Landa v. Assurance Co. of America, 2013 MT 217 (Aug. 6, 2013) (5-0) (Wheat, J.)
Issue: (1) Whether the district court properly granted summary judgment to Assurance on the basis that Assurance had no duty to defend because the complaint did not allege an “occurrence” and did not involve “bodily injury,” and (2) whether the district court properly held that Assurance had no duty to conduct an independent investigation.
Short Answer: (1) Yes, and (2) yes.
Facts: Landa was the sole managing member of Landa-Harbaugh & Associates, LLC, a Montana LLC licensed to sell securities and insurance. Landa carried commercial general liability insurance through Assurance. In 2008, Olan “Bubba” Alsup, a former employee of Landa’s, sued Landa for fraud, misrepresentation, negligence, breach of contract, and other claims. Landa tendered the defense, and Assurance refused to defend because Alsup’s claims did not allege “bodily injury” or “property damage” caused by an “occurrence,” as defined by the policy.
Landa filed for a declaratory judgment that Assurance had a duty to defend and indemnify Landa, and also alleged violations of the Montana Unfair Trade Practices Act, common-law bad faith, negligence, and other claims.
Procedural Posture & Holding: Assurance moved for summary judgment on all of Landa’s claims. The district court granted the motion because Alsup did not allege “bodily injury” as the result of an “occurrence,” as those terms were defined in the policy. The court further held that Assurance was not liable for statutory bad faith because the denial of coverage was grounded on a legal conclusion. Landa appeals, the Supreme Court affirms.
Reasoning: (1) To determine whether Assurance had a duty to defend Landa, the Court looks first to the terms of the policy and then to the facts alleged in the complaint. Landa’s policy defines “occurrence” as an “accident.” The n has previously held that this term in a policy “refers to any unexpected happening that occurs without intention or design on the part of the insured.” ¶ 20 (quoting Safeco v. Liss, 2000 MT 380). Alsup’s complaint does not allege any accidental, unintentional conduct. Moreover, the focus is on the facts, not the legal theories, and the conduct underlying all of Alsup’s claims is intentional. It is unnecessary to determine whether Alsup alleged bodily injury or property damages, as the complaint does not allege an “occurrence.”
(2) Landa argues Assurance has an obligation under the UTPA to investigate a claim. Assurance contends that when an insurer has a reasonable basis in law for denying a claim, it is not liable under the UTPA. The Court agrees.