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Vol. 6, Iss. 3
March 22, 2017

Is This Argument For Coverage Ridiculous Or Genius?

Part of the business of being a lawyer is having to handle less than ideal cases. All lawyers get bad cases. Counsel must play the hand they are dealt – and their job is to make the most of it. That’s how I would describe the situation that confronted the plaintiff’s counsel in its pursuit of coverage in Associated Dermatology & Skin Care Clinic v. Mt. West Farm Bureau Mutual Ins. Co., No. DA 16-0098 (Mont. Feb. 21, 2017). Counsel had a pair of twos. But they didn’t push their cards into the center of the table. Instead they did what they could. They lost. But I can’t decide if the argument they made is support of coverage, for this tough case, was ridiculous or genius. But the fact that the trial court bought it suggests the latter.

In Associated Dermatology, the Montana Supreme Court addressed coverage for damages arising out of a fire. Robert Fitte ran a construction business out of his home. His property contained pine trees that had been killed by beetles. Concerned about potential damage that could occur to his work vehicles, ladders, and scaffolding if a tree fell, he decided to cut down two beetle-killed pine trees on his property. He cut down the tress without incident. So far so good.

Fitte cut the trunks into eight-foot logs and stacked them on his property. Pursuant to a burn permit he started a fire to burn the branches from the trees so that they would not take up space on his property.

You can see where this is going. “Two days later, a fire rose from the ashes of Fitte’s burn and erupted into a wildfire that became known as the Corral Fire. . . . The Corral Fire burned over 1,800 acres owned by approximately 35 landowners, including [Stephen] Behlmer’s 224-acre parcel, and consumed four dwellings, timber, and other personal property.” [Jeez Louise.] Fitte conceded negligence.

Fitte was insured under three policies issued by Mountain West: $300,000 homeowners policy; $1,000,000 commercial general liability policy; and $500,000 commercial automobile policy. Mountain West acknowledged coverage under the homeowner’s policy and another court concluded that no coverage was owed under the CGL policy.

Fitte and Behlmer entered into a stipulated judgment and covenant not to execute and Fitte assigned to Behlmer Fitte’s rights under the commercial auto policy. Auto policy? Huh? Wait, you’ll see.

Behlmer filed suit against Mountain West. The auto policy insuring agreement provided: “ We [Mountain West] will pay all sums an ‘insured’ legally must pay as damages because of ‘bodily
injury’ or ‘property damage’ to which this insurance applies, caused by an ‘accident’ and resulting from the ownership, maintenance or use of a covered ‘auto.’”

The trial court found in favor of Behlmer: “By removing and disposing trees to prevent damage to his vehicles, Fitte caused the Corral Fire. Thus, [Behlmer’s] property damage flowed from, grew out of, or originated from Fitte maintaining his insured vehicle.” (emphasis added).

An appeal was taken to the Montana Supreme Court. Writing for a unanimous court, Justice Jim Rice [I had his 1975 rookie card; Actually, I still have it] turned to whether the damage resulted from the “maintenance” of Fitte’s covered vehicles. Mountain West argued that “preventing harm to a vehicle by cutting down trees is not ‘maintenance’ of a vehicle, but, rather, ‘maintenance’ consists of ‘repairing or working on an intrinsic part’ of a vehicle.” Behlmer argued that the trial court got it right.

The court held that Fitte’s act of cutting down the trees was not maintenance of the autos: “Intrinsic within the definition of ‘maintenance’ . . . [is] that the acts of ‘preservation’ or ‘repair’ or ‘support’ or ‘sustaining’ or ‘continuing’ would occur on the item being maintained. ‘Maintenance’ as constituting work on the actual object is a meaning commonly understood by other courts. ‘Maintenance’ includes ‘the act of repairing the covered automobile.’ . . . In an automobile insurance contract, New York defined ‘maintenance’ as ‘performance of work on an intrinsic part of the mechanism of the car and its overall function.’” (emphasis in original).

However, the court also noted that, after all this discussion, the maintenance question was actually a non-issue: “Even if we were to assume, for sake of argument, that cutting down trees constituted maintenance of a vehicle, the policy would not extend coverage for the damages here. Placing the word ‘maintenance’ back within the provision at issue requires that the damage ‘result from’ the maintenance of the covered vehicles. Fitte’s decision to dispose of the branches by burning them and his action of starting the fire occurred after the trees had been cut down. As Fitte admitted in his deposition, the perceived risk to his vehicles was eliminated when he felled the trees. Fitte could have disposed of the trees in any number of ways, demonstrating that his decision to burn the branches was not an inherent part of vehicle maintenance.”

Ridiculous or genius?

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