concurring in the result.
[¶ 20] I concur in the result reached by the majority but would employ a different analysis to reach that result. I am persuaded the method of analysis used by the Supreme Court of Ohio, in a similar case and under a similar appellate framework, should guide our decision here.
[¶ 21] Chapter 32-23, N.D.C.C., authorizes a court to enter a declaratory judgment. A declaratory judgment is a remedy that was unknown to the common law. Gen. Accident Ins. Co. v. Ins. Co. of N. America, 44 Ohio St.3d 17, 540 N.E.2d 266, 271 (1989). The declaratory judgment action is a special proceeding as that term is used in N.D.C.C. § 28-27-02(2). Kee v. Redlin, 203 N.W.2d 423, 429 (N.D.1972) (“[U]nder the terms of our statutes an ordinary proceeding is one known to the common law, ... while a special proceeding is a remedy of statutory origin.”). In General Accident, at 272, the Ohio court recognized a declaratory judgment action as a special proceeding for purposes of appeal under Ohio Rev.Code 2505.02. The statute includes the following as final orders that are appealable: “[a]n order that affects a substantial right in an action that in effect determines the action and prevents a judgment” and “[a]n order that affects a substantial right made in a special proceeding or upon a summary application in an action under judgment.” Ohio Rev.Code 2505.02. Similarly, N.D.C.C. § 28-27-02(2) provides for an appeal from “[a] final order affecting a substantial right made in special proceedings.... ”
[IT 22] Treating the declaratory judgment action as a special proceeding from which an appeal can be taken, the court must analyze whether there is a final order affecting a substantial right. The language of N.D.C.C. § 32-23-06 demonstrates that decisions on the duty to defend are decisions which affect a substantial right.
The court may refuse to render or enter a declaratory judgment or decree where such judgment or decree, if rendered or entered, would not terminate the uncertainty or controversy giving rise to the proceeding. However, the court shall render or enter a declaratory judgment or decree in an action brought by or against an insurance company to determine liability of the insurance company to the insured to defend, or duty to defend, although the insured’s liability for the loss may not have been determined.
N.D.C.C. § 32-23-06. (Emphasis added).
[¶ 23] The Ohio courts have recognized the substantive nature of the rights and obligations under an insurance contract relating to the duty to defend:
The duty to defend is of great importance to both the insured and the insurer. If an insurer mistakenly refuses to defend its insured, the adverse consequences can be great. “When an indem-nitor wrongfully refuses to defend an action against an indemnitee, the indem-nitor is liable for the costs, including *789attorney fees and expenses, incurred by the indemnitee in defending the initial action and in vindicating its right to indemnity in a third-party action brought against the indemnitor.” Allen v. Standard Oil Co. (1982), 2 Ohio St.3d 122, 2 OBR 671, 443 N.E.2d 497, paragraph two of the syllabus. On the other hand, if the insurer is required to defend an insured, “ * * * [the insurer] may try an expensive negligence case which a court may later hold is not within the terms of the policy. * * * ” Amer, The Declaratory Judgments Act of Ohio (1942), 14 Cleve. B. Assn. J. 19, 32.
The duty to defend is equally important to the insured. If the insurance company refuses to defend, then the insured often must choose to settle the suit as quickly as possible in order to avoid costly litigation, bring a declaratory judgment action against the insurer seeking a declaration that there is a duty to defend, or defend the suit without help from the insurer.
Thus, the duty to defend involves a substantial right to both the insured and the insurer.
Gen. Accident Ins. Co., 540 N.E.2d at 271.
[¶ 24] Although the decision of a trial court to render a decision in a declaratory judgment action is discretionary under N.D.C.C. §§ 32-23-01 and 32-23-06, the language inserted by the legislative assembly in N.D.C.C. § 32-23-06 in 1983, which is underlined in the above quote, indicated that decisions on the duty to defend were required. In this respect, I am convinced that this Court’s decision in Blackburn, Nickels & Smith, Inc. v. Nat’l Farmers Union Prop. & Cas. Co., 452 N.W.2d 319 (N.D.1990), cited and relied upon by the majority, is directly contradicted by a plain reading of the language of N.D.C.C. § 32-23-06. The statute requires a decision on the duty to defend, but leaves to the discretion of the trial court whether to decide other issues, including the duty to indemnify. Despite the plain language of the statute, this Court in Blackburn construed the 1983 language to require a court “to render a declaratory judgment to determine both coverage and duty to defend, whether or not the insured’s liability has been determined.” Blackburn, at 323. Rather than providing a decision on the duty to defend, which would allow the underlying case to go forward, the interpretation in Blackburn leaves trial courts in a quandary, demonstrated by the facts in this case.
[¶ 25] The duty to defend is distinct from and broader than the duty to indemnity.
The insurer’s duty to defend and duty to indemnify are two different issues. Smith v. American Family Mut. Ins. Co., 294 N.W.2d 751, 759 (N.D.1980). “Ordinarily, an insurer has a duty to defend an underlying action against its insured if the allegations in the complaint give rise to potential liability or a possibility of coverage under the insurance policy.” [Nodak Mut. Ins. Co. v.] Heim, 1997 ND 36, ¶ 11, 559 N.W.2d 846.
Hanneman v. Cont’l W. Ins. Co., 1998 ND 46, ¶ 39, 575 N.W.2d 445. Often the duty to indemnify cannot be determined until the facts of the underlying litigation have been developed. If both the duty to defend and the duty to indemnify must be decided in the declaratory action, neither it nor the underlying action can proceed in an orderly fashion.
[¶ 26] The 1983 amendments make clear that the duty to defend enjoys special status. That emphasis supports the arguments of the appellants that there should be an expeditious decision, including appellate review, of decisions on the duty to defend. I would hold that a decision on *790the duty to defend under N.D.C.C. § 32-23-06 involves a final order affecting a substantial right for purposes of appeala-bility under N.D.C.C. § 28-27-02(2). Such a result would further the specific intent expressed in N.D.C.C. § 32-23-12: “This chapter is remedial. Its. purpose is to settle and to afford relief from uncertainty and insecurity with respect to rights, status, and other legal relations, and it is to be construed and administered liberally.”
[¶ 27] This case amply identifies the problems created when Blackburn instructed trial courts to make decisions on both the duty to defend and coverage issues at an early state when the factual allegations of the complaint have not been subject to evidentiary findings. The duty to defend is broader than the duty to indemnify. Farmers Union Mut. Ins. Co. v. Decker, 2005 ND 173, ¶ 13, 704 N.W.2d 857. The duty to defend arises “if any part of the cause of action against the insured arguably falls within the scope of the coverage.... ” John Deere Ins. Co. v. Shamrock Indus., Inc., 929 F.2d 413, 417 (8th Cir.1991) (quoting Senger v. Minnesota Lawyers Mut. Ins. Co., 415 N.W.2d 364, 369 (Minn.App.1987)). See also Decker, at ¶ 13; Hanneman, at ¶ 39; Heim, 1997 ND 36, ¶ 11, 559 N.W.2d 846. However, coverage issues often cannot be decided until issues of fact in the underlying litigation are fully developed, if not completed. John Deere, at 416. There is simply insufficient information in this record to determine whether the trial court’s decision on coverage is correct. Indeed, the trial court’s order regarding coverage reflects this very problem.
Plaintiff asks this Court to look beyond the face of the complaint, similar to what the district court did in Ohio Casualty Ins. Co. [v]. Clark, 1998 ND [153,] 583 N.W.2d 377, and look to the underlying “sham transaction.” Again, it should be noted that there appear to be no North Dakota cases that explain how far beyond the complaint a court can look to determine whether or not an insurer should provide coverage. The North Dakota Supreme Court in Clark said the district court did not err in looking beyond the complaint to the underlying facts of the act. In Farmers Union Mutual Ins. Co. [v]. Decker, 2005 ND [173,] 704 N.W.2d 857, the Court said the allegations of the complaint should be reasonably interpreted in determining whether the claims are within the coverage and any doubt or ambiguity resolved in the insured’s favor. So it appears that looking at the underlying transaction that is allegedly a “sham” would be reasonable, considering that “sham transaction” is a broad descriptive statement.
Under the facts of this case it would be reasonable to conclude that Dakota West loaned the funds to H & J Livestock under the assumption that H & J was purchasing cattle from Ziegler on consignment. Although it was concluded later by Dakota West that the transaction was a “sham” it was the belief of Dakota West initially that there was a valid consignment sale from a sales ring to H & J. Although Ziegler may have been negligent in the way he conducted his business with Horob the transaction between Horob Livestock, Ziegler and H & J Livestock would best be described as a consignment sale albeit it was a “sham.” Absence proof of a conspiracy between Horob and Ziegler Star Insurance is obligated to defend and indemnify Ziegler.
To reach a decision at this point, the trial court was forced to make assumptions, based on allegations, to decide whether coverage existed because evidentiary findings had not yet been made. This is the *791analysis required for the duty to defend, but should not be the basis for decisions on coverage.
[¶ 28] However, holding that an order determining the duty to defend is an order affecting a substantial right for purposes of appeal does not end the inquiry. This action involves more than the duty to defend. Other issues are pending between these parties. Section 32-23-07, N.D.C.C., provides that “orders, judgments, and decrees under this chapter may be reviewed as other orders, judgments, and decrees.” Thus, where other claims exist and the trial court has not declined to render a decision declaring the rights of the parties in those other matters, but has left them pending, N.D.R.Civ.P. 54(b) requires an analysis of whether there is no just cause to delay the entry of an order from which an appeal can be taken.
[¶ 29] The John Deere decision, supra, is instructive. Applying Minnesota law and the federal rules of procedure, the Eighth Circuit Court of Appeals reviewed a trial court decision granting summary judgment determining an insurer had a duty to defend, denying summary judgment on the duty to indemnify, and applying F.R.Civ.P. 54(b) to hold there was no just cause to delay appeal of the order on the duty to defend. Such procedure gives full effect to the importance the Legislature has placed on getting a decision on the duty to defend, prevents the attempt to review a trial court’s decisions of coverage where there is an insufficient record to do so, and permits the parties and the trial court to address the issues in an orderly fashion, perhaps delaying the issue of coverage in the declaratory judgment action until the conclusion of the underlying action.
[¶ 30] In this case, although there is an order requiring the insurer to defend, which should be treated as an order affecting a substantial right in a special proceeding and thus appealable if a proper N.D.R.Civ.P. 54(b) certification was entered, no such certification was entered. Although appellants moved for a 54(b) certification, the motion was brought after filing this appeal, and the trial court held it had no jurisdiction to enter further orders. Moreover, the underlying claims and posture of the declaratory judgment action would have made the entry of an order under N.D.R.Civ.P. 54(b) improvident in any event. I would dismiss the appeal.
[¶ 31] Carol Ronning Kapsner