MEDICAL RECORDS CHARGES: Montana limits applicable to paper copies requested by patients, not their attorneys, and not to electronic records… putative class action alleging overcharges dismissed… Molloy.

Ryan Deming, Briana Frasier, Michael McFarland, and Lucas Griswold (collectively “Deming”) allege that a group of Montana hospitals and their records vendor Ciox Health (collectively “Ciox”) overcharged for copies of medical records in violation of Montana law. Ciox seeks to dismiss for failure to state a claim. The motion is granted.

Both state and federal law impose limits on fees for medical records. Under the federal Health Insurance Portability & Accountability Act and its regulations, providers and their vendors may charge a “reasonable, cost-based fee,” limited to the cost of labor, supplies, postage, and preparing an explanation of the records. 45 CFR 164.524(c)(4). The Health Information Technology for Economic & Clinical Health Act further limits the fee for electronic health records to the labor cost in responding to the request. 42 USC 17935(e)(3). However, these limits apply only to records requested by patients for personal use and not to requests from 3rd parties such as insurers or law firms. Ciox (DDC 2020).

MCA Title 50 Ch. 16 Part 8 imposes additional limits on health care providers that are subject to HIPAA. §50-16-801(4), 802. Title 50 Ch. 16 Part 5 governs providers not subject to HIPAA. §50-16-502. Under both parts, “a reasonable fee for providing copies of health care information may not exceed 50 cents per page for a paper copy or photo copy. A reasonable fee may include an administrative fee that may not exceed $15 for searching & handling recorded health care information.” MCA 50-16-816, 540.

Plaintiffs engaged Western Justice Associates about PI suits. The attorneys ordered 3 years of their medical records. For each request Ciox charged a $15 basic fee and a per page fee of 50 or 75 cents. In some cases it also charged a $2 electronic data archive fee. In one instance it charged a shipping fee even though the records were delivered electronically. Invoices did not describe the time or labor involved. The parties agree that Ciox is subject to HIPAA and Part 8 and that because attorneys placed the requests, federal law does not limit the fees, but dispute whether Part 8 limits the fees.

Deming claims that Ciox violated §50-16-816, the Montana CPA, and the implied covenant of good faith & fair dealing. He moved for class certification in 2/20 before any of the Defendants appeared, but the parties eventually agreed that class discovery was necessary. The motion for class certification was denied subject to renewal pending completion of discovery. Ciox moved in 4/20 to dismiss under Rule 12(b)(6).

Although Ciox presents numerous arguments in support of its motion, the dispositive issue is application of §50-16-816:

Unless prohibited by federal law, a reasonable fee for providing copies of health care information may not exceed 50 cents for each page for a paper copy or photocopy. A reasonable fee may include an administrative fee that may not exceed $15 for searching and handling recorded health care information.

Ciox argues that the statute merely defines “reasonable fee,” applying only if some other provision limits the allowable fees, and does not apply to electronically transmitted records. Deming contends that it limits fees for medical records in any circumstance. Applying principles of interpretation for Montana statutes, Ciox has the better interpretation.

Deming asserts that §816 is “a standalone statute requiring that the charge for providing medical records be reasonable.” But it does not require anything; it is purely definitional. Its plain text does not authorize or command providers to take any action, nor does it explain when a fee must be reasonable. More compelling than the text is the structure of Part 8, which shows that §816 merely explains what is meant by “a reasonable fee” as used elsewhere in the statute. It does not apply unless some other provision already limits providers to charging “a reasonable fee” for records.

Only one provision in Part 8 explicitly limits providers to charging “a reasonable fee:” “A health care provider required to disclose health care information pursuant to compulsory process may charge a reasonable fee, not to exceed the fee provided for in 50-16-816, and may deny examination or copying of the information until the fee is paid.” §812(5) (emphasis added). This limits the allowable charge to “a reasonable fee,” which is defined via reference to §816, confirming that 816 is definitional. Indeed, even Part 8’s “Definitions” section defines “reasonable fee” by reference to §50-16-816. §803(7). Deming’s contention that 816 governs the allowable fees in all situations would render the subpoena provision superfluous, in contravention of the MCA 1-2-101 command to “give effect to all” provisions.

By contrast, Part 5 limits healthcare providers to charging “a reasonable fee,” as provided in its version of §816, in 4 situations. Like Part 8, it limits the fees that can be charged in response to a subpoena. §536. However, it also limits the allowable fees for a patient’s own request for records, §541(2), a patient’s authorization to disclose records to a 3rd party, §526(2), and a patient’s request for amended or corrected records, §545(2). Importantly, Part 5 predates HIPAA and Part 8. In enacting Part 8 to govern HIPAA-regulated entities, the Legislature only duplicated the fee limitation regarding subpoenas. Unlike Part 5, Part 8 is silent on the fees allowed in response to requests for 3rd-party disclosure, like the requests here. Deming would have the Court import the provision governing 3rd-party requests from Part 5, notwithstanding the Legislature’s choice not to. But “the office of the judge is simply to ascertain and declare what is in terms or in substance contained therein, not to insert what has been omitted or to omit what has been inserted.” §1-2-101.

Rather than engage with the text, Deming appeals to Part 8’s purpose to be more restrictive than HIPAA and a snippet of legislative history indicating that “where federal rules don’t apply, current State standards remain in place.” (HB 647 (2003) Legislative History). According to Deming, because federal law does not govern records requests by 3rd parties, Ciox, state law must limit the fees. But neither the purpose nor the legislative history can overcome the Legislature’s failure to impose the same standards on 3rd-party fee requests in Part 8 that exists in Part 5. Further, Deming’s policy arguments about protecting Montanans are overstated considering the federal protections. Had Deming rather than his attorneys requested the records, HIPAA and HITECHA would have limited the fees. 45 CFR 164.524(c)(4), 42 CFR 17935(e)(3).

Finally, as Ciox argues, §816’s plain text does not apply to electronic records, but limits fees “for each page for a paper copy or photocopy.” Deming’s contention that discovery is needed to determine if Ciox’s method qualifies as a photocopy lacks support. And while his argument is well-taken that under this interpretation, fees are limited for the more burdensome process of providing paper copies but not for likely cheaper electronic copies, it is more properly addressed to the Legislature. Part 8 was enacted in 2003 and §816 has not been updated since. As Congress did with HITECHA, the Legislature may need to update the fee statute to comport with practices of our digital world. But in its present form, §816 does not limit fees that can be charged for electronic medical records.

Because state law does not limit fees that can be charged when 3rd parties request electronic records, Deming’s claim under §816 fails. His CPA and implied covenant claims also fail because they are premised on Ciox’s alleged unlawful charge.

Ciox’s motion to dismiss is granted.

Deming, Frasier, McFarland, and Griswold individually and on behalf of all others similarly situated v. Ciox Health, St. Vincent Healthcare, Bozeman Health Deaconess Hospital, Kalispell Regional Healthcare, St. James Healthcare, and Community Medical Center, 44 MFR 228, 7/30/20.

Domenic Cossi, Jory Ruggiero, and Maxwell Kirchoff (Western Justice Associates), Bozeman, for Plaintiffs; Jay Lefkowitz & Joseph Sanderson (Kirkland Ellis), NYC, and Matthew Hayhurst & Randy Tanner (Boone Karlberg), Missoula, for Ciox; Ian McIntosh (Crowley Fleck), Bozeman, for the hospitals.

INSURANCE: Motion to dismiss putative class action challenging subrogation practices of GEICO and related entities granted in part including rejection of boilerplate allegations of personal jurisdiction over non-contracting entities based on a conspiracy theory… Molloy.

James Lee was in an MVA caused by another driver 8/5/19. He was injured and his vehicle was totaled. Lees were insured by GEICO and GEICO General. The at-fault driver was insured by The General Ins. with $25,000/$50,000 bodily injury and $20,000 property damage. Lees received $25,000 from the at-fault driver’s bodily injury coverage and an unspecified amount from GEICO and GEICO General under their med-pay. They also received $3,156.65 from the at-fault driver’s insurer and at least $14,194 from GEICO and GEICO General for property damage. However, they allege that they suffered at least $24,660.18 property damage including $19,124.90 for loss of their vehicle, $2,586.72 for loss of use, and $2,948.56 for damage to its contents. They also claim damages for the cost of a rental vehicle, future medical expenses, loss of income, loss of consortium, and attorney fees. Little detail is provided on the status of their claim against the at-fault driver except that it has not settled. However, GEICO and GEICO General have already subrogated $14,194 from the at-fault driver’s insurer, which Lees claim will prevent them from fully recovering.

Lees sued in State Court 4/3/20 on behalf of themselves and a putative class challenging the practices of GEICO and GEICO General and other GEICO entities with which they do not hold policies. The case was removed to this Court 5/12/20 and Lees filed an Amended Complaint for failure to pay UIM under their policy, violations of the MUTPA, breach of contract and the implied covenant, and conversion. They allege that the GEICO entities with which they did not have a policy are liable on a civil conspiracy theory and aiding & abetting. The GEICO entities moved to dismiss on the basis that Lees lack standing, the Court lacks personal jurisdiction over the non-contracting entities, and Lees failed to state plausible claims for relief.

I. Standing

GEICO seeks to dismiss for failure to state a claim under Rule 12(b)(6). However, standing is jurisdictional, so the motion is construed as a 12(b)(1) motion for lack of jurisdiction. White (9th Cir. 2000). To have standing, a “plaintiff must have (1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision.” Spokeo (US 2016).

GEICO first argues that Lees failed to show injury in fact. “To establish injury in fact, a plaintiff must show that he or she suffered an invasion of a legally protected interest that is concrete and particularized and actual or imminent, not conjectural or hypothetical.” Id. “An injury is imminent if the threatened injury is certainly impending, or there is a substantial risk that the harm will occur.” MEIC (9th Cir. 2014). Lees allege that GEICO’s subrogation impaired their ability to recover from the at-fault driver by depleting the available coverage. GEICO does not contest their concrete interest in recovery from the at-fault driver. Indeed, Montana law recognizes an insured’s right to be “made whole” before an insurer is entitled to subrogation. However, GEICO contends that the alleged harm to that interest is too speculative because it is “impossible to know” whether Lees will fully recover until after their claim against the at-fault driver is resolved. That is not the standard. They have alleged damages in excess of the at-fault driver’s remaining coverage. Paired with the reasonable inference that the subrogation weakens their litigation position against the at-fault driver and her insurer, this is enough to establish a “substantial risk” that they will not be made whole. Id.

GEICO also makes a cursory argument that any harm to Lees is not traceable to its conduct. But had it not subrogated $14,194 they could pursue that amount from the at-fault driver’s insurer. Concerns about double recovery and the amount to which they are ultimately entitled are merits issues. Lees have shown at this stage that GEICO’s conduct poses a substantial risk to their interest in being made whole.

GEICO argues that public policy disfavors allowing Lees’ claims to go forward, contending that their position disincentivizes insurers from making payments up front and treats subrogation differently from offsets. But federal courts sitting in diversity must apply the law of the forum state, and GEICO’s policy concerns have been rejected in Montana, where the insured’s right to be made whole takes precedence over the insurer’s right to subrogate. “When the sum recovered by the Insured from the Tortfeasor is less than the total loss and thus either the Insured or the Insurer must to some extent go unpaid, the loss should be borne by the insurer, for that is a risk the insured has paid it to assume.” Van Orden (Mont. 2002) (quoting Skauge (Mont. 1977) (emphasis in original).

II. Personal Jurisdiction

GEICO also seeks to dismiss the GEICO entities with which Lees do not hold policies for lack of personal jurisdiction under Rule 12(b)(2).

Lees contend that personal jurisdiction exists under Rule 4(b)(1)(A), which confers specific jurisdiction over claims arising out of “the transaction of any business within Montana,” and 4(b)(1)(B), which confers specific jurisdiction over claims arising out of “the commission of any act resulting in accrual within Montana of a tort action.” However, GEICO submitted a declaration from Sarah Davis, an underwriting supervisor who has been with the company for 23 years, affirming that GEICO Advantage, GEICO Choice, and GEICO Marine “do not write/provide auto insurance in Montana or subrogate any claims.” Lees argue that she only establishes that they are “not currently” operating in Montana and that “upon a demonstration of non-participation in Montana subrogation over the past eight years, the companies so demonstrating should be dismissed.” But it is Lees’ burden to demonstrate that jurisdiction is proper, and if they are unable to show that GEICO Advantage, GEICO Choice, and GEICO Marine operated in Montana, they likely cannot show that they are subject to personal jurisdiction under 4(b)(1).

But this Court lacks personal jurisdiction over all the non-contracting defendants, not just those 3, for a more fundamental reason: Lees have not shown that their claims arise from those entities’ conduct in Montana. They do not allege that the non-contracting Defendants participated in handling their claim or the decision to subrogate. Rather, they allege that the non-contracting Defendants are liable for “aiding and abetting” the wrongful subrogation and “civil conspiracy.” Montana courts have not addressed whether an alleged conspiracy establishes jurisdiction under 4(b)(1), but even if sufficient under state law, the conspiracy theory of personal jurisdiction, at least as pled here, fails under the Due Process Clause.

The 9th Circuit has neither recognized nor rejected the constitutional validity of basing personal jurisdiction on an alleged conspiracy, although it seems skeptical of the concept. The only published opinion on the issue concluded that personal jurisdiction under the theory does not exist where the plaintiff “alleges no facts to even suggest a conspiracy.” Underwager (9th Cir. 1995). The later unpublished Chirila (9th Cir. 2002) acknowledged “a great deal of doubt surrounding the legitimacy of this conspiracy theory of personal jurisdiction,” but as in Underwager, ultimately concluded that the allegations of conspiracy were too conclusory. Similarly, this Court reasoned in Steinke (D.Mont. 2003) that it lacked personal jurisdiction because the plaintiff had “not specifically alleged a conspiracy.” Among courts following a similar approach, a general rule has emerged that — assuming a conspiracy theory of personal jurisdiction is viable — to comport with due process “a plaintiff must set forth non-conclusory allegations that the defendant was a member of a conspiracy, that the defendant’s or his co-conspirator’s acts in furtherance of the conspiracy caused harm in the forum, and that the conspiracy individually targeted a known forum resident.” W. States Wholesale Natl. Gas Antitrust Litig. (D.Nev. 2009); see also UMG Recording (C.D. Cal. 2015) (“Even if the theory is viable, to comply with traditional notions of fair play and substantial justice, it must be based on more than conclusory allegations of the existence of a conspiracy.”); Brown (N.D. Cal. 2019) (collecting cases).

The allegations of a conspiracy here are too conclusory to establish personal jurisdiction over the GEICO entities with which Lees do not hold policies. The Amended Complaint merely repeats the general allegation that Defendants acted “jointly” or “engaged in concerted action” to assert wrongful subrogation claims. But the “statement that ‘[defendants] have been acting in concert’ is, by itself, merely conclusory and therefore not entitled to an assumption of truth.” Krypt (N.D. Cal. 2020). And that same allegation is reiterated 9 times without any detail about how the conspiracy commenced or was conducted. Only a single paragraph of the Amended Complaint alleges any concrete action by Defendants:

In addition to the adjustment of Plaintiffs’ claims within the state of Montana, Defendant Insurance Companies also jointly adjust and assert automobile subrogation claims in the State of Montana by (a) working together to design the adjustment procedures and subrogation assertion strategies knowingly designed to deprive insureds of their made whole rights; (b) jointly employing claims adjusters under a single jointly administered employment arrangement; (c) jointly training these adjusters to utilize for all such companies the same procedures in adjusting, including the procedures for collection of subrogation arising from damages suffered by Montana insureds; (d) jointly managing and directing these adjusters on specific procedures for asserting subrogation, and adjusting and evaluating subrogation rights, including the procedures for investigation and evaluation of the insureds losses and collection of subrogation arising from damages suffered by Montana insureds; (e) jointly compensating the adjusters for such conduct, and (f) jointly paying to such adjusters bonuses reflecting common profitability experienced by the collective companies through the implementation of the jointly developed and administered adjustment and subrogation strategies.

But with respect to the alleged conspiracy, it does no more than assert that Defendants acted “jointly.” It “does not allege the conspirators made an agreement specifically regarding [Montana] or its residents,” as required to establish personal jurisdiction based on a conspiracy. W. States.

What’s more is that these are boilerplate allegations, repeated verbatim from a complaint filed by the same counsel against other insurers. See, e.g., Johnson v. State Farm Mutual Auto Ins. (D.Mont. 2020). Nearly the entire pleading is recycled, with counsel barely bothering to use the party names, instead opting for the generic “Plaintiffs” and “Defendant Insurance Companies.” Nonspecific allegations that can be and have been swapped from case to case are insufficient to support personal jurisdiction under a conspiracy theory. Such a practice does not comport with the “traditional notions of fair play and substantial justice” embodied in the Due Process Clause. Walden (US 2014). The non-contracting GEICO entities are dismissed for lack of personal jurisdiction. The conspiracy and aiding & abetting claims, pled only as theories of liability, are also dismissed.

III. Failure to State a Claim

GEICO seeks to dismiss the remaining claims under 12(b)(6.

A. UIM

GEICO’s motion makes clear that it is not seeking to dismiss Lees’ UIM claim. (See Doc. 11 at 2 (seeking “an order dismissing all claims alleged in Plaintiffs’ First Amended Complaint except their Underinsured Motorist claim”).) Nonetheless, it argues that the claim should be dismissed because Lees “omit key facts.” Its argument relies on facts outside the pleadings, which is improper on a 12(b)(6) motion. Lee (9th Cir. 2001); Rule 12(d). The motion to dismiss is denied as to the UIM claim.

B. UTPA Claim

GEICO seeks to dismiss the UTPA claim to the extent that it is based on the failure to advance-pay medicals. Lees concede that Mears (D.Mont. 2012) forecloses their claim based on medicals that were not covered by the at-fault driver’s insurance. The motion to dismiss is granted on those limited grounds.

C. Contract Claims

GEICO argues that Lees cannot maintain a breach of contract or implied covenant claim against the non-contracting defendants. Because they are dismissed for lack of personal jurisdiction, this argument is unnecessary to consider. It also argues that Lees cannot maintain a claim for tortious breach of the implied covenant. Because Lees do not contest that point, the motion to dismiss is granted on those limited grounds.

D. Conversion

GEICO argues that Lees’ conversion claim is barred by the UTPA preemption provision at MCA 33-18-242(3):

An insured who has suffered damages as a result of the handling of an insurance claim may bring an action against the insurer for breach of the insurance contract, for fraud, or pursuant to this section, but not under any other theory or cause of action.

Lees respond that the alleged wrongful subrogation does not qualify as handling of an insurance claim. However, based on the allegations in the Amended Complaint, the subrogation at issue was part & parcel of their claim to GEICO after the accident. Indeed, the subrogation only occurred because they submitted a claim to GEICO under the property damage coverage.

Their argument is also inconsistent with Montana law which allows insurers to subrogate when reasonable “to prevent duplicate payments for the same element of loss.” MCA 33-23-203(2). However, before exercising that right, an insurer must determine whether the insured has been made whole. Van Orden. By itself, then, subrogation does not convert the insured’s recovery; only wrongful subrogation can result in conversion. The Amended Complaint recognizes this. Count 4 alleges that the subrogation only amounts to conversion in this case “because the insurer has failed (a) to make an investigation and determination of all of the losses of the insured, and (b) to assure that the Plaintiffs have been made whole for all their damages as recognized by Montana law.” It goes on to allege that GEICO had “not attempted to investigate, evaluate or quantify the amount of Plaintiffs’ losses which are outside of the coverage’s provided by GEICO and GEICO General.” The failure to conduct a reasonable investigation also forms the basis, in part, of Lee’s UTPA claim. Ultimately, that the same conduct underlies both claims underscores that the UTPA preempts the conversion claim.

GEICO’s motion to dismiss is granted in part: the non-contracting GEICO entities are dismissed for lack of personal jurisdiction, the civil conspiracy and aiding & abetting claims are dismissed, the UTPA claim is dismissed to the limited extent that it is based on failure to advance pay medicals, the breach of the implied covenant claim is dismissed to the limited extent that it is based on a tortious breach, and the conversion claim is dismissed. The motion is denied in all other respects.

James Lee Const. et al v. Government Employees Ins. Co. et al, 44 MFR 229, 8/11/20.

Alan Lerner (Lerner Law Firm), Kalispell, Allan McGarvey (McGarvey, Heberling, Sullivan & Lacey), Kalispell, Brian Joos & Judah Gersh (Viscomi, Gersh, Simpson & Joos), Whitefish, and Evan Danno (Danno Law Firm), Kalispell, for Lees; Ian McIntosh & William Morris (Crowley Fleck), Bozeman, Sheila Carmody (Snell & Wilmer – Phoenix), and Courtney Henson (Snell & Wilmer – Tucson), for Defendants.

DISCOVERY: Vehicle rental company compelled to produce thoroughly educated & prepared 30(b)(6) designees to address topics listed in wrongful death Plaintiffs’ notices (all topics, not just topics specifically identified in Order, to avoid further pettifogging and taking a mile when given an inch), failure to provide knowledgeable designees shall be contempt of court… given Plaintiffs’ failure to specifically request what they now seek and that the materials were ultimately disclosed, sanctions under 37(c) are not appropriate, any other result would value the discovery motion more than the discovery… Molloy.

A Dodge truck pulling a horse trailer owned by Guinnane Ranch and driven by Edwin with Katherine Guinnane as a passenger was in a collision in 7/15 with a Dodge Journey driven by Robert with Nancy Dobbins as a passenger. The Journey was rented from Enterprise RAC of Montana/Wyoming and owned by EAN Holdings. Both Edwin and Robert were killed and Katherine and Nancy suffered serious injuries. Katherine, on behalf of herself and her husband’s estate, in conjunction with Guinnane Ranch, sued Nancy as PR of Robert’s estate alleging negligence and negligence per se and the Enterprise Defendants alleging negligent maintenance.

Plaintiffs seek sanctions against Enterprise for failing to timely supplement discovery regarding maintenance policies and training manuals and failing to produce a qualified prepared witness for their Rule 30(b)(6) deposition. Argument was heard 8/12/20.

A. Training Materials

The crux of this dispute is whether “maintenance policies” could be expected to include employee training materials. Both Enterprise’s Rule 26(a) disclosures and Plaintiffs’ Rule 26(b) discovery requests use the terms “maintenance policies” or vehicle “servicing” or “checklists,” but neither the disclosures nor the requests reference employee training. As a result, Enterprise produced only 3 pages of records in 5/20. Surprised by the dearth of maintenance policies for such a large rental company, Plaintiffs sought and received confirmation that the 3 pages were the “totality of all documents” in Enterprise’s possession.

Plaintiffs emailed Enterprise 4/23/20 to schedule a 30(b)(6) deposition, including 43 topic areas as to Enterprise RAC and 44 as to EAN Holdings. None of the areas referenced employee procedures or training. Counsel for Enterprise responded that he would need to confer with co-counsel and the client, but no further response was provided. Plaintiffs renewed their requests 6/5. Enterprise did not respond. Plaintiffs made a 3rd request 6/11, and even though Enterprise did not respond, Plaintiffs indicated that notices would be sent for a 6/22 deposition. Enterprise finally responded 6/16 with a name, location, and availability of its 30(b)(6) deponent. Plaintiffs agreed to delay the deposition until 7/9.

The day before the deposition, Enterprise objected to many of the topic areas. Plaintiffs responded, noting the unreasonable delay. Enterprise responded that they had “prepared a witness to testify on all topics except those few to which we have objected in total as completely irrelevant.” When asked to justify this delay at the 8/12 hearing, counsel for Enterprise admitted that he could provide no good reason:

The Court: But explain the chronology of this request. As I read the record, and I might not be entirely accurate on the days, but roughly 2 months before the actual 30(b)(6) deposition you had the topics, and sometime during that period there was a request to meet and confer. And then there was no response, literally, and then you get the 30(b)(6) notice, and then the day before the deposition there’s, I guess, objections, is what you call them. But why did it take so long? And if you were anxious for meet and greet and to discuss this, which I think the rules contemplate, why didn’t you do that?

Douglas Baldridge: I can’t defend that, is the answer. I can’t defend that our objections were sent out the day before.

Plaintiffs took the 30(b)(6) deposition of Enterprise’s corporate representative George McNeir 7/9. He referenced several training manuals that had not been produced or specifically identified as a topic for the deposition. A deposition of Marlon Miles proffered similar information. As a result, on 7/15, Plaintiffs sent a letter demanding the documents identified by the 2 employees including:

1. Training Power Point presentations

2. Training packets, McNeir

3. Training road maps, McNeir

4. Training video, Miles

5. New employee handbook, Miles

6. Enterprise Holdings Curriculum.

Plaintiffs further demanded “any additional maintenance policies or training materials, “relying on Enterprise’s obligations under Rules 26(a) and (e). The present motion was file 7/27. 2 days later Enterprise produced:

1. New Hire Orientation – Day 3

2. Digital Image

3. Management Trainee Branch Orientation

4. Trunk to Trunk Inspection Participant Guide

5. Risk Management PowerPoint

6. New Hire Orientation – Day 1

7. Trunk to Trunk Inspection Leader Guide

8. Vehicle Inspection Best Practices

On 8/6 Enterprise produced:

1. Checklist

2. Management Trainee Roadmaps

3. Service Agent and Driver Training.

The emails accompanying both disclosures disavow any obligation to produce the documents. Discovery is closed and we are moving toward a fixed trial date. No further discovery is allowed by virtue of the PTO, absent another order.

The first question is whether Enterprise was required to produce these training materials as part of its initial disclosures. A party has a duty to provide “a copy — or a description by category and location — of all documents, electronically stored information, and tangible things that the disclosing party has in its possession, custody or control and may use to support its claims or defenses.” Rule 26(a)(1)(A)(ii). However, this obligation is limited to supporting the disclosing party’s claims and defenses. Webster (D.Mont. 2019); see also 2000 Amendment to Advisory Committee Note to 26(a)(1) (“A party is no longer obligated to disclose witnesses or documents, whether favorable or unfavorable, that it does not intend to use.”). Enterprise has stated that it “did not intend to rely upon [these documents] within the scope of their Rule 26 initial disclosures.” Thus so long as it did not intend to use them “to support its claims or defenses” it did not have a Rule 26(a) obligation to produce them.

The next question is whether these materials fell within the purview of Plaintiffs’ discovery requests under Rule 26(b). Rule 26(a)(1) “does not limit the scope of discovery or prohibit the proponent of discovery from seeking additional information.” Allen (D.Kan. 2012). Plaintiffs’ requests included interrogatories related to “standard maintenance procedure” and production related to “policy/procedure manual(s)” and “vehicle maintenance,” “documents relating to the servicing and maintenance of the Dodge Journey,” and Enterprise’s “pre-rental standard procedure” and “policies, procedures or checklists used.” Enterprise argues that Plaintiffs neither alleged negligent training nor requested employee training materials, and employee training was not a noticed 30(b)(6) topic. Thus, until the 30(b)(6) depositions, it distinguished “maintenance” from “training,” even if that literalism was the product of gamesmanship. That distinction crumbled at the 30(b)(6) deposition when the designee repeatedly referred to training materials when asked about maintenance policy.

If a party fails to provide information as required by Rule 26(a) or (e), “the party is not allowed to use that information at a trial unless the failure was substantially justified or is harmless.” Rule 37(c)(1). The Court may also order payment of reasonable expenses or fees, “inform the jury of the party’s failure,” or impose other sanctions outlined by Rule 37(b)(2)(A). Enterprise did not violate 26(a), but 26(e) imposes a duty to supplement disclosures “in a timely manner if the party learns that in some material respect the disclosure or response is incomplete or incorrect.” Rule 26(3)(1)(A). The 30(b)(6) deponent’s references to training materials made clear that these documents reasonably fell within the purview of Plaintiffs’ requests, notwithstanding Enterprise’s prior literal interpretation. Thus supplemental disclosure under 26(e) was required.

But that disclosure has since occurred. It is therefore unclear why Plaintiffs continue to insist that sanctions are warranted. Because the training materials are not part of Enterprise’s 26(a) disclosures, it is prevented from relying on them at trial. And with trial 2 months away, Plaintiffs have plenty of time to review them. Given Plaintiffs’ failure to specifically request what they now seek and that the materials were ultimately disclosed, sanctions under 37(c) are not appropriate. Any other result would, as Enterprise suggests, “value the discovery motion more than the discovery.”

II. 30(b)(6) Deposition

Rule 30(b)(6) requires an organization subject to proper notice to produce a witness who can answer questions about the subject in the deposition notice. (See also Sched. Or. requiring parties to meet & confer “to identify each person the organization will designate to testify and the topic areas that will be addressed”). That includes matters beyond those personally known to the witness. Great Am. Ins. (D.Nev. 2008) (collecting cases). Because the designee speaks on behalf of the entity, he “cannot be a potted plant.” Pioneer Drive (D.Mont. 2009).

Plaintiffs identify 21 ways they believe McNeir was not adequately prepared. Enterprise has responded to each allegation. Ultimately, 30(b)(6) required more than Enterprise provided. The amendments to the Rules and in particular 30(b)(6) were intended to put an end to the kind of antics Enterprise adopted here. The meet & confer requirement has no specific time limit but reason dictates that a hiatus of nearly 2 months falls far short of the “just, speedy and inexpensive” resolution of cases,” Rule 1, and the spirit of the amended rule.

McNeir was not prepared to discuss the Enterprise Defendants’ finances (topics 37-40), corporate relationship or structure (topics 1-4), insurance coverage (topic 5), record and maintenance procedures (topics 28-32), rental operation statistics (topics 33-36), corporate knowledge of tire policy (topics 18-22), or the full rental history of the Journey (topics 7-17). Because those topics were properly identified in the deposition notice, Enterprise was obligated to educate and prepare its designee to address them. Enterprise argues that it issued a “blanket objection” to some of those topic areas prior to the deposition. But a party cannot simply object to deposition topics and not prepare its designee. Those objections must be resolved through a meet & confer process or a protective order. Enterprise did neither.

First, despite being provided with the topic lists in 4/20, it — admittedly without justification — did not notice its objections until the day before the deposition. Thus it cannot now argue that it attempted to resolve any dispute about the topics in good faith prior to the deposition.

Second, 30(b)(6) does not provide a mechanism by which a party can simply refuse to produce or prepare its designee on noticed topics. To the contrary, 30(c)(2) indicates that the examination is to proceed subject to objection. While Enterprise could have sought a protective order to challenge those areas that it believed were irrelevant, it did not do so. And now that ship has sailed. It was obligated to provide a witness or witnesses who could accurately answer questions about the relationship between the Enterprise entities, as well as their insurance, including information about their profits, number of vehicles, rental days, operational history, and corporate knowledge of safety concerns. It did not do so.

Rule 37(c) allows a range of sanctions for failure to comply with 30(b)(6). See Pioneer Drive (“Many courts treat the failure of an organization to produce a prepared and educated witness under Rule 30(b)(6) as tantamount to a nonappearance at a deposition, meriting the imposition of sanctions.”) A variety of sanctions have been invoked when a party fails to produce an adequate 30(b)(6) deponent, including:

(1) costs and attorneys’ fees incurred in filing a motion to compel, (2) monetary sanctions against the non-complying party and its counsel, (3) an order compelling compliance with Rule 30(b)(6) and requiring an educated deponent to be produced, (4) requiring a corporation to redesignate an adequately prepared witness to testify in the new deposition at the corporation’s expense. Great Am. Ins. (collecting cases).

Other courts have precluded witnesses from testifying on subjects about which the designee was unable to provide knowledge and specific responses. Reilly (2d Cir. 1999). The jury could also be instructed that it may draw adverse inferences where wrongdoing prevented the opposing party from gaining discoverable information.

Given the nature of this 30(b)(6) violation, sanctions like those in Pioneer Drive are warranted. Enterprise must designate a person or persons to be deposed by Plaintiffs on all matters in its prior 30(b)(6) notices, at a location of Plaintiffs’ choosing (because of COVID, video remote is permissible). (While the Court would normally limit the new deposition to topics specifically identified above, Enterprise has demonstrated that if given an inch it will take a mile. To avoid further pettifogging, all topics in the deposition notices may be addressed.) Enterprise must pay Plaintiffs’ costs and expenses as well as 1 attorney’s fees for retaking the deposition(s). They shall take place before 9/7/20. To ensure that this does not happen again, it shall file a statement with the Court prior to the deposition(s) identifying whom it has designated on each topic. Failure to provide knowledgeable designees shall be treated as contempt of court. Rule 37(b). However, unlike Pioneer Drive, attorney fees are not awarded on the present motion. As discussed above, Plaintiffs do not prevail under Rule 37(c).

Guinnane et al v. Dobbins and Enterprise Rent-A-Car et al, 44 MFR 230, 8/14/20.

James Geddes, Katherine DeLong, and Trent Gardner (Goetz, Baldwin & Geddes), Bozeman, for Plaintiffs; Patrick Sullivan & Randall Colbert (Poore Roth & Robinson), Butte, for Dobbins; Douglas Baldridge & Theodore Randles (Venable LLP), DC, for Enterprise.

INSURANCE: Property damage to YMCA caused by employee’s meth “drug den” covered by commercial policy with ambiguous or undefined pollution/criminal act exclusions and vandalism/smoke exceptions… Molloy.

Greater Missoula Family YMCA discovered in 4/18 that an employee was habitually using meth in its daycare center. She had constructed a “drug den” inside a cabinet by installing baffles, a light, shelves, and a lock to secure the door from the inside. Testing revealed that she had also likely used meth in the bathroom, laundry room, and kitchen, and that the HVAC system spread contamination throughout the premises. She subsequently pled guilty to endangering the welfare of a child, drug possession, and criminal mischief. US Fire Ins. seeks a declaration that it has no obligation to pay YMCA’s property damage claim under its commercial policy. YMCA has counterclaimed, and both seek summary judgment.

The material facts are generally undisputed. US Fire and YMCA agree that the damages sustained to the daycare resulted from the habitual use of meth by an employee and that the property was covered by the policy at the time of the incident. They dispute application of the policy’s pollution and criminal acts exclusions.

The pollution exclusion bars coverage for the “discharge, dispersal, seepage, migration, release or escape of ‘pollutants’ unless the discharge, dispersal, seepage, migration, release or escape is itself caused by any of the ‘specified causes of loss.'” “Pollutants” is defined as “any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste.” “Specified causes of loss” include “fire; lightning; explosion; windstorm or hail; smoke; aircraft or vehicles; riot or civil commotion; vandalism; leakage from fire-extinguishing equipment; sinkhole collapse, volcanic action; falling objects; weight of snow, ice or sleet; water damage.” In short, the policy bars a claim for contamination but restores coverage for — relevant here — damage caused by “vandalism” and “smoke.”

US Fire has the burden of proving that the exclusion applies. Ribi (Mont. 2005). YMCA makes a half-hearted attempt to argue that meth contamination does not inherently meet the definition of a “pollutant.” That argument is belied by the plain language of the policy (including “contaminant” in the definition of “pollution”), the undisputed facts agreed to by the parties (describing chemical composition of contamination), and the parties’ extensive argument on the fundamental nature of meth particulate. Because US Fire has met its burden, YMCA must show that the damage is excepted from the exclusionary language. Id. It argues that the damage was caused by “vandalism” or “smoke,” which are both “specified causes of loss” that would restore coverage.

Vandalism Exception.

“Vandalism” is not defined in the policy and Montana courts have not addressed or defined it in the context of insurance coverage. It must therefore be assigned its usual meaning. Id. “Vandalism” is commonly understood as the deliberate destruction of or damage to property. Black’s; Webster’s. While the parties largely agree on this definition, US Fire argues that the term requires a specific intent to destroy and that the damage resulting from the employee’s meth use was neither intended nor reasonably expected. While YMCA agrees that vandalism must be malicious or willful to some degree, it argues that the intentional disregard of another’s property interest satisfies the intent requirement.

The parties rely primarily on Livaditis (Ga. 1968) (residential tenant’s moonshine operation), Bowers (Wash. 2000) (covert marijuana grow), and Graff (Wash. 2002) (meth lab). In all 3, smoke, fumes, and vapors from the activity left a residue that was ultimately characterized as contamination. However, the courts determined that the malicious or deliberative component of vandalism is met when one acts with intentional disregard for the property rights of another. See also Louisville (6th Cir. 1985) (“malice may be presumed from the unlawful act itself,” especially if it is evident that the act will result in property damage). Consistent with that conclusion, the employee’s habitual use of meth inside the YMCA satisfies the ordinary meaning of vandalism. The resulting contamination is therefore excepted from the pollution exclusion.

Smoke Exception.

While the parties do not contest that the damage suffered by YMCA was the result of its employee habitually using meth, US Fire characterizes the resulting particulate matter as “fumes” (not covered) while YMCA characterizes it as “smoke” (covered). YMCA has the better argument. The policy does not define “smoke.” Nevertheless, it can be reasonably interpreted to include the particulates that result from meth use. Montana courts have not addressed this question and the limited non-precedential case law provides little guidance. See Farmers (Ore. 1993) (unnecessary to address whether smoke includes vapor because there was evidence of smoke as defined by insurer). Smoke, like vandalism, must therefore be assigned its usual meaning. “Smoke” is generally understood to describe the visible suspension of carbon or other particles in the air emitted from a burning substance. Webster’s (the “gaseous products of burning materials especially of organic origin made visible by the presence of small particles of carbon” and “a suspension of particles in a gas”). The term is often used colloquially to refer to the act of inhaling and exhaling the gaseous product of a burning material, such as smoking a cigarette or other illicit substances. Id.

US Fire disputes YMCA’s assertion that its employee smoked meth by burning foil, instead arguing that she ingested meth fumes by heating foil. But when applying the ordinary definition of smoke, this distinction is one without a difference. From the viewpoint of a layperson untrained in law or insurance, Giacomelli (Mont. 2009), when she used meth, the resulting by-product resulted in suspension of particles in the air emitted from the heated substance. This is consistent with the ordinary definition of smoke. Moreover, the policy uses the term “smoke” in both defining “pollutants” in the exclusion and “unspecified causes of loss” in the exception, giving rise to ambiguity which must be construed in favor of coverage.

Criminal Act Exclusion.

The criminal act exclusion bars coverage for any “dishonest or criminal act (including theft).” But it “does not apply to acts of destruction by [YMCA] employees….” The policy does not define “acts of destruction.” Montana courts have not had an opportunity to interpret the exception in this context, nor have others applied an analogous clause to similar facts. This case may present a matter of first impression.

US Fire argues that — like the vandalism exception to the pollution exclusion — the acts of destruction exception to the criminal act exclusion requires a showing that the employee acted with an intent to destroy the property that was damaged. According to US Fire, she was acting solely “to get high.” While YMCA does not contest that she was engaged in criminal conduct, it argues that “acts of destruction” contemplates “harm that substantially detracts from the value of the property.” Although a close call, YMCA has the better argument.

The parties only substantively discuss one case that addresses the acts of destruction exception. NMS (4th Cir. 2003) determined that an employee’s act of installing hacking software that destroyed company records was a covered cause of loss. US Fire seizes on specific language in NMS to extrapolate that an acts of destruction exception requires an intent element, highlighting that the employee had a specific “plan” to destroy the files. However, NMS does not squarely address the intent question.

US Fire additionally cites a footnote in SA-OMAX (Tex. 2010) pertaining to an employee’s theft of copper wires. In the “copper crime” cases, some courts have extended coverage for damage resulting from the theft of copper wire and pipe because stealing copper often results in extensive property damage. See Morley Witus, The Paradox of Insurance Coverage for Vandalism but Not Theft, Wayne L. Rev. (2010). But other courts have denied coverage for property damage if the crime was motivated by theft for profit rather than property destruction. Id.

These cases provide limited guidance where it is difficult to discern if one’s actions are motivated by an intent to destroy or whether one is merely indifferent to the property rights of others. For example, the YMCA employee was using meth to get high but concealed her use, “defaced and damaged the inside of a cabinet to make what has been described as a ‘drug den’,” and specifically used it in areas from which the HVAC spread the contamination. Her actions therefore go beyond what was necessary to merely “get high.” And those actions, consistent with YMCA’s argument, “substantially detract from the value of property.” Black’s (defining “destruction”). Although US Fire asserts that a broad interpretation of the exception threatens to swallow the rule, construing the acts of destruction exception to be analogous with the vandalism exception provides greater internal consistency in the policy. The acts of destruction exception can therefore be read to include the YMCA employee’s conduct, and thus the criminal acts exclusion does not bar coverage.

Attorney Fees.

YMCA asserts that it is entitled to fees if it is determined that coverage exists for its claims. US Fire did not address this request. Although it appears that an award of fees may be appropriate under Brewer (Mont. 2003) and Riordan (9th Cir. 2009), this case is somewhat unique. Although YMCA counterclaimed, it has since stipulated to dismissal of its claims potentially related to US Fire’s bad faith. And application of both exceptions raised close questions under Montana insurance law. Thus US Fire shall have the opportunity to address whether fees can or should be awarded.

YMCA’s motion is granted and US Fire’s cross-motion is denied. (Fn. US Fire asserts in a footnote that if YMCA’s motion is granted and coverage is found to exist, further proceedings will be required to establish the scope and value of covered damages. However, such relief is not included in its pleading and is beyond the scope of this litigation.)

United States Fire Ins. v. Greater Missoula Family YMCA, 44 MFR 220, 4/9/20.

Kristin Gallagher & Mark Hamilton (Kennedys CMK), Basking Ridge, NJ, and Shane Macintyre (Brown Law Firm), Missoula, for US Fire Ins.; Leah Handelman & Bradley Luck (Garlington, Lohn & Robinson), Missoula, for YMCA.

INSURANCE: Even assuming general contractor is additional insured under painting subcontractor’s policy (a close question), pollution exclusion bars coverage for alleged injury through exposure to chemicals in epoxy coatings that painters applied on wastewater plant, no duty to defend/indemnify… Molloy.

This is a coverage dispute arising out of injuries sustained by employees of T&L Painting, a subcontractor to Swank Enterprises in the 2015 construction of the Butte-Silverbow Metro Wastewater Treatment Plant. 2 T&L Painting employees filed suit in State Court in 6/18 against Swank and Tnemec Co., an epoxy manufacturer, alleging injury through exposure to chemicals in the coatings they applied at the Project. T&L was insured by United Fire & Casualty. Swank tendered the underlying cases to United for defense & indemnity, insisting that it was an additional insured under T&L’s policy. United rejected the tender, and seeks a judgment on the pleadings that it does not owe a duty to defend or indemnify Swank as an additional insured under T&L’s policy. The motion is granted because even assuming that Swank is an additional insured, which is a close question, the pollution exclusion bars coverage.

Pursuant to the Subcontractor’s Agreement, T&L agreed to indemnify Swank for all claims for bodily injury and property damage related to the Project and name Swank as an additional insured on T&L’s policy “with respect to liability for bodily injury, property damage or personal and advertising injury to the extent caused by the negligent acts or omissions of [T&L], or those acting on [T&L]’s behalf, in the performance of Subcontract Work for Contractor at the Project site.” As required by the Agreement, T&L provided a “Certificate of Liability Insurance” produced by Cogswell Ins. Agency 8/18/14. It identifies Swank as the “Certificate Holder” but advises across the top:

THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE HOLDER. THIS CERTIFICATE DOES NOT AFFIRMATIVELY OR NEGATIVELY AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW. THIS CERTIFICATE DOES NOT CONSTITUTE A CONTRACT BETWEEN THE ISSUING INSURER(S), AUTHORIZED REPRESENTATIVE OR PRODUCER, AND THE CERTIFICATE HOLDER.

It also includes an attachment of “additional insured endorsements” specific to the relationship between T&L and Swank. However, Swank was not added to the Schedule of Additional Insureds included in T&L’s policy.

The applicable endorsements are:

Additional Insured — Owners, Lessees or contractors — Completed Operations Endorsement.

Additional Insured — Managers of Lessors of Premises Endorsement.

Contractors Blanket Additional Insured — Limited Products — Completed Operations Coverage Endorsement.

Broadened Liability Plus Endorsement.

Because the first two endorsements require that the additional insured be “shown in the Schedule [of Additional Insureds],” and Swank is not on that Schedule, United argues that only the second two endorsements apply. Swank insists that a material fact issue exists as to whether United should have listed it in the Schedule but wrongfully failed to do so. Plum Creek Mktg. v. Am. Econ. Ins. (Mont. 2009) directly addressed this issue in United’s favor. Thus the action as currently pled is limited to consideration of T&L’s Policy as issued, which does not list Swank as a Scheduled Additional Insured. Thus only the second two endorsements apply.

United argues that under the two remaining endorsements, Swank — as an additional insured — is covered by T&L’s policy only to the extent that T&L is liable for wrongdoing and that liability can be imputed to Swank. Swank responds that the Subcontractor’s Agreement broadened the scope of coverage. However, “an insurer’s duty to defend or indemnify depends on the four corners of the invoked insurance policy — not on an agreement between an insured and a third party.” Stoltze (Mont. 2015). And the endorsement language that limits coverage under T&L’s policy to that contracted by the parties cannot reasonably be read to broaden coverage beyond those 4 corners.

Swank’s reliance on the policy amendments section is also unavailing. It purports to amend the additional insured endorsements to state: “coverage to the additional insured will be afforded to the extent permissible by law and to the extent the named insured is required by the contract or agreement to provide insurance for the additional insured.” However, that amendment only applies to certain enumerated endorsements, which does not include the 2 at issue. Although Swank argues that this raises an ambiguity in the policy, the amendment actually clarifies that absence of such language in the endorsements was purposeful.

While Swank may have a claim against T&L or United regarding the scope of insurance actually obtained, that dispute is not relevant to the coverage provided under the 4 corners of T&L’s policy.

Pursuant to the additional insured endorsements, Swank’s coverage under T&L’s policy is limited to the extent that T&L’s liability can be imputed to Swank. United argues that Swank cannot make such a showing because the underlying cases do not allege liability against T&L, and T&L is immune from such actions under Montana comp exclusivity. United cites Plum Creek and Stoltze, but it appears that this case is distinguishable because the underlying cases allege liability for injuries caused at least in part by an entity allegedly acting on T&L’s behalf — Tnemec — and the policy language from Plum Creek and Stoltze is narrower, providing that the additional insured “is an insured only to the extent [the named insured] is held liable due to” work performed under the subcontract, while the T&L policy merely uses the term “your liability.” This distinction also impacts comp exclusivity under the Workers’ Compensation Act. Accordingly, United argues that liability cannot be established under the endorsement because T&L is immune. But legal immunity is different from causal responsibility. While “held liable” unambiguously has a legal connotation, Graham (D. Neb. 2016), Phillips (D. Or. 2009), the T&L policy simply states “your liability.” Because “your liability” could reasonably be interpreted to mean causal responsibility or legal liability, it is ambiguous and must be construed in favor of coverage. Ribi (Mont. 2005). Thus immunity under the WCA does not necessarily bar T&L from being found responsible.

But even assuming that Swank is an additional insured, the Total Pollution Exclusion bars coverage: T&L’s policy does not apply to “‘bodily injury’ or ‘property damage’ which would not have occurred in whole or part but for the actual, alleged or threatened discharge, dispersal, seepage, migration, release or escape of ‘pollutants’ at any time.” “‘Pollutants’ mean any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste.”

The parties’ arguments reflect the 2 approaches courts have taken to interpret the Total Pollution Exclusion. “Some courts apply the exclusion literally because they find the terms to be clear and unambiguous.” Apana (9th Cir. 2009, collecting cases). “Other courts have limited the exclusion to situations involving traditional environmental pollution, either because they find the terms of the exclusion to be ambiguous or because they find that the exclusion contradicts policyholders’ reasonable expectations.” Id. Montana falls into the former category. Id.; Sokoloski (Mont. 1999).

Swank relies on Enron (9th Cir. 1997) in which an oil company alleged injury resulting from explosions and malfunctions caused by injection of foreign substances into a pipeline carrying its crude oil. The policy included an exclusion that used the undefined term “contamination.” The 9th Circuit concluded that the exclusion was ambiguous and could be reasonably read to limit its application “to only those hazards traditionally associated with environmental pollution.” But 2 years later the Montana Supreme Court decided Sokoloski, which involved a homeowner’s claim for smoke & soot damage caused by scented candles. Unlike the Enron policy, the Sokoloski policy defined “pollutants” as “any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste.” Distinguishing Enron, the Court determined that the “smoke and soot damages were expressly included within the policy definition of ‘pollutants’” and there was no reason to look beyond the policy, and coverage was therefore properly denied.

Sokoloski controls here because T&L’s policy explicitly defines “pollutants” to include “chemicals,” which unambiguously includes the epoxies used at the Project. See Kline (E.D. Va. 2007) (the pollution exclusion barred coverage for fumes released by an epoxy/urethane sealant). Although an ambiguity exists where a policy when taken as a whole is reasonably subject to two different interpretations, “courts should not seize upon certain and definite covenants expressed in plain English with violent hands, and distort them so as to include a risk clearly excluded by the insurance contract.” Ribi. This exclusion unambiguously bars coverage.

Because there is no possibility of coverage, United owes neither a duty to defend nor to indemnify. United’s motion for judgment on the pleadings is granted.

Swank Enterprises v. United Fire & Casualty, 44 MFR 219, 4/7/20.

Randy Tanner & Scott Stearns (Boone Karlberg), Missoula, for Swank; Nicholas Pagnotta & Alexander Tsomaya (Williams Law Firm), Missoula, for United.