INSURANCE: Insurer has duty to defend contractor against all claims in complaint by luxury home owners, but does not have duty to indemnify for $2.6 million+ liquidated damages, breach of warranty, MCPA, unjust enrichment, emotional distress claims, and fact issues preclude summary judgment on duty to indemnify for other claims… Molloy.

Peggy & Kevin Quinn contracted with Brunner Homes & Const. to build a $745,688.98 home in Missoula. The contract required Brunner to complete it no later than 300 days after work commenced — by 5/24/16. Barring any change orders, Brunner agreed to be responsible for .5% of the contract price for every day beyond the completion date. Quinns sued Brunner in State Court 9/25/17 asserting 12 counts including negligence, breach of contract, and construction default, alleging that the home was not satisfactory for habitation by the completion date. They assert that Brunner must pay $3,728.45 for each day past the completion date that the home remains substandard, and thus that as of 4/27/18 it owes $2,624,828.80 for the delay. Brunner notified Atlantic Casualty of the suit 10/6/17. It informed Brunner 11/14 that it would defend under reservation. It then sued in this Court for a declaration that it has no duty to defend or indemnify Brunner. It moved for summary judgment on its duty to defend/indemnify against all 12 counts of the underlying complaint. Brunner cross-moved for summary judgment on the duty to defend.

Atlantic argues that faulty workmanship is not a covered occurrence because it is not a fortuitous event. It is incorrect. The policy covers bodily injury and property damage caused by an “occurrence” which is defined as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.” “Accident” is undefined. The Fisher (Mont. 2016) test for when an act is an occurrence asks “1) whether the act itself was intentional, and 2) if so, whether the consequence or resulting harm stemming from the act was intended or expected from the actor’s standpoint.” “If the answer to either question is ‘no,’ the act is an occurrence.” Western Heritage (D.Mont. 2019). As Western Heritage recognized, faulty workmanship can be an occurrence under Fisher if the consequences were not objectively intended or expected by the insured, notwithstanding that the work was intentional. The record is sparse as to Brunner’s alleged faulty workmanship. Quinns’ complaint merely makes general allegations that issues with “the roof, concrete, the decks, drywall, plumbing, framing, trim work, paint, windows, doors, tile, venting, leaking, and cracking” have “resulted in water damage, water stains, destruction of personal property, stained floors, damage to a range hood, and other damage to tangible personal property.” Nevertheless, Atlantic has not adduced any evidence that a contractor in Brunner’s position would have intended or expected these damages. Thus factual development is needed to determine whether its alleged faulty workmanship is a covered occurrence.

Atlantic argues that even if Brunner’s alleged faulty workmanship were an occurrence, the resulting property damage is excluded by Exclusion 2(j)(6), property “that must be restored, repaired or replaced because ‘your work’ was incorrectly performed on it.” However, the Products-completed operations hazard restores coverage for property damage that occurs after the work is “completed,” which means all work called for in the contract is finished or the site has been “put to its intended use by any person or organization other than another contractor or subcontractor working on the same project.” Additionally, “work that may need service, maintenance, correction, repair or replacement, but which is otherwise complete, will be treated as completed.” Atlantic argues that the Products-completed operations hazard is inapplicable because the home was not completed. The record suggests otherwise. Quinns’ discovery requests indicate that they took occupancy, putting it “to its intended use.” The Products-completed operations hazard, then, provides coverage for damage that occurred after the home was completed. However, Exclusion 2(j)(6) still excludes damage that occurred during Brunner’s work on the home. Mulroy (D.Mont. 2019) (the Products-completed operations hazard “depends on timing”). The record is unclear as to when the alleged damage occurred. As with whether Brunner’s alleged faulty workmanship is a covered occurrence, factual development is needed to determine whether the alleged damage is excluded under 2(j)(6) or covered under the Products-completed operations hazard. However, because coverage is a possibility, Atlantic has a duty to defend Brunner against Quinns’ negligence claims, Staples (Mont. 2004), and the mixed-action rule requires Atlantic to defend against the other claims, Wendell (Mont. 1999).

Atlantic argues that the alleged breach of contract is not a covered occurrence. The parties focus on whether a breach of contract in the abstract can ever be an occurrence, but the proper inquiry is whether the underlying conduct is an occurrence. Geraldine (Mont. 2008) (“It is the acts giving rise to the complaint which form the basis for coverage, not the complaint’s legal theories or conclusory language.”). The record is unclear as to Brunner’s conduct, which makes applying the Fisher test for an occurrence difficult. Some of the breach allegations are duplicative of the negligence allegations. For example, Quinns allege that Brunner breached the contract in part by failing to “perform all work in a good and workmanlike manner.” This is essentially an allegation of faulty workmanship, which may be an occurrence under Fisher, although factual development is needed to determine whether it is an occurrence here. The other allegations are even harder to analyze on such a sparse record. For example, Quinns allege that Brunner breached the contract by failing to abide by the completion date. Brunner claims that the delay was due to change orders and therefore was not intentional. However, it has not offered any change orders or other evidence to support its contention. The record at this point does not allow a ruling on whether the conduct underlying Brunner’s alleged breach of contract constitutes an occurrence.

Atlantic argues that even if failing to meet the completion date is an occurrence, the liquidated damages accruing at .5% of the price of the home per day are not covered property damages. “Property damage” refers to “physical injury to tangible property, including all resulting loss of use of that property” and the “loss of use of tangible property that is not physically injured.” “However, ‘property damage’ does not include breach of contract, breach of any express or implied warranty, deceptive trade practices or violation of any consumer protection laws.” Brunner and Quinns argue that the liquidated damages reflect “loss of use” of the home due to the delay. A different take is that the provision is a penalty. But as Atlantic contends, the liquidated damages are purely economic. The liquidated damages provision is divorced from any facts, apart from the home price, and does not purport to be compensation for loss of use or any other damages resulting from the delay. Further, the “usual, common-sense meaning” of the policy’s exclusion of “breach of contract” from the definition of “property damage” — while not the model of clarity — is that purely contractual damages are not covered. Accordingly, the liquidated damages accruing at .5% of the home price per day are not covered under the policy and Atlantic has no duty to indemnify Brunner for those damages. However, whether it has a duty to indemnify for the remaining breach of contract and implied warranty claims cannot be determined as a matter of law at this time.

Atlantic has no duty to indemnify for alleged breaches of warranty or violations of the MCPA.

The record is unclear as to the content & circumstances of Brunner’s alleged misrepresentations and fraudulent statements. Thus whether they constitute occurrences under Fisher cannot be determined as a matter of law at this time.

Quinns allege that Brunner caused emotional distress to Peggy Quinn that manifested as physical injuries, “including anxiety, shaking, loss of sleep, panic attacks, insomnia, exhaustion, stress, hot flashes, and worry.” Atlantic argues that this is not covered “bodily injury” because the policy excludes “costs or expenses arising out of emotional distress … unless it arises out of physical injury that occurs to that person.” Quinns concede that this claim is not covered. Atlantic has no duty to indemnify Brunner for emotional distress damages awarded in the underlying suit.

Quinns allege that Brunner was unjustly enriched by retention of payment despite defects. Atlantic argues that equitable relief is not covered. Neither Quinns nor Brunner disputes this contention. Thus Atlantic has no duty to indemnity for the unjust enrichment claim.

Quinns allege that they are entitled to damages under MCA 70-19-420 which allows homeowners to recover enumerated damages proximately caused by a construction defect, including reasonable repairs, reasonable temporary housing, reduction in market value, and reasonable attorney fees & costs. Atlantic argues that this does not allege an occurrence. However, what matters is the underlying conduct, not the legal theory. The statutory defect claim is merely an allegation of faulty workmanship. Factual issues preclude summary judgment on whether Brunner’s alleged faulty workmanship is a covered occurrence.

Quinns allege that Brunner negligently selected and supervised contractors. This is essentially a claim that it is responsible for its subcontractors’ alleged faulty workmanship. Atlantic argues that the policy treats subcontractors’ work the same as Brunner’s work and therefore property damage resulting from subcontractors’ allegedly faulty workmanship is excluded by 2(j)(6). However, the Products-completed operations hazard restores coverage for property damage that occurs after the work is completed. The record is unclear as to when the alleged damage occurred. Thus summary judgment is improper on Atlantic’s duty to indemnify for the subcontractors’ alleged faulty workmanship.

Atlantic Casualty Ins. v. Quinn and Brunner Homes & Const., 44 MFR 206, 6/20/19.

Matthew Hutchison (Ramlow & Rudbach), Whitefish, for Atlantic; David McLean & Ryan Willmore (McLean & Associates), Missoula, for Quinns; Rachel Parkin & Philip Condra (Milodragovich Dale Steinbrenner), Missoula, for Brunner.

EXCESSIVE FORCE DEATH: Shooting of suspected robbery or drug shooter in stop of vehicle for alleged unlit plate light in which suspect was backseat passenger survives summary judgment as to whether deadly force was constitutional and — until facts can be established — whether officer violated clearly established law… summary judgment for City and PD granted on §1983 claims… summary judgment granted and denied on state law claims… Molloy.

(The facts are those stipulated, provided in support of summary judgment, and taken from the patrol car dash cam.)

Billings Officer Marc Snider responded 4/13/14 to reports of a robbery during which a person had been shot. Michael Chavez said he had been shot by Richard Ramirez. Officers found 3 syringes, bags of pills, and what they believed to be meth. Snider believed that Chavez had a large amount of cash at the time of the shooting and found a phone with texts from people who appeared to want drugs. He theorized that the shooting may have been a drug rip off. Officer Grant Morrison arrived 10-15 minutes after the shooting had been reported. He heard 2 people on the radio identify Ramirez as the suspect. He had previously been to the home of his parents Julio & Betty to assist in removing him. On the night of the Chavez shooting, Morrison and Officer Tony Jensen went to Julio & Betty’s home but Ramirez was not there. Morrison began his shift at 9 p.m. the next night At the shift briefing he learned that the Chavez shooting was likely drug-related and of an “attempt to locate” on Ramirez who may be armed & dangerous. No arrest warrant had been issued. It is disputed whether Morrison was instructed to treat him as armed & dangerous or whether officers merely surmised that he might be armed & dangerous. Morrison was later traveling south on South 34th St. in the “Southside” when he saw a red Ford Focus traveling west on 6th Ave. He claims that it made a quick right turn when the driver saw his patrol car, and he began following. Plaintiffs claim that he followed because he knew that Ramirez was a passenger. After following for 1 minute 40 seconds, he initiated a stop purportedly because the license plate was not illuminated. (The video shows that driver obeyed all regulations including stopping at signs and signaling turns; the only rationale for the stop is the purported lighting violation which is not evident from the video.) As Morrison’s lights went on, the passenger in the rear — Ramirez — turned to look at Morrison and shifted his body. Morrison approached the rear door and said, “Hands up. All 4 of you hands up.” Ramirez raised his hands. Morrison opened the rear door and said to Ramirez, “What were you doing? Why were you moving your hands around so much? You’re making me nervous, man.” Then he asked, “Who are you?” Ramirez replied, “Richard” and his left hand dropped out of view of the dash cam. Morrison said, “Richard? All of you put your fucking hands up right now on top of the seats.” Ramirez placed his hands on the seat in front of him, then dropped them out of the cam’s view again. Morrison radioed dispatch that he had Richard Ramirez and asked backup to “step it up.” At this point, Ramirez’s hands were out of the cam’s view again. Morrison yelled, “Hands up. Hands on the fucking…. Get your fucking hands up or I’m going to shoot you.” As he said the last part he pulled his gun from its holster and aimed it at Ramirez. He took a step back and said, “I will shoot you. Hands up,” then fired 3 shots. He continued to yell “hands up” and warned twice that he would shoot again. He commanded Ramirez to get on the ground, which he, mortally wounded, was unable to do. Backup arrived.

Less than 43 seconds elapsed from when Morrison turned on his light until he shot Ramirez. In that time he ordered — then screamed at — Ramirez and the others to put their hands up, 7 times. 3 seconds elapsed from when he first said “I’m going to shoot you” until he pulled the trigger. All 3 shots hit Ramirez — 1 penetrated his right shoulder, 1 entered his chest, and 1 grazed his wrists. He was unarmed and no weapon was found. Officers found a syringe on the floor and 2 baggies — 1 containing meth — near Ramirez’s seatbelt buckle. A toxicology report showed that he had meth and amphetamine in his system when he died.

Ramirez’s estate, his father Julio, and his son Richard Jordan Ramirez sued Morrison, Billings PD Chief Rich St. John, and Billings under 42 USC 1983 claiming excessive force, and also brought state negligence, survivorship, wrongful death, and assault claims. Defendants request summary judgment.

Morrison asserts qualified immunity as a defense to the excessive force claim. A material dispute of fact exists as to whether his use of deadly force violated Ramirez’s constitutional rights. The test is whether the force was objectively reasonable based on totality of circumstances. Graham (US 1989). Facts to consider include “the severity of the crime at issue, whether the suspect poses an immediate threat to the safety of the officers or others, and whether he is actively resisting arrest or attempting to evade arrest by flight.” Id.

As to severity of the crime, Morrison argues that Ramirez was suspected of shooting Chavez the previous night during a robbery or drug deal. While drug shootings are serious crimes, the severity is tempered by the time elapsed, the lack of certainty that Ramirez was the shooter, and that the crime at issue was an arguably pretextual stop of the car in which Ramirez was a backseat passenger. Immediacy of any threat the alleged shooter posed had long passed. Ramirez was merely a person of interest in the shooting. Morrison expressed surprise at the inquest at Ramirez having been named a suspect, stating: “I’ve never known him to shoot somebody before.” The PD’s failing to issue an arrest warrant and merely putting out an “attempt to locate” suggest that it did not treat him as a dangerous criminal. Apart from being out late in a high-crime neighborhood, he had done nothing to suggest that he was engaged in criminal conduct. Morrison initiated the stop ostensibly because the plate was not lit. Plaintiffs dispute the lighting violation and Morrison concedes that the dash cam is inconclusive. Even so, an alleged lighting violation can hardly be described as “severe,” and would be attributed to the driver rather than Ramirez. Although traffic stops can be dangerous, the alleged lighting violation weighs against Morrison as to severity of the crime and arguably suggests a pretextual stop.

The most significant Graham factor is whether Ramirez posed an immediate threat to the safety of the officer or others when he was in the backseat of a car stopped for a vehicle condition violation. Mattos (9th Cir. 2011). Morrison argues that Ramirez moved his left hand toward his waist as if reaching for the gun with which he shot Chavez. But a material dispute exists as to whether he was reaching for his waist or otherwise moving in a threatening manner, or if he was reaching to undo his seatbelt or to rid himself of drugs in his pocket. The video does establish that Ramirez was not verbally aggressive toward Morrison, while Morrison was arguably out of control in his commands, language, and aggressiveness. It also depicts him firing 3 rounds into a small sedan occupied by Ramirez and 3 innocent bystanders. Crystal Jones claims that she did not feel Ramirez moving in the seat behind her and Dustin Halverson — the driver — claims that from his limited perspective Ramirez appeared to be trying to move the seatbelt. Defendants argue that these statements are inconsistent with their testimony at the inquest, but at summary judgment all facts are construed in favor of Plaintiffs without making credibility determinations. Their statements allow the inference that Ramirez’s movement — although noncompliant — was nonthreatening. Morrison is the only witness who saw what Ramirez was doing with his left hand. That puts this case within Scott‘s instructions to thoroughly examine the record for inconsistencies and circumstantial evidence that “would tend to discredit the police officer’s story.” Morrison averred that he “knew that persons who use methamphetamine tended to be aggressive, unpredictable and violent.” However, he has not indicated that he recognized that Ramirez was under the influence, and thus his after-the-fact justification has no place in the reasonableness analysis. His inquest testimony and affidavit are inconsistent as to when he recognized Ramirez, and the inquest testimony leaves open the shift briefing warning’s scope. Finally, Morrison’s knowledge of Ramirez’s reputation for nonviolence raises questions as to whether he posed an immediate threat.

Morrison argues that Ramirez resisted arrest by ignoring commands to keep his hands up. However, his “resistance” is more accurately described as “noncompliance,” and is balanced against Morrison’s aggressiveness.

The inconsistencies in Morrison’s account and Ramirez’s history of nonviolence are enough to preclude summary judgment as to whether his use of deadly force was objectively reasonable. (Plaintiffs also rely on police practices expert Ernie Burwell’s opinions to create a material dispute of fact as to reasonableness. Generally, an expert opinion that an officer acted unreasonably is not enough to defeat summary judgment. Sheehan (US 2015). The factual inconsistencies create a material dispute even absent Burwell’s report and thus the Court need not consider his opinions as to Morrison’s motion.)

The Supreme Court has repeatedly warned “not to define clearly established law at a high level of generality,” Kisela (US 2018), but has provided no meaningful guidance on the appropriate level of specificity. Plaintiffs contend that this is one of those “obvious cases” under Graham and Garner (US 1985) as to clearly established law. And it would be if the jury accepts their version of the facts that Ramirez’s motions were non-threatening. Defendants would define the level of specificity to require that the officer was aware that the decedent was a suspect in a shooting the day before and was familiar with his past and the decedent was noncompliant in following orders to keep his hands on the seat and was moving his left hand out of sight. The Court cannot determine whether Morrison violated clearly established law or even determine the appropriate level of specificity without knowing the facts. Thus Plaintiffs’ §1983 claim cannot be resolved at summary judgment.

Morrison is entitled to summary judgment on the state law claims because MCA 2-9-305(5) immunizes him from suit. He cannot be individually liable even if his conduct constituted malice under the MCA 2-9-305(6) exceptions, although 305(5) leaves the City on the hook for Morrison’s conduct which it acknowledged occurred within the course & scope of his employment, including malicious conduct. Kornec (Mont. 1947).

The City and St. John are entitled to summary judgment on Plaintiffs’ §1983 claims because Plaintiffs have failed to establish Monell (US 1978) liability on any of their theories of policy & custom, failure to train, and ratification.

The City’s and St. John’s motions for summary judgment as to negligent hiring and retention is granted and denied as to vicarious liability. Their motion for summary judgment on wrongful death/survivorship is denied. Their motion for summary judgment on assault is granted as to direct liability, denied as to vicarious liability.

Estate of Ramirez et al v. Billings, Morrison, and St. John, 44 MFR 194, 1/30/19.

JR Casillas, Brian Lebsock, and Peter Lacny (Datsopoulos MacDonald & Lind), Missoula, for Plaintiffs; Gerry Fagan & Adam Warren (Moulton Bellingham), Billings, for the City and St. John; Harlan Krogh & John Crist (Crist, Krogh & Nord), Billings, for Morrison.

COPYRIGHT: Photo of Democrat Congressional Candidate shot by hired photographer at Party event and downloaded from Facebook by Republicans for use in mailer supporting Congressman’s reelection campaign was “fair use, not copyright infringement… Christensen.

Erika Peterman contracted with the Montana Democratic Party in the spring of 2017 to take photos of the Mansfield-Metcalf Dinner for $500. Several photos feature Rob Quist, a singer-songwriter and then Democratic candidate for the House of Representatives. One photo (the “Work”) shows Quist neck-up from behind, his cowboy hat slightly illuminated, with 3 stage lights in the distance. Peterman edited the photos and shared them with the MDP 3/21/17. She retained ownership, granting unrestricted royalty free licenses to the MDP and Quist Campaign for no additional fee. MDP and the Quist Campaign posted the Work to Facebook without any photographer attribution or copyright information. MDP posted it without a caption and as part of a series of images from the Mansfield-Metcalf Dinner, and the Quist Campaign posted it as a stand-alone image, captioned with an invitation to a public lands rally. Peterman learned 5/9/17 that an independent expenditure unit of the Republican National Committee had issued mailers appropriating the Work and criticizing Quist to bolster the campaign of his opponent Republican Congressman Greg Gianforte. The vender that prepared the mailer had downloaded the photo as a high-resolution image directly from the Quist Campaign’s Facebook page. No copyright information or photographer credit was included in the Facebook post, and the parties agree that it would have been reasonable for the RNC to assume that the Quist Campaign owned the Work. The mailer includes 3 images of Quist, all of which the vendor found on the Quist Campaign’s Facebook page. (The other images are not at issue in this litigation.) On the front panel, next to the address block, Quist stands in front of a microphone holding a guitar and wearing a bolo tie, leather vest, and the cowboy hat worn in the Work. A treble clef appears at the top of the panel with the words “Tell Liberal Rob Quist:/It’s Time to Face the Music” over the adjacent music staff. Inside the mailer is a photoshopped image of Quist playing guitar and singing, dressed in the same outfit and hat as on the front panel, accompanied by Nancy Pelosi on accordion. At the top of the page, a treble clef precedes a staff over which is written “Liberal/Rob Quist/Music to Nancy Pelosi’s Ears.” Text at the bottom of the page reads, “Rob Quist & Nancy Pelosi/Singing the Same Tune.” The Work covers the back panel. It is cropped slightly and light streams from the stage lights, a variation from the original. The same treble cleff and staff cover the bottom left corner of the panel, reading, “For Montana Conservatives,/Liberal Rob Quist/Can’t Hit the Right Note.”

Peterman registered the Work with the Copyright Office 5/12/17. She filed her Complaint 5/16, alleging copyright infringement and intentional interference with economic advantage. The Court previously dismissed the IIEA claim. The parties request summary judgment on the copyright claim.

The parties do not dispute that Peterman owns the Work and that the RNC reproduced and distributed it, establishing her prima facie case of infringement. The RNC argues that the evidence establishes the affirmative defense of fair use. Alternatively, it contends that she cannot recover more than a single award of statutory damages. Peterman does not address the statutory damages issue, ostensibly conceding that she is not entitled to statutory damages for each mailer. She argues instead that she is entitled to summary judgment as to fair use and that the issue of willfulness should proceed to trial.

Pursuant to 17 USC 107, courts must consider 4 factors in determining whether a use is “fair”:

1. the purpose and character of the use, including whether it is of a commercial nature or is for nonprofit education purposes;

2. the nature of the copyrighted work;

3. the amount and substantiality of the portion used in relation to the copyrighted work as a whole;

4. the effect of the use on the potential market for or value of the work.

Fair use “permits the use of copyrighted works without the copyright owner’s consent under certain situations,” serving the goal of stimulating ingenuity and promoting the free exchange of ideas without sacrificing creators’ rights to their work. Perfect 10 (9th Cir. 2007).

Purpose and Character of the Use. Considering both transformation and commerciality, this factor weighs in favor of fair use. Transformation, “a judicially-created consideration that does not appear in the text of the statute,” Monge (9th Cir. 2012), has been described as “the most important component of the inquiry into the purpose and character of the use,” LA News Service (9th Cir. 2002). “The more transformative of the new work, the less will be the significance of other factors, like commercialism, that may weigh against a finding of fair use.” Campbell (US 1994). A work is transformative when it does not “merely supersede the objects of the original creation,” but “adds something new, with a further purpose or different character, altering the first with new expression, meaning, or message.” Id. The RNC argues that its use is transformative because it altered the original and because the nature of the Work changed. Its vendor — Majority Strategies — made 2 minimal alterations, cropping to fit the mailer and adding a soft stream of light from the 3 stage lights shining at Quist. The cropping is irrelevant; the RNC merely did away with black space so it would fill the back panel of the mailer. The added glow of light is somewhat closer to transformative, but is too subtle to alter the function of the Work, and even intensifies the feeling of the original, playing up to Quist’s musician background. However, in light of the mailer’s critical messaging, the RNC’s use “altered the expressive content or message of the original work.” Seltzer (9th Cir. 2013). Although it “made few physical changes” to the Work, “new expressive content or message is apparent,” satisfying the transformation inquiry. Id. As to commerciality, the mailer was “clearly part of a political campaign message, noncommercial in nature.” Keep Thomson Governor (DCNH 1978). Peterman argues that “the RNC profited from its use of the Work because it stood to gain publicity, voters, and campaign donations.” However, it did not solicit donations through the mailer, and self-interest is not equivalent to commerciality.

Nature of the Copyrighted Work. This factor is inconclusive and weighs neither for nor against fair use. Any internet user could download a high-quality version of the image, and — absent a complete suspension of common sense — it must be assumed that the MDT, Quist Campaign, and Peterman would have welcomed reposts, retweets, and other forms of appropriation by pro-Quist social media users. On the other side of the equation, the Work is at least as creative as it is informative. More than a simple snapshot of a political candidate speaking at a campaign event, Peterman’s creative decisions push the Work “closer to the core of intended copyright protection.” Campbell.

Amount & Substantiality of Portion Used. This factor weighs against fair use. The RNC copied essentially the entirety of the Work. If anything, its contention that it could not reasonably appropriate part of the image and retain the meaning it wished to convey actually strengthens Peterman’s position. Harper & Row (US 1985) (“The fact that a substantial portion of the infringing work was copied verbatim is evidence of the qualitative value of the copied material, both to the originator and to the plagiarist who seeks to profit from marketing someone else’s copyrighted expression.”).

Effect on the Market. This most important factor supports a finding of fair use. The RNC’s use will not interfere with Peterman’s ability to profit from the original Work. She received the entirety of her $500 fee to photograph the Mansfield-Metcalf Dinner. With her permission and pursuant to an agreement that she would receive no additional fee for their use of the Work, the Quist Campaign and the MDP made it available for download on Facebook without any photographer attribution or copyright information. It has no recognizable value outside of Quist’s campaign, and that value has been fully realized by Peterman. Her own arguments demonstrate the strength of the RNC’s position. She argues that “it is possible she lost additional revenue from customers who might have licensed her images but did not do so because she could not guarantee the images’ exclusivity. In addition, the Montana Democratic Party may not hire her in the future to shoot their events because she cannot guarantee her images’ exclusivity.” However, the Copyright Act does not exist to protect artists’ general reputations. No artist can guarantee exclusivity; every copyrighted work is subject to fair use. What is more, the Supreme Court has rejected the argument that this factor is satisfied when the original work loses value due to criticism. Copyright law recognizes the difference between “potentially remediable displacement and unremediable disparagement.” Campbell. For example, “when a lethal parody, like a scathing theater review, kills demand for the original, it does not produce a harm cognizable under the Copyright Act.” Id. “The role of the courts is to distinguish between biting criticism that merely suppresses demand and copyright infringement, which usurps it.” Id. Thus, even in the unlikely situation that the Work’s value to Peterman had decreased because of the RNC’s use, any decrease in value is not displacement.

Weighing the 4 factors, the undisputed facts establish that the RNC is entitled to summary judgment.

Peterman v. Republican National Committee, 44 MFR 195, 2/22/19.

Anne Sherwood & John Morrison (Morrison, Sherwood, Wilson & Deola), Helena, and Erin Erickson (Bohyer, Erickson, Beaudette & Tranel), Missoula, for Peterman; Ari Meltzer, David Weslow, Douglas Dreier, and Richard Smith (Wiley Rein), DC, and Mark Williams (Williams Law Firm), Missoula, for the RNC.

INSURANCE: Fact issues preclude summary judgment that CGL insurer has no duty to indemnify contractor for $441,770.83 judgment for damages to condos from failure of T-panel systems intended to melt roof snow & ice… Christensen.

Slopeside Condo Association in Whitefish entered into an agreement in 9/11 for Matthew Folkman to install thermal “T-panel” systems on roofs to melt snow & ice. Not only were they not effective, they created ice buildups and caused additional damages, and Slopeside sued Folkman in State Court in 11/16. Folkman retained counsel without notifying his CGL insurer Western Heritage/Scottsdale of the suit, but his counsel withdrew 3/23/17 and Folkman did not respond to Slopeside’s discovery requests or otherwise defend. Slopeside filed a motion for summary judgment and proposed order 6/27/17, to which Folkman did not respond. On 7/21/17 Slopeside’s attorney informed Western of the underlying action, attaching the proposed summary judgment order. The State Court adopted the proposed order 7/31/17, awarding Slopeside $436,040.37 damages and $5,730.46 attorney fees. The Court adopted in full Slopeside’s statement of actual & anticipated expenses: $68,040.37 actual expenses and $368,000 anticipated expenses based on 23 condos and $16,000 incurred repairing the T-panel system in one of the units, rounded down to the nearest $1,000. Folkman was served with notice of entry of judgment 8/4/17. On 9/19/17 Western wrote him that it would defend under reservation if Slopeside would agree to set aside the judgment. Slopeside refused, and Western declined coverage based on Folkman’s failure to provide timely notice. Western now seeks a declaration that it had no duty to indemnify Folkman. Folkman has chosen to represent himself and has not responded to Western’s motion. Slopeside seeks partial summary judgment, arguing that the policy provides coverage if it can prove certain facts.

Western argues that there was no “occurrence” triggering coverage. The policy provides liability for “bodily injury” and “property damage” caused by an “occurrence,” which “means an accident, including continuous or repeated exposure to substantially the same general harmful conditions.” The test for an occurrence asks whether the act was intentional and if so, whether the consequence or resulting harm was intended or expected from the actor’s standpoint. Fisher (Mont. 2016). If the answer to either is “no,” the act is an occurrence. Western’s contention that defective workmanship is the basis for Slopeside’s claims against Folkman and that defective workmanship is never an occurrence is foreclosed by Fisher: an “occurrence” may be found where “an initial act of intention led to unexpected results.” Folkman’s installation of the T-panels may have been an intentional act, but the Court must also “determine objectively what injuries could reasonably be expected to result from [that] intentional act.” Id. The Court cannot conclude that Folkman intended or expected his installation of the T-panels to cause property damage to the buildings. Where the Montana Supreme Court has determined that harm was objectively intended or expected, the insured’s conduct suggested that she had some reason to believe that her acts were likely to cause harm. Folkman’s work damaged Slopeside’s buildings only to the degree that it was performed negligently. No facts suggest that he should have expected Slopeside’s impending damages, even if they were foreseeable under the general negligence standard. Slopeside’s damages arose from the unanticipated and unexpected consequences of Folkman’s conduct. His installation of the T-panels constitutes an “occurrence,” and the underlying dispute falls within the policy’s insuring agreement.

Western argues — and Slopeside does not dispute — that there is no coverage to the degree that Slopeside’s damages were caused by Folkman’s breach of contract. However, Western does not point to any damages awarded arising from breach of contract. And inclusion of a contract-based claim in an underlying complaint is not unusual. Although the Court agrees that there is no coverage for breach of contract, it cannot grant summary judgment on this ground. While Slopeside brought a claim for breach of contract in the underlying action, the judgment mentions only “negligence.” Western has not shown that the Court’s agreement with its general legal proposition entitles it to relief.

Slopeside argues that Western cannot rely on exclusions j(5) and j(6) because Western did not raise them in the operative complaint or its reservation letter. Western acknowledges its “oversight” in failing to raise them earlier. However, failure to raise a policy defense does not constitute waiver unless the insured suffers prejudice. PPL (Mont. 1993); EEOT (D.Mont. 1999). Slopeside has not even claimed prejudice, and Western is not strictly limited to those defenses previously asserted. Nonetheless, neither exclusion defeats coverage. The parties agree that they apply only to damages that occur during performance of the insured’s work. Western has not pointed to any damages that arose while Folkman was performing his work.

Exclusion l bars coverage for “‘property damage’ to ‘your work’ arising out of it or any part of it and included in the ‘products-completed operations hazard.’” The property damage falls under the PCOH. Slopeside argues that exclusion 1 is nonetheless inapplicable because the property damage is not to Folkman’s “work” and the “damaged work or work out of which the damage arises” was performed by a subcontractor, Mike Whalen. “Your work” is defined as “(1) Work or operations performed by you or on your behalf; and (2) Materials, parts or equipment furnished in connection with such work or operations.” Slopeside claims that at least some of the property damage was not to Folkman’s work because “Folkman’s work was limited to installing the T-panels on the Slopeside roofs, but Folkman damaged other parts of Slopeside’s property — i.e., because of his negligence, ice dams formed and damaged Slopeside’s roofs.” Western does not disagree, contending instead that exclusion m excludes coverage where exclusion l does not apply. As the parties seemingly agree, at least part of the property damage — damage to the T-panel systems and their components — constitutes damage to Folkman’s work. Slopeside argues that exclusion l is nonetheless inapplicable because Folkman hired a subcontractor to install the T-panels. Western asserts that collateral estoppel applies to prevent Slopeside from offering evidence that Whalen installed the T-panels because the State Court entered judgment against Folkman. However, the “identical issue” element has not been met. In the underlying action, Folkman was assigned all liability for damages caused by the T-panels, but the State Court decision did not discuss the theory of liability. A general contractor may be liable for acts of a subcontractor in some circumstances. Beckman (Mont. 2000). Factual disputes remain as to the degree to which Slopeside’s damages are damages to Folkman’s “work” and whether a subcontractor performed the work giving rise to those damages.

Western is not entitled to summary judgment as to exclusion m, which applies only to “impaired property,” which does not include an insured’s work, and “property that has not been physically injured,” which could include an insured’s work but which Western does not rely on to defeat coverage. Thomas(D.Mont. 2011). A factual dispute remains as to the degree to which the damages in the underlying action are damages to Folkman’s work; any damages to his work fall strictly under exclusion l. Exclusion m is in play only to the extent that Slopeside’s damages are not damages to Folkman’s work. Western does not point to specific damages falling under its umbrella; rather, it asserts that any damages that are not addressed under exclusion l are excluded under exclusion m. However, the exclusion needs to be analyzed separately and according to its own terms. The Court cannot simply determine that — because a policy includes business risk exclusions — all damages resulting from construction work are excluded. It is difficult to imagine any particular damages falling under exclusion m. “Impaired property” is only property that can be “restored to use” by performing additional work on the T-panels. The policy excludes coverage for “property damage” to the impaired property,” and property damage is defined to mean either “physical injury to tangible property, including all resulting loss of use of that property,” or “loss of use of tangible property that is not physically injured.” However, “impaired property” does not include physically injured property, but only property that can be fully restored by altering the insured’s “work” rather than repairing or replacing the impaired property itself. Reading the definitions of “property damage” and “impaired property” in tandem, exclusion m addresses only “loss of use” of the “impaired property” — if the property is “physically injured,” it is not “impaired.” There is no indication that Slopeside incurred any damages falling within the scope of exclusion m.

Western’s motion for summary judgment is denied.

Slopeside’s motion for summary judgment is denied as to exclusion l and otherwise granted.

Western Heritage Ins. v. Slopeside Condominium Association and Folkman dba Jaras Const., 44 MFR 196, 3/6/19.

Bradley Luck (Garlington, Lohn & Robinson), Missoula, for Western; Fred Simpson (Capp, Jenks & Simpson), Missoula, for Slopeside; Folkman, pro se.

COMMON CARRIER DUTY OF CARE: Amtrak liable for damages to passenger raped by sleeper car attendant under Montana duty of care to passengers. . . Amtrak’s reliance on general course & scope rule rejected. . . Johnston/Morris.

Magistrate Johnston’s findings & recommendations.

Patsy Shepherd of North Carolina, then 68, was a passenger on Amtrak’s Empire Builder as it passed through Montana. Charles Pinner of Michigan, then 59, a sleeper car attendant, raped her 4/19/15 as the train passed by Wolf Point. He was convicted in Roosevelt Co. of kidnap and rape and sentenced to 60 years in prison. Amtrak has terminated him. Shepherd filed a complaint 4/14/17 alleging that Pinner is liable for damages stemming from the intentional torts of assault, sexual assault, battery, and false imprisonment, and that Amtrak is liable for the damages that he caused her to suffer and also for the damages she suffered because it was negligent in his hiring, supervision, and retention. Both parties request summary judgment.

Shepherd argues that regardless of whether Pinner’s actions were foreseeable or within course & scope of his employment, Amtrak is strictly liable because it is a common carrier, which is an exception to the “course and scope” rule, citing Taillon (Mont. 1903) for the proposition that “courts will not allow the carrier to shield himself behind the objection that such act was beyond the scope of the servant’s employment.” See also Ellinghouse (Mont. 1915). Amtrak argues that she is relying on antiquated dicta and that it is not strictly liable under Montana statutory or common law. It argues that Montana has not explicitly adopted the common carrier exception to the general course & scope rule. It cites Maguire (Mont. 1992) for its argument that the Montana Supreme Court has declined to extend employer liability to an employee’s intentional criminal acts outside course & scope of employment.

Montana has long recognized that common carriers owe a higher duty of care to those who have entrusted their safety to them. Cash (Mont. 1984). However, this does not equate to strict liability for holding Amtrak liable for any harm regardless of fault. Strict liability — also called liability without fault — is “liability that does not depend on proof of negligence or intent to do harm but that is based instead on a duty to compensate the harms proximately caused by the activity or behavior subject to the liability rule.” Black’s. Montana law does not hold a common carrier “strictly liable” for the harm caused to its passengers regardless of negligence or fault. Rather, the issue is — based on the undisputed facts — whether Amtrak — as a common carrier — is liable for the torts of its employee that were committed outside the course & scope of employment.

Taillon rejected a common carrier’s argument that it was not liable for a passenger’s damages caused by a servant’s intentional and wrongful acts committed outside the course & scope of employment. It analyzed a statute identical to the current statutory duty of care — MCA 69-11-107(1) — and held that the common carrier was liable to its passenger for the damages its employee’s intentional torts outside the course & scope of the employee’s employment caused the passenger to suffer:

Our statute charges upon the carrier of passengers for hire certain duties, among which are the following (section 2790, Civ.Code): “A carrier of persons for reward must use the utmost care and diligence for their safe carriage, and must provide everything necessary for that purpose, and must exercise to that end a reasonable degree of skill.” This statute is merely declaratory of the common law as it has existed for many years. From the nature of the business, the actual transportation of passengers is usually intrusted to servants. These servants, therefore, must be charged with the exercise of the same care toward the passenger as is charged upon the master under the statutes and the contract of carriage; and it necessarily follows that any negligence or wrong committed to the passenger by the servant is a violation of such statute and contract, and if injury results therefrom the master is liable. The carrier is bound to do certain acts, and cannot excuse himself from liability upon the ground that he has committed their performance to others. The proper doing of the acts by another, appointed by him alone, is just as obligatory and binding upon him as though he undertook to perform them himself. He is bound to discharge his statutory and contractual obligation to the letter, and, if he commits the performance of these obligations to another, he does so at his own peril. There is no way in which he can shirk or evade their performance. If the servant in such cases does what the master could not do without violating the duties resting upon him, then the master must be held responsible for the acts of the servant, no matter how wrongful, willful, or even malicious they may be. Therefore, whenever the misconduct of the servant causes a breach of the obligation or the violation of the duty of the master, the master is liable for such acts, if injury follow.(Emphasis added).

Thus, under Montana law, if a common carrier commits the performance of its statutory duty of care to its agent, it is responsible for the agent’s actions “no matter how wrongful, willful, or even malicious they may be.” As the Supreme Court stated, there is no way in which a common carrier can shirk or evade its performance of its statutory duty, which would necessarily include arguing that the employee was outside the course & scope of his employment.

It is undisputed that Amtrak confided the duty to “use the utmost care and diligence for [Shepherd’s] safe carriage” to Pinner and that he breached this duty. Because it is a common carrier under Montana law, Amtrak is liable for the damages he caused her to suffer when he breached this duty and she is entitled to partial summary judgment on this issue. Amtrak’s argument that it is not liable because he was outside the course & scope of his employment is contrary to Taillon and must be rejected.

Further, Montana adopted Restatement of Agency §214 in Paull (Mont. 2009), which defines a “non-delegable duty”:

A master or other principal who is under a duty to provide protection for or to have care used to protect others or their property and who confides the performance of such duty to a servant or other person is subject to liability to such others from harm caused to them by the failure of such agent to perform the duty.

Amtrak argues that Paull adopted §214 only with respect to “inherently dangerous activities” because it did not address Maguire or other cases where the non-delegable duty exception was interpreted beyond inherently dangerous activities. However, Paull did not limit §214 to situations involving inherently dangerous activities, but stated: “We adopt Restatement (Second) Agency, § 214, as an appropriate statement of the law in Montana.” Cmt (e) contains a pointed example: “P, a railroad, employs A, a qualified conductor, to take charge of a train. A assaults T, a passenger. P is subject to liability to T.” Given that §214 is an accurate statement of Montana law, Amtrak is not excused from discharging the duty to provide for Shepherd’s protection and safety because the agent it chose to discharge this duty acted outside course & scope of his employment. To the contrary, §214 imposes liability on Amtrak for Shepherd’s damages because the very agent to whom it delegated the performance of this duty breached it, causing her to suffer damage.

Recommended, summary judgment for Shepherd.

– – –Judge Morris’s order.

Judge Johnston’s findings & recommendations are adopted in full. Shepherd’s motion for summary judgment

is granted; Amtrak’s cross-motion is denied.

Shepherd v. Amtrak and Pinner, 44 MFR 192, 4/9/18, 44 MFR 193, 8/15/18.

Michael George (George Law Firm), Great Falls, for Shepherd; Michelle Friend & Jared Frickle (Hedger Friend), Billings, Mark Landman (Landman Corsi Ballaine & Ford), NYC, and John Bonventre (Landman Corsi Ballaine & Ford), Newark, for Amtrak.