Beaverhead Co. v. MACo
2014 MT 267
Mont.2014Background
- Beaverhead County awarded a construction contract to Coleman Construction for a stream rehabilitation and bridge replacement project; Coleman sued the County after delays and cost overruns.
- Coleman pleaded ten claims; seven were contract-based and three (claims 1–3) were pleaded as torts: negligent misrepresentation, negligence, and professional negligence, each tied to alleged defects in the contract documents.
- The County notified its insurer, MACo JPIA, which denied coverage citing Exclusion 12 (claims arising out of a breach of contract) and later Exclusion 23 (faulty preparation of bid specifications/plans).
- The County repeatedly requested defense and submitted Coleman’s complaint and interrogatory answers; MACo maintained its denial, concluding the claims were contract-based.
- The County sued MACo for breach of the duty to defend; the district court granted summary judgment for MACo, finding Exclusion 12 (and alternatively Exclusion 23) barred coverage.
- Montana Supreme Court affirmed: claims 1–3 were contract-based in substance, so Exclusion 12 precluded coverage and MACo had no duty to defend.
Issues
| Issue | County's Argument | MACo's Argument | Held |
|---|---|---|---|
| Whether MACo had a duty to defend the County against Coleman’s claims | The complaint and subsequent letters/interrogatories contained factual allegations that could trigger coverage; MACo could not conclusively show claims were excluded | The factual basis of claims 1–3 was the contract; Exclusion 12 (breach of contract) unequivocally excluded coverage so no duty to defend | Held for MACo: no duty to defend because the acts underlying claims 1–3 arose from the contract and fell within Exclusion 12 |
| Whether the district court erred in considering Exclusion 23 when granting summary judgment | County argued Exclusion 12 did not definitively bar coverage; challenged reliance on additional exclusions | MACo asserted Exclusion 23 (faulty preparation of bid/specs) independently excluded claims | Court declined to decide: unnecessary to reach Exclusion 23 because Exclusion 12 alone disposed of the case |
Key Cases Cited
- Town of Geraldine v. Montana Mun. Ins. Auth., 347 Mont. 267 (2008) (acts arising from contract, not labels, determine whether tort claims are in substance breach-of-contract claims)
- Newman v. Scottsdale Ins. Co., 370 Mont. 133 (2013) (insurer need not look beyond complaint unless it actually obtained other information; duty to defend analysis)
- Farmers Union Mut. Ins. Co. v. Staples, 321 Mont. 99 (2004) (insurer must unequivocally demonstrate no potential for coverage to avoid duty to defend)
- Tidyman’s Mgmt. Servs. v. Davis, 376 Mont. 80 (2014) (reiterating that a duty to defend arises if complaint alleges facts that, if proved, could result in coverage)