No. 90-544
IN THE SUPREME COURT OF THE STATE OF MONTANA
1992
TRUCK INSURANCE EXCHANGE, a reciprocal
inter-insurance exchange,
Plaintiff and Respondent,
-vs-
THOMAS G. WALLER and LINDA L. WALLER,
Defendants and Appellants, ,
x.*zifL
t;
DONALD ENGELKE, CHARLES ENGELKE, and &[
&
CHARLES AND DONALD ENGELKE, d/b/a CHARLES ,t:i$E(K OF Sef;5RT?$E COURT '
AND DONALD ENGELKE, a partnership, STATE OF UOATANA
Defendants,
and
THOMAS G. WALLER and LINDA L. WALLER,
Counterclaimants and Appellants,
-vs-
TRUCK INSURANCE EXCHANGE, a reciprocal
Inter-insurance Exchange,
Counterclaim Defendant and Respondent.
APPEAL FROM: District Court of the Fifteenth Judicial District,
In and for the County of Roosevelt,
The Honorable M. James Sorte, Judge presiding.
COUNSEL OF RECORD:
For Appellants:
David L. Irving, Attorney at Law, Glasgow, Montana
David S. Evinger; Robins, Kaplan, Miller & Ciresi,
Minneapolis, Minnesota
For Respondent:
George C. Dalthorp and Peter F. Habein; Crowley,
Haughey, Hanson, Toole & Dietrich, Billings, Montana
Submitted on Briefs: January 30, 1992
Decided: April 10, 1992
Filed:
Justice Karla M. Gray delivered the opinion of the Court.
The appellants, Thomas and Linda Waller, appeal from an order
of the District Court of the Fifteenth Judicial District, Roosevelt
County, which granted summary judgment in favor of the respondent,
Truck Insurance Exchange (Truck Insurance). We affirm.
The issues on appeal are:
1. Did the District Court err in concluding that the language
of the Engelkest insurance policies excluded coverage for Mr.
Waller s injuries arising from the airplane accident and, thus,
that Truck Insurance was entitled to summary judgment?
2. Did the District Court err in granting summary judgment to
Truck Insurance on the Wallerst misrepresentation counterclaim?
3. Did the District Court err in dismissing the Wallers1 bad
faith counterclaim?
Truck Insurance brought this action in 1985 seeking a
declaration that the insurance policies it issued to Donald and
Charles Engelke did not provide coverage for the injuries suffered
by Mr. Waller while he was a passenger in an airplane which crashed
while piloted by Donald Engelke. Prior to the accident, the
Engelkes had insured their farm through Truck Insurance with a Farm
Sentinel policy and a commercial umbrella policy. When this
declaratory judgment action originated, the Engelkes were
defendants in a personal injury action filed by the Wallers.
Judgment in that action was entered in 1989 against Donald Engelke.
The Engelkes answered Truck Insurance's declaratory judgment
complaint by admitting that the insurance policies provided no
2
coverage for the airplane accident; they are no longer involved in
this suit. The Wallers answered by alleging that there was
coverage for the airplane accident. They also counterclaimed for
misrepresentation against Truck Insurance asserting that after the
Engelkes purchased their insurance, Truck Insurance's agent
misrepresented to Donald Engelke that Engelke could not obtain
insurance coverage for his aircraft because he did not have a
pilot's license. The Wallers sought reformation of the insurance
policies to provide coverage or estoppel on the part of Truck
Insurance to deny coverage.
Truck Insurance filed a motion for summary judgment on all
issues, including the Wallers' misrepresentation counterclaim, on
February 14, 1989. The District Court allowed further discovery by
the Wallers and the motion for summary judgment was set for hearing
on May 30, 1990.
Prior to the hearing, the Wallers filed a cross-motion for
summary judgment on May 9, 1990, as to coverage under the policies.
In addition, the Wallers were granted leave on May 24, 1990, to
amend their answer to add a second counterclaim for bad faith. On
May 30, 1990, the day of the hearing on the cross-motions for
summary judgment, Truck Insurance filed a motion for
reconsideration of the court's order granting the Wallers leave to
amend their answer; it subsequently filed its answer to the second
counterclaim on June 5, 1990. The court never ruled on Truck
Insurance's motion for reconsideration.
The District Court granted summary judgment to Truck Insurance
on August 10, 1990. It ruled that the policy language did not
provide coverage for the accident in which Mr. Waller was injured
and that the counterclaim for misrepresentation or "coverage by
estoppelff
was without merit. The court also dismissed the Wallersf
counterclaim for bad faith. The Wallers appealed.
Did the District Court err in concluding that the language of
the Engelkesf insurance policies excluded coverage for Mr. Wallerfs
injuries arising from the airplane accident and, thus, that Truck
Insurance was entitled to summary judgment?
Summary judgment is proper when there is no genuine issue as
to any material fact and the moving party is entitled to judgment
as a matter of law. Rule 56 (c), M.R.Civ.P. The interpretation of
an insurance contract is a question of law. Truck Insurance
Exchange v. Nelson (1987), 228 Mont. 233, 236, 743 P.2d 572, 574.
The language of the insurance policy governs its interpretation if
it is clear and explicit. Section 28-3-401, MCA.
Coverage f1E2ff the Farm Sentinel policy states that the
of
insurer agrees to pay various medical expenses incurred as a result
of bodily injury caused by an accident while on the premises with
the permission of the insured, or elsewhere if such injury is
caused by the activities of an insured. The policy also contains
the following exclusion:
THIS POLICY DOES NOT APPLY UNDER:
(b) Coverages ...E2 to the ownership, maintenance,
operation, use, loading or unloading of . . .
(iv)
aircraft; but, with respect to bodily injury to a
residence employee or a farm employee, arising out of and
in the course of employment by the insured of such
residence or farm employee, parts (i), (ii) and (iii) of
this exclusion do not apply, and part (iv) applies only
while such employee is engaged in the operation or
maintenance of aircraft[.]
The commercial umbrella policy states that coverage under that
policy is subject to the insuring provisions in the underlying
(Farm Sentinel) policy.
The District Court concluded that the Farm Sentinel policy
does not provide coverage for the accident in which Mr. Waller was
injured. The Wallers claim error. They assert that the aircraft
exclusion applies only to injuries sustained by farm or residence
employees and that, because Mr. Waller was not an employee of the
Engelkes, the exclusion does not apply to the accident in which he
was injured. We disagree.
The meaning of the aircraft exclusion is clear and explicit.
The language plainly excludes coverage for bodily injury arising
from the ownership, maintenance, operation, use, loading or
unloading of aircraft; however, in the case of bodily injury to a
residence or farm employee, the policy excludes coverage only where
such employee is engaged in the operation or maintenance of
aircraft. It is undisputed that the injuries to Mr. Waller arose
out of the operation and use of an aircraft and that he was not a
residence or farm employee at the time of his injuries. Thus, the
airplane accident in question is excluded from coverage.
Accordingly, we hold that the District Court did not err in
granting summary judgment to Truck Insurance on the question of
coverage under the insurance policies.
11.
Did the District Court err in granting summary judgment to
Truck Insurance on the Wallers1 misrepresentation counterclaim?
The Wallers contend that the misrepresentation counterclaim
was not involved in the cross-motions for summary judgment. Citing
Hereford v. Hereford (1979), 183 Mont. 104, 598 P.2d 600, they
argue that it is reversible error to grant summary judgment on a
claim not before the court without affording them notice and
reasonable opportunity to respond.
We find no error on the part of the District Court. Truck
Insurancels February 14, 1989 motion for summary judgment
specifically included the misrepresentation counterclaim. Thus,
the Wallers cannot reasonably argue that they had no notice or
opportunity to respond.
In analyzing the merits of the counterclaim for
misrepresentation, the District Court, having already found that
the language of the policies excluded coverage, addressed whether
Truck Insurance was nonetheless estopped from denying coverage
because of statements made to Donald Engelke by Truck Insurancels
agent, LeRoy Tvedt. The court found that no issue of material fact
existed with respect to the conversation between Engelke and Tvedt.
It then applied the elements of estoppel to the Wallers1 claim and,
finding some of the elements of estoppel to be lacking, concluded
that Truck Insurance was entitled to summary judgment as a matter
of law.
The Wallers maintain that the District Court erroneously
characterized the counterclaim as one of estoppel, arguing that
misrepresentation is a cause of action independent of the
declaratory judgment action. We find the Wallers1 attempt to
distinguish estoppel from misrepresentation unpersuasive under the
circumstances of this case. The Wallers did not seek money damages
for the alleged misrepresentation; they sought reformation of the
policies to provide coverage or estoppel on the part of Truck
Insurance to deny coverage. The remedies sought make it clear that
the counterclaim was tied to, and not independent of, the
declaratory judgment action.
In addition, an element of both estoppel and misrepresentation
is detrimental reliance. The Wallers were not parties to the
conversation and in no way relied on Mr. Tvedtls statements.
Therefore, they cannot establish this element.
The Wallers assert that, as judgment creditors of Donald
Engelke, "they have the right to stand in the same position as
Donald Engelke with respect to his insurer, Truck Ins~rance.~'
Assuming arsuendo that the Wallers correctly assert that they have
the right to bring a misrepresentation action against Truck
Insurance on behalf of Donald Engelke, their claim still fails.
Donald Engelke did not change his position for the worse in
reliance on Mr. Tvedtls statements. He did not have or seek
insurance coverage for the airplane before the conversation with
Mr. Tvedt and did not pursue obtaining coverage after that
conversation. Under these facts, it is clear that the Wallers
cannot establish the element of detrimental reliance. Thus, their
misrepresentation counterclaim fails as a matter of law. We hold
that the District Court did not err in granting summary judgment to
Truck Insurance on the Wallers' misrepresentation counterclaim.
111.
Did the District Court err in dismissing the Wallersl bad
faith counterclaim?
Having determined that there was no coverage pursuant to the
language of the insurance policies or by estoppel, the court
concluded that it was proper to address the Wallers' bad faith
counterclaim. It dismissed the counterclaim concluding that "[iln
light of the court's ruling that there is no coverage under the
insurance policies, the counterclaim is without merit and totally
inapplicable to this case."
The Wallers argue that the bad faith counterclaim was not
before the court at the time of the May 30, 1990 summary judgment
hearing and, thus, the District Court erred in addressing and
dismissing it. They also argue that a determination that the
insurance policies do not provide coverage for the airplane
accident does not mandate dismissal of the bad faith counterclaim
because "[tlhe claim stands alone as a separate and independent
cause of action from the declaratory judgment action.I' We conclude
that under the circumstances of this case the District Court did
not err in dismissing the bad faith counterclaim.
The Wallers' bad faith counterclaim alleges that:
Since the filing of the declaratory action herein,
and especially since judgment was granted against the
insured in the underlying personal injury action, Cause
Number 10105 in this Court, upon information and belief
the counterclaim defendants have violatedtheir fiduciary
duty and the contractual rights of the Wallers, as third
party claimants, concerning good faith and fair dealing
in the investigation, discovery, prosecution and
settlement of the declaratory action. Upon information
and belief, said violations amount to a breach of the
implied covenant of good faith and fair dealing, as well
as the statutory protections of the Montana Unfair Trade
Practices Act.
(Emphasis added.) It is clear that the Wallerst claims of bad
faith on the part of Truck Insurance were all premised upon the
existence of a contract between Truck Insurance and the Engelkes,
that is, that the Engelkest insurance policies provided coverage
for the airplane accident in which Mr. Waller was injured. Because
the policies excluded coverage, the Wallerst claims of bad faith on
the part of Truck Insurance fail as a matter of law. While we
agree with the Wallers that the counterclaim for bad faith was not
within the scope of the partiest respective motions for summary
judgment, the law does not require the performance of idle acts.
Section 1-3-223, MCA. To compel the District Court, under the
circumstances of this case, to dispose of the bad faith
counterclaim in a separate, independent proceeding would be to
compel inefficient and idle acts.
Affirmed .
We concur: