Giacomelli v. Scottsdale Ins

December 8 2009
DA 09-0035

IN THE SUPREME COURT OF THE STATE OF MONTANA
2009 MT 418

TIM GIACOMELLI, DON HAMILTON,
YELLOWSTONE HORSE RACING ALLIANCE, INC.,
and YELLOWSTONE COUNTY, METRAPARK,

Plaintiffs and Appellants,

v.

SCOTTSDALE INSURANCE COMPANY,
and PAYNE FINANCIAL GROUP, INC.
d/b/a Hoiness La Bar,

Defendants and Appellees.

APPEAL FROM: District Court of the Thirteenth Judicial District,
In and For the County of Yellowstone, Cause No. DV 07-1129
Honorable Gregory R. Todd, Presiding Judge

COUNSEL OF RECORD:

For Appellants:

Allen P. Lanning, Conklin, Nybo & Lanning, P.C.;
Great Falls, Montana

David P. Legare, Legare Law Office; Billings, Montana

For Appellees:

Calvin J. Stacey; Stacey & Funyak; Billings, Montana

Submitted on Briefs: October 28, 2009

Decided: December 8, 2009

Filed:

__________________________________________
Clerk
Justice W. William Leaphart delivered the Opinion of the Court.

¶1 Plaintiffs Tim Giacomelli and Don Hamilton (collectively, “Jockeys”) appeal the

order of the District Court for the Thirteenth Judicial District, Yellowstone County,

granting summary judgment in favor of Scottsdale Insurance Company (Scottsdale). We

affirm.

¶2 We consider the following issues on appeal:

¶3 1. Whether the District Court erroneously interpreted the term “exhibitors” from

§ 23-4-205, MCA, to exclude jockeys;

¶4 2. Whether the District Court erred in holding that the Jockeys were not entitled to

recovery from Scottsdale, but stated that the Jockeys had a claim against the Montana

board of horseracing;

¶5 3. Whether the District Court erroneously held that the special event participant

exclusion and the athletic or sports participants exclusion in the commercial general

liability insurance policy (CGL policy) are unambiguous;

¶6 4. Whether the District Court erred in holding that the special event participant

exclusion and the athletic or sports participants exclusion did not violate the insureds’

reasonable expectations.

FACTUAL AND PROCEDURAL BACKGROUND

¶7 The material facts in this case are undisputed. The Jockeys, Giacomelli and

Hamilton, suffered injuries in horse races at MetraPark in Billings, Montana, in

September 2003. Yellowstone County owns and operates MetraPark. Yellowstone

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Horse Racing Alliance Inc. (Alliance) leased MetraPark from Yellowstone County to

conduct the horse races in which the Jockeys were injured. The Jockeys sued

Yellowstone County and Alliance for their injuries, alleging negligence.

¶8 Pursuant to a requirement of its lease agreement, Alliance purchased a CGL policy

from Scottsdale. Yellowstone County is listed as an additional insured in the CGL

policy. The CGL policy covers bodily injuries (not subject to any of numerous

exclusions) arising from “the ownership, maintenance or use” of MetraPark or any

operations “necessary or incidental” to MetraPark or the horse racing track. Among the

exclusions are a “special event participant exclusion” and an “athletic or sports

participants” exclusion. The special event participant exclusion specifies that the CGL

policy does not provide coverage “to any ‘participant’ arising out of: 1. The practicing for

or participation of any person in any athletic event, contest, game, demonstration,

exhibition, race or show covered by this policy.” The exclusion then defines participant

to “include performers, stage-hands, volunteers, drivers, setup crew, pitcrew and other

persons located in the pit area, security personnel, mechanics, stewards, officials or

attendants, or any other person taking part in paragraph 1. or 2. above.” The athletic or

sports participants exclusion reads, “With respect to any operations shown in the

Schedule, this insurance does not apply to ‘bodily injury’ to any person while

participating in any sports or athletic contest or exhibition.” The schedule refers to the

operation of a “Horse Racing Track.”

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¶9 Pursuant to statute, Alliance and Yellowstone County submitted the CGL policy to

the Montana board of horseracing. The board of horseracing approved the CGL policy

and apparently issued a license to Alliance to conduct horse races.

¶10 After the Jockeys sued, Alliance and Yellowstone County contacted Scottsdale

about insurance coverage. Scottsdale, citing the special events participant exclusion and

athletic and sports participants exclusion, responded that the CGL policy did not cover

the Jockeys’ injuries. Consequently, Scottsdale refused to defend or indemnify Alliance

and Yellowstone County.

¶11 Eventually, the Jockeys settled their suits against Alliance and Yellowstone.

Pursuant to the settlements, Alliance and Yellowstone consented to the entry of

judgments, the Jockeys agreed not to execute on the judgments, and Alliance assigned to

the Jockeys any claims that it had against Scottsdale.

¶12 The Jockeys then filed the present declaratory judgment action, seeking a

declaration that the CGL policy covered their claims and that Scottsdale had a duty to

indemnify and defend Alliance and Yellowstone County. Eventually, the Jockeys moved

for summary judgment to invalidate the special events participant and the athletic or

sports participants exclusions for violating public policy and to enforce the remainder of

the CGL policy (to provide coverage). Scottsdale opposed the motion. The District

Court denied the Jockeys’ motion, ruling that the exclusions do not violate public policy

and are unambiguous, and that Alliance and Yellowstone had no reasonable expectation

that the CGL policy would cover jockeys. The Jockeys appealed.

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 STANDARD OF REVIEW

¶13 We review a district court’s grant of summary judgment de novo to determine if it

complied with Rule 56, M. R. Civ. P. Natl. Cas. Co. v. Am. Bankers Ins. Co. of Fla.,

2001 MT 28, ¶ 13, 304 Mont. 163, 19 P.3d 223. Viewing the evidence in the light most

flattering to the non-moving party and indulging all reasonable inferences in that party’s

favor, a court correctly grants summary judgment when the evidence presents no genuine

issue of material fact and the moving party is entitled to judgment as a matter of law.

M. R. Civ. P. 56(c); Peyatt v. Moore, 2004 MT 341, ¶ 13, 324 Mont. 249, 102 P.3d 535.

¶14 We review a district court’s interpretations of statutes and contracts for

correctness. Signal Perfection, Ltd. v. Rocky Mt. Bank – Billings, 2009 MT 365, ¶ 10,

353 Mont. 237, __ P.3d __; State v. Skyline Broadcasters, Inc., 2009 MT 193, ¶ 12, 351

Mont. 127, 211 P.3d 189.

DISCUSSION

¶15 Issue 1: Whether the District Court erroneously interpreted the term

“exhibitors” from § 23-4-205, MCA, to exclude jockeys.

¶16 The Jockeys’ principal argument is that § 23-4-205, MCA, mandates people

licensed to conduct horse races to carry liability insurance covering jockeys.

Consequently, they contend, the special event participant and athletic or sports

participants exclusions are contrary to public policy and therefore invalid. Thus, they

conclude, the Court should enforce the CGL policy—sans the exclusions—to allow the

Jockeys to recover the amounts of their judgments from Scottsdale. The District Court

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nipped this argument in the bud by rejecting its first premise: that § 23-4-205, MCA,

mandates liability insurance coverage for jockeys. The Jockeys contend that this was

error. The first question, consequently, is whether § 23-4-205, MCA, mandates liability

insurance coverage for jockeys.

¶17 Section 23-4-205, MCA, reads, “For the protection of the public, exhibitors, and

visitors, a person licensed to conduct a race meet or operate a simulcast facility under this

chapter shall carry public liability insurance in an amount and form of contract approved

by the board.” The Jockeys insist that the term “exhibitors” should include jockeys. The

District Court, in denying summary judgment to the Jockeys, did not define the term

“exhibitor,” but concluded that it did not include jockeys. We agree with the District

Court.

¶18 Statutory interpretation, the goal of which is to give effect to the legislature’s

intent, begins with the text of the statute. Smith v. Burlington N. & Santa Fe Ry., 2008

MT 225, ¶ 22, 344 Mont. 278, 187 P.3d 639; Fliehler v. Unisured Employers Fund, 2002

MT 125, ¶ 13, 310 Mont. 99, 48 P.3d 746. When the legislature has not defined a

statutory term, we consider the term to have its plain and ordinary meaning. Czajkowski

v. Meyers, 2007 MT 292, ¶ 24, 339 Mont. 503, 172 P.3d 94. To determine the meaning

of a statutorily undefined term, we may consider dictionary definitions, e.g. Colmore v.

Uninsured Employers’ Fund, 2005 MT 239, ¶ 72, 328 Mont. 441, 121 P.3d 1007, prior

case law, e.g. Associated Press v. Mont. Sen. Republican Caucus, 286 Mont. 172, 179-80,

951 P.2d 65, 69-70 (1997), and the larger statutory scheme in which the term appears,

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e.g. In re Mental Health of E.T., 2008 MT 299, ¶ 13, 345 Mont. 497, 191 P.3d 470. We

may also consider similar statutes from other jurisdictions and legislative history for

guidance in interpreting a statute. Gannett Satellite Info. Network, Inc. v. State, 2009 MT

5, ¶ 20, 348 Mont. 333, 201 P.3d 132; Mont. Sports Shooting Assn. v. State, 2008 MT

190, ¶ 25, 344 Mont. 1, 185 P.3d 1003.

¶19 Here, the term “exhibitor” is not defined in Title 23, chapter 3, MCA, which

regulates horseracing at which a pari-mutuel system of wagering is used. Webster’s

Third International Dictionary defines “exhibitor” as one that “exhibits (as in an

exhibition).” Webster’s Third International Dictionary 796 (G. & C. Merriam Co. 1961).

The relevant definition of “exhibit” then is “to present to view: show, display: as . . . to

show publicly: put on display in order to attract notice to what is interesting or instructive

or for purposes of competition or demonstration.” Webster’s Third International

Dictionary 796. “Exhibition” is defined as “a public show or showing: as . . . a public

display of athletic or other skill often in the form of a contest or other game but usu.

without importance with respect to winning or losing.” Webster’s Third International

Dictionary 796.

¶20 Here, consonant with these dictionary definitions, we determine that the exhibitors

of a horse race where pari-mutuel wagering occurs are those people who organize the

horse race—not the jockeys, who are the participants in the exhibition. The legislature

originally defined “race meet” as “any exhibition of thoroughbred, purebred, and/or

registered horse racing where the pari-mutuel system of wagering is used.” 1965 Mont.

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Laws ch. 196, sec. 2(3). In light of this definition, we conclude that an “exhibitor” as

originally used in § 23-4-205, MCA, means one who exhibits “as an exhibition.”

Webster’s Third International Dictionary 796. The exhibition is the entire spectacle of

the horse race—not, as the Jockeys propose, the exhibition of the strength, speed, and

endurance of each individual horse. The organizers of the race present this exhibition,

not the individual jockeys.

¶21 That the term “exhibitor” does not include participants finds support in similar

racing statutes from neighboring jurisdictions. Colorado requires people licensed to

conduct race meets to carry public liability insurance to protect “the public and the

exhibitors, contestants, and visitors.” Colo. Rev. Stat. § 12-60-509(1) (2009) (emphasis

added). New Mexico and Oregon have similar statutes that distinguish between

exhibitors of races and participants in the races. See N.M. Stat. § 60-2D-12(A) (2009)

(requiring licensees of pari-mutuel bicycle racing to carry public liability insurance “for

the protection of the public, exhibitors, contestants, visitors, other licensees and

spectators” (emphasis added)); Or. Rev. Stat. § 462.110(1), (5) (2007) (mandating race

licensees to carry liability insurance coverage to protect “the public, and all members

thereof, the exhibitors and visitors” and additional insurance to protect “jockeys and, if

appropriate, drivers”); see also Ross v. Golden St. Rodeo Co., 165 Mont. 337, 348, 530

P.2d 1166, 1172 (1974) (Daly, J., dissenting) (referring to rodeo company, rather than

bull rider, as exhibitor of bull).

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¶22 The Jockeys, in support of their contention that the term “exhibitors” includes

jockeys, cite a number of cases in which courts refer to horse riders as exhibitors. We,

however, find these cases distinguishable. In Hoyt v. Northern Maine Fair Assn., 118 A.

290, 292 (Me. 1922), the Maine Supreme Court observed:

Within the scope and purpose of the larger fairs is included another
class of exhibitors invited for precisely the same purpose as those named,
and, an important purpose of inviting this class is to offer such attractions
and exhibitions as will appeal to the sporting sense of the public and to
allure them to the fair grounds to witness the sports of the day. This class of
exhibitors is composed of the horsemen, who come to exhibit their horses
in the races and unquestionably furnish by far the most attractive display of
the entire exhibition and become the most important source of revenue, a
consideration not only desirable but essential to the success of most large
fairs.

The court further explained that at a state fair the horsemen show horses, “results of good

husbandry . . . , including draught, family and trotting horses . . . for the purpose of

stimulating an interest and arousing increased activity in the departments of agricultural

opportunity.” Hoyt, 118 A. at 292. In this context, the riders exhibit the qualities of the

horses, and are rightly considered “exhibitors.” We cannot say that this is the case with

jockeys who race horses at meets where the purpose is not to display the “results of good

husbandry” to stimulate interest and activity in agriculture, but rather to allow pari-

mutuel wagering. Thus, we find the statements from Hoyt unpersuasive in this case. For

this same reason, we also distinguish Haynes v. County of Missoula, 163 Mont. 270, 517

P.2d 370 (1973), Lindemann v. American Horse Shows Assn., 164 Misc. 2d 937 (N.Y.

Sup. 1994), and Morrison v. Union Park Assn., 149 A. 804 (Me. 1930), which all involve

either county fairs or horseshows, but not horse races with pari-mutuel betting.
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¶23 The Jockeys next advance that the District Court erroneously disregarded Rule

32.28.501(10), Admin. R. M., when it interpreted § 23-4-205, MCA. This rule reads,

“Every track licensee shall have on file with the board at least ten days prior to the

opening of any race meeting, a copy of an adequate liability insurance contract covering

all persons at the race meeting.” Admin. R. M. 32.28.501(10) (2009) (emphasis added).

The Jockeys assert that this rule supports their reading of § 23-4-205, MCA. Citing Kuhr

v. City of Billings, 2007 MT 201, ¶ 29, 338 Mont. 402, 168 P.3d 615, the Jockeys further

contend that the District Court was required to take judicial notice of the rule and enforce

it (presumably by invalidating the special event participant exclusion and the athletic or

sports participants exclusion) because it does not add to the requirements of § 23-4-205,

MCA, and because it helps effectuate the intent of § 23-4-205, MCA. We are

unpersuaded by this argument.

¶24 Assuming for the sake of argument that Rule 32.28.501(10), Admin. R. M.,

requires coverage of jockeys,1 then it would be invalid and not subject to judicial notice.

In Kuhr we wrote, “An administrative rule will be considered invalid ‘only upon a clear

showing that the regulation adds requirements which are contrary to the statutory

language or that it engrafts additional provisions not envisioned by the legislature.’”

Kuhr, ¶ 29 (quoting Christenot v. State, 272 Mont. 396, 400, 901 P.2d 545, 548 (1995)).

Here, given our conclusion that § 23-4-205, MCA, does not require persons licensed to

1
Rule 32.28.501(10), Admin. R. M., requires coverage of “all persons at the race
meeting.” It is unclear whether the board of horseracing intended this to apply to jockeys
who are not “at” the race meeting, but are “in” the race meeting. In any case, we need
not resolve this issue here.
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conduct a horse race to carry public liability insurance for jockeys, Rule 32.28.501(10),

Admin. R. M.—as interpreted by the Jockeys—would engraft an additional requirement

onto the statute. Consequently, if Rule 32.28.501(10), Admin. R. M., required liability

insurance covering jockeys, then it would be invalid and irrelevant to the District Court’s

analysis. Thus, the Jockeys’ argument fails.

¶25 For the foregoing reasons we hold that the District Court did not err in concluding

that the term “exhibitors”—as used in § 23-4-205, MCA—does not include jockeys.

Therefore, the District Court correctly dismissed the Jockeys’ argument that the special

event participant and athletic and sports participants exclusions violate public policy.

¶26 Issue 2: Whether the District Court erred in holding that the Jockeys are not

entitled to recover from Scottsdale, but stated that they had a claim against the state

board of horseracing.

¶27 In its order denying the Jockeys’ motion for summary judgment, the District Court

wrote:

The statute itself requires the insurance contract obtained for
horseracing to be “in an amount and form of contract approved by the
board.” The State of Montana approved the insurance contracts submitted
by the County and the Alliance for several years. The evidence of this
approval is in the licenses being issued and horse races being conducted. If
the insurance policies had defective coverage based on certain exclusions,
the Plaintiffs have a claim against the board, not the defendants.

(Citation omitted.) The Jockeys assert that the District Court erred in suggesting that

they had a claim against the board of horseracing. The correct remedy, the Jockeys

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maintain, when an insurance contract violates Montana law, is to void the offending

provision and enforce the remainder of the contract.

¶28 This argument has no merit because we have already concluded that the exclusion

in the CGL policy did not violate Montana law. Accordingly, the Jockeys’ proposed

remedy is not available. Furthermore, the District Court’s suggestion that the Jockeys

have a claim against the board of horseracing was merely obiter dicta. Black’s Law

Dictionary 1102 (defining “obiter dictum” as “[a] judicial comment made while

delivering a judicial opinion, but one that is unnecessary to the decision in the case and

therefore not precedential”). As such, it is not an appropriate basis for an assignment of

error.

¶29 Issue 3: Whether the District Court erroneously held that the special event

participant exclusion and the athletic or sports participants exclusion in the CGL

policy are unambiguous.

¶30 The Jockeys next contend that the District Court erred in holding that the special

event participant exclusion and the athletic or sports participants exclusion are

unambiguous.

¶31 When the language of an insurance contract is ambiguous, courts construe the

ambiguous provisions against the insurer and in favor of extending coverage. Modroo v.

Nationwide Mut. Fire Ins. Co., 2008 MT 275, ¶ 23, 345 Mont. 262, 191 P.3d 389. Courts

do so to further the object of the insurance contract, which is to give protection, Natl.

Farmers Union Prop. & Cas. Co. v. George, 1998 MT 205, ¶ 12, 290 Mont. 386, 963

12
P.2d 1259, and because insurers draft the language of insurance contracts, see Pablo v.

Moore, 2000 MT 48, ¶ 22, 298 Mont. 393, 995 P.2d 460.

¶32 A contract provision is ambiguous if it is susceptible, without violence, to more

than one reasonable interpretation. Modroo, ¶ 23; Libby Lumber Co. v. Pacific Sts. Fire

Ins. Co., 79 Mont. 166, 175, 255 P. 340, 343 (1927). Whether a provision is ambiguous

is a question of law, which courts resolve from the viewpoint of the layperson “untrained

in the law or the insurance business.” Modroo, ¶ 23. “Ambiguity does not exist just

because a claimant says so,” Holmstrom v. Mut. Benefit Health & Accident Assn., 139

Mont. 426, 428, 364 P.2d 1065, 1066 (1961), or just because the parties disagree as to the

meaning of the contract provision, Dollar Plus Stores, Inc. v. R-Mont. Assocs., L.P., 2009

MT 164, ¶ 17, 350 Mont. 476, 209 P.3d 216. Further, courts will not distort contractual

language to create an ambiguity where none exists. See Johnson v. Eq. Fire & Marine

Ins. Co., 142 Mont. 128, 131, 381 P.2d 778, 779 (1963) (emphasizing that courts may 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”

(quoting Mitchell v. German Com. Accident Co., 161 S.W. 362, 363 (Mo. App. 1913))).

¶33 Here, we need not address the special events participant exclusion, because the

athletic or sports participants exclusion is dispositive. The athletic or sports participants

exclusion provides, “With respect to any operations shown in the Schedule, this insurance

does not apply to ‘bodily injury’ to any person while participating in any sports or

13
athletic contest or exhibition.” The schedule contains the following provision:

“Description of Operations: Horse Racing Track.”

¶34 This provision applies generally to operations of the horse racing track. Here, the

Jockeys’ theories of liability all pertain to Alliance’s operations of the racetrack. As a

result of Alliance’s mismanagement of the racetrack, the Jockeys allege, they were

injured while participating in horse races. The Jockeys’ theories of liability and

allegations fit neatly within the language of the athletic or sports participants exclusion.

Accordingly, we conclude that the District Court did not err in holding that the Jockeys’

claims are excluded under the unambiguous terms of the CGL policy.

¶35 The Jockeys argue that the athletic or sports participants exclusion is ambiguous

because it could also be reasonably interpreted to “apply only to injuries arising from the

natural or inherent risks of horse racing,” but not to “injuries allegedly caused by an

insured’s breach of duty to design, inspect, maintain, or operate the race track in a safe

condition before the race.” We find no support for this interpretation in the language of

the exclusion. Indeed, to read such a limitation into the athletic or sports participants

exclusion would be to distort or “do violence” to the language of the policy. This we

decline to do. Johnson, 142 Mont. at 131, 381 P.2d at 779; Libby Lumber, 79 Mont. at

175, 255 P. at 343.

¶36 The Jockeys further contend that the athletic and sports participants exclusion is

ambiguous because there is a split in authorities that have construed similar contractual

provisions. The Louisiana Court of Appeals, the Jockeys point out, held that a similar

14
exclusion did not exclude coverage of injuries suffered by a jockey during a practice race

where the jockey alleged “negligent failure to maintain the racetrack and failure to

provide adequate medical care following the accident.” Colson v. La. St. Racing

Commn., 726 So. 2d 432, 433-35 (La. App. 4th Cir. 1999). Subsequently, the Federal

District Court for the Middle District of Florida distinguished Colson and held that a

similar exclusion excluded coverage of injuries suffered by pugilists during a match

where the fighters alleged negligence by the promoters before and after the fight. Natl.

Fire & Marine Ins. Co. v. Adoreable Promotions, Inc., 451 F. Supp. 2d 1301, 1307-10

(M.D. Fla. 2006). This split in authority, the Jockeys advance, demonstrates that the

exclusion in the CGL policy here is ambiguous.

¶37 The Jockeys’ argument requires us to clarify a statement from prior case law. In

Wendell v. State Farm Mutual Automobile Insurance Co., 1999 MT 17, ¶ 29, 293 Mont.

140, 974 P.2d 623, we stated, “The fact that courts are split as to the meaning of

‘accident’ further confirms our belief that the term is subject to more than one reasonable

interpretation.” The Jockeys read this statement, as subsequently repeated in Pablo v.

Moore, 2000 MT 48, ¶ 15, 298 Mont. 393, 995 P.2d 460, to mean that a split in authority

with respect to a contractual term conclusively demonstrates that the term is ambiguous.

¶38 While we did ultimately conclude in both Pablo and Wendell that the terms in

question were ambiguous, Pablo, ¶ 16; Wendell, ¶ 41, we do not read these cases to

establish the rule that the Jockeys advocate. In both Pablo and Wendell, we noted the

split in authority as additional support for concluding that there was ambiguity. Pablo,

15
¶ 16; Wendell, ¶ 29. Thus, neither case stated that a split in authority conclusively

demonstrates ambiguity. Furthermore, the rule advanced by the Jockeys is inconsistent

with the role of the Court in determining whether a contract is ambiguous. As the

Maryland Court of Appeals observed, “Surely we would be abdicating our judicial role

were we to decide such cases by the purely mechanical process of searching the nation’s

courts to ascertain if there are conflicting decisions.” Sullins v. Allstate Ins. Co., 667

A.2d 617, 624 (Md. 1995) (quoting Lower Paxton Township v. U.S. Fid. & Guar. Co.,

557 A.2d 393, 400 n. 4 (Pa. Super. 1989)). We determine that the better rule is that a

split in authority over the interpretation of language in an insurance policy does not

conclusively establish ambiguity, but rather is a factor that we will consider in

determining whether ambiguity exists. See Sullins, 667 A.2d at 624 (announcing similar

rule).

¶39 Applying this rule, we conclude that the split in authority with respect to the

athletic or sports participants exclusion does not render the policy language in this case

ambiguous. In particular, we do not find Colson, a decision from an intermediate court of

appeals in Louisiana, persuasive or analogous to this case. First, the court in Colson

failed to analyze the language of the exclusion, and simply made the conclusory

statement that the exclusion did not apply because the plaintiff’s claims were

“independent” of his participation in the race. 726 So. 2d at 435. Moreover, in Colson,

unlike the present case, the plaintiff alleged harm caused by inadequate medical care after

the race, and the court stated that the plaintiff’s “personal injuries sustained in the

16
accident which occurred during [the] race are clearly excluded from coverage.” Colson,

726 So. 2d at 435. Here, conversely, the Jockeys have only alleged injuries that occurred

during the races. Thus, we find Colson of little help in interpreting the athletic or sports

participants exclusion. Accordingly, we hold that the District Court did not err in

concluding that the athletic or sports participants exclusion is unambiguous.

¶40 Issue 4: Whether the District Court erred in holding that the special event

participant exclusion and the athletic or sports participants exclusion did not violate

the reasonable expectations of Alliance and Yellowstone County.

¶41 The Jockeys’ final argument is that the District Court erred in holding that the

special event participant exclusion and the athletic or sports participants exclusion

violated their reasonable expectations of coverage.

¶42 “The reasonable expectations doctrine provides that the objectively reasonable

expectations of insurance purchasers regarding the terms of their policies should be

honored notwithstanding the fact that a painstaking study of the policy would have

negated those expectations.” Am. Family Mut. Ins. Co. v. Livengood, 1998 MT 329, ¶ 32,

292 Mont. 244, 970 P.2d 1054. The genesis of this doctrine is “the judicial recognition

that most insurance contracts, rather than being the result of anything resembling equal

bargaining between the parties, are truly contracts of adhesion in which many insureds

face two options: (1) accept the standard insurance policy offered by the insurer, or (2) go

without insurance.” Couch on Insurance vol. 2, § 22:11, 22-23 (3d ed., Lee R. Russ &

Thomas F. Segalla, eds., Thompson West 1997) (citation omitted); see also

17
Transamerica Ins. Co. v. Royle, 202 Mont. 173, 180-81, 656 P.2d 820, 824 (1983)

(applying reasonable expectations doctrine to invalidate exclusion because automobile

insurance policy was “adhesion contract”). The reasonable expectations doctrine,

however, “is inapplicable where the terms of the policy at issue clearly demonstrate an

intent to exclude coverage.” Livengood, ¶ 33. This is because expectations “contrary to a

clear exclusion are not ‘objectively reasonable.’” Livengood, ¶ 33 (quoting Wellcome v.

Home Ins. Co., 257 Mont. 354, 359, 849 P.2d 190, 194 (1993)).

¶43 Here, Alliance and Yellowstone County expected the CGL policy to cover injuries

to jockeys. This expectation, however, was not objectively reasonable. Contrary to the

Jockeys’ assertions, we have concluded that the athletic or sports participants exclusion

unambiguously expresses an intent to exclude coverage for jockeys injured while

participating in horse races. Accordingly, we hold that the District Court did not err.

¶44 The Jockeys, noting that both exclusions refer to “exhibitions,” assert that it is

inconsistent to interpret the exclusions to apply to jockeys while interpreting § 23-4-205,

MCA, which is for the protection of “exhibitors,” to not apply to jockeys. We are

unconvinced by this argument. First, the CGL policy excludes coverage for participants

in a “sports or athletic contest or exhibition” (emphasis added). The horse races in which

the Jockeys were injured qualify as “sports or athletic contests.” Therefore, we need not

address the term “exhibition” as used in the CGL policy exclusions. Second, the

Jockeys’ charge of inconsistency is illusory. According to our interpretation of § 23-4-

205, MCA, a jockey participating in an exhibition of horseracing is not an “exhibitor,”

18
but a “participant.” The “exhibitor” is the organizer of the horse race. Given these

definitions, there is no inconsistency in applying the athletic or sports participants

exclusion to jockeys, as participants in an exhibition, while not applying the protection of

“exhibitors” in § 23-4-205, MCA, to jockeys (because the organizers, not the jockeys, are

the exhibitors).

¶45 Affirmed.

/S/ W. WILLIAM LEAPHART

We concur:

/S/ MIKE McGRATH
/S/ JAMES C. NELSON
/S/ JIM RICE
/S/ BRIAN MORRIS

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