Employers Mutual Casualty Co. v. Fisher Builders, Inc.

Employers Mutual Casualty Co. v. Fisher Builders, Inc., 2016 MT 91 (April 19, 2016) (Rice, J.) (5-0, rev’d)

Issue: (1) Did the district court err in concluding the alleged acts and their consequences were not an “occurrence” under the policy; and (2) whether the district court erred in granting summary judgment to Employers Mutual Casualty (EMC).

Short Answer: (1) Yes, clarifying previous precedent; and (2) yes.

Reversed and remanded

Facts: Jerry and Karen Slack have owned a vacation home on Flathead Lake since 1969. In 2007, the Slacks hired Fisher Builders to build a remodeled home that would serve as the Slacks’ year-round residence. In order to maintain the home’s status as an acceptable non-conforming property use under Lake County zoning laws, the remodeled home had to incorporate the existing structure. The Slacks’ building permit also required that the existing deck remain unchanged.

Fisher elevated the existing house on steel I-beams to pour a new foundation. While the house was on the beams, Fisher began to dismantle the walls and found a carpenter ant infestation. He cut out the infested planks and subsequently burned the ant-infested boards. At some point, the deck collapsed.

The Lake County Planning Department visited the site and issued a cease and desist order, then revoked the Slacks’ building permit based on multiple violations of the Lakeshore Protection Regulations and the fact that the existing structure had been destroyed. Slacks appealed to the district court, and eventually reached a settlement with Lake County that allowed them to build a smaller home.

Slacks then filed suit against Fisher for negligence. Fisher gave notice to EMC, which was Fisher’s commercial general liability insurer. EMC provided a defense under a reservation of rights while filing a declaratory judgment action (this case) alleging there was no coverage and it had no duty to indemnify or defend.

EMC and the Slacks both moved for summary judgment, with Fisher joining the Slacks’ motion. Fisher ultimately settled with Slacks, consenting to entry of judgment in Slacks’ favor and assigning its rights under the EMC policy to Slacks.

Procedural Posture & Holding: The district court granted EMC’s motion for summary judgment, concluding Fisher’s conduct was clearly intentional and therefore was not an “occurrence” under the policy. Slacks appeal and the Supreme Court reverses. 

Reasoning: (1) The EMC policy excluded from coverage “bodily injury or property damage, which is either expected or intended from the standpoint of the insured.” The Court has previously held that intentional acts can result in unintended or unexpected consequences, thereby constituting an “occurrence.” Phalen; Strainer. EMC relies on Blair, the analysis of which the Court clarifies. Acknowledging that its precedent has not been consistent, the Court holds that policy language defining “accidents” may include intentional acts if the damages were not objectively intended or expected by the insured.

(2) The Court concludes that genuine issues of material fact precluded summary judgment, and remands for further proceedings.