Landa v. Assurance Co. of America
2013 MT 217
| Mont. | 2013Background
- Leonard Landa, sole managing member of Landa-Harbaugh & Associates, sought defense under a commercial general liability policy issued by Assurance for claims brought by former employee Olan L. “Bubba” Alsup.
- Alsup sued alleging fraud, misrepresentation/deceit, deception in employment, negligence, breach of contract, and related claims based on alleged intentional false promises to induce him to quit his job and work for Landa.
- Landa tendered defense to Assurance twice (initial complaint and later a statement of claim asserting emotional distress); Assurance declined, citing lack of coverage because the claims did not allege a policy “occurrence” or “bodily injury,” and did not fit “personal and advertising injury.”
- Landa sued Assurance for declaratory relief and various statutory and common-law claims (including UTPA violations and bad faith); Assurance moved for summary judgment asserting no duty to defend or investigate.
- The District Court granted summary judgment for Assurance, concluding Alsup’s allegations alleged intentional acts (not an "occurrence"), did not allege compensable "bodily injury" under the policy, and Assurance had a reasonable legal basis to deny coverage and thus no UTPA liability.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Alsup’s claims involved an “occurrence” under the policy | Landa: some misrepresentations could be accidental or negligent; policy should be read from insured’s perspective to find an "occurrence" | Assurance: complaint alleges intentional fraudulent conduct, not accidental conduct; no occurrence | Court: Held no occurrence — complaint pleads intentional acts, so no duty to defend |
| Whether Alsup alleged “bodily injury” under the policy | Landa: policy ambiguous; emotional distress can be bodily injury without physical manifestation | Assurance: no bodily injury alleged in complaint; emotional distress not tied to bodily injury | Court: Declined to decide fully (unnecessary) because absence of occurrence dispositive; District Court found no bodily injury alleged |
| Whether Assurance had duty to investigate or independently develop facts before denying defense (UTPA claim) | Landa: insurer had affirmative obligation to investigate claims reasonably under UTPA | Assurance: had reasonable legal basis to deny coverage; UTPA liability barred when insurer has reasonable basis in law | Court: Held Assurance had reasonable legal basis to deny defense based on complaint; no UTPA liability and no affirmative duty to further investigate |
| Whether insurer must look beyond complaint when complaint does not allege coverage-triggering facts | Landa: attached a statement of claim and cited Wagner-Ellsworth to show coverage facts existed | Assurance: insurer may rely on complaint where it contains all information it has; may decline defense if complaint alleges noncovered conduct | Court: Held insurer may refuse to defend when complaint clearly shows noncoverage; insurer not required to seek additional facts absent information that would trigger coverage |
Key Cases Cited
- Allstate Ins. Co. v. Wagner-Ellsworth, 344 Mont. 455, 188 P.3d 1042 (Mont. 2008) (addressed duty-to-defend analyses and claims alleging emotional injury)
- Blair v. Mid-Continent Cas. Co., 339 Mont. 8, 167 P.3d 888 (Mont. 2007) (an intentional act is not an "occurrence" when policy defines occurrence as an "accident")
- Safeco Ins. Co. of Am. v. Liss, 303 Mont. 519, 16 P.3d 399 (Mont. 2000) (definition of "accident"/"occurrence" viewed from insured's perspective requires unexpected, unintended act)
- Travelers Cas. & Sur. Co. v. Ribi Immunochem Research, 326 Mont. 174, 108 P.3d 469 (Mont. 2005) (coverage depends on the underlying acts alleged, not merely the legal theories pleaded)
- Farmers Union Mut. Ins. Co. v. Staples, 321 Mont. 99, 90 P.3d 381 (Mont. 2004) (insurer’s duty to defend is determined by the facts alleged in the complaint)