F.H. Stoltze Land & Lumber Co. v. American States Insurance Co.

F.H. Stoltze Land & Lumber Co. v. American States Insurance Co., 2015 MT 165 (June 23, 2015) (Baker, J.) (5-0, aff’d)

Issue: Whether district court properly granted summary judgment to insurer on grounds that policy insurer has with Schlegel does not require it to defend and indemnify Stoltze in action where Schlegel could not be held liable.

Short Answer: Yes.

Affirmed

Facts: In 2003, Schlegel and Stoltze contracted for Schelgel to log Stoltze’s property. In the contract, Schlegel agreed to obtain liability insurance indemnifying Stoltze from liability for loss or injury arising from the logging operations. Schelgel also agreed that the indemnification would not be limited by Schlegel’s immunity, Schlegel having waived such immunity as a defense against Stoltze.

The policy extended coverage to any person for whom Schlegel was required by contract to provide insurance, but further provided there was no coverage if “in the absence of this endorsement, no liability would be imposed by law” on Schlegel.

Shanks worked for Schelge, and injured himself during logging operations on Stoltze’s land in 2004. Shanks was covered by Schlegel’s work comp, but filed a personal injury suit against Schelgel and Stoltze. Stoltze tendered defense and indemnity to ASI. ASI accepted the tender but reserved the right to withdraw is if determined Stoltze was not covered.

In 2010, Schlegel moved to dismiss Shank’s claim under the exclusive remedy provision of the Worker’s Compensation Act, and the district court granted the motion. ASI then withdrew its defense of Stoltze on the grounds that the policy covered Stoltze only to the extent Schlegel was liable. 

Procedural Posture & Holding: Stoltze and Maxum Specialty Insurance Group filed suit against American State Insurance (ASI) seeking a declaratory judgment that ASI must defend and indemnify Stoltze against a lawsuit brought by Whitney and Ana Shanks. The district court granted summary judgment to ASI. Stoltze appeals and the Supreme Court affirms.

Reasoning: An insurer’s duty to defend or indemnify is determined by the policy. An insurer must defend unless there is an “unequivocal demonstration that the claim against the insured” is not covered. ¶ 7. Under the plain terms of Schlegel’s policy, Stoltze is not covered because Schlegel is not liable.