Montana Supreme Court Clarifies Meaning of “Accident”

The Montana Supreme Court, reversing a trial court’s decision, has clarified the definition of “accident” under Montana law and has ruled that it could include intentional acts if the damages “were not objectively intended or expected by the insured.”

Background

Jerry and Karen Slack alleged that they hired contractor Jeffrey Fisher and his company, Fisher Builders, to build “a remodeled home located on the site of the small home” to serve as a year-round residence. They said that they told the contractor that their permit was conditioned on the existing deck remaining “unchanged.”

According to the Slacks, the contractor elevated the existing structure to pour a new foundation when he discovered an infestation of carpenter ants. The contractor cut out the ant-infested planks and, at some point during his work, the deck collapsed.

The Slacks’ permit was revoked and they sued the contractor for negligence. Employers Mutual Casualty Company (“EMC”), which had issued a commercial general liability insurance policy to the contractor, provided a defense under a reservation of rights. EMC also filed a declaratory judgment action, alleging that there was no coverage and that it had no duty to defend or indemnify EMC in the Slacks’ action.

The trial court granted EMC’s motion for summary judgment, concluding that the contractor’s conduct clearly was intentional and did not fit within the meaning of “occurrence” under the policy, regardless of whether the contractor had “intended the consequences or not.”

The Slacks appealed to the Montana Supreme Court, contending that the trial court had erred by concluding that unintended consequences resulting from the contractor’s acts did not satisfy the definition of “occurrence” as an “accident.”

The Montana Supreme Court’s Decision

The court reversed.

In its decision, the court said it sought to “harmonize” its prior “inconsistent statements” on the meaning of the word “accident.” It then ruled that an “accident” could include intentional acts if the damages “were not objectively intended or expected by the insured.”

The court concluded that issues of material fact precluded summary judgment, and it remanded the case to the trial court for further proceedings.

The case is Employers Mutual Cas. Co. v. Fisher Builders, Inc., No. 15-0429 (Mont. April 19, 2016).