, demonstrating that his decision to burn the
branches was not an inherent part of vehicle maintenance. See Wendell, ¶ 54 (the phrase
“arise out of the use [of a vehicle]” meant the injuries must “originate from, or grow out
of, or flow from the use of the . . . vehicle.”). Thus, the District Court’s conclusion that
burning the trees was a necessary part of preventing damage to, and thus maintaining,
Fitte’s vehicles, was incorrect.
¶18 Accordingly, the District Court’s declaration of coverage under the Mountain
West commercial automobile policy is reversed.
/S/ JIM RICE
We concur:
/S/ JAMES JEREMIAH SHEA
/S/ LAURIE McKINNON
/S/ BETH BAKER
/S/ MICHAEL E WHEAT
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