American States Insurance v. Willoughby

No. 92-022

I N THE SUPREME COURT O F THE STATE O F MONTANA

1992

AMERICAN STATES INSURANCE
COMPANY,
Plaintiff and Respondent,

SUSAN WILLOUGHBY, MARK T.
NIELSEN and JOHN GEERING,
Defendants and Appellants.

APPEAL FROM: District Court of the Thirteenth Judicial District,
In and for the County of Yellowstone,
The Honorable William J. Speare, Judge presiding.

COUNSEL O F RECORD:

For Appellants:
James P. Healow, Sweeney & Kealow, Billings, Montana
For Respondent:
Guy W. Rogers, Anderson, Brown, Gerbase, Cehull,
Fulton, H a m a n & Ross, Billings, Montana

Submitted on Briefs: June 11, 1992
Justice R. C. McDonough delivered the Opinion of the Court.

Defendants appeal from the decision of the Thirteenth Judicial
District, Yellowstone County, granting Plaintiff's motion for
summary judgment and denying Defendant's motion for summary
judgment. Plaintiff, American States, had requested a declaratory
judgment stating that it did not have to indemnify or defend
Defendant, Mark Neilsen, in two civil actions because the acts
committed by Neilsen were not covered under his American States
insurance policy. We affirm the District Court.
There are two issues on appeal:
I. Did the District Court err in granting summary judgment to
Plaintiff because it ruled that Neilsen's actions were not covered
under his American States policy?
11. Did the District Court err in concluding that Neilsen had
the burden of proving the reasonableness of the settlements with
Willoughby and Geering?
Mark Neilsen attended the automobile races at Yellowstone
Belaro Speedway with his wife and friends. Sometime during the
evening, security guards received a complaint about Neilsen's
behavior. Shortly thereafter, two security guards, Susan
Willoughby and John Geering, entered the area where Mark Neilsen
and his party were sitting. Susan and John observed Mark Neilsen
being disruptive and approached him to request that he quiet down
but he refused to change his behavior.
A physical altercation followed between Neilsen and Willoughby
when Neilsen pushed or fell on Willoughby and they both fell to the
ground. John Geering approached the two on the ground and
attempted to assist Susan. Eventually, Mark Neilsen's wife, Joe
Gonzales, the security guard supervisor, and a friend of Mark's
joined the melee. Ultimately, Mark was restrained and taken under
the grandstand where he created another disturbance, tussling with
Deputy Sheriff Ellis and damaging a police vehicle before he was
subdued and placed inside the vehicle.
Susan Willoughby and John Geering sustained injuries during
the altercation and both went to the hospital following the
incident. Willoughby complained of a sore back, sore leg, and
swelling and a cut on her leg while John Geering was treated for
three bites from Neilsen sustained during the scuffle. Neither
party required hospitalization although Ms. Willoughby obtained a
prescription.
Criminal charges against Mark Neilsen followed the incident.
Mr. Neilsen was charged with three counts of misdemeanor assault
against Susan Willoughby, John Geering and Deputy Sheriff Ellis.
Mr. Neilsen pled guilty to these charges as well as to one count of
criminal mischief for damage to the police vehicle.
Susan Willoughby and John Geering filed actions against Mark
Neilsen for damages incurred during the incident at the Speedway
and Neilsen sought indemnification from his insurance company.
Neilsen's insurance policy with American States provided that
it would:
 pay up to our limit of liability for the damages.. .and
provide a defense at our expense if ... ...
a suit is brought
against an insured for damages because of personal
injury ...
caused by an occurrence to which this coverage
applies ....
The exclusion provision of the policy states that coverage
does not apply to bodilv injury ...which is ex~ectedor intended by
the insured. In addition, this provision states that the exclusion
"does not apply to an act committed by or at the direction of the
insured not intended to cause serious bodilv injury. . . . (Emphasis
original.)
The word "occurrence" in the policy means an accident,
including exposure to conditions, which results, during the policy
.
period, in. .personal injury. [Plersonal injuryo1means bodily
injury ....
A procedural history of two underlying cases will clarify the
present case. On May 9, 1989, Defendant Susan Willoughby filed an
action against Mark Neilsen for personal damages for assault and
battery. The complaint was later amended to include a count of
negligence. Neilsen tendered the defense of this action to
American States requesting that it provide a defense and
indemnification of any damages awarded in the Willoughby action.
American States offered to provide a defense for Mr. Neilsen under
a reservation of rights.
Subsequent to this arrangement, Neilsen entered into a
settlement with Susan Willoughby for $25,500 without the knowledge
or consent of American States. Neilsen assigned his rights under
the policy to Susan Willoughby in satisfaction of the settlement
agreement.
John Geering filed his action against Mark Neilsen on May 29,
1991. Virtually the same sequence 0 5 events followed in this
action and ultimately, Neilsen entered into a similar settlement
agreement with Geering, assigning his rights under his insurance
policy without American State's knowledge or consent.
American States filed the present action for a declaratory
judgment that it did not have to indemnify or defend Neilsen in
either of these actions. The District Court granted summary
judgment to American States.
Summary judgment is only proper under Rule 56(c), M.R.Civ.P.,
where the record discloses that no genuine issue of material fact
e x i s t s and t h e moving p a r t y i s entitled t o judgment as a matter of
law. New Hampshire Ins. Group v. Strecker, (1990), 244 Mont. 478,

480, 798 P.2d 130, 131.

I.
Did the District Court err in granting summary judgment to
Plaintiff because it ruled that Neilsenls actions were not covered
under his American States policy?
American States contended that Neilsenvs actions were
intentional acts and thus excluded from coverage under his
insurance policy. If the company was liable for his actions, then
American States argued that the settlement agreements were
unreasonably high and that Neilsen had the burden to prove they
were reasonable,
However, the Defendants contended that ~eilsen's actions
resulted in unintended injuries and were therefore accidental.
They argued that accidental injuries fell within the coverage of
the insurance policy and the exclusion provision in the policy was
not applicable.
The District Court concluded in its opinion that "Neilsen1s
actions against Willoughby and Geering were deliberate ....Thus,
NielsenlsAmerican States Insurance policy does not cover the acts
he committed against Willoughby and Geering.It Judge Speare also

stated that whether Neilsen intended to seriously injure Willoughby
and Geering was a question of fact to be decided by a jury.
However, since he found that the insurance policy did not cover
Neilsentsactions against Willoughby and Geering, there was no need
to bring this issue to the jury. Finally, he concluded that
Neilsen had the burden of proof to show that the settlements with
Willoughby and Geering were reasonable.
The court reviewed deposition testimony from Willoughby,
Geering, and witnesses Sheryl Wetsch and Michelle McKinney, that
Neilsen refused to cooperate with the security guards and entangled
several people in a physical altercation. These witnesses reported
his kicking, hitting and biting people who were attempting to
restrain him, including Willoughby and Geering. Evidence that Mr.
Neilsen pled guilty to three counts of misdemeanor assault gave
additional support to the District Court's conclusion that
Neilsen's acts were intentional and not accidental. Strecker at
480-481, 798 P.2d at 131.
Actions such as biting, kicking and hitting are similar to
those involved in Mutual Service Cas. Ins. Co. v. McGehee, (1985),
219 Mont. 304, 711 P.2d 826, wherein Mr. McGehee struck a coworker

in the face twice and the victim sought damages for his injury.
Mr. McGehee attempted to have Mutual Service indemnify him under
his insurance policy but the company said his actions precluded
recovery and they brought suit for a declaratory judgment of the
parties' rights. The court granted Mutual Services's motion for
summary judgment stating that the company would not have to
indemnify McGehee.
On appeal, Mr. McGehee contended that the court could not
grant summary judgment to the insurer because there was a factual
question regarding whether he intended the specific injuries
sustained by the victim. In denying insurance coverage in that
instance, the Court stated:

[Tlhe act of striking another in the face is one which we
recognize as an act so certain to cause a particular kind
of harm that we can say a person who performed the act
intended the resulting harm, and his statement to the
contrary does nothing to refute that rule of law.
(Citations omitted.)
McGehee at 307, 711 P.2d at 828. See also, Transamerica Ins. Group
v. Meere, (Ariz. 1984), 694 P.2d 181.
The course of conduct pursued by Mr. Neilsen included acts
such as hitting, biting and kicking directed toward those who were
trying to restrain him. We agree that such acts are similar to the
blows struck by Mr. McGehee and are certain to cause harm of some
kind, and can cause serious injury. These types of action are per
se intentional and the intent to seriously injure is evident from
the commission and type or nature of the act itself.
Such actions cannot be the basis for policy coverage without
vitiating the purpose of insurance. I1[I]f a single insured is
allowed through intentional or reckless acts to consciously control
risks covered by policy, the central concept of insurance is
violated." (Emphasis original.) TransAmerica at 186. The
exclusion clause, excluding acts which are not "accidental"
developed to ensure that in standard insurance policies, insurance
companies would pay damages for "accidents" only.
We determined the applicability of this exclusion clause under
general liability insurance policies by using a two-pronged test in
Strecker. Strecker at 4 8 1 , 798 P.2d at 132. If either prong of
this test is satisfied, the acts at issue fall within the exclusion
provision and are not covered under the policy. I1The first prong
is satisfied if the injury was not caused by an accident. The
second prong is satisfied if the injury was either expected or
intended from the standpoint of the insured." Emphasis original.
Strecker at 481, 7 9 8 P.2d at 132.
In Strecker, a father attempted to invoke his insurance
policy's coverage when his daughter filed a civil action against
him because he had sexually molested her for 10 years. We
concluded that such conduct was intentional and the intent to
injure was present regardless of protestations to the contrary.
The exclusion clause applied and coverage was precluded.
If w e apply the Strecker test to our conclusion that Neilsenvs
acts were intentional and evince an intent to injure by their very
nature, both prongs of the test are satisfied. Therefore, the
exclusion clause applies and coverage is precluded under Neilsen's
American States insurance policy. Summary judgment was properly
granted.
11

Did the District Court err in concluding that Neilsen had the
burden of proving the reasonableness of the settlements with
Wilfoughby and Geering?
By reason of our above coverage decision, this issue is moot.
AFFIRMED.

We Concur: