Steadele v. Colony Insurance
2011 MT 208
| Mont. | 2011Background
- Steadele contracted with MCHC and Custom Comfort Homes to construct a single-family home, with MCHC to assemble sections shipped from Anaconda, and a completion deadline of November 2007 that extended into March 2008 before the project was abandoned.
- The underlying suit alleged negligent construction, improper insulation, incorrect exterior screws causing rust, incorrect foundation placement, and substantial mold growth requiring reconstruction, resulting in significant damages.
- MCHC and Kim Powell were properly served but did not respond to the suit, leading to a December 9, 2008 default judgment against MCHC for $1,879,204.54, including damages, CP A penalties, punitive damages, and fees.
- Colony Insurance had provided CGL coverage to MCHC from October 1, 2007 to March 29, 2008, but canceled for nonpayment, and MCHC never notified Colony of the claim or suit.
- Steadeles filed suit against Colony, alleging denial of coverage violated Montana law governing unfair claim settlement practices; Colony answered that there was no coverage under the policy.
- The district court found no dispute about MCHC's failure to notify Colony and granted Colony's cross motion for summary judgment, denying the Steadeles' partial summary judgment motion.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether MCHC's failure to notify Colony barred coverage | Steadeles contend insured failure to notify does not defeat third-party recovery. | Colony argues lack of notice constitutes a material breach causing prejudice and no duty to indemnify. | Notice breach precludes coverage; upheld summary judgment for Colony. |
Key Cases Cited
- LaBonte v. Mutual Fire & Lightning Ins. Co., 75 Mont. 1, 241 P. 631 (1925) (notice as a condition precedent to recovery)
- Riefflin v. Hartford Steam Boiler Inspection & Ins. Co., 164 Mont. 287, 521 P.2d 675 (1974) (failure to notify as required bars reimbursement)
- Park Place Apartments v. Farmers Union, 358 Mont. 394, 247 P.3d 236 (2010 MT 270) (ambiguity in policy interpreted in insured's favor; exclusions construed narrowly)
- Mitchell v. State Farm Ins. Co., 315 Mont. 281, 68 P.3d 703 (2003 MT 102) (ambiguity and interpretation rules for insurance contracts)
- Travelers Cas. v. Ribi Immunochem Research, 326 Mont. 174, 108 P.3d 469 (2005 MT 50) (interpretation of insurance policy language and coverage limits)
- Grimsrud v. Hagel, 328 Mont. 142, 119 P.3d 47 (2005 MT 194) (duty to defend depends on policy language and coverage)
- Truck Ins. Exchange v. Waller, 252 Mont. 328, 828 P.2d 1384 (1992) (third-party claims cannot create coverage where policy excludes it)